Currently have a $61.50 target. GLTA
EXCHANGE INCOME CORPORATION Q4 First Pass: In Line With Expectations
Key Takeaway: Neutral impact. EIF reported Q4 results that were essentially
in line with expectations, and maintained its 2024 guidance, which it had
issued when it reported Q3 earnings last year. The company is hosting a
conference call on February 23 at 8:30 a.m. ET. We will be looking for more
details on the delivery of aircraft for its aviation contracts, what other
contracts are up for bid in 2024, and commentary on the matting business,
which is continuing to see a normalization of operations.
Q4 Recap: Revenue came in at $657MM, up from $543MM in Q4/22 and
versus our estimate of $633MM (consensus was $647MM). Adj. EBITDA
came in at $144MM, up from $124MM in Q4/22 and versus our estimate of
$141MM (consensus was $143MM). Adj. EPS came in at $0.70, down from
$0.73 a year ago, versus our estimate of $0.69 (consensus was $0.72). FCF
(CFO less net capex and cash lease payments) was $7MM, down from
$70MM in Q4/22, compared to our estimate of ($12)MM. The main variance
versus our estimate was working capital. Gross capex in the quarter was
$156MM, of which $52MM was deemed maintenance capex.
Divisional Results: Below is a summary of EIF’s divisional results.
• Aerospace & Aviation: Q4 revenue came in at $385MM, up from
$340MM in Q4/22 and versus our estimate of $381MM (consensus was
$386MM). EBITDA was $109MM, up from $88MM in Q4/22 and versus
our estimate of $103MM (consensus was $106MM).
• Manufacturing: Q4 revenue came in at $271MM, up from $203MM in
Q4/22 and versus our estimate of $252MM (consensus was $261MM).
EBITDA was $45MM, down from $47MM in Q4/22 and versus our
estimate of $50MM (consensus was $50MM). We suspect the variance
versus our estimate comes from the matting business and the mix of
sales versus rental of mats.
Maintaining 2024 Guidance: EIF is maintaining its 2024 EBITDA guidance
of $600MM - $635MM versus our estimate of $612MM (consensus is
$626MM).
Liquidity Update: The company has liquidity of ~$1B through cash on hand
and available credit facilities (including the credit facility accordion feature).
EIF ended the year with a leverage rate of 2.47x and is well within its key
financial covenant of 4.0x.
Conference Call Details: The company is hosting a call at 8:30 a.m. ET on
February 23. Dial-in number is 888-886-7786 or 416-764-8658