Credit: Cirrus Networks
A renewed services-led strategy and structural changes are beginning to show improved earnings momentum for Cirrus Networks in the financial year ahead.
Revenue was slightly down 2 per cent on the financial year 2020-21 to $104 million, but despite this, the company experienced a record second half revenue of $60 million – up 13.5 per cent on the previous period.
Adjusted earnings for FY22 before tax (EBITDA pre options) were $2.1 million, up 2 per cent on the prior year, while profit after tax was up 6.9 per cent, to $471,369.
The company did point out that the earnings results should be viewed across two halves “given the significant negative events in the business during the first half”, which saw the company successfully defend “a very disruptive and costly low-ball hostile takeover bid while faced with ongoing COVID headwinds on labour and supply chain”.
Following a comprehensive review, the company executed a restructure in October 2021 to reduce overhead and simplify the structure to execute on strategic services focus as a pathway to growth.
Cirrus expects the renewed services-led strategy and structural changes will deliver strong business outcomes into FY23.
“While never an easy decision, the restructure has re-energised the business and I want to recognise and thank the wonderful Cirrus staff across all our locations who have embraced the changes,” Cirrus managing director Chris McLaughlin said.
“The Cirrus team continue to be recognised for their technical expertise, innovative approach and uninterrupted focus to deliver great client outcomes.”
McLaughlin said a real positive was the growth in services contribution and in particular the higher margin annuity based managed services.
Along with the Icon Water win, McLaughlin said it had preferred tenderer status on another significant managed service contract and ongoing opportunities being qualified and tendered demonstrates Cirrus’ evolution.
“The significant ongoing momentum, coupled with a solid debt free balance sheet and $9.6m of cash, puts the business in the strongest position it has ever been going into a new financial year and provides confidence to deliver continued improvement in FY23 earnings,” he said.
Combined services revenue (professional and managed) was up 17 per cent to $30.7 million, in comparison to FY21 with $26.4 million.
Cirrus said this was driven by managed services annuity revenue of $14.1m, up 30 per cent on prior year.
The company also highlighted the successful transition and operation of the Geoscience Australia managed service deal in FY22 as a strong contributor to the improved performance.
While product delivered $6.1 million gross margin, the combined services gross margin was $8 million and a blended gross margin percentage of 26 per cent, with managed services margin at 36 per cent.
Cirrus said professional services margins were lower than expected, particularly in the first half, due to project delays caused by global supply chain issues negatively impacting product deliveries on a number of implementation projects along with tightening of the labour market due in large part to border restrictions.
There is currently a record backlog of $12.1 million, compared to $4.9 million in FY21.
