Truck Hero posts 1Q EBITDA growth; softer 2Q expected

Truck Hero posted 1Q20 earnings that show a boost in revenue and EBITDA thanks to adding in the contribution of Lund International, which it acquired in 2Q19, according to two sources familiar with the situation

The CCMP Capital-owned truck accessories manufacturer reported USD 295m in revenue for 1Q20, up from USD 223m in 1Q19 before the Lund acquisition, the first two sources said. Pro forma the acquisition, the 1Q19 revenue figure was around the same, at USD 294m, specified one of the sources.

The borrower’s 1Q20 EBITDA was USD 58.4m, compared to USD 40.8m pre-Lund in 1Q19, the sources said. The pro forma comparison shows a slight uptick from USD 56m, one of the sources added. 

Leverage at quarter-end was 6.3x, based on USD 225m in adjusted EBITDA, the sources said. In comparison, the April 2019 bond deal was marketed on adjusted EBITDA of USD 217m in full-year 2018.

In response to the pandemic, the company said it experienced a negative impact in late March and early April and expects 2Q20 results to be softer due to lower order rates and sales, the sources said. 

Moody’s expects free cash flow to be negative for 2Q20 due to the effects of the coronavirus and full-year 2020 free cash flow to fall to USD 20m compared to USD 70m in 2019, according to a 13 May credit opinion

On the positive side, management added that automotive repair and maintenance facilities—which make up most of the company’s customers—have been listed as essential services in the US. The company saw a gradual recovery towards the end of April, the sources said.

Truck Hero’s USD 335m 8.5% first lien notes due 2024 last traded on 6 May at 85.125 to yield 13.476%, up from trades at 83.25 to yield 14.148% on 24 April, according to MarketAxess. The notes were quoted today in 84/85 context, according to a trader. 

In 2017, the company issued a USD 675m Libor+ 375bps (0% floor) TLB due 2024 with a USD 250m second lien TL due 2025 to fund its buyout by CCMP. The company added another USD 190m onto the TLB in May 2018.

The TLB was last quoted today in the 82.225/84.4 context, trending upward from pre-earnings levels in the 79.232/81.786 context, according to Markit.

As of 7 May, liquidity stood at USD 149m, through USD 83m of cash and USD 66m of revolver availability.

Truck Hero did not respond to a request for comment. 

2020 Debtwire

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