Post by
Daudau11 on Feb 10, 2022 9:18am
RBC
RBC Price Target $14
Q4 in line but mgmt points to a potential slow down in M&A on elevated valuations Our View: Q4 results were in line with consensus as higher revenue was offset by weaker margins. Thatsaid, we flag the market may take a negative view on commentary within mgmt's outlook, which cited cost pressures (driven by equipment and worker shortages) and indication that mgmt is “uncomfortable with the current valuation expectations" as it relates to future M&A. Mgmt noted that they would instead focus on integration, but we would nevertheless view a slowdown in M&A activity as a sentiment negative.
First impression: Q4/21 results in line with consensus. MTL reported adjusted EBITDA of $61MM, in line with consensus $61MM (RBC: $66MM). Revenue of $442MM came in ahead of consensus $429MM (RBC: $438MM); offset by lower margins. Highlights by segment as follows, with details in Exhibit 1.
• LTL – EBITDA below (EBITDA $25.7MM: RBC $27.7M). Revenue was up +45% Y/Y to $169MM (RBC: $171MM), but came in a touch below our expectations. EBITDA margin of 15.2% was below our 16.2%, due to higher purchased transportation costs.
•Logistics and Warehousing (L&W) – EBITDA in line (EBITDA $23.3MM: RBC $23.0MM). EBITDA wasin line as higher revenue was offset by lower margins.
• Specialized and Industrial Service – EBITDA below (EBITDA $12.3MM: RBC $15.3MM). Revenue was down -3% Y/Y to $82MM (RBC: $86MM) driven by a drop in pipeline activity and civil construction projects; partly offset by higher drilling related revenues. Margins also came in below at 15% (RBC: 17.8%) due to a change in revenue mix associated with large diameter pipeline projects.
• U.S. & International Logistics - EBITDA below (EBITDA $2MM: RBC $2.8MM). EBITDA was below expectations as higher revenue was more than offset by lower margins.
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