After battling some climate woes and addressing the underperformance of some units, traffic management company AVADA (ASX: AVD) is powering through. In FY23, it has reported an increase in earnings, forecasting FY24 numbers to look up too.

The Company’s earnings reached $15.8 million for the full year, with $8.7 million achieved in the second half of the year. AVADA has also provided a forecast for the 2024 financial year, estimating an underlying EBITDA in the range of $20 million to $22 million.

The unaudited earnings outcome for the second half of the 2023 financial year exceeded the previously provided guidance range, indicating the success of ongoing initiatives implemented in the first half. AVADA’s focus on improving profitability, along with favourable trading conditions, including normalised weather patterns, has contributed to this positive outcome.

AVADA’s improved financial position—which was hurt by unpredictable weather and poor performance in the first half—can also be attributed to two strategic acquisitions completed during the financial year. These acquisitions have strengthened the Company’s overall performance, and AVADA aims to pursue more such acquisition opportunities that align with its growth strategy. Plus, in 2023, the Company entered the New Zealand market and is now witnessing positive outcomes.

During H2 FY23, AVADA implemented measures aimed at centralising and consolidating various functions, such as operating models, finance, IT, and human resources. This initiative has resulted in cost savings and better resource allocation. Additionally, as AVADA took on recruiting an experienced team, its executive director Robert Cazzolli stepped down to spend more time with his family.

AVADA expects its underlying EBITDA for H1 FY24 to range between $7.5 million and $8.5 million, surpassing the $7.1 million achieved in the first half of the year.

Looking ahead to FY24, AVADA plans to focus on organic growth while continuing to pursue cost efficiencies and margin improvements. Based on the current trading outlook, assuming average weather conditions and prevailing industry demand and macro-economic factors, AVADA anticipates an underlying EBITDA between $20 million and $22 million for the 2024 financial year.

This forecast includes expected organic EBITDA growth of 8% and the full-year impact of Wilsons Traffic Management, which AVADA acquired on May 5, 2023.

What’s more, last month, the Company announced its intentions to build a new traffic management company, Bilingarra Indigenous Services. In a a 49-51 joint venture agreement with Maranirra Indigenous Services Group, AVADA will not only diversify its portfolio but also help train indigenous population.

In some ways, AVADA feels that its business rests on nature’s devices—unpredictable weather and what not—given that it functions outdoors. On the other hand, it is finding profitable ground in acquisitions, expansions and reviewing its operations strategy.