Select Harvests Limited · ASX:SHV
Select Harvests — H1 FY2023 Earnings Presentation
35 slides from Select Harvests's earnings presentation, May 29, 2023
Slide 1: FY2023 Half Year Results
Select Harvests Limited FY2023 Half Year Results 31 March 2023 #
Slide 2: Webcast
Webcast This presentation deck accompanies a live webcast at 11.00am AEST on Monday 29 May 2023 You can participate in the webcast by using the following link https://us02web.zoom.us/webinar/register/WN_DH3R-c-DQ7eaCk3ZunqqYA You are advised to log on at least 15 minutes before 11.00am. If you are u
Slide 3: Disclaimer and Basis of Preparation
Disclaimer and Basis of Preparation This presentation is provided for information purposes only and has been prepared using information provided by the company. The information contained in this presentation is not intended to be relied upon as advice to investors and does not take into account the
Slide 4: FY2023 Half Year Result
FY2023 Half Year Result David Surveyor - Managing Director and CEO Brad Crump – CFO and Company Secretary#
Slide 5: Discussion Agenda
Discussion Agenda 1 Executive Overview 2 Financial Results 3 Sustainability 4 Growing and Transforming our business 5 Forward outlook 6 Questions 5
Slide 6: Safety – People are Critical
Safety – People are Critical Recordable Injury Frequency Rate Key Areas of focus: 99.0 “Felt Leadership” & increased Safety visibility 81.1 Building Safety Processes 70.0 - Hazard identification & action before incidents occur - Introduction of Incident Cause Analysis Method for major events 58.
Slide 7: 1H FY2023 Financial Results
1H FY2023 Financial Results NPAT Loss ($96.2M) Performance materially impacted by three events: - 2022 crop inventory quality ($24.2M) Debt to Equity % 44% - Lower 2023 crop volume ($69.5M) - Goodwill written off non-cash ($26M) Operating Cashflow ($26.7M) - Recognition of the full loss of the 202
Slide 8: Key Drivers - Volume
Key Drivers - Volume Almond Volume (MT) 2022 Crop volume Value and volume reduced after 1H FY2023 review (1,264MT) Balance contracted or allocated to value added processing 2023 Crop Volume (1) - FY22 tonnes lower after FY23 half year write-off Estimated crop 30,000MT vs actual 17,500MT - 62%
Slide 9: Key Drivers – Production Cost
Key Drivers – Production Cost Total Almond Production Cost ($/kg) 12 11.42 10 Production costs impacted by lower volumes 8 6.66 5.63 5.88 6 5.37 Substantial increases in fertiliser costs ($12M). These 4.73 4 2 are now starting to abate 0 Water prices at the lower end and forecast to remain low F
Slide 10: Key Drivers – Market Price
Key Drivers – Market Price Almond Price ($/kg) Pricing Current prices $1/kg higher than prior six months Strong demand from key export markets (China and India) Reduced North American crop Current Market Pricing Trends - 2023 US production forecast range 2.2 – 2.5 $3.25 billion pounds (USDA-NA
Slide 11: Customers and Markets
Customers and Markets Select Harvests Inshell Shipments Customer and Market Mix 70% 60% Geographic diversity and growing customer relationships 50% - Expanding kernel into India and reinvigorating New Zealand 40% - Looking to access Japan & Korean markets 30% - Increasing Value Add exports 20% 10%
Slide 12: Financial Results
Financial Results Brad Crump – CFO and Company Secretary 1
Slide 13: Income Statement
Income Statement $ millions 1H FY2023 EBITDA loss of $117.7m (1H FY2022 $17.7m). (except where indicated) 1H FY2023 1H FY2022 Variance - 2022 Crop fair value adjustment during the period as a result Almond volume (Mt) 17,500 29,630 (12,130) of quality reclassification and inventory write-off ($24.
Slide 14: Group EBITDA Waterfall
Group EBITDA Waterfall The full 2023 crop fair value loss of $69.5m has been recognized within the half year result – 50% in inventory fair value and 50% in biological assets. 17.7 -117.4 14 (* Underlying EBITDA = Reported EBITDA less (Goodwill Impairment + Impairment Loss on Biological Asset + Impa
Slide 15: Balance Sheet
Balance Sheet The market value of the company’s assets is significantly higher than book value. $ millions Inventory levels lower than 1H FY2022, due to a full recognition of the (except where indicated) 1H FY2023 1H FY2022 2023 crop fair value loss – 50% in inventory and 50% within biological Cur
Slide 16: Banking Facilities - Debt and Cash
Banking Facilities -Debt and Cash Drivers of higher net debt: 260 Lower sales revenue resulting from 2022 crop quality write-down Decrease in market prices resulting in Lower Almond prices and lower sales revenue higher 2023 growing costs Increased 2023 crop growing costs due to fertiliser (pa
Slide 17: Asset Valuations and Net Tangible Assets
Asset Valuations and Net Tangible Assets Asset valuations (including market value of leased properties future earnings) are 68.4% higher than the current book carrying values at 31 March 2023, driven by higher market valuations across the orchards, Select’s processing facility and water rights. Ne
Slide 18: Cash Flows
Cash Flows Challenging cashflows in first half of 2023. Expected to return to normal in 2024. Cashflow commentary: $ millions (except where indicated) 1H FY2023 1H FY2022 Negative operating cash flows driven by: Customer receipts 82.7 134.5 Supplier & employee payments (100.7) (115.4) - Lower 2022
Slide 19: Sustainability
Sustainability 1
Slide 20: Almond Growing - Circular Economy
Almond Growing - Circular Economy 30,000MT Focus areas: Compost returned to orchards 130,000MT Biomass produced Select Harvests is utilizing its full farm by our orchards production, reducing waste and extracting maximum value 9,262 HA Orchards Fruit Forests 10,000MT Reviewing carbon value creat
Slide 21: Sustainability and generating commercial returns
Sustainability and generating commercial returns Operational Pilot process Almond Hull Compost Almond Hull Fly Ash to Energy to Fertiliser to Liquid Fertiliser 1. Ash by-product from co- Select Harvests has developed a novel Select Harvests developed a novel Select Harvests co-generation power gener
Slide 22: Strategy and Outlook
Strategy and Outlook ~~
Slide 23: Select Harvests – Investment Logic
Select Harvests – Investment Logic Select Harvests Orchard Map Why Select Harvests? One of the world’s largest almond companies - geographic diversity and scale Positive long term growth – industry CAGR 5%-8% Long run rising prices through the economic cycle Unique vertically integrated port
Slide 24: Select Harvests Strategy - Evolution Underway
Select Harvests Strategy - Evolution Underway Strategic Path Financially disciplined - Faster to Cash - Further lower the Cost Curve - Tightly managed working capital and analytical approach to investing Grow almond volumes and lower our agri risk – increased external supply and lower capital in
Slide 25: Higher ROIC - Project Management office and initiatives under way
Higher ROIC - Project Management office created and 18 Initiatives under way… To be explored Horizon 1 Horizon 2 Horizon 3 Building our foundations Robust Thru the Cycle Transformation Focus on Cash & ROIC CWPF Capacity expansion – Phase 1 CWPF Capacity expansion – Phase 2 - Accelerate cash (c
Slide 26: FY2024 Outlook
FY2024 Outlook Outlook Customers and markets - Almond prices firming (it may not be a straight line) - China and India demand levels increasing - Global inventory levels reducing and US crop challenged - Food mega trends supports almonds 2024 crop - Yield set to rebound – tree health positive -
Slide 27: Key Messages
Key Messages Safety performance continuing to lift Acknowledge FY2023 difficult year – impact of two years in one Farming outlook positive - 2023 harvest complete and being processed with improved quality over 2022 crop - 2024 crop rebound expected Market demand and pricing moving to more at
Slide 28: Questions
Questions 28
Slide 29: Thank you
Thank you Please direct any queries to: David Surveyor Brad Crump Andrew Angus Managing Director CFO and Company Secretary Investor Relations +61 3 9474 3544 +61 3 9474 3544 +61 402 823 757 Please note that background material/data regarding the global almond industry can be found on the Select Harv
Slide 30: Historical Financial Summary
Historical Financial Summary Consolidated results for the year ended 30 September/June SELECT HARVESTS CONSOLIDATED 2009 2010 2011 2012 2013 * 2014 2015 2016 2017 2018 2019 + 2020 2021 2022 RESULTS FOR YEARS ENDED 30 SEPTEMBER/ JUNE 30-June 30-September Total sales 248,581 238,376 248,316 246,766 19
Slide 31: Historical Almond Pricing
Historical Almond Pricing Almond Pricing – USD/lb Source: Derco Foods 31
Slide 32: Orchard Age Profile
Orchard Age Profile Select Harvests weighted average orchard age is 14 years, with 100% of current planted acres cash generative1. Age Profile of Select Harvests Almond Orchards1 (100% of current planted hectares are cash generative) 11% 85% 4% Planted orchards are Planted orchards in economic sweet
Slide 33: Planted Hectares
Planted Hectares 2.6x growth in planted hectares since 2012 Select Harvests Orchard Profile Select Harvests Planted Almond Hectares Select Harvests Total Planted Almond orchard portfolio (as at 30 September 2022) hectares acres 9,262 9,262 9,262 9,262 Central Region Company Owned 1,693 4,183 Piangil
Slide 34: Water Use Efficiency of Australian Almonds
Water Use Efficiency of Australian Almonds Almonds have the highest calories per ML of water used, the highest protein per ML of water used and the highest dollars generated per ML of water used. Calories per ML Kg Protein per ML 600,000 20.00 18.00 500,000 16.00 14.00 Protein/ML (kg) 400,000 12.00
Slide 35: Useful Almond Industry Websites
Useful Almond Industry Websites Select Harvests Internal Video https://vimeo.com/680215981 Industry Associations Californian Almond Board www.almondboard.com Almond Board of Australia www.australianalmonds.com.au International Nut and Dried Fruit Council www.nutfruit.org/about-us/history Indus