Published: October 31, 2023 at 10:40am ET
Written by Adriano Marchese
Dye & Durham shares soared in early trading Tuesday after the company said it would prioritize lowering its leverage ratio as quickly as possible.
As of 10:28 a.m. ET, the stock was trading 3% higher at C$8.65 ($6.26), slowing from an early morning high of C$9.71.
slow…
Written by Adriano Marchese
Dye & Durham shares soared in early trading Tuesday after the company said it would prioritize lowering its leverage ratio as quickly as possible.
As of 10:28 a.m. ET, the stock was trading 3% higher at C$8.65 ($6.26), slowing from an early morning high of C$9.71.
The Canadian cloud-based software company said late Monday that its total debt was C$45 million ($32.5 million) lower than at the end of June, mainly due to debt repayments the company made during the quarter.
CIBC analyst Scott Fletcher said in a report that Dye & Durham’s stock has been under continued pressure since the company announced in its fourth-quarter results in September that it would increase its investment in mergers and acquisitions. He said that it has been done.
The stock is down about 47% since the beginning of the year, and about 43% over the past 52 weeks.
He said the company’s fourth-quarter results were broadly in line with expectations, but Dye & Durham committed to C$55 million in additional M&A after quarter-end, even though it had higher levels of leverage. said. Fletcher said this has not been well-received by the market.
CEO Matthew Proud said late Monday that Dye & Durham will reduce its leverage ratio as soon as possible to less than four times total net debt to adjusted earnings before interest, tax, depreciation, and amortization. He emphasized that the amount of debt is C$45 million. Reduced during the quarter.
Revenue for the first quarter ended Sept. 30 was flat at C$120.1 million, but beat analysts’ expectations of C$117.4 million, according to a FactSet poll.
Net loss widened by C$2 million to C$13.5 million. This was primarily due to an increase in financing costs during the period.
Adjusted EBITDA increased 7% to C$68.7 million.
CIBC’s Fletcher said Dye & Durham’s management noted on a conference call with investors that the majority of the company’s M&A spending in the quarter was completed before last quarter’s results were released.
”[This signals] He said the message from the market has been clearly received and the possibility of future M&A is extremely low. ”
Please email Adriano Marchese at adriano.marchese@wsj.com.
