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Smartgroup share price on watch after full year results release

The Smartgroup Corporation Ltd (ASX: SIQ) share price will be one to watch on Thursday.

After the market close on Wednesday the employee management services provider released its full year results.

How did Smartgroup perform in FY 2019?

For the 12 months ended December 31, Smartgroup delivered revenue of $249.8 million and EBITDA of $118.2 million. This was a 3% increase in both metrics over the prior corresponding period.

On the bottom line, the company reported NPATA of $81 million, which was a 4% increase on FY 2018’s profit. NPATA per share came in at 61.5 cents.

Adjusted after-tax operating cashflows came in at 110% of NPATA, with leverage of less than 0.2x.

This allowed the Smartgroup board to declare a final fully franked 21.5 cents per share dividend. This brings the total ordinary dividends for FY 2019 to 43 cents per share, up 4% from a year earlier. It also paid a 20 cents per share special dividend in May.

What were the drivers of its result?

Management put its growth down to its success in servicing clients, which helped it overcome industry headwinds. These headwinds include an 8% decline in private new vehicle sales during 2019 and a regulatory review into add-on insurances.

Over the 12 months Smartgroup achieved organic growth of ~24,700 salary packages and ~3,500 novated leases. Which, after acquisitions and client losses, led to net growth of ~15,500 salary packages and ~3,250 novated leases.

Smartgroup’s chairman, Michael Carapiet, was pleased with the company’s performance.

He said: “Smartgroup remains a customer-focussed organisation with an ongoing program of greater automation and service expansion through partnerships and acquisition. The Smartgroup team have delivered consecutive years of growing customer numbers and another year of record financial results.”

“Our strategy for success includes maintaining exceptional customer service, a culture of innovation and an inclusive workplace. We believe that a productive and committed workforce is a key success factor, as well as being a responsible corporate citizen. To this end, we are very proud to have been recognised as one of only 35 Inclusive Employers by Diversity Council Australia for 2019/20.”

No guidance was provided for FY 2020.

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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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