Steel & Tube Holdings Limited · NZX:STU
Steel & Tube — FY2020 Earnings Presentation
31 slides from Steel & Tube's earnings presentation, 2020
Slide 1: FY20 Results Presentation
FY20 Results Presentation For the 12 months ended 30 June 2020
Slide 2: FY20 Snapshot
FY20 SNAPSHOT • Challenging 1H20, with adverse market conditions, particularly reduced vertical construction work and a contraction in the stainless steel market, impacting on sales revenue and volumes. • COVID-19 pandemic had a significant impact on 2H20 results and more than offset some of the pro
Slide 3: Our Response to the COVID-19 Pandemic
OUR RESPONSE TO THE COVID-19 PANDEMIC • Contingency planning and precautionary measures including development of contactless tracing system that was shared within the industry and with customers. • During L4 lockdown, all sites closed except where needed to supply essential services. • Customers sup
Slide 4: Strategic Response to 'New Normal'
STRATEGIC RESPONSE TO ‘NEW NORMAL’ Expect a longer term downturn in economic activity as a result of global COVID-19 pandemic ACTIONS TAKEN OUTCOMES • Accelerated organisation restructure to right size the business: Reduction in labour cost in FY21 — Network footprint reduced by 8 during the year wi
Slide 5: Benefits from Organisation Restructuring
BENEFITS FROM ORGANISATION RESTRUCTURING Accelerated restructuring is well progressed and new ways of working including Digital are being implemented enabling a significantly lower cost base Labour Forecast 35% Variable Cost Metrics 1062 30% 1050 1007 25% 20% 916 950 15% 830 10% 850 5% 800 FTES 0% 7
Slide 6: Network Strategy
NETWORK STRATEGY Network consolidation programme coming to an end while maintaining a regional presence and increased product offering • 2017 includes sale & lease back of two properties with lease costs of $3.5m per annum, partially offset by reduced interest costs of ~$1.6m per annum. Annual Lease
Slide 7: Sector Exposure
SECTOR EXPOSURE SHARE OF FY20 SALES FY19:13% Infrastructure, 13% Non-food Manufacturing FY19: 24% 24% Non-Residential FY19:25% Construction 24% Food Manufacturing 14% FY19:14% Retail/ Residential Wholesale Construction 10% 15% FY19:12% FY19:12% 7
Slide 8: Market Conditions
MARKET CONDITIONS Reduced vertical construction activity and softer stainless market impacted on revenues and margin Non-Residential Consents – Floor Area RBL Non- Residential Crane Index 3,900 170 Base Dec -15 = 100 3,700 160 3,500 150 3,300 140 3,100 130 2,900 120 2,700 110 FY19 FY20 2,500 100 M2
Slide 9: FY20 Group Financial Summary
FY20 GROUP FINANCIAL SUMMARY $m FY201 NZ IFRS 16 FY20 Pre-NZ FY19 adjustments IFRS 16 Revenue 417.9 - 417.9 498.1 EBIT (57.7) (1.3) (59.0) 16.8 Non-trading adjustments2 58.1 - 58.1 (0.8) Normalised EBIT (excluding non-trading adjustments) 0.4 (5.6) (5.2) 16.0 NPAT/(NLAT) (60.0) 2.8 (57.2) 10.4 Share
Slide 10: Revenue & Margin
REVENUE & MARGIN Reduction in revenue primarily related to COVID-19 Sales and Margin lockdown and restrictions in 2H20 and contraction 300 25.0% in vertical construction activity and stainless steel 250 20.0% market which continued throughout the year. 200 15.0% • Improving sales and pipeline in 3Q2
Slide 11: Normalised Operating Expenses
NORMALISED OPERATING EXPENSES Operating expenses largely in line with prior year, on a normalised basis1 FY20 FY20N1 FY19N1 % Change $m • Overall prudent and disciplined OPEX 97.1 96.8 95.9 1.0% management of expenditure continues. • Operating costs have been held flat versus prior year in real term
Slide 12: Strong Operating Cash Flow & Net Cash Position
STRONG OPERATING CASH FLOW & NET CASH POSITION Improved operating cash flow generation Net Cash/(Debt) and Borrowings Cashflow 20 FY20 FY19* $m 0 Reported net operating cash flow 39.6 21.3 NZ IFRS 16 cash flow reallocations (13.0) - (20) Pre-IFRS16 operating cash flow 26.6 21.3 (40) (60) • Improved
Slide 13: Working Capital
WORKING CAPITAL Continued focus on working capital management • On-time debt collection rates have FY19:FY20 Inventory continued the year-on-year improvement 120 114.0 (11.0) trend seen from 2H19. 110 (1.9) • Reduction of inventory by $13m to $101m 100 101.1 through disciplined procurement and opera
Slide 14: Capital Expenditure
CAPITAL EXPENDITURE Prudent management of capital expenditure with increased allocation to Digital and Growth projects • FY20 capex of $7.6m (FY19:$7.2m). CAPITAL INVESTMENT • Capital spend remains in line with D&A. 50 • Priority capital allocation to projects 40 supporting digital and business impr
Slide 15: Balance Sheet
BALANCE SHEET Tight control over balance sheet, with substantial bank funding lines secured • Working capital improvements strengthening cash $m FY20 FY19 flows. • Reduction in inventory to $101.1m. Trade and other receivables 92.7 99.9 • Net cash position of $7.4m as at 30 June 2020. Inventories 10
Slide 16: Division Review
DIVISION REVIEW
Slide 17: 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 18: FY20 Divisional Performance
FY20 DIVISIONAL PERFORMANCE Both divisions significantly impacted by COVID Distribution shutdown FY20 FY19 $m Revenue 248.0 287.7 Distribution • Improvements from Strive initiatives with Normalised EBIT (0.2) 2.9 targeted initiatives lowering cost to serve Normalised EBIT Pre-NZIFRS 16 (3.4) 2.9 • I
Slide 19: Moving Forward
MOVING FORWARD IT’S GAME ON
Slide 20: FY17 to FY20 Strategic Progress
FY17 TO FY20 STRATEGIC PROGRESS Late-2017: Embarked on an extensive company-wide reset to drive long-term sustainable earnings improvement and rebuild shareholder value. Foundation now laid and moving forward. Moving Forward: Steel & Tube leadership in the JOURNEY TO REFRESHED sector and the preferr
Slide 21: Strategic Pillars
STRATEGIC PILLARS Our four pillars are fundamental for our business and underpin all that we do. COMMITMENT TO QUALITY, OPERATIONAL AND SUPPLY CHAIN HEALTH AND SAFETY EXCELLENCE ▪ Safe and healthy work ▪ Leverage our procurement and environment supply chain scale ▪ Quality processes ▪ Excellent inve
Slide 22: Moving Forward: Purpose, Vision, Goal
MOVING FORWARD OUR PURPOSE: To make life easier for our customers needing steel product and service solutions. OUR VISION: To provide unparalleled customer service and experience. OUR GOAL: To position Steel & Tube as the best in the sector, the preferred choice for steel products and solutions and
Slide 23: Our Strategic Pathways
OUR STRATEGIC PATHWAYS MAKING IT EASY Delivering the information, expertise, purchasing options and communication channels that make it easy for our customers FULL SERVICE Leveraging our breadth of expertise, quality products and strong brands to deliver PROVIDER a ‘ground up’ solution for our custo
Slide 24: Sector Outlook
SECTOR OUTLOOK • Residential near-term demand strong, supported by tight supply, low mortgage rates, and strong first home and returning expat buyer interest. Construction • Non-residential demand remains soft with many projects being delayed. Residential and business investment expected to contract
Slide 25: FY21 Outlook
FY21 OUTLOOK Sector leadership as the preferred choice for steel products and solutions and a trusted partner for our customers • Post Level 4 shutdown, structural changes embedded. • Trading in Q1 FY21 has been stronger than anticipated to date. • Moving ahead with clear strategic plan for next thr
Slide 26: Questions
QUESTIONS d
Slide 27: Developing a Sustainable Business
DEVELOPING A SUSTAINABLE BUSINESS We believe in a sustainable business, which is committed to creating value for our customers, employees, shareholders and communities COMMITMENT TO SAFETY & QUALITY OPERATIONAL & SUPPLY CHAIN EXCELLENCE • Occupational Health & Safety • Financial performance and gove
Slide 28: NZ IFRS 16 Effective 1 July 2019
NZ IFRS 16 EFFECTIVE 1 JULY 2019 BALANCE SHEET • Removes the distinction between operating AS AT 30 JUNE 2020 400,000 and finance leases, with all leases now on 300,000 balance sheet 200,000 • Results in a shift of operating lease costs, 100,000 currently reported within other operating 0 $000’s Ass
Slide 29: Non-GAAP Financial Information
NON-GAAP FINANCIAL INFORMATION Non-GAAP financial information: Steel & Tube uses several non- RECONCILIATION OF GAAP TO NON GAAP MEASURES FY20 FY19 GAAP measures when discussing financial performance. These Year ended 30 June 20 $000s include Normalised EBIT and Working Capital. Management believes
Slide 30: Glossary of Terms
GLOSSARY OF TERMS COVID-19: The Group’s financial results for FY20 have been impacted by the alert level 4 shutdown and progressive return to work due to the pandemic. The Group has identified certain impairments, restructuring and site rationalisation costs that have arisen as a result of the strat
Slide 31: 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