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I guess we have the answer to the question what the cosmans are doing…

Does anyone have the passcode for the earnings call?

I would recommend everyone listens to the earnings call when Helen is talking about impact on cash flow in 2025 and capex…starts around minute 52…

In the last two years capex was around 150-200mio (including growth)…which is not sustainable…she mentioned that 250-300mio (of which 100mio is NASB) is the running rate…as such we should expect ~100mio additional capex compared to last year as well as 50-70mio more to pay for previous busses…as such she is expecting net debt to increase this year…which makes sense considering the impact on cash flow…only encouraging thing is that they expect covenant gearing to remaining roughly stable…which must be driven by an increase in EBITDA…given NASB will be disposed of middle of this year…things should start to improve in 2026

Free cash flow…

I think we need to be a bit careful with their stated numbers…

A) the hybrid payments have to be deducted from it…21mio and likely to double this year

B) adjusting items are deducted…likely restructuring costs will continue to run at 30-50mio and onerous contract provisions are likely to cause 20-35mio outflows for the foreseeable future

While we also had a 58mio outflow for an acquisition this year…net fund flows for the year was actually flat.

Further net maintenance capital has been significantly below depreciation for the last two years which is not sustainable and Helen mentioned as much…I think she mentioned around 220mio of maintenance needs for buses in 2025 which should significantly reduce fcf all things considering…

Another underwhelming fact is that she mentioned that she expects covenant ratios to remain roughly stable (around 2.8) which probably means that net debt will be slightly higher next year (excluding the NASB sale) assuming that ebitda continues to rise.

Unfortunately, i believe that this is not true as drawing the RCF would increase net debt

I am a bit surprised that the share price didn’t get any boost from today’s report…I find it particularly promising that net debt remained the same despite the acquisition cash flow.

One thing that was obvious to me is that they intend to sell We drive u next…the way they presented it makes it a key target for further divestures imho…hopefully this time at a decent price though…

Even if they wanted to, they can’t unless ebitda increases significantly…they are very close to their max covenant ratio

Hindy, it’s not always that easy to buy back your own debt immediately…and don’t forget they are also earning around 5% on the cash they hold…so net net it’s probably roughly the same.

Yeah and that’s not

Even accounting for the hybrid…which adds another 500mio…so 900 net debt + 200 market cap + 500 hybrid…

9mio OP doesn’t tell the story here as it was still recovering…future potential is much greater.

“ Before the COVID-19 pandemic, Mobico Group (formerly National Express Group) reported strong financial performance in its North American school bus division. In 2019, the division achieved a record revenue of $1.57 billion, reflecting a 21.4% increase in constant currency. Operating profit for the division reached $157 million, marking a 21.4% rise in constant currency as well .”

Hence analysts were expecting a major part of the future growth to come from this division…and an ebitda multiple of 5 is very small

Yeah fingers crossed…let’s see…the only encouraging thing in Fridays rns was that so far for 2025 business is going as expected…

Last thing I am gonna say is

Unfortunately I don’t think that a RI is that unlikely given the companies history with those…that’s my biggest fear for Tuesday. Otherwise, I also think that most of the negatives are out now

I think if there are not further unexpected bad news, cash flows are positive and the guidance is towards an increasing operating profit then I believe we will be back above 50 in no time…big danger is any potential mentioning of a conservation of RI

Does someone know what the real impact is of the write off of 200gbp of deferred tax assets? They are stating that this will not affect the groups ability to utilise those tax losses in future years. So is there any real impact at all or can it be ignored?

Thanks Craig. That’s my understanding as well. I think it will impact 2024 cash flow most likely by an additional 20mio but certainly not anywhere near the 85mio. Given we didn’t pay a divi this year, didn’t have to repay Covid support, didn’t make any acquisitions, our cash flow will still look ok despite higher financing costs.

Just a sanity check here…the onerous contract provision of 95mio is on top of last years 99mio, correct? Anyone has any idea how much this kay impact this years cash flow

Yeah on top of it you had a another gbp 85mio charge from Germany due to onerous contract provisions and no sign of an agreement with the German authorities to reimburse Mobico for increased costs…this is in my view even more important than all the write downs which have no impact on cash flow. On top of it, 70mio of the sale price was in earn outs and is not guaranteed.

Laura, 50xebit is irrelevant as ebit is just recovering…ebitda multiple is much more relevant and a 5x multiple is tiny compared to 9x (that’s were fpg sold) and was expected from most (around 1bn)

I think the price of the sale is far from ideal but there was a lot of noise yesterday which has helped to crater the sp. I think the key for Tuesday will be what the real cash flow has been last year. If it was positive then I think we will have a decent future ahead. If it was negative and net debt has increased then it will be a much different conversation.

The asset wrote down and tax write downs are far from great but don’t really impact the underlying business as such…will be interesting to see how much the German issue has impacted real cash flow and in which years. If it wasn’t for Germany I wouldn’t be very concerned as Alsa and the remaining US business seem to be doing well and the UK is dialect flat at the moment…so I will keep my attention of FCF and net debt change (excluding yesterdays change) to make up my mind what to do with my position going forward.

Only other concern is that they mentioned continued focus on the capital structure which in my mind raises the danger of including a RI which at current prices would obviously almost erase their current shareholders.

Anyone has a smart answer to why the bond price is actually up today while the share price is getting absolutely smoked? Makes little sense to me