After the market closed yesterday Alliance Aviation Services Ltd (ASX: AQZ) released their 2019 financial year (FY19) results which were headlined by record revenue and record profit.
Alliance Aviation is Australasia’s leading provider of contract, charter and allied aviation services currently employing nearly 600 full-time staff in Australia and Europe. The company has operational bases in five of Australia’s capital cities and a further three in the Queensland regional centres of Townsville, Rockhampton and Cairns.
During FY19, Alliance utilised 38 aircraft for more than 38,000 flying hours which is set to grow in FY20 after the addition of a number of new aircraft during this past financial year.
What You Really Need To Know
Alliance’s Net Profit After Tax (NPAT) came in at $22.7 million which is a 25.5% increase on the previous financial year. This strong bottom line result was driven by disciplined cost control along with strong growth in revenue which was up more than 11% to $277.1 million for the period.
This Rask Finance video explains the difference between revenue and profit.
Alliance has made a concerted effort to pay down debt over recent years and finished FY19 with total debt of $60 million and a gearing ratio now at a relatively comfortable 26%.
The strong operating performance of the business has allowed management to announce a record fully franked final dividend of 8.8 cents per share, payable to eligible shareholders in November.
Perhaps most importantly, Alliance maintained a positive outlook for growth for FY20. Management is expecting to see revenue growth in most of its business segments which are expected to drive further profit growth.
CEO Lee Schofield was clearly pleased with the result, saying, “Alliance has delivered the best financial result in the company’s history. This financial result is underpinned by the continued focus of all Alliance employees on ensuring the safe, on time and cost effective provision of services to all of our clients. This is what makes Alliance the pre-eminent aviation services company in Australia.”
Is Now The Time To Buy?
The Alliance share price has run hard in the lead up to the results announcement with the share price up more than 20% in less than two months. There is no doubting that this was a great result for Alliance but much of that good news may already be baked into today’s share price.
Personally, I’m not a big advocate for investments in the aviation space due to the heavy capital expenditure required to service and maintain aircraft and the ever-present tail risk of disasters that can erode years of hard work and company value in the blink of an eye.
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Disclosure: At the time of publishing, Luke has no financial interest in any companies mentioned.
