Steel & Tube Holdings Limited · NZX:STU
Steel & Tube — H1 2022 Earnings Presentation
24 slides from Steel & Tube's earnings presentation, February 2022
Slide 1: 1H22 Results Presentation
[TITLE 1H22 GOES Results HERE] Presentation For the six months ended 31 December 2021
Slide 2: Agenda
Agenda • 1H22 Snapshot • Operating Environment • Financial Performance • Strategic Progress • Outlook • Discussion Presenters • Mark Malpass, CEO • Richard Smyth, CFO
Slide 3: 1H22 performance
1H22 performance Record revenue and earnings driven by strong sector demand, customer service, operational performance and disciplined supply chain management Revenue Volume EBITDA EBIT NPAT $282.2m 82,802t $31.9m $22.6m $14.3m +24.7% +12.5% +87.3% +165.9% +252.7% Dividend DIFOT Customer NPS TRIFR E
Slide 4: Strongly positioned to benefit from market conditions
Strongly positioned to benefit from market conditions • Positive economic activity driving increased demand for Headwinds Tailwinds steel across a range of sectors • High levels of customer • Global Covid-19 • Steady increase in service and operational environment infrastructure activity performance
Slide 5: Positive economic activity driving demand for steel
Positive economic activity driving demand for steel Increased demand across a range of sectors; most trends expected to continue over the medium term Residential Consents Performance of Manufacturing Share of 1H22 Sales 50 8 Index (PMI) No. Consents (000’s) 45 60 7 SQM (000s) 40 Infrastructure 35 40
Slide 6: Significant structural change now
Significant 1H18 to 1H22 structural Optimised national network with • Sites reduced from 50 to 26 change now regional strength • $2.5m reduction in annual lease costs Enhanced customer value Group-wide Customer Excellence Centre embedded • proposition established, e-commerce, omnichannel platform, a
Slide 7: 1H22 group financial summary
1H22 group financial summary Record half year performance $m 1H22 1H21 • Strong volume and revenue uplift Revenue 282.2 226.3 • Structural reduction in operating expenses locked in EBITDA 31.9 17.0 • Significant increase in earnings, results at/above top end of guidance Normalised EBITDA* 31.8 1
Slide 8: Sales & Volume
Revenue 300 250 Sales & Volume 100 80 Strong trading momentum pre Tonnage (000’s) 200 and post Covid-19 lockdown 60 150 $m 40 100 Majority of New Zealand businesses and projects 20 shut down for up to five weeks in 1Q22 50 0 0 Volume 82,802t, up 9,222t or 12.5% on 1H21 *1H18 *1H19 1H20 1H21 1H22 Inc
Slide 9: Covid-19 management
Covid-19 management Careful planning for ongoing Covid-19 Weekly Revenue - 1H22:1H21 environment 18 • Leadership position on vaccine 16 Lockdown Auckland AL3 incentives for staff 14 Weekly Revenue ($m) • Vaccination mandate implemented 12 10 • Vaccine protocols for customers and 8 suppliers visiting
Slide 10: Margin
Margin Focus on gross margin dollar improvement Year on Year Margin Improvement Gross margin 22.8% 25.0% 22.8% • Data driven pricing decisions resulting in effective 20.3% price management in a dynamic environment 20.0% • Product mix focused on growing market share 15.0% in attractive sectors which
Slide 11: Normalised operating expenses
Normalised operating expenses Ongoing relentless focus on operating expenditure Completion of three year Project Strive programme with 60.0 25% significant structural changes delivering long term benefit 50.0 20% • Lower fixed cost base and reductions now locked in 40.0 • Operational costs as a perc
Slide 12: EBIT improvement
EBIT driven by volume and improvement margin growth 1H21 Normalised EBIT 1H21 Lease Gains Volume Growth Margin Growth 1H22 Wage Subsidy Net cost escalations 1H22 Normalised EBIT 12
Slide 13: Balance sheet
Balance sheet $m 1H22 1H21 FY21 Well positioned to support growth Trade and other receivables 89.6 72.1 84.0 Inventories 152.9 98.3 113.5 Working capital management Trade and other payables (85.8) (59.5) (80.0) • Disciplined approach to working capital Working Capital 156.7 110.9 117.5 management em
Slide 14: Inventory management
Inventory management Inventory management system and laser focus on availability of critical items has resulted in consistent DIFOT for customers • DIFOT – 98% achieved through targeted product availability and operational improvements • Supply dynamics have been tight – steel mill customers have be
Slide 15: Capital expenditure
Capital expenditure Careful management of funds in current Capital Investment environment 20 18 Prudent cash management 16 • 1H22 capex of $2.6m (1H21 $1.8m*) 14 • Capex reduced to below depreciation levels 12 during Covid-19 environment 10 $m • Continued investment in health and safety 8 Planned ca
Slide 16: Business scorecard: focus on continual improvement
Business scorecard: focus on continual improvement Employee Safety Measure Employee Engagement TRIFR 1.27 Well below industry standards Satisfaction Score 7.7/10 29 15 30 eNPS SCORE 19 TRIFR 10 20 15 13 5 10 5 0 0 FY16 FY17 FY18 FY19 FY20 FY21 HY22 July 20 Nov 20 Mar 21 July 21 Dec 21 Customer satis
Slide 17: Our purpose
Our purpose To make life easier for our customers needing steel solutions • Providing a one-stop-shop for the most essential steel products – from foundation to roof and everywhere in between • Doing everything we can to make it easy for our customers to do business with us • Always looking for ways
Slide 18: Strategic focus: investment for growth
Strategic focus: investment for growth Focus on growth opportunities driving gross margin dollar improvement NEW PRODUCT BUILD ON STRONG BUSINESS DEVELOPMENT AND BUSINESS FOUNDATION GROWTH INNOVATION • Continue to build best-in- • Continue to develop • Primary focus on organic class customer experie
Slide 19: Our digital investment
Our digital investment Making our business more competitive and +209% on 1H21 enabling best in class customer experience Online Revenue Growth Investments in e-commerce, customer experience, analytics, cloud technology and Industry 4 initiatives +121% Benefits • Making it easy for our customers Aver
Slide 20: Product development and innovation
Product development and innovation Identified opportunities in high margin sectors where we can build market share Expand plate processing capability and offer • Attractive margins for value-added products • Growing market sector • Existing footprint with significant opportunity to expand • Replacem
Slide 21: 2H22 outlook
2H22 outlook Market conditions expected to remain positive Significant turnaround complete with • Commercial consents building and significant benefits locked in, now capturing growth increase in tenders coming to the market opportunities: • Infrastructure/Government spending continuing • Business m
Slide 22: Shareholder Discussion
Shareholder Discussion discussion 22
Slide 23: Non-GAAP Financial
Non-GAAP Financial RECONCILIATION OF REPORTED TO NORMALISED EBITDA EBIT Period ended 31 December Restated Restated $000s HY22 HY21 HY22 HY21 Reported 31,935 17,049 22,636 8,512 Holiday Pay provision release (854) - (854) - IFRS16 Impairment Reversal (374) (777) (374) (777) Gain on sale of property -
Slide 24: Steel & Tube
GC steel&tube
Steel & Tube Holdings — H1 2022 Earnings Presentation on 6ix