Steel & Tube Holdings Limited · NZX:STU
Steel & Tube — FY2021 Earnings Presentation
37 slides from Steel & Tube's earnings presentation, 2021
Slide 1: Steel & Tube FY21 Results Presentation
Steel & Tube FY21 Results Presentation For the 12 months ended 30 June 2021
Slide 2: FY21 Performance Overview
FY21 PERFORMANCE OVERVIEW Strong result driven by delivery on strategic initiatives BENEFITS OF STRATEGIC INITIATIVES NOW BECOMING CLEAR: • Volumes and revenues have been rebuilt • Driving margin improvements • Improved customer service and delivery • Significant structural cost reductions – buildin
Slide 3: FY21 Results at a Glance
FY21 RESULTS AT A GLANCE Significant and sustainable improvement in results • 14.9% improvement in revenue YoY REVENUE • Substantial 13.5% year on year reduction in NPAT $16.1M $480.0M operating expenses now locked in • Significant improvement in earnings: EBITDA $40.7M EBIT $21.8M FY21 FY20 NORMALI
Slide 4: FY21 Operating Environment
FY21 OPERATING ENVIRONMENT
Slide 5: Strongly Positioned for Market Conditions
STRONGLY POSITIONED FOR MARKET CONDITIONS HEADWINDS TAILWINDS STEEL & TUBE VALUE • Global Covid-19 environment • Boom in residential activity • Distribution footprint and breadth of product • Supply chain congestion • Steady increase in • Infrastructure businesses infrastructure activity add point o
Slide 6: Sector Exposure
SHARE OF FY21 SALES SECTOR EXPOSURE Steel & Tube is a diversified business with limited exposure to Infrastructure, Non-food any one sector 14% (FY20: 13%) Manufacturing 19% (FY20: 24%) • 47% Residential and Commercial Construction Non-Residential Food Manufacturing Construction • 14% Infrastructure
Slide 7: Market Conditions
MARKET CONDITIONS Activity remains strong in most sectors post Covid-19 lockdown, strong growth in residential construction, decline in non-residential consents showing signs of recovery Residential Consents Performance of Manufacturing 45 7,000 Index (PMI) No. Consents (000’s) 40 6,500 60 SQM 35 6,
Slide 8: Our Purpose
OUR PURPOSE: OUR PURPOSE: To make life easier for our customers needing steel solutions To make life easier for our customers needing steel solutions Providing a one-stop-shop for the most essential steel products – from floor to roof and everywhere in between Doing everything we can to make it easy
Slide 9: Building Our Business: Key Initiatives in FY21
BUILDING OUR BUSINESS: KEY INITIATIVES in FY21 Strong foundation now in place, focus on growth and continual improvement PROJECT STRIVE: BUILDING ON OUR FOUNDATION, CONTINUAL IMPROVEMENT CHANGE PROGRAMME, OPERATIONAL RESET FY17 to FY20 Strategic Initiatives FY21 Priority focus on quality, health a
Slide 10: Continued Investment in Quality, Safety and Training
CONTINUED INVESTMENT IN QUALITY, SAFETY AND TRAINING • Our commitment to Safety remains a stand out strength with employees rating Steel & Tube’s safety commitment 8.6/10 in Strong improvement in eTRIFR*, engagement survey down to 1.86, well below industry average. LTIFR of 0. • Critical risk manage
Slide 11: Network Strategy
NETWORK STRATEGY Network consolidation programme largely completed – optimised branch network maintaining a regional presence and increased product offering. Will consider increasing presence in key regions to meet sustainable demand. Annual Lease Cash $18.4* $15.9 Cost ($m) *2017 includes sale & le
Slide 12: Substantial and Significant Structural Cost Savings
SUBSTANTIAL AND SIGNIFICANT STRUCTURAL COST SAVINGS Variable Cost Metrics $m FY21 FY20 12% Sales 480.0 417.9 Operating Expenses (Excl D&A) 62.4 73.6 7% Operating Expenses/Sales 13.0% 17.6% 2% Depreciation and Amortisation* 17.5 18.8 Operating Expenses (Reported) 79.9 92.4 Freight/Sales % Direct Labo
Slide 13: Enhanced Focus on Inventory and Supply Chain Management
ENHANCED FOCUS ON INVENTORY AND SUPPLY CHAIN MANAGEMENT Inventory Management Supply Chain Management • Developed capabilities managing • International shipping coordination and international supply chain congestion devanning management • Developing advanced data analytics • Network design and optimi
Slide 14: Positive Gains from Sales Disciplines and Customer Excellence
POSITIVE GAINS FROM FOCUS ON SALES DISCIPLINES AND CUSTOMER EXCELLENCE • Focus on cross-selling through leveraging national Net promoter score measures footprint and breadth of products and availability customer satisfaction and has improved since 2018 • Infrastructure businesses point of difference
Slide 15: Investment into Digital
INVESTMENT INTO DIGITAL Webshop, e-commerce, data analytics, customer management, online training modules, new digital tools to make jobs easier KEY STATS FOR E-COMMERCE Webshop is delivering significant value Increase in revenue Increased order frequency and value +628% Online Revenue Growth Yo
Slide 16: Data Analytics Delivering Valuable Business Insights
DATA ANALYTICS DELIVERING AUTOMATED TRACEABILITY VISION VALUABLE BUSINESS INSIGHTS Test certificates automatically loaded Supplier Mill • Use of rich data to understand our into S&T system when customers and optimise our sales and order dispatched service performance • Targeting resources to provide
Slide 17: Creating a Sustainable Business
CREATING A SUSTAINABLE BUSINESS POSITIVE MOVEMENT IN KEY METRICS • Working with sector to promote steels as an 13% REDUCTION IN FUEL important, essential and sustainable building material CONSUMED and encourage cradle-to-cradle methodology in product assessment 448,766 ltrs • Operational initiatives
Slide 18: Building a Winning Team
BUILDING A WINNING TEAM FY21 focus on Leadership development and building the online training library • Leadership programme rolled out across the organisation with Employee Satisfaction participation from 70 supervisors and team leaders eNPS • Over 50 online training modules currently available in
Slide 19: FY21 Financial Results
FY21 FINANCIAL RESULTS
Slide 20: FY21 Group Financial Summary
• Revenue increased by FY21 GROUP FINANCIAL SUMMARY $62.1m (14.9%) $m FY21 FY20 • Normalised EBIT has Revenue 480.0 417.9 increased by $18.6m 40.7 (37.2) EBITDA against prior year (2.8)1 58.12 Non-trading adjustments • Shareholder equity Normalised EBITDA (excluding non-trading 37.9 20.9 adjustments
Slide 21: Revenue & Margin
REVENUE & MARGIN 14.9% year on year improvement in sales and strong gains vs prior half year 25% Gross Margin % • Strong year on year increase in sales 20% • 2H21 vs 2H20: + 36.4% • 2H21 vs 1H21: + 12.1% 15% • Input cost pressures passed through to price 10% 1H20 2H20 1H21 2H21 • Driving margin impr
Slide 22: Reduction in Operating Expenses
REDUCTION IN OPERATING EXPENSES Sustainable fixed cost baseline now achieved • Prudent and disciplined management of expenditure continues • Operating expenses reduced by 13.5% from prior year1 • FY21 savings primarily driven by improved network structure - indirect labour, employee benefits and res
Slide 23: Balance Sheet
BALANCE SHEET Tight control over balance sheet, with substantial bank funding lines secured • Repaid remaining borrowings during FY21 $m FY21 FY20 • Bank covenant waivers and revised covenants in Trade and other receivables 109.0 92.7 place for FY21; New $50m debt facility secured Inventories 113.5
Slide 24: Working Capital
WORKING CAPITAL Disciplined approach to working capital management Working Capital KPIs FY21 FY20 FY19 Trade Receivables: DSO 38 42 48 Inventories: DIO 101 101 107 Trade Payables: DPO 41 31 26 • On-time debt collection rates have continued to improve • Increase in fast moving inventory to support sa
Slide 25: Capital Expenditure
CAPITAL EXPENDITURE Prudent management of capital expenditure with increased allocation to Digital and Growth projects • FY21 capex of $7.7m (FY20: $7.6m) Capital Investment • Capital spend remains in line with D&A 35 30 • Priority capital allocation to projects supporting 25 digital (53%) and busin
Slide 26: Division Performance
DIVISION PERFORMANCE
Slide 27: Our Business - Divisions
OUR BUSINESS - DIVISIONS DISTRIBUTION INFRASTRUCTURE Products sourced from preferred steel mills and Products processed before sale, typically on a contract or project distributed through our national network basis, including onsite installation services 27
Slide 28: Distribution
Sales & Volume DISTRIBUTION 300 90 Tonnage (000’) 200 • Strong growth in revenue and earnings 60 $m • Driven by increased activity in residential, 100 30 infrastructure and commercial sectors, manufacturing picking up 0 0 FY20 FY21 • Gross margin and margin percentage both Sales Tonnage improved str
Slide 29: Infrastructure
INFRASTRUCTURE 200 Sales & Volume 60 150 • Increasing volume of activity in 2H21 Tonnage (000’) 40 with large commercial projects coming 100 $m back on stream 50 20 • Volumes up versus prior period with - 0 gross margin improvements from cost FY20 FY21 out programme being partially offset Sales Tonn
Slide 30: Moving Forward
MOVING FORWARD
Slide 31: Our Strengths
OUR STRENGTHS • Strong governance and sustainability focus • Established leadership positions in multiple categories of the steel market • Diversity across multiple sectors in the steel market, reducing exposure to any one sector and providing ability to cross-sell to customers • Streamlined and eff
Slide 32: Strategic Focus: Investment for Growth
STRATEGIC FOCUS: INVESTMENT FOR GROWTH Focus on gross margin dollar improvement and growth opportunities NEW PRODUCT BUILD ON STRONG BUSINESS DEVELOPMENT AND BUSINESS GROWTH FOUNDATION INNOVATION • Continue to build best-in- • Continue to develop • Primary focus on organic class customer experience
Slide 33: FY22 Outlook
FY22 OUTLOOK Positive outlook with number of identified opportunities • Positive market backdrop for the medium term, cycle expected to be stronger for longer: o Residential likely to ease next 1-2 years due to interest rate rises and supply demand imbalance slowly reducing with borders closed o Com
Slide 34: Discussion
ISCUSSION ed aw,
Slide 35: Non-GAAP Financial Information
NON-GAAP FINANCIAL INFORMATION RECONCILIATION OF REPORTED TO NORMALISED EARNINGS Year ended 30 June EBITDA EBIT $000s FY21 FY20 FY21 FY20 Reported 40,731 (37,236) 21,752 (57,694) Add back / (subtract) unusual transactions/non-trading adjustments: Gain on sale of properties (1,215) (1,215) NZ IFRS 16
Slide 36: Glossary of Terms
GLOSSARY OF TERMS EBIT: Earnings / (Loss) before the deduction of interest and tax. This is calculated as profit for the year before net interest costs and tax. FY21 EBIT was impacted by non-trading adjustments of $2.8 million, as shown in the table above. EBITDA: Earnings / (Loss) before the deduct
Slide 37: 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