EPS of $0.517 missed expectations of $0.585 and revenues of $406.98M beat estimates of $405.437M. Its total volume grew by 68% and revenues grew by 45%, while organic growth was 20%. The company initiated a dividend of $0.10 per share payable on September 5, 2023. Management reduced its guidance due to two factors: longer than anticipated lag times in new business, and its recent decision to exit a relationship with a large customer. Its new revenue guidance is $1.17B to $1.2B from a previous $1.23B to $1.26B, and Adjusted EBITDA of $417M to $432M from a previous $456M to $477M. This still represents significant revenue growth over the prior year and the company grew its balance sheet, however, its finance costs caused margin compression, and due to acquisitions the company has grown its debt balances.
Shares now trade at 10X forward earnings, and 1.5X book value. While the reduced guidance is not great, the company continues to generate positive free cash flow and is targeting 15% to 20% year-over-year sales growth rates. The loss of a large customer is not encouraging, however, we feel that this is a slight overreaction to the news. Given its continued expectations for decent growth rates and current cheap valuation following this drop (10X forward earnings), we would treat this name as a hold. It is not a great development, but we continue to like the space going forward and we feel that its growth expectations will stabilize and these valuations will seem attractive.