Bastiaan

🧵 $FOUR Deleverage Story — Why the leverage fear is the opportunity? Shift4 needs to keep March buybacks under ~$60M to stay below 3.75x net leverage at Q1 end. But they'll fire the remaining ~$440M in April-May — and STILL show deleveraging by Q2. Here's my full cash waterfall, EBITDA path, and catalyst map. 👇 1/ Q1 2026 — THE PAIN QUARTER Starting cash: $964M + FCF: +$70M (guided) - Buyback Jan-Feb (confirmed): -$195M - Buyback Mar (est ~$60M): -$60M - Bambora acquisition: -$84M - TRA final payment: -$139M = Ending cash: ~$556M Q1 EBITDA: $233M (guided) LTM EBITDA: $1,070M (Q2-25 $230 + Q3-25 $303 + Q4-25 $304 + Q1-26 $233) Net Debt: $3,990M → Q1 Net Leverage: 3.73x ✅ (under 3.75x cap) Three one-time cash drains hit at once: • Bambora: $84M — done • TRA (final EVER payment): $139M — done forever ($440M in future payments also eliminated) • $255M buyback at cycle lows Total Q1 cash drain: $478M. Peak pain. Never this bad again. 2/ Q2 2026 — THE BUYBACK SPRINT Remaining $1B auth: ~$440M Deployed at ~$45 avg = ~9.8M shares Funded by: • Q2 FCF: +$148M • AR factoring: +$150M (same playbook as H2 2025) Q2 cash bridge: $556M + $148M + $150M - $440M = $414M Q2 EBITDA: $330M (my est — guide beat + World Cup) LTM EBITDA: $1,170M Net Debt: $4,132M → Q2 Net Leverage: 3.53x ✅✅ $1B BUYBACK AUTHORIZATION: COMPLETE. 3/ WHY Q2 EBITDA BEATS Management guided FY26 EBITDA: $1,190M My full-year estimate: $1,307M (+9.8% beat). Why? • World Cup starts June 11 — 48 games, 16 US cities • Shift4 processes payments in most major US stadiums • DCC activated for international fans (~300bps extra per txn) • Restaurant + hotel spending surge in host cities My FY26 FCF estimate: $585M (+17% beat on $500M guide). 4/ TOTAL BUYBACK SCORECARD Under current $1B authorization: Q4 2025: 4.3M shares ($305M) — confirmed Q1 2026: ~4.7M shares ($255M) — $195M confirmed + ~$60M Mar Q2 2026: ~9.8M shares ($440M) — remaining auth Total: ~18.8M shares retired 10-K (Dec 31, 2025): FD common (incl unvested RSUs): 86.5M + Preferred: 10.0M = Total FD: 96.5M After $1B auth + ~1.5M SBC issuance: Common: 73.5M (-15.0% from Dec 31) Total FD: 83.5M (-13.5%) 5/ Q3-Q4 2026 — DELEVERAGE ACCELERATES No more buyback ($1B auth exhausted). Pure cash accumulation + AR factoring unwind. Q3 2026: + FCF: +$222M (peak season — summer tourism, stadiums, TFS) - AR factoring unwind: -$75M Ending cash: ~$561M Q3 EBITDA: $409M (peak quarter, WC tail) LTM EBITDA: $1,302M → Net Leverage: 3.06x 📉 Q4 2026: + FCF: +$145M - AR factoring unwind: -$75M Ending cash: ~$631M Q4 EBITDA: $335M LTM EBITDA: $1,307M → Net Leverage: 2.99x ⭐ SUB-3x ACHIEVED This is the re-rating trigger. Sub-3x = credit upgrade territory, institutional buyers return. 6/ 2027 — WHY GROWTH RE-ACCELERATES FY2027 is a clean comp year. Here's what changes: • Global Blue fully annualized in BOTH years — no more acquisition distortion in YoY comps • Underlying organic payments growth: ~15-18% (stable, proven) • European all-in-one terminals live in 15 countries (vs pilot in 2026) • Bambora 140K merchants cross-sell ramp hitting stride • Vectron 65K locations payment monetization scaling • FY26 Q1 was weak comp (SMB softness) — easy lap in FY27 Result: FY27E EBITDA $1,580M (+21% YoY). Every quarter ~+20% clean growth. FY27E FCF: $750M (+28% YoY). 7/ Q1-Q2 2027 — CASH FORTRESS MODE Q1 2027: + FCF: +$115M Ending cash: ~$746M Q1 EBITDA: $290M LTM EBITDA: $1,395M → Net Leverage: 2.72x 📉 Q2 2027: + FCF: +$190M Ending cash: ~$936M Q2 EBITDA: $395M LTM EBITDA: $1,514M → Net Leverage: 2.38x 📉 $936M cash. Conv note prep: done. No stress. 8/ Q3 2027 — THE STRUCTURAL RESET August 1, 2027: $632.5M convertible note REPAID in cash. Q3 2027: + FCF: +$270M (peak season) - Conv note repayment: -$632.5M Ending cash: ~$573M Total debt drops: $4,546M → $3,914M Q3 EBITDA: $490M LTM EBITDA: $1,518M → Net Leverage: 2.20x ⭐⭐ Also: every conv note hedger must cover their short at maturity. ~1-1.5M shares of forced buying on a hard deadline. 9/ Q4 2027 — NEAR INVESTMENT GRADE Q4 2027: + FCF: +$175M Ending cash: ~$748M Q4 EBITDA: $405M LTM EBITDA: $1,580M → Net Leverage: 2.00x ⭐⭐⭐ FY2027 total FCF: $750M Common shares: ~74.0M FCF per common share: $10.14 Up from $5.78 in FY25 — that's +75% in 2 years. May 2028: preferred converts → $60M/yr dividend eliminated. Clean cap structure at last. 10/ THE FULL DELEVERAGE MAP Lev Cash LTM EBITDA FCF Q4 25A: 3.69x $964M $970M — Q1 26E: 3.73x $556M $1,070M +$70M ← pain quarter Q2 26E: 3.53x $414M $1,170M +$148M ← buyback done Q3 26E: 3.06x $561M $1,302M +$222M ← peak FCF Q4 26E: 2.99x $631M $1,307M +$145M ⭐ sub-3x Q1 27E: 2.72x $746M $1,395M +$115M Q2 27E: 2.38x $936M $1,514M +$190M Q3 27E: 2.20x $573M $1,518M +$270M ⭐ conv note gone Q4 27E: 2.00x $748M $1,580M +$175M ⭐ near IG 3.73x → 2.00x in 8 quarters. Leverage nearly halved. 11/ FCF PER SHARE — THE COMPOUNDING MACHINE FY25A FY26E FY27E FCF: $500M $585M $750M Common sh: 86.5M 73.5M 74.0M FD (w/pref): 96.5M 83.5M 84.0M FCF/common: $5.78 $7.96 $10.14 YoY: — +37.7% +27.4% Double engine: • FCF grows 50% ($500M → $750M) • Common shares drop 15% (86.5M → 73.5M by mid-26) Combined = FCF per share up +75% in 2 years. And this is BEFORE any new buyback authorization which is likely in H2 2026. 12/ WHAT THE MARKET SEES vs REALITY Market: 3.7x leverage, scary Reality: peaks Q1, drops every single quarter for 2 straight years Market: GAAP P/E 18x Reality: FCF yield 12%+, PEG 0.24 Market: Complex cap structure Reality: simplification done, TRA eliminated forever, deleverage on autopilot Market: M&A integration risk Reality: same playbook executed 10+ times — Vectron, Bambora, Global Blue, Finaro, Revel, Smartpay Same company. Different time horizons. 13/ CATALYST TIMELINE May '26: Q1 report — 3.73x leverage (better than feared 4.0x+) Jun '26: World Cup kicks off — volume + DCC boost visible Aug '26: Q2 report — guidance raise + $1B buyback complete ⭐ Nov '26: Q3 report — sub-3x leverage almost there Feb '27: FY26 report — sub-3x confirmed, new buyback auth likely ⭐⭐ Aug '27: Conv note repaid — $632M debt gone, hedge shorts forced to cover ⭐⭐⭐ May '28: Preferred converts — $60M/yr dividend eliminated, clean cap structure 14/ AT $41 TODAY — all numbers on FY26 management guide midpoint, zero beat assumed: GRLNF growth: +29% ($2,550M) EBITDA: $1,190M Adj FCF: $500M Non-GAAP EPS: $5.60 P/E: 7.3x EV/EBITDA: 6.0x (based on Dec 31 share count, excl preferred) FCF yield: 14.1% PEG (on 29% GRLNF growth): 0.25 Insider buying: founder bought $13.7M at $44-48 Short interest: 33% of float (12.9% borrow rate) This is ON GUIDE. No beat, no World Cup, no AR factoring assumed. Just the company's own numbers at today's price. Now add my estimates (thread above): +9.8% EBITDA beat → $1,307M +17% FCF beat → $585M FY27E FCF: $750M → $10.14/share At 15x FY27E FCF: $152 (+270%) At 18x: $183 (+346%) Name another 29% grower at 6.0x EBITDA — on GUIDE — with the founder buying $13.7M at the lows. I'll wait. $FOUR