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Fundamentals

Size Analysis: In summary, there has been a notable decline of new public companies entering the market from the last quarter to 2Q2023. Specifically, there are now 49 less public companies compared to the previous quarter. However, it's essential to highlight that despite this decrease in the number of public companies, the market capitalization has experienced a growth, rising from $3.31 trillion to $3.37 trillion. This represents a significant and noteworthy increase in market value.

Public Market Dynamics: The industry's performance improved over the quarter, with the top 20 companies experiencing a slight decline but still staying ahead of the market. In contrast, the bottom 20 companies declined in performance and continued to lag behind the SPX. The debt-to-equity ratio decreased slightly, while the interest expense-to-revenue ratio increased slightly over the quarter. Net profit margin improved during the quarter, while gross margin declined slightly. Operating expenses as a percentage of revenue also decreased. Overall revenues increased during the quarter.

Transaction Trends: There were a total of 596 transactions during the quarter, lagging behind the transaction figures observed in 2022 Q1. Cumulative transaction values have also continued to decline over the past few quarters. The majority of transactions occurred in the Power and Electricity space. The number of public offerings outpaced private placements, with public offerings higher relative to the last quarter, while private placements declined over the quarter.

Dispersion Insights: Asia emerged as the main contributor to revenues, followed by North America and Africa. M&A activity declined compared to the last quarter, with the highest activity in Asia, followed by Europe. Public offerings and private placements were highest in North America, followed by Asia.

Methodology

We screened CapitalIQ using its industry classification. Transactions were filtered by announced date within the last 3 years. Companies were filtered by having a public company type. The main industry selected was "Utilities". CapitalIQ sector "Software and Services" was used to screen the database. CapitalIQ subsectors "Electric Utilities", and "Independent Power and Renewable Electricity Producers" were used to determine our "Power & Electricity" and the rest to was included into our "Gas, Water & Multi-Utilities" category. Our sectors were defined by the CapitalIQ primary industry classification.

THIS REPORT IS NOT TO BE USED OR CONSIDERED UNDER ANY CIRCUMSTANCE BY ANYONE AS INVESTMENT ADVICE

This research report is for informational and discussion purposes only. Information presented here is not investment advice of any kind to any person and does not constitute a recommendation as to the purchase or sale of any interests or as to any other course of action. General, financial, and statistical information concerning the details of this report and related industry are from sources Spaulding Financial believes to be reliable.

Spaulding Financial has accurately reflected such information in this research report; however, Spaulding Financial makes no representation as to the sources’ accuracy or completeness and has accepted this information without further verification. Neither all nor any part of the content of this report may be conveyed to the public through advertising, public relations, news, sales, mail, direct transmittal, or other media without the prior written consent of Spaulding Financial. Spaulding Financial ’s research is as of the date reported herein.

Spaulding Financial has no affiliation with any of the companies comprising the industry used as a basis for research in this report, nor does Spaulding Financial hold any investments in the companies listed herein. The content of this report may be used, in part, as a basis for any work that Spaulding Financial performs for you in the future at the sole discretion of Spaulding Financial. All data is from Capital IQ database.

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