The Alliance Aviation Services Ltd (ASX: AQZ) share price has slid 2.3% lower on the ASX after announcing its full-year results after market close yesterday.
Highlights from Alliance's results
Alliance announced a record profit before tax (PBT) result of $32.8 million for the year ended 30 June 2019, an increase of $6.7 million or 25.7% on the prior corresponding period (pcp).
The company's net profit after tax (NPAT) for the same period increased by $4.6 million to $22.7 million (2018: $18.1 million).
Alliance said that it continues to further enhance its contract retention reputation by successfully negotiating a number of renewals containing improved terms.
A record number of 38,026 flight hours (2018: 34,612) were operated during the year utilising up to 38 aircraft (2018: 33) while management said the full-year effect of fleet additions in the year will not be seen until FY2020.
Total revenue from operations increased by 11.9% or $29.4 million during the financial year to $277.1 million (2018: $247.7 million).
Alliance said all flying revenue streams reported increases during the year, with contract revenue accounting for 40% (or $12.3 million) of the increase.
Wet lease contributed $8.3 million to the increase in flying revenue with charter and regular passenger transport (RPT) revenue contributing $5.4 million and $5.1 million respectively.
However, it was not all good news for the company as its operating cash flow fell compared to the previous financial year, primarily due to significant base maintenance and entry into service program where a number of operating cash flow items are subsequently capitalised as assets.
Alliance's net debt reduced to $50.4 million in the year, bringing its leverage ratio to 0.90 (2018: 1.09).
What's ahead in FY2020 for Alliance?
Alliance said that scheduled services are expected to increase for a number of resource sector clients as a result of high commodity prices and increasing mine production levels in FY2020.
According to the company, tourism services continue to increase each year and Alliance will commence flights into Western Australia from Victoria in the new financial year, the newest addition to its tourism offering.
Wet lease revenue is expected to increase in the financial year, with charter operations expected to continue to benefit from the increase in available capacity due to the additional aircraft being entered into service.
Overall, the results aren't all bad for Alliance with upwards trends across its main earnings metrics, however, investors appear wary of reduced growth outlooks or higher capital expenditure which has hurt the Alliance share price this morning.
