Pace steps higher with 28% dividend hike, more acquisitions expected
Pay-TV specialist Pace set off into 2015 at top speed as it raised its dividend by over a quarter thanks to a strong performance last year and strong momentum going into the new year.
FTSE 250
19,391.30
17:09 19/04/24
FTSE 350
4,341.08
17:09 19/04/24
FTSE All-Share
4,296.41
17:08 19/04/24
Pace
415.40p
17:15 23/12/15
Technology Hardware & Equipment
1,920.18
16:30 11/04/24
The FTSE 250 company, which develops technology for PayTV and broadband service providers, lifted revenue 6.1% to $2.6bn as it launched a record number of products into the market.
Chief executive Mike Pulli said Pace had continued to evolve into "a more profitable, cash generative business with a broader spread of offerings and customers" that allowed to finish the year in a strong position.
The $323m acquistion of Aurora Networks last year was hailed as a "great strategic addition", widening out the group offering into broadband network infrastructure and building deeper relationships with customers. The integration was achieved ahead of plan and helped the networks business achieved a record year due to strong underlying customer demand.
Pulli and his team expanded the operating margin by an impressive 140 basis points to 9.2%, a year ahead of target, helping adjusted earnings before interest, tax, depreciation and amortisation surge 24.5% to $241.1m.
Profit before tax soared 34.3% to $175.7m, with adjusted basic earnings per share up 43.6% to 63.6 cents, ahead of consensus forecasts due to lower financing costs and a much lower effective tax rate.
Based on the momentum of the business going into 2015, management has proposed a final dividend 4.75 cents per share, resulting in full year dividend of 7 cents, a 27.5% increase on the prior year.
For 2015, the team has guided to 5% revenue growth, nearly 6% growth in EBITA and predicted at least $185m of free cash flow.
Pulli said Pace was well positioned to capitalise on major market trends over the next three to five years and made confident noises about the "significant opportunity" for the increasing performance via Aurora and potential further acquisitions.
Broker Peel Hunt agreed. "Although margin progression must now slow, we expect Pace to use its balance sheet to drive earnings ahead of our current forecasts, most likely through acquisition."