G8 Education (GEM) H1 2024 earnings summary

Executive summary

• Achieved strong revenue and earnings growth despite sector headwinds, with operational focus, cost discipline, and network optimization driving improved results.

• Occupancy improved to 68.2%, up 0.8 percentage points year-over-year, though recent months saw a softening trend.

• Divested 15–18 underperforming centres, surrendered 3 leases, and opened 2 new centres as part of ongoing portfolio optimization.

• Statutory NPAT increased by 33.6% to $20.0 million, with a fully franked interim dividend of 2.0 cents per share declared.

• 91% of centres rated 'Exceeding' or 'Meeting' National Quality Standard, with a 10%+ reduction in emissions and improved team retention.

Financial highlights

• Revenue increased 5.5–6% year-over-year to $480.4–$483.3 million, supported by higher occupancy and fee reviews.

• Operating EBIT rose 18.9–20.5% to $39.4–$55.4 million; operating NPAT up 21.8% to $23.9 million.

• EPS increased 33.5% to 2.5 cents; interim dividend of 2.0 cents per share, up 33%, representing 81% of NPAT.

• Operating cash flow ranged from $31 million to $67 million, with net debt at $68–$120 million and leverage at 0.5x.

• CapEx for 2024 estimated at $40–$45 million.

Outlook and guidance

• Sector conditions expected to be more challenging in H2 2024, with lower enquiries and cost of living pressures impacting occupancy.

• Federal Government to fund a 15% wage increase for ECEC employees, with a 4.4% fee cap for 12 months from August 2024.

• Ongoing focus on team engagement, family experience, operational execution, and cost management.

• On-market buyback of up to 5% of issued capital to be implemented.