Steel & Tube Holdings Limited · NZX:STU
Steel & Tube — H1 FY2019 Earnings Presentation
31 slides from Steel & Tube's earnings presentation, 2019
Slide 1: Interim Results Presentation
Interim Results Presentation For the six months ended 31 December 2018 1
Slide 2: Steel & Tube Is…
STEEL & TUBE IS… One of New Zealand’s leading providers of steel solutions, and a proud New Zealand company, with over 65 years of trading history We offer New Zealand’s most comprehensive range of steel products, services and solutions We operate with a significant presence across New Zealand
Slide 3: Half Year (1H19) Financial Summary
HALF YEAR (1H19) FINANCIAL SUMMARY 1H19 EBIT in line with earnings guidance of ~40% FY18 FY19 of full year earnings target $M 1H18 2H18 1H19 Significant improvement on 2H18, with strong Revenue 267.9 227.9 258.2 sales growth and reduction in operating costs Normalised Revenue (1) 249.3 224.2 258
Slide 4: Half Year (1H19) Key Events
HALF YEAR (1H19) KEY EVENTS Continuing improvement in health and safety performance (TRIFR* down 40% on 1H18) Building momentum from Project Strive business transformation initiatives AX ERP system now settled in and providing key insights into the business and supporting customer service Co
Slide 5: Comparative Six-Month Snapshot
COMPARATIVE SIX-MONTH SNAPSHOT REVENUE EBIT Significant improvement on 2H18 10 300 results Sales revenue returning to 250 -10 previous levels with strong turn around on 2H18 200 -30 EBIT and NPAT recovering from $M $M 150 2H18 -50 1H18 2H18 1H19 1H18 1H18N 2H18 2H18N 1H19 Solid improvement i
Slide 6: Our Strategy for Profitable Growth
OUR STRATEGY FOR PROFITABLE GROWTH 6
Slide 7: Progress Under Striving for Excellence Strategy
PROGRESS UNDER STRIVING FOR EXCELLENCE STRATEGY Continuing improvement in health and safety TRIFR down 40% on 1HFY18 Continuing optimisation of Steel & Tube’s national 48 locations down to 40 network providing cost benefits Sales +15% and volumes +20% vs 2HFY18(1) Sales and volume upward trend
Slide 8: Improving Sales Trends
IMPROVING SALES TRENDS Positive trajectory seen in last 12 months as continuing focus on customer experience, improving stock availability and delivery performance realises benefits 2018 MONTHLY SALES PERFORMANCE TREND LINE 60 16 +20% +15% Volumes(Tonnes) $M (Monthly) 40 13 20 10 Dec-17 Jan-18 Mar-1
Slide 9: Reduction in Operating Expenses
REDUCTION IN OPERATING EXPENSES 2018 OPEX/SALES PERFORMANCE TREND LINE 25% Pleasing reduction in overall operating costs offsetting inflation pressures and Strive implementation costs Reduction in non-labour 15% expenses Combined with labour efficiencies, total operating costs as a percentage
Slide 10: Striving for Excellence Strategy: Location Consolidations
STRIVING FOR EXCELLENCE STRATEGY Location consolidations, retaining presence whilst improving efficiency 10
Slide 11: Striving for Excellence Strategy: External Warehousing
STRIVING FOR EXCELLENCE STRATEGY Integration of external warehousing 1H19 EXTERNAL WAREHOUSING SAVINGS Achieved by exiting third party 2,000 warehousing and integrating into existing S&T distribution centres 1,600 Savings exceeded expectations due 1,200 to the acceleration of integrations 800 in
Slide 12: Striving for Excellence Strategy: Freight Efficiencies
STRIVING FOR EXCELLENCE STRATEGY Operational excellence freight efficiencies 1H19 INFRASTRUCTURE FREIGHT BENEFITS 800 Increasing freight benefits in the Infrastructure business 600 Freight efficiencies resulted in an 83% improvement relative to the 400 1H18 baseline 200 $K Jul-18 Aug-18 Sep-18 O
Slide 13: Earnings Before Interest and Tax (EBIT)
EARNINGS BEFORE INTEREST AND TAX (EBIT) EBIT BRIDGE FROM 2H18N TO 1H19 Benefits of Project Strive being 15 seen in improved sales performance and increased operating efficiencies 10 $1.9m $9.7m $0.1m $9.8m 1H19 Normalised EBIT up 116% on $3.3m 2H18, reflecting the positive turnaround in ongoing
Slide 14: Balance Sheet
BALANCE SHEET $M FY18 1H19 Inventories 116.0 123.8 Prudent management of capital Trade and other receivables 99.2 84.1 expenditure Trade and other payables (49.9) (42.8) Improvement in debtors and Working Capital 165.3 165.1 collection rates Increased inventory to meet customer Cash and cash e
Slide 15: Significant Reduction in Net Debt
SIGNIFICANT REDUCTION IN NET DEBT NET DEBT BRIDGE FROM FY18 TO 1H19 Significant reduction in debt following capital raising concluded in 120 September 2018, repayments from $104.4m ($78.9m) improved operating cashflows and prudent capital expenditure 90 Ongoing efforts to improve working capital
Slide 16: Inventory
INVENTORY INVENTORY BRIDGE FROM FY18 TO 1H19 130 Improving core product availability and meeting customer demand +$3.0m ($2.2m) has been a focus ($1.1m) +$3.8m $122.7m Product price increases have also +$3.2m contributed to increased inventory value $116.0m 115 ~$6m of aged inventory has been
Slide 17: Capital Structure
CAPITAL STRUCTURE Annual Capital Structure Performance Dividend Policy Dividend payout ratio target of between 60% and Capital Metrics Target 1H18 FY18 1H19 80% of ‘normalised’ Net Earnings (NPAT) adjusted for any material non-trading items and subject to Net Debt: Net relevant factors at the time i
Slide 18: Divisional Review
DIVISIONAL REVIEW Distribution Infrastructure 18
Slide 19: Our Business: Divisions
OUR BUSINESS: DIVISIONS DISTRIBUTION INFRASTRUCTURE Products are sourced from preferred steel mills and distributed through Products are processed before sale and typically on a contract or project basis, Steel & Tube’s national network of branches including onsite installation services Roll-forming
Slide 20: Divisional Performance
DIVISIONAL PERFORMANCE REVENUE 1H19 REVENUE 300 Both divisions experienced 200 strong sales growth compared to 2H18 100 Distribution turnaround $M 0 1H18 2H18 1H19 due to product availability, Distribution Infrastructure service focus, and reduced operating costs EBIT 1H19 EBIT 15 Infrastructu
Slide 21: Distribution
DISTRIBUTION Key areas of focus: • Safety, quality and traceability • Site consolidations and operating efficiencies • Ongoing integration into a cohesive business offering high quality carbon, stainless steel and fastening products • Service standards and product availability exceeding customer exp
Slide 22: Infrastructure
INFRASTRUCTURE Key areas of focus: • Safety, quality and traceability • Sales growth momentum continues • Deliver further manufacturing efficiencies • Rationalise footprint to consolidate capabilities in key markets 22
Slide 23: Operating Environment
OPERATING ENVIRONMENT Global Steel Market Annual Trend GLOBAL CRUDE STEEL ANNUAL 2,000 PRODUCTION (1) Global crude steel production increased over the last year China’s increased output over the year which was 1,000 mainly consumed domestically Tonnes (Million) East Asian steel prices have beg
Slide 24: Outlook
OUTLOOK 24
Slide 25: Full Year (FY19) Guidance
FULL YEAR (FY19) GUIDANCE No change in guidance; Forecast FY19 earnings before interest and tax of $25m EBIT BRIDGE FROM 1H19 TO FY19 30 +$5.6m 1H19 performance in line $25m with expectations +$9.7m Improving business performance with 15 momentum building $9.8m ($0.1m) $9.7m Project Strive ben
Slide 26: A Stronger Future
A STRONGER FUTURE Steady economic growth trends across majority of sectors in which S&T operates – construction, manufacturing and rural Sales momentum on the strong foundation now in place Pleasing progress being seen with early benefits from Project Strive initiatives and improving sales res
Slide 27: Discussion
DISCUSSION 27
Slide 28: Non-GAAP Financial Information
2 8 NON-GAAP FINANCIAL INFORMATION The Group uses several non-GAAP measures when discussing financial performance. These include Normalised EBIT and Working Capital. Management believes that these measures provide useful information on the underlying performance of the Group. They may be used intern
Slide 29: Glossary of Terms
2 9 GLOSSARY OF TERMS EBIT: This means earnings before the deduction of interest and tax and is calculated as profit for the period before net interest costs and tax. Normalisation adjustments include: o FY18 Business rationalisation: Included business change costs incurred to rationalise Steel
Slide 30: Disclaimer
DISCLAIMER This presentation has been prepared by Steel & Tube Holdings Limited (“STU”). The information in this presentation is of a general nature only. It is not a complete description of STU. This presentation is not a recommendation or offer of financial products for subscription, purchase or s
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