Is it time to buy some Recall Holdings Ltd shares?

Credit: bettybl

The Recall Holdings Ltd (ASX: REC) share price traded mostly flat today despite the company announcing its latest round of half-year results to the market.

For the six-month period ended 31 December 2015, Recall Holdings reported a 6.9% fall in revenue to $US397.6 million and a net profit of $US16.7 million, down 48.2% on the prior corresponding period.

Reporting in US dollars, the company said its results would’ve been better had it not been for currency movements. “During the period, Recall continued to execute its strategic plan and delivered constant currency revenue growth of +6.7%,” the company said.

It highlighted, “underlying EBITDA” growth of 6.6%.  

“We are very pleased with our results for H1 FY16 that reflect our commitment to executing Recall’s strategy and achieving revenue and earnings growth,” Recall CEO, Doug Pertz, said. “The underlying trends are strong and we are managing the short term challenges associated with the delay to the Iron Mountain transaction which, among other things, has meant slowing down acquisition growth.”

The company is subject to a takeover from US-based Iron Mountain Inc. As a result, $16.2 million of the $20.4 million in significant costs incurred during the reporting period were due to the deal.

Recall said it intends to defer the Scheme Meeting, at which time shareholders were due to vote on the deal, from April 17 2016, to April 19 2016.

“The revised transaction timetable takes into account Iron Mountain’s commitments to complete the regulatory reviews, and to meet all other obligations under the Scheme Implementation Deed,” Mr Pertz said. “Iron Mountain has also assured the Recall Board that it is confident that the transaction will continue to result in meaningful synergies and accretion, and that the material shareholder value the transaction should deliver remains achievable.”

The company announced an interim dividend of 9.5 Australian cents per share, up 5.5% in actual currency, or 1.3% in constant currency.

Recall said the strengthening US dollar is likely to impact second-half results, but to a lesser extent than it did in the first half. It said full-year revenue (in constant currency) is expected to be in the high-single digits year over year.

Foolish takeaway

Recall’s results are arguably less share price sensitive than may otherwise be the case if it had not been for the proposed Iron Mountain takeover. Nevertheless, I think the current Recall share price leaves much to be desired. Therefore, at current prices, I’m not a buyer of Recall shares.

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Motley Fool Contributor Owen Raszkiewicz does not have a financial interest in any company mentioned. Owen welcomes -- and encourages -- your feedback on Google+, LinkedIn or you can follow him on Twitter @ASXinvest.

Unless otherwise noted, the author does not have a position in any stocks mentioned by the author in the comments below. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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