The Johns Lyng Group Ltd (ASX: JLG) share price has been the worst performer on the ASX 200 index on Monday.
In afternoon trade, the building services company's shares are down 10% to $5.94.
Image source: Getty Images
Why is the Johns Lyng share price sinking?
As well being caught up in a broad market selloff, the Johns Lyng share price is being sold off today following some major insider selling.
According to the release, the company's managing director and CEO, Scott Didier, has sold 4 million shares in the company.
While no financial details have been released on the sale, it is worth noting that a couple of trades of 2 million shares were made this morning at $6.25 per share. Based on this sale price, Mr Didier received a total consideration of $25 million for his shares.
Why the sale?
Insider selling rarely goes down well with the market. After all, if you were confident that your shares were going to increase in value, you would surely hold onto them.
However, there is a legitimate reason for this insider selling. The release notes:
Following JLG's acquisition of Reconstruction Experts (RE), effective 1 January 2022, and Mr Didier's appointment to Group CEO, Mr Didier now co-resides between Melbourne and Denver Colorado, the headquarters of the RE business, to oversee and manage the growth of JLG in the USA. This share sale has been undertaken to fund Mr Didier's relocation and living expenses, including the acquisition of a family home in Denver Colorado, along with certain tax liabilities.
The company also highlights that Didier remains a significant shareholder, with this sale representing just ~7.5% of his holding. As a result, the CEO still has 49,314,825 shares, which represents a 19% stake in the company.
Mr Didier also informed the company that he remains a committed leader and shareholder. He commented
I remain incredibly proud of what JLG does every day in Australia and now in the US. The continued flood events in Australia and with events such as Hurricane Ian in Florida have demonstrated what a critical role we play in the catastrophe management chain now globally. We have been honoured to support Australian communities to rebuild following natural disasters and are proud to be able to continue this contribution.
Trading update
Not even a positive trading update has been able to keep the Johns Lyng share price from sinking today.
It revealed that it continues to expect FY 2023 sales of $1,030.9 million and EBITDA of $105.3 million. This represents a 27.4% and 43.3% increase, respectively, over the prior corresponding period.
