TSX:BOS - Post Discussion
Post by
retiredcf on Mar 10, 2022 7:46am
TD 2
Their target is now $51.00. GLTA
AirBoss of America Corp.
(BOS-T) C$34.33
Q4/21; Large Pipeline of Opportunities Awaits AirBoss Event
After market close on March 8, AirBoss reported Q4/21 Adjusted EBITDA of $27.0 million compared with our forecast/consensus of $24.7 million/$23.9 million. Adjusted diluted EPS of $0.55 compared with our forecast/consensus of $0.42/$0.44.
Impact: NEUTRAL
We are maintaining our BUY recommendation and reducing our target to C$51.00 from C$52.00. The increase reflects the shift forward of our valuation period by one quarter and a slight decrease to our Defense segment valuation period adjusted EBITDA forecast. The lower Defense segment adjusted EBITDA forecast is due to relatively unchanged forecast revenue, combined with the carry-forward of a portion of the higher-than-forecast Defense segment operating expenses. Despite a year filled with supply-chain challenges, we believe that AirBoss has maintained the financial resources, expertise, organic growth opportunities, and customer base necessary to drive future shareholder value.
We believe that AirBoss is in the process of showing investors that its significant jump in revenue and earnings in 2020/2021 will be sustainable. We assume that as the large ($288 million) nitrile glove contract winds down in Q2/22, the company will be able to backfill revenue with new defense and first responder PPE contracts. We assume that the company will reach 10% adjusted EBITDA margin in its Engineered Products (AEP) segment by 2023 with additional upside beyond based on easing supply chain challenges, contract pricing adjustments, and diversifying its customer base to include higher margin non-automotive customers.
We believe that large potential contract awards over the 3-6 months, as well as M&A that accelerates the company's growth strategy, could be positive catalysts over the near term. We believe that the pull-back in AirBoss' share price, its balance sheet strength, $1.5 billion contract pipeline, and investments in margin enhancing initiatives in both AEP and ARS, along with eventual supply chain relief, support a positive view.
TD Investment Conclusion
We believe that AirBoss' strong balance sheet, dividend, and growing exposure to global demand for personal protective equipment make it an appealing investment. We believe that its Defense segment is increasingly well-positioned to drive strong earnings, while its legacy Rubber Solutions and Engineered Products segments regain momentum.
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