Steel & Tube Holdings Limited · NZX:STU
Steel & Tube — H1 2025 Earnings Presentation
37 slides from Steel & Tube's earnings presentation, Feb 24, 2025
Slide 1: 1H25 Results Presentation
1H25 Results Presentation For the six months ended 31 December 2024 24 February 2025
Slide 2: Acquisition of Perry Metal Protection
Acquisition of Perry Metal Protection 2
Slide 3: Perry Metal Protection Transaction Summary
Perry Metal Protection Transaction Summary The acquisition supports strategy of growing high value products and services Transaction • Acquisition of assets of Perry Metal Protection, Perry Grating and Waikato Sand Blasting for $43.5m including $6.1m of inventory • Performance based earnout payable
Slide 4: Strategic Rationale
Strategic Rationale Strong fundamentals and stable earnings through the cycle • Highly aligned customer base improving our service offer • Provides earnings consistency throughout the cycle • Identified synergies including further growth pathways • Strong brands retained including Perry Metal Protec
Slide 5: Perry Metal Protection
Perry Metal Protection • Privately held, established in 1974, nationwide footprint and market leading position ~44% share in hot dip galvanizing • Includes a complementary grating and sandblasting businesses • 113 staff across 6 locations 6 Sites Nationwide 5
Slide 6: Business Overview – Key Metrics
Business Overview – Key Metrics Revenue Normalised EBITDA (pre IFRS16) Normalised EBIT (pre IFRS16) Revenue Average Selling Price 12 10 9 8 Millions Millions 10 9 40 36 2,500 10 8 7 33 35 8 Average Selling Price Revenue (Millions) 2,000 8 30 6 1,500 6 ($/tonne) 20 4 1,000 4 10 2 500 2 - - - - FY22 F
Slide 7: Integration Strategy
Integration Strategy Strengthen fundamentals and leverage operational excellence • Agreement follows a rigorous 6-month due diligence process • Steering committee has been established to support the integration process with the involvement from leaders in Steel & Tube and Perry Metal Protection • St
Slide 8: Proven M&A Track Record
Proven M&A Track Record Successful acquisitions over the past 4 years supporting business into the future Fasteners NZ Kiwi Pipe & Fittings Transport Strategy • Acquired 2021 • Acquired 2022 • Acquired 2024 • Increased share of • Building on position in • Internalising margin from fasteners market f
Slide 9: Steadily navigating weak economy, strong fundamentals in place
Steadily navigating weak economy Strong fundamentals in place 9
Slide 10: Results at a glance
Results at a glance Weak economic conditions impacting volumes and earnings Volume Normalised Normalised NPAT Normalised Inventory EBITDA EBIT OPEX 48,667t $2.0m -$9.5m -$10.4m $36.0m $109.6m -22% -91% -184% -294% -3% 1H24: $128.6m Revenue EBITDA EBIT ROFE Operating Net Cash Cash Flows $196.0m $0.6m
Slide 11: Key messages
Key messages Company is focused on delivering to its priorities • Cycle looks to have bottomed out • Strong fundamentals in place • Prioritising cashflows and inventory • Signs of market improvement, likely to build from mid-2025 • Further M&A opportunities remain 11
Slide 12: Manufacturing and Commercial
Manufacturing and Commercial Manufacturing and commercial construction slow Performance of Manufacturing Index (PMI) 34% 65 MANUFACTURING of group sales 55 • PMI has reduced by 7% since December 2019 45 • PMI expanded for the first time in 23 months, increasing to 35 51.4 in January, up from 46.2 in
Slide 13: Residential and Infrastructure
Residential and Infrastructure Residential in decline, delayed infrastructure RESIDENTIAL 13% of group sales Residential Consents 60 8 No. Consents (000s) • Residential consented floor area has reduced by 10% YoY to SQM (millions) 50 7 December 40 6 • Sector has been impacted by high interest rates
Slide 14: Long term trends are favourable for Steel & Tube
Long term trends are favourable for Steel & Tube Navigating near term softness; well positioned to capture the upside • Lowering interest rates • Government investment in infrastructure • Improved business confidence and investment • Recovery in consumer spending and the housing market Commercial Re
Slide 15: Actively managing market challenges
Actively managing market challenges Market 1H25 2H25 FY26 Response and Mitigation Challenges • Strong balance sheet and lean cost structure Continuing • Expanding existing customer share of wallet weak economic High High Med • Focus on higher value products and services drivers • Diversified busines
Slide 16: Business strategy
Business strategy
Slide 17: Strategic pathways
Strategic pathways Overall goal to deliver gross margin improvement Grow High Value Products and Continue to Strengthen the Core Services • Best-in-class customer experience • High value products, diversified materials and value-added services • Cross sell products and services • Diversify customer
Slide 18: Operating leverage
Operating leverage Scenario modelling FY24’s operating leverage Controlling the controllables at increasing product volume levels Volume EBIT • Focus on higher value products and Historical Volume scenarios lower costs driving strong operating 70 200 leverage 60 35% increase in Volume (ktonnes) earn
Slide 19: Growth investments adding value
Growth investments adding value Recent growth initiatives and M&A Added Value from Strategic Investments Plate Processing Value add service (Auckland & 12.0 Wellington) 10.0 Aluminium High value product, continuing to 8.0 expand range 6.0 $m Last mile freight Exceeding expectations delivery 4.0 2.0
Slide 20: Capital management
Capital management Balance sheet providing resilience and opportunity through the cycle • Net cash $17.5m end-Dec 24 • Strong cashflows supporting strategic Net (Debt)/Cash Position initiatives 50 Covid-19 60% 25 30% • Priority capital allocation to 0 0% Net Debt/Equity maintenance spend and strateg
Slide 21: 2H25 focus and priorities
2H25 focus and priorities Tight control through the cycle; operating leverage as demand returns • Laser focus on capturing revenue and driving profitability • Expand offering and sales to current customers – cross-sell opportunities • Continue to take cost out, while retaining ‘muscle’ • Continued t
Slide 22: Financial results
Financial results 22
Slide 23: Financial performance
Financial performance $m 1H25 2H24 1H24 Group financial summary Revenue 196.0 217.4 261.8 Volume (Ktonnes) 48.7 53.0 62.6 • Volumes continue to be suppressed in a recessionary environment GM$/tonne 762 871 926 • Revenues reflect decreased volumes and selling EBITDA 0.6 10.2 21.2 price pressure from
Slide 24: Revenue
Revenue Sales & Volume Focus on customer, high value products 350 100 and services, and pricing disciplines 300 80 250 Tonnage (000s) Sales ($m) 200 60 150 • Reduction in volume and revenue compared to 100 40 1H24 driven by the continuation of challenging 50 20 economic conditions 0 0 1H22 2H22 1H23
Slide 25: Competitive margins
Competitive margins Margin $/tonne 1252 1220 Declining margins reflect economic conditions 1081 1126 1162 1155 1032 926 850 850 871 820 778 762 • Competitor price pressure has flowed through to margins • Continued focus on Gross Margin $/tonne 1H22 2H22 1H23 2H23 1H24 2H24 1H25 through customer valu
Slide 26: Normalised operating expenses
Normalised operating expenses Cost out programme more than offsetting inflationary pressures Targeting annualised $7m (versus $5m planned) of operating expense savings in FY25 • Ongoing focus on streamlining operational costs • Normalised operating expenses reduced by $1m from 1H24 • Cost initiative
Slide 27: Normalised EBITDA
Normalised EBITDA Volume impacts partially offset by operating cost reductions • Volume decline consistent with New Zealand’s recessionary environment • Pricing impact reflective of market competitiveness and product mix • Renewed focus on higher value products, improved pricing disciplines, leverag
Slide 28: Balance sheet summary
Balance sheet summary $m 1H25 2H24 1H24 Robust balance sheet, capable of investing in growth Trade and other receivables 51.4 68.5 61.3 • Disciplined management of working capital Inventories 109.6 121.3 128.6 • Cash balance of $17.5m, no borrowings, $100m Trade and other payables (54.0) (56.7) (61.
Slide 29: Inventory management
Inventory management Managing inventory levels to ensure best use of working capital • 1H25 inventory in line with activity, coupled with further improvements and optimisations • Unit finished product prices remain at elevated levels • Active stewardship and use of detailed analytical tools to ensur
Slide 30: Cashflow
Cashflow Focus on cash management • Cash balance of $17.5m at 31 December 2024, up from $8.7m at the end of June 2024 • Disciplined cash flow management has ensured strong cash collections, despite economic/construction downturn • Careful inventory management and supply chain optimisation 30
Slide 31: Outlook
Outlook
Slide 32: Market outlook
Market outlook • Cycle appears to have bottomed out • Starting to see improved activity and sentiment from customers, with momentum expected to build from mid-2025 (1H26) ‒ Manufacturing is poised to grow, supported by recovery of the domestic and international markets ‒ Commercial and residential p
Slide 33: Summary key messages
Summary key messages Well positioned for economic improvement • Steadily navigating the weak economy • Focused on maximising the benefit of M&A activity • Prioritising cashflows and inventory • Well placed to deliver material earnings growth as economic conditions improve
Slide 34: Appendices
Appendices 34
Slide 35: Non-GAAP financial information
Non-GAAP financial information Reconciliation of Reported to Normalised Earnings EBITDA EBIT $000s 1H25 2H24 1H24 1H25 2H24 1H24 Reported 561 10,243 21,172 (10,922) (603) 10,172 Project Strong costs* 906 2,382 319 906 2,463 729 Business restructuring costs 227 550 - 227 550 - Software as a Service (
Slide 36: Glossary of terms
Glossary of terms EBIT: Earnings/(Loss) before the deduction of interest and Working Capital: This means the net position after tax. This is calculated as profit for the period before net Current Liabilities are deducted from Current Assets. interest costs and tax The major individual components of
Slide 37: 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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