ASX 200 stock Johns Lyng Group Ltd (ASX: JLG) is cratering on Tuesday, falling 20.15% shortly after the market open after the building services company released its 1H FY24 earnings.
At the time of writing, Johns Lyng is the worst-performing stock of the ASX 200 benchmark index.
While the company said it had delivered strong earnings growth, investors appear to be disappointed with the numbers. The ASX 200 stock fell to an intraday low of $5.75 in the first hour of trading.
The Johns Lyng share price opened at $6.65 and is currently sitting at $5.80.
ASX 200 stock spiralling on news of profit drop
Johns Lyng specialises in the rebuilding and restoration of properties damaged in weather events for the insurance industry. It also builds commercial property and offers strata management services.
Here are the key numbers for 1H FY24:
- Sales revenue of $610.6 million (1H FY23: $635.6 million)
- Group earnings before interest, taxes, depreciation, and amortisation (EBITDA) of $69.7 million (1H FY23: $64.5 million)
- Net profit after tax (NPAT) of $31.1 million (1H FY23: $34.1 million)
- Earnings per share (EPS) of 8.47 cents (1H FY23: 9.68 cents)
- Net assets of $460.3 million, including net cash of $53.7 million
- Interim dividend of 4.7 cents per share payable 19 March (fully franked)
- Dividend is 56% of NPAT in line with the payout policy of 40%-60% of NPAT
What else happened in 1H FY24 for this ASX 200 stock?
Johns Lyng said it had a record volume of Business as Usual (BaU) work during the quarter. This resulted in $426.1 million in revenue, up 13.7% on 1H FY23.
However, Catastrophe (CAT) revenue was lower at $120.4 million, down 35% on the record revenue of 1H FY23. However, the company points out that this represents more than 87% of its full-year FY24 forecast. This has led to an upgraded full-year revenue forecast of $177.8 million.
The company said its group EBITDA of $69.7 million includes BaU EBITDA growth of 28.1% to $55 million.
Johns Lyng said it continued to execute its strategy for international growth by expanding its partner network through agreements with Allstate Insurance in the US and Tower Insurance in New Zealand.
What did Johns Lyng management say?
Group CEO and managing director Scott Didier AM said:
We are proud to deliver these strong results for the first half of FY24, which again underscore the resilience of our business model and operational framework.
Our IB&RS BaU work constitutes the cornerstone of JLG's earnings. With an annuity style profile, these earnings instil a confidence in our sustained revenue streams, and we anticipate substantial growth as we continue to enhance our market presence and capitalise on our diversified service portfolio, notably within our burgeoning Strata business.
During the period, we established our fifth strategic growth pillar, Essential Home Services. This followed the acquisition of Smoke Alarms Australia and Linkfire, which significantly progressed our goal of being a full turnkey solution for homeowners, property managers, and Strata managers.
What's next for Johns Lyng?
This ASX 200 stock now has upgraded guidance for FY24.
Johns Lyng upgraded its full-year forecast group sales revenue to $1.207 billion and forecast EBITDA to $129.4 million.
The company said its deep relationships with insurers coupled with the continued expansion of its strata services network "forms the bedrock of the future growth prospects for the IB&RS [BaU] division".
Didier noted an "ongoing and escalating trend" of higher value work in the catastrophe business as a result of prolonged adverse weather events.
Johns Lyng share price snapshot
The ASX 200 building services stock is down 0.33% over the past 12 months.
By comparison, the S&P/ASX 200 Index (ASX: XJO) is up 5.5% over the same period.
