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  5. PKI: Would you agree with the activist investor (Engine Capital) that PKI is undervalued and a stock buyback and a reduction in capital would be good for the company. [Parkland Corporation]
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Q: Would you agree with the activist investor (Engine Capital) that PKI is undervalued and a stock buyback and a reduction in capital would be good for the company.?

Thx
Asked by blake on September 27, 2023
5i Research Answer:

Engine has a few competing objectives, such as lowering debt but also buying back stock, but we agree that PKI can generate substantially more free cash flow with some 'tweaking' and the stock is quite cheap on many metrics. Certainly debt at more than 3X cash flow turns off some investors, and asset sales or other debt reduction plans we think could help a lot. With 2.5% ownership, Engine likely doesn't have enough shares to really cause pressure, but it is always good to have management under scrutiny. The share count has risen over the past 10 years, but we would prefer a big reduction in debt. We do agree with Engine in that PKI could 'clean up' its structure a bit to both clarify its growht potential for investors and reduce leverage.