TALGO: FY2020 RESULTS (ANÁLISIS BANCO SABADELL)
4Q'20 vs. 4Q'19 ResultsSales: € 147.7 M (+17.0% vs. -0.5% BS(e) and -0.5% consensus);
EBITDA: € 11.6 M (-48.2% vs. -56.7% BS(e) and -58.0% consensus);
Net Profit: € -11.1 M (€ 11.5 M in FY2019 vs. € 0.4 M BS(e) and € 2.8 M consensus).
FY2020 vs. FY2019 Results
Sales: € 487.1 M (+21.3% vs. +15.8% BS(e) and +15.8% consensus);
EBITDA: € 34.2 M (-53.1% vs. -55.7% BS(e) and -56.1% consensus);
Net Profit: € -17.4 M (€ 37.7 M in FY2019 vs. € -5.9 M BS(e) and € -3.5 M consensus).
The company released at yesterday’s closing bell FY2020 Results still hit by Covid-19, although above expectations in sales (+5% vs. BS(e) and consensus) and EBITDA (+6% vs. BS(e) and consensus), and slightly better in debt (€ 48 M vs. 60 BS(e) and consensus).
Thus, sales increased by +29% vs. 2019 (+17% on the quarter) to € 487 M, impacted, above all, by Covid-19 in maintenance activities (no breakdown provided). This impact is more significant on the EBITDA level, as the drop in activity translates into lower absorption of fixed costs (and possible cost overruns), bringing the year’s adjusted EBITDA to € 34.2 M (€ 11.6 M on the quarter), with a 7.0% margin (vs. 6.9% BS(E) and consensus; 9.4% 2019). Net Profit’20 came in at €-17.4 M (vs. €-5.9 M BS(E) and €-3.5 M consensus), with the main difference vs. our estimate being the full depreciation (one-off, with no impact on cash) of 2 Talgo S8 trains manufactured in 2019 that did not start operations due to problems linked to the client.
As for cash generation, FCF in the second half of the year stood at €~-97 M, impacted by increasing working capital levels (especially in the client account, slightly above our estimate). Thus, the company’s NFD stands at € 48 M (vs. € 60 M BS(e) and consensus; 1.4x NFD/EBITDA; € 53 M as of YE2019) thanks to the Changes in financial assets and liabilities headline. The company has available financing lines totalling € 150 M (vs. € 90 M as of YE2019), which leaves its liquidity position at € 380 M vs. € 56 M in debt maturities in 2021-22.
It unveiled its 2021 guidance, stressing that (i) 2021-22 sales would account for between 35-37% of the backlog (vs. 40% BS€ and 35% consensus), (ii) the average 2020/21 BtB will be >1.2 (vs. 1.0 BS(e)) and (iii) the EBITDA margin would range between 10% and 12% (vs. 14% BS(e) and 12% consensus). The company also announced it will cancel shares representing 2.8% of the capital (pending to be cancelled according to the information made public at the time).
Even though the share price opened with sharper drops than the market, we believe the correction should ease as these results were above expectations and the guidance seems reasonable given the mobility restrictions still in force in some of the markets where the company operates. The share price has climbed +2% vs. IBEX YtD. Conference call at 12:00 )CET). BUY, T.P. € 5.88/sh. (+35.33% upside).
Talgo is engaged in designing, manufacturing, repairing and maintaining the railway rolling stock, as well as the manufacturing, assembling, repairing and maintaining the engines, machinery and parts of the railway systems. Co. has an industrial presence in seven countries: Spain, Germany, Kazakhstan, Uzbekistan, Russia, Saudi Arabia and U.S.A. Co. has an active fleet in Europe, Asia and North America that comprises of 94 high-speed trains and more than 1,400 Talgo tilting passenger cars. Also, Co. purchases, redesigns, constructs, leases and sells all types of real estate.
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