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Loomis AB (LOOMIS AB; NR/BBB) FV

CONSUMER CYCLICALS
Credit BulletsBulletHomepagemarkets-real-timeCredit
exp. €300m 5Y SLB IPT MS+160a vs. FV +120 (-40), subject to revisions
  • Correction to above Loomis is coming with S&P only ratings at BBB (-2 notches vs. Experian).

    • This is a €2.5m in sales co - so small scale but large market share (S&P has 12% on global). It's pointing to rising cash in circulation and the fact it continues to have a significant share of total payment volumes...that is not a trend we see in major developed economies; UK as example saw cash use hit 15% in 2021 down from (estimates) of over half a decade ago. The number of ATMs have also been in decline since 2016 for the UK. Loomis points to outsourcing from companies as helping it - S&P has taken this to heart as well noting "good organic growth, supported by increasing outsourcing trends, despite changing consumer preferences around payment methods."

    As Tobacco co's has shown having market share in a structurally declining industry can still be incredibly profitable. Though this has been spun-off from Securitas we would not compare it to that - guarding services is 2/3 of revenue for Securitas but it also has 1/3 to technology and solutions that should have firmer growth prospectus. It is lower margin though running a high 6-handle currently - nearly half what Loomis runs. Loomis BS is squared away on high 1-turn leverage and FCF to debt metrics that rival IG Tobacco.

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exp. €300m 5Y SLB IPT MS+160a vs. FV +120 (-40), subject to revisions
  • Correction to above Loomis is coming with S&P only ratings at BBB (-2 notches vs. Experian).

    • This is a €2.5m in sales co - so small scale but large market share (S&P has 12% on global). It's pointing to rising cash in circulation and the fact it continues to have a significant share of total payment volumes...that is not a trend we see in major developed economies; UK as example saw cash use hit 15% in 2021 down from (estimates) of over half a decade ago. The number of ATMs have also been in decline since 2016 for the UK. Loomis points to outsourcing from companies as helping it - S&P has taken this to heart as well noting "good organic growth, supported by increasing outsourcing trends, despite changing consumer preferences around payment methods."

    As Tobacco co's has shown having market share in a structurally declining industry can still be incredibly profitable. Though this has been spun-off from Securitas we would not compare it to that - guarding services is 2/3 of revenue for Securitas but it also has 1/3 to technology and solutions that should have firmer growth prospectus. It is lower margin though running a high 6-handle currently - nearly half what Loomis runs. Loomis BS is squared away on high 1-turn leverage and FCF to debt metrics that rival IG Tobacco.

Keep reading...Show less