SIRVA IPO Moves Up To A Good Deal For Investors

Jul.30.14 | About: SIRVA (SRVA)

Summary

SRVA, a provider of services related to employee relocation for corporations and government institutions, plans to raise $185.0 million in its upcoming IPO.

We are optimistic on this IPO and suggest investors consider buying in.

SRVA has achieved profitability on the back of an impressive client list, and firms continue to choose to outsource their mobility needs, giving SRVA room to grow.

SIRVA, Inc (Pending:SRVA), a provider of services related to employee relocation for corporations and government institutions, plans to raise $185.0 million in its upcoming IPO.

The Oakbrook Terrace, Illinois-based firm will offer 11.6 million shares at an expected price range of $15-$17 per share. If the IPO can reach the midpoint of that range at $16 per share, SRVA will command a market value of $637 million.

SRVA filed on March 28, 2014.

Lead Underwriters: Goldman, Sachs & Co; J.P. Morgan Securities LLC; Morgan Stanley & Co. LLC

Underwriters: Robert W. Baird & Co. Incorporated; William Blair and Co., L.L.C.

Summary Of Relocation Services

SRVA is a provider of outsourced employee relocation services for multi-national corporations and government institutions, helping those organizations to maintain mobility in their talent pools.

The firm's more than 1,800 customers include over a quarter of the Fortune 500 and some two-thirds of the Dow Jones 30. SRVA was involved in more than 280,000 "mobility events" for its customers in 2013. The firm's customer base is highly diversified, with no customer accounting for than 3.1% of its service revenue for 2013.

SRVA utilizes an agent/franchise network consisting of some 1,158 locations along with 66 company-operated locations spread across some 170 countries in order to maintain a global presence. The firm's agents operate under its Allied and northAmerican brands. SRVA essentially allows its franchises to do the heavy lifting in any given move while providing its clients with a consistent experience. The firm attempts to provide comprehensive mobility services for its clients, offering some 50 relocation-related services.

Valuation

SRVA offers the following figures in its S-1 balance sheet for the three months ended March 31, 2014:

Revenue: $284,600,000.00

Net Loss: ($5,700,000.00)

Total Assets: $390,300,000.00

Total Liabilities: $571,700,000.00

Stockholders' Equity: ($181,400,000.00)

For fiscal 2011, 2012 and 2013, SRVA posted service revenues of $1,380.5 million, $1,450.8 million and $1,464.5 million, respectively, and net incomes (losses) of $(52.9) million, $(1.4) million and $9.7 million, respectively.

Direct Competition From Well Established Firms

SRVA faces direct competition for corporate business from several well-established firms on the basis of cost, capacity, geographic presence, and quality of relocation experience. Major competitors include Cartus Corporation, Weichert Relocation Services, and Brookfield Global Relocation services. Some of the firm's competitors may have access to greater financial and marketing resources than SRVA.

The firm's agent networks also face competition from other moving service providers, such as Atlas World Group, Graebel Companies, Inc., Wheaton Van Lines, Inc., and Unigroup Inc.

Management Highlights

CEO Wes Lucas has held his current position since July 2008. He previously co-founded BioMass Capital, a renewable energy company, and continues to serve as a Director of BioMass Capital AB. Mr. Lucas also served as CEO of Quebecor World Inc. and as Chairman, CEO and President of Sun Chemical Corporation.

Mr. Lucas holds a B.S. in finance and accounting from the University of California, Berkeley and an MBA from Harvard Business School.

Conclusion: SRVA Looks Strong

We are optimistic on this IPO and suggest investors consider buying in.

SRVA has achieved profitability on the back of an impressive client list, and as the global economy continues to recover, demand for SRVA's services should only increase.

Firms have increasingly chosen to outsource their mobility needs, as many corporations lack the expertise at a local level to accomplish effective movement throughout their diverse geographic footprints.

SRVA has every opportunity to continue to expand and to increase its profits.

We are hearing the deal has more room to work.

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Note: As a large sample of information sources does not yet exist for SRVA, we have taken much of the information for this article directly from SRVA's S-1 filing.

Disclosure: The author has no positions in any stocks mentioned, but may initiate a long position in SRVA over the next 72 hours. The author wrote this article themselves, and it expresses their own opinions. The author is not receiving compensation for it (other than from Seeking Alpha). The author has no business relationship with any company whose stock is mentioned in this article.