Usually any report on Australia-domiciled Speedcast starts off with “fast growing”, but the international communications technology company has stumbled this week on the Sydney stock exchange. The company specialises in connecting shipping (commercial and cruise), mining, government and energy markets with secure satellite broadband and IT facilities.
Speedcast also confirmed it had entered into a definitive agreement to buy Globecomm Systems for US$135 million (to close in Q4 this year) and last year acquired UltiSat, to add to its existing leases on some 70 satellites positioned around the planet.
Speedcast announced its half-year financials on August 28th and while the headline numbers looked good (revenues up 24 per cent) the company reported that its important ‘Energy’ sector was suffering (down 17 per cent). EBITDA margin was 19.8 per cent (21.6 per cent last year).
Speedcast’s largest customer is Royal Caribbean Cruise Lines, which it supplies with broadband connectivity.
It will be borrowing new cash to fund the latest purchase and also restructure some existing debts. But its overall debt obligations increases to US$430 million.
Speedcast has adjusted its full year 2018 guidance down, from US$155 million (EBITDA) to US$135-$145m. It means the company is now trading at about 25-times earnings. The company says it is on track to see revenues of US$1 billion within three years. Pro-forma revenues, with Globecomm, would have been US$758 million.
At one point the company’s shares had crashed 37.4 per cent to just A$4.35, although recovered slightly in afternoon trading on the exchange to A$4.55.