Capral Limited · ASX:CAA
Capral — H1 2023 Earnings Presentation
27 slides from Capral's earnings presentation, Aug 17, 2023
Slide 1: 2023 Half Year Results Presentation and Earnings Guidance
2023 HALF YEAR RESULTS PRESENTATION AND EARNINGS GUIDANCE 17 August 2023 Capral Limited (ASX:CAA) 15 Huntingwood Drive, Huntingwood NSW 2148 Approved and authorised by Capral’s Board of Directors Our Capability Our Success 1 DD
Slide 2: Agenda
Agenda 1 Business Overview 2 1H23 Highlights 3 1H23 Financials 4 Strategy 5 Outlook & Guidance 2
Slide 3: Our business at a glance
1 # 1 # Our business Extrusion Manufacturer Supplier of Industrial Aluminium at a glance Extrusions Australia’s leading supplier of aluminium extrusion and rolled 1 # 2 # products Distributor of Distributor of Rolled Aluminium Commercial Window Products and Door Systems Our Capability Our Success 3
Slide 4: Our business at a glance
Our business at a glance 6 Plants 8 Distribution Centres Key Markets Market Share 8 Extrusion Presses 12 Trade Centres Residential and ~27% Commercial Construction Industrial 65,000 tonnes of annual extrusion capacity Annual Turnover Total Assets Employees ~$680 million 1 ~$430 million 1000+ 1 Last
Slide 5: Derisked the business and increased our capability for future success
Derisked the business and increased our capability for future success Key Milestones and Events 2018 2019 2020 2021 2022 • Bremer packing/bundling • Bremer restructure • COVID impact • Smithfield acquisition • Record high LME automation $5m - Cost $6m • Market rebound H2 $10m • Penrith upgrade $4m •
Slide 6: Strategic National Footprint
Strategic National Footprint Capral has a national footprint with a presence in every state 22 Darwin and Extrusion plants near five mainland capital cities 1 5. Bremer Park Manufacturing Plant • Capacity 23k tonnes Townsville 2 • 3 presses • 1 paintline • Co-located with distribution centre • Recen
Slide 7: Half year highlights
Half year highlights Tony Dragicevich, CEO & Managing Director “Stronger than expected first half earnings driven by: • continued high volumes supported by residential pipeline and diversified industry exposure • maintaining margins through careful cost management and recovery.” Our Capability Our S
Slide 8: 1H23 Performance highlights
1H23 Performance highlights First half results exceeded expectation Volume Sales Revenue Underlying EBITDA1, 2 (excl. rent) Underlying EBIT2 Underlying EPS 2 35,600 tonnes $333 million $31.7 million $20.7 million $0.96 36,300t in 1H22 $349m in 1H22 $31.6m in 1H22 $21.0m in 1H22 $1.05 in 1H22 Underly
Slide 9: Sales channels
Sales channels Diversification of industries helps protect volume Channels to Market Diverse Industry Volume Seasonality (volume) Exposure 12% 45 14% 30% 40 42% 35 30 46% 25 56% 20 Extruded Aluminium (direct from mill) Industrial 15 Extruded Aluminium (via DCs) Residen�al Building Rolled Aluminium -
Slide 10: Detached housing commencements have slowed
Detatched housing commencements have slowed and backlog of work has reduced 2023 Annual Dwelling Commencements (000’s) 1 Latest estimate1 174,000 starts in 2023, down 16% on 2022 Detached Housing 16% Mul�-Res Low Rise 250 Mul�-Res High Rise • Residential starts impacted by: - Higher interest rates -
Slide 11: Recent Capral Projects Residential
Recent Capral Projects Residential Sandstone Villa, SA Mosman House, NSW Centre House, VIC Fabricator KR Installations Fabricator K&K Shopfitters Fabricator Audsley Windows Products Schüco Windows & Doors Products Schüco & Capral Windows & Doors Products Capral Windows & Doors Our Capability Our Suc
Slide 12: Recent Capral Projects Commercial
Recent Capral Projects Commercial Hobart UTAS, TAS ANZAC House, WA Sarah Sands, VIC Fabricator Hobart Glass Fabricator LGA Fabricator Fenestrate Products Capral Commercial Windows & Doors Products Capral Commercial Windows Products Capral Commercial Windows & Doors Our Capability Our Success 12
Slide 13: Industrial sector remains strong despite slowdown in some segments
Industrial sector remains strong despite slowdown in some segments Transport Marine Solar Industrial Resellers Manufacturing & • Strong conditions • Slower market conditions • Demand for local supply Construction • Volume to industrial General Fabrication improving • Infrastructure investment distri
Slide 14: Recent Capral Projects Industrial
Recent Capral Projects Industrial Volgren Louvreclad Sloanebuilt Bus body manufacturer Commercial Facade Solutions Truck Trailer Builders VIC, NSW, QLD & WA Bundamba, QLD Smeaton Grange, NSW Our Capability Our Success 14
Slide 15: Half Year Financials
Half Year Financials Tertius Campbell, CFO “Underlying earnings performance remains strong despite slightly lower volume and inflationary pressures.” Our Capability Our Success 15
Slide 16: Earnings above expectation
Earnings above expectation and on par with record 1H22 level 1H23 1H22 1 Volume 2% lower than 1H22 Sales Volume ('000 tonnes) 1 35.6 36.3 2 Sales Revenue decreased 5% on 1H22, driven by lower metal prices (LME) $m $m 3 Underlying EBITDA in line with 1H22 despite inflationary pressures Sales Revenue
Slide 17: Strong balance sheet
Strong balance sheet underpinning expanded capital allocation Balance Sheet Jun 23 Dec22 1 Inventory reduced due to lower stock levels and retracement from record high metal prices (LME) in 1H22 Current Assets $m $m 2 Receivables metrics remain excellent with DSO at 44 days (1H22:46 days) Inventory
Slide 18: Strong cash generation
Strong cash generation enhanced by cash release from lower working capital levels Continued strong focus on cash management. Cash conversion ratio improved due Cash Flow 1H23 1H22 to reduction in working capital. $m $m 1 Working capital decrease driven by lower inventory due to reducing metal costs
Slide 19: Disciplined capital allocation
Disciplined capital allocation delivering improving returns to shareholders Shareholder Distributions (cps) S HA R EHOL DER S DISTRIBUTIONS (CPS) Interim Dividend Final Dividend Special Dividend Share Buyback1 50.0 50.0 15.0 15.0 45.0 37.5 37.5 30.0 15.0 20.0 20.0 20.0 FY16 FY17 FY18 FY19 FY20 FY21
Slide 20: Strategy and outlook
Strategy and outlook Tony Dragicevich, CEO & Managing Director “Drive return on investments and continue to improve our long-term competitive position.” Build on Optimise Grow our strengths what we do for the future Our Capability Our Success 20
Slide 21: Clearly Defined Strategy
Clearly Defined Strategy Build, Optimise and Grow GROW for the future • Leverage our capabilities into new opportunities – knowledge, national presence, quality, service • Develop innovative new products and channels to market • Maintain share won from imports OPTIMISE what we do • Continually impro
Slide 22: Improve productivity, grow in new markets
Improve productivity, grow in new markets and retain market share gains Manufacturing Distribution Sales and Marketing • Continue process improvement • Capral’s new window and door • On going technology investment programmes product range and systems to improve sales effectiveness software released
Slide 23: Improve productivity, grow in new markets continued
Improve productivity, grow in new markets and retain market share gains …continued Market Development Solar Defence Cladding Imports & Anti-dumping • Grow share in the $60m+ solar rail • Capral is an approved supplier to • Work with cladding system • Retain market share gains market major defence co
Slide 24: On a path to a better tomorrow
On a path to a better tomorrow Our Commitment Our Roadmap • Aluminium Stewardship Initiative Certification • Net Zero by 2050 Identify and implement Reduce waste going to Identify ways to Source from ethical (Scope 1 & 2 emissions) strategies to minimise landfill by reuse, minimise the use of suppli
Slide 25: Metal cost fell from record highs
Metal cost fell from record highs Aluminium Price $A (LME & Premiums) LME Premiums 5.00 1. Average Premiums decreased marginally during 2023, due to slightly lower regional and smelter billet premiums 4.00 1 2. Average LME decreased 10% during 1H23 to $A3,500t due to softer global aluminium demand 2
Slide 26: Outlook
Outlook Earnings guidance lifted to top-end of guidance range • Residential building is forecast1 to soften in 2H23 1. Source: HIA May 2023 forecast, 2 quarters delayed • Other key markets; Commercial and Industrial, are expected to remain at relatively high levels 2. Source: Harbor Aluminium Intell
Slide 27: Questions
Questions Our Capability Our Success 27