Steel & Tube Holdings Limited · NZX:STU
Steel & Tube — H1 2024 Earnings Presentation
29 slides from Steel & Tube's earnings presentation, Feb 20, 2024
Slide 1: 1H24 Results Presentation
1H24 Results Presentation For the 6 months ended 31 December 2023 20 February 2024
Slide 2: Results at a glance
Results at a glance Continued solid performance in a more challenging trading environment • Solid financial Revenue Volume Normalised EBITDA Normalised performance, above EBITDA EBIT December 2023 guidance $261.8m 62,569t $21.2m -17.0% -22.2% $21.9m -30.5% $11.3m • Normalised EBIT up on -30.7% -47.4
Slide 3: 1H24 summary
1H24 summary Staying the course on strategy and focusing on controlling the controllables • Subdued trading with volumes remaining under • Market share growth in key categories pressure from economic headwinds • Continued to generate strong margins, particularly • Economic recovery taking longer tha
Slide 4: Actively managing market challenges
Actively managing market challenges Market Risk Level Risk Level FY24 response Challenges 2H23 1H24 • Customer focused, resilient and sustainable business platform Slowing High High • Growth strategy focused on high value products, services and sectors economy • Diversified business with limited exp
Slide 5: Continued demand for steel despite economic conditions
Continued demand for steel despite economic conditions Dampened domestic demand in 1H24; macro trends supporting positive long term outlook Residential Consents Performance of Manufacturing Index (PMI) Sector Split Long term demand and undersupply Headwinds affecting activity, long term remains posi
Slide 6: Investor returns
Investor returns Interim Dividend Interim Dividend 1H24 cps (net) 4.0 • Interim dividend of 4.0 cents per share 1H24 Dividend Yield (Gross)1 % 10.3% maintained at FY23 level – above 60%-80% Interim Dividend 1H23 cps (net) 4.0 target range reflecting confidence in the Dividends company’s future 15 FY
Slide 7: Making life easier for customers needing steel solutions
Making life easier for customers needing steel solutions Clear growth strategy in place, building on strong foundations to strengthen the core and growth in high value products and services Continue to Strengthen the Grow High Value Products and Our Goals Core Services Customer – preferred supplier
Slide 8: Growth investments focused on added value
Growth investments focused on added value Recent organic growth initiatives Completed M&A PLATE PROCESSING ALUMINIUM PROJECT STRONG KIWI PIPE AND ROBOS • Continuing increases • Immediately earnings • Increased warehouse FITTINGS • February 2024 in revenue and Gross accretive capacity for high • One
Slide 9: Customer, employee and sustainability update
Customer, employee and sustainability update • Customer satisfaction remains at high Customer Satisfaction (NPS2) Employee Safety Measure (eTRIFR1) Industry average: 32 levels due to focus on best-in-class 3 80 customer experience and solutions 61 1.86 60 2 42 • Safety outcomes are positive, remain
Slide 10: Financial Results
Financial Results 10
Slide 11: Delivered solid 1H24 results
Delivered solid 1H24 $m 1H24 2H23 1H23 results Revenue 261.8 273.8 315.3 Volume (Ktonnes) 62.6 65.9 80.5 Group financial summary GM$/tonne 926 850 850 • Volumes continue to be suppressed in a recessionary environment EBITDA 21.2 21.4 30.5 • Revenues reflect decreased volumes with some Normalised EBI
Slide 12: Successfully repositioned the business for more challenging economic cycle
Successfully repositioned the $m 1H24 2H23 1H23 business for more challenging Trade and other receivables 61.3 79.3 78.9 economic cycle while investing Inventories 128.6 139.2 175.0 in growth Trade and other payables (61.7) (69.4) (62.9) Working Capital 128.2 149.1 191.0 Group balance sheet summary
Slide 13: Resilient revenue
Resilient revenue 350 Sales & Volume 100 300 80 Driven by strong focus on our customers, 250 Tonnage (000s) pricing disciplines and growth of high Sales ($m) 200 60 value products, services and sectors 150 40 100 20 Limited reduction in volume and revenue compared 50 to 2H23 despite challenging econ
Slide 14: Continued growth in Gross Margin $/tonne
Continued growth in Gross Gross Margin $/tonne Margin $/tonne 12 Month Rolling Average 1,000 926 850 • Continued growth in Gross Margin $/tonne 800 778 as a result of pricing discipline and cost control 600 • Improvement in Gross Margin % Jun-21 Dec-21 Jun-22 Dec-22 Jun-23 Dec-23 • Strategic focus o
Slide 15: Business performance
Business performance Resilient performance in a softer market Distribution – high volume business Distribution 1H24 2H23 1H23 • Solid performance despite market conditions % of Group revenue 58.5% 60.1% 60.8% • Benefiting from inventory management, pricing and Revenue ($m) 153.1 164.6 191.6 supply c
Slide 16: Normalised operating expenses
Normalised operating expenses Good progress being made on cost out programme targeting $5m of operating expense savings in FY24 to offset inflationary increases • Ongoing focus on streamlining operational costs • 1H24 normalised operating expenses $0.8m down on 1H23: ‒ Inflationary pressure – wage/s
Slide 17: Normalised EBIT
Normalised EBIT Pricing benefits offset by inflationary pressures • 1H24 Normalised EBIT $11.3m - at top of guidance • Focus on higher value products, ensuring inventory availability 1H24 2H23 1H23 • Improved pricing disciplines, leveraging analytics and digital capabilities Normalised EBIT has been
Slide 18: Inventory management
Inventory management Managing inventory levels carefully to ensure best use of working capital • Inventory levels normalised at the end of FY23 • 1H24 inventory positions have been reduced in line with activity and further improvements and optimisations • Unit finished product prices remain at eleva
Slide 19: Cashflow
Cashflow • Cash collections remain high in a softened operating environment • Decreased inventory on hand as a result of careful inventory management and supply chain normalisation • Dividends of $6.6m paid during 1H24 19
Slide 20: Capital expenditure
Capital expenditure Careful management of funds in current environment • 1H24 capex of $4.4m (1H23: $2.3m, 2H23: $3.9m) Capital Expenditure • Priority capital allocation to business improvement / 10 growth projects (87%) and supporting digital (13%) 8 6 Planned investment for FY24 $m • Investment in
Slide 21: Moving Forward
Moving Forward 21
Slide 22: Economic drivers
Economic drivers Build share of sales in growth sectors FY24 FY27 Resellers Demand primarily driven by residential market trends Strong long-term pipeline driven by climate investments, rebuild following Infrastructure weather events, and catch up on low investment in prior years Residential Economi
Slide 23: Infrastructure opportunity
Steel & Tube Infrastructure opportunity • Leading provider of steel solutions for horizontal construction and infrastructure • New Zealand is facing a massive infrastructure shortage, across projects, from windfarms to almost every category – water reforms, healthcare roads and bridges to ports infr
Slide 24: 2H24 outlook
2H24 outlook Market outlook • Economic cycle likely to remain challenging in Well positioned to take advantage of increasing near term; expect some easing of macro trends – activity and demand when the economy interest rates, construction and cost inflation recovers • Expected increase in Government
Slide 25: Steel & Tube: Delivering strong and sustainable value
Steel & Tube: Delivering strong and sustainable value • Attractive dividend policy and yield • Balance sheet strength with headroom for growth investment • Growth strategy delivering increasing returns • Leading supplier in the New Zealand market • Investment in technology and analytics driving oper
Slide 26: Discussion
Discussion
Slide 27: Non-GAAP financial information
Non-GAAP financial information Period ended 31 December EBITDA EBIT $000s 1H24 2H23 1H23 1H24 2H23 1H23 Reported 21,172 21,394 30,482 10,172 10,665 20,344 Project Strong costs 319 - - 729 - - Loss on de-recognition of finance lease receivable - (53) 181 - (53) 181 NZ IFRS 16 reversal of impairment -
Slide 28: Glossary of terms
Glossary of terms EBIT: Earnings / (Loss) before the deduction of interest and NPS: Net Promoter Score – assists in measuring customer tax. This is calculated as profit for the period before net satisfaction and loyalty interest costs and tax Normalised EBIT/EBITDA: This means EBIT and EBITDA EBITDA
Slide 29: Disclaimer
Disclaimer • This presentation has been prepared by Steel & Tube Holdings operations and business, and business strategy of STU. Information Limited (“STU”). The information in this presentation is of a general about the future, by its nature, involves inherent risks and nature only. It is not a com
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