The Johns Lyng Group Ltd (ASX: JLG) share price is down 32% after the S&P/ASX 200 Index (ASX: XJO) industrial stock reported its FY24 earnings.
At the market open, Johns Lyng shares opened down 28% at $4, and they are currently trading at $3.76.
Johns Lyng share price sinks as financials miss expectations
- Total revenue declined 9.6% to $1.16 billion
- Total earnings before interest, tax, depreciation and amortisation (EBITDA) increased 8.5% to $129.6 million
- Net profit after tax (NPAT) grew 0.8% to $63.3 million
- Final dividend up 4.4% to 4.7 cents per share
- Full-year dividend up 4.4% to 9.4 cents per share
The company's guided revenue was $1.2 billion, and EBITDA was $136.4 million, so it underperformed expectations.
The company's revenue performance was mixed. The insurance building and restoration services (IB & RS) revenue increased 9% to $845.3 million, but the catastrophe revenue dropped 45% to $205.6 million.
The company said it continues to win new clients and contract extensions in the IB&RS division in Australia and New Zealand, and it significantly outperformed the forecast catastrophe revenue.
There was a similar divergence in performance at the EBITDA level. IB&RS business as usual (BAU) EBITDA increased 20.2% to $111.2 million, while catastrophe EBITDA dropped 39% to $27 million.
The company reported an underlying NPAT measure, the normalised business as usual NPAT-A profit, jumped 37.2% to $55.9 million.
What else happened in FY24?
Johns Lyng has continued to execute its growth strategy for the strata services division through organic growth and acquisitions. At just under 5%, it now has the second-largest market share in Australia.
The bolt-on acquisitions of Your Local Strata and AM Strata during the year, as well as the acquisition of SSKB Strata after the end of FY24, helped expand its portfolio to more than 145,000 lots under management across more than 4,800 schemes.
In the second half of FY24, Johns Lyng USA was appointed to a panel for one of the largest US insurance companies, Allstate, with access to a potential 16 policyholders. The Johns Lyng share price rose more than 5% on the day of this announcement.
What did Johns Lyng management say?
Johns Lyng Group CEO Scott Didier said:
We have continued to grow amid a challenging macro-economic environment which is a testament to our people and underscores our defensive business model which gives us confidence that our growing portfolio of businesses will continue to deliver into the future.
FY24 marked an inflection point for our growth in the United States. We grew the number of business partners to 25, launched our core business services lines, and were appointed to AllState's Emergency Response and Mitigation Panel.
What's next for the ASX 200 industrial stock?
Johns Lyng said it's well placed for growth in FY25, with the first quarter "maintaining the positive momentum". It said its solid BAU job registration pipeline has contributed to its expectations of growth.
The company noted that several of its catastrophe contracts continue into FY25, so it is expecting "strong revenue" for this division.
Disappointingly, it's guiding total revenue of $1.13 billion, which would represent a fall of approximately 2.5%. BAU revenue is forecast to increase 15.1% to $1.07 billion.
FY25 total EBITDA is guided to be $123.5 million, which equates to a decline of 4.7%. BAU EBITDA is forecast to increase 7.2% to $119.2 million.
Johns Lyng share price snapshot
Since the start of 2024, the Johns Lyng share price is now down 33%.
As I feared, the Johns Lyng share price did react negatively. But, my long-term optimism about the business has not altered.
