Nido Education (NDO) H2 2024 earnings summary

Executive summary

• FY24 revenue reached $166.8 million, up 74% year-over-year, with EBITDA (pre-AASB 16) of $22 million and NPAT of $19.5 million, reversing a $14.9 million loss in FY23.

• Declared a partially franked dividend of 5.8c per share, yielding 7.4% on current share price.

• Service EBITDA rose to $32.4 million, averaging $611,000 per service, with margin improving to 20%.

• New CEO brings over 20 years of transformation and strategy experience, emphasizing quality, educator support, and a unique growth model.

• Incubation model continues to de-risk growth, with 13 services in incubation and a pipeline of 100+ sites.

Financial highlights

• Service revenue increased 81% to $159.9 million; establishment and management fees slightly declined.

• Cash from operations was strong at $25 million, with a cash conversion rate of 110% and free cash flow of $24.1 million.

• Net leverage ratio at 0.16x, with $48 million acquisition facility available.

• Finance costs were kept low at $500,000 due to refinancing and debt repayments; net finance costs reduced by 62% year-over-year.

• FY24 tax expense was $1 million after utilizing available tax losses.

Outlook and guidance

• January 2025 service-based EBITDA increased 40% year-on-year (30% organic, 10% acquisitions), but February enrolments subdued due to economic caution.

• Significant upside potential for 2025, supported by government policy changes and sector tailwinds.

• Expecting to deliver 13 new services in 2025 and escalate to 20 per year in 2026.

• Confident in reaching the target of 150 company-owned centers by 2029.

• Changes to the child care subsidy activity test and 2025 election may further boost demand and sector support.