The Think Childcare Ltd (ASX: TNK) share price is climbing today after a positive earnings update for the 2020 calendar year (CY20).
At the time of writing, the Think Childcare share price is trading 2.2% higher at $1.62.
Why is the Think Childcare share price higher today?
In this morning’s ASX release, Think Childcare upgraded its guidance for its earnings before interest, tax, depreciation and amortisation (EBITDA).
The company had forecast underlying CY20 EBITDA of $22–23 million in its guidance provided on 2 November. This came as COVID restrictions eased and Victoria emerged from strict lockdown measures.
However, due to better than expected trading in November – driven by a strong recovery in headline revenue and continued roster management and cost controls – EBITDA for the year through 30 November came in ahead of expectations.
Think Childcare now expects that with the overall improvement in business conditions in December, underlying EBITDA for the full 2020 calendar year will come in at $24–25 million.
The company advised its cash position and facility headroom are strong, with a closing cash position as at 30 November of $22.1 million.
Think Care also provided an update on the 23 November buyout proposal from Busy Bees Early Learning Australia for an all cash consideration of $1.75 per share. (At time of writing the stock is trading for $1.62 per share.)
The company noted that Alceon Private Equity, which had proposed $1.35 per share on 16 November for its own buyout plan, hasn’t submitted a counter proposal and doesn’t intend to submit a binding proposal. Think Care is still in discussion with Busy Bees, but notes there is no certainty that the proposal will eventuate into a binding transaction.
Think Childcare share price and company snapshot
Think Childcare Group owns, operates, and manages childcare centres in Australia.
When much of Australia went into lockdown and some childcare centres were forced to close earlier this year due to the coronavirus pandemic, Think Childcare’s share price plummeted 54% from 27 February through to 25 March.
Shares reached a 12-month high of $1.66 on 27 November before retracing slightly to the current $1.62 per share.
Year-to-date the Think Childcare share price is up 14%. By comparison the broader All Ordinaries Index (ASX: XAO) is up 2% in 2020.
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Motley Fool contributor Bernd Struben has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.
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