Qualtek Services ($QTEK) - US infran rakentaja

QualTek Services Inc ($QTEK) on US markkinalle fokusoitunut infran rakentaja. Kohteena erityisesti langattomat verkot, mastot, 5G tukiasemat jne. Toinen merkittävä osa on kuituverkkojen asennukset. Pienempiä, mutta nopeammin kasvavia uusiutuvan energian infran rakentaminen sekä poikkeustilojen logistiikka, uutena myös radioverkkojen konsultointi.

Taustaa

Listautuminen SPAC mergerin kautta 15.2.2022

Useita yritysostoja 2021, esim:
https://qualtekservices.com/News/1013/qualtek-expands-wireless-services-segment-with-acquisition-of-vinculums
https://qualtekservices.com/News/1014/qualtek-expands-northeast-presence-with-acquisition-of-aerial-wireless-services
https://qualtekservices.com/News/1007/qualtek-acquires-fiber-network-solutions-a-premier-provider-of-fiber-optic-and-e


Langattomat ja kuituverkot yhteensä 80% liikevaihdosta

Uusiutuvan energian rakentaminen 10% liikevaihdosta

Pelastus- ja suojalogistiikka (tms suomennos, Recovery Logistics) 10% liikevaihdosta

Lisäksi uutena SiteSafe, joka on radioverkkoihin liittyvää konsultointia:

Palvelut tarkemmin kuvattuna

Sijoittajapresis 06/2021 - eli ennen yhdistymistä ja listautumista

Materiaaliin tulee suhtautua varauksella, muutoksia on tullut ja yhdistymisessä ei saatu kaikkea pääomaa. PIPE (private investment placement) ja vakuudettomat vaihtovelkakirjat kuitenkin toivat hyvän määrän pääomaa.

“2021 was a critical year for the company. We successfully closed our SPAC transaction creating over $80 million of additional liquidity to allow us to execute on our strategic growth plan.”


2021 ja Q4 tulokset

For the Fourth Quarter 2021:

Fourth quarter 2021 revenue was up 11.0% to $147.1 million, compared to $132.4 million for the fourth quarter of 2020. Net loss from continuing operations for the fourth quarter 2021 was $81.1 million compared to net loss from continuing operations of $56.3 million in the fourth quarter of 2020. Excluding one-time impairment of goodwill, Net loss from continuing operations for the fourth quarter 2021 was $28.6 million compared to a net loss from continuing operations of $27.5 million in the fourth quarter of 2020. Fourth quarter 2021 adjusted EBITDA was $4.0 million compared to a loss of $13.5 million for the fourth quarter of 2020. Backlog at the end of the fourth quarter was $2.1 billion which is a 22% increase over the fourth quarter 2020.

For the Full Year 2021:

Full year 2021 revenue was $612.2 million, a decline of 6.7% from $656.5 million for the full year 2020. Net loss from continuing operations for 2021 was $101.6 million compared to net loss from continuing operations of $94.2 million in 2020. Excluding one-time impairment of goodwill, Net loss from continuing operations for 2021 improved to $49.1 million compared to a net loss from continuing operations of $65.4 million in 2020. Full year 2021 adjusted EBITDA increased 356.9% to $60.0 million, compared to $13.1 million for the full year 2020. The increase in adjusted EBITDA was driven primarily by margin improvement initiatives across both the Telecom and Renewables & Recovery segments. On a pro-forma basis, assuming the recently closed acquisitions had been owned for the full year ending December 31, 2021, QualTek estimates adjusted EBITDA would be approximately 72.0 million. For the full year 2022, guidance remains unchanged.

The company is issuing fiscal year 2022 adjusted EBITDA guidance of $100-$120M

S1- filing, josta löytyy kaikki olennainen yhdistymisestä. En ole kunnolla käynyt läpi. Mukana siis ROCR eli Roth Acquisition III SPAC

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Miksi tämän nyt sitten pitäisi olla kiinnostava tai miksi ylipäätään lähdin tarkemmin kaivamaan jotain infrarakentajaa jenkkimarkkinalta?

QualTek tarttui infrarakentajana kaikenlaisten tukipakettien myötä silmiin viime kesällä, kun yhdistymisestä tiedotettiin ensimmäistä kertaa. Tästä lyhyesti SPAC -ketjussa:

@tedmel muistutti tästä muutama viikko sitten. Otin pienen seurantaposition silloin, jotta mielenkiinto pysyy yllä.

Aloitetaan kuitenkin jatkon arviointi 24kk backlogista, joka on 2,1Mrd$. Tämä on siis yli 3x 2021 liikevaihto.

Reported 24-month backlog at the end of Q4 2021 was $2.1 Billion, an increase of 22.0% over year end 2020

Valuaatio on siis todella edullinen, jos päästään ennusteisiin. Tämä tietysti on hyvin epäselvää vielä ja varsinkin SPAC mergerien kanssa näissä on ollut haasteita :sweat_smile:

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lähde: marketscreener

EV/Sales 0,08 ! Market Cap / Sales n. 0,1 (Edit: tarkistettu lukuja)
EV/Sales noin 0,9-1,0. Odottaa tarkennettuja lukuja.

Huomattavaa on kuitenkin merkittävät sulkeisiin jenkkityyliin piilotettu tappio, Markerscreener näyttää tutummin luvut miinuksella.

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Laitetaan nyt vielä analyytikkojen ennusteet, vaikka Inderesin laatuun suhteuttaen näitä saa katsella huomattavan kriittisesti.
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Disclaimer:
- itsellä on pieni seurantapositio, tutustuminen menossa ja lisäapua siihen kaivataan
- deSPAC yrityksissä on isompi riski kuin monissa muissa kohteissa
- paljon yritysostoja, joten potentiaalin lisäksi riskiä lisää

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Valuaatio suhteessa liikevaihtoon ja backlogiin selittyy paljolti isolla velkalastilla. SPACin kautta listautumisella haettiin nimenomaan tuohon ratkaisua, tarkoituksena saada taattu pääoma listautumisen yhteydessä kohtuullisilla kuluilla.

Redemption -osuus oli lähes 100%. Suuret lunastusosuudet on SPACien osalta olleet enemmän sääntö kuin poikkeus 2021 kevään jälkeen. Rahastosta ei siis saatu tavoitteita täyteen, mutta PIPE rahoituksilla sekä erillisellä vaihtovelkakirjalainalla (convertible notes issuance) sopimuksella tavoitteesta saatiin toteutumaan suurin osa, mutta ei täysin. Lisäksi korko on ilmeisen kova vaihtovelkakirjoilla (9,00%-11,25%), mutta niiden lunastustaso taisi olla alimmillaan 6,00$. Kurssi nyt 2,7$ tasoilla.

Tarkemmin tuosta järjestelystä:
https://www.marketwatch.com/investing/secfile/15481808


Sijoittajapresiksestä

SPAC rahaston osuus 115M$ jäi siis saamatta, joten piristysruiske taseen osalta jäi puleenväliin.


Kommenttia mergerin jälkeisestä tilanteesta:

Moreover, delivering quality projects on time and within budget will be key to more consistent earnings at QualTek.QualTek’s rating remains constrained by its high debt leverage, with adjusted debt/EBITDA close to 7x, after its convertible notes issuance.

QualTek continues to pursue bolt-on acquisitions that will increase the company’s scale and diversity, but also keep its execution risks high. The company has completed a number of acquisitions in the last 12 to 18 months and will continue to do so with the proceeds from the transactions. Although business acquisition is consistent with QualTek’s strategy to meet the growing demand for infrastructure services to the 5G wireless, telecom, and renewable energy sectors across North America, the company’s ability to achieve target earnings remains to be seen given the short business track record and limited disclosure of the newly acquired businesses


EBITDA avattuna, kuvastaa hyvin paitsi isoja lainanhoitokuluja, mutta myös yritysostoihin perustuvaa liikearvojen kautta tulevaa arvonalenemaa.

Lähde SEC FORM 8-K/A: https://d18rn0p25nwr6d.cloudfront.net/CIK-0001839412/ec88c76f-c44d-4e73-b258-d315f9001206.pdf


Eli yhteenvetona jatkettakoon vielä, että tuon ison backlogin tulee kääntyä kannattavaksi toiminnaksi, jotta lainoja saadaan hoidettua pois ja sitä kautta kassavirta paremmalle tolalle. SPACin kautta saatu pääoma auttaa tässä ainakin vuodeksi eteenpäin, tosin osa siitä käytettäneen edelleen yritysostoihin sekä epäorgaaniseen kasvuun.

Potentiaalisesti uutta rahoitusta tarvitaan vielä jatkossa, joten omistuksen liudentumiseen on hyvä varautua. Nykyisellä arvostuksella nähdäkseni on jo hinnoiteltu mukaan.

Joka tapauksessa QualTek menee vielä monen seurantatutkan alla, tuore listautuminen, vuosiraporttia odotellaan vielä, samoin päivitettyä sijoittajamateriaalia.

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Jatketaan nyt vielä, 1.4.2022 julkaisun yhteydessä hieman materiaalia lisää

Osakemäärä kaikissa palveluissa ei vastaa todellista, johtuen SPAC mergeristä. Sitä kautta raportoiduissa valuaatiossakin heittoa
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Yhteensä osakkeita siis 51,11M kpl, aiemmin raportoidut, ennen mergeriä 21,57M kpl.

Velat
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Eli Enterprise Value / Revenue on noin 1 tai vähän alle, kunhan nyt saadaan tarkistetut luvut.

Riskiprofiiliin ja taseeseen nähden ei enää niin aliarvostettu, kuin aiemmin olisi voinut arvella.

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10K eli Annual Report julkaistu
Huom: luvut on vielä SPACin ajalta 2021 puolelta, eli ROCR lukuja. Merger vasta 14.2.2022, joten Q1:n jälkeen vasta saadaan oikeampia lukuja. Vuosikertomus ja liiketoimintakuvaus pääasiassa QualTek toiminnasta.

Toiminnan kuvaus yrityksen omin sanoin

Overview
We are a technology-driven, leading provider of communications infrastructure services, power grid modernization, and renewables solutions to the North American telecommunications and utilities industries. We provide a variety of mission-critical services across the telecom and renewable energy value chain, including wireline and fiber optic terminations, wireless, fiber-to-the-home, or FTTH, and customer fulfillment activities. Our experienced management team has leveraged our technical expertise, rigorous quality and safety standards, and execution track record to establish and maintain long-standing relationships with blue-chip customers.

We operate out of two business segments: Telecom and Renewables & Recovery Logistics. Telecom consists of wireless, wireline, and power, which represented 81% of our revenues for the fiscal year ending December 31, 2021. We entered the renewable infrastructure sector with our acquisition of Fiber Network Solutions, LLC (“FNS”) in January 2021, which represented 5% of our revenues for the fiscal year ending December 31, 2021. Recovery Logistics represented 14% of our revenues for the fiscal year ending December 31, 2021.

Telecommunications
We provide a full suite of services to the telecom sector across both the wireless and wireline markets, from site acquisition and permitting to initial engineering and design to installation, maintenance, program management and fulfillment. Our core offerings consist of:

  • Engineering and construction services including the design and construction of aerial and underground fiber optic and coaxial systems for homes, businesses, cell towers, and small cells.
  • Installation services including the placement and splicing of fiber and coaxial cable, in addition to upgrades and new site builds for cellular towers.
  • Site acquisition services to determine the location for new sites prior to new site builds.
  • We also provide cable and satellite fulfillment services for residential and commercial customers. These services are provided for telecom companies in connection with the maintenance or expansion of new and existing networks.

While the telecommunications industry is naturally concentrated, we maintain customer diversification across our business segments. We have numerous long-established relationships with telephone companies, wireless carriers, multiple cable system operators and electric utilities companies, which have been built upon and cultivated through numerous Master Service Agreements (“MSAs”) that extend for periods of one or more years (majority are for three or more years, some of which have auto-renewal provisions). Blue-chip, investment grade customers including AT&T, Verizon, COX Communications, T-Mobile, Spectrum, and Comcast comprise a substantial portion of our revenue.

Within our Telecommunications segment we also provide electrical contracting, and utility construction and maintenance services. We
construct and maintain overhead and underground distribution systems for municipalities, electric membership cooperatives, and electricutility companies.

Renewables and Recovery Logistics
We entered the renewable infrastructure sector with our acquisition of FNS in January 2021. FNS is a full-service provider of fiber optic and electrical services, focusing primarily on renewable energy projects. Our capabilities in the space include expertise in wind and solar farm fiber, installation, and testing, optical ground wire (“OPGW”) & all-dielectric self-supporting, or ADSS, aerial transmission line installation, and large-scale data com solutions and installation.

In serving our customers, we provide fiber optic terminations, optical time domain reflectometer (“OTDR”) and power meter testing, fusion splicing, fiber placement, extensive fiber optic and copper infrastructure installation, cable jetting, boring and trenching, industry specific maintenance and material procurement.

We also provide business continuity and disaster relief services to telecommunications and power utility companies, as well as businessas-usual, or BAU, services such as generator storage and repair and cell maintenance services.

makro taustalla

Uusiutuvissa tukipaketit merkittäviä

The Biden administration is expected to amplify this increase in spending for renewable power projects. For example, since his first day in office, President Biden has rejoined the 2015 Paris Agreement, committed to investing $400 billion in the next ten years in clean energy and innovation, and set a goal to achieve a carbon pollution-free power sector by 2035. We believe that this will translate into significant government spending in renewables to meet this goal, and also government regulations and policies that promote spending in the renewables space across various sectors of the economy. We believe that the Biden administration’s commitment to renewable energy will create ripple effects across the nation and ultimately lead to more opportunities for us to expand our business with customers.

Verkkoasennuksissa operaattorit lisää koko ajan panostuksia infraan

Backlogien osalta huomioitavaa, että valtaosa on MSA (Master Service Agreement) alaisia ja myös peruttavissa, ei siis täysin sitovia. Määrä perustuu aiempaan kokemukseen vastaavista

Backlog
Our backlog consists of the estimated amount of revenue we expect to realize from future work on uncompleted contracts, including new contracts under which work has not begun, as well as revenue from change orders and renewal options. A significant portion of our 24- month backlog is attributable to MSAs and other service agreements, none of which require our customers to purchase a minimum amount of services and are cancelable on short or no advance notice. Backlog amounts are determined based on estimates that incorporate historical trends, anticipated seasonal impacts, experience from similar projects and estimates of customer demand based on communications with our customers.

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Jatketaan seurantaa, kun Q1 luvut ulkona ja odotuksia paremmat. Toki paljon on vielä matkaa kannattavaan liiketoimintaan.

Aihioita kuitenkin on, monta kohtaa joista löytyy potentiaalia ja kasvua.

Tuoreet sijoittajamateriaalit ja Q1 tulokset

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Skaalausta tarvitaan merkittävästi, jotta kääntyy kannattavaksi. Tai sitten uusien toimintojen tulee olla paremmalla katteella. Nykyinen bruttokate on n. 10% luokkaa. Tuosta kaikki muut kulut pois, niin vaikea tehdä tulosta. Osittain merger ja listautumiskulut syynä kasvaneisiin muihin kuluihin, mutta ei poista perusongelmaa.

The increase in Net loss in 2022 is primarily due to transaction and public company readiness costs along with stock compensation and other one-time expenses associated with the public transaction. First quarter 2022 adjusted EBITDA was $4.0 million compared to $2.9 million, inclusive of discontinued Canadian operations, for the first quarter of 2021, a 38% increase. Backlog at the end of the first quarter 2022 was $2.2 billion, up from year-end 2021 of $2.1 billion. Guidance for the year remains unchanged.

Renewables & Recovery segmentin osalta kannattavuus ainakin Adjusted EBITDA -luvuilla on selkeästi parempi, eli noin ~30%. Telecom segmentissä vastaava alle 4%.

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Bullimpaa näkemystä infran rakentajista, Qualtek erityisesti

Q2 Earnings are to be announced Monday, August 8, 2022 after COB. Since the company went public in February, it has been SPAC smashed as the market has switched to risk off. Hurricane season is in full swing and QualTek’s recovery logistics line of business profits from rebuilding after hurricanes. The $2.2B 24 month backlog is worth $200M in EBITDA across the next two years by my rough napkin math. The market capitalization is $31M and there is $485M in debt and the company’s last quarter of EBITDA was a measly $4M on $148M of revenue, but business is seasonal and Q2 and Q3 are their bigger quarters.

Hurrikaanikaudella nuo Recovery Services palvelut on Qualtekille ilmeisen tuottavia

Kommenttien perusteella marginaalien pitäisi parantua, mikä on myös edellytys toiminnan kestävyydelle. Toinen vuosipuolikas pitäisi myös olla vahvempi. Muitakin riskejä riittää edelleen, mutta potentiaaliakin on, backlogin kun saa muutettua liikevaihdoksi ja mieluummin paremmilla katteilla kuin tähän saakka.

Edit: Itse en näe ihan heti 10$ lappuna, ellei marginaalit pomppaa olennaisesti. Mutta nykyhinnasta pitäisi olla kohtuullinen nousuvara, mutta edellyttää myös sitä suorittamista.

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Q2 ulkona

Suunta alkaa olla oikea, mutta matka plussalle on vielä pitkä

Scott Hisey, QualTek’s Chief Executive Officer, said “We continue to experience unprecedented demand for our services. In this past quarter, we recorded the highest second quarter revenue in the Company’s history, up 41% year-over-year. It’s important to note that 96% of revenue was generated under Master Service Agreements. This growth, coupled with our estimated $2.3 billion backlog, has positioned QualTek to capitalize on what we continue to believe will be the largest telecommunications 5G and fiber builds in our nation’s history.”

Kysyntää on, mutta hinnoittelussa olisi kehittämistä.


Edit: lisätty transkripti ja parit poiminnat

From a working capital perspective, we expect our working capital build to level out in the middle of the third quarter and the business turning cash flow positive for the back half of the year. Net loss from operations was $25.6 million compared to a net loss of $21.8 million in the second quarter 2021. The increase in net loss in 2022 is primarily due to expenses related to operating as a public company, share-based compensation expense and one-time public company readiness cost not in the year ago period.

“So as we reported, we ended the quarter with $71 million drawn on our line of credit. And as I mentioned, we’re at peak working capital right now. So the back half of the year, as things start to level out, we’ll be cash flow positive. And we expect some of that working capital to come in, in Q4”

And during Q2 call, I let everyone know that we’re going to operate through Q3 and give guidance after Q3. It’s very important that we establish real credibility with everyone, and we want to make sure that when we go out with that first guidance after going public that we nail this and get it down to the right number. So we feel running through Q3.

:thinking:

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