For the second time in 10 months, Speedcast International shares have fallen sharply in the wake of a profit downgrade.
In August 2018 the company revealed an earnings before interest tax depreciation and amortisation (EBITDA) forecast range of $135 million to $145 million that was weaker than expected and the shares fell 35% to $4.35.
Yesterday shares in the satellite business slumped more than 40% to $2.16 after it revealed that it now expected EBITDA to be lower – in the region of $US140 million to $US150 million.
The company also warned it expects first half 2019 adjusted EBITDA to hit between US$60 million to US$64 million, which means it will need to deliver a far stronger second half to the year to even meet its downgraded guidance.
“Speedcast’s expectations for 1H 2019 and full year 2019 have changed since our recent 2019 outlook at our AGM in May due to evolving market conditions and more recent commercial developments,” the company said in yesterday’s announcement.
It singled out delays in NBN revenues, weak market conditions in enterprise and emerging markets and “technical difficulties causing further delays in the ramp-up of the Carnival contract”.
As well the acquisition of GlobComm last December will not provide the boost first forecast.
“Globecomm’s expected contribution to EBITDA of US$8 million to US$10 million in 1H 2019 is lower than previously expected of (in the order of) US$12 million mainly due to delays in Government systems integration projects, lower revenue in Maritime as a result of higher churn, and delayed new business wins,” the company said yesterday.
“This includes the contribution of cost synergies, expected to be approximately US$4 million, in line with original expectations,“ Speedcast said.
“Globecomm Underlying EBITDA is expected to be approximately US$21 million in full-year 2019, US$5 million lower than previously expected. With respect to cost synergies from the Globecomm acquisition, Speedcast is on track to achieve approximately US$11 million in 2019 in line with previous guidance,” the company added.
