Dexterra is a buy, Beacon Securities says

Beacon Securities analyst Kirk Wilson maintained his “Buy” rating and $11.00 target for Dexterra (Dexterra Stock Quote, Chart, News, Analysts, Financials TSXV:DXT) in a June 9 note, saying the company’s expanded $425-million credit facility signals readiness for M&A-driven growth, particularly in the U.S. integrated facilities management market.

Dexterra has expanded its credit facility to $425-million, with an additional $150-million uncommitted accordion, up from a previous $260-million facility with the same accordion amount. The new agreement extends the maturity to September 7, 2029, from 2026, and includes a slightly lower interest rate, now based on the bank prime rate plus 0.5%–1.5% or the Canadian Overnight Repo rate plus 1.5%–2.5%, depending on net debt-to-EBITDA. The rate structure is similar to before but with the top end reduced by 25 basis points.

Dexterra provides a range of services across Canada, including facilities management, workforce accommodations, and support for the energy and forestry sectors. 9,000 employees

“Investors may wonder why the need for such a large increase to DXT’s borrowing capacity when the LTD was $82-million at the end of Q1/25 (LTD/EBITDA = 0.7x TTM),” Wilson said. “As the company’s business model is ‘capital light,’ especially in the Support Services division that accounts for approximately 82% of our 2025 forecasts, the obvious answer is that the company needs the room to address the M&A market, which it has said offers many opportunities in both Canada and the U.S.

“We believe the potential to add/expand its presence in the IFM sector, particularly in the U.S. where its most recent acquisition of CMI gave the company a foothold in the U.S., is most likely. The U.S. market is fragmented, and DXT has set expansion there as a goal.

Wilson expects Dexterra to generate $112-million in Adjusted EBITDA on $1.05 billion in revenue for fiscal 2025. He forecasts those figures to improve to $118-million in EBITDA on $1.08 billion in revenue in fiscal 2026.

He said Dexterra has consistently employed acquisitions as part of its growth strategy in the past, and he expects no change to this approach going forward.

“While we do not know of any specific opportunity or timing of any M&A deals, we know that the company is always evaluating opportunities,” he said. “We maintain our price target of $11.00, which tracks to a 5.5X EV/EBITDA multiple of our 2026 forecasts. We maintain our ‘Buy’ rating.”

Dexterra CEO Mark Becker said in a June 9 statement that the expanded credit facility, secured on improved terms, reflects the strength of the business and the confidence of its financial partners.

“The facility allows Dexterra to deliver our strategy while we remain committed to maintaining a strong balance sheet,” Becker said.

The facility carries an interest rate of bank prime plus 0.50% to 1.50%, or the Canadian Overnight Repo Rate plus 1.50% to 2.50%, depending on Dexterra’s total net debt-to-EBITDA ratio.

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