Why the Speedcast share price crashed 25% lower today

The Speedcast International Ltd (ASX:SDA) share price has been crushed on Tuesday. Here's what you need to know…

The Speedcast International Ltd (ASX: SDA) share price has had another day to forget following the release of its half year results.

The shares of the provider of remote communications and IT services crashed as much as 25.5% lower to a new all-time low of $1.25 this morning.

When its shares hit that level, it meant that they had lost a disappointing 81% since this time last year.

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What happened in the first half?

In the first half of FY 2019 Speedcast reported a 17.3% increase in revenue to $357.6 million. But on the bottom line it posted a statutory loss after tax of $175.5 million. This was driven largely by a $154.8 million negative impact from the impairment of goodwill relating to the performance of its Non-Government operating segment.

On an underlying basis, which excludes the goodwill impairment, Speedcast reported a 3% lift in EBITDA to $62.2 million and 20% decline in NPATA to $14.7 million.

Net debt increased to a whopping $625 million, which is more than double its current market capitalisation.

Understandably, no dividend was declared in the first half, nor will one be declared in the second half.

Speedcast CEO Pierre-Jean Beylier said: "The first half of this financial year was a very challenging six months for Speedcast. The Board and management are disappointed with the Company's financial performance, the lower than anticipated contribution from Globecomm and slower organic growth. Significant steps have been taken to address our operational performance and return Speedcast to growth."

"We have substantial opportunities across our operating divisions to drive organic growth and deliver strong future outcomes for our customers, staff, suppliers, and shareholders. We have enhanced the flexibility in our debt facilities while having a stronger focus on more tightly managing working capital and capital expenditure to support a positive turnaround in cash flows in the second half of this year," added Mr Beylier.

Looking ahead, the company has reaffirmed its previous guidance for FY 2019 of EBITDA in the range of $150 million to $160 million (including $10 million of leasing reclassification benefit).

Elsewhere on the market today, the Inghams Group Ltd (ASX: ING) share price and the Northern Star Resources Ltd (ASX: NST) share price have both fallen heavily following the release of their respective results.

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. 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 Scott Phillips.

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