The Infomedia Limited (ASX: IFM) share price has fallen 2.2% lower this morning following the company’s release of its full year 2020 financial results. The Infomedia share price has recovered nearly 36% from its March low but is still 14.4% down for the year.
Infomedia is a technology services global developer and supplier of electronic parts catalogues and service systems to the global automotive industry. In addition, Infomedia provides information management and analysis solutions for the Australian automotive and oil industries.
Why is the Infomedia share price on watch?
Investors are selling down the Infomedia share price this morning after the company recorded full year revenues of $94.6 million during FY 2020, a 12% increase over the prior year. This however, was a slowdown on the 16% annual revenue growth achieved during FY 2019.
Earnings before interest, tax, depreciation, and amortisation (EBITDA) came in at $46 million. That was up very strongly by 21% on the prior corresponding period. Meanwhile, net profit after tax (NPAT) grew solidly by 15% to $18.6 million, while cash EBITDA grew by 11% to $21.3 million for FY 2020.
Infomedia ended the financial year in a reasonably solid financial position. Cash and cash equivalents amounted to $103.9 million as at 30 June 2020. However, it should be pointed out that $83.9 million was raised from an institutional placement and share purchase plan during May.
Infomedia Ltd CEO, Mr Jonathan Rubinsztein said:
…In the first half, we benefited from the completion of the rollout of a global contract, a strong cadence of sales across each of the regions, and the progressive development and successful early stage pilots of our Next Gen parts and service platforms.
COVID-19 associated restrictions have resulted in delayed revenue in each of our regions. However, the period has also delivered positive outcomes, including deeper customer relationships and increased focus on leveraging technology and data insights in global automotive aftersales; revenue will follow the current build of contracted sales.
Market outlook and dividend
Infomedia believes that it is well placed to emerge from the challenges of FY 2020, brought on by the pandemic, in a stronger overall position. Pleasingly, Infomedia noted that stronger customer engagement was back for the company during June and July. Also, its current backlog of dealer based and large manufacturer contracts are anticipated to be rolled out later in 2021.
However, pandemic restrictions are anticipated to delay converting some sales opportunities to revenues. Softer revenues experienced during the fourth quarter are anticipated to continue during the first half of FY 2021. Also, COVID-19 restrictions are slowing down efforts to close some international acquisitions currently in Infomedia’s pipeline. As a consequence, Infomedia decided not to provide FY 2021 revenue guidance. However, the tech company believes it is well positioned to grow solidly over the medium term.
Mr Rubinsztein added: “COVID-19 associated restrictions have resulted in delayed revenue in each of our regions. However, the period has also delivered positive outcomes, including deeper customer relationships and increased focus on leveraging technology and data insights in global automotive aftersales; revenue will follow the current build of contracted sales”.
Infomedia declared a final dividend of 2.15 cents per share, partially franked. This brought the total dividend for FY 2020 for Infomedia to 4.3 cents. That was a 10% increase on the prior year.
At the time of writing, the Infomedia share price has edged lower to $1.78. As mentioned, whilst the Infomedia share price has recovered significantly from the March bear market, it is still trading 28.2% lower than its 52-week high.
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Phil Harpur has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Infomedia. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.
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