Lindbergh Spa (Watchlist)
Rather interesting specialized logistics company building a platform for technicians.
Note*: I am not investing in this, this is going on my watchlist because it is quite an interesting company.
The company piqued my interest because their business model and platform actually seem like REAL value adds with a big market to disrupt!
Why I am not investing? Too expensive for me…
What these guys do:
This small-cap Italian company has a rather interesting business model.
They supply their clients’ technicians (Field Service Management) with the T-Linq Platform which allows the technicians to order spare parts, return parts, and facilitate waste removal through an app. The app is interconnected to the clients entire organization.
The parts are delivered directly to the technicians vehicle, which can be onsite. This is part of what makes their business model unique, and is fundamental to the value they add their clients.
A major part of the value add comes from reducing wasted time the clients would normally experience when their technicians are repairing, or conducting maintenance on machines. The Night Delivery and Collection Service delivers spare parts to the technicians directly over night, so when the technicians arrive on site in the morning, they can immediately begin work. Compare this to your normal logistics company, where deliveries are done during normal working hours and drivers are not specifically designated to the company. There would be a lot of time wasted.
The Lindbergh T-Linq Platform saves time, and time is money for their clients.
Revenue Drivers:
3 Business Units currently operating in Italy and France:
Network Management (Through the T-Linq Platform) 85% Total Revenue
Waste Management (synergistic with Network Management) 11% Total Revenue
Warehouse Management. 4% Total Revenue
Revenue’s seem quite sticky too with half the number of clients being clients for more than 10 years (this is old data and they’ve had a lot of contract renewals (big ones) from clients since):
Revenue Generators:
Lindbergh has recently done a string of small strategic acquisitions into the Field Management Services (maintenance and repairs) as well as acquiring a few HVAC installation companies.
I believe this is part of a strategy to increase their geographic footprint and also provide installation and maintenance services, essentially to become more vertically integrated. This market in Europe is fragmented. They have an advantage with their logistics system, so they will probably outcompete in terms of service delivery, but I have yet to see the results from this implementation.
I am quite optimistic about future revenue generation, because it seems like the platform and the business model adds a lot of value. The rollout in France seems to be struggling but it is still early days:
“In France, for the moment, we have not yet been able to assure stable profitability and therefore generate a cash flow. So we cannot say we are satisfied, after a good first six months and the first positive results in terms of margins, we recorded a negative second half of the year, which effectively cancelled out all that we produced in the first part of the year. The reasons are clear to us, starting from the incorrect choice of General Director (people make all the difference), up to the failure to adjust the price lists with all main clients in the past two years (hindered by the multiannual contracts signed in late 2021). As in Italy, the authorisations for offering and selling waste services are proceeding slower than expected. I could continue to list all the reasons, but I think it would be quite pointless here.” -Source (Michele Corradi - (CEO and co-founder of Lindbergh S.p.a.)
He seems quite blunt, and I like that.
The acquisitions into the HVAC market have mostly been done at EV/EBITDA multiples of around ~4
Price. Management. Company.
Price:
Current market cap at 32.30M EUR
EBITDA 2023: 3.4M
EV: 30M
EV/EBITDA: 10X
Management:
From the shareholder letters, I quite like the way the CEO talks: “We have a large shareholder called market, that leaves us to work and judges us, and is the only one we are accountable to. And the market is every one of you, and we will be accountable to every one of you.”
Good Company/Competitive Advantage
The company has quite a competitive edge with its T-Linq platform. Adds real value to technicians, will be interesting to see how their entry into France goes…
Target & Weight:
None.
Monitor:
I’ll take another look if EV/EBITDA gets to 5X or if revenue growth starts to really pick up from France and HVAC Consolidation strategy in Italy.