Algeco Memo 100120
- Understand TDR Capital’s strategy in and likely exit options from the modular leasing and remote accommodation sector
- Understand TDR’s investments in the sector since 2004 and its IRR across Algeco, William Scotsman and Target to date
- Understand how Algeco has been transformed via disposals of William Scotsman and Target
- Understand the business divisions and revenue streams of a full-service modular space leasing company
- Understand Algeco’s end-use markets served
- Understand the modular space leasing market and its growth prospects within Europe and APAC by country
- Understand Algeco’s competitive advantages vis-a-vis smaller, regional players
- Understand Algeco’s fleet utilisation, average rental rate and VAPS per unit trends by geography
- Understand the lifecycle of a modular unit and average cash flows generated over its lifetime
- Understand the change in accounting policies, consolidation perimeter and early adoption of IFRS 16; and the related differences between Adj EBITDA generated from 2017 onwards and prior years
- Assessment of TDR’s strategy in modular leasing and remote accommodation, its IRR to date and prospects for an IPO of Algeco (and attendant CDS orphaning) vs continuation of the roll-up strategy
- Stressing Algeco for shocks to utilisation, average rental rates, VAPS per unit, gross margin and other key variables
- Valuing Algeco’s equity – base and stress DCF valuations and listed and transactional comparable multiples
- Can Algeco turn around it operations to generate positive FCF after interest payment?
- What is Algeco’s equity value – multiples and DCF approaches?
- What is the impact of recently announced acquisitions on liquidity and FCF?
- Is Algeco’s highly touted VAPS business transferable to the fleets and customers of the acquired entities?
- What is the EBITDA impact of restating financials from 2017 onwards under IFRS 16?
- What has been the financial impact of the disposals of William Scotsman and Target?
- What is a sustainable level of maintenance capex that Algeco can operate with?
- How has the leverage been affected by disposals in the past 2 years and how will it be impacted by recently announced acquisitions?
- What is the impact, if any, of Brexit on the Elliott business in the UK?
- Will APAC operations turn around after a dismal period owing to the Australian mining downturn?
- Does Algeco’s liquidity break under stressed conditions? Would further equity contributions be needed from TDR?
- What recovery rate would be likely on the senior secured notes, ABL facility and senior notes?
- View, Variant Perception & Recommendations
- Business Overview
- Industry Overview
- Group Structure & Capitalisation
- Historic Financial Analysis
- Everest Base Case
- Everest Stress Case
- Recovery Analysis