How Embark Early Education’s Latest Acquisitions Boost Its Centre Count to 40
Embark Early Education announces a fully franked interim dividend and the conditional acquisition of two Queensland childcare centres, boosting its portfolio to 40 centres.
- Interim dividend of AUD0.015 per share declared
- Two Queensland centres acquired, adding 180 licensed places
- Acquisitions valued at $3.7 million with $923,000 annual EBITDA
- Expansion funded through increased bank debt
- Total centres to reach 40 after settlements
Dividend Announcement
Embark Early Education Limited (ASX: EVO) has declared a fully franked interim dividend of 1.5 cents per share for the fiscal year 2024. The dividend ex-date is set for 26 May 2025, with payment scheduled for 17 June 2025. This move reflects the company’s confidence in its ongoing cash flow and profitability amidst its expansion efforts.
Strategic Acquisitions in Queensland
In a significant growth step, Embark has executed conditional contracts to acquire two additional childcare centres in Queensland. These centres collectively offer 180 licensed places and generate an annual EBITDA of $923,000. The total purchase price for these acquisitions is $3.7 million, which will be funded through a drawdown on existing bank debt, currently standing at $4.4 million.
The settlements are anticipated in late May and early July 2025, subject to customary licensing and regulatory approvals. This acquisition will increase Embark’s portfolio from 38 to 40 centres, following 14 centres acquired during 2024 and 24 centres held prior to that year.
Growth Trajectory and Financial Implications
Embark’s aggressive acquisition strategy underscores its ambition to consolidate its position in the early childhood education sector. The incremental EBITDA contribution from these centres is expected to bolster the company’s earnings profile. However, the increased leverage through additional bank debt warrants close monitoring, especially in a sector sensitive to regulatory changes and operational costs.
Managing Director Chris Scott’s leadership appears focused on balancing shareholder returns with strategic growth, as evidenced by the simultaneous dividend declaration and expansion moves. The company’s ongoing due diligence on further acquisitions signals that this growth phase is far from over.
Bottom Line?
Embark’s dual focus on rewarding shareholders and expanding its footprint sets the stage for a pivotal year ahead.
Questions in the middle?
- Will regulatory approvals for the new centres proceed smoothly and on schedule?
- How will the increased debt impact Embark’s financial flexibility and credit profile?
- What are the prospects and timelines for further acquisitions in Embark’s pipeline?
