New Risk • Feb 25
New minor risk - Earnings quality The company has large one-off items impacting its financial results. One-off items were 35% of the size of the rest of the company's trailing 12-month earnings before tax. This is considered a minor risk. One-off items are incomes or expenses that the company does not expect to repeat in future periods. Examples include profits from the sale of a business or expenses from a restructuring or legal settlements. If the company's reported statutory earnings include a large proportion of one-off items it means they may be an unreliable indicator of its true business performance as the earnings were skewed by these incomes or expenses. Currently, the following risks have been identified for the company: Minor Risks High level of debt (115% net debt to equity). Large one-off items impacting financial results. Profit margins are more than 30% lower than last year (1.3% net profit margin). Buy Or Sell Opportunity • Jan 19
Now 20% undervalued Over the last 90 days, the stock has risen 3.5% to €10.26. The fair value is estimated to be €12.85, however this is not to be taken as a buy recommendation but rather should be used as a guide only. Revenue has grown by 11% over the last 3 years. Meanwhile, the company has become profitable. Revenue is forecast to grow by 2.8% in 2 years. Earnings are forecast to grow by 73% in the next 2 years. Buying Opportunity • Jan 17
Now 21% undervalued Over the last 90 days, the stock is up 2.1%. The fair value is estimated to be €12.79, however this is not to be taken as a buy recommendation but rather should be used as a guide only. Revenue has grown by 11% over the last 3 years. Meanwhile, the company has become profitable. Revenue is forecast to grow by 2.8% in 2 years. Earnings is forecast to grow by 73% in the next 2 years. Announcement • Dec 28
Applus Services, S.A. (BME:APPS) acquired Barlovento Recursos Naturales, S.L. Applus Services, S.A. (BME:APPS) acquired Barlovento Recursos Naturales, S.L. on December 27, 2023. The transaction has been completed and Barlovento will be part of the Energy & Industry Division at Applus+. Barlovento is a fast-growing company with more than 140 employees and over €13 million of annual revenue, the majority coming from Europe and Latin America. Applus Services, S.A. (BME:APPS) completed the acquisition of Barlovento Recursos Naturales, S.L. on December 27, 2023. Announcement • Sep 15
ISQ Global Infrastructure Fund III (UST), L.P. a fund managed by ISQ Global Infrastructure Fund III (UST), L.P. and TDR Capital V L.P. a fund managed by TDR Capital LLP made a voluntary and and competing takeover offer to acquire Applus Services, S.A. (BME:APPS) for approximately €1.2 billion. ISQ Global Infrastructure Fund III (UST), L.P. a fund managed by ISQ Global Infrastructure Fund III (UST), L.P. and TDR Capital V L.P. a fund managed by TDR Capital LLP made a voluntary and competing takeover offer to acquire Applus Services, S.A. (BME:APPS) for approximately €1.2 billion on June 28, 2023. On 13 September 2023, Applus, I Squared Capital Advisors (UK) LLP and TDR Capital, entered into a joint bid agreement (the “Joint Bid Agreement”), pursuant to which they agreed certain cooperation principles for the implementation of the Offer. The consideration offered by the Offerors to the holders of the shares in Applus Services, S.A. amounts to €9.75 per share (the “Offer Price”). As a result, the maximum total amount to be paid by the Offeror is €1,258,472,796.75. The Offer Price will be fully paid in cash. The Offeror has the debt and equity commitments necessary to pay the consideration. On 25 April 2023, Applus, I Squared Capital Advisors (UK) LLP and TDR Capital, entered into a confidentiality agreement to preserve the use and confidentiality of the initial discussions and the information.
The launching of the Offer does not require the approval of any other resolution by any corporate body of the Offeror or its shareholders. The transaction offer will be subject to the prior authorization from the Council of Ministers of the Government of Spain, Target shareholders, authorization by the European Commission, Hart-Scott-Rodino, deemed authorization by the National Antitrust Authority of Canada, the relevant authorization to the Directorate General for International Trade and Investment of the Ministry of Industry, Trade and Tourism.
Kroll Advisory, S.L. acted as fairness opinion provider and Linklaters, S.L.P. acted as legal advisor to TDR Capital LLP & I Squared Capital Advisors (US) LLC. Reported Earnings • Jul 27
First half 2023 earnings released: EPS: €0.24 (vs €0.19 in 1H 2022) First half 2023 results: EPS: €0.24 (up from €0.19 in 1H 2022). Revenue: €1.00b (up 9.0% from 1H 2022). Net income: €30.4m (up 20% from 1H 2022). Profit margin: 3.0% (up from 2.8% in 1H 2022). The increase in margin was driven by higher revenue. Revenue is forecast to grow 2.7% p.a. on average during the next 3 years, compared to a 5.5% growth forecast for the Professional Services industry in Europe. Over the last 3 years on average, earnings per share has increased by 110% per year but the company’s share price has only increased by 15% per year, which means it is significantly lagging earnings growth. Announcement • Jul 26
Applus Services, S.A. Revises Organic Revenue Guidance for the Full Year 2023 Applus Services, S.A. revised organic revenue guidance for the full year 2023. For the period, the company expected organic revenue to grow at high single digits, where previously expected it to be mid- to high-single digits. Price Target Changed • Jul 03
Price target increased by 7.7% to €10.40 Up from €9.66, the current price target is an average from 11 analysts. New target price is 5.5% above last closing price of €9.86. Stock is up 54% over the past year. The company is forecast to post earnings per share of €0.45 for next year compared to €0.36 last year. Upcoming Dividend • Jun 27
Upcoming dividend of €0.13 per share at 1.8% yield Eligible shareholders must have bought the stock before 04 July 2023. Payment date: 06 July 2023. Payout ratio is a comfortable 45% and this is well supported by cash flows. Trailing yield: 1.8%. Lower than top quartile of Spanish dividend payers (6.0%). Lower than average of industry peers (2.8%). Announcement • Jun 20
I Squared Capital Considers Takeover Bid for Applus Infrastructure private equity fund I Squared Capital Advisors, LLC said on it was evaluating a takeover bid for Spanish industrial testing company Applus Services, S.A. (BME:APPS) together with rival fund TDR Capital. In a filing to the Madrid stock market regulator, I Squared Capital said it has undertaken preparatory actions and has not made a decision whether to launch an offer yet. Applus’s market value was EUR 1.24 billion ($1.36 billion) on June 16, 2023. Last month, Applus said it had received non-binding offers from unidentified investors to acquire the company after Reuters had earlier reported buyout funds Apollo and Apax, among other potential bidders, were considering buying Applus. Last week, local newspaper Expansion reported I Squared Capital Advisors was considering a bid for Applus. Announcement • Jun 16
Ten Oaks Capital completed the acquisition of Non-destructive asset testing and inspection business and operations of Applus+. Ten Oaks Capital has agreed to acquire Non-destructive asset testing and inspection business and operations of Applus+ on March 30, 2023. The completion is subject to regulatory approvals and customary conditions and expected to take place in the next few months. Houlihan Lokey, Inc. acted as financial advisor for Applus Services, S.A.Ten Oaks Capital completed the acquisition of Non-destructive asset testing and inspection business and operations of Applus+ on June 14, 2023. The Applus+ oil and gas business in the United States generated a turnover of €101.8 million in 2022. Announcement • Jun 02
Applus Services, S.A. (BME:APPS) acquired Suzhou Chunfen Test Technology Services Co., Ltd. Applus Services, S.A. (BME:APPS) acquired Suzhou Chunfen Test Technology Services Co., Ltd on June 1, 2023.Applus Services, S.A. (BME:APPS) completed the acquisition of Suzhou Chunfen Test Technology Services Co., Ltd on June 1, 2023. Announcement • May 06
Applus Confirms Takeover Interests, Does Not Identify Potential Bidders Applus Services, S.A. (BME:APPS) confirmed on May 5, 2023 it received non-binding offers from investors to acquire the company after Reuters reported buyout funds Apollo Global Management, Inc. (NYSE:APO) and Apax Partners LLP, among other potential bidders, were interested in a takeover. Applus, which did not identify any of the potential bidders, said that no decision has been made by any of the investors and there is "no certainty that such entities will pursue any further action". Valuation Update With 7 Day Price Move • May 04
Investor sentiment improves as stock rises 16% After last week's 16% share price gain to €8.64, the stock trades at a forward P/E ratio of 19x. Average forward P/E is 15x in the Professional Services industry in Europe. Total returns to shareholders of 55% over the past three years. Simply Wall St's valuation model estimates the intrinsic value at €15.67 per share. Major Estimate Revision • Mar 20
Consensus EPS estimates fall by 11% The consensus outlook for fiscal year 2023 has been updated. 2023 EPS estimate fell from €0.497 to €0.444 per share. Revenue forecast steady at €2.11b. Net income forecast to grow 22% next year vs 13% growth forecast for Professional Services industry in Spain. Consensus price target broadly unchanged at €9.22. Share price was steady at €7.28 over the past week. Major Estimate Revision • Mar 14
Consensus EPS estimates fall by 12% The consensus outlook for fiscal year 2023 has been updated. 2023 EPS estimate fell from €0.497 to €0.437 per share. Revenue forecast steady at €2.11b. Net income forecast to grow 22% next year vs 14% growth forecast for Professional Services industry in Spain. Consensus price target of €9.22 unchanged from last update. Share price rose 9.1% to €7.58 over the past week. Reported Earnings • Mar 03
Full year 2022 earnings: Revenues exceed analysts expectations while EPS lags behind Full year 2022 results: EPS: €0.36 (up from €0.23 in FY 2021). Revenue: €2.05b (up 15% from FY 2021). Net income: €48.6m (up 51% from FY 2021). Profit margin: 2.4% (up from 1.8% in FY 2021). The increase in margin was driven by higher revenue. Revenue exceeded analyst estimates by 1.7%. Earnings per share (EPS) missed analyst estimates by 11%. Revenue is forecast to grow 3.9% p.a. on average during the next 3 years, compared to a 5.4% growth forecast for the Professional Services industry in Europe. Over the last 3 years on average, earnings per share has increased by 71% per year but the company’s share price has fallen by 9% per year, which means it is significantly lagging earnings. Announcement • Feb 17
Applus Services, S.A. to Report Fiscal Year 2023 Results on Feb 27, 2024 Applus Services, S.A. announced that they will report fiscal year 2023 results Pre-Market on Feb 27, 2024 Announcement • Jan 27
Opus Inspection, Inc. agreed to acquire Applus Technologies, Inc. from Applus Services, S.A. Opus Inspection, Inc. agreed to acquire Applus Technologies, Inc. from Applus Services, S.A. on January 26, 2023. Completion of the transaction is subject to customary conditions. Announcement • Oct 25
Applus Services, S.A. to Report Q2, 2023 Results on Jul 25, 2023 Applus Services, S.A. announced that they will report Q2, 2023 results at 8:00 AM, Central European Standard Time on Jul 25, 2023 Reported Earnings • Jul 27
First half 2022 earnings released First half 2022 results: Revenue: (down 100% from 1H 2021). Net income: (down €14.7m from profit in 1H 2021). Profit margin: (down from 1.7% in 1H 2021). Over the next year, revenue is forecast to grow 4.1%, compared to a 10% growth forecast for the industry in Spain. Over the last 3 years on average, earnings per share has increased by 14% per year but the company’s share price has fallen by 18% per year, which means it is significantly lagging earnings. Upcoming Dividend • Jun 28
Upcoming dividend of €0.12 per share Eligible shareholders must have bought the stock before 05 July 2022. Payment date: 07 July 2022. Payout ratio is a comfortable 66% and this is well supported by cash flows. Trailing yield: 2.2%. Lower than top quartile of Spanish dividend payers (5.8%). Lower than average of industry peers (2.6%). Board Change • Mar 29
High number of new directors Independent Director Marie-Francoise Damesin was the last director to join the board, commencing their role in 2021. Valuation Update With 7 Day Price Move • Mar 08
Investor sentiment deteriorated over the past week After last week's 17% share price decline to €6.72, the stock trades at a forward P/E ratio of 16x. Average forward P/E is 18x in the Professional Services industry in Europe. Total loss to shareholders of 34% over the past three years. Reported Earnings • Mar 02
Full year 2021 earnings: EPS misses analyst expectations Full year 2021 results: EPS: €0.23 (up from €1.11 loss in FY 2020). Revenue: €1.78b (up 14% from FY 2020). Net income: €32.2m (up €190.5m from FY 2020). Profit margin: 1.8% (up from net loss in FY 2020). The move to profitability was driven by higher revenue. Revenue was in line with analyst estimates. Earnings per share (EPS) missed analyst estimates by 27%. Over the next year, revenue is forecast to grow 7.9%, compared to a 9.3% growth forecast for the industry in Spain. Over the last 3 years on average, earnings per share has fallen by 36% per year but the company’s share price has only fallen by 13% per year, which means it has not declined as severely as earnings. Board Change • Jan 01
High number of new directors There are 5 new directors who have joined the board in the last 3 years. Independent Director Marie-Francoise Damesin was the last director to join the board, commencing their role in 2021. The company’s lack of board continuity is considered a risk according to the Simply Wall St Risk Model. Board Change • Dec 02
High number of new directors There are 5 new directors who have joined the board in the last 3 years. Independent Director Marie-Francoise Damesin was the last director to join the board, commencing their role in 2021. The company’s lack of board continuity is considered a risk according to the Simply Wall St Risk Model. Reported Earnings • Aug 02
First half 2021 earnings released: EPS €0.10 (vs €1.19 loss in 1H 2020) The company reported a strong first half result with improved earnings, revenues and profit margins. First half 2021 results: Revenue: €843.0m (up 14% from 1H 2020). Net income: €14.7m (up €184.6m from 1H 2020). Profit margin: 1.7% (up from net loss in 1H 2020). Over the last 3 years on average, the company's share price growth rate has exceeded its earnings growth rate by 65 percentage points per year, which is a significant difference in performance. Upcoming Dividend • Jun 29
Upcoming dividend of €0.12 per share Eligible shareholders must have bought the stock before 06 July 2021. Payment date: 08 July 2021. Trailing yield: 1.8%. Lower than top quartile of Spanish dividend payers (5.0%). In line with average of industry peers (1.9%). Is New 90 Day High Low • Mar 09
New 90-day high: €9.38 The company is up 10.0% from its price of €8.53 on 09 December 2020. The Spanish market is up 2.0% over the last 90 days, indicating the company outperformed over that time. It also outperformed the Professional Services industry, which is down 1.0% over the same period. According to the Simply Wall St valuation model, the estimated intrinsic value of the company is €14.35 per share. Reported Earnings • Feb 26
Full year 2020 earnings released: €1.11 loss per share (vs €0.39 profit in FY 2019) The company reported a poor full year result with weaker earnings, revenues and control over costs. Full year 2020 results: Revenue: €1.56b (down 12% from FY 2019). Net loss: €158.2m (down 384% from profit in FY 2019). Over the last 3 years on average, earnings per share has fallen by 98% per year but the company’s share price has only fallen by 8% per year, which means it has not declined as severely as earnings. Analyst Estimate Surprise Post Earnings • Feb 26
Earnings beat expectations, revenue disappoints Revenue missed analyst estimates by 0.6%. Earnings per share (EPS) exceeded analyst estimates by 16%. Over the next year, revenue is forecast to grow 11%, compared to a 6.4% growth forecast for the Professional Services industry in Spain. Major Estimate Revision • Jan 28
Analysts update estimates The company's losses in 2020 are expected to improve with analysts raising their consensus EPS forecasts from -€0.82 to -€0.64. Revenue estimate was approximately flat at €1.57b. The Professional Services industry in Spain is expected to see an average net income growth of 36% next year. The consensus price target increased from €10.03 to €10.19. Share price is down by 4.1% to €8.43 over the past week. Major Estimate Revision • Jan 17
Analysts update estimates The company's losses in 2020 are expected to improve with analysts raising their consensus EPS forecasts from -€0.70 to -€0.60. Revenue estimate was approximately flat at €1.57b. The Professional Services industry in Spain is expected to see an average net income growth of 29% next year. The consensus price target of €10.02 was unchanged from the last update. Share price stayed mostly flat at €8.92 over the past week. Is New 90 Day High Low • Dec 24
New 90-day high: €8.90 The company is up 47% from its price of €6.05 on 25 September 2020. The Spanish market is up 19% over the last 90 days, indicating the company outperformed over that time. It also outperformed the Professional Services industry, which is up 4.0% over the same period. According to the Simply Wall St valuation model, the estimated intrinsic value of the company is €16.52 per share. Is New 90 Day High Low • Dec 04
New 90-day high: €8.62 The company is up 27% from its price of €6.77 on 04 September 2020. The Spanish market is up 16% over the last 90 days, indicating the company outperformed over that time. It also outperformed the Professional Services industry, which is up 6.0% over the same period. According to the Simply Wall St valuation model, the estimated intrinsic value of the company is €13.98 per share. Is New 90 Day High Low • Nov 11
New 90-day high: €7.79 The company is up 3.0% from its price of €7.59 on 13 August 2020. The Spanish market is up 6.0% over the last 90 days, indicating the company underperformed over that time. It also underperformed the Professional Services industry, which is up 4.0% over the same period. According to the Simply Wall St valuation model, the estimated intrinsic value of the company is €17.42 per share. Major Estimate Revision • Oct 16
Analysts update estimates The 2020 consensus revenue estimate was lowered from €1.59b to €1.57b. The company's losses in 2020 are expected to improve with analysts raising their EPS forecasts from -€0.50 to -€0.25. The Professional Services industry in Spain is expected to see an average net income growth of 18% next year. The consensus price target increased from €9.20 to €9.24. Share price stayed mostly flat at €6.58 over the past week. Is New 90 Day High Low • Sep 22
New 90-day low: €6.21 The company is down 11% from its price of €6.99 on 24 June 2020. The Spanish market is down 4.0% over the last 90 days, indicating the company underperformed over that time. It also underperformed the Professional Services industry, which is up 5.0% over the same period. According to the Simply Wall St valuation model, the estimated intrinsic value of the company is €15.41 per share.