[This updates a Debtwire story, published earlier today, to include additional details about 1Q19 EBITDA calculations provided by the company. The information has been added in the seventh paragraph.]

APTIM reported lower quarterly revenue and a big drop in LTM EBITDA, depressing its bonds and pushing leverage into the double-digits, said three sources familiar with the matter. The industrial services company has lined up a non-deal roadshow in June, two sources added.

The company’s USD 515m 7.75% secured notes due 2025 shed more than two points today to trade at 75.625 for a yield of 13.807% after the company released numbers yesterday (15 May), down from trades at 78 earlier this month, according to MarketAxess.

For the LTM period ended 31 March, the Veritas Capital-owned company generated EBITDA of USD 50m, down 52% from USD 104m a year prior and down 18% sequentially from USD 61m. Factoring in a cap on add-backs, LTM EBITDA drops further to USD 31m, sources said.

The company attributed the decline to lower results from power, maintenance and services, which was partially offset by higher disaster-recovery results, the sources said.

The company is projecting USD 50m-USD 60m of EBITDA in fiscal 2019, two of the sources said.

Revenue for the quarter totaled USD 349m, compared to USD 370m in 1Q18, two of the sources said. APTIM does not report quarterly adjusted EBITDA figures, but one source estimated negative single-digit EBITDA for 1Q19.

In response to inquiries, however, an APTIM spokesperson said the company calculated its 1Q19 reported EBITDA at USD 900,000, compared to negative USD 3m YoY, and its 1Q19 adjusted EBITDA at USD 9.5m versus USD 6.2m last year.

The results increase leverage by nearly two turns from the prior quarter, to 10.3x based on USD 515m of total debt and USD 50m of LTM EBITDA. Leverage balloons to 16.6x if factoring in the cap on EBITDA add-backs.

As of 31 March, APTIM’s liquidity totals roughly USD 137m, based on USD 37.6m of revolver availability and USD 99m of cash on hand.

The company’s recent revolver amendment brings its borrowing base to roughly USD 111m. If APTIM were to use its entire USD 25m cash deposit, liquidity would remain unchanged at roughly USD 137m, with USD 74m of cash, USD 62.6m of availability under its ABL facility due 2022 and USD 47.1m in letters of credit.

APTIM was created as a standalone company in mid-2017 when Veritas acquired Chicago Bridge & Iron’s Capital Services business, as CB&I sold assets to deal with near term maturities and covenant compliance.

Veritas bought the business for USD 755m, financing the salewith the 2025 notes. APTIM began struggling with contract losses shortly after the buyout financing.

Contracts appeared to turn a corner in 1Q19, however, with the company reporting USD 473.5m of newly awarded contracts, up from USD 338.8m in 1Q18, one of the sources said.

“I don’t think they’ll make massive progress this year but if they can keep getting these new orders to come in, 2020 might be a better year,” another source said.

2019 Debtwire