Q: Updated opinion please on GDI, earnings were light again. Still positive on their outlook going forward?
5i Research Answer:
GDI is now trading at 10x times' EV/EBITDA. In the 4Q, GDI’s revenue grew 6% to $622M, compared to last year of $588M and EBITDA declined to $37M from last year of $42M. The organic growth decelerated to around 2%. The balance sheet is slightly leveraged now, with net debt of $417M and net debt/EBITDA is currently around 3.2x; we think this is still reasonable level for a recurring business model like GDI. A slowdown in revenue growth in recent quarters was due to a combination of slow organic growth and a lack of acquisitions activities. Overall, we would wait and see a few quarters to see if operating results get better, we would not be in a hurry to add here but remain generall positive.