The Johns Lyng Group Ltd (ASX: JLG) share price is humming on Tuesday morning after the insurance construction business released eye-opening results before market open.
The stock is currently 3.78% higher at $5.76 a share in early trade, after closing Monday at $5.55 apiece.
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What did the company report?
- Revenue up 43.2% to $1.281 billion
- Net profit after tax (NPAT) up 64.3% to $62.8 million
- Earnings before interest, tax, depreciation and amortisation (EBITDA) up 42.9% to $119.4 million
- Final dividend of 4.5 cents brings the 2023 total to 9 cents, up from 5.7 cents in the 2022 financial year
What else happened in FY23?
Johns Lyng has been busy with corporate activity, completing six acquisitions over the 2023 financial year. Another three takeovers have wrapped up after June 30.
The presentation to investors also noted there are "additional strategic acquisitions under assessment".
The insurance repairer also had much work coming in from natural disasters, which the industry calls "CAT events". With La Nina wreaking havoc, Johns Lyng won contracts arising out of floods in Queensland, NSW, Victoria, South Australia, and Tasmania plus Hurricane Ian in the US and the Auckland cyclone.
The company called it a "record FY23 CAT result" and those contracts would continue to contribute in future financial years.
What did Johns Lyng's management say?
Johns Lyng chief executive Scott Didier said on Tuesday:
Testament to our growth and value of the business today, JLG was admitted to the ASX 200 during the period.
Johns Lyng is first and foremost a people business and these results are a validation of the vision and work ethic of our staff. I thank them unreservedly.
Our IB&RS BaU business remains the bedrock of our financial performance and a 32.2% increase in revenue this year was incredibly pleasing given the additional growth opportunities that lie ahead.
Johns Lyng achieved strong growth in our CAT activity. We are seeing the continuing trends of longer-tail recoveries, coupled with counterparties (especially governments) looking for relationships with service providers that are multi-project and multi-year in nature. Johns Lyng's business model gives us the best opportunity to win a large proportion of this significant and important work.
We have now owned Reconstruction Experts in the US for 18 months. In this short period, we have already leveraged our US network to cross-sell RE's and Steamatic's services and we have commenced the roll-out of JLG's Business Partner equity model. Hurricane Ian was our inaugural CAT response and we expect our work to continue in respect of this major CAT event through FY24 and beyond. We expect to see work emanating from Hurricane Hilary and the devastating Hawaiian fires. There is further detail in our results presentation on our US business, but we are excited about its future prospects.
What's next for Johns Lyng?
The company stated it is in for another "strong year" during the current period, with sales revenue expected to hit $1.176 billion, which would make it an 18.5% increase from 2023. EBITDA is forecast to reach $128 million, which would be 20.1% up from the previous year.
Didier said:
Johns Lyng has a portfolio of defensive growth businesses. They will continue growing annuity style revenues which are largely immune to underlying economic conditions.
Our reported and forecast earnings are defensive and resilient and we have confidence that they will continue to grow.
Johns Lyng share price snapshot
Before market open on Tuesday, Johns Lyng shares had lost 21.4% over the past 12 months. It's close to a 40% loss if you go back to the company's April 2022 peak.
Johns Lyng shares have been an excellent long-term investment though, with the stock returning more than 490% over the past five years.
