Cardno Limited (ASX: CDD), a global provider of integrated professional community services, presented itself in the Wilsons Rapid Insights Conference held today, i.e. 20 November 2018.
The financial performance of the company has shown significant improvement with the growth of 28% in FY18 EBITDA to $56.2 million, in line with market guidance of $55 million to $60 million. The company has managed to pull off positive earnings growth despite witnessing substantial decline in the EBITDA margin of Asia Pacific Engineering from 10.9% to 7.5%. However, the company has reported continued improvement in the performance of Americas Engineering and Environmental division with EBITDA margin increasing from 1.6% to 4.8%.
Although the industry averages are higher than the margins achieved by the company, Cardno stays optimistic to witness further positive momentum going forward.
On bottom line front, Cardno posted net loss after tax of $14.0 million for FY18, down 263.0% year on year basis. FY18’s loss is underpinned by $32.8 million charges included to reduce tax assets associated with the change in US federal corporate income tax rate from 35% to 21%. Net cash flow from operations of the company increased to $45.7 million with Backlog up by 9.7% to $1,433 million on a like for like basis.
During second half of FY18, the company has undertaken restructuring and operations realignment of APAC division with the view to increase collaboration and revenue opportunities across regions. The company further reported overhaul of the US benefits plan resulting in considerable ongoing cost savings and the return of business cashflows from PPI to positive in Q4 FY18.
In the wake of corporate responsibility, the company has taken up the renovation of the Neighbours Children’s Home as its first project. The project scope covers refurbishment of the entire home which is a small orphanage built in 1978 situated on the outskirts of Kenya. The program includes full renovation with the new roof, new toilets and bathrooms, new plumbing system among others; fixing the home’s water supply to provide access to running water for the first time in years; paying for the entire year’s school fees for all 24 children who reside at the orphanage.
Looking into Fiscal 2019, the company targets to return all divisions to organic growth, expand EBITDA margins across all divisions, increase investments in information technology and digital to elevate the productivity and client services, executing on greater client collaboration across offices, and explore ‘on strategy’ acquisitions to gain access to key markets and skills. The company also intends to re-finance the existing debt facility during remaining FY19 period while continuing its share buy-back program.
Cardno anticipated to invest $15 million to $20 million in capital expenditure on the current existing business next year. Further, Cardno confirmed that the company is operationally and financially in the strongest position it has been in the past three years and it strongly believes that there is a solid basis for both revenue and EBITDA growth in the medium term. Cardno’s share price fell 3.336% to last trade at $1.050 on 20 November 2018. Moreover, in the past one year, the stock has witnessed a negative performance change of 21.38%.
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