JFrog stock rises as Cantor Fitzgerald maintains Overweight rating after strong Q2
Investing.com -- Fitch Ratings has revised the Rating Outlook for SPIE SA, a technical services provider, to Positive from Stable. The Long-Term Issuer Default Rating (IDR) and senior unsecured rating for SPIE have also been confirmed at ’BB+’. The Recovery Rating remains unchanged at ’RR4’.
The revision in the outlook is based on Fitch’s expectations of SPIE’s gross leverage, as defined by Fitch, improving to well below 3.0x across 2025-2028, down from 3.1x at the end of 2025. This improvement is expected to come mainly from strong revenue and EBITDA growth, while Free Cash Flow (FCF) is projected to stay close to 3% of revenues. If SPIE can maintain these trends and keep leverage within its target, while continuing its shareholder distribution policy and supporting growth through FCF-funded acquisitions, the ratings could be upgraded. However, a large, debt-funded acquisition may eliminate the potential for a ratings upgrade.
SPIE’s rating is backed by a strong business profile, benefiting from a good market position and high exposure to structural investments into energy transition, which provides recurring earnings generation.
Fitch anticipates continuous improvement in EBITDA gross leverage to 2.6x at the end of 2025 and further decrease to 2.0x at the end of 2028. This improvement is expected to result from robust EBITDA growth to above EUR800 million in 2025-26, fueled by 6%-7% revenue growth and slight margin improvement.
SPIE’s financial policy, which includes a commitment to maintain company-defined EBITDA net leverage below 2x, an EBITA margin target of at least 7.7% by 2028, and a stable dividend policy at 40% of adjusted net income, is viewed by Fitch as achievable and supportive of the rating.
Fitch forecasts FCF margins of 3% in the medium term, supported by minimal working-capital changes, an asset-light business profile requiring low capital expenditure spending (around 1% of revenue) and stable dividend payouts.
SPIE is expected to continue its acquisitive strategy with several bolt-on acquisitions each year. These acquisitions are expected to expand its service offering in industrial decarbonization, data centers, solar/wind power installations, IT infrastructure, robotics, and automation technologies.
SPIE’s business model showed resilience during the pandemic in 2020 and the inflation spike in 2022 with stable revenue growth, continuous EBITDA margin improvement, FCF margins of 3% and declining leverage.
SPIE is the European leader in technical services, with its strongest presence in France (around 34% of revenue), Germany (33%) and Northwestern (NASDAQ:NWE) Europe (20%). Despite the European focus, the company’s diversification benefits from a number of end markets and low customer concentration risk.
SPIE’s EBITDA gross and net leverage ratios of 2.6x at end-2025 and 2.0x at end-2028, respectively, over the forecast period are in line with or stronger than that of Sodexo (EPA:EXHO) SA’s and Rentokil Initial (LON:RTO) Plc’s.
Fitch’s key assumptions include 6%-7% revenue growth per year over 2025-2028, EBITDA margin improving to around 7.5% in 2025 gradually increasing toward 8% in 2028, capex at 0.9% of revenue in 2025-2028, dividends averaging EUR225 million a year over 2025-2028, and acquisitions of around EUR260 million annually in 2025-2028.
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