PSAV IPO Could Pop This Week

| About: PSAV (PSAV)

Summary

Illinois-based PSAV is a leading provider of event and audiovisual technology services in North America and internationally.

PSAV intends to price its NYSE IPO this Thursday evening, June 16; lead underwriters for the deal are Goldman Sachs and Morgan Stanley.

With a 25% increase in revenues and net losses narrowing by 50% as noted above, we are optimistic on PSAV's long-term growth.

We suggest investors consider a modest allocation.

Schiller Park, Illinois-based audiovisual technology and event service provider PSAV, Inc., (Pending:PSAV) expects to raise $200.5 million in its upcoming IPO. We highlighted PSAV last week on our IPO Insights platform.

PSAV will offer 16.1 million shares at an expected price range of $14 to $17. PSAV filed for the IPO on September 10, 2015. Lead underwriters are Goldman Sachs (NYSE:GS) and Morgan Stanley (NYSE:MS). Underwriters also include Barclays Capital (NYSE:BCS), Credit Suisse Securities (NYSE:CS), Macquarie Capital, Piper Jaffray, and William Blair & Co.

Business Summary: A Leading Provider of Event Technology Services

As described in its SEC Filings, PSAV, Inc. provides event and audiovisual technology services to the resort, hotel and conference center industry in the United States, Mexico, Canada, Europe, the Caribbean and the United Arab Emirates. PSAV provides audiovisual support for a wide range of events, ranging from intimate gatherings to large conventions. Its services include high-definition imaging, computer interfaces, power distribution, video mapping, concert sound and lighting, special effects, virtual meetings, and more.

The company also notes the following important highlights:

  • They support over 1.5 million meetings annually, with services used by over 1,100 event organizers daily (avg.).
  • PSAV is the exclusive on-site technology provider for over 1,400 venues across the globe.
  • PSAV is the market leader in 19 out of the top 20 hotel markets in the United States.
  • The company has averaged 98 percent venue retention rates (and an organic growth rate of 48 new venues) per year for the last five years.

Use of Proceeds: Repaying Debts, Accrued Interest

The company intends to use the net proceeds from the IPO to repay debt and accrued interest under a second lien credit line, which matures on January 24, 2022. This includes a premium payment of 1 percent of the aggregate principal amount voluntarily prepaid prior to January 24, 2017. Any excess proceeds will be used for general corporate purposes.

Executive Management Highlights

PSAV notes that CEO, President and Executive Director Mike McIlwain joined the company in 2009 as the CFO of the Audio Visual Services Group. His previous experience includes senior financial positions at Motor Coach Industries. Mr. McIlwain is a Certified Public Accountant and holds a Bachelor's of professional accountancy from Mississippi State University and a master's of tax accounting from the University of Alabama.

CFO Benjamin Erwin also serves as CFO of TestAmerica Laboratories. His previous experience comes from executive positions at Cornell Companies, Enron and Trilogy Software. He graduated from Wake Forest University with a BA in Political Science and a BA in Economics.

Potential Competition: Freeman Company and Regional Providers

Currently, PSAV is the largest provider of event and audiovisual technology in the United States, and the company has a venue portfolio that is approximately five times greater than its nearest competitor, Freeman Company. The industry is comprised primarily of smaller, regional and local providers of such services and certain hotel chains that maintain in-source services like Marriott (NYSE:MAR).

Financial Overview: Growing Revenues, Narrowing Losses

PSA, Inc. provided the following figures from its financial documents for the for the years ended Dec. 31:

2015

2014

Revenue

$1,487,170,000

$1,188,283,000

Net Income

($5,801,000)

($10,566,000)

Click to enlarge

As of March 31, 2016:

Assets

$1,260,124,000

Total Liabilities

$1,173,388,000

Stockholders' Equity

$86,736,000

Click to enlarge

Conclusion: Consider A Modest Allocation

With a 25% increase in revenues and net losses narrowing by 50% as noted above, we are optimistic on PSAV's long-term growth.

Stated risks do include failure to retain current partners and hotel chains and growing acceptance of virtual meeting (teleconference) technologies.

The deal could be a success with a powerful underwriting team. We suggest investors consider a modest allocation.

Disclosure: I/we have no positions in any stocks mentioned, but may initiate a long position in PSAV over the next 72 hours.

I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.