Johns Lyng share price sinks despite full-year EBITDA surging 59%

The industrials giant posted a 57% increase in revenue and 40% higher profits for financial year 2022.

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Key points

  • The Johns Lyng share price is falling on Monday, sliding nearly 4% to trade at $7.23
  • It comes after the company posted $895 million of revenue and $38.5 million of after-tax profits for financial year 2022
  • On top of that, it upped its full-year dividend to three cents, bringing its full-year offerings to 5.7 cents per share

The Johns Lyng Group Ltd (ASX: JLG) share price is in the red after the company released its earnings for financial year 2022 (FY22).

The stock continues to slide after opening 3.2% lower at $7.28.

Right now, the Johns Lyng share price is $7.23, 3.86% lower than its previous close.

Johns Lyng Group share price slips on FY22 earnings

Here are the key takeaways from the building services provider's full-year results:

The company's record full-year financial performance was underpinned by its insurance, building, and restoration services (IB&RS) division, which delivered $586.5 million of revenue – a 63.8% increase on the pcp.

Meanwhile, its catastrophe response activity brought in $164.8 million of revenue – marking a 90.4% increase.

What else happened in FY22?

The biggest news from Johns Lyng in FY22 was its acquisition of United States insurance repairs provider Reconstruction Holdings. The deal came with a US$144 million price tag and up to US$58 million of potential earn-outs.

The Johns Lyng share price surged 17% after it returned to trade following a $230 million capital raise, with most of the proceeds earmarked to fund the acquisition and its costs.

It also snapped up numerous smaller businesses, including insurance building services company Unitech and a controlling interest in restoration services company Steamatic Australia.

Finally, the company achieved a number of new contract wins and extensions, contributing to its strong FY22 performance.

What did management say?

Johns Lyng CEO Scott Didier commented on the company's earnings, saying:

We are pleased to once again deliver such a strong result for our shareholders, with significant growth across all key metrics. To do so in such a challenging and unpredictable year highlights that we are largely insulated from traditional market volatility and have a robust value proposition across all our segments.

We have a solid pipeline of work in our IB&RS division that will flow into the coming period. The value we bring in this space is based on our relationships and the outstanding quality of our service offering – the number of contract wins and extensions achieved during FY22 attest to this.

We were also pleased to progress our Strata Services growth strategy, with the acquisition of several bolt-on businesses. We also extended our building and restoration services for strata insurers, which provides us with significant cross-sell opportunities.

What's next?

Johns Lyng is expecting another strong year in FY23, noting the first quarter saw continued positive momentum.

It expects to post $1.03 billion of revenue for FY23, marking a potential 15% year-on-year increase. It also hopes to record $105.3 million of EBITDA – a potential 26% improvement.

The company also vowed to keep an eye out for further acquisitions and strategic growth opportunities across all its segments, as well as opportunities to further grow its presence in the strata market.

Johns Lyng share price snapshot

Despite the company's record financial performance, it's been a rough year for the Johns Lyng share price.

The stock has tumbled 18% since the start of 2022. Though, it has gained 28% since this time last year.

For context, the All Ordinaries Index (ASX: XAO) has slumped 9% year to date and 7% over the last 12 months.

Motley Fool contributor Brooke Cooper has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has positions in and has recommended Johns Lyng Group Limited. The Motley Fool Australia has recommended Johns Lyng Group Limited. 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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