Release Date: August 30, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Revenue increased by 21% to $2.3 billion, driven by acquisitions and organic growth in the US and Australia.
- APM supported over 2 million people globally in FY24, demonstrating a significant social impact.
- The company secured important new contracts, including in Canada and the United States, contributing to future growth.
- APM's performance in employment services remains strong, with 17% of contracts rated high, nearly three times the industry average.
- The company has secured financing out to 2030, removing refinancing risks and positioning it well for future challenges.
Negative Points
- Underlying EBITDA declined by 23% to $280 million, impacted by lower contributions from employment services in Australia and the UK.
- Underlying NPATA decreased by 47% to $95 million, affected by higher interest rates and lower employment services revenue.
- The company faced a non-cash impairment charge of $269 million related to goodwill and customer contracts from historical acquisitions.
- Revenue from employment services in Australia and the UK declined, offsetting gains from other segments.
- Margins in North America were down due to a mix shift to lower-margin contracts and new contract wins.
Q & A Highlights
Q: Can you provide more details on the financial performance for FY24?
A: Michael Anghie, Group CEO, highlighted that revenue increased by 21% to $2.3 billion, primarily due to acquisitions and organic growth in the US and Australia. However, underlying EBITDA declined by 23% to $280 million, and underlying NPATA fell by 47% to $95 million, mainly due to challenges in employment services in Australia and the UK, as well as higher interest rates.
Q: What were the key drivers behind the revenue growth in North America?
A: Matthew Cooper, CFO, explained that North America's revenue grew significantly by $426.7 million to $1.1 billion, driven by a full year contribution from the Equus acquisition and strong organic growth in Canada, particularly from the Ontario employment transformation program.
Q: How has the employment services segment performed, particularly in Australia and the UK?
A: Michael Anghie noted that the employment services segment faced challenges due to lower client flows and a higher proportion of long-term unemployed clients requiring more support. This contributed to softer financial performance in these regions.
Q: Can you elaborate on the impairment charge and its impact on the financials?
A: Matthew Cooper stated that the impairment charge of $269 million related to goodwill and customer contracts from historical acquisitions. This non-cash impairment is excluded from underlying results and covenant calculations and does not impact the consideration under the proposed scheme.
Q: What are the strategic priorities for APM moving forward?
A: Michael Anghie emphasized the focus on investing in people and processes, mobilizing recent contract wins, optimizing the business for the current environment, and driving efficiency. The company aims to continue delivering exceptional service and improving balance sheet strength.
Q: How is APM addressing the current challenging environment?
A: Matthew Cooper mentioned that APM has secured financing out to 2030 through a committed facility with Goldman Sachs, removing refinancing risks and positioning the company well to weather the current environment.
Q: What is the status of the proposed scheme of arrangement?
A: Michael Anghie informed that the scheme booklet has been dispatched, and the APM Independent Board Committee unanimously recommends shareholders vote in favor of the proposed transaction. The shareholder meetings are scheduled for September 18, 2024.
Q: What are the expectations for future revenue and earnings margins?
A: Michael Anghie highlighted the intentional strategy to build a balanced revenue mix, with 67% of revenue now coming from cost-plus, fixed-fee, and fee-for-service contracts. This diversified footprint is expected to generate more predictable and stable revenue and earnings margins going forward.
Q: How has APM's performance been assessed by the department in workforce Australia contracts?
A: Michael Anghie noted that APM continues to differentiate itself as a high-performing provider, with 17% of contracts rated high, nearly three times the industry average. The company focuses on improving low-rated contracts to ensure better performance.
Q: What are the key areas of focus for APM's health and well-being business?
A: Matthew Cooper mentioned that the health and well-being segment experienced modest revenue growth, driven by contributions from everyday independence and organic growth in hearing health businesses. The focus remains on supporting growth and improving margins in this segment.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
