EPS of 2c missed estimates of 12c. Revenue of $484M missed estimates of $493.3M. EBITDA of $127M missed estimates of $138.9M. Results reflect higher costs and forex movements. Revenue rose 46%; EBITDA rose 82%. The stock is cheap at 6X earnings, but debt is an issue at more than 4X cash flow. It has a $400M note due next year than needs to be refinanced. ESI reiterated a debt repayment plan, and we would expect some sort of refinancing/restructuring. Investors are worried, rightly so. It is supposed to show strong EPS growth next year but for us there is just too much financial risk here. In the last 12 months it did have $241M in cash flow, but only $49M was free cash flow. But in a down cycle, cash flow is very low (only $78M in 2021). It needs a very strong sector to work its way out of its debt issue.
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