The business
Lindbergh is engaged in picking up spare parts at a customer’s warehouse and subsequently delivering it in the vehicles of their technicians who will be repairing elevators and the like, before 7am next morning. Additional services customers can opt for include personal protection equipment, tool testing, special waste disposal (requires a license), and more. These services can be requested through Lindbergh’s mobile app.
The company holds multi-year agreements with its customers, encompassing one or more of the previously mentioned services. Subsequently, technicians have the ability to request the necessary spare parts for the following day, along with any additional services covered by the contract, for which Lindbergh earns fees.
Competitive advantages and competitors
In Italy, they hold a unique position as the sole provider of such services. Competitors solely supply spare parts to a company’s warehouse, without delivering them directly to technicians’ vehicles. Consequently, these technicians are required to visit their warehouse before commencing work. Therefore, Lindbergh is estimated to save technicians an average of 50 minutes per day, as reported by Integrae SIM (sell-side), consisting of a 30-minute drive and 20 minutes spent on gathering necessary items.
Switching costs are typically a factor in this context due to the established and habitual nature of customer operations. Also, 75% of Lindbergh’s clientele has remained loyal to the company for over 5 years, which is likely attributable to a combination of both switching costs and high levels of customer satisfaction.
Moreover, the company enjoys economies of scale. As it acquires more customers, expands its network density, and offers a broader range of services beyond just spare parts, it should be capable of delivering additional services with reduced time and cost, potentially leading to improvements in profit margins.
Management
The co-founders and employees collectively possess more than 60% ownership of the company, which aligns their interests closely with those of the shareholders. Moreover, the CEO demonstrates a strong awareness of past mistakes and actively seeks value-creating opportunities. For instance, the company has been acquiring small technician companies at multiples of 3-6 times EBITDA in recent years. This strategy has not only generated attractive returns on capital but has also contributed to the expansion of their spare parts services, leading to a denser network. These opportunities arise because the owners of these businesses struggle to find successors.
Growth opportunities
Because these services are somewhat distinctive, a well-defined market and market size do not exist. Since the company derives the majority of its revenue from only 12 customers, there is ample potential to expand these services, especially given the absence of direct competitors in Italy.
Nevertheless, acquiring new customers can be a slow and challenging process, as altering established routines often proves difficult for old companies. Yet, armed with a superior value proposition, Lindbergh is poised to steadily expand its customer base going forward.
The French division, which generates approximately as much revenue as the Italian division, has margins of just above zero while the Italian division has over 20% margins. Whereas there are no direct competitors in Italy, there are direct competitors in France. The average revenue per technician per year in Italy is €4.096 in 2022, while in France it’s only €2.307. This is partly explained by the fact that ~50% of the revenue from Italy is from value-adding services while it’s ~20% for France. Therefore, Lindbergh is trying to get a waste disposal license in France and provide additional services to make their offering unique and generate more revenue from high-margin value-added services.
Other value-creating endeavors include getting more customers to buy more value-added services, possible international expansion, and adding even more value-added services to their portfolio.
Risks
The company’s top 15 customers account for 85% of revenue and the largest customer, Jungheinrich, makes up approximately 30% of revenue. However, no customer has ever left the company and nearly 50% of its customers are with the company for over 10 years.
Furthermore, Lindbergh has 2,528,000 warrants outstanding. Every 2 warrants can be exchanged into one share, possibly resulting in 15% dilution by December 2024.
Whereas the French division has been brought to break-even in 2022, the company may be unable to attain a waste disposal license and successfully implement value-added services. In this case, we may not see the hoped for margin expansion of this division.
Valuation
Management expects to generate €26.5m in revenue for 2023 and approx €2m EBIT, indicating an EV/EBIT of just above 10x. Revenue is expected to increase by 9.4% to €29m in 2024 and by 13.8% to €33m in 2025. Margins are expected to increase from 7.5% in 2023 to 13.3% in 2025 due to increasing margins in the French division as the company is able to distinguish themselves by providing the waste disposal and additional services. This means that the company is trading at EV/EBIT ‘24 of 7.4x and ‘25 of 4.9x. If the company keeps its
valuation of 10x EV/EBIT, it would mean a double in 2 years or a 32% CAGR (adjusted for the 15% dilution from warrants).
Key reasons for why this opportunity is available
This company has a market cap of €21 million and over 60% is owned by insiders, which means a float of 6 million shares and average daily volume of 60,000.
Since the creation of the joint venture in France, Lindbergh’s overall margins have been decreasing, making the financials unsuited for screens.
Noordermeer Capital 
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