Big Tex 4Q19 EBITDA shrinks 39% YoY; COVID-19 impact reduces operating capacity

Big Tex Trailers booked a 39% year-over-year EBITDA decline for 4Q19, attributed to a slowdown in manufacturing and customer destocking which led to decreased volumes, according to two sources familiar with the company.

Management, on an earnings call last week, further credited the volume decline to “a questionable future” for the overall economy in the COVID-19 era, the sources added.

For guidance, the company said it can operate at 50% lower revenue for 2Q20 and 3Q20 at current staffing levels to take into account the impact from the Coronavirus pandemic, the sources continued.

“Overall they are still operating. Many of their customers are deemed essential operators, so it’s not like business has dropped to zero, but they’re definitely operating at reduced capacity,” one of the sources said.

Adjusted EBITDA for 4Q19 totaled USD 26m, compared to USD 40.2m in 4Q18. For 2019, EBITDA came in at USD 158m, down 13% from USD 182.3m in 2018.

Quarterly revenue declined 11.5% to USD 254m from USD 287m in 4Q18, while organic revenue for the quarter declined 14% year-over-year to USD 247.2m. Revenue for the year declined to USD 1.231bn compared to USD 1.259bn in 2018.

The company’s current liquidity stands at USD 223.5m through USD 88.7m of cash and USD 134.8m of ABL availability.

Big Tex was exploring a sale of the company with Goldman Sachs and Morgan Stanley as recently as late-2018, as reported.

Bain acquired Big Tex in 2015 from H.I.G Capital; at the time the company had around USD 50m in EBITDA, according to Debtwire sister publication Mergermarket. Since then the company has more than doubled in size, due in part to acquisitions.

Big Tex merged with fellow Bain portfolio companyAmerican Trailer Works in 2016, which the sponsor acquired that year from the Southlake Equity Group. Bain paid USD 467m for ATW, representing a 7.3x multiple of the target’s 2015 EBITDA, according to a Debtwire report at the time.

To finance the acquisition Big Tex issued a USD 670m 9.625% senior secured note due 2023, which priced at par, with Goldman Sachs and Barclays acting as bookrunners. During syndication for the bond deal, the company pitched its combined pro forma EBITDA – including synergies – at USD 158m, as reported.

The company’s USD 670m 9.625% senior secured notes due 2023 last traded yesterday (23 April) at 84.25 to yield 15.787% from a low of 80.438 to yield 17.425% when early numbers came out on 7 April. The notes were trading at 102.75 to yield 7.677% in early March before the pandemic, according to MarketAxess.

Big Tex and Bain did not respond to requests for comment.

2020 Debtwire

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