The company’s second quarter is in the books and Beacon Securities analyst Russell Stanley is still liking Tornado Global Hydrovacs (Tornado Global Hydrovacs Stock Quote, Chart, News, Analysts, Financials TSXV:TGH)
On August 17, TGH reported its Q2, 2023 results. The company reported EBITDA of $2.01-million on revenue of $23.5-million, a topline that was up 76 per cent over the same period last year.
Stanley broke down the quarter.
“TGH reported Q2 revenue/adjusted EBITDA of $23.5M/$2.0M v. our forecast of $21.2M/$1.9M. Revenue was 11% above forecast, which contemplated a flat Q2 after a stronger-than-expected Q1,” the analyst said. “Revenue improved 75% y/y and 12% q/q. Hydrovac Sales improved 84% y/y and 12% q/q to $21.9M, with Parts & Services contributing $1.6M in revenue, in line with Q1 levels. Gross margins were 83 bps below our forecast, but still improved 49 bps q/q. Margins continue to be negatively impacted by increased material/labour/freight cost inflation, but the company is benefiting from sourcing parts more globally. The gross margin improvement drove adjusted EBITDA margin growth of 68 bps q/q. The company continues to generate positive operating cash flow before (OCF of $1.5M) and after working capital (CFO of $0.5M), and with nominal CAPEX requirements, this translated to positive free cash flow of $0.3M.”
In a research update to clients August 18, Stanley maintained his “Buy” rating and one-year price target of 89 per cent at the time of publication.
The analyst thinks Tornado Global Hydrovacs will post Adjusted EBITDA of $9.0-million on revenue of $95.0-million in fiscal 2023. He expects those numbers will improve to EBITDA of $19.0-million on a topline of $118-million the following year.