Saunders International (ASX:SND) in sweet spot with record order book and robust H1 financials

Saunders International Limited (ASX:SND) delivered a resilient performance in the first half of FY22 ended 31 December 2021.

The multi-disciplined engineering and construction company reported revenue of AU$46.4 million and EBIDTA of AU$5.5 million for the reported period. Net profit after tax (NPAT) stood at around AU$2.8 million, an uptick of 3.28% from the previous corresponding period.

Saunders has announced an interim dividend of 1 cent per share for its shareholders, on the back of strong and stable operating performance. The record date is 15 March 2022, while the expected payment date is 11 April 2022.

Related read: Saunders International beefs up balance sheet

Data source: Group update, 24 February 2022

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Strengthened financial position

The results are in line with the earnings guidance provided by Saunders last month on 28 January 2022.

The Group’s operations during the period were impacted by the restrictions and lockdowns imposed by the Federal and state governments. However, Saunders took all safety measures to ensure the safety of its employees, customers, and the communities.

The gross margin of the Group improved as the operational teams continued to deliver projects successfully. The strengthened financial position during the half-year period has been attributed to its proactive culture of working capital management and positive operational project delivery.

The Group recorded a significant increase in its cash and cash equivalents during the period. As of 31 December 2021, cash on hand stood at AU$30.54 million, an increase of nearly 93% with respect to pcp.

The earnings per share or EPS increased to 2.69 cents. Saunders does not have any interest-bearing loans, except for finance leases and insurance premium funding.

Related read: A quick glance at Saunders International’s 2021 projects

Data source: Group update, 24 February 2022

Major operational highlights of 1H FY22

Here are the key operational highlights for the six-month period:

• Saunders managed to record strong safety performance with 3.7 million hours of lost time injury (LTI) free.
• During the reported period, the Group won a defence contract valued at AU$165 million for the construction of fuel storage tanks in Darwin.
• Saunders successfully acquired and integrated Saunders PlantWeave.
• The Group holds a strong balance sheet with an operating cash flow of AU$9.15 million.
• Banking on its excellent operational record, the Group boosted its Bank Guarantee and Surety facilities to AU$25 million from AU$20 million.
• The Group successfully installed seven Geodesic Dome Roofs over the past year, becoming the leading Australian contractor for the construction and installation of such roofs.  

Related read: Here’s how Saunders International (ASX:SND) is tapping Australian defence space 

Strong platform for growth

Saunders’ order book is at a record level of AU$223 million as of 31 January 2022. The size of the work in hand is such that it will underpin the Group’s performance for the remainder of FY22 and FY23.

Saunders is expecting new opportunities on the back of soaring public and private investment in the infrastructure space. The Group remains consistent with short-term opportunities from FY21 and continues to focus on Australia’s Diesel Storage Program, Defence and NSW Government’s ‘Fixing Country Bridges’ program.

Saunders is involved in tendering activities with a value at AU$513 million and has managed to secure a preferred contractor status for projects worth AU$190 million. The project pipeline that is yet to be tendered is valued at AU$516 million. These figures represent immense opportunities for Saunders in the near-term.

Commenting on the outlook, Mr Benson said, “Having secured the major US Defence contract with Crowley, Saunders has entered the second half of FY22 with a strong platform for growth, which will continue into FY23. Although uncertainty remains due to COVID-19, we are confident that our strong order book and the forecast growth in the sectors we operate in will lead to the Group continuing to report strong earnings.”

Saunders has revised its revenue guidance for FY22 in the range of AU$115-130 million. The EBIT is expected to be in the range of 6.5% to 7.5%. The projections are subject to project delays and COVID-19 impacts.

Related read: Saunders International (ASX:SND) riding high on $165M defence contract