September 16, 2024 11:49 GMT
TECHNOLOGY: Worldline EUR 28s Wide Of Double-B BVAL Curve
TECHNOLOGY
NR/BBB-
Worldline’s EUR 28s are ~10bps wider again today sit wide of the double-B Corp BVAL curve despite. We note that the Friday’s revision brings the name further below the expectations tied to S&P’s stable outlook and look at what consensus figures imply for company-reported leverage (with the caveat that consensus won’t yet reflect any changes on Friday’s guidance/CEO change).
- Worldline’s stable outlook reflects S&P-adjusted expectations of 5-6% growth, EBITDA margin remaining around 15-17% in 2023-2024 and S&P-adj leverage of ~2.8x in 2023, declining toward 2.6x in 2024 (from 3.8x at FY22).
- Upside/downside thresholds given at 2.5x/3.5x with the upside scenario seen stemming from an EBITDA margin toward 20% and the downside possibly occurring on large debt-funded M&A or operational missteps.
- With organic growth guidance cut to c.1% on Friday (vs. consensus of 2.4%), Worldline has fallen further short of the outlook’s expectations. FY24 consensus before the guidance cut was for a ~30bp decrease in reported FY24 EBITDA margin (from 24.1% in FY23) followed by a ~140bp increase in FY25.
- BBG consensus sees company-reported EBITDA leverage falling from 1.6x at FY23 (and 1.5x at H124) to 1.5x at FY24 and 1x at FY25. This compares to the S&P-adjusted expectation of 2.9x to 2.6x to <2x over the same period though we have no visibility and make no comment on the adjustments made.
- The updated FY24 guidance for EBITDA (EUR c.1.1bn) and FCF (EUR c.0.2bn) was broadly in line with where the market already had consensus.
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