It's always a pleasant surprise when a company beats expectations, and Hansen Technologies Limited (ASX: HSN) delivered a record year to shareholders, steamrolling over its previous guidance in the process.
Surprisingly, shares have only risen 6% in trade today, which is far less than some other companies that posted more mediocre results. Here are the highlights from Hansen's full-year report:
The What
- Revenues up 24% to $106.2m
- Net Profit After Tax up 14% to $16.9m
- Earnings Per Share up 12% to 10.3 cents per share
- Dividends of 6 cents per share for a yield of 2.6% (5.5 cents in 2014)
- Acquisition of TeleBilling business in Denmark*
- $22m cash at bank, new $30m multi-currency loan facility
- Total borrowings of $10.4m**
*funded through a share issue, which is why Earnings Per Share grew slower than profits
**$10m in debt was drawn to aid cashflow after TeleBilling acquisition, and was repaid after the date of this report
So What?
Back in March, Hansen guided for operating revenue "in excess of $95 million", the final result of $106 million represents an increase of more than 10% above previous forecasts. Additionally, Earnings Before Interest, Tax, Depreciation and Amortisation (EBITDA) margins came in at 29.4%, at the upper end of the 25-30% range forecast.
Hansen management gains a tick for conservative forecasting, and a bigger one for their attitude toward debt. The TeleBilling acquisition in May resulted in management drawing down $10m from their new $30m debt facility to support company cash-flows post-acquisition. That debt has since been repaid, albeit after the date of the annual report which is why there is still $10m debt on the books.
The full-year report wasn't clear on this, but I am operating on the assumption Hansen repaid its debt from a combination of cash and receivables, meaning the company could have less cash than indicated. Regardless, it was an impressive set of results and Hansen looks to be in a sound financial position.
Now What?
Investors taking a dig through the balance sheet might notice that expenses grew almost in line with revenue, up 23% for the year. However, much of this looks to be as a result of acquisitions, with an increase in hardware and staffing costs (staff numbers grew by 90+ as a result of the TeleBilling acquisition alone).
Management's guidance for 2016 was for another record year, with revenue expected to exceed $135 million and EBITDA margin to remain in the range of 25-30%. Growth is expected to occur both organically and through new acquisitions.
With a 27% lift in revenue on the cards, zero debt and conservative management, shareholders in Hansen look to have a bright future despite the apparent expensive-ness of the stock, which trades on a Price to Earnings (P/E) ratio of ~27.
