Savings will cut ShawCor’s debt

Article Excerpt

SHAWCOR LTD. $16 (Toronto symbol SCL; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 70.1 million; Market cap: $1.1 billion; Price-to-sales ratio: 0.8; Dividend yield: 3.8%; TSINetwork Rating: Average; www.shawcor.com) acquired Edmonton-based ZCL Composites in April 2019. That firm makes fibreglass-reinforced plastic underground tanks that store fuel and wastewater. ShawCor paid $308 million for ZCL. Loans needed to fund that purchase pushed up ShawCor’s long-term debt to $474.1 million (as of June 30, 2019). That’s a high, but still manageable, 43% of its market cap. As well, savings from integrating ZCL will free up cash for debt repayments. The company expects annual savings of $8 million by the end of 2019. ShawCor is still a buy for aggressive investors. investors. …

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