Steel & Tube Holdings Limited · NZX:STU
Steel & Tube — Shareholder Meeting (October 2018)
40 slides from Steel & Tube's shareholder meeting presentation, Oct 25, 2018
Slide 1: Annual Shareholders' Meeting
ANNUAL SHAREHOLDERS’ MEETING 25 October 2018
Slide 2: Board
BOARD Susan Paterson Christopher Ellis Steve Reindler Independent Chair Independent Director, Independent Director Appointed Jan 2017 Appointed Oct 2017 Appointed Oct 2017 Rosemary Warnock Anne Urlwin Independent Director, Independent Director Appointed Sept 2010 Appointed June 2013
Slide 3: Chair's Presentation
Chair’s Presentation Susan Paterson
Slide 4: Fletcher Building (FBU) Offer
FLETCHER BUILDING (FBU) OFFER • Your Board was very responsive to FBU’s non-binding offers, and absolutely focussed on the interests of shareholders as a whole • We viewed $1.90 per share as below fair value but close enough to engage an independent expert • FBU chose not to await the independent ex
Slide 5: Impact of historical issues greater than expected
IMPACT OF HISTORICAL ISSUES GREATER THAN EXPECTED CAPITAL INVESTMENT $Millions FY17 FY18 ▪ Significant difficulties with 50 Inventories 143.1 116.0 ERP implementation Debtors 93.5 99.2 45 Trade and other Creditors (54.4) (49.9) impacting trading 40 Working Capital 182.2 165.4 ▪ Scale of legacy issue
Slide 6: Rebuilding shareholder value is top of mind
REBUILDING SHAREHOLDER VALUE IS TOP OF MIND Long term share price performance: March 2005 to YTD Significant financial restructuring required over the last 12 months to reset the business: • Sophisticated investors recognised historical issues with increasing debt, inventories and core business dete
Slide 7: Re-setting our business
RE-SETTNG OUR BUSINESS Late-2017: Embarked on an extensive company-wide reset to drive long-term sustainable earnings improvement JOURNEY TO REFRESHED BOARD, STRATEGY AND LEADERSHIP CHANGE PROGRAMME AND OPERATIONAL RESET STRENGTHENED EXTENSIVE ORGANISATIONAL REVIEW FOUNDATION 2H17: January to June 1
Slide 8: Steel & Tube is…
STEEL & TUBE IS… ▪ One of New Zealand’s leading providers of steel solutions, and a proud New Zealand company, with over 65 years of trading history ▪ We offer New Zealand’s most comprehensive range of steel products, services and solutions ▪ Our stable of best-in-class businesses are some of this c
Slide 9: A stronger future
A STRONGER FUTURE ▪ Positive economic growth trends across majority of sectors in which S&T operates ▪ Strong foundation from which to build our company ▪ Financial flexibility to undertake business transformation initiatives and achieve our goals ▪ Pleasing progress being seen with early benefits f
Slide 10: Management Presentation
Management Presentation Mark Malpass
Slide 11: FY18 Financial Summary
FY18 FINANCIAL SUMMARY ▪ Revenues impacted by issues with ERP system implementation affecting customer service FY18 FY17 ▪ $53.8m of non-trading impacts from legacy issues Revenue $495.8m $511.4m recognised in FY18 following detailed review EBIT $(36.2)m $31.6m ▪ Normalised EBIT slightly ahead of ea
Slide 12: Our Business: Divisions
OUR BUSINESS: DIVISIONS DISTRIBUTION INFRASTRUCTURE Products are sourced from preferred steel mills and distributed through Products are processed before sale and typically on a contract or project basis, Steel & Tube’s national network of branches including onsite installation services FY18: ~58% o
Slide 13: Industry Landscape and Market Shares
INDUSTRY LANDSCAPE AND MARKET SHARES (1) Long Products Flat & Roll-formed Products Specialised Pre-Fab PLATE MESH WIRE STRUCTURAL HOLLOWS STAINLESS SHEET & COIL FASTENINGS MERCHANT DIRECT TO MARKET REBAR ROLLFORMING ENGINEERING STEEL CHAIN &RIGGING PREFAB & OTHER 1) Market share for S&T and other su
Slide 14: Sector Exposure
SECTOR EXPOSURE Well balanced across construction, manufacturing and rural sectors Construction ▪ Exposure to infrastructure, commercial (non-residential) and residential construction ▪ A highly competitive market experiencing high demand ▪ Construction expected to drive reinforcing, piping, roll-fo
Slide 15: Our Opportunity
OUR OPPORTUNITY Growth in customer sectors is driving demand • Multi-unit dwellings are an increasing share in the residential sector • Increased central and local government funded infrastructure, housing and development projects Steel is a preferred building material • Increased intensity of steel
Slide 16: Our Strengths
OUR STRENGTHS ▪ Strong Board and Management with deep industry experience ▪ Passionate and engaged workforce ▪ Loyal and extensive customer base ▪ Well considered and articulated strategy ▪ In-depth understanding of our business and opportunities ▪ Breadth and depth of our distribution network and p
Slide 17: Our Strategy for Profitable Growth
OUR STRATEGY FOR PROFITABLE GROWTH
Slide 18: Our Strategy in Action
Our Strategy in Action “Striving for Excellence”
Slide 19: Commitment to Safety and Quality
CONTINUING IMPROVEMENT IN SAFETY INIDCATORS COMMITMENT TO SAFETY AND FY18 lag indicator improvements continue into FY19 ▪ Strong employee engagement QUALITY ▪ Worksafe based programme on the power of speaking up ▪ Robust return to work programme following end of year break ▪ Safe and healthy work en
Slide 20: Focus on Quality
FOCUS ON QUALITY KEY QUALITY INITIATIVES IN FY19 ▪ Dedicated QHS&E team ▪ Group-wide update to ISO 9001:2015 ▪ Third party audits of steel mills ▪ Traceability enhancements including barcode scanning
Slide 21: Putting the Customer at the Heart of the Business
PUTTING THE CUSTOMER AT THE HEART OF THE BUSINESS ▪ Products and services to meet customer needs ▪ Leverage our technical expertise ▪ Delivery in full, on time and in specification KEY INITIATIVES IN FY19 ▪ Sales account alignment, management and sales excellence programme ▪ Improvement in delivery
Slide 22: Positive Impact of Initiatives Now Being Seen
POSITIVE IMPACT OF INTIATIVES NOW BEING SEEN Positive results now being seen from the implementation of the change programme with increases in both average daily volumes and average daily sales, and improving market share in key categories
Slide 23: Innovation is Important to Success
INNOVATION IS IMPORTANT TO SUCCESS BIM SPEC ▪ One stop portal for Building Information Models (BIM) and 2D and 3D content across the Steel & Tube product range ▪ Easy to use digital platform for design professionals to access our technical content COMFLOR SR ▪ Flat soffit designed and tested to the
Slide 24: Operational and Supply Chain Excellence
OPERATIONAL AND SUPPLY CHAIN EXCELLENCE ▪ Leverage our procurement and supply chain scale ▪ Manufacturing excellence ▪ Excellence in inventory management ▪ Employ data analytics to better service our customers ▪ Delivering operational efficiencies KEY INITIATIVES IN FY19 ▪ Supply chain improvements
Slide 25: Supply Chain Excellence
SUPPLY CHAIN EXCELLENCE ▪ Inventory segmentation: Resulting in improvements in A-line stock availability from 83% to 93%; targeting 98% ▪ Dedicated sales and operations planning team ▪ Sales and operations planning (S&OP) system: Better matching customer demand with supply. Implemented Q1 FY19 ▪ Inv
Slide 26: Optimising Our Footprint
Significant rationalisation in Steel & Tube site OPTIMISING OUR FOOTPRINT numbers while retaining regional footprints - from 50 to 40 sites with more to come • Integration of previously acquired businesses delivering synergy benefits Whangarei 2 • Heritage Steel & Tube Stainless combined Auckland 8
Slide 27: Manufacturing Excellence
MANUFACTURING EXCELLENCE • Implementing a Lean 5s programme Initiatives leading to significant reduction in wage costs across the manufacturing businesses - Reinforcing and Roll-forming • Involves Key Performance Targets and systems tracking of machine efficiency and productivity • Already deliverin
Slide 28: Supporting a Winning Team
SUPPORTING A WINNING TEAM ▪ Develop leaders ▪ Everyone matters ▪ Recognise personal and team contributions ▪ Provide a rewarding workplace KEY STRATEGIES IN FY19 ▪ Employee engagement ▪ Leadership development ▪ Sales training ▪ Annual Excellence Awards ▪ Continue to support First Foundation
Slide 29: Annual Staff Survey Results
ANNUAL STAFF SURVEY RESULTS High levels of staff engagement ▪ High participation by staff across company divisions and locations ▪ 76% willing to go the extra mile to contribute to the company’s success ▪ Company Strengths: people, teamwork, employee knowledge and loyalty ▪ Strong recognition Health
Slide 30: Strong Management Team
STRONG MANAGEMENT TEAM OPERATIONAL MANAGEMENT Mark Malpass Marc Hainen Steve Kubala Andrew Roche Mohammed Afroz CEO GM Distribution GM Roll Forming Reinforcing Manager CFDL Manager BUSINESS MANAGEMENT Greg Smith Miki Cooke Dave Clegg Damian Miller CFO National Supply Chain GM People & Culture Qualit
Slide 31: Trading Update and Outlook
Trading Update and Outlook
Slide 32: Operating Environment
OPERATING ENVIRONMENT Global Steel Market Trend ▪ Global crude steel production increased by 2.6% to 1.748b tonnes over the last year ▪ China’s increased output of 2.7% over the year which was mainly consumed domestically ▪ East Asian steel prices continued the upward trend but flattened out in the
Slide 33: FY19 Guidance
FY19 GUIDANCE No change in guidance, FY19 earnings before interest and tax of $25m ▪ Legacy issues behind us and major financial restructuring completed ▪ Beginning journey to significantly improved operating and financial performance ▪ Recent increases in volumes are encouraging as ERP stabilised a
Slide 34: Half Year Outlook
HALF YEAR OUTLOOK ▪ Majority of earnings improvements driven by the FY19 EBIT target of Strive programme Half year earnings $25m budget ~40% of FY ▪ Benefit of improvement actions expected to flow through subsequent years ▪ 1Q on track with budget to achieve FY19 guidance ▪ Strive programme driving
Slide 35: Shareholder Discussion
Shareholder Discussion
Slide 36: Resolutions
Resolutions
Slide 37: Resolutions
RESOLUTIONS RESOLUTION 1: That the Directors be authorised to fix the fees and expenses of PricewaterhouseCoopers as the Company’s auditor. RESOLUTION 2: That Susan Paterson, who retires by rotation and is eligible for re-election, be re-elected as a Director of the Company. RESOLUTION 3: That Anne
Slide 38: Other Business Close of Meeting
Other Business Close of Meeting
Slide 39: 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
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