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My favourite slide in the last big presentation from CLH....

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Berger978456

1,847 Posts.

157

04/05/18

10:11

Post #: 32879494
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Originally posted by SteveSage ↑

The plus on this deal is that CLH earns service/management fees as they are still collecting the debt (and this is guaranteed for 5 years so great recurring revenues), but the downside is the potential hit in revenues over that period (2019 & 2020 will be the hardest if they don't deploy the cash immediately).

It does seem like they are attempting to transition the business with a higher contribution from collection services (collecting for the ATO, Banks, now Balbec), but my sense is that there is no way they would be able to replicate the loss in revenues & margins on the PDL cash collections side (serivces is ~16% EBIT margin vs ~40% on PDLs).

I'm not sure what is stopping them pushing both businesses (with the appropriate level of prudence on price for the PDLs).

IMHO the only way to get back above $2 is to show EPS growth in 2019, and my biggest concern would be that this sale may not make it easy.

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My favourite slide in the last big presentation from CLH.

CLH Price at posting: $1.63 Sentiment: Buy Disclosure: Held
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