Shares in safety and security services provider Marlow (MRL:AIM) climbed 3.8% to 789p after the company raised its full year earnings forecast for the second time in three months thanks to better than expected second-half trading.
Marlowe, which operates in the fields of health and safety, fire safety, security, water treatment, hygiene and air quality, said that thanks to margin expansion and strong cash generation it expected EBITDA (earnings before interest, taxes, depreciation and amortization) to top £28 million for the year ended in March.
BEAT AND RAISE
This follows February’s trading update when the company raised its EBITDA forecast to the top end of market forecasts, which at the time were between £23.6 million to £26.3 million.
Also, thanks to a handful of small bolt-on acquisitions in fire safety, water treatment and occupational health, the current run-rate of EBITDA is more like £39 million compared with £37 million in February.
The group recently set out a three-year plan to reach £500 million of revenues and over £100 million of EBITDA, helped by a combination of underlying growth and acquisitions.
STRUCTURAL GROWTH PLUS M&A
The new year has started well ‘with significant demand experienced across all business units in April’, according to today’s update.
Moreover, the company’s pipeline of earnings-enhancing acquisitions ‘remains well developed’, so there are likely to be more announcements in the not-too-distant future.
Analysts at Cenkos Securities reiterated their Buy rating, describing Marlowe as 'attractively valued given the strength of its business model and an industry underpinned by durable structural growth drivers'.
