APTIM gross margins continued rising on a sequential basis during 3Q20, further building momentum along the company’s path to a recovery, according to two sources familiar with the matter.
The engineering and construction services company’s gross margins rose to 7.7% in 3Q20, compared to 6.8% in 2Q20 and 5.8% in 1Q20, the sources continued. This also compares to 5.4% for the same period last year.
Unadjusted EBITDA came in at USD 10m for the quarter, compared to USD 4m last year, the sources said. Although the company did not break out adjusted EBITDA for the quarter, one source estimated USD 15m of adjusted EBITDA in 3Q20, adding back a non-cash charge, non-recurring cash and management fee.
On an LTM basis, unadjusted EBITDA totaled negative USD 8.7m. Including adjustments, the number inflates to positive USD 53.2m. Factoring in a cap on adjustments, the LTM figure settles at USD 49.7m, the first source noted.
Investors expect to gain more clarity on performance during an earnings call set for tomorrow (5 November) at 11am ET, the sources said.
On the top line, APTIM reported USD 301.7m of revenue for the most recent quarter, down from USD 310.6m for the same period last year, the sources said.
The company generated USD 25.3m of cash in the quarter through USD 28.7m of operating cash flow and USD 3.4m of capital expenditures, the sources added. New bookings shook out to USD 260m, the sources added.
Liquidity at 30 September totaled roughly USD 203m through USD 17.5m of ABL availability and USD 185.6m of cash, the sources said. APTIM’s leverage shrunk to 10.4x through USD 515m of total debt and USD 49.7m of post-cap adjusted LTM EBITDA.
APTIM has been struggling with contract losses since Veritas Capital acquired the business from Chicago Bridge & Iron in 2017. The USD 755m deal was partly financed with a USD 515m secured bond issue. Leverage had ballooned to 19.7x earlier this year, with the company’s bonds trading in the 30s. But the USD 515m 7.75% senior secured notes due 2025 have caught a bid since the onset of the pandemic in March. The notes last traded in size at 61.75 on 29 October, according to MarketAxess.
Officials from APTIM and Veritas did not respond requests for comment.