Pinned straw:
Ava's FY23 results seem good to me. The market disagrees :)
The highlights from their results update:
If you look only at new revenue from the detect segment (an additional $3.8m in revenue), and ignore Illuminate which added $6.8m in revenue following the acquisition of GJD which was acquired in August last year, you still have a 20% lift in revenue. Indeed, around a third of orders for Detect came from North America, which saw a 20% lift in orders received over the year.
In fact, sales orders were up 36% if you ignore the GJD acquisition (up 71% in total). This is a great leading indicator for revenue growth.
Access was disappointing as the company awaits key product certification for the Cobalt 2 locks. Once received, the company expects that to open high quality distribution channels. We'll see.
Gross margins were essentially flat, which ain't bad given the shift in product mix (Illuminate products are lower margin), but the operating margin (ex restructure costs) was up 3% to 7%. A good demonstration of the operating leverage potential. They maintained their slide that highlights ambitions to growth the EBITDA margin to 14% next year, and up to 25% within 3 years. Also had the $100m sales target, which Mal talked about when we chatted with him recently. Very bold aspirations, but not unreasonable in my view.
At the bottom line there was a $1.1m net loss for the year due to higher depreciation and interest charges associated with GJD purchase. (compared to $0.7m in the prior year, ex discontinued operations).
Cash flow was negative for the full year as the business bulked up its inventory in response to supply chain issues. But op Cash flow was positive in the second half of the year. The company has $3m in net cash, but given receivables from recent orders, non-cash depreciation charges and working capital movements, I don't see a big risk of a capital raise.
At a current enterprise value of $46.8m, the EV/EBITDA ratio is 23.4x. That does not strike me as high given the pace of growth in revenue, sales order intake and the demonstrated scalability of the business.
I missed the briefing this morning, but will try and track down a recording and post here.
Full ASX presentation is here.
[HELD]
Silky84
I too thought this was a solid result for AVA. I know andrew recently mentioned on the podcast machine that doing your own analysis is key and ignore what the market does- this might then present buying opprtunities. In the past ive always been scared to buy when the market goes down on a result that i personally thought was decent- however i have taken the plunge and added today in RL. Not quite a back up the truck moment but progress none the less. In no small part thanks to the honest open lessons learnt from the strawman community! #strongertogether
mikebrisy
@Strawman I agree - pretty decent result.
I've had $AVA on my watchlist since joining SM over two years ago, including following your commentaries and the meetings. It was on my shopping list for this results season if a) result was good and b) price stayed good. So both were achieved this morning, and I have taken my 1% RL position (although I don't think the entire order has gone through at my price limit, although I have moved the market a litte back up ;-), you're welcome. ).
Will also add to SM.
Disc: Held in RL (yay) and later on SM.