Release Date: August 15, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Enero Group Ltd (ASX:EGG, Financial) delivered a net profit after tax growth of 7% on a like-for-like basis, driven by lower interest expenses and stronger earnings in wholly owned businesses.
- The company reported an 8% growth in earnings per share on a like-for-like basis.
- Enero Group Ltd (ASX:EGG) achieved a strong cash conversion rate of 88%, allowing for continued share buybacks and loan repayments.
- The Australian-based agencies, BMF and Orchard, showed strong performance with revenue growth and improved EBITDA margins despite inflationary pressures.
- The company has expanded its roster of blue-chip clients, including significant wins like the Endeavour Group, enhancing its client base and revenue potential.
Negative Points
- Net revenue decreased by 6% on a like-for-like basis, with EBITDA declining by 10%.
- OBMedia, a significant part of the business, experienced an 8% revenue decrease and a 17% decline in EBITDA on a like-for-like basis.
- The technology sector, particularly the Hotwire Group, faced ongoing challenges due to global market conditions, impacting overall performance.
- Enero Group Ltd (ASX:EGG) recognized a statutory loss of $44.2 million due to significant impairment losses related to ROI DNA and GetIT intangibles.
- The OBMedia sale process faced setbacks, with negotiations failing to finalize terms with a preferred bidder, prolonging uncertainty.
Q & A Highlights
Q: Is it possible to quantify the bounce back that you saw in the fourth quarter in OBMedia versus the third quarter?
A: We don't disclose trading quarter-by-quarter, but we noted ongoing market softness and volatility. There was a slight margin improvement in Q4, but it's based on only a few months of trading.
Q: Can you provide more color on the revenue cadence in the second half for the agencies business?
A: With only one month of data, the performance remains broadly consistent with the second half. We anticipate slight margin improvements in the technology sector due to cost actions taken in Q4.
Q: Is there potential to quantify the cost reductions executed in the second half in corporate and creative agencies?
A: The cost profile remains broadly consistent entering FY '25, with some cost inflation in growing agencies offset by savings in technology. We focus on maintaining cost relative to revenue.
Q: Can you provide extra color on the OBMedia sales process and the preferred tender not reaching an agreement?
A: We can't disclose specifics, but our focus is on driving positive shareholder outcomes. The asset is in demand, reflected in a competitive process, and we prioritize shareholder returns over speed.
Q: What is the difference in the revenue bridge between new client wins and the actual result in the agency business?
A: Not all new clients are $1 million clients. The strategy focuses on larger clients, dropping smaller ones, and recognizing revenue over time. This slide highlights clients over $1 million at a point in time.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
