Nido provides trading, pipeline and guidance update ahead of half year close

Listed early learning provider Nido Education has released a pre-close investor update in which it provides an update on current trading, its greenfield development pipeline as well as full year earnings guidance.

 

The Group, which became the ASX’s fourth listed early childhood education and care (ECEC) provider in October 2023, has confirmed that at a group level operating earnings (EBITDA) will amount to around $26.3 million and net profits (NPAT) around $17.8 million in calendar year 2024, with both results more or less consistent with forecasts provided at listing in October 2023. 

 

Earnings from the core operating portfolio, consisting of both mature and ramping Nido services, are estimated to reach $35.5 million, six per cent higher than forecasts, which will serve to offset a lower than expected contribution from management fees as thirteen new openings are rescheduled to 2025. 

 

Despite current operating conditions being relatively robust the turmoil experienced in the construction and development segment of the early learning sector appears to be persisting longer than expected. 

 

“Increased construction costs, shortage of trades, and construction company failures have resulted in renegotiation of rents across many locations. As a result we have experienced delays in construction commencement pushing thirteen builds into 2025,” the Group stated in  its update. 

 

The consequences of the deferrals explain the shortfall to this year’s management fee income, with the expected $3.25 million in management fees now instead expected in CY25. 

 

Current operating conditions appear supportive of core portfolio performance  

 

Occupancy across the group’s 52 owned services reached 78 per cent in the week of 12 May 2024, five per cent higher than that disclosed in its inaugural FY results released in February 2024, appearing to be following a similar trend to that recorded last year. 

 

The Group expects average occupancy forecasts for 2024 to peak at 89 per cent in November,  seven per cent higher than last year.

 

Current daily fees across the network are $158 per day and are signaled to rise to around $163 by end of the year, which implies a further rise of around 3.1 per cent in coming months. 

 

Workforce management initiatives continue to emphasise both staff retention and attraction with turnover still hovering around levels experienced prior to COVID-19 in excess of 30 per cent. 

 

That being said, open roles in April were consistent with those recorded in February and March, with overall new hires trending lower given early hiring in February to get ahead of the build up in seasonal demand requirements. 

 

To read Nido’s trading update presentation click here.