Clarios books mixed numbers for fiscal 2020, beats cost savings target

Clarios (f/k/a Johnson Controls Power Solutions) reported mixed numbers for fiscal 2020 ended 30 September, according to three sources familiar with the matter. The company attributed the lack of growth to the hit the auto industry took in its second and third quarters, the sources said.

The power solutions company reported USD 1.522bn in adjusted EBITDA for the fiscal year, roughly in line with USD 1.51bn last year, the sources said. The company added back USD 135m of COVID-19 costs throughout the year, two of the sources noted. Revenue for the year dropped 11% year-over-year to USD 7.6bn, the sources said.

One of the sources, however, estimated closer to USD 1.128bn in LTM adj. EBITDA, compared to USD 894m last year.

For the quarter ended 30 September, the company generated USD 315m in adjusted EBITDA, two of the sources said.

Before the COVID-19 pandemic hit, Clarios set 2020 guidance at USD 1.65bn – USD 1.7bn for adjusted EBITDA. Management also told investors that it expected USD 65m of cost savings for the rest of the fiscal year after booking USD 35m in 1Q20.

In turn, the company achieved USD 110m of run-rate cost savings in fiscal 2020, the sources said. The company expects to achieve another USD 75m – USD 100m in fiscal year 2021, the sources added.

For fiscal year 2020, Clarios generated USD 303m of free cash flow, two of the sources said.

In October, the company paid down USD 150m on an outstanding term loan facility, two of the sources said.

As of 30 September, liquidity totaled USD 1.804bn through USD 554m of cash and USD 1.25bn of revolver availability, the sources said. Pro forma the paydown, the company is 6.8x levered, based on USD 1.52bn of adjusted EBITDA and USD 10.354bn of total debt.

Clarios was formed when Brookfield acquired the energy solutions arm of Johnson Controls in May 2019 after a tumultuous syndication process for the loans and bonds backing the LBO.

The USD 1.95bn 8.5% senior unsecured notes due 2027 traded yesterday at 109.125 to yield 4.724%, compared to trades in the 107.625 context before the earnings report, according to MarketAxess. The USD 1bn 6.25% senior secured notes due 2026 last traded yesterday at 107.5 to yield 3%, slightly higher than pre-earnings levels of 106.6 to yield 3.65%.

Clarios did not respond to a request for comment.

2020 Debtwire

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