Arborgen Holdings Limited · NZX:ARB
Arborgen — Shareholder Meeting (August 2024)
30 slides from Arborgen's shareholder meeting presentation, Aug 26, 2024
Slide 1: Annual Shareholders' Meeting
ANNUAL SHAREHOLDERS’ MEETING 26 AUGUST 2024
Slide 2: Disclaimer
DISCLAIMER This presentation has been prepared by ArborGen Holdings Limited (“ArborGen”), to provide an overview of the performance of ArborGen and its activities at the date of this presentation. It is not prepared for any other purpose and must not be provided to any person other than the intended
Slide 3: Chair of the Board
CHAIR OF THE BOARD David Knott
Slide 4: Introducing the Board
INTRODUCING THE BOARD David Knott George Adams Chairman Independent Director Appointed 19 August 2021* Appointed 12 August 2019 Paul Smart Thomas Avery Ozey Horton Independent Director Independent Director Independent Director Appointed 21 August 2018 Appointed 18 July 2018 Appointed 11 July 2018 4
Slide 5: Our Vision
OUR VISION To be the world-leading provider of value-added, high-quality seedlings for the forestry industry… creating thriving forests that benefit landowners, the environment, and future generations through unmatched industry expertise. 5
Slide 6: Dual Pathway Strategy
DUAL PATHWAY STRATEGY Driving growth and leveraging long term demand trends OPERATING STRENGTH GO TO MARKET Enable a strong foundation for the Grow demand and sales of higher value future advanced genetics seedlings • Strengthen the organisation and • United States: Expand market and develop a perfo
Slide 7: FY24 Highlights
FY24 HIGHLIGHTS FROM SEEDLINGS TO SUCCESS Further year of improved financial and commercial performance Record Adjusted US GAAP EBITDA Growth strategy delivering clear benefits and outcomes New CEO and leadership strengthening the business Clear pathway to future growth 7
Slide 8: Growth Strategy Delivering Tangible Results
GROWTH STRATEGY DELIVERING TANGIBLE RESULTS FY24 surpassed pre-ANZ sale earnings; significantly reduced net debt Accelerated expansion into Brazil ANZ sale Nov 2021 for FY24 comparatives to FY20: US$m $NZ$22.25m 60 • Record revenue, up 19% • Record Adjusted US GAAP 40 EBITDA, up 38% 20 • Gross profi
Slide 9: Share Price Disconnected from Fundamental Value
SHARE PRICE DISCONNECTED FROM FUNDAMENTAL VALUE Share buyback announced 14 12 • Share price does not reflect 10 intrinsic value of the company • Value accretive for shareholders 8 • Reflects Board confidence in US$m 6 long term growth strategy 4 Board remains committed to 2 driving shareholder value
Slide 10: Building Value in FY25
BUILDING VALUE IN FY25 CORPORATE: US SOUTH: BRAZIL: Capital Management Margin Expansion and Accelerated Growth Measured Growth Opportunities • Lease/sale of Ridgeville • Maintain and grow • Continue to expand building market share through acquisition of • Continuing efficiencies • Focus on higher va
Slide 11: Climate Resilience and Opportunities
CLIMATE RESLIENCE AND OPPORTUNITIES Experienced management of climate risks OPPORTUNITIES • Offsetting carbon emissions • Operations mostly outdoors - risk from through sequestration weather events – flooding, excessive rain, • Reforestation and hurricanes, drought, extreme heat afforestation projec
Slide 12: ArborGen is Strongly Positioned for the Future
ARBORGEN IS • The leading provider of advanced genetics for STRONGLY the forestry industry POSITIONED FOR • Unparalleled and proven product portfolios in THE FUTURE each of our core markets • Decades of investment in research and intellectual property that is now bearing fruit • Clear strategy • Exp
Slide 13: Chief Executive Officer
CHIEF EXECUTIVE OFFICER Justin Birch
Slide 14: FY24 Highlights
FY24 HIGHLIGHTS Focus on total productivity and operating strength Strengthened the leadership team Optimising footprint and operations Acquired two nurseries and expanded container production Strong focus on advanced genetics bolstered US performance Continued momentum in Brazil with record result
Slide 15: FY24 Financial Snapshot
Sales Revenue Sales Volume Adj US GAAP FY24 FINANCIAL SNAPSHOT ($m) 67.7 (m seedlings) 375 EBITDA ($m) 12.8 56.1 373 10.1 9.2 47.5 360 • 21% increase in revenue to $67.7m • 32% increase in gross profit to $24.0m FY22 FY23 FY24 FY22 FY23 FY24 FY22 FY23 FY24 • Improvement in NLAT from $2.5m to $0.2m a
Slide 16: FY24 Revenue
FY24 REVENUE Strong growth from Brazil with steady sales in US despite challenges Revenue US$m 0 0 • Record group sales revenue, 0 up 21% yoy to $67.7m 0 • Strong pricing and margins 0 in both regions delivering 3 o th ra i yoy revenue increases • Significant growth in Brazil Sales $m Sales units m
Slide 17: US GAAP EBITDA
US GAAP EBITDA Record Adjusted US GAAP EBITDA result of $12.8m, up 39% yoy Adjusted US GAAP EBITDA 14 • Boosted by increased sales 12.8 12 revenue and improved gross 10 10.1 9.2 margin 8 US$m 6 4 2 0 FY22 FY23 FY24 Adjusted US GAAP EBITDA is a non-GAAP financial measure and excludes one-off and unus
Slide 18: Optimising the Business
OPTIMISING THE BUSINESS Redeploying cash and savings into paying down debt and growth initiatives Review of assets to ensure these meet Borrowings the oard’s investment criteria and Improved interest cover and gearing provide value for shareholders 40 • Exit from Taylor Nursery in the US 35 33.6 • C
Slide 19: Investment into Growth
INVESTMENT INTO GROWTH FY24 reflects investment into production expansion US SOUTH BRAZIL • Expansion of container capacity at two • Expansion in Brazil with nursery US nurseries acquisition (lease) • Automation of inventory counts in US • Capacity increased by 18m • Purchase of $2.5m Jasper Nursery
Slide 20: US South
US SOUTH Sales revenue remained strong despite the impact of macro conditions on sales volumes Sales Revenue • Revenue of $41.2m ahead of prior 50 39.9 39.3 41.2 year despite subdued volumes 40 30 • Focus on highest margin products US $m 20 delivering stronger pricing and 10 margins 0 • Acquisition
Slide 21: Market Conditions
MARKET CONDITIONS ArborGen’s advanced genetics seedlings offer customers the opportunity to achieve higher yields and returns from premium grade saw timber • Current economic and weather headwinds to continue into FY25 Expansion in the South’s Lumber Sector Will • Recovery in saw timber Push Souther
Slide 22: Our Strategy
OUR STRATEGY ARBORGEN IS A KEY PLAYER, WITH ONE • Increased sales focus and effort - OF THE LARGEST concentrating on higher value advanced genetics products CAPACITIES FOR ADVANCED • Explore new and innovative ways to grow and market our superior products GENETICS SEEDLINGS • Thoughtful growth – M&A
Slide 23: Managing Extreme Weather
MANAGING EXTREME WEATHER Science based approach and investment to enhance resilience • Increasing use of Container planting • Contour mapping • Improved drainage • Managing planting schedules • Increased use of agricultural products to help hold seed in the field • Geographic diversification of orch
Slide 24: Brazil
BRAZIL Opportunistic and measured expansion delivering record results and strong momentum Sales revenue FY24 Performance: 30 26.5 51% three-year CAGR 25 • Record revenue of $26.5m, up 58% yoy 20 16.8 • Strong volume growth bolstered by US $m 15 10 7.7 strong pricing and margins 5 • Expanding product
Slide 25: Brazil Market Overview and Strategy
BRAZIL OUR STRATEGY • Leverage our strong position Market Overview in the pine and eucalyptus • ra i is the wor d’s argest prod cer and exporter of seedling markets hardwood pulp • Convert the market to • Rapid expansion in production capacity in response to products with superior demand genetics •
Slide 26: Outlook
OUTLOOK MANAGING US HEADWINDS CONTINUING STRENGTH IN BRAZIL • Current conditions impacting demand • Strengthening of the market following • New customer T&Cs – orders being lows in 2H 2024 placed later in the cycle • Pricing and demand for protected clones • Significant seedling losses in 2024 due r
Slide 27: FY25 Outlook
FY25 OUTLOOK • Ongoing growth momentum in Brazil; increasing demand in US South expected when economic cycle recovers • Strategic focus on higher value, advanced genetics seedlings • Investment into the expansion of our team, nursery improvements and other strategic initiatives will be reflected in
Slide 28: Shareholder Discussion
SHAREHOLDER DISCUSSION 28
Slide 29: Resolutions
RESOLUTIONS Resolution 1: That the Directors be authorised to fix the fees and expenses of De oitte as the Company’s a ditor Resolution 2: Re-election of David Knott as a Director of the Company. Resolution 3: Re-election of Thomas Avery as a Director of the Company. Resolution 4: Re-election of Oze
Slide 30: Other Business
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ArborGen Holdings — Shareholder Meeting (August 2024) on 6ix