Automotive repairer AMA Group (AMA) saw its share price drop from 110 to 88c before Christmas after it issued a revised earning forecast. The share price has risen to 95c at the time of writing against a 2019 high of 1.45 back in August.
In early October, AMA released a forecast earnings before interest, tax, depreciation and amortisation (EBITDA) for the 2020 financial year, expecting to receive over $100 million. The update issued on 20 December outlined the company now expects EBITDA for the 2020 financial year to fall between $73 million and $77 million.
The release dry weather and a fall in new car sales are cited as contributing factors. "Prolonged drier weather conditions in the first half and the ACAD (Automotive Components and Accessories Divisions) Division has been impacted by a pronounced year-on-year decline in new car sales impacting the industry as a whole."
The integration of the Capital Smart and ACM Parts companies is "proceeding better than expected," the company said. "Based on the work undertaken to date by the dedicated integration team, AMA is confident of delivering the previously identified $17M of synergies for the entire FY21."
On the subject of acquisitions the company officially announced three businesses: SmashCare multi-state group, Diplocks in Rockhampton, WA and All Transport Crash Repairs in Adelaide, the latter will further plump out its truck repair division.
These acquisitions represent a total of 10 new sites and, once full integrated, are expected to contribute approximately $30M in revenue and $2.5M of EBITDA to the Group, the company says. The current acquisitions were funded through a combination of cash and deferred earnout related consideration.
The release states: "The acquisition pipeline for AMA remains very strong with no upward pressure on acquisition multiples. We are currently negotiating acquisition opportunities representing $110M of revenues and in addition to these opportunities, the pipeline we are evaluating represents over $200M of revenues.
"Due to the significant strategic acquisition of Capital Smart and ACM Parts, the level of “business as usual” acquisitions understandably slowed in the first half. The acquisition pace is on track to return to historical levels in the second half of this financial year.
On its banking facility update the company said: "To facilitate the acquisition of Capital Smart and ACM Parts and help enable the continued growth of the Group, a new $375M banking facility was implemented with ANZ and NAB in October this year. The new facility was underwritten by ANZ and NAB who in turn undertook to syndicate part of the facility to a group of new lenders by the end of 2019. The Syndication process has now been completed with five additional parties joining the facility as lenders. Pleasingly, the Syndication was extremely well supported and oversubscribed.The facility is currently drawn on a net basis to approx. $235M."