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Embark Education reports strong CY23 results, confirms new acquisitions
Jason Roberts
Feb 28, 2024
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ASX listed Embark Education Group has released a strong set of CY23 results and confirmed a new set of acquisitions as it continues to execute its strategic growth plans.
Revenue growth across its network of 24 centres was16 per cent in 2023, rising to $63.1 million with underlying earnings before interest, tax, depreciation and amortisation (EBITDA) up 30 per year on year to $17.1 million.
EBITDA margins increased to 27.2 per cent in 2023, up from 24.2 per cent in 2022, supported by revenue growth but also disciplined through cost control. Wages as a percentage of revenue at a centre level were 52.6 per cent, down 2.2 per cent year on year.
Embark confirmed average occupancy of 82 per cent in 2023, compared to 80 per cent in 2022, with peak occupancy of 86.1 per cent reported in Week 41.
“Our financial and operational performance in 2023 was very encouraging,” Chris Scott, Managing Director and Chief Executive Officer said.
“I am happy with the way the Embark team is working together and the results are testament to a culture that is focused on optimising performance and delivering high quality early learning,”
New acquisitions to drive growth in 2024
Embark has confirmed it has entered into conditional contracts to acquire nine early childhood education and care (ECEC) centres five of which are in Victoria and four in Queensland.
The centres are of a high quality with strong occupancy and are expected to generate annualised EBITDA of around $6.3 million and take the total portfolio to 33 centres by the beginning of May 2024.
The cost of the centres is $25.2 million placing the translation on an earnings multiple of exactly 4.0x with funding expected to be met through cash reserves and operating cash flow.
With YTD revenues currently tracking 10 per cent higher than last year, the contribution from the new acquisitions will build on the strong foundations already in place.
Embark balance sheet in strong shape, new loan facility improves efficiency
Embark closed out 2023 with $26.9 million on the balance sheet, an increase of $10.6 million on the previous year with the Group also closing out 2023 with zero long term, or short term, borrowings.
The absence of any debt, and by extension financing costs, has been of a material benefit to Embark from a profitability perspective in the last 24 months as interest rates have steadily crept higher.
That being said, Embark has confirmed that a new bank credit approved facility has been secured for $20 million and that these funds could be used for acquisition purposes if required.
Embark will pay a fully franked interim dividend of AUD 1.5 centres for the second half of FY2023.
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