Gartner Inc T.IT.R

Lennard Zwart from seeking alpha site

[Carpenter72]

JPJ had another solid quarter with revenue up 11.2% and EBITDA up 4.3% YoY. TTM EBITDA clocked in at 103.2m.

 

Normalised FCF to the equity for the quarter was very healthy at GBP 22.3m (excluding transaction cost). Unfortunately Net Debt only decreased by 0.8m because the earnout liability increased because of the good results of JPJ. One thing to keep in mind is that this is additional EBIT that is in effect 'being bought' for 4.5x so the earnout liability increasing is not exactly bad news long term. It was also the last earnout reset so any future EBIT increases are 100% for JPJ.

 

Before the end of June JPJ expects to pay off another 95m of earnout liability out of internally available cash and this will take care of most of this liability (which currently stands at 135.1m). After the liability is completely extinguished a few Q's later, debt repayments will start adding about 5m pa to FCF due to interest savings.

 

We (conservatively) see current stable state annual FCF at 60-65m taking all upcoming tax changes into account and we still expect dividends to be initiated around Q1 2019.

 

We were on the call asking a couple of question on the cost structure and were pleasantly surprised when John Paulson joined the question round as well (his firm recently bought a 5.4% stake in JPJ).