Recall Financial Results – Half-Year Ended 31 December 2014
February 17 2015 - 6:26PM
Business Wire
Revenue growth +8.4%; Earnings growth ahead of
revenue growth; Full year guidance reaffirmed
Recall Holdings Limited (ASX: REC), a global leader in document
storage, digital document management, data protection and secure
destruction services today released its half-year results for the
2015 financial year. Financials are presented in USD and
comparisons to the prior corresponding period are made on a
constant currency basis. Financials for the prior corresponding
period are presented on a pro forma basis as if the legal entity
structure of Recall Holdings as at 18 December 2013 (the date of
demerger from Brambles) was in existence for all of H1 FY14.
Financial highlights
H1 FY15ActualFX
H1 FY15ConstantFX
Pro formaH1 FY14Actual FX
Change %ConstantFX
Revenue 427.0 439.4 405.5 8.4 % Underlying EBITDA 101.5 104.7 93.6
11.9 % Underlying EPS (US cents per share) 11.6 Dividend (AUD cents
per share) 9.0
- Strong revenue growth of 8.4%, led by
positive performance in Americas and Asia
- Achieving earnings leverage with 11.9%
EBITDA growth, exceeding revenue growth
- Business portfolio strengthened with
six acquisitions and the sale of SDS Germany
- Revenue growth across all service
lines
- DMS revenue grew 10.3%; carton growth
of 11.1%, net carton growth in all regions
- Improved organic carton growth of 2.2%
(up from 1.7%)
- SDS revenue grew 4.0% (ex. SDS Germany)
supported by a positive turnaround in North America
- Facility Optimisation Program on
track
- Utilisation rates improved
- Capital expenditures less than 7% of
revenue
- Digital strategy successfully
launched
- Dividend determined AUD 9.0 cents;
increased by 12.5%
- Full year guidance reaffirmed
President and CEO Doug Pertz said, “During the first half of the
year, we made good progress on each of our three strategic
objectives of sustainable profitable growth, operational excellence
and innovation for the future. We completed six acquisitions,
improved utilisation rates, commenced execution of the Facility
Optimisation Plan and reduced our capital spend. All of these
factors contributed to driving sustainable, profitable growth ahead
of our target.
“We experienced positive revenue growth across all service lines
and achieved a key milestone in our digital strategy with the
successful launch of the Recall PortalTM in North America and ANZ
regions, which is greatly enhancing our customer experience.
Additionally, we conducted a successful trial of CommandIGTM – our
document and digital information governance and collaboration
solution – with North America and ANZ releases expected this
year.
“Of note this half are the excellent results in our businesses
in the Americas and Asia, with the Americas delivering revenue
growth of 15%, including 6% organic growth, and Asia delivering
organic growth of 13%. The North America SDS business improvement
program performance was on target and supported significant
earnings leverage in the Americas.
"While we were not satisfied with the first-half results in our
Australian business, which was impacted by strategic price
reductions for large customer contract renewals during FY14, fewer
one-time projects and lower than expected activity revenue, we are
pleased that net carton growth was positive. In addition, the
negative impact of contract price renewals is less than the prior
period,” said Mr. Pertz.
Financials
Operating costs increased due to the full period impact of the
re-investment in sales and marketing undertaken over the course of
FY14. Costs also increased due to acquisitions and increased
depreciation and amortisation. Despite increased operating costs,
Recall achieved earnings leverage during H1 FY15, generating EBIT
growth of +10.2% (+6.1% excluding SDS Germany) and EBITDA growth of
+11.9% (+9.4% excluding SDS Germany) on revenue growth of +8.4%
(+8.8% excluding SDS Germany).
Total capital expenditure for the period was $27.5 million,
equivalent to 6.4% of revenue, with $14.5 million invested in
business growth. This compares with capital expenditure in H1 FY14
of $42.3 million, equivalent to 10.4% of revenue. The reduced capex
spend reflects increased rigour and focus on improving ROCI.
Net debt of $558 million increased by $74 million during the
period, less than the total cost of completed acquisitions of $106
million. Net debt to EBITDA stands at less than 2.5x, below the
covenant level of 3.5x on the amended syndicated loan facility
negotiated in October 2014. With continued support from lenders,
the facility was increased to $1.05 billion with a single five-year
term to October 2019.
The Board has determined that the interim dividend will be
increased by 12.5% to 9.0 AUD cents per share. The interim dividend
is expected to be paid on 24 April 2015 to shareholders on the
Recall register on 7 April 2015 with an ex-dividend date of 1 April
2015. The dividend will be franked to 30%, with 70% qualifying as
conduit foreign income.
Outlook
For full year FY15, Recall reaffirms guidance that, on a
constant currency basis and after adjusting for the disposal of the
SDS business in Germany, revenue growth is expected to approach
double digits, and EBITDA growth will be at least in line with
revenue growth. Revenue growth will be stronger in H2 FY15 due to
the impact of acquisitions and on-boarding of large accounts. The
effective tax rate of the group is expected to be at or slightly
below the H1 FY15 rate of 36.7%.
Recall’s outlook is based on assumptions regarding present and
future business strategies and the environment in which Recall will
operate in the future. Recall’s future results are subject to
market conditions and unforeseen circumstances and risks that may
arise. This earnings release, the investor presentation, Appendix
4D and conference call / webcast details are all available on the
company’s investor relations website at recall.com.
About Recall
Recall is a global leader in information management solutions,
offering customers complete management of their physical and
digital information assets with one partner. Recall’s innovative
solutions empower organisations to make better business decisions
throughout the information lifecycle, while keeping regulatory
compliance and eliminating unnecessary resources, time and costs.
Recall services more than 80,000 customer accounts in over 300
dedicated operation centers, spanning five continents in 24
countries. For more information, please visit recall.com.
Investor RelationsRecall Holdings LimitedBill Frith, +61 2 9582
0244Senior Director, Investor
RelationsBill.Frith@recall.comorAmericas, Europe and Asia media
enquiriesMSLGROUPDavid Sprague or Amanda Fountain, +1
781-684-0770recall@mslgroup.comorAustralian media
enquiriesGRACoswayFleur Jouault, +61 405 669
632Directorfjouault@gracosway.com.au
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