Empired: Execution is key

Execution is a key investment characteristic we look and the management of Empired has delivered that in spades. Late in 2014, EPD provided guidance that it would contest a pipeline of $100m in large strategic contracts to be awarded by 30 June 2015. Following a string of contract wins, EPD announced last week that it had secured $65m of the $100m that was contested and upgraded revenue guidance for FY15 and FY16. The contract wins all represent new business for blue chip clients and include a high level of recurring revenue. Importantly, EPD announced that its recent acquisition, Intergen, had won a $12m contract with the Ministry of Primary Industry, underpinning management’s decision to acquire this business. At the same time, EPD advised that 100 staff had been recruited to support the execution of these contracts in FY16. The substantial costs associated with recruiting, onboarding and mobilising approximately 100 new staff will weigh on profit in FY15. However, we’re willing to look past some short-term softness given the significant uplift in revenue and profit expected in FY16. (VIEW LINK)