When you bring operating leases on balance sheet, the lease expense is reallocated to interest and depreciation in the income statement. Accordingly, for TRS, to arrive at a lease adjusted EBITDA, you will add about $90m to their EBITDA of $43m to get a lease adjusted EBITDA of about $133m. At 3x debt to Ebitda, this gives total debt capacity of about $400m. Given lease debt is about $250m, this leaves traditional debt capacity of about $150m.
Now the above is based on their lease disclosures which as I said are lower than I would have expected given their lease profile, but it appears the accountants are Ok as they have signed off on the accounts.
TRS Price at posting:
$4.90 Sentiment: Buy Disclosure: Held
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