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20/12/16
12:00
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Originally posted by bug1
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I didnt realise they were that big, that news is a bit disturbing if it cost that much and their earnings do fall.
The only positive thing i might suggest is that spotless does already have a presence in the industry through AE Smith, so there might be some synergies expected, and other sources of work, they couldnt have been blind to the risks.
I expect spotless have more longer term goals for their acquisitions than the immediate contracts that they provide. That they provide integrated services and long term contracts means they should have a good idea of where they can grow revenue. So smallish bolt-ons i dont have a problem with.
The worry for me is that management said they where going to focus on organic growth, and with debt levels already high by their own admission i wonder if even they believe in their own plan.
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For me the negative takeaways were two -
Continued attempts to grow eps via sloppy acquisitions which for Spotless means via debt, when they are already too highly leveraged.
Anecdotal confirmation of the broader market fear that spotless are going to either continue losing major contracts, or lose their margins.