Securus loans pop on 4Q20 earnings strength, upbeat outlook

Securus Technologies loans advanced after the inmate telecommunications services provider earlier this week posted revenue and EBITDA gains for 4Q20 and 2020, according to two sources familiar with the situation. The company also provided a positive outlook, outlining expectations for further earnings improvement in 2021, they said.

Securus generated USD 194.6m of revenue in 4Q20, up 12.5% year-over-year, the sources noted. In tandem, adjusted EBITDA jumped 18% to USD 57.7m for the quarter, the sources added. 

Revenue for 2020 totaled USD 767.5m, up 10% from 2019, while adjusted EBITDA shot up 22% to USD 240.5m, they continued.

Looking forward, Securus noted projections for adjusted EBITDA to strengthen roughly 17% and revenue to increase 11% in 2021, the sources said. 

Sources attributed the earnings growth to the company benefiting from stay-at-home orders and social distancing guidelines due to the COVID-19 pandemic. Earnings got a bump in 2020 as friends and family members of incarcerated citizens relied more on e-messaging, video connect and telephone services than in-person contact, the sources said. 

The Platinum Equity-owned company also received requests to install e-messaging and video connections at inmate locations that previously did not have such programs, according to a December Standard & Poor’s report.

Securus and the sector at large face regulatory risks moving forward from the Biden administration’s efforts to lower the average daily population or ADP at prisons across the US.

The borrower’s USD 1.087bn Libor+ 450bps first lien term loan due 2024 was last quoted 94.1/95.15 today, versus 93.1/94.4 on 5 April and 92.295/93.398 last week, before the earnings report, according to Markit. Its USD 283m L+ 825bps second lien term loan due 2025 moved up further with quotes at 84.25/86.5 today, from 83/84.75 on 5 April and 82.444/84.444 on 2 April.

Securus and Platinum did not respond to requests for comment. 

2021 Debtwire

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