Sitowise secures new financing agreement
Sitowise has announced that it has signed a 90 MEUR financing agreement as an extension of its current financing agreement. We view this as a positive development, as it allows the company to extend the maturity of its debt, giving it more time to reduce leverage (i.e., net debt to EBITDA) without immediate concerns about maturity dates. We are not making any immediate changes to our estimates or valuation.
The new financing arrangement, which replaces existing financing agreement of 100 MEUR maturing on 12 March 2026, includes 37 MEUR term loan facility, 33 MEUR acquisition loan facility and 20 MEUR revolving credit facility. The agreement has maturity until 12 June 2027, and the term loan is amortized in semi-annual instalments of 0.5 MEUR.
Earnings improvement is still essential
Since Sitowise had already indicated plans to negotiate an extension of its financing package beyond 2026, this news did not come as a surprise to us. However, given Sitowise's very high debt leverage (net debt/adjusted EBITDA) stood at 5x in Q4’24 (with a target below 2.5x), we see it as a positive development that they have been able to refinance their existing debt. This extension provides Sitowise with additional time to lower its leverage without immediate concerns over debt maturity. In our view, the debt burden is at elevated levels, making it crucial for earnings to improve so that leverage can be reduced to more sustainable levels. Furthermore, since the loan margin is tied to Sitowise's leverage ratio, the cost of borrowing will fluctuate depending on how much debt the company carries relative to its earnings. Therefore, we believe that a turnaround in the company's financial performance is essential for an improvement in the financial figures.
Sitowise Group operates in the construction and infrastructure sector. The company specializes in the development of large construction projects. Examples of projects that the company carries out include road and building construction, as well as pipe and underground construction. The projects are carried out independently and in collaboration with other players in the industry. The largest operations are found in the Nordic market, where customers are found among corporate customers and public actors.
Read more on company pageKey Estimate Figures13/02
| 2024 | 25e | 26e | |
|---|---|---|---|
| Revenue | 192.9 | 191.2 | 207.6 |
| growth-% | -8.5 % | -0.9 % | 8.5 % |
| EBIT (adj.) | 4.6 | 9.5 | 14.7 |
| EBIT-% (adj.) | 2.4 % | 5.0 % | 7.1 % |
| EPS (adj.) | -0.01 | 0.08 | 0.20 |
| Dividend | 0.00 | 0.10 | 0.14 |
| Dividend % | 4.1 % | 5.8 % | |
| P/E (adj.) | neg. | 31.1 | 12.4 |
| EV/EBITDA | 11.9 | 7.9 | 6.1 |
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