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Hansen share price on watch after revising FY20 guidance

Technology and Business shares

The Hansen Technologies Limited (ASX: HSN) share price is on watch this morning after the company released its half-year FY20 results.

What did Hansen report?

For the six months to 31 December 2019, Hansen recorded operating revenue of $144.3 million. This was significantly up 28% on the prior corresponding period (pcp) of 1H19. The company noted, however, that this jump in revenue was driven by the contribution from the Sigma acquisition made in June 2019.

Revenue by Sigma in its first full 6-month period since the acquisition totalled $34.9 million. Excluding the Sigma acquisition, Hansen’s revenue came in at $109.4 million, which was marginally lower by $3.0 million compared to the pcp. 

The company’s recurring revenues for 1H20 came in $1.2 million higher during the period, while non-recurring revenues were reported to be $4.2 million lower.

Hansen reported underlying earnings before interest, tax, depreciation and amortisation (EBITDA) of $34.1 million, which was up by 20% on the prior half. However, excluding the Sigma acquisition, underlying EBITDA came in lower at $27.6 million, a decline of 3.2% on the pcp.

Hansen noted that working capital had increased during 1H20 as its receivables significantly increased at the end of the period, primarily due to seasonal invoicing fluctuations. However, this trend is expected to reverse in the second half. The company added that an improved working capital position of $6.7 million had flowed into January this year.

Meanwhile, gross borrowings were reported by the company to come in at $183.1 million at the end of the half.

Hansen declared an interim, partially franked dividend of 3.0 cents per share, with a payment date of 26 March 2020.

Commenting on Hansen’s 1H20 results, Chief Executive Officer Andrew Hansen, said, “the highlight of our first half 2020 was the record number of new project wins right across the company – a reflection of the quality of our products and the expertise of our people.”

“The wins not only set us up for revenue growth in the second half, but provide a platform for growth into the future,” he added.

FY20 outlook

Hansen downgraded its guidance for FY20 operating revenues to now be around the $300 million to $305 million level. This compares to the previously guided range of $305 million to $310 million.

However, pleasingly for shareholders, FY20 guidance for underlying EBITDA was slightly upgraded to a range of $72 million to $77 million. This compares to the previous guidance of $70 million to $76 million.

The company noted that growth in 2H20 is anticipated to be driven by increased revenue flowing through from new business wins, as well as an expected increase in revenue across its existing client base. With this, Hansen is expecting 2H20 operating revenue of $156 million to $161 million.

Hansen further noted that its EBITDA margin (pre AASB 16) is expected to expand in 2H20 from 23.6% to a range between 24% and 25%.

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Phil Harpur has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of Hansen Technologies. The Motley Fool Australia has recommended Hansen Technologies. 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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