Release Date: August 27, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Peoplein Ltd (ASX:PPE, Financial) maintained stable revenues at $1.17 billion, only a 1% decrease from FY23.
- The company has improved on-hire margins steadily throughout the year.
- Efficiency programs resulted in a cost reduction of $7.8 million in FY24.
- Strong cash conversion in the second half at 105% of EBITDA.
- Peoplein Ltd (ASX:PPE) has a resilient balance sheet, operating well within covenant and risk levels.
Negative Points
- Normalized EBITDA decreased by 39.5% to $37 million, impacted by lower permanent recruitment revenue.
- Total billed hours were 2.3% lower at 21.5 million hours.
- Permanent placement revenue was down $14 million from FY23.
- The company paused full-year dividends to strengthen the balance sheet.
- Economic conditions are expected to remain challenging for at least the next six months, impacting business confidence and recruitment activities.
Q & A Highlights
Highlights of PeopleIn Ltd (ASX:PPE) Earnings Call Transcript
Q: Can you give us a sense of whether the working capital position has normalized post-balance state? How should we be thinking about operating cash over EBITDA conversion?
A: The second half was very good, returning to normal after timing differences in the first half. We should consistently target an 85% to 90% cash conversion across both halves.
Q: Regarding the cost reductions achieved during the second half, how much of that will stick into FY25 and be incremental to earnings?
A: The program has been highly successful, taking out $7 million this year. Most of that, except for $1 million due to additional commissions and sales-based incentives, will stick into the new year.
Q: Where are we in the recruitment cycle, especially given the ongoing challenges in permanent recruitment?
A: We expect the next six months to continue to be challenging due to low business confidence. Until we see a pickup in business confidence, permanent recruitment and higher-margin areas will remain tough.
Q: Does the tough market translate to stabilizing or seeing incremental drops in demand across the business?
A: Conditions are tough, but there is an element of stability. We are taking appropriate actions on sales and cost efficiencies to manage the business for the current economic conditions.
Q: What is driving the improvement in professional services margins in the second half?
A: The improvement is due to better activity in finance and executive areas, cost reductions, and good performance in the permanent side, particularly in the last quarter.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
