G8 Education (GEM) H1 2024 earnings summary

Executive summary

• Achieved strong revenue and earnings growth despite sector headwinds, with net profit after tax rising 33.6% to $20.0 million, driven by improved occupancy, operational execution, and cost discipline.

• Occupancy improved to 68.2%, up 0.8 percentage points year-over-year, supported by higher booking frequency and network optimisation.

• Network optimisation included divestment of 15–18 underperforming centres, surrender of 3 leases, and opening of 2 new centres, enhancing portfolio quality and earnings.

• Maintained a strong and conservative balance sheet, enabling capital management flexibility and supporting a 33% increase in interim dividend.

• 91% of centres rated 'Exceeding' or 'Meeting' National Quality Standard, with continued progress on ESG initiatives and a 10%+ reduction in emissions.

Financial highlights

• Revenue increased 6% year-over-year to $483.3 million, with operating EBIT up 20.5% to $55.4 million and statutory NPAT up 33.6% to $20.0 million.

• Operating NPAT up 21.8% to $23.9 million; EPS increased 33.5% to 2.5 cents.

• Interim fully franked dividend of 2.0 cents per share declared, up 33%, representing 81% payout of NPAT.

• Operating cash flow pre-tax up 14% year-over-year, with net debt at $90 million due to seasonal factors and higher dividend payment.

• CapEx for 2024 estimated at $40–45 million, with $13.1–15 million spent in H1.

Outlook and guidance

• Sector conditions expected to be more challenging in H2 2024, with lower enquiries, cost of living pressures, and occupancy softening from May 2024.

• Federal Government to fund a 15% wage increase for educators, with a 4.4% fee cap for 12 months from August.

• Focus remains on team engagement, family experience, operational execution, and cost management.

• CapEx for 2024 estimated at $40–45 million, subject to construction and timing.