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GENIVAR Reports In-line Second Quarter Results

With EBITDA of $21.6 million against forecasts, GENIVAR Inc. showed second quarter results that were nearly in line with forecasts. Staying at 16.4%, EBITDA margin was lower than their historical range of 18% to 20%. Future forecasts are lower, based on the recent environment, at 17.8% in 2015.

Largely, market conditions are negative, causing the margins to seem burdened. GENIVAR Inc. divulged on the conference call that they are taking measures to gain operational effectiveness, mainly the ERP system. Some markets saw a moderate decline in workforce as well. Margins are expected to stay lower than the historical range in the short-term, with EBITDA margins of 17.25% and 17.8% in the second half and 2015, respectively.

Remaining lower than the firm’s 5% target, organic growth stayed at 0.2%, due to persisted inefficiencies in Quebec and global markets, while GENIVAR Inc. also informed pricing pressure in the municipal infrastructure division. Organic growth was estimated at 3% in the quarter. The company is taking in 4% to 5% organic revenue growth in the second half of 2014. With conservative forecasts, their organic growth is now being predicted to be at 2% in the second half and 4.5% in 2015.

Estimates have been lowered and valuation multiple to imply a more uncertain economic guidance. This has led the new 12-month target to stay at 27.00 per share. The company’s 6.2% yield is favorable, though the shares are trading at a premium to the peers. The “Sector Perform” rating remains intact on shares of GENIVAR Inc.

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