Steel & Tube Holdings Limited · NZX:STU
Steel & Tube — H1 2020 Earnings Presentation
23 slides from Steel & Tube's earnings presentation, February 2020
Slide 1: 1H20 Results Presentation
1H20 Results Presentation For the six months ended 31 December 2019
Slide 2: 1H20 Results Snapshot
1H20 RESULTS SNAPSHOT ROBUST OPERATING CASHFLOW REVENUE $17.1M $232.0M Pre-IFRS 16 $10.5M2 EBIT $(33.4)M FURTHER REDUCTION IN NET DEBT NORMALISED EBIT $5.7M1 TO $10.9M Pre-IFRS 16 $3.1M2 NPAT $(37.0)M INTERIM DIVIDEND Pre-IFRS 16 $(36.8)M2 1.5 CENTS 1) Normalised EBIT excludes $39.1m in non-trading
Slide 3: 1H20 Overview
1H20 OVERVIEW • Challenging trading environment continued with 1H20 impacted by a decline in activity in the vertical construction and stainless steel markets • Result includes non-trading adjustments as announced on 31 January 2020: Non-cash impairment of goodwill of $37.1m and Project Strive execu
Slide 4: Strategic Pillars
STRATEGIC PILLARS OUR GOAL IS TO BE THE LEADER IN BUYING, SELLING, PROCESSING AND PLACING STEEL PRODUCTS IN NZ Safe and healthy work Products and services Leverage our procurement Develop leaders environment to meet customers’ and supply chain scale Everyone matters Quality processes nee
Slide 5: Progress Highlights: Continuing Commitment to Quality, Health and Safety
PROGRESS HIGHLIGHTS CONTINUING Quality • Lloyd’s Register independent steel mill audits ongoing COMMITMENT TO • Random sampling and independent testing underway QUALITY, HEALTH • Automation of test certificate process underway AND SAFETY • ESG framework and Key Performance Indicators under developme
Slide 6: Progress Highlights: Deliver on Customer Service Promise
PROGRESS HIGHLIGHTS • Successfully launched Chatbot ‘Stanley’, allowing customers DELIVER ON to query and receive answers about orders and shipments CUSTOMER • Launched “Group Product Guide” to drive awareness and SERVICE PROMISE sales across our broad range of products • Continuing to build on cust
Slide 7: Progress Highlights: Operations and Supply Chain Excellence
PROGRESS HIGHLIGHTS OPERATIONS AND • Focussed on Distribution division turnaround: SUPPLY CHAIN - Improved product margins, procurement, direct labour EXCELLENCE efficiency and freight - Redefined branch product footprints ensuring right inventory in the right locations - Successful trial of barcode
Slide 8: Progress Highlights: Supporting a Winning Team
PROGRESS HIGHLIGHTS • Continued investment into training and development SUPPORTING A - Launch of S&T Area Leadership programme – focus on sales, WINNING TEAM commercial skills and leading digital change - Offered Workplace Literacy programmes to staff, to support those with English as a second lang
Slide 9: 1H20 Group Financial Summary
1H20 GROUP FINANCIAL SUMMARY $millions 1H19 Actual 1H20 Pre-NZ NZ IFRS 16 1H20 IFRS 16 adjustments Actual Revenue 258.2 232.0 - 232.0 EBIT 9.8 (36.0) 2.6 (33.4) Non-trading adjustments* (0.1) 39.1 - 39.1 Normalised EBIT (excluding non- 9.7 3.1 2.6 5.7 trading adjustments) NPAT/NLAT 5.6 (36.8) (0.2)
Slide 10: Market Conditions
MARKET CONDITIONS Reduced vertical construction activity and softer stainless market has impacted on Steel & Tube revenues 10
Slide 11: Sector Exposure
SECTOR EXPOSURE SHARE OF SALES Infrastructure, Non-food 13% Manufacturing, 24% Non-Residential Construction, 24% Food Manufacturing, 14% Residential Retail/Wholesale, Construction, 15% 10% 11
Slide 12: Revenue & Margin
REVENUE & MARGIN Reduction in revenue primarily related to contraction in vertical construction activity and stainless steel market. Maintained margin and market share SALES AND MARGIN 300 30.0% 250 25.0% Revenue 1H20 1H19* % change $millions 200 20.0% Distribution 135.4 149.8 -9.6% Infrastructure 9
Slide 13: Operating Expenses
OPERATING EXPENSES Cost efficiencies continue to be achieved in underlying opex • $2.8m decrease in underlying 1H19:1H20 NORMALISED OPERATING EXPENSES* opex after normalisation and STRUCTURAL / EFFICIENCIES OTHER COSTS excluding impact of bad debts • Property costs down $2.3m, 50 49.4 2.8 partially
Slide 14: Operating Cash Flow
OPERATING CASH FLOW Improved operating cash flow generation 1H19:1H20 OPERATING CASH FLOW BRIDGE 20.0 $millions 1H20 1H19 (5.6) Reported net operating cash flow 17.1 11.1 15.0 1.9 NZ IFRS 16 cash flow reallocations (6.6) - 11.1 3.0 10.5 Pre-NZ IFRS 16 operating cash flow 10.5 11.1 10.0 • Improved op
Slide 15: Working Capital
WORKING CAPITAL Continued focus on working capital management FY18 Excl. Working Capital KPIs 1H20 1H19 FY19 Plastics Trade Receivables: DSO 43 48 48 65 Inventories: DIO 111 124 107 110 Trade Payables: DPO 30 26 26 26 • Continuing focus on working capital management has resulted in strong operating
Slide 16: Capital Expenditure
CAPITAL EXPENDITURE Prudent management of capital expenditure with increased allocation to Digital and Growth projects CAPEX SPEND • $3.9m 1H20 Capex spend (1H19: $2.9m) • Capital spend remains in line with depreciation and amortisation Maintenance • Increased capital allocation to Digital and 35% G
Slide 17: Balance Sheet
BALANCE SHEET Tight control over balance sheet, with disciplined focus on working capital management • Working capital improvements strengthening $m 1H20 1H19 FY19 cash flows Trade and other receivables 74.1 84.1 90.7 • Reduction in net debt to $10.9m from Inventories 120.0 123.8 114.0 operating cas
Slide 18: NZ IFRS 16 Effective 1 July 2019
NZ IFRS 16 EFFECTIVE 1 JULY 2019 BALANCE SHEET • Removes the distinction between operating AS AT 31 DECEMBER 2019 400000 and finance leases, with all leases now on 300000 balance sheet 200000 • Results in a shift of operating lease costs, 100000 currently reported within other operating 0 Assets Lia
Slide 19: 2H20 Trading Update
2H20 TRADING UPDATE Priority is customer service and streamlining business leading to profitable growth • No major changes to current market dynamics expected • Some indications of improving business confidence should lead to increased market activity in 2H20. Major projects secured post balance dat
Slide 20: Questions
QUESTIONS d
Slide 21: Non-GAAP Financial Information
NON-GAAP FINANCIAL INFORMATION Non-GAAP financial information: Steel & Tube uses several non- RECONCILIATION OF GAAP TO NON GAAP MEASURES IH20 1H19 GAAP measures when discussing financial performance. These Half Year ending 31 December 2019 include Normalised EBIT and Working Capital. Management $00
Slide 22: Glossary of Terms
GLOSSARY OF TERMS EBIT: This means Earnings/ (Loss) before the deduction of interest and tax and is calculated as profit for the year before net interest costs and tax. 1H20 EBIT was impacted by a number of non-trading adjustments totaling $(39.1) million, details of which are included in S&T’s Inte
Slide 23: 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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