Investor's Guide by Leonardo Bruno - 08/03/2022

By Writing Team
Posted in August 3, 2022

Ambipar (AMBP3) continues with the ‘open safes’ in the North American market, and announced this Wednesday its newest acquisition. Canadian Ridgeline and increasing its revenue in the region by almost 50%. The negotiation was carried out through Ambipar Response, a subsidiary of the company.

Ridgeline operates 16 emergency response bases in Canada and is focused on the so-called L1 and L2 stages – basically, telephone support and emergency coordination (remotely or in person). At L3, the company acts directly in the emergency, removing the chemical from the site and stabilizing the situation. For this, however, it needs to have assets (such as trucks and vehicles).

Today, Ridgeline does not have this asset structure, “so when it comes to acting in an emergency, it subcontracts other companies,” CFO Thiago Silva said in a linked press report.

“Now, we are going to take the assets we already have and use them to meet the emergencies that it generates.”

Ridgeline earned C$34 million last year (R$150 million at today’s exchange rate) with an EBITDA margin of 12.5%. This margin is a little lower compared to other acquisitions that Ambipar made in the region precisely because Ridgeline does not operate in the L3.

With the synergies of the acquisition, the company expects that the margin “quickly” converges to 20% (the average of the other businesses). Historically, Ambipar has paid a multiple of 5-6x EBITDA on its acquisitions. The company does not disclose the value of today’s transaction, but the CFO says the multiple was a little higher because Ridgeline “has another level of scale and sophistication”.

The procurement policy
With the acquisition, the company reaches its ninth acquisition in the year. The latest acquisition was C-Tank, a specialist in industrial and naval tank cleaning.