Vaisala - A Quality Company in Observation and Measurement Technology

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Insider Information: Vaisala Accelerates Xweather’s Growth by Acquiring Maxar Intelligence’s WeatherDesk Business

Vaisala acquires the US-based Maxar Intelligence’s WeatherDesk business. With this acquisition, Vaisala strengthens its leading position in AI-driven weather forecasting and reinforces its offering to the insurance, finance, and energy sectors.

Maxar’s WeatherDesk is a pioneer in AI-based weather forecasting, offering rapid access to reliable, global weather forecasts and observations. WeatherDesk serves customers focused on commodity and energy trading, as well as forecasting both energy demand and supply.

The acquisition strengthens Vaisala’s position as a global leader in measurement technology. In line with the company’s strategy, the transaction helps expand in the energy transition and grow its subscription-based data business. Together with the recently acquired Speedwell Climate, the acquisition further strengthens Vaisala Xweather’s position as a weather intelligence partner for the insurance and finance sectors.

“Weather is a key parameter in commodity and energy trading, as well as in planning energy demand and supply. Together with the WeatherDesk team, we can enhance weather and climate-related understanding, which helps our customers forecast energy demand and supply, optimize trading strategies, and manage risks related to extreme weather events. I want to warmly welcome the team to Vaisala,” says Samuli Hänninen, Director of Vaisala Xweather business.

The purchase price is 70 million US dollars and will be financed mainly with interest-bearing debt. Maxar’s WeatherDesk business had a revenue of 13 million US dollars in 2023, and the business is strongly profitable. The revenue is based on recurring billing and is expected to grow in double digits, like the rest of the Xweather business. Due to WeatherDesk’s business model based on a very light balance sheet, the assets identified in connection with the acquisition are primarily technology and customer-based intangible assets, in addition to goodwill. With the acquisition, 34 employees in the United States will transfer to Vaisala.

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I coincidentally noticed that Amazon Web Services (AWS) powers that WeatherDesk OS, and AWS has also published a blog post about the product: How Maxar builds short duration ‘bursty’ HPC workloads on AWS at scale | AWS HPC Blog

Those interested and developers can read more there, if interested.

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Here are Pauli’s comments on Vaisala’s recent acquisition, which has already been discussed here. :slight_smile:

Vaisala has made several acquisitions during the current year, with which it has supplemented its Xweather weather data business, which consists of continuous high-margin invoicing. The latest acquisition target, WeatherDesk, focuses specifically on customers involved in commodity and energy trading. We view the acquisition with cautious optimism, but we do not see the deal having a significant impact on the stock’s return/risk potential. We will update our forecasts no later than in connection with the Q4 preliminary comments.

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Pauli has prepared a new company report on Vaisala in his evening work. :slight_smile:

Vaisala has strengthened its weather data business inorganically this year, and we consider the value creation potential of the deals favorable. The acquired data businesses can be scaled by utilizing Vaisala’s strong sales channels, and in our opinion, the acquisition prices also appear reasonable.

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Kai Öistämö discusses in Yle’s article Vaisala’s readiness to react to Trump’s upcoming tariff walls. If necessary, production can be moved to the United States.

– Yes, it would certainly take some time, but we have existing factories and we have experience in moving production between different factories, Öistämö says.

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Going well, but let’s keep it going!

“Vaisala Oyj’s 2024 operating profit (EBIT) was, according to preliminary unaudited information, EUR 83 million and net sales EUR 565 million. In the earnings forecast on 24 October 2024, Vaisala’s 2024 operating profit (EBIT) was estimated to be EUR 68–78 million and net sales EUR 540–570 million.”

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Here are Pauli’s comments on this recent guidance raise. :slight_smile:

Vaisala’s Q4 proved to be clearly stronger than market expectations, both in terms of growth and especially profit. The figures indicate, on the one hand, that demand in the industrial segment recovered better than expected, and, on the other hand, strengthen expectations of improved profitability in the Weather and Environment business area. We expect the information to have moderately positive effects on the 2025 earnings forecasts. We will update our forecasts by Friday morning.

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Pauli Lohe’s updated view on Vaisala is now out. Forecasts and target price are up.

“We raised our earnings forecasts for the coming years by approximately 5% following a strong Q4 report. We see several positive drivers for the current year and expect revenue growth to accelerate to even double digits, which, in our opinion, still leaves some upside potential in the valuation. We reiterate our ‘add’ recommendation and raise the target price to 54 euros (previously 51 euros).”

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Here’s Evli’s view on Vaisala’s performance. :slight_smile:

According to the analysis, Vaisala ended the year strongly, exceeding its forecasts for sales and profitability in both business areas, with cost control being the main reason, according to Evli.

The company is expected to achieve significant growth and improved profitability, especially due to the recovery of industrial measurement markets and sales of renewable energy solutions. Evli is positive about the future. :slight_smile:

No paywall,

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Here are Lohen’s preliminary comments as Vaisala releases its Q4 on Tuesday, Feb 18.

Q4’s strong revenue growth and profitability are known, as the company announced results exceeding guidance already on Jan 16. Revenue growth should accelerate broadly during 2025, both organically and supported by acquisitions in weather data services. The most significant uncertainties relate to the demand outlook for Industrial Measurements, with tariffs slowing global investment activity and possibly even directly impacting Vaisala’s sales to the USA.

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Vaisala Oyj Financial Statement Release January–December 2024

Excellent final quarter as market strengthened

This release is a summary of Vaisala’s January–December 2024 Financial Statement Release. The full report is attached to this release as a PDF file. The report is also available on the company’s website at www.vaisala.fi/sijoittajat.

Fourth quarter 2024 in brief

  • Orders received EUR 144.5 (147.1) million, decrease 2%
  • Order book at the end of the period EUR 215.0 (172.5) million, increase 25%
  • Net sales EUR 167.5 (147.4) million, increase 14%
  • Operating result (EBITA) EUR 30.3 (18.2) million, 18.1 (12.3)% of net sales
  • Operating result (EBIT) EUR 28.0 (16.3) million, 16.7 (11.0)% of net sales
  • Earnings per share EUR 0.59 (0.36)
  • Cash flow from operations EUR 28.9 (29.5) million
  • Vaisala acquired the US-based Maxar Intelligence’s WeatherDesk business for an acquisition price of EUR 70 million

January–December 2024 in brief

  • Orders received EUR 565.6 (528.1) million, increase 7%
  • Net sales EUR 564.6 (540.4) million, increase 4%
  • Operating result (EBITA) EUR 90.3 (74.7) million, 16.0 (13.8)% of net sales
  • Operating result (EBIT) EUR 82.9 (66.6) million, 14.7 (12.3)% of net sales
  • Earnings per share EUR 1.76 (1.35)
  • Cash flow from operations EUR 78.9 (83.8) million
  • Board of Directors proposes a dividend of EUR 0.85 (0.75) per share

Financial guidance 2025

Vaisala estimates, excluding potential material changes in the market environment, that its net sales for 2025 will be EUR 590–620 (2024: 565) million and its EBITA operating result EUR 90–105 (2024: 90) million.

Starting from the beginning of 2025, Vaisala has changed its operating result (EBIT) guidance to EBITA operating result in line with its long-term financial targets.

Market outlook 2025

The industrial market and health technology market began to gradually improve in the second half of 2024. The same gradual improvement is expected in 2025. The power market is expected to grow.

More established weather systems markets, such as meteorology, aviation, and road traffic, are expected to be stable. The renewable energy market is expected to be stable.

Key figures

EUR million 10-12/2024 10-12/2023 Change 1-12/2024 1-12/2023 Change
Orders received 144.5 147.1 -2 % 565.6 528.1 7 %
Order book 215.0 172.5 25 % 215.0 172.5 25 %
Net sales 167.5 147.4 14 % 564.6 540.4 4 %
Gross margin 94.5 80.1 18 % 318.1 301.7 5 %
Gross margin, % 56.4 54.3 56.3 55.8
Fixed costs 66.6 64.4 3 % 235.8 235.9 0 %
EBITA 30.3 18.2 90.3 74.7
EBITA, % 18.1 12.3 16.0 13.8
Operating result 28.0 16.3 82.9 66.6
Operating result, % 16.7 11.0 14.7 12.3
Profit before taxes 26.4 16.1 80.8 63.1
Profit for the period 21.4 12.9 63.7 48.9
Earnings per share 0.59 0.36 66 % 1.76 1.35 30 %
Return on equity, % 22.1 18.9
Research and development expenses 19.2 18.1 6 % 68.6 67.7 1 %
Investments in intangible and tangible assets* 9.4 3.1 206 % 19.1 13.9 37 %
Depreciation and impairment 6.9 6.1 14 % 24.3 24.3 0 %
Cash flow from operations 28.9 29.5 -2 % 78.9 83.8 -6 %
Ratio of cash flow from operations to operating result 1.0 1.8 1.0 1.3
Cash and cash equivalents 88.8 90.3 -2 %
Interest-bearing liabilities 129.5 62.1 108 %
Net gearing, % 13.2 -10.5
* Excluding impact of acquisitions

CEO Kai Öistämö

”Vaisala’s year 2024 ended very strongly, and we started 2025 with a robust order book of EUR 215 million. Both of our business areas grew and improved their profitability despite global challenges such as increased geopolitical tensions and business environment uncertainty.

Our orders received in the last quarter were stable compared to the previous year. Demand in the Industrial Measurements business area grew, and demand in the Weather and Environment business area remained strong. Our net sales grew by 14%, reflecting a strong order book and large project orders, growth in recurring revenue, and successful deliveries at the turn of the year. The gross margin percentage improved as a result of net sales growth and a favorable sales mix.

Our full-year orders received grew by 7%, and our net sales grew by 4%. After a slow start to the year, market demand in the Industrial Measurements business area gradually improved during the year. In the Weather and Environment business area, demand was strong throughout the year. Additionally, our operating result margin improved to 15% as a result of net sales growth, improved gross margin percentage, and successful cost management.

During the year, we continued to implement our strategic focus areas. In the Weather and Environment business area, we strengthened our global leadership in weather systems and signed significant customer agreements, such as a contract to supply weather radars to the Spanish Meteorological Agency. We significantly improved our profitability in established weather systems markets and continued the organic growth of our recurring revenue. We also acquired Speedwell Climate and Maxar’s WeatherDesk business to strengthen Vaisala Xweather’s position as a weather data partner for insurance and finance customers, as well as Nevis Technology to expand our offering related to offshore wind farms. In the Industrial Measurements business area, we launched several new products and were able to maintain our strong market position despite a globally challenging year.

The fourth quarter concluded our three-year strategy period, whose long-term financial targets were an average 7% net sales growth and a 15% operating result margin (EBIT). Despite the various uncertainties that characterized the three-year period, our team demonstrated resilience and commitment throughout the period. A warm thank you to all Vaisala personnel and our partners for making this possible.

At the end of the year, we announced changes in Vaisala’s Management Team. In January 2025, Samuli Hänninen became a member of Vaisala’s Management Team and continues to lead the Xweather business. Anne Jalkala started as the head of the Weather, Energy and Environment business and Jarkko Sairanen as the head of the Industrial Measurements business area. Lorenzo Gulli started as the Head of Strategy and M&A. Sampsa Lahtinen retired after an impressive decade during which he successfully grew the Industrial Measurements business.

As we move into 2025, we estimate that market environment uncertainty will continue, and the risks of geopolitical tensions and trade restrictions will increase. Excluding potential material changes in the market environment, we estimate our net sales for 2025 to be EUR 590–620 million and our EBITA operating result EUR 90–105 million.”

Board of Directors’ proposal for dividend distribution

The parent company’s distributable funds are EUR 221,935,585.08, of which the profit for the financial year is EUR 58,240,409.02.

The Board of Directors proposes to the Annual General Meeting that a dividend of EUR 0.85 per share, totaling EUR 30.8 million, be distributed from the distributable funds and the remainder be left in equity. No dividend will be paid for own shares held by the company.

No material changes have occurred in the company’s financial position since the end of the financial year. In the Board of Directors’ view, the proposed profit distribution does not jeopardize the company’s financial position.

Annual General Meeting 2025

Vaisala Oyj’s Annual General Meeting will be held on Tuesday, March 25, 2025, starting at 2:00 p.m. at Vaisala Oyj’s headquarters, at Vanha Nurmijärventie 21, 01670 Vantaa.

Audiocast and conference call
An English-language audiocast and conference call for analysts, investors, and media will be held on Tuesday, February 18, 2025, starting at 1:00 p.m.You can participate in the live webcast (audiocast) via the following link: https://vaisala.events.inderes.com/q4-2024

Questions can be asked by participating in the telephone conference. Register for the telephone conference by using the link below. After registration, you will receive the phone numbers and conference ID by email.
https://palvelu.flik.fi/teleconference/?id=50051620

A recording of the event will be available at vaisala.com/sijoittajat later the same day.

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Pauli has already quickly written comments on the Q4 results. :slight_smile:

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Night reading for you brought to you by Pauli Lohi. Here’s a fresh company report. :slight_smile:

Revenue growth and profit developed strongly, driven by both business areas, in the last quarter of 2024. We made small cuts to our forecasts due to what we interpreted as cautious guidance from the company and estimate EBITA operating profit to rise close to the upper end of the guidance range. However, the expected return is no longer sufficient at the current share price, which is why we lower our recommendation to reduce (previously add) with a target price of 54 euros (unchanged). A clear strengthening of industrial demand could improve the expected return, but so far, only quite early indications of this have been received.

Quoted from the report:

Our current forecasts assume Vaisala’s result will settle near the upper end of the 2025 guidance, against which we believe an adjusted EV/EBIT of 19x no longer offers sufficient upside. Applying an EV/EBIT multiple of 18x to our 2026 earnings forecasts would yield an upside of approximately 8% per year, including dividends, which we do not consider particularly attractive, even though it just barely reaches the level of the required return on equity.

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Second sale of shares from Vaisala’s Board of Directors within a week:

DISPOSAL
Volume: 534
Average price: 49.025 EUR

Last week:

Transaction type: DISPOSAL
Volume: 1500
Average price: 51.6 EUR

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This company combines growth and profitability; the figures look quite good from recent years. I owned Vaisala shares in 2020-2021 and they performed well; I sold them at an average price of approx. 42€ in a portfolio “clearance sale”. Now, it seems the company could be acquired significantly cheaper relative to its earnings, as earnings have grown more than the share price has risen.

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What do you see as the biggest risks here?

This appears in many ways to be a quality company - market leader, excellent profitability, growing business, etc. (somewhat reminiscent of Harvia in terms of performance, market position, and financial profile). I have now updated my 2020 justifications and it was interesting to note how the company has grown.

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Yes, it seems to be a quality company. The company is quite evenly distributed globally (Americas 35%, EMEA region 34%, and APAC 31% of revenue). This could potentially mitigate damage from an accelerating trade war. A single, poorly positioned company can also easily fall victim to a trade war.

The following information is from the 2024 financial review:

  • ROE % has grown from 16.3% (2020) to 22.1% (2024).
  • The equity ratio has slightly decreased between 2020 and 2024 but is still 52.4%.
  • Operating profit has risen steadily over the last four years.
  • I would expect earnings volatility to remain relatively low, as I believe the customer base wants to stick with old and familiar suppliers (hopefully also those perceived as good).

In 2024, 70% of revenue streams came from product sales, which will certainly be affected by the recently discussed US tariffs – Vaisala, however, also has production in the United States. China’s counter-reaction to US tariffs also adds its own element of tension to the company’s operations, as one production facility is located in Shanghai. I would assume potential Asian import tariffs would target the United States.

It would be nice to hear others’ opinions too :slightly_smiling_face:.

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Section on Vaisala from Inderes’ tariff review: Case: Yhdysvaltain tuontitullien mahdollisia vaikutuksia Helsingin pörssin yhtiöihin - Inderes

Vaisala’s revenue is fairly evenly distributed globally, but as a large market area, the United States accounts for a significant portion of its revenue (an estimated 27 percentage points). Vaisala has production in the USA, which is particularly related to locally used products – primarily, as we understand it, to observation devices in the Weather and Environment business area. The key customer base for weather observation devices consists of public sector actors who, in our estimation, cannot afford to pay significantly increased prices if tariffs rise, which could reduce demand for weather observation devices manufactured in Finland. Regarding industrial measurement devices, price increases are, in our opinion, easier to implement, and most competitors in this segment, like Vaisala, come from the EU and are subject to the same tariffs. A key question is how tariffs affect global industrial investments, as this drives the demand for industrial measurement devices. As we understand it, Vaisala has the option to consider transferring the production of some of its products to the United States to avoid tariffs.

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“The core customer base for weather observation equipment [in the United States] consists of public sector actors.”

I started thinking that the impact of the current administration’s actions (not just tariffs) might be surprisingly drastic. For example, NOAA (National Oceanic and Atmospheric Administration) is a target of DOGE’s destructive actions.

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Doge focuses, as I understand it, on (allegedly) streamlining overgrown administrative bodies and cutting their costs. DOGE’s impact, e.g., on the acquisition of observation stations, may not be as direct as I understood from your message. Of course, it’s possible that, for example, the people responsible for equipment procurement are removed, and their replacements choose a different supplier instead of Vaisala. I don’t believe that such fumbling will reduce administrative costs, at least.

I don’t believe anyone wants to weaken American weather services. If Vaisala’s offerings have been considered good, DOGE’s actions probably won’t affect public sector entities’ Vaisala purchases.

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