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People Infrastructure share price races higher after posting strong profit growth

The People Infrastructure Ltd (ASX: PPE) share price is having a strong finish to the week.

In morning trade the workforce management company’s shares have zoomed 7% higher to $3.40 following the release of its full year results.

What happened in FY 2019?

In FY 2019 People Infrastructure posted revenue of $278.15 million, which was a 26.8% increase on the prior corresponding period.

This was driven by a 22.7% increase in contract hire revenue to $255.9 million, which was supported by solid growth across almost all of the company’s other segments. Management advised that this was the result of growth in both its current and new client base and strong industry tailwinds which are providing further support to its growth trajectory.

And thanks to the expansion of its EBITDA margin from 5.9% to 6.4%, the company reported a 36.8% increase in normalised EBITDA to $17.8 million. Normalised NPATA came in 43.6% higher year on year at $12.05 million or 27.7% higher on a per share basis to 16.6 cents per share. The normalised result adjusts for one-offs such as costs associated with acquisitions and its IPO.

Managing director, Declan Sherman, appeared to be pleased with the company’s performance in FY 2019.

He said: “People Infrastructure is pleased to announce a strong performance for FY19 with the Company continuing to grow significantly throughout the year and delivering a significant increase in earnings to shareholders. The Company continues to deliver on its long term strategy of being a leading provider of workforce solutions to clients across Australia and New Zealand. By continuing to deliver efficient, innovative and cost-effective workforce management services, we have been able to grow both our current and new client base. Strong industry tailwinds are also providing further support to the growth trajectory of the business.”

The good news is that Mr Sherman appears confident on the company’s prospects in the future.

Mr Sherman said:  “People Infrastructure not only delivered on organic growth in 2019, but also expanded its platform in the Health and Community Services division providing an expanded base for anticipated growth. Likewise significant investment throughout the year in the IT sector provides a larger base for growth in that sector. Ultimately, a relentless focus on customer and candidate services and the processes that underpin these services is anticipated to continue to generate further success across the business.”

“The outlook for People Infrastructure is positive with continued organic growth anticipated across the business. People Infrastructure is also enthusiastic about the recent acquisitions that have been completed and further upside this will generate for the Company,” he added.

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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Freedom Foods Group Limited and People Infrastructure Ltd. 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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