The DGL Group Ltd (ASX: DGL) share price spent Friday in the green after the company dropped its earnings for the first half of financial year 2022.
As of the week's close, the DGL share price is trading at $2.71, 0.37% higher than it was at the end of Thursday's session.
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DGL share price lifts as revenue increases 55%
- Revenue of $134 million – a 55% increase on pro forma revenue in the first half of financial year 2021
- Normalised earnings before interest, tax, depreciation, and amortisation (EBITDA) of $23 million – 77% more than the prior period's pro forma EBITDA
- Net profit after tax (NPAT) of $8.5 million – up 70% on the prior period's pro forma NPAT
- Ended the period with a net debt position of $35 million
DGL has completed its first full half as a listed company. And not only has it survived, but it's also seemingly thrived.
The specialist chemicals manufacture, transportation, storage, and processing company floated on the ASX on 24 May 2021.
Last half, it saw all three of its segments contribute to revenue and EBITDA growth.
Its warehousing and distribution leg experienced high demand due to widespread supply chain issues and shipping delays.
Meanwhile, its environmental segment saw its Victorian lead smelter commissioned in June.
Additionally, despite being hampered by shipping and logistical issues when dispatching battery materials to offshore customers, the segment reported a strong conversion of finished goods to sale.
Finally, the company's manufacturing business saw an impressive number of acquisitions.
Over the first half, DGL recorded an operating cash flow of $15 million – 8% lower than the prior period.
It also underwent $41 million worth of acquisitions and $21 million of property purchases, leading the company to finish the half with a net debt position of $35 million.
That's down from a $23 million net cash position at the end of the prior half.
What else happened in the half?
As mentioned, the company engaged in several purchases last half. In fact, it completed a whopping seven acquisitions.
Six of those were integrated into its manufacturing segment. The first – Labels Connect – was acquired in July for around $1.55 million in cash and scrip.
After that, the company acquired Opal, Profill, Aquapac, Austech and AUSblue.
Additionally, it acquired freight carrier service, Shackell Transport.
It also expanded into Queensland, purchasing a storage hub in Townsville which it plans to transform into a chemicals facility, as well as the freehold property of its chemical manufacturing operation in Victoria.
Perhaps unsurprisingly given the company's acquisition action, the DGL share price gained 144% between 30 June 2021 and 31 December 2021.
What did management say?
DGL CEO Simon Henry commented on the company's results for the first half, saying:
Our first half [of financial year 2022] results are excellent.
[They evidence] DGL's ability to successfully execute our strategy to sustainably grow through organic growth and acquisitions of strategically positioned businesses.
All 3 operating segments performed exceedingly well and is a testament to the efforts of our employees across the entire DGL Group.
The continuing trend in on-shoring of international supply in response to the pandemic, is benefiting DGL. We are seeing customers forward ordering and implementing long-term supply planning. This highlights the benefit of being a locally operated, vertically integrated speciality chemicals and dangerous goods company that can assist across the supply chain.
We expect DGL's [quarter 2] momentum to carry into [quarter 3] and [quarter 4] with greater contributions from completed acquisitions.
What's next?
Likely helping boost the DGL share price on Friday, the company reconfirmed its increased financial year 2022 guidance on the back of its strong first half.
Its upgraded earnings guidance predicts revenue of around $343 million for financial year 2022.
Additionally, it expects to report full year EBITDA of around $54 million, before acquisition costs.
DGL share price snapshot
Despite its day in the green, the DGL share price is still lower than it was at the start of 2022.
The company's stock has fallen 10.5% year to date. Though, it has gained more than 150% since it debuted on the ASX last year.
