- Wednesday, October 16, 2024
Dye & Durham, the Canadian cloud-based software company, has announced its focus on reducing its leverage ratio as quickly as possible. This news has caused a surge in the company's shares, which are now trading 3% higher at 8.65 Canadian dollars ($6.26). Although this is a moderation from a morning high of C$9.71, it indicates positive investor sentiment.
To achieve this goal, the company has successfully reduced its total debt by 45 million Canadian dollars ($32.5 million) since June. Notably, these debt repayments have significantly contributed to the decrease in liabilities.
However, Dye & Durham's share price has been under continuous pressure since its fourth fiscal-quarter results were announced in September. The company's increased investment in mergers and acquisitions during that period did not resonate well with the market. As a result, the stock is now down approximately 47% year-to-date and nearly 43% lower over the past 52 weeks.
Despite these challenges, Chief Executive Matthew Proud remains optimistic about the company's prospects. He emphasizes that reducing the leverage ratio to less than four times the total net debt to adjusted earnings before interest, taxes, depreciation, and amortization is a top priority. Proud highlights the C$45 million in debt reduction achieved during the quarter as evidence of their commitment.
In terms of financial performance, Dye & Durham's first fiscal quarter ended on September 30. Although the company reported flat revenue of C$120.1 million during this period, it exceeded analyst forecasts of C$117.4 million. However, the net loss widened by C$2 million to C$13.5 million due to higher financing costs. On a positive note, adjusted Ebitda increased by 7% to C$68.7 million.
CIBC analyst Scott Fletcher acknowledges that the company's fourth fiscal-quarter results were generally aligned with expectations. However, he attributes the market's negative response to Dye & Durham's commitment to investing an additional C$55 million in mergers and acquisitions after the quarter ended. This decision raised concerns given the company's already elevated levels of leverage.
To alleviate these concerns, Dye & Durham's management has assured investors that future M&A activity is highly unlikely. This message was conveyed through a call with investors, indicating that the company has taken heed of market feedback.
Overall, Dye & Durham remains focused on debt reduction and restoring investor confidence amidst challenging market conditions.
All Rights Reserved © 2024
Post a comment