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The NRW Holdings Limited (ASX:NWH) share price has soared by more than 9% in early trade, following the release of the company’s FY20 results.

NRW Holdings provides a range of services to the Australian resources, civil infrastructure and urban development sectors. The company has 4 core operating segments: civil, mining, drill, and blast and mining technologies.

Impressive FY20 revenue and earnings growth

NRW delivered impressive FY20 revenue growth, up 83% to $2,062 million. Earnings before interest, taxes, depreciation and amortisation (EBITDA) growth was also very strong at 74%, coming in at $250 million for the full year. Meanwhile, normalised operating EBIT amounted to $140.9 million, which was up by a massive 120% on the prior year.

Normalised earnings per share was 21 cents for NRW, up significantly on 10.7 cents in FY 2019. Net earnings after tax increased 122% to $89.7 million, when normalised for acquisition intangibles.

NRW ended the 2020 financial year with a very strong balance sheet. Total cash amounted to $170 million on 30 June, up sharply from $105 million, 12 months prior.

Cash conversion reached a record high of 97% for NRW, while total debt repayments amounted to $82.4 million during the financial year.

Growth strategy progressing

NRW noted that the acquisition of BGC Contracting, which was finalised in December last year, had been successfully completed. BCG Contracting has now been fully integrated into the wider company.

Likewise, RCR Mining Technologies and DIAB Engineering have also been successfully integrated into the group. The latter 2 divisions are now on track to deliver combined annual revenues of $500 million. This is anticipated to be delivered via growth in maintenance, fabrication, shutdown and project works.

Commenting on the results, Jules Pemberton, NRW chief executive officer and managing director, said:

Growing record revenues to over two billion dollars during the year is a great achievement, however the highlight for me is the strong contributions made to that growth from all parts of the business. Doubling the earnings from last year also demonstrates that we can deliver work profitably and through our disciplined approach, produce outstanding cash conversion despite the magnitude of the challenges faced over the last 12 months.

Market outlook

NRW is confident that it is in a very strong position to tap in to a rising number of growth opportunities in the next 12 months. This will be underpinned by strong recent organic growth and the completion of a range of strategic acquisitions over the prior 3 years.

NRW reported its order pipeline is currently in a solid position. The group also highlighted the potential for additional infrastructure projects to be added to its pipeline as part of government initiatives to address the economic impact of of COVID-19.

The group’s pipeline of tenders and prospects for the 12 months has risen to $12.9 billion. NRW has forecast revenue for FY 2021 to be between $2.2 billion to $2.3 billion.

At the time of writing, the NRW share price is up by 9.28% to $2.12 per share.

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Motley Fool contributor Phil Harpur has no position in any of the stocks mentioned. 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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The Tabcorp Holdings Limited (ASX: TAH) share price is in a trading halt this morning after launching a $600 million equity raise following a full-year $870 million loss.

Why the Tabcorp share price is one to watch

For the year ended 30 June 2020 (FY20), Tabcorp reported a 4.8% slump in group revenue to $5,224 million. Lotteries & Keno contributed 56% of revenue while Wagering & Media (40%) and Gaming Services (4%) made up the rest.

That flowed through to earnings before interest, tax, depreciation and amortisation (EBITDA) which fell 11.5% lower to $995 million.

The Lotteries & Keno segment was the only unit to report positive growth across revenues, EBITDA and EBIT during the year.

Tabcorp cited the coronavirus pandemic as a the major contributor while a non-cash goodwill impairment charge hit the company’s bottom line.

The Aussie wagering group reduced goodwill in its Wagering & Media segment by $905 million while Gaming Services goodwill took a $185 million hit.

Profit before significant items was down 31.6% to $271 million while the company booked a statutory $870 million loss after tax.

The Tabcorp share price is one to watch when it emerges from the current halt after reporting a 42.9 cents per share (cps) loss and paying no final dividend for FY20.

That means the full-year distribution totalled 11.0 cps, down 50% on FY19 dividend figures.

Positively, the group’s integration of Tabcorp and Tatts is now “substantially complete”. Tabcorp reported that cost synergies were on track with revenue synergies unable to be measured due to COVID-19.

Those impacts have been significant and forced a number of measures to be taken by the wagering group. The pandemic has seen the cancellation or postponement of many sports, although domestic racing has continued.

Capital management and equity raising

Tabcorp has looked to furlough staff and slash costs with a renewed focus on capital management reflected in its prudent dividend policy.

That has seen Tabcorp launch an entitlement offer to raise approximately $600 million of equity from shareholders. This comes as Tabcorp looks to strengthen its balance sheet and move towards a lower target gearing range.

Eligible shareholders are entitled to 1 new Tabcorp share for every 11 shares held on the record date of Monday 24 August.

The 0ffer price of $3.25 per new share represents a 10.6% discount to its theoretical ex-rights price and an 11.4% discount on the Tabcorp share price at yesterday’s close.

The Tabcorp share price will be worth watching when it returns to the boards in coming days.

July update

Investors will react to the latest results once Tabcorp shares resume trading this week. Despite reporting some softer numbers, it has been a strong start to FY21 for the wagering group.

Lotteries & Keno revenue is up 4.7% in July with strong ACT digital growth a primary driver. Wagering & Media revenue has increased thanks to many sports now having resumed.

However, Gaming Services has seen revenue drop 52.2% in July largely thanks to venue closures in Victoria.

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Motley Fool contributor Ken Hall has no position in any of the stocks mentioned. 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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The Bigtincan Holdings Ltd (ASX: BTH) share price has climbed steadily after the ASX software company reported a big jump in annualised recurring revenues over the June quarter.

Since crashing in mid-March to a 52-week low of just $0.265, the Bigtincan share price has surged more than 230% to $0.89 in mid-morning trade today.

What does the company do?

Bigtincan develops software to streamline and automate sales and marketing functions for its business clients.

Bigtincan’s flagship sales enablement automation platform is a centralised, integrated software solution designed to support businesses throughout their entire sales and marketing lifecycle. That’s from onboarding and training new staff, to engaging new customers and providing accurate reporting.

How is Bigtincan performing?

Despite the challenges of operating during COVID-19, results for the June quarter were strong across just about all key financial metrics. Quarterly customer cash receipts were up 89% against the prior comparative period to $10.4 million, while annualised recurring revenues were up 53% year-on-year to $35.8 million. The company reiterated its FY20 guidance for organic revenue growth of between 30% and 40%.

The software company’s balance sheet was also healthy with $71.9 million in cash and equivalents as at June 30. This had been strengthened by an oversubscribed $35 million institutional placement and $7.5 million share purchase plan, both of which occurred within the June quarter.

Bigtincan says it will use these funds to invest in its technology and pursue potential M&A opportunities, which means some exciting announcements could be on the horizon.

Should you invest?

Bigtincan isn’t quite the same growth company it was last year. In 2019, the Bigtincan share price soared more than 160%. So far this year – after all the share market volatility stemming from COVID-19 – its share price has only managed to gain 29%. This is still well short of its January high of $1.08.

However, the company’s underlying results have remained strong, and it has built a solid foundation for future growth despite tough market conditions. It anticipates customer retention rates to remain stable during FY20, and even reported some significant new customer wins in the most recent quarter – including one of the largest technology companies in the world.

There is even the potential for the ongoing impacts from COVID-19 to continue to drive growth. With people continuing to work remotely, there could be sustained high demand for digital solutions for activities such as staff training, coaching and ongoing development.

There are obvious risks to an investment as well. Bigtincan is still a small company with a market cap of only $335 million. With most economic indicators pointing to a severe downturn lurking on the horizon, small-cap growth stocks aren’t quite the exciting investment opportunity they were 12 to 18 months ago.

However, Bigtincan joins a growing list of junior ASX tech companies, like internet communications company MNF Group Ltd (ASX: MNF) and software developer Objective Corporation Limited (ASX: OCL), that are showing their ability to adapt – and even thrive – in the challenging conditions created out of the COVID-19 global pandemic.

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Rhys Brock 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 BIGTINCAN FPO. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Objective Limited. The Motley Fool Australia owns shares of and has recommended MNF Group Limited. The Motley Fool Australia has recommended BIGTINCAN FPO. 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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The Crown Resorts Ltd (ASX: CWN) share price has been resilient this morning after the company released its annual result for the year to 30 June 2020. At the time of writing, the Crown share price was down just 0.53% to $9.44 following the release.

What was in the announcement?

Crown reported earnings before, interest, tax, depreciation and amortisation (EBITDA) of $504.6 million, these were down 40.6% compared to the prior year.

Reported net profit after tax was $79.5 million, a drop of 80.2%. According to Crown’s CEO, Ken Barton, the company was directed to close its gaming activities and a significant part of its non-gaming operations at Crown Melbourne and Crown Perth for a significant amount of the financial year. Mr Barton stated that these closures were reflected in the company’s financial results.

Crown incurred costs related to its government mandated closures of $81.6 million which affected its results. It also recorded significant items of $78.7 million after tax which it stated were related to the impairment of Crown Aspinalls and Nobu, Crown Sydney pre-opening costs and costs related to a reassessment of DGN contingent consideration.

The company announced that the construction of Crown Sydney remained on track and it expects the asset to open to the public in December as scheduled.

Crown determined that, although its dividend policy is to pay 60 cents per share on a full year basis subject to the company’s financial position, that it would not pay a final dividend for the period. The company stated that this was due to the impact of mandatory closures on Crown’s business and uncertainty surrounding the resumption of trading at Crown Melbourne. It stated that future dividends would be subject to Crown’s financial position at the time. 

About the Crown share price

Crown is one of Australia’s largest entertainment groups. It operates resorts, casinos, bars, restaurants and online betting facilities. Crown has been listed on the ASX since 2007.

The Crown share price is up 67.38% from its 52-week low of $5.64, however, it is down 21.46% since the beginning of the year. The Crown share price is down 16.97% since this time last year.

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Motley Fool contributor Chris Chitty has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Crown Resorts Limited. 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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The EML Payments Ltd (ASX: EML) share price surged more than 8% in early trade after the company released its financial report for FY20. The EML share price has since pulled back slightly and is trading for $3.43 at the time of writing.

How has EML performed in FY20?

Earlier today EML released its annual report and results for FY20.

The company’s report was highlighted by record revenue for the financial year of $121.6 million, a 25% increase from the year prior. Record revenue helped fuel a 17% surge in EML’s net profit after tax and amortisation (NPAT) for FY20 of $24.0 million.

Other highlights from the company’s report included a 10% increase in earnings before interest, taxes, depreciation and amortisation (EBITDA) for FY20. EML also noted a 57% surge in gross debit volume (GDV) of $13.9 billion, indicating growing demand for the company’s services.

For FY20, the company’s underlying operating cash inflows surged 63% on the year prior to $35.8 million. EML also completed a $264.8 million upfront acquisition of Irish payments group Prepaid Financial Services (PFS) during the financial year.

Despite the headline figures, on a statutory basis EML reported a net loss of $5.8 million for FY20. The company cited the unprecedented challenges of the COVID-19 pandemic as having an impact.

EML’s management noted that prior to the pandemic the company was performing strongly. The company’s gift and incentive segment contributed approximately 65% to group revenue in the first half of FY20. According to EML, gift and incentive GDV declined by 26% in March, 53% in April and 39% in May, with signs of recovery in June.

EML also noted that the company $118.4 million cash on hand and will not be paying a final dividend.

What is the outlook for EML?

EML Payments is an Australian fintech company that provides the technology solutions for payouts, gifts, rewards and supplier payments. The company has a large presence in Australia, North America and Europe, issuing mobile, virtual and physical card solutions.

In its investor presentation, EML highlighted that the company continues to sign new contract with customers in each segment. Despite hints of a recovery, the company expects impacts of the COVID-19 pandemic to continue into 2021.

The company has cited various headwinds including lower foot traffic in retail centres and social distancing measures to impact retail sales. As a result, EML has refreshed its strategy in order to drive growth over the next 3 years.

In order to fuel growth, EML has launched its ‘Project Accelerator’ strategy, which is designed to expand the company’s presence in the tech space. EML also cited its strong capital position which will help the company withstand further impacts of the pandemic.

Foolish takeaway

At the time of writing, the EML share price is trading more than 4% higher for the day. Shares in the company were up more than 8% earlier after hitting an intraday high of $3.55. The EML share price is trading more than 25% lower in 2020.

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Nikhil Gangaram has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Emerchants Limited. The Motley Fool Australia has recommended Emerchants Limited. 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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The Carsales.com Ltd (ASX: CAR) share price is on the rise this morning after the online classifieds business revealed growth in revenue and profits despite the impacts of COVID-19. At the time of writing, the Carsales share price is trading at $19.88, 2.37% up from yesterday’s closing price. Carsales.com delivered a robust set of results in a challenging environment demonstrating the strength of its Australian business and growth potential of international markets. 

What does Carsales.com do? 

Carsales.com operates the largest online automotive, motorcycle, and marine online classifieds business in Australia. Regarded as one of Australia’s original disruptors, the company has expanded into South Korea and Brazil. COVID-19 has created uncertainty in Carsales.com’s operating markets, but the trends coming out of the pandemic including continued digital adoption and increased propensity for car ownership are a positive for the business. 

How did Carsales.com perform? 

Carsales.com reported adjusted revenue of $423 million for FY20, a 1% increase on FY19. This was a strong outcome given the impact of COVID-19 and reflects good growth in the domestic and South Korean segments. This growth was partly offset by revenue declines in the domestic private and media businesses largely due to the impacts of COVID-19 in H2. 

Adjusted earnings before interest, taxes, depreciation and amortisation (EBITDA) grew 6% to $237 million, with EBITDA margins of 55% reflecting good operating leverage and strong cost control in both domestic and international businesses. Results were underpinned by earnings growth across domestic and international portfolios, including an excellent performance from South Korea which delivered 18% EBITDA growth. Diversification across product and geography is continuing with international now representing 24% of look-through revenue. 

Carsales.com ended FY20 with adjusted NPAT up 6% to $138 million. Reported NPAT declined 9% to $120 million, primarily due to a $28 million COVID-19 dealer support package. A final dividend of 25 cents per share was declared, on par with the previous year. CEO, Cameron McIntyre, said, “this is a pleasing full year result given the impact of COVID-19 on our business in the second half…..our long standing strategy to grow and diversify our business by geography and product positions us well even in a challenging operating environment.” 

What’s next for Carsales.com? 

The company says it has seen a strong rebound in demand for vehicles across multiple international markets as customers have emerged from lockdown. People have continued to migrate to digital platforms and an aversion to public transport (due to COVID-19 concerns) has increased the propensity for car ownership. While Carsales.com is not providing FY21 guidance due to uncertainty, it has observed that Australian private listing volumes have largely recovered to pre-COVID levels and lead volumes grew strongly in July. 

The Carsales share price has risen 89.9% since its March low and is up 18.4% in year-to-date trading.

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Motley Fool contributor Kate O’Brien has no position in any of the stocks mentioned. The Motley Fool Australia has recommended carsales.com Limited. 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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The Medical Developments International Ltd (ASX: MVP) share price returned from its trading halt and zoomed higher today.

The healthcare company’s shares were up as much as 14% to $7.15 at one stage.

At the time of writing the Medical Developments International share price has given back a good portion of these gains but remains up a solid 6% to $6.63.

Why is the Medical Developments International share price zooming higher?

Investors have been fighting to get hold of the company’s shares this morning after it announced an agreement with the Mundipharma network in Europe. This agreement will see it take back the distribution rights for its pain relief drug, Penthrox in all 27 member states in the European Union.

According to the release, Medical Developments International plans to have a hybrid model selling direct in some countries and using distributors in others.

In preparation for this, the company has already set up a European office and appointed a Head of Europe – Stefaan Schatteman. Mr Schatteman is a 15-year veteran of the Mundipharma network in Europe, having established its operations in Belgium before moving to France as General Manager. Through these roles he knows Penthrox and its market entry plans very well.

A turning point.

The company advised that it will be able to buy back the EU rights because of a significant reorganisation of Mundipharma’s business in Europe.

Mundipharma has significantly scaled back its EU staff and presence. As a consequence, Medical Developments International will buy back its rights for an amount 3 million euros, which is payable in staged instalments over the period of transition. It also includes a 5% royalty on sales capped at a maximum of 5 million euros. This will commence on 1 September when the company starts booking the sales revenue.

The company’s chairman, David Williams, believes this is a pivotal moment in the company’s history.

He said “This buyback is a turning point in the history of MVP. We are the beneficiaries of the enormous effort and expense Mundipharma has invested in pre-marketing activities, marketing approvals, patient trials, clinical data and initial market launches.”

“Mundipharma is going through a significant reorganisation. As a result of these unusual circumstances we are able to access the local European experience of well-qualified staff and all of the work and materials relating to our business,” he commented.

Acting CEO, Max Johnston, added: “Mundipharma has expended a very significant amount of funds in the pre-marketing phase and initial market entries and have done an excellent job on the preparing and seeding of the market. The separation of the MVP business from Mundipharma is collegial and friendly. Both companies are focused on building on the enormous amount of work already done and serving the needs of patients and customers.”

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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 Medical Developments International Limited. The Motley Fool Australia has recommended Medical Developments International Limited. 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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The WiseTech Global Ltd (ASX: WTC) share price has shot out of the gates this morning following the release of the company’s FY 2020 results, which showed strong overall revenue growth.

Solid revenue growth despite strong COVID-19 headwinds

WiseTech reported solid revenue growth, despite the challenges of the coronavirus pandemic.

Total revenue for WiseTech grew to $429.4 million, up by 23% on the prior year. Meanwhile, earnings before interest, taxes, depreciation and amortisation (EBITDA) grew by 17% to $126.7 million, while EBITDA margin came in at a strong 30%. This reflected continued revenue growth and cost savings during the second half of FY 2020. However, this margin was a slight decline on the 31% achieved during FY 2019.

WiseTech recorded statutory net profit after tax (NPAT) of $160.8 million. This was up 197% on the prior corresponding period, however it does include a non-cash, non-taxed fair value gain amounting to $111.0 million. Excluding adjustments, NPAT was flat on the prior year. However, NPAT was impacted by increased investment into research and development as well as the amortisation of prior acquisitions.

The company was able to further strengthen its balance sheet, with operating cash flow increasing by 16% on the prior year.

Recent acquisitions fuelling further growth

WiseTech reported that revenue from its core platform, CargoWise, was up by 20% to $263 million during FY 2020. This was supported by large recent roll-outs following major contract wins from a range of new clients, including Hellmann Worldwide Logistics and Aramex.

Revenue attributable to newly acquired businesses amounted to $166.4 million, which was up by 29% on the prior year.

Pleasingly, WiseTech reported that the integration of its recent acquisitions is progressing well. The company commented that the coronavirus pandemic actually provided it with the opportunity to restructure earnouts in order to better deliver its CargoWise pipeline of products.

Commenting on the results, WiseTech founder and CEO Richard White said:

Notwithstanding the unprecedented challenges of COVID-19, our business has remained resilient, delivering solid revenue and EBITDA growth in FY20, in line with our guidance. Importantly, our CargoWise platform has continued to deliver strong revenue growth in FY20 through increased usage by existing customers and growth in new customer numbers. Our strategic acquisitions over the past three years have further extended our market reach, enabling us to increase our penetration of the $13 trillion global logistics and supply chain market.

Dividend and market guidance

WiseTech declared a fully franked dividend of 1.60 cents per share. This will be payable on 2 October 2020.

WiseTech Global anticipates FY 2021 revenue growth to be in the range of 9% to 19%. This corresponds to total revenue between $470 million and $510 million. EBITDA growth is expected to fall within the range of 22% to 42%.

At the time of writing, the WiseTech share price is up by 12.16%.

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Phil Harpur owns shares of WiseTech Global. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of WiseTech Global. 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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The Megaport Ltd (ASX: MP1) share price is pushing higher on Wednesday after the release of its FY 2020 results.

At the time of writing the network as a service provider’s shares are up 1.5% to $14.82.

How did Megaport perform in FY 2020?

For the 12 months ended 30 June 2020, Megaport’s strong growth continued with a 66% increase in revenue to $58 million.

On a recurring basis, at the end of the period the company’s monthly recurring revenue (MRR) had reached $5.7 million. This was an increase of 57% year on year and equates to $68.4 million on an annualised basis.

Given that Megaport is investing heavily in its future growth, it continues to operate at a loss. It recorded a net loss of $47.7 million for FY 2020. Despite this, it has a very strong balance sheet with a cash position of $166.9 million.

What were the drivers of Megaport’s growth?

Megaport drove consistent increases in all metrics across all regions in FY 2020.

This includes its footprint in data centres globally, which grew 22% to 366 installed locations and 27% to 669 enabled locations.

Strong demand thanks to the shift to the cloud and its expanding footprint led to Megaport’s customer base increasing by 352 or 24% to 1,842. Management advised that customers grew across many verticals, but Financial Services, Manufacturing, Healthcare, and Digital Media continue to perform exceptionally well. This is a result of increased demand for cloud connectivity and data requirements within vertical-specific digital supply chains.

Also growing strongly were its Ports and Megaport Cloud Routers (MCRs), which were up 42% and 75%, respectively. This led to Total Services increasing by 5,151 or 45% to 16,712. This includes a 53% increase in Virtual Cross Connections to 9,248.

Management commentary.

Megaport’s Chief Executive Officer, Vincent English, said, “The Company has reached $5.7 million in monthly recurring revenue, a 57% increase from last year. This growth is underpinned by our North American business contributing $26.3 million this fiscal year, an increase of 94% from FY19.”

“Our continued global expansion to key locations in Europe, Asia Pacific, and North America has enabled Megaport to reach 23 countries, and 669 enabled locations including 366 installed data centres in 128 cities globally. Our expansion into Japan with the enablement of Tokyo and Osaka has unlocked new opportunities as Megaport is the first global neutral interconnection fabric in the market,” he added.

Outlook.

Mr English believes that its performance in FY 2020 has put the company on a path to become EBITDA breakeven in the near future.

He commented: “Megaport’s performance in Fiscal Year 2020 has positioned the company on a path to profitability. We are driving our business to achieve EBITDA breakeven on an exit run rate basis in Fiscal Year 2021. With the investments we’ve made in our people, technology, and network footprint, Megaport is well positioned to achieve our revenue and profitability objectives.”

A key driver of this looks like to be in recently announced Megaport Virtual Edge offering.

“The development of Megaport Virtual Edge and our collaboration with Cisco to enable SD-WAN capabilities will unlock a new level of value for our customers and enable more businesses to take advantage of Megaport’s industry-first elastic interconnection platform,” he explained.

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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 MEGAPORT FPO. The Motley Fool Australia has recommended MEGAPORT FPO. 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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The Corporate Travel Management Ltd (ASX: CTD) share price is on watch this morning after the company revealed an $8.2 million loss.

The travel agent saw revenues collapse as global travel markets shut down earlier this year thanks to the coronavirus pandemic. Nonetheless, Corporate Travel says it is positioned for recovery and can be profitable on a domestic-only model. 

What does the company do? 

Corporate Travel is a travel solutions provider with a focus on the corporate market. It recorded EBITDA of $150.1 million in FY19 which generated a statutory profit of $86.2 million. But the sudden shutdown in travel markets this year saw volumes dry up in March.

Corporate Travel responded rapidly with redundancies and other cost reductions to stem losses. One of the few not to raise capital during the COVID-19 downturn, the travel company did, however, delay its interim dividend in March. 

How did Corporate Travel perform in FY20? 

Corporate Travel  reported underlying EBITDA of $65 million for FY20. This gave underlying net profit after taxes of $32 million but a statutory loss of $8.2 million.

The less-than-stellar results are expected given the turmoil in global travel markets. Border closures have dramatically reduced travel spend during the second half, with client activity reaching its lowest point in April 2020.

Positively, Corporate Travel reported a better than expected Q4 performance. Revenue averaged $11.5 million a month compared to $2–$5 million a month in May. This was due to its high level of exposure to clients in essential services industries who have been permitted to travel despite restrictions.

The company has established a solid platform for growth with client retention above 97% and new business wins in all regions. 

With a strong liquidity position and no debt, Corporate Travel is positioning itself for recovery. It has $60 million cash net of client cash and creditors and no further significant one-off costs expected in FY21. The deferred interim dividend has been cancelled in order to preserve funds. 

What’s next for Corporate Travel? 

Corporate Travel is seeing a significant contribution from essential services travel, which provides recurring revenues.

With a focus predominantly on domestic travel, managing director Jamie Pherous says the business model “positions the business for a rapid return to profitability with only a marginal increase in domestic travel activity from current levels”.

Given ongoing uncertainty around travel restrictions, the company has declined to provide FY21 guidance, but says an extended period with no international travel is likely to create opportunities for industry consolidation.

Corporate Travel will consider potential acquisitions that align with its strategy and says it is well-positioned to pursue these opportunities. The Corporate Travel share price was trading at $12.14 at yesterday’s close.

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Motley Fool contributor Kate O’Brien has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Corporate Travel Management Limited. 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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