ISS Global (Baa3 S, BBB- P)1Q Results

Guidance for FCF of DKK1.8b unch. Reminder its bumped shareholder returns to DKK1.4b this year given leverage at 2.2x is now in target 2-2.5x range. Front maturity is a €300m Dec line - refi then looks likely & if so would extend out a current <3yr curve.

• The facilities manager reported revenue at DKK20.1b (c€2.7b) vs c€20.2b at organic growth of 6% (c7.5%) - prices did leg work at +6.5%. Gross growth was +4.2%yoy on -2.5% currency headwind.
• By region firm growth in Europe & APAC on organic MSD to LDD. Only weakness was in smallest (DKK2.2b/12% of rev's) Americas which fell -2% organic (gross -4%) - it says prices couldn't offset contract exists - some of which was deliberate.
• Its divested ISS France - it says leverage was unch through it & did a bolt-on acquisition of a Swiss business that will add +0.6% to group revenue. Leverage at FY23 was healthy 2.2x at mid point of 2-2.5x target.
• Says Deutsche Telekom (DTE) situation is unchanged/progressing with arbitration - its in reference to what it claims is payments for services that have been held back - it said in FFY23 results that it did not impact its relationship/existing contracts with DTE (its biggest customer).
• FY24 guidance unch; organic growth +4-6%, operating margin >5% (from 4.6% last yr), underlying FCF>DKK 2.4b (>60% cash conversion) but including withheld DTE payments actual >DKK1.8b (€240m). Analyst have taken guidance in full. Its medium term targets are the same as FY24.