Steel & Tube Holdings Limited · NZX:STU
Steel & Tube — H1 2021 Earnings Presentation
23 slides from Steel & Tube's earnings presentation, February 2021
Slide 1: Steel & Tube 1H21 Results Presentation
Steel & Tube 1H21 Results Presentation For the six months ended 31 December 2020
Slide 2: 1H21 Overview
1H21 OVERVIEW • Normalised EBIT result above top end of December 2020 guidance ($6.5m to $7.5m); 33% improvement on pcp ROBUST REVENUE OPERATING • Strong balance sheet with all debt repaid and $23.9m $226.3M CASHFLOW cash in bank $24.0M • 40% improvement in operating cashflow EBIT $8.9M DEBT REPAID
Slide 3: Sector Exposure
SECTOR EXPOSURE Advantage of diversified business, with limited exposure to any one sector SHARE OF 1H21 SALES Infrastructure, • 53% Construction and 14% Infrastructure Non-food Manufacturing 23% • 36% Manufacturing Non-Residential Construction • 11% Merchants/other 22% Food Manufacturing 13% Reside
Slide 4: Market Conditions
MARKET CONDITIONS Activity remains strong in most sectors post Covid-19 lockdown, strong recovery in residential construction, decline in non-residential consents continue Residential Consents Ready mixed concrete Annual YoY: -5.0% 40.0 6,200 Consents 4Q20 YoY: +8.3% 1,200 6,100 Annual YoY: +4.8% 6,
Slide 5: Our Purpose
OUR OUR PURPOSE: PURPOSE: To make life easier for our To make life easier for our customers needing steel solutions customers needing steel solutions Providing a one-stop-shop for the most essential steel products – from floor to roof and everywhere in between Doing everything we can to make it easy
Slide 6: Building Our Business: Key Initiatives
BUILDING OUR BUSINESS: KEY INITIATIVES Strong foundation now in place, focus on growth and continual improvement PROJECT STRIVE: BUILDING ON OUR FOUNDATION, CONTINUAL IMPROVEMENT CHANGE PROGRAMME, OPERATIONAL RESET FY17 to FY20 1H21 ✓ Priority focus on quality, health and ✓ Introduced webshops and e
Slide 7: 1H21 Group Financial Summary
1H21 GROUP FINANCIAL SUMMARY $m 1H21 1H20 • Normalised EBIT at top end of guidance; up 33% on pcp Revenue 226.3 232.0 • Q2 sales returned to prior year levels with earnings improvement from cost-out EBIT 8.9 (33.4) programme and efficiencies Non-trading adjustments1 1.3 (39.1) • Continued working ca
Slide 8: Revenue & Margin
REVENUE & MARGIN Impact of COVID lockdown still being seen in Q1, with recovery in Q2. Key focus remains on gross margin dollar improvement and continuing efficiencies. Sales and Margin 300 25.0% • Progressive sales recovery in Q1 following 250 L4 lockdown, with Q2 sales back to prior 200 20.0% year
Slide 9: Normalised Operating Expenses
NORMALISED OPERATING EXPENSES Operating expenses reduced by 12% from prior year, on a normalised basis1 1H20:1H21 Operating Expenses* 45 44.1 (2.2) % Change 44 $m 1H21 1H20 1H20N1 43 Normalised (2.0) 42 OPEX 38.9 46.1 44.1 (12)% 41 (1.0) 40 38.9 39 • Overall prudent and disciplined 38 37 management
Slide 10: Working Capital and Cashflow
WORKING CAPITAL AND CASHFLOW Working Capital KPIs • On-time debt collection rates have 1H21 1H20 FY20 continued to improve Trade Receivables: DSO 42 43 42 • Inventory levels in line with expectations Inventories: DIO 109 111 101 and reflecting seasonal variations Trade Payables: DPO 35 30 31 • No ma
Slide 11: Balance Sheet
BALANCE SHEET Tight control over balance sheet, with substantial bank funding lines secured • Repaid remaining borrowings in 1H21 $m 1H21 1H20 FY20 • Net cash increased by $16.5m from June-20 to Trade and other receivables 95.9 87.2 92.7 $23.9m Inventories 98.3 120.0 101.1 • Bank covenant waivers an
Slide 12: Capital Expenditure
CAPITAL EXPENDITURE Prudent management of capital expenditure with increased allocation to Digital and Growth projects 1H21 CAPEX SPEND • 1H21 capex of $2.8m (1H20 :$3.9m) • Capital spend remains in line with D&A • Priority capital allocation to projects supporting digital and business improvement/g
Slide 13: Divisional Performance
DIVISIONAL PERFORMANCE Steady return to prior trading levels in Distribution; Infrastructure facing tightening market conditions in some sectors Distribution Distribution 1H21 1H20 • Significant improvement year on year, $m Revenue 131.9 135.4 doubling of earnings compared to pcp Normalised EBIT 4.4
Slide 14: Moving Forward
MOVING FORWARD
Slide 15: Our Strengths
OUR STRENGTHS • Established leadership positions in multiple categories of the steel market • Diversity across multiple sectors in the steel market, reducing exposure to any one sector and providing ability to cross-sell to customers • Streamlined and efficient national network, covering all main re
Slide 16: Creating a Sustainable Business
CREATING A SUSTAINABLE BUSINESS SHAREHOLDER VALUE ONE WINNING TEAM Progressing towards long term sustainable returns • Employee Satisfaction score (eNPS) of SAFETY 13 against industry standard of 9 ▼ TRIFR: 3.35 (vs 3.65 prior year) below industry • Investment into education standards - Back to Scho
Slide 17: Strategic Focus: Investment for Growth
STRATEGIC FOCUS: INVESTMENT FOR GROWTH Focus on high margin, growth opportunities NEW PRODUCT BUILD ON STRONG BUSINESS DEVELOPMENT AND BUSINESS GROWTH FOUNDATION INNOVATION • Continue to build best-in- • Identify and develop • Primary focus on organic class digital platform and differentiated expert
Slide 18: 2H21 Outlook
2H21 OUTLOOK Improving outlook, continue to build on strong foundation with increasing focus on higher margin growth opportunities • Continued focus on improving gross margin dollars and efficient cost structure, supported by a strong balance sheet • Accelerating investment in digital technology pro
Slide 19: Discussion
DISCUSSION
Slide 20: Our Business - Divisions
OUR BUSINESS - DIVISIONS DISTRIBUTION INFRASTRUCTURE Products sourced from preferred steel mills and Products processed before sale, typically on a contract or distributed through our national network project basis, including onsite installation services Roll-forming STEEL RURAL PRODUCTS ROOFING COI
Slide 21: Non-GAAP Financial Information
NON-GAAP FINANCIAL INFORMATION Non-GAAP financial information: Steel & Tube uses several non- RECONCILIATION OF GAAP TO NON GAAP MEASURES 1H21 1H20 GAAP measures when discussing financial performance. These Half Year ended 31 December $000s include Normalised EBIT and Working Capital. Management bel
Slide 22: Glossary of Terms
GLOSSARY OF TERMS EBIT: Earnings / (Loss) before the deduction of interest and tax. This is calculated as profit for the year before net interest costs and tax. 1H21 EBIT was impacted by non-trading adjustments of $1.3 million, as shown in the table above. eNPS: Employee Net Promoter Score – assists
Slide 23: Disclaimer
DISCLAIMER This presentation has been prepared by Steel & Tube 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 sale, or a
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