Vulcan Steel Ltd. · ASX:VSL
Vulcan Steel — H1 FY22 Earnings Presentation
31 slides from Vulcan Steel's earnings presentation, Feb 10, 2022
Slide 1: Result Presentation: Half Year Ended 31 December 2021
FINANCIALS & OPERATIONS VULCAN.CO RESULT PRESENTATION Half Year Ended 31 December 2021 1
Slide 2: Disclaimer
FINANCIALS & OPERATIONS VULCAN.CO Disclaimer The material contained in this document is They may also be based on factors which are subject a presentation of information about Vulcan Steel to significant uncertainties and contingencies which Limited’s (“Vulcan”) activities current as of 10 may be ou
Slide 3: Agenda
HALF YEAR REPORT FY22 VULCAN.CO Agenda It has been a historic first half of FY22, including our listing on the ASX and NZX. Overview While our listing could be seen as the completion of a journey, we view it as part of a longer sustained journey, Financials and Operations the beginning of the next c
Slide 4: Overview
F IANL A H F NYCE IAARL S R E& P OORPTE FR YA2T2I O N S VVUULLC CAAN N .. C O Overview 4
Slide 5: Performance Highlights
OVERVIEW VULCAN.CO Performance Highlights ADJUSTED EBITDA 2 ADJUSTED NPAT 5 ADJUSTED EPS 6 REVENUE GROSS MARGIN (EXCLUDING OFFER COSTS) (EXCLUDING OFFER COSTS) (EXCLUDING OFFER COSTS) NZ$463m 41.3% NZ$118m NZ$70m NZ 53.0c 1 +35% on NZ$344m 1H FY21 +6.1% on 35.2% in 1H FY21 (NZ$106m pre-IFRS 163,4 ba
Slide 6: A Recap on Vulcan's Business
OVERVIEW VULCAN.CO A Recap on Vulcan’s Business Vulcan is the only Australasian-wide, pure-play, value added steel distributor and processor. STEEL METALS Steel Distribution Plate Processing Coil Processing Stainless Steel Engineering Steels Distributes steel hollows, Processes steel plate to Proces
Slide 7: A Recap on Vulcan's Business continued
OVERVIEW VULCAN.CO A Recap on Vulcan’s Business continued Trans-Tasman positions with a national footprint and significant scale drive operating leverage and supply chain capability 29 Sites across Australia and New Zealand, strategically located to serve the local customer base 800+ Company Employe
Slide 8: A Recap on Vulcan's Business continued
OVERVIEW VULCAN.CO A Recap on Vulcan’s Business continued Our business model at a glance... Outcome Accountable profit centres 98% Delivery in full, on time1 Enablers Internally developed Flat fit-for-purpose IT Structure Operational Excellence Inventory Processing Managing Customer Management Capab
Slide 9: A Recap on Vulcan's Business continued
OVERVIEW VULCAN.CO A Recap on Vulcan’s Business continued Health & Safety Environment • Committed to providing a safe and healthy work environment • Greenhouse gas CO2 emissions of 9.4k tonnes in 2021 • More than 95% of staff fully-vacinated • Vulcan current initiatives • Vulcan team focused on mana
Slide 10: Growth Strategy
OVERVIEW VULCAN.CO Growth Strategy Expansion of Business Brownfield Entry into new product and/or Opportunistic improvement expansion geographies service offering M&A initiatives • Strong track record in • Expanded into 10 regional • Successfully introduced and • Acquired and successfully • Ongoing
Slide 11: Growth Initiatives Update
OVERVIEW VULCAN.CO Growth Initiatives Update As outlined in Vulcan’s prospectus (15 October 2021), the company commenced the implementation of several business improvement opportunities with potential to increase its annual run-rate revenue by up to NZ$60m over 36 months based on prevailing market d
Slide 12: Financials & Operations
F IANL A H F NYCE IAARL S R E& P OORPTE FR YA2T2I O N S VVUULLC CAAN N .. C O Financials & Operations 12
Slide 13: Operating Backdrop during 1H FY22
FINANCIALS & OPERATIONS VULCAN.CO Operating Backdrop during 1H FY22 • Australia and New Zealand activity level - good momentum after the easing of COVID-19 restrictions in October 2021 • Global & local market conditions - World steel production declined - Global steel prices & freight rates peaked i
Slide 14: Global Sector Indicators
FINANCIALS & OPERATIONS VULCAN.CO Global Sector Indicators Steel demand is forecast to lift >2% in 2022 Short term production appears constrained GLOBAL STEEL DEMAND FORECAST (m tonnes) WORLD CRUDE STEEL PRODUCTION (m tonnes) 2000 120 1900 100 1800 80 1700 1600 60 1500 40 1400 20 1300 1200 0 Jun-20
Slide 15: Steel, Stainless, Nickel & Freight Prices
FINANCIALS & OPERATIONS VULCAN.CO Steel, Stainless, Nickel & Freight Prices HRC price has fallen by c13% from Jul-Dec 2021 Stainless price receded c12% from Jul-Dec 2021 average average, container rates remain elevated while nickel price remains elevated 1200 HOT ROLLED COIL PRICE (US$/tonne) 35000
Slide 16: Australia and New Zealand Economic Trend
FINANCIALS & OPERATIONS VULCAN.CO Australia and New Zealand Economic Trend Australia Economic Activity New Zealand Economic Activity AU STATE FINAL DEMAND QUARTERLY GROWTH NZ GROSS DOMESTIC PRODUCT QUARTERLY GROWTH (seasonally adjusted, %) (seasonally adjusted, NZ$m) 8 72000 6 70000 4 68000 2 66000
Slide 17: Australia and New Zealand Building Activity
FINANCIALS & OPERATIONS VULCAN.CO Australia and New Zealand Building Activity Australia Building Activity New Zealand Building Activity AUSTRALIAN QUARTERLY BUILDING APPROVALS NZ QUARTERLY BUILDING VALUE CONSENTED 70000 (seasonally adjusted, dwelling units) 7000 (seasonally adjusted, NZ$m) 60000 600
Slide 18: Group Financial Performance
FINANCIALS & OPERATIONS VULCAN.CO Group Financial Performance • Revenue driven by 10% year-on-year MILLION NZ$ 1H FY22 1H FY21 % CHANGE (YOY) volume growth and 23% YOY Revenue 463.0 344.1 +34.5% product price inflation in 1H FY22 Adjusted EBITDA 1,4 118.1 59.7 +97.7% • Gross margin improved 6.1% YOY
Slide 19: Group Financials – Key drivers of EBITDA change
FINANCIALS & OPERATIONS VULCAN.CO Group Financials – Key drivers of EBITDA change • Volume growth contributed $17m YOY EBITDA MOVEMENT FROM 1H FY21 TO 1H FY22 (NZ$m) 140 • Margin growth contributed $53m YOY 53.1 120 118.1 • Net OPEX in 1H FY21 included $3.1m gain -11.4 102.4 on property sale. Gross
Slide 20: Steel Segment, Steel GP$/tonne
FINANCIALS & OPERATIONS VULCAN.CO Steel Segment, Steel GP$/tonne • Revenue increase was driven by 10% YOY (STEEL, MILLION NZ$) 1H FY22 1H FY21 % CHANGE growth in volume and 29% YOY product Revenue 300.3 211.0 42% price inflation EBITDA 1,2 84.5 38.5 119% - Throughput in distribution and Sales Volume
Slide 21: Metals Segment, Group OPEX
FINANCIALS & OPERATIONS VULCAN.CO Metals Segment, Group OPEX • Revenue increase was due to 8% YOY (METALS, MILLION NZ$) 1H FY22 1H FY21 % CHANGE growth in volume and 14% product Revenue 162.7 133.1 22% price inflation EBITDA 1,2 44.3 24.0 85% • Gross profit per tonne lifted 32% YOY Sales Volume (000
Slide 22: Cashflow & Working Capital
FINANCIALS & OPERATIONS VULCAN.CO Cashflow & Working Capital • Strong EBITDA uplift accompanied by higher tax 140 1H FY22 EARNINGS AND CASHFLOW (CF) MOVEMENTS payment and inventory build 120 118.1 100 -5.6 -1.3 • Capex was $5m in 1H FY22. Retaining FY22 $14m 88.4 80 capex guidance 60 -22.8 51.4 39.9
Slide 23: Balance Sheet Metrics & Dividend
FINANCIALS & OPERATIONS VULCAN.CO Balance Sheet Metrics & Dividend • Strong balance sheet position to execute on growth strategy 3.5 NET DEBT COVER (NET DEBT/EBITDA, PRE IFRS 16) 3.00 and maintain our 60%-80% annual dividend payout policy 3.0 • Banking facilities of NZ$200m are now on a fully commit
Slide 24: Outlook & Guidance
S EA C H L FT IYOEN A RT IRTELPEO R T F Y 2 2 VVUULLC CAAN N .. C O Outlook & Guidance 24
Slide 25: Outlook & Guidance
OUTLOOK & GUIDANCE VULCAN.CO Outlook & Guidance Outlook Earnings Guidance • Australia and New Zealand activity level Overall, following the conclusion of stronger than expected - Positive outlook medium term but new COVID-19 waves since trading since Vulcan’s last trading update in early December De
Slide 26: Q&A
F IANL A H F NYCE IAARL S R E& P OORPTE FR YA2T2I O N S VVUULLC CAAN N .. C O Q&A 26
Slide 27: Supplementary Information
F IANL A H F NYCE IAARL S R E& P OORPTE FR YA2T2I O N S VVUULLC CAAN N .. C O Supplementary Information 27
Slide 28: Profit and Loss Segment Disclosure
SUPPLEMENTARY INFORMATION VULCAN.CO Profit and Loss Segment Disclosure STEEL METAL CORPORATE TOTAL POST IFRS 16 1 IN MILLION NZ$ 1HFY22 1HFY21 % CHANGE 1HFY22 1HFY21 % CHANGE 1HFY22 1HFY21 % CHANGE 1HFY22 1HFY21 % CHANGE Revenue 300.3 211.0 42% 162.7 133.1 22% 0.0 0.0 - 463.0 344.1 35% Adjusted EBIT
Slide 29: Statutory Non-GAAP Earnings
SUPPLEMENTARY INFORMATION VULCAN.CO Statutory Non-GAAP Earnings REVENUE EBITDA EBIT NPAT EPS (NZ CENTS) IN MILLION NZ$ (UNLESS STATED) 1H FY22 1H FY21 1H FY22 1H FY21 1H FY22 1H FY21 1H FY22 1H FY21 1H FY22 1H FY21 Statutory basis 463.0 344.1 102.4 59.7 89.0 45.4 53.9 29.1 41.0 22.2 + offer costs -
Slide 30: Balance Sheet
SUPPLEMENTARY INFORMATION VULCAN.CO Balance Sheet IN MILLION NZ$ 31-DEC-21 30-JUN-21 % CHANGE Trade and other receivables 123.3 128.1 -4% Inventories 264.4 191.5 38% Less trade and other payables -171.3 -139.9 22% Working capital excluding tax items 216.4 179.8 Tax payable -19.2 -13.8 40% Working ca
Slide 31: VULCAN.CO
FINANCIALS & OPERATIONS VULCAN.CO VULCAN.CO 31