Transcrip Interview Michele Corradi - Lindbergh's CEO
DISCLAIMER: This transcript may not be 100% accurate due to software and interpretation. If you have questions, feel free to reach out.
David:
Hi, welcome once again to the Value Hunt Podcast.
Today I'm very happy to be here with Michele Corradi, the CEO of Lindbergh SPA, listed at the Euronext Growth Milan. I'm really happy because Michele will talk to us about all the updates since the last interview we did last year.
If you want to know more about what Lindbergh is doing and what the business model is, you can go to the other interview so you can be more knowledgeable – now I'm missing the word in Italian – for this interview.
Michele, why don't you say a few words before starting with the difficult questions?
Michele Corradi:
First of all, thank you, David, for the hospitality and for inviting me again.
The first interview went well, and this one is the first of the year, and I'm happy to do it with you. As you can see, there are some news, so I'm very happy to be able to talk to you first.
David:
It's an honour, it's an honour. So, let's start right away to avoid losing the momentum.
What does this sale of Lindbergh France mean in strategic terms but also in numbers, knowing that Lindbergh France, even if it had a very large revenue, the margins were not at the level of Lindbergh Italia?
So, why don't you explain a little how you thought about this sale and all the details you consider important?
Michele Corradi:
Well, let's say that the margins were not only not at the level of Lindbergh Italia, but they were not there yet, in the sense that we managed, as you know, after four years that we took control there—three and a half years.
So, we took control of a company there, really in a lot of financial difficulties in 2021, at the end of 2021. We did a fairly important healing operation, which also succeeded, I must say. Sometimes I say we were also quite good because, in the course of a year and a half, we brought a company that did 8-9 million euros in sales and lost 2.5 million a year, to 10.5-11 million in revenues and be at break-even.
So, a first important step in our process of development and healing of France—we did it.
I must say that then, in the last two years, especially in terms of opportunities that we have created—of business here in Italy, for example, in the HVAC sector but not only—we began to ask ourselves if it was actually worth continuing to insist there with a company that did bring revenues but that, for a year and a half, we were struggling to get it to the profitability we wanted.
This was due to a whole series of reasons—our mistakes, maybe also interpretations or readings of the context that were not too well-made, and perhaps a market that we found was maybe not yet ready to take our services as we do in Italy.
For example, I speak about the issue of waste, which here in Italy was a bit of a fly in the ointment for the opening of all the other services that we call around our core business. There, we actually struggled a lot both to implement procedures, processes, authorizations, and also with the final customers to ensure that this sensitivity actually emerged.
This process took a long time. In addition, we faced a very aggressive competitor, which added risk related to staying in that market. I have also written several times and mentioned the issue not only of capital allocation but also of energy.
Managing a company in Italy and another in France, with these dimensions, characteristics, and problems, certainly took away a lot of energy. Considering that the group has defined a growth trajectory over the last two years with new opportunities, we evaluated everything and determined that it was the right time to step back.
We had tried, completed half of our work, but we preferred to focus on other opportunities that we consider not only more promising but also less risky. I emphasize this because I believe it is a fundamental point of our strategy.
There was the risk of losing some big customers because this competitor operated in the market with very competitive rates. If we had lost these customers, we would have returned to a losing ground.
Taking all this into account, along with the fact that there are new prospects, we decided to leave France and focus on other activities and opportunities, especially here in Italy.
The choice was an easy one because, for me, it was a very good decision. I saw it as a natural consequence of our strategy. I have also said before that it is more difficult to sell than to buy. I confirm that—it is more difficult to sell than to buy—but you also need to be clear and know when it is time to leave without wasting more money, time, and energy.
So, we made this decision.
David:
Perfect, very interesting to understand all the thinking behind this sale.
Now, as you were saying, it is more difficult to sell than to buy. Obviously, without entering into information that is not already public, I would like to understand better—who it was, or how you managed this sale. Was it a company already in this business or a fund?
Michele Corradi:
As you know, we provide quite niche services, so there wasn’t a plethora of potential buyers interested in a business that must be known and understood.
We turned to companies that were already more or less in this sector and had an interest. Let’s say that, also for the serenity of our clients—as you know, we have clients both in Italy and France—the choice fell on an operator who was already providing these services. They have been present in the territory for many years and are also known to our clients.
This ensured the continuity of service that we wanted to provide to our customers. So, we didn’t sell to simply accept the best offer, if I may say so, but we also made a conscious choice to protect the services and their continuity for our customers.
From this point of view, we chose the party who, at that moment, could guarantee these things. I feel very calm knowing that the continuity of services for our customers will be maintained.
There will be a period of support for the implementation of the new supplier, which we have guaranteed in the coming months. We will help the new company integrate into operations and contracts with our customers. Gradually, we will stop our efforts there, but there will be a support period, particularly on the IT side.
Currently, we use our platform, so a system migration must take place. We have made ourselves available to work closely with the customers to ensure a seamless transition without disruptions.
David:
I understand, I understand. This is interesting information because, obviously, keeping the customer satisfied is always a priority for any company.
Now, moving for a moment to the opportunities that were created in 2024, I would like to understand the HVAC project, the acquisitions, and the consolidation of the Italian market. What are the plans for the short, medium, and long term?
Michele Corradi:
A statement came out yesterday—we started 2025 with another acquisition in a territory where we are already established and have our expertise.
I can confirm, as I have said many times, that for us, the HVAC sector is certainly a very promising and important sector with many opportunities. We continue to evaluate M&A opportunities, yes, but we also aim to grow organically.
There are many opportunities to attract technicians who currently work independently or those who wish to join a more industrialized reality. This can provide them with more stability and less management burden.
Our growth strategy will continue along both paths—through acquisitions and through decisive organic growth. I confirm that there are many opportunities because, as I have mentioned before, it is a market where there are more buyers than sellers.
From an industrial point of view, in Italy, we are the first to move forward with an industrial consolidation project in this sector, and we intend to maintain this leadership.
Certainly, the numbers for 2024 will reflect the entry of this new business unit and the contribution it will bring. By 2025, this unit will likely become the group’s number one business unit in terms of revenues, at least.
We are very happy and highly motivated. Having freed ourselves from the mental burden of France, we are now fully focused on executing our strategies in this sector, which we believe to be very promising and aligned with what we do.
Our services can, in some way, be delivered to technicians in this sector to make them more efficient. This will allow us to capture additional margins, compared to the costs we incur when making acquisitions.
David:
Perfect, interesting. At this moment, one thing comes to mind because I am a student of serial acquirers—however you wish to call them.
Mainly in Sweden, there are many examples of companies that, as a business model, acquire other companies. There are two distinct models: one does a little more integration, and the other leaves each company on its own.
So, I would like to understand how you are thinking in terms of integration and synergies. What is the philosophy behind the strategy in this field? Obviously, the goal would be to consolidate the market, but I know that these are very small companies, often with names attached for many, many years.
It would be interesting to deepen this topic a little more.
Michele Corradi:
Yes, the market is very large. We did a calculation at the end of last year—the market of active companies in Italy is worth 12 billion euros for the installation, maintenance, and assistance of HVAC devices.
Effectively, we are consolidating companies that tend to be small. The issue of centralization—or leaving responsibility at the local level—is one we have carefully considered.
It is obvious that we are not a fund; we have an industrial project. Having an industrial project means we want to implement certain strategies to make these technicians more efficient. We know what to do because of the services we already provide to our customers in other sectors.
For example, there are projects for centralizing peripheral warehouses, night-shift deliveries, and other activities that can be centralized without touching the operability, local knowledge, or responsibilities at the territory level—from both operational and commercial perspectives. This is certainly something we aim to achieve.
Beyond that, we have additional projects in mind. Being in the sector, we’ve started to notice characteristics we didn’t know before. For instance, some companies are highly seasonal—they work a lot in the winter months and very little in the summer months.
One of our plans is to create a more efficient sharing of technicians. For example, if I have technicians specialized in cold services and others specialized in heat, with adequate training and best practices sharing, I can transfer technicians to where they are needed based on the season.
This, I believe, has significant potential to boost margins. Think about it: some companies specialized in heat generate all their profit in the last four months of the year, while the previous eight months they essentially break even or even lose money. The same structure remains underutilized during this period.
This creates huge opportunities. During the low season, we could also introduce best practices from other group companies. For example, companies that sell additional services can help those that haven’t adopted such practices yet.
All these activities are not aimed at complete centralization. Instead, we see ourselves as facilitators, providing a boost to help companies implement projects. However, the operational and commercial aspects—and the local knowledge—must remain in the hands of the individual centers.
Responsibility for the performance and numbers of each center will remain with the managers. We have no intention of pushing ultra-centralization.
We aim to centralize only non-core activities—those that, if left at the local level, can create inefficiencies. For example, administrative tasks or back-office activities can be optimized through centralization.
Keep in mind that, on average, there is one back-office person for every two and a half technicians. This is an area where centralization—whether physical or organizational at the central level—can yield improvements.
I’ve given you some examples of what we are working on and will implement in the coming months and years as part of our industrial model.
This is our industrial project. We are not a fund that simply buys companies and leaves them to operate independently without coordination.
We are very deliberate about what to centralize and what not to. We are aware of these challenges, but our project is industrial in nature.
David:
Perfect, very interesting to see this evolution of Lindbergh.
Another thing that comes to mind when talking about acquisitions is how you maintain and incentivize the seller or the local manager to stay in the business—or how you replace them in one or two years in case they want to retire or do something else.
Michele Corradi:
Good question.
When we do these acquisitions, we tend to agree with the seller on a period of continuity, which can be one or two years. This gives us time to organize and find a solution.
It is certainly a challenge because these companies are not very large, and the entrepreneur—who has been a reference point for 40 years—is an important figure.
I can tell you that we have encountered different cases, and there is no absolute truth.
In the best situations, there was already someone in the company, or the entrepreneur had created an internal figure who could provide continuity and replace them. In some cases, the entrepreneur had already stepped back, and this internal figure had acquired the necessary skills to move forward independently. In these cases, the transition is easier, as this process had already been initiated before our entry.
In other companies where this preparation has not been done, the first thing we do is assess whether there are internal and local figures who can handle the business areas. Typically, these areas are twofold: operational and commercial.
You need two key figures—even if it’s a single person—to take over these roles. We always try to look internally first, as it’s also a way to motivate and value the people already within the company.
We are a significant group—a group that is growing with many people. Before we look externally for someone to fill the role, we explore if we have someone internally who, with the right training, support, and motivation, can take over and successfully fulfill that role.
If we don’t find the right person internally, we then look to the market. We aim to be attractive to bring in a manager from the sector who can serve as a local reference and lead the company forward.
This is not always easy, as it requires technical skills. However, I can tell you that we are quite attractive in this regard because the market sees us as a structured operator with career growth opportunities for the people inside.
From this perspective, people always make the difference. It’s a very delicate point, but one way or another, we manage it and will continue to do so.
Sometimes it’s also necessary for us to intervene directly for a few months to address certain issues. We may find things that are not as they should be, and in these cases, we invest time to fix them.
For example, Matteo Vaccari, who oversees the development of the sector, often has to travel to various locations to better understand organizational dynamics.
There’s a lot of work involved, but the fact that the old owners agree to stay for a year or two gives us the time to organize. This way, we don’t have to address these issues the day after the acquisition—it’s not an immediate urgency.
We still have time to organize ourselves effectively in this way.
David:
Interesting. I think that, at this moment, there are not many people at Lindbergh who feel bored with the lack of novelty and opportunity.
I also think it’s an interesting option for junior people at Lindbergh to understand that there is a possibility to take on this type of role. Promoting from within, as you said, is always easier and more effective.
Michele Corradi:
Yes, it obviously has its pros and cons.
I have always looked for—and wanted to—grow people who have been in the company for a long time. Young people who have been here for many years and today also cover important tasks bring great satisfaction to me.
It is obvious that, on the other hand, you sometimes pay for the lack of managerial experience, so you have to build it. But it is a great satisfaction to see young people who come in and, after four or five years, already have responsibilities.
I like it a lot—I’ve always liked it a lot. I think it’s also an interesting thing for you to see.
David:
Anyway, to finish this HVAC theme and then move on to the final questions, I would like to briefly understand how you think about the valuation of these businesses.
I understand there is an opportunity and a motivated seller, but how do you think about the valuation? How are the prices on the market? Have they been within your hurdle, or are there times when it is easier or more difficult to acquire these businesses?
Michele Corradi:
As I said before, it is a market where there are more sellers than buyers.
This already puts us in a position to choose because today we have so many opportunities on the table. We have the privilege of being able to select the ones that appeal to us most from many perspectives.
So, it’s not only about valuation. The companies we have acquired so far were within our parameters, and I think we valued them in the right way.
It’s not just about the famous multiple. I also look a lot at cash flow. As you may have seen, in almost all the deals we’ve done, the sellers grant us deferred payments. This is very important for us because it allows for very effective cash management.
I always say that it’s not just about whether the multiple is 0.5 more or less to decide if a deal was good or not. There’s a whole series of conditions that, for me, are sometimes even more important—like having the entrepreneur stay involved for a year or two.
These are all things that need to be considered. While it’s true that people reduce it to “How much did you pay?”, when it comes down to it, it’s not just about the price.
It’s also about how you pay, what support you get in the first year or two, and many other organizational and structural considerations.
In general, I think we’ve done a lot. I wouldn’t say we’ve taken too much advantage of this context, but we’ve tried to make the most of it—and that’s what we will continue to do.
David:
Perfect, yes. I think it’s the right philosophy.
It’s a win-win situation: the seller is motivated, and you are happy to have another small business to consolidate.
Michele Corradi:
The fact that we can choose is a big plus.
We can decide if we want to acquire a more structured company with certain characteristics or, maybe with the same money, acquire three companies in three different territories with different characteristics.
I’m not saying one option is better than the other, but these evaluations are in our hands.
We are the ones who create our destiny from this point of view, and that is a very important thing.
David:
Yes, I totally agree.
The optionality is always interesting to keep an agile company. Then there are times when it will surely be more interesting to buy three small companies or other times when a bigger company would be more suitable.
So I’m glad you stressed this point.
Now, let’s move on to the final questions to conclude this beautiful conversation.
I would like you to tell us briefly what is the current vision for Lindbergh. I know that last time you gave me your vision, but there were still no HVAC, circular economy, and so on. So let me know what is the current version for the future.
Michele Corradi:
I think it’s very simple.
We have our core business, our network management in Italy, our historical clients with whom we will continue to work, and we will continue to invest especially on information systems from this point of view as we have been doing in recent months.
From that point of view, on the Italian market, last year was also a year of stagnation for the macroeconomic context compared to how we were used to having a fairly sustained organic growth from the growth of our customers.
This year the macroeconomic context has changed a bit, so we found ourselves in a moment of stagnation, but we are already planning to start the journey again for 2025 thanks to the commercial activity we have done in the last two years, especially from this point of view, therefore also going to take smaller customers who are starting out.
From this point of view, I am confident that we will continue to deliver our services at an even higher quality level and in the service of our historical clients, who will therefore be able to be absolutely at ease because these services will continue to be delivered on the subject of business unit network management.
And then there are the other two business units that we have already talked about.
We have already talked about HVAC through our control at SMIT, so I don’t want to dwell too much on this, but we have already said it.
And then there is the whole issue of the circular economy, of waste management, so our other historical business unit in Italy, which is precisely the one that we initially called waste management and then we also started to call it circular economy, thanks to the fact that this contract that we made with the LVMH group on the circular economy and the management of all the waste of all the brands of the group in the context of the circular economy in Italy, and this has already given us an excellent boost in 2024 and will certainly give us even more boost in the years to come.
So on this, we also believe in this a lot, we also have some very interesting investment projects here, to be able to distinguish ourselves in the market and to be able to give our customers, which are of this caliber, truly unique and quality services.
So this business unit has already grown very well in 2024 and we expect that in the coming years it will grow at very interesting rates.
So here, if I have to give you a flash, certainly the most important growth in terms of business units, waste management, circular economy, and HVAC.
On the other hand, we will obviously continue to manage our customers, to have an organic growth that I hope can still be satisfactory, also because in the market today we do not have competitors or other target companies that could potentially be the subject of any M&A and other things, so we have to build the market brick by brick.
So let’s start from a good base. We will hardly do more than 50% year on year in that business unit, but I call it a bit our cash cow, so we’ll take care of it.
David:
Well, well, yes, yes, I think it’s a good decision.
At the moment, I just have a little curiosity, and then we move on to the other questions I had programmed. It makes me think—how does a company like Lindbergh, which, even if it is growing a lot and so on, but is still a micro-cap, a company that is not considered very large for listed companies, acquire a client like LVMH?
This fact is really very interesting, so I would like to better understand how you created this bridge. Was it them who contacted you, or how did you acquire a client like them?
Michele Corradi:
Look, we actually started working with some of the brands of the group already in 2012-2013, so the group knew us because we were delivering waste management services to a couple of production sites here in Italy.
They had even contacted us at the time—we were even smaller than we are today. They contacted us on LinkedIn, one of their managers, because they had this particular problem of waste management.
From there, I think it was 2012-2013, now I’m going back in time a bit, and from there, we started working a little for the group and for these companies.
Then, probably in these years, we have also worked well, and when this group project started, we were already delivering services to some of their companies. They already knew us, in short, we were a bit in the pole position, as they say.
I like to think that they chose us also because, over the years, we have always shown reliability, attention, flexibility. I think this too was a key word in their choice.
We are not a big company, too big. This is a project that we have built together with them and are building together with them, in the sense that it is a project that did not exist before.
It’s like you sit at a table with a blank sheet of paper and start writing—what you do, what you don’t do, how you can do it, how you can’t do it. Also, the whole part of pricing—let’s say economic—of this project was born by talking to the client.
This projectual ability and this flexibility that distinguishes us, in my opinion, were the levers that allowed us to be chosen to be their partner in the development of this project.
Then, as you can see, at the beginning it was always by chance, and then, as always, if you are able to prove yourself on the field, show a little bit of credibility, in short, every now and then the results come.
David:
Very, very interesting, and then it is a company that must be studied, so congratulations.
Now I have two questions that were sent by two of my friends. The first is a bit, let’s say, out of the box.
Which car does Michele, the CEO and founder of Lindbergh, drive?
Michele Corradi:
I don’t know, I don’t know honestly what interest my answer can arouse.
However, I have a BMW Series 4, full electric, 50 years old, for a couple of years, a year and a half, and I have to say that I feel very good in the full electric. It was a bit like that, a test that I wanted to do, that happened to me, and I have to say that I feel really good, in short.
Yes, full electric, BMW, 4 Series.
David:
Interesting, interesting.
Anyway, moving on, I would have another question sent by a friend who asks, what keeps you awake at night?
Obviously not personal things, I would say things more linked to Lindbergh, but what are your concerns for the future, and how are you thinking, let’s say, of managing them?
Michele Corradi:
Well, look, I have to say that I sleep a lot. Fortunately, at night I sleep.
Obviously, maybe in some particular period, there are thoughts. A very difficult period—I still remember it—was when we entered France, and the company lost a lot of money.
We still didn’t have full control, for example, of the operation there. So you find yourself in a company that loses a lot of money, you have no control, you don’t understand where these losses come from. Those situations bother me a lot.
When I’m not clear about the context, especially as in that case, there were also losses that had to be resolved as soon as possible.
So there, actually, maybe I also lost some nights, in addition to a few years of life, because then thoughts, the head always goes there. But above all, what makes me, let’s say, a little more—I'm not an apprehensive person—but what makes me a little more apprehensive is when I can’t control one thing, or when I’m not clear about the situation.
For what can be clear in reality, but from a numerical point of view—to say, okay, I have a business that loses, why does it lose, do I have everything under control?
When I don’t have the levers of control, this thing for me should be resolved as soon as possible because it’s like you’re driving a car at 200 km per hour, and your eyes are covered.
This is a risk that I can’t take for the company.
That case is an example. Fortunately, it has happened only a few times in the course of my career. I remember a few times. I made the example of France—I also remember that it was a summer. I was on vacation for a week, and I remember that week I didn’t sleep, so it was not a vacation, just for this thought.
In general, however, I am very serene. I wake up, I sleep. I try to recharge energy so that I can take advantage of it during the day with my colleagues.
David:
Perfect. I believe that this friend of mine didn’t really mean the literal sense of sleep—it would be more that expression, "what keeps you awake," that is, what keeps you worried.
Michele Corradi:
In general, however, I confirm this to you. Let’s say, beyond whether I sleep or not, the thing that gives me the most pressure is precisely not having control of things.
So, let’s say that a good part of my time I spend it to have under control all the activities we do. Under control, at least—I am not a maniac of details—I like to have the understanding of things as they go. But I don’t like to get to the euro of detail; I have never been a big supporter of this.
I know things. I can still know what is good, what is not good, why it is good, why it is not good, and intervene.
So when I don’t have this perception, that’s where I actually lose sleep a little.
David:
Okay, very interesting.
Well Michele, thank you very much for all your generosity with your time, and I hope to continue these conversations when there are interesting things to talk about.
I believe that people are really very interested in Lindbergh, especially this niche of microcap investors and so on.
So I thank you very much, and I hope you enjoyed it as much as I did.
Michele Corradi:
Thank you, David. It is I who thank you for the hospitality. We will keep in touch, and I hope I have answered your questions in the best way.
David:
Thank you very much.