Speedcast International Limited 
 
Downgrades FY19 Earnings by ~10%:Speedcast International Limited (ASX: SDA) is a leading remote communications and IT services provider. The company delivers critical communications solutions through its multi-access technology, multi-band and multi-orbit network of more than 80 satellites and an interconnecting global terrestrial network, bolstered by extensive local support from more than 40 countries.
 
On 05 February 2020, with a press release, the company informed that the securities of Speedcast International Limited (ASX: SDA) will be suspended from quotation immediately under Listing Rule 17.2, at the request of SDA, awaiting the release of its latest FY19 financial results.
 
Change in Management: On 03 February 2020, the company announced the acceptance of PJ Beylier’s resignation from the post CEO, effective from 01 February 2020. The company highlighted that on the expectations of the disappointing preliminary FY19 result, Mr. PJ Beylier took the above action. The company also announced that its existing Board of Directors, Peter Shaper and Joe Spytek will act as joint interim CEO till further notice. They will be paid a salary of US$25k each per month and will be entitled to a short-term incentive from the full year bonus target of US$250k each.
 
Upcoming Activities by the Company: The Board also mentioned that the range of non-trading profits such as procurement savings, the sale of minor surplus assets and the impact of various accounting estimates are normally included within the company’s reported EBITDA. However, SDA also confirms that the core result and the non-trading items for FY19 may show certain discrepancies from the earlier guidance provided by the company. The Board expects providing further transparency around the preliminary result at the time it resumes trading; which majorly includes identification of the amounts which is likely to deliver a baseline for the expected performance of the business in FY20.
 
The Board also proposes a long-term incentive of Performance Rights, with a full year value of US$200k each, subjected to the shareholder approval.
 
Outlook: The company also informed about its FY19 earnings downgrade of ~10% which includes several items that do not directly impact to current earnings. However, the Board is analysing whether additional matters, such as non-cash write downs, should be taken up, and what additional additional market disclosure is appropriate. The Management will review the potential exit from its non-core segments to reduce debt component. As per the previously provided FY19 guidance, the company expected EBITDA within the range of $150 million to $160 million, including a $10 million of Leasing reclassification benefit. The company was expecting a moderate organic growth during the second half of FY19. Underlying EBITDA from Globecomm was expected at ~$21m, including cost synergies of ~$11m ex Leasing reclassification benefit. Globecomm cost synergies in FY20 were expected within the range of $18 million to $20 million.
 
Stock Update:The stock has corrected 20.60% and 58.09% in the last three months and six months, respectively. The CEO of the Group has resigned on account of the poor FY19 performance. The company lowered its FY19 guidance and indicated that the full-year FY19 earnings will be impacted by several non-cash write downs. The stock of SDA lastly traded at $0.790, up 1.282% as on 31 January 2020. We look forward the stock to come out from suspension which is due to the pending announcement related to its latest FY19 financial results.

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