Tag: Motley Fool

Tassal Group Limited (ASX: TGR) shares are on the rise this morning following the company’s release of its FY21 first-half (1H21) results. At the time of writing, the Tassal share price has jumped 1.51% to $3.37.

The salmon farming company has had a slow start to 2021 with the Tassel share price trading flat for the year to date. Let’s take a look at Tassal’s 6-month update.

What’s driving the Tassal share price?

The Tassal share price is edging higher in morning trade despite the company reporting statutory net profit after tax (NPAT) of $27.6 million for 1H21. This compares to a $40.8 million NPAT reported for 1H20.

According to Tassal’s update, its 1H21 cash flows were materially impacted by lower export market returns for salmon, with the price $2.19kg lower than in 1H20.

The company’s statutory earnings before interest, tax, depreciation and amortisation (EBITDA) was $77.5 million, a 4.3% drop compared to 1H20 EBITDA of $81 million.

However, in positive news, Tassal’s operating EBITDA jumped 18% to $78.4 million, compared to $66.5 million during 1H20.

An FY21 interim dividend of 7 cents per share, unfranked, will be paid on 30 March 2021. This is 22.2% less than the prior corresponding period’s interim dividend of 9 cents.

CEO comments

Commenting on 1H21 activities and what lies ahead, Tassal Managing Director & CEO Mark Ryan said:

Significant uncertainty caused by COVID-19 is expected to continue for the remainder of FY21. Tassal’s strategy of driving increased domestic per capita consumption is well positioned to align consumer needs both during and post-COVID-19.

While Tassal is not immune to global and local forces outside of its control, our key strengths that will assist us [to] mitigate this environment – our diversification strategies across customers and consumers, growing and processing areas, and species and products – combined with our focus on sustainability, position the Company as best it can to navigate the market issues that COVID-19 continues to present. 

Foolish takeaway

Over the past 12 months, the Tassal share price has shed more than 23% of its value. Tassal shares fell as low as $2.90 during the March 2020 bear market before rebounding to their current levels. However, the Tassal share price is still trading 28.3% lower than its 52-week high.

Based on the current share price, the company commands a market capitalisation of around $703 million.

More reading

• These are the 10 most shorted shares on the ASX
• Here are the 10 most shorted shares on the ASX
• GameStop effect: 3 more shorted ASX shares that could skyrocket
• Huon (ASX:HUO) share price sinks on profit downgrade and write-downs
• Here are the 10 most shorted shares on the ASX

Motley Fool contributor Gretchen Kennedy 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.

The post Here’s why the Tassal (ASX:TGR) share price is jumping today appeared first on The Motley Fool Australia.

from The Motley Fool Australia https://ift.tt/3jRlIVv

In late morning trade the S&P/ASX 200 Index (ASX: XJO) is on course to record another solid gain. At the time of writing, the benchmark index is up 0.5% to 6,904.2 points.

Four ASX shares that are climbing more than most today are listed below. Here’s why they are charging higher:

BHP Group Ltd (ASX: BHP)

The BHP share price is up 2.5% to $46.88 following the release of its half year results. For the six months ended 31 December, the Big Australian reported a 15% increase in revenue to US$25.64 billion and a 21% jump in underlying EBITDA to US$14.7 billion. This led to the mining giant declaring an interim dividend of US$1.01 per share (~A$1.30 per share), which was up 55% on the prior corresponding period.

Codan Limited (ASX: CDA)

The Codan share price has jumped 6.5% to $13.23. Investors have been buying the electronics products company’s shares following the announcement of an acquisition. Codan has entered into an agreement to acquire Domo Tactical Communications (DTC) from a private equity company. DTC is an established technology provider for high bandwidth wireless communications with specialist capabilities in MIMO Mesh networks. The company will pay US$88 million (A$114 million) upfront.

Seven West Media Ltd (ASX: SWM)

The Seven West Media share price has jumped 17% to 58.5 cents. Investors have been buying the media company’s shares after it announced a letter of understanding in relation to a long term partnership with Google. The agreement will see Seven West Media provide news content to the Google Showcase product which launched in Australia in early February.

Zip Co Ltd (ASX: Z1P)

The Zip share price has continued its incredible run and is up a further 12% to $14.17. This is despite there being no news out of the buy now pay later provider. Investors have been fighting to get hold of the company’s shares on the belief that they are undervalued in comparison to its peers. In addition, the prospect of a secondary listing in the United States has gone down well with investors.

More reading

• BHP (ASX:BHP) share price higher after huge first half profit and dividend growth
• 5 things to watch on the ASX 200 on Tuesday
• Up 2%: Is the BHP (ASX:BHP) share price a buy?
• The Novatti (ASX:NOV) share price rocketed 38% today
• Morgan Stanley: ASX earnings season is topping expectations

James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of ZIPCOLTD FPO. 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.

The post Why BHP, Codan, Seven West Media, & Zip shares are charging higher appeared first on The Motley Fool Australia.

from The Motley Fool Australia https://ift.tt/3rYav8p

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

Many restaurant chains and food companies got squashed by the pandemic in 2020. But their businesses — and their stock prices — could be headed for a comeback this year. Beyond Meat Inc (NASDAQ: BYND) was an initial public offering (IPO) darling in 2019, but its growth was undercut as the foodservice industry slumped amid the crisis. Shake Shack Inc (NYSE: SHAK) was also making progress until COVID-19 hit. But what investors need to think about now are their future prospects.

Modern takes on old classics

Beyond Meat, maker of plant-based patties and other meat alternatives, had a standout debut on the stock market in April 2019, gaining 250% in the first two months. Soon after, though, the stock traded down sharply, and is yet to reach its all-time highs.

The company has an exciting product line and strong partnerships with retailers such as Walmart and Target. Sales were strong before the pandemic, growing 212% in 2019’s fourth quarter.

Revenue slowed significantly in 2020, and it wasn’t just the closures of restaurants and catering facilities that put a dampener on its foodservice business. Its retail sales diminished as well. In the third quarter, revenue increased 2.7% driven by a 39% rise in retail sales. That was nothing to sneeze at, but was still a huge decline from pre-pandemic sales levels.

Shake Shack’s sales weren’t growing nearly as fast as Beyond Meat’s before the pandemic. While the burger chain’s revenue was growing by low double-digit percentages, comparable sales (what the company calls same-Shack sales) were growing at low-single-digit percentage rates.

Its store count remains fairly small, with 310 domestic locations and 120 international locations. Shake Shack typically opens 20 to 25 stores in a year, but it’s expecting to ramp up that rate and add 35 to 40 company-owned stores in 2021. Management sees plenty of opportunities to expand store count and move into different formats such as food courts.

Leaving the pandemic behind

Beyond Meat is busy developing new products and partnerships to move the sales needle. It recently announced a deal with PepsiCo Inc (NASDAQ: PEP) to create new plant-based snacks and beverages, and it announced a new burger recipe in November that it plans to launch early this year.

These efforts could pay off down the road. But the pandemic showed that in some ways, Beyond Meat’s plant-based products are not essential purchases. The company also faces strong competition from many challengers such as Impossible Foods and The Tattooed Chef (NASDAQ: TTCF). 

Shake Shack delivered an encouraging update in January, announcing that comps in the fourth quarter were only down 17%, a significant improvement from the 32% slump they experienced in the third quarter. And revenue in Q4 rose 4% year over year. Meanwhile, in suburban areas, same Shack sales were flat year over year.

The chain has also been improving its digital options, adding curbside pickup, drive-thru, and testing delivery in certain markets. Its digital strategy clearly wasn’t fully deployed prior to the pandemic, but it has made strides: digital orders accounted for 59% of total orders in the fourth quarter.

The restaurant chain’s comps growth is typically positive but low, and it’s looking to harness digital capabilities and innovate its menu offerings to accelerate that growth. I like that the company is taking it slow and figuring out its next steps while it’s still small enough to significantly boost sales through new store openings. And it has a strong cash position.  

The better buy

Beyond Meat has demonstrated that it has many ways to keep growing. Its sales chart may not be as impressive as it was when the company was younger, but new products and partnerships — though unpredictable — hold the key to future gains. In addition, the company’s greatest challenge is competition.  

Shake Shack is also still working out how to grow. But it’s made excellent progress since the early months of the pandemic, and it has the cash to keep going as it works on improving its menu and figures out how to bolster its digital sales. The market thinks so too, since the burger chain’s share price surged in January. At this point, I think Shake Shack has better long term growth options than Beyond Meat.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

More reading

• Why the IOUpay (ASX:IOU) share price is halted again today
• 5G Networks (ASX:5GN) share price rises 6%. Here’s why
• Why the Adairs (ASX:ADH) share price just raced to a record high
• Why the Ansell (ASX:ANN) share price is lifting this morning
• Redbubble (ASX:RBL) share price sinks 13% despite strong H1 FY21 results

Jennifer Saibil has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and recommends Beyond Meat, Inc. 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.

The post Better buy: Beyond Meat vs. Shake Shack appeared first on The Motley Fool Australia.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

from The Motley Fool Australia https://ift.tt/2NvUiIw

The IOUpay Ltd (ASX: IOU) share price has found itself motionless again this morning. The company’s shares have been placed into a trading halt pending the release of an announcement and a capital raising.

Let’s take a closer look at the announcement and what this means for the IOUpay share price. 

Trading halt again?

This trading halt is the second in as many days this week. Yesterday, IOUpay halted its shares less than an hour into trade following a meteoric share price rise. Shares in the Malaysia-based buy now, pay later (BNPL) provider flew from 44 cents to 82 cents on no news.

In response to the price query, the IOU Board indicated their belief that the dramatic price action was due to “price-factoring” of the major partnership for BNPL services announced on 9 February.

Following the response yesterday the trading halt was lifted. The shares traded hands once more. By the end of the day, IOU shares closed at 70 cents, down from the intraday peak of 82 cents.

Today’s halt, however, is not in relation to the share price. Rather, it appears the company being opportunistic and raising further capital while the shares are trading at these elevated prices.

IOUpay is cash hungry

For newer investors in IOUpay, it is worth knowing the company completed a capital raise of $10.5 million via a placement to investors on 9 November 2020. These funds were nominated to be used for salaries, professional services, product development, marketing, etc.

In the company’s December activity report the cash balance at the end of December was reported to be $8.54 million, with an operational cash outflow of $834,000. IOUpay relayed that its cash reserves and balance sheet were to be further strengthened by operating and financing activities in the following quarter. Well, it is the following quarter and today marks the financing activity.

Given the business is new in breaking into the BNPL market in Malaysia, receipts from customers are fairly low. Hence, IOUpay is reliant on capital raises currently to assist the company’s push into the market.

When will shares trade again?

IOUpay has requested the halt to remain in place until the earlier of trading on Thursday, or when the announcement is released to the market.

More reading

• The Novatti (ASX:NOV) share price rocketed 38% today
• Why the Sezzle (ASX:SZL) share price is charging 7% higher today
• 98% surge in IOUpay (ASX:IOU) share price triggers speeding ticket
• Ioupay (ASX:IOU) share price rallies another 54% to new 52-week high
• Here’s why the IOUpay (ASX:IOU) share price is rocketing 30% higher

Motley Fool contributor Mitchell Lawler 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.

The post Why the IOUpay (ASX:IOU) share price is halted again today appeared first on The Motley Fool Australia.

from The Motley Fool Australia https://ift.tt/3jT2LSh

The 5G Networks Ltd (ASX:5GN) share price is running higher today. This comes after the company announced its selection by a South Australian government panel to provide IT infrastructure services.

During mid-morning trade, shares in the telecommunications carrier are up 5.82% to $1.46.

What did 5G Networks announce?

In today’s release, 5G Networks advised that it will become the strategic supplier to the South Australian government managed platform services panel. This in-turn allows state government agencies to buy key infrastructure and cloud services from 5G Networks.

The extended relationship with South Australia is expected to boost the company’s coffers to more than $300 million. In return, 5G Networks will deliver managed platforms and public cloud management services such as Infrastructure-as-a-Service (IaaS) and Platform-as-a-Service (PaaS).

Previously, the company provided managed hosting and infrastructure services to the South Australia government for several years.

Management commentary

5G Networks general manager of sales, Joe Gillett, welcomed the new agreement, saying:

We are delighted to continue our relationship with the SA Government as a strategic supplier for critical infrastructure services. In working closely with SA agencies for many years, we now look forward to the next phase in the journey by enabling new innovative models of service delivery.

The panel will also benefit from our direct investment in South Australia as we further develop our managed infrastructure platforms. This includes the continued development of the 5GN Cloud platform in Adelaide, which provides hybrid cloud services across both private and public clouds.

5G Network share price performance

Over the past 12 months, the 5G Network share price has lifted 34%. Its shares hit a low of 54 cents in March, before climbing to an all-time high of $2.44 in August.

Based on the current share price, 5G Network commands a market capitalisation of around $167 million.

More reading

• Why is the Webcentral (ASX:WCG) share price on a rollercoaster today?
• Why the 5G Networks (ASX:5GN) share price is charging higher

Aaron Teboneras has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. recommends 5G NETWORK FPO. 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.

The post 5G Networks (ASX:5GN) share price rises 6%. Here’s why appeared first on The Motley Fool Australia.

from The Motley Fool Australia https://ift.tt/2Zk7WkO

The Adairs Ltd (ASX: ADH) share price is shooting higher on Tuesday.

In morning trade the furniture retailer’s shares are up 5% to a record high of $4.33.

Why is the Adairs share price shooting higher?

Investors have been buying Adairs shares today after the release of a strong half year result.

For the six months ended 31 December, the company reported a 34.8% increase in group sales to $243 million. This was driven by a 20.9% increase in Adairs sales, a 44.4% jump in Mocka sales, and strong online sales growth.

Thanks to a significant expansion in its gross margin, Adairs reported a 166% increase in underlying earnings before interest and tax (EBIT) to $60.2 million. This doesn’t include a $6.1 million JobKeeper benefit which the company plans to return to the government.

On the bottom line, Adairs reported an underlying net profit after tax of $41.9 million, up 174% over the prior corresponding period.

In light of this strong profit growth, the Adairs board declared a fully franked interim dividend of 13 cents per share. Last year’s interim dividend was cancelled due to COVID-19.

At the end of the period, the company had cash of $22.1 million. This compares to net debt of $1 million at the end of June.

How did its segments perform?

Both its Adairs and Mocka businesses performed very positively during the first half.

The Adairs business delivered total sales of $215 million, up 20.9% on the prior corresponding period. This was driven by a 95.2% increase in online sales to $62.2 million and a 4.6% lift in store sales to $152.8 million. The latter was achieved despite 43 Greater Melbourne stores being closed for ~82 trading days. This represents 45% of their total trading days in the first half.

The Mocka business reported sales of $28 million for the six months. This compares to a four-week contribution of $2.4 million in the prior corresponding period. While not a true comparison, if you were to extrapolate that $2.4 million over a 26-week period, it would come to $15.6 million. Based on this, Mocka would have achieved sales growth of 79.5%.

Also growing strongly was the company’s Linen Lover loyalty program. Its membership numbers now exceed 900,000. Management notes that this is a big positive as members are highly engaged, visit more often, and spend more each visit than non-members. Linen Lover members now account for 75% of Adairs sales.

Outlook

Adairs has started the second half strongly. It advised that sales during the first seven weeks of the half are well ahead of the prior year.

Adairs online sales were +65.9%, Mocka +48.6%, and like-for-like store sales were +12.4%. Positively, gross margins in both businesses remain elevated and in line with the first half.

Management commented: “COVID-19 continues to encourage strong spending in home improvement and home decoration, and we expect this behaviour to persist whilst COVID-19 uncertainty continues. While current trading remains strong, due to the ongoing uncertainty relating to COVID-19 the Board does not consider it appropriate to provide guidance for the FY21 full year at this time.”

It also explained: “Stock flow from China and South East Asia remains inconsistent due to international shipping disruptions across the region. However, our plans have been adapted to accommodate delays without a significant impact on our ranging or customer experience.”

Following today’s gain, the Adairs share price is up 30% since the start of the year.

More reading

• ASX retail shares show strong signs of resurgence 
• Why this fund likes these 3 ASX shares
• 3 small ASX dividend shares with big yields
• 3 little-known ASX dividend shares offering big income

James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. recommends ADAIRS FPO. The Motley Fool Australia has recommended ADAIRS FPO. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

The post Why the Adairs (ASX:ADH) share price just raced to a record high appeared first on The Motley Fool Australia.

from The Motley Fool Australia https://ift.tt/3ppE6Ww

The Ansell Limited (ASX: ANN) share price is on the rise this morning, up 3% on the open. This follows the release of the company’s results for the first half of the 2021 financial year (H1 FY21).

At the time of writing, shares in the company have retreated slightly, trading up 0.88% at $38.91.

What results did Ansell report?

In this morning’s release, the personal protection safety solution provider reported sales for the half year reached $937.8 million. That’s up 24.5% from H1 FY20 and up 22.9% in terms of organic growth.

(Organic growth compares the two periods at constant currency – using average foreign exchange rates – and excludes the impacts of acquisitions and divestments.)

Ansell’s healthcare segment had organic growth of 37.3%, while the company reported industrial organic growth of 7.0%.

Earnings before income and tax (EBIT) grew 60.6% over the previous corresponding period. Ansell credited sales growth coupled with higher production volumes and manufacturing efficiencies for much of the earnings growth.

Earnings per share (EPS) were also up 65.5% to 82.9 cents per share (cps), and profit attributable came in at $106.5 million, an increase of 61.9% year-on-year.

Ansell raised its half year dividend to 33.2 US cents, up 52.6% from the first half of the 2020 financial year and representing roughly a 40% dividend payout. Looking ahead, the company aims for a 40-50% dividend payout ratio from its profit attributable.

From the management

Commenting on the results, Ansell CEO Magnus Nicolin said:

We were able to deliver better than expected growth across all of our strategic business units. Exam/SU, Life Sciences and Chemical saw stronger performance partially driven by COVID-19 whilst Surgical and Mechanical SBU’s were able to demonstrate favourable performance and market share gains despite facing industry headwinds.

Our capacity expansions are progressing well despite the challenges of operating in a COVID-19 environment. During the first half, we started five new production lines and expect another eight production lines to go live during the second half.

Looking ahead, Nicolin stated that by 2022-2023 financial year, he expects Ansell will have more than doubled its in-house capacity to produce single use gloves and suits.

The company forecasts strong demand for personal protective equipment (PPE) will persist for the next 12 months, saying that even after 70% of the population is vaccinated, increased demand for most of its products will remain.

Ansell share price snapshot

Counterintuitively, Ansell’s share price was sold off heavily during the COVID fuelled panic last year, selling along with most other ASX shares. But shares have come back strongly since late March, reaching an all time high of $42.91 per share on 9 November.

Though the share price has retraced a bit from that record high, the Ansell share price is up 20.3% over the past 12 months and up 11.1% so far in 2021.

By comparison the S&P/ASX 200 Index (ASX: XJO) is up 3.1% in 2021.

More reading

• 5 things to watch on the ASX 200 on Tuesday
• ASX 200 rises, JB Hi-Fi profit soars, Altium drops
• ASX 200 up 0.8%: Nearmap jumps, Bendigo and Adelaide Bank impresses
• A turbulent tale of 2 ASX biotech shares: Polynovo (ASX:PNV) and Pro Medicus (ASX:PME)
• Why ASX travel shares were smashed on Friday

Motley Fool contributor Bernd Struben has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Ansell Ltd. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

The post Why the Ansell (ASX:ANN) share price is lifting this morning appeared first on The Motley Fool Australia.

from The Motley Fool Australia https://ift.tt/3rRGyqo

The Redbubble Ltd (ASX: RBL) share price is sinking today following the release of its half-year result for 2021.

In early morning trade, shares in the e-commerce company are down an astonishing 13% to $6.07.

Let’s take a look and see how Redbubble performed over the H1 FY21 period.

Financial highlights

The Redbubble share price is deep in negative territory despite announcing significant growth across its business’ key metrics.

A catalyst for the fall could be that customer orders were affected by COVID-19 constraints during December. The temporary issue was caused by shipping partners who were unable to provide assurances in delivering products on time to customers. Consequently, lower sales margins in December were realised.

Despite the delays in shipping orders at the end of the period, the company experienced strong sales throughout the first-half.

For the six months ending 31 December, Redbubble reported marketplace revenue (total revenue less artist revenue) of $352.8 million. This was up 96% over the prior corresponding period (pcp). When using a constant currency basis, revenue actually grew 105% compared to H1 FY20. The result reflected strong customer demand throughout the holiday season with around 572,000 artists making sales. This was an increase of 76% year-on-year.

Most of its business came from its United States customer base which accounted for 69% of total gross transactions. The next in line was the European Union with just 14%. Following the EU was the United Kingdom and the Australia/New Zealand region, at 11% and 6% respectively.

Gross profit came to $144 million, which represented a lift of 118% from the same time last year. Again, on a constant currency basis, this metric actually further increased to 127%.

Earnings before interest and tax (EBIT) stood at $41.8 million. A massive improvement over the H1 FY20 result where EBIT recorded a loss of $1.9 million.

The group achieved an operating cash inflow of $79.7 million compared to $40.9 million over the pcp. The leadership team did carefully manage operating expenses. However, the strengthening of the Australian dollar in Q2 led to a favourable currency impact of $2.2 million.

At the end of December, Redbubble had a closing cash balance of $129.7 million.

The board moved against declaring an interim dividend, instead opting to reinvest into the company’s growth strategy. In addition, it also noted that due to the uncertain economic environment, it will be prudent with its cash.

Words from the CEO

Looking towards the future, Redbubble CEO Michael Ilczynski commented:

The strategic priority for the Group now is to ensure we extend the market leadership we have established. We intend to invest in both the artist and customer experiences, to improve loyalty and retention and to ensure long-term growth.

Redbubble share price snapshot

The Redbubble share price has been a standout performer over the past 12 months, accelerating to more than 460%. The company’s shares hit a low of 40 cents in March, before moving on an upwards trajectory.

Based on the current share price, Redbubble commands a market capitalisation of around $1.8 billion.

More reading

• Got money to invest? Here are 3 ASX shares to buy
• 3 reasons why the Redbubble share price could be a buy
• 3 great ASX tech shares to buy
• 2 fast-growth ASX tech shares that are being sold off
• 3 compelling ASX tech shares to buy

Motley Fool contributor Aaron Teboneras 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.

The post Redbubble (ASX:RBL) share price sinks 13% despite strong H1 FY21 results appeared first on The Motley Fool Australia.

from The Motley Fool Australia https://ift.tt/3rXZVyo

The GWA Group Ltd (ASX: GWA) share price has been sneaking up over the past 6 months, gaining more than 52% despite challenging market conditions.

However, shares in the water solutions product provider have dipped today, dropping 1.35% at the open to $3.66.

Let’s review some highlights from the half-year results released today to see what drives the GWA share price.

GWA Group financial results

For the half-year period ended 31 December 2020, GWA’s normalised net profit after tax was $20 million, a 17% dip compared to the previous corresponding period (pcp).

GWA grew revenue in New Zealand and the United Kingdom, but this was offset by the weaker Australian market. Group revenue for the half-year period slid 4.4% to $197.2 million.

GWA advised that these losses reflected an overall decline in market conditions.

However, despite the challenges, operating cash flow jumped 18% to $49.7 million.

The company also reduced its net debt from $144.8 million on 30 June 2020 to $125 million on 31 December 2020.

The GWA interim dividend paid out will be 6 cents per share, fully franked, payable on 20 April 2021. This compares to 8 cents per share for the pcp and 3.5 cents per share for the final dividend for FY20. 

Positioning GWA share price for growth

GWA advised that it continues to execute its growth strategy as market conditions improve. Commenting on what lies ahead, managing director Tim Salt said:

We launched new ranges of taps, showers, accessories and sanitaryware under the Caroma brand in Australia and New Zealand and new Methven showerware ranges in Australia, New Zealand and China.

We introduced Germgard® antibacterial glazing to our sanitaryware to capitalise on consumers’ heightened concerns over safety and hygiene following the COVID-19 outbreak.

Meanwhile, our touchless intelligent bathroom system, Caroma Smart Command®, continues to represent a growth opportunity in the commercial segment.

The system has now been successfully installed in 77 sites with a solid bank of additional projects in the pipeline. We have completed the first pilot installation in Asia with further activity planned over the next year.”

The GWA share price is closing in on the same price levels it was trading at a year ago, and is now down just 4.8% over the previous 12-month period.

More reading

• Top brokers just upgraded these 3 ASX shares to “buy”

Motley Fool contributor Gretchen Kennedy 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.

The post Why the GWA Group (ASX:GWA) share price has gained 52% in six months appeared first on The Motley Fool Australia.

from The Motley Fool Australia https://ift.tt/3qqriAz

The ELMO Software Ltd (ASX: ELO) share price is surging higher on Tuesday morning.

At the time of writing, the cloud-based human resources and payroll platform provider’s shares are up 6% to $6.70.

Why is the ELMO share price surging higher?

Investors have been buying ELMO shares this morning following the release of its half year results. Those results revealed that ELMO has once again delivered another six months of strong growth.

For the six months ended 31 December, the company reported a 29.3% increase in statutory revenue compared to the prior corresponding period to $30.6 million.

Things were even better for its Annualised Recurring Revenue (ARR), which now stands at a record $74.2 million. This is an increase of 42.8% compared to a year ago. This strong ARR growth was driven by a combination of both organic growth and acquisitions.

Driving this strong growth was a large increase in mid-market customers. ELMO now has 2,892 mid-market customers, up 95.7% on the prior corresponding period. From this cohort, it generates ARR of $67.3 million. This represents almost 91% of its total ARR.

The company’s small business segment is supporting its growth as well. The newly acquired Breathe business grew its customer base to 7,146 customers by the end of December.

As expected, ELMO posted a small operating loss of $0.8 million. Despite this, the company is well capitalised with a $71.3 million cash balance and a new $34.5 million debt facility with Commonwealth Bank of Australia (ASX: CBA).

Delivering on its growth strategy

ELMO’s CEO and Co-Founder, Danny Lessem, was pleased with the half and notes that the company is delivering on its growth strategy.

This growth strategy is underpinned by three pillars: segment expansion, module expansion and geographic expansion.

In respect to its segment expansion, he commented: “With the acquisition of Breathe, ELMO now services two distinct market segments, the small business market (<50 employees) and the mid-market (50 to 2,000 employees). The small business market segment is a new $2.2 billion opportunity.”

Commenting on its module expansion, Mr Lessem said: “We continue to broaden ELMO’s all-in-one solution, offering new modules to our new and existing customers. These new modules create additional revenue streams and increase our competitive moat. In the half, we were able to add an expense management module to the suite through the acquisition of Webexpenses, providing a significant cross-sell opportunity.”

And finally, the CEO spoke about its geographic expansion. He said: “In 1H21 we also laid important foundations to build out ELMO’s business in a new geography, the United Kingdom (UK). The acquisitions of Breathe and Webexpenses are powerful examples of ELMO expanding its market opportunity in line with its growth strategy. Both businesses are based in the UK. Breathe places ELMO as the preeminent provider of HR solutions to small businesses in the region and Webexpenses provides a solid operational and mid-market customer base there.”

Outlook

ELMO has reaffirmed the guidance it provided to the market in January.

It continues to expect FY 2021 ARR of $81.5 million to $88.5 million. This will be an increase of 47.9% to 60.6% year on year.

Management has also reiterated guidance for revenue of $65 million to $71 million and an operating loss of $2.4 million to $7.4 million. 

Chat with management

I was fortunate to have the opportunity to chat with management following the release of the results.

Mr Lessem was pleased with the result and notes that its operating leverage is starting to show. ELMO’s EBITDA improved by 69.5% during the half compared to revenue growth of 29.3%.

We also spoke about the UK and the impact that COVID-19 was having on its expansion there. Positively, the company’s UK operations are growing strongly despite the country being locked down since the beginning of January.

Management believes this reflects the resilience of the business model. It also appears optimistic that its growth could accelerate in a post-COVID environment when businesses return to normal and there is an upswing in procurement.

Another question I posed to management was the operating loss guidance. Given that ELMO recorded a first half operating loss of $0.8 million, I was curious what might lead to a potential operating loss of $7.4 million.

Mr Lessem explained that the company has worked through a wide range of scenarios that reflect the current environment and that a $7.4 million operating loss is a worst case scenario. He is hopeful that as the second half progress, ELMO will be in a position to narrow its guidance ranges.

All in all, management appear confident on the future and its aforementioned three pillar growth strategy.

More reading

• 2 outstanding ASX growth shares that could be strong buys
• 2 quality SaaS ASX shares to buy in February 2021
• Brokers name 3 ASX shares to buy right now
• Here’s why the ELMO (ASX:ELO) share price is sinking lower today
• 2 exciting mid cap ASX shares to buy and hold

James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and recommends Elmo Software. The Motley Fool Australia has recommended Elmo Software. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

The post Here’s why the ELMO (ASX:ELO) share price is surging 6% higher today appeared first on The Motley Fool Australia.

from The Motley Fool Australia https://ift.tt/3ppBgAQ