Priner, a Brazilian industrial engineering services company, has released its preliminary operational results for the third quarter of 2024.
The report showcases a remarkable recovery and paints a promising picture for the company’s future. The company’s gross revenue has shown a significant rebound compared to the first two quarters of 2024.
Priner is now approaching the R$100 million ($18 million) per month mark in gross revenue. This recovery comes after a challenging period marked by contract cancellations in late 2023. One of the most noteworthy developments for Priner has been its acquisition of Real Estruturas.
The company purchased Real Estruturas, a firm specializing in industrial assembly, for R$170.7 million ($30 million) in August 2024. Initially, this acquisition seemed like a good deal, but recent figures suggest it was an even better bargain than anticipated.
Real Estruturas’ 2023 financials showed a net revenue of R$350 million ($63 million) and an EBITDA of R$61 million ($11 million). These numbers initially implied an acquisition multiple of 2.7x EBITDA.
Priner’s Q3 Preview: Revenue Rebound and Undervalued Acquisition. (Photo Internet reproduction)
However, the projected 2024 EBITDA, based on annualized Q3 figures, now exceeds R$80 million ($14 million). This revised projection brings the acquisition multiple down to approximately 1.95x EBITDA.
Such a low multiple for a transformational deal is rare in the industry. The acquisition terms included R$22 million ($4 million) paid in Priner shares and R$149 million ($27 million) in cash.
The combined entity of Prins and Real Estruturas now presents an even more attractive valuation for investors. The projected annualized EBITDA for the merged company surpasses R$220 million ($39 million).
Priner’s Q3 Preview: Revenue Rebound and Undervalued Acquisition
This figure translates to a current EV/EBITDA multiple of about 3.5x. Analysts suggest that a fair value estimate for a company of this caliber should be in the range of 5-6x EV/EBITDA.
This discrepancy between the current valuation and the estimated fair value indicates significant potential for both earnings growth and multiple expansion.
Priner’s growth strategy has been aggressive since its IPO in early 2020. The company raised over R$170 million ($30 million) during its initial public offering. Since then, Priner has completed six acquisitions, expanding its service offerings and market reach.
The company’s EBITDA growth has been nothing short of impressive. It has surged from R$5 million ($1 million) in 2017 to over R$110 million ($20 million) currently, representing a 22-fold increase. Priner’s management has set ambitious goals for the future.
By 2026, the company aims to achieve R$1.5 billion ($268 million) in revenue and R$100 million ($18 million) in net profit. These targets reflect the company’s confidence in its growth strategy and market position.
Priner’s management has also hinted at plans for further acquisitions in the near future. The company’s stock performance has been strong, with PRNR3 showing a year-to-date gain of approximately 20% as of September 2023.
This upward trend in stock price reflects investor confidence in Priner’s growth strategy and future prospects. Priner’s Q3 2024 preliminary results and the successful integration of Real Estruturas demonstrate the company’s resilience and growth potential.
With an attractive valuation, strategic acquisitions, and a clear growth strategy, Priner appears well-positioned for future success in the Brazilian industrial engineering services sector.
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