Standard Profil - no longer stuck in neutral

All,

Please find our updated model here. 

A short note following Standard Profil’s announcement last night, as we published after the Q4 results earlier this month. In line with our expectations that Standard Profil and the OEMs would come to an agreement on cost passthroughs, Standard Profil confirmed there would be €15.2m of additional compensation for cost increases incurred in H2 2022. This will restate revenue and EBITDA upwards by €15m but more importantly, the negotiations confirm the higher cost passthrough for FY23 production.

Investment Rationale:

- We maintain our 5% position and would expect the bonds to rerate following the confirmation of the passthrough agreements with the OEMs. 

- We confirm our strong bullish view on the Company, which is underpinned by the large order book and the sole supplier status Standard Profil enjoys from the OEMs. With €20m of interest costs, €45m of CAPEX, and €5m other expenses, the Company will start to deleverage in cash terms from FY23.  

Model Update:

- Standard Profil has not restated their quarterly numbers, instead just adding €15.2m to revenue as an adjustment. We have allocated the €15.2m evenly between Q3 and Q4, for modelling purposes. 

- Although we have modelled a higher OEM production volume than prior years, our FY23 revenue expectation of €472m is below Company guidance of more than €480m. This also leaves an EBITDA expectation of €71m (EBITDAR) lower than the Company guidance of €75-80m. The Company has not adjusted its guidance for FY23 for the additional compensation agreed, and therefore actual FY23 may exceed guidance. 

- However, we are comfortable with our model, as the Company guidance is predicated on stronger OEM volumes for H2 2023 and into FY24. Although we have anticipated an uptick in OEM volumes our expectations aren’t as pronounced. 

Other Issues:

- As we previously noted, there are no liquidity issues at Standard Profil. With the demise of Credit Suisse, the Company drew down in full on its RCF. In addition, the Company received a €10m equity injection in late April (which will not show up in the Q1 accounts, due to be released on the 7th of June). 

- We expect the Company will try to rearrange a new RCF facility in the coming quarters and will repay the RCF once secured. 

- Our model shows the significant operational leverage that Standard Profil operate under. The delta between our model and Company guidance, driven by higher OEM production levels, would result in higher margins, given the operational leverage. 

Happy to discuss.

Tomás

E: tmannion@sarria.co.uk
T: +44 20 3744 7009
www.sarria.co.uk