Embark Education confirms strong half year 2024 results and further acquisitions

Embark Education Group, the ASX listed early childhood education and care (ECEC) provider previously known as Evolve Education, has released its Half Year 2024 results confirming strong operational and financial performance in the period coupled with the anticipated settlement of a further seven acquisitions.

Strong occupancy performance helped push Group revenues up 34 per cent year on year to $34.4 million and operating earnings before interest, tax, depreciation and amortisation (EBITDA) up 20.7 per cent to $7.0 million. 

“I am delighted at the performance of Embark in the first half of 2024,” Chris Scott, Managing Director said. 

“We have once again demonstrated that our team and operating model can deliver excellent returns whilst concurrently scaling our business.” 

Healthy occupancy and cost management support financial outperformance 

Occupancy across the Group’s twenty nine centres averaged 78 per cent in the seasonally weaker first half of 2024, topping ASX listed peers G8 Education and Nido Early School which reported first half occupancy of 68.2 per cent and 77.0 per cent respectively. 

Wages as a percentage of revenue, a key measure of workforce usage efficiency, was 55.5 per cent (compared to 55.3 per cent last year) which, when combined with steady rental and centre expenses, saw EBITDA margins maintained at the 23.5 per cent level. 

Support office costs as a percentage of revenue remain anchored at 3.1 per cent, down slightly from last year’s 3.3 per cent, a solid performance given generic cost pressures and the scaling of the business. 

Group underlying EBITDA margins were up on last year, at 21.0 per cent. 

Growth remains on the agenda with seven new centres to transition 

Having already settled five centres that are contributing pro forma annual centre based EBITDA of $3.3m for a cost of $12.9 million so far this year Embark has now confirmed a further seven new acquisitions are planned for the coming weeks, with expectations for settlement in September and October subject to licensing and customary checks taking the overall network size to 36 centres.  

The seven centres will have 795 combined licence places and contribute twelve month pro forma post EBITDA of $4.9 million at a total purchase price of $20.4 million. 

It is understood that the transactions will be financed by a combination of cash on hand and some bank debt.

Current trading strong as spot occupancy reaches 83.5 per cent

As of the week ending 11 August 2024, occupancy across Embark’s twenty nine centres reached 83.5 per cent with centre consolidated centre EBITDA reaching a weekly record of $531,000, despite five centres only being owned for a portion of the year. 

Additionally, Embark stated that Group performance on a seven month year to date time frame was also substantially higher than the prior period last year with centre EBITDA tracking at $10.2 million to July 2024 up 27.5 per cent on 2023. 

In light of the Group’s overall performance the Board of Directors resolved to pay a further quarterly dividend of AUD0.015 (one and a half cents) per share taking the half year 2024 total pay out to 3.0 cents. The dividend will be fully franked with the ex-dividend date scheduled for 30 August 2024 and a payment date of 23 September 2024.

To review Embark’s half year results announcement, trading statement and presentation visit their website here.