Recall Holdings Ltd (ASX: REC) – an information management giant spun out of Brambles Limited (ASX: BXB) in late 2013 – has reported a solid set of half-yearly results.
In the six months to 31 December 2014, profit jumped 54% to $US325 million as a result of a significant increase in sales revenue. Here are five key takeaways from today's report:
- A dividend of nine cents per share was declared, up 12.5% (expected to be paid on 24 April 2015)
- Revenue jumped 139% to $US427 million, bolstered by six recent acquisitions worth a combined $US106 million.
- The company's North American and Asian businesses experienced strong organic revenue growth of 6% and 13%, respectively, during the half.
- Underlying EBITDA – earnings before interest, taxes, depreciation and amortization – grew 11.45% to $US104.7 million on a constant currency basis.
- Full year guidance was confirmed, with management expecting revenue growth to approach double digits, whilst EBITDA is forecast to at least be in line with revenue (on a constant currency basis, excluding a disposal of the SDS business in Germany).
Commenting on the results 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."
At reporting date, net debt stood at $US558 million, an increase of $US74 million, however its balance sheet remains well within banking covenants.
Should you buy Recall?
Shares in Recall have rallied 64% in the past year following a takeover offer from larger rival, Iron Mountain, which was subsequently rejected. Currently around $7.45 per share, it trades on a forecast price-earnings ratio of 23, price to book ratio of 3.6 and dividend yield of 2% with partial franking.
In my opinion although its future looks bright, at today's prices, its shares appear fully valued and are not a buy. However whilst I'm not rushing out to buy Recall shares at today's prices, there is one stock I recently bought for my family's portfolio which is still an excellent buy. It offers growth at a reasonable price and a juicy fully franked dividend – which it increased today!
