Canada's Dexterra Q3 revenue misses estimates; adjusted EBITDA rises on favorable mix

Dexterra (Alberta)

Wed 22:13

Overview
Canada support services firm's Q3 revenue rose yr/yr but missed analyst expectations
Adjusted EPS for Q3 increased to C$0.28 from C$0.25 a year earlier
Revenue growth was supported by workforce accommodation occupancy, organic growth and a full-quarter contribution from Right Choice

Outlook
Company expects Support Services adjusted EBITDA margin to remain above 9% over the medium term
Dexterra anticipates Asset Based Services adjusted EBITDA margins between 30% and 40% over the long term
Company expects adjusted EBITDA conversion to free cash flow to exceed 50% for the year

Result Drivers
WORKFORCE ACCOMMODATION OCCUPANCY - Co said solid workforce accommodation occupancy contributed to revenue growth, particularly in Support Services
BUSINESS MIX SHIFT - Higher-margin workforce accommodation rental revenue and stronger profitability from rental activity in Asset Based Services improved margins
ACQUISITION CONTRIBUTIONS - Right Choice contributed for a full quarter, while Pleasant Valley contributed C$1.3 mln to adjusted EBITDA versus C$0.9 mln a year earlier

Company press release: ID:nNFC465kB1

Key Details
Metric
Beat/Miss
Actual
Consensus Estimate
Q3 Revenue
Miss
C$291.23 mln
C$305.92 mln (6 Analysts)
Q3 Net Income
 
C$14.39 mln
 
Q3 Adjusted EBITDA
 
C$38.10 mln
 
Q3 Basic EPS
 
C$0.23
 
Q3 Free Cash Flow
 
C$38.27 mln
 

Analyst Coverage
The current average analyst rating on the shares is "buy" and the breakdown of recommendations is 6 "strong buy" or "buy", 1 "hold" and no "sell" or "strong sell"
The average consensus recommendation for the business support services peer group is "buy"
Wall Street's median 12-month price target for Dexterra Group Inc. (Alberta) is C$20.00, about 2% above its November 3 closing price of C$19.60
The stock recently traded at 22 times the next 12-month earnings vs. a P/E of 18 three months ago

Reuters Recommended Reads
Nov 4 - Canada's Colliers misses Q3 revenue estimates, cuts outlook
Nov 3 - Canada's FLINT Q3 revenue jumps 80% to record high
Nov 4 - Denmark's workplace management firm ISS Q3 organic growth rises, reaffirms outlook

For questions concerning the data in this report, contact Estimates.Support@lseg.com. For any other questions or feedback, contact reuters.support@thomsonreuters.com.

(This story was created using Reuters automation and AI based on LSEG and company data. It was checked and edited by a Reuters journalist prior to publication.)