ASX 200 stock IPH Ltd (ASX: IPH) is on a trading halt today following two major updates.
First was the release of its FY24 earnings report. The global IP services group also confirmed a major acquisition of Canadian IP firm Bereskin & Parr.
The trading freeze was put in place before the market opened today. IPH shares are currently halted at $6.08 apiece, after gaining 1.1% in the past week.
Let's see what the company posted today.
ASX 200 stock reports FY24 results
Key earnings highlights from IPH include the following:
- Revenue increased 22.9%, reaching $609.9 million.
- Earnings before interest, tax, depreciation and amortisation (EBITDA) rose by 15% to $195.5 million.
- Statutory net profit declined by 5.7% year over year to $60.8 million.
- Underlying net profit increased by 14% to $112.4 million.
- Underlying diluted earnings per share (EPS) of 46 cents, up 5.6% year over year.
- The board declared a final dividend of 19 cents per share, up 8.6% from the previous year.
What else happened in FY24?
The ASX 200 stock had a reasonably strong year in FY24, with net profits up 14% to $112 million. This result also includes a year's worth of contribution from its Smart & Biggar acquisition, completed back in 2022.
Performance in the company's Australia/New Zealand footprint and "increased earnings from Canada" underscored growth. This result drove a 15% growth in EBITDA to $195 million.
Cash flow from operations was up 43% year over year to $132 million, leading to a "cash conversion ratio of 107%".
Management paid down $70mm of debt from these proceeds, leaving it with a leverage ratio of 1.9 times.
However, the company's Asian operations saw a decline in revenue, particularly in Singapore, where a slowdown in patent filings impacted performance.
Meanwhile, revenues in its Canada operations were up 10%, driven by growth in legal revenues from its Smart & Biggar division. This could impact the ASX 200 stock.
What did management say?
IPH CEO Dr Andrew Blattman commented positively on the results:
IPH delivered a strong financial result for FY24. We continued the turnaround in our Australian/New Zealand business from the first half to deliver growth at both the top and bottom line with improved margin. Over the past two years, we have significantly narrowed the gap in terms of our patent filing performance relative to the market which has been a key objective of the Group.
We delivered increased underlying earnings growth in our Canadian business with the acquisitions completed during the year consolidating our market-leading position in that market. The integration of these businesses continues to progress in line with our expectations with synergies on track and contributing to solid earnings growth on a like-for-like basis.
What's next?
Looking ahead, IPH plans to "narrow the gap in patent filings" whilst focusing on growth.
However, in addition to the earnings update, the company also confirmed a major acquisition, advising that it has reached an agreement to buy IP services firm Bereskin & Parr.
The Canadian firm, founded in 1965, filed more than 2,800 patents in 2023 and will now operate under the Smart & Biggar brand.
IPH will buy the firm for roughly $90 million, made of a cash consideration of $63 million, and issue around $27 million of additional stock to finance the remainder.
Bereskin & Parr obviously see value in IPH accepting that percentage of the terms in stock.
ASX 200 stock snapshot
IPH shares are on the backburner today after the company made two highly important announcements for the market to digest.
In the past 12 months, IPH shares have fallen 19.4%.
