Why did this ASX All Ords share just crater 23%?

Investors haven't received the update well.

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Key points

  • DGL Group posted its FY22 results today 
  • The company saw growth from its pro forma FY21 results across all operating divisions 
  • DGL did not provide guidance today and instead will provide an FY23 outlook in its annual meeting 

Australian markets are off to a poor start on Wednesday, with the S&P/All Ordinaries Index (ASX: XAO) down 32 basis points to 7,207 at the time of writing.

Meanwhile, the DGL Group Ltd (ASX: DGL) share price has faltered more than 23% in trade this Wednesday following the release of its FY22 results.

DGL Group shares slide in first year of listing

Key takeouts from the All Ords share's results include:

  • Sales revenue of $369.8 million, up 88% on pro-forma FY21 revenue and up 4% on guidance
  • Underlying EBITDA of $65.6 million, a gain of 133% on pro-forma FY21, and 1% above prospectus guidance
  • Underlying earnings before interest and tax (EBIT) of $48.4 million an increase of 188% on pro-forma FY21 results
  • Underlying net profit after tax (NPAT) of $33.6 million, up 197% on pro-forma FY21 profit
  • $25.4 million in cash on the balance sheet with $66 million in net bank debt
  • Nil dividends paid

What else happened last period for DGL Group?

Growth was observed across all operating segments and throughout the income statement for FY22.

This included chemical manufacturing, warehousing and distribution and environmental solutions, up 141%, 54% and 39% year on year respectively.

Performance was underlined by higher demand for DGL's services, higher selling prices, and sales revenue contributions from acquired businesses.

In addition, and "following inappropriate public comments expressed by a senior company representative", the board "engaged culture expert Rhonda Brighton-Hall and her firm MWAH to conduct the independent review".

"The review found DGL has a diverse workforce and a positive and inclusive culture that is both hard-working and ambitious. Trust and respect were found to be consistent across the business."

Management commentary

Speaking on the performance, DGL Founder and CEO, Simon Henry said:

Building on our strong momentum in the first half of 2022, we have delivered exceptional results for the 2022 financial year with growth across all earnings metrics. This is a testament to our ability to grow sustainably by offering a fullservice solution for our customers, achieving further economies of scale, and identifying appropriate acquisitions.

All three of our operating divisions performed exceedingly well, benefitting from our deep customer relationships and robust demand as customers continue to onshore their chemical supply chain and hold onto more inventory.

Our deep supplier relationships, capabilities across the supply chain and robust balance sheet mean we are well positioned for another successful year in FY23.

What's next for DGL Group?

DGL noted many uncertainties in its operations and operating environment looking ahead. With that in mind, it did not provide further guidance for FY23.

Instead, the All Ords share will provide a trading update at its annual general meeting.

Motley Fool contributor Zach Bristow 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 DGL Group Limited. The Motley Fool Australia has recommended DGL 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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