Leading toll road operator Transurban Group (ASX: TCL) has reported a net profit excluding significant items of $45 million for the financial year (FY) ending 20 June 2015.
Due to the massive upfront costs associated with building and acquiring toll roads, the reported results of Transurban always require a deep dive by investors. For this reason, adjusted results can be more insightful for understanding the underlying operating performance of the company.
Here are the key points from today's full year profit result.
Financials:
- Adjusted revenue grew 10.7% to $1.2 billion
- Adjusted earnings before interest, tax, depreciation and amortisation (EBITDA) increased 13.1% to $1.05 billion
- The adjusted EBITDA margin expanded to a whopping 85.7% from 83.9% in the prior year
- Gearing increased from 36.4% to 40.2%, however the interest cover ratio also increased from 2.9x to 3.5x
- The full year dividend was up 5 cents per share (cps) to 40 cps
Operations:
- Average daily traffic (ADT) across the Transurban network increased by 5%
- Sydney was a standout with ADT growing 7.7% thanks to additional capacity being delivered through widening and on-ramp projects
- Northern Virginia also saw a surge in ADT due to the 95 Express Lanes opening for operation in December 2014.
Outlook:
- The outlook for Transurban remains positive with the group controlling a suite of highly desirable assets. Amongst the future growth drivers of the business is the scheduled works to undertake the widening of the CityLink Tullamarine freeway.
- Transurban's management also provided guidance for a FY 2016 pay-out of 44.5 cps which represents an 11% increase over FY 2015.
- For investors looking to undertake a valuation of Transurban one of the more useful measures is the free cash flow (FCF) data provided by management. According to today's presentation FCF in FY 2015 equated to 40.2 cps. With the stock trading around the $10 mark, this implies a price-to-FCF multiple of 25x.
