Recall Announces Facility Optimisation Program 2
June 21 2015 - 7:30PM
Business Wire
Provides M&A update
Confirms earnings guidance for FY15
Recall Holdings Limited (ASX: REC), a global leader in
information management, today announces the implementation of the
second Facility Optimisation Program (FOP 2), provides an update on
M&A activity, and confirms its earnings guidance for FY15.
Recall and Iron Mountain are working closely to prepare the
regulatory filings required in relation to the Scheme
Implementation Deed announced June 8, 2015, and progress is being
made in line with expectations. The investment programs, related
charges, expected EBITDA contribution from the items noted below,
and the anticipated FX impact on FY15 financial results are
included in the base business assumptions used by Iron Mountain
during the transaction due diligence process.
Facility Optimisation Program 2 (FOP
2)
FOP 2 builds upon the first Facility Optimisation Program (FOP
1) announced in June 2014, which is progressing well and in line
with the original plan. Since announcing FOP 1 and as communicated
in our H1 FY15 results, Recall has sought new opportunities that
will further improve facility utilisation, drive operational
efficiencies and reduce real estate costs. FOP 2 identifies such
opportunities in Australia, Brazil, France, Denmark and the United
Kingdom. It focuses on the Document Management Services (DMS)
service line and includes exiting 16 facilities and the development
of four new custom built facilities. Recall customers will not
experience any interruption to their service while FOP 2 is being
implemented, and the highest level of service and security will
continue to be provided. FOP 2 is due to be completed by September
2017.
Once fully implemented, FOP 2 will improve annual EBITDA by over
US$6.5 million, with savings mainly associated with reduced
property and operational costs. The EBITDA impact in FY16 will be
negligible, in FY17 it should be approximately US$4 million, with
the full US$6.5 million benefit realised in FY18 and beyond. This
program has targeted IRRs in excess of 20 percent.
A restructuring charge of approximately US$16 million will be
incurred in the period ended June 30, 2015 as a result of FOP 2.
The restructuring charge comprises a non-cash cost of approximately
US$5 million relating to surplus plant and equipment and net cash
costs of approximately US$11 million, which principally relate to
lease exit, relocation and other operational costs that will be
incurred during the course of FOP 2. Cash incentives of US$8
million, that are not considered part of the restructuring charge,
will be received as lease incentives for new facilities entered
during the course of FOP 2. Accordingly, excluding capex, the net
cash cost will be approximately US$1 million in FY16, with a total
net cash cost of US$3 million for the project.
FOP 2 will require capex investment of US$30 million, primarily
related to additional racking to accommodate the consolidated
holdings. Of this amount, US$22 million is expected to be incurred
prior to the end of FY16.
M&A update
In H2FY15, Recall has completed six acquisitions, with another
in Brazil scheduled to close at the end of June. These acquisitions
include three in the U.S., two in Australia and two in Brazil.
Purchase price consideration for the seven acquisitions will be
approximately US$67 million, and while these acquisitions will not
be material to FY15, they will contribute approximately US$27
million to FY16 revenue.
For the full 2015 financial year, Recall will have closed 13
acquisitions, for total purchase consideration of US$175 million,
which are expected to generate revenue in FY16 of US$58 million.
The average acquisition EBITDA multiple, post synergies, of these
transactions is less than 6.5x. Recall’s acquisition pipeline
remains strong and a number of deals consistent with our core
business strategy are at an advanced stage, and are expected to
close in the coming months.
Earnings guidance confirmation
Recall expects FY15 revenue growth, in constant currency terms,
to be approximately 7-8 percent, after adjusting for the disposal
of SDS Germany, which was owned by Recall for the first five months
of FY15. Consistent with guidance, FY15 EBITDA growth, in constant
currency, is expected to be approximately 10-12 percent, (8-10
percent excluding SDS Germany) with FY15 EBITDA expected to be
between US$215 million - US$220 million, in constant currency.
As expected, FY15 results on an actual FX basis will be
negatively impacted by approximately 7-9 percent, as compared to
constant currency, due to the significant strengthening of the USD
during FY15, primarily against the AUD, Euro and Brazilian
REAL.
About Recall
Recall is a global leader in information management solutions,
offering customers complete management of their physical and
digital information. Recall’s innovative solutions empower
organizations to make better business decisions throughout the
information lifecycle, while assuring regulatory compliance and
eliminating unnecessary resources, time and costs. Recall services
more than 80,000 customer accounts in over 300 dedicated
facilities, spanning five continents in 24 countries. For more
information, please visit recall.com.
View source
version on businesswire.com: http://www.businesswire.com/news/home/20150621005025/en/
For further information, please contact:Recall Holdings
LimitedInvestor RelationsBill Frith, +61 2 9582 0244Senior
Director, Investor RelationsBill.Frith@recall.comorUS Media
enquiriesMSL GROUPDavid Sprague or Amanda Fountain,
+1-781-684-0770Recall@mslgroup.comorAustralian MediaGRACoswayGeoff
Elliott, +61 2 8353 0420gelliott@gracosway.com
Recharge Metals (ASX:REC)
Historical Stock Chart
From Jun 2024 to Jul 2024
Recharge Metals (ASX:REC)
Historical Stock Chart
From Jul 2023 to Jul 2024