Full Year 2026 Steadfast Group Ltd Earnings Call Transcript
Key Points
- Steadfast Group Ltd (SFGLF) delivered solid underlying earnings growth, with underlying NPAT up 8.2% to $319.5 million and underlying EBITDA up 13.8% to $669.8 million.
- The company's broking network achieved 6.2% GWP growth to $13.2 billion, driven by organic growth and acquisitions, with EBITDA up 13.2%.
- Underwriting agencies demonstrated resilience, growing GWP by 2.3% despite a soft market, with EBITDA up 5.2% and organic income growth of 4.6%.
- International operations exceeded expectations, with ISU Steadfast and HWS Specialty beating budgeted EBITDA, and Novum achieving over 60% organic growth in GWP and revenue.
- The proposed acquisition by KKR at $6 per share represents a 51.9% premium to the undisturbed share price, providing significant value to shareholders.
- Strong cash generation continued, with post-tax operating cash flow of $408.6 million exceeding underlying NPAT, and free cash flow up to $166.6 million.
- Technology advancements, including Steadfast Apps and AI-driven tools, are enhancing broker efficiency and data insights, with a 40% performance improvement in platform optimization.
- The premium rate cycle has been softening, with the slowest period in two years at the FY26 close, impacting organic growth in broking.
- Organic GWP growth in the broking network was moderate at 2.4%, reflecting the soft market conditions.
- Underlying NPAT growth of 8.2% was lower than EBITDA growth of 13.8%, due to increased financing and amortisation costs from acquisitions.
- The company faces regulatory approvals and uncertainties related to the scheme of arrangement, which could delay or affect the takeover completion.
- The dividend reinvestment plan will not apply for FY26 due to the scheme, limiting shareholder options for dividend reinvestment.
- The FY27 guidance assumes a 2% to 3% improvement in premium rates, which is uncertain given the current market softness.
- The disposal of Sterling impacted underwriting agency GWP, and the company noted a slight negative impact on growth.
(Operator Instructions) I will now hand over to Robert Kelly.
Thanks very much, David, and welcome everybody to the call. I'll get straight into it.
If you go to page 4, it's just basically our graphs that demonstrate our performance since 2014. I just asked you to read the graphs from left to right, not from right to left.
Okay, we're proud of those graphs and I won't bore you by going through them from the bottom. So if you go to page 5, I think this is the brief page of where we're actually at and where we look like from that point of view.
It just proves our resilience and that how through funny periods of time in where the premium cycle goes up and down, we can adapt our business model to provide results. The NPAT, statutory NPAT at $269.1 million, underlying NPAT up 8.2% to $319.5 million, underlining diluted EPS NPAT, up 7.7% at $28.8 million and the underlying diluted EPS NPATA is up 6.7% to 33 CPS.
Underlying NPATA
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