Elders Limited · ASX:ELD
Elders — HY24 Earnings Presentation
39 slides from Elders's earnings presentation, May 20, 2024
Slide 1: Half Year Results Presentation for FY24
Half Year Results Presentation for FY24 20 May 2024 Presented by Mark Allison Managing Director and CEO Paul Rossiter CFO 1 Elders Limited
Slide 2: Disclaimer And Important Information
Disclaimer And Important Information The material in this presentation has been prepared by Elders Limited and is general background about Elders' activities and performance at the date of this presentation. The information is in summary form, does not purport to be complete, and where derived from
Slide 3: Agenda
ELDERS LIMITED AGENDA Agenda 01 Executive Overview 04 Questions 02 Financial Results 05 Appendix 03 Strategy and Outlook 3
Slide 4: Executive Overview
Executive Overview Presented by Mark Allison (Managing Director and CEO) 4 Elders Limited
Slide 5: Earnings Resilience Through Seasonal Volatility
ELDERS LIMITED EXECUTIVE OVERVIEW Earnings Resilience Through Seasonal Volatility Guidance reflects first quarter weakness from below average seasonal conditions, balanced with an improved outlook for cropping and livestock First Eight Point Plan Second Eight Point Plan Third Eight Point Plan Fourth
Slide 6: People and Customer Highlights
ELDERS LIMITED EXECUTIVE OVERVIEW People and Customer Highlights 1 lost time injury 37% women in the workforce 9.8 total recordable injury #1 most trusted 21% frequency rate agribusiness brand women in senior positions amongst farmers fourth year in a row 47 77% net promoter score employee engagemen
Slide 7: Safety, Health and Well-being
ELDERS LIMITED EXECUTIVE OVERVIEW Safety, Health and Well-being Commitment to a safe working environment Lost Time Injuries (LTI) Total Recordable Injury Frequency Rate (TRIFR)1 6 18.7 -15% 15.1 12.6 3 3 3 Average 10.1 9.8 2 1 FY20 FY21 FY22 FY23 HY24 FY20 FY21 FY22 FY23 HY24 1. All fatalities, LTIs
Slide 8: Sustainability Performance
ELDERS LIMITED EXECUTIVE OVERVIEW Sustainability Performance Meaningful progress towards Scope 1 and 2 emission targets CLIMATE TARGETS1 OUR PROGRESS Targets set to reduce our Scope 1 and 2 greenhouse gas emissions: ▪ Engaged centralised waste management services provider, driving waste reduction in
Slide 9: First half impacted by below average seasonal conditions
ELDERS LIMITED EXECUTIVE OVERVIEW First half impacted by below average seasonal conditions First half impacted by poor client sentiment following El Niño declaration and below 10-year median livestock prices $38.4m 11.4% 339% 2.6x Underlying EBIT Return on Capital Cash Conversion Leverage Ratio R12
Slide 10: Financial Results
Financial Results Presented by Paul Rossiter (CFO) 10 Elders Limited
Slide 11: Financial Performance Overview
ELDERS LIMITED FINANCIAL RESULTS Financial Performance Overview Improved seasonal outlook supporting FY24 EBIT guidance of $120m - $140m ▪ Reaffirming underlying EBIT range of $120m - $140m FY24 Underlying EBIT Guidance ▪ Supported by return to average seasonal conditions ▪ Second half EBIT to achie
Slide 12: Five-Year Financial Performance
ELDERS LIMITED FINANCIAL RESULTS Five-Year Financial Performance Resilient financial result despite below average seasonal conditions Sales Revenue ($m) Gross Margin ($m) +10.5% +8.8% 3,445 3,321 653 619 2,549 529 2,093 438 1,342 285 1,515 1,657 327 306 1,101 204 242 900 FY20 FY21 FY22 FY23 HY24 FY2
Slide 13: Five Year Shareholder Returns
ELDERS LIMITED FINANCIAL RESULTS Five Year Shareholder Returns Compelling shareholder value proposition through the agricultural cycles Underlying Earnings per Share (cents) Adjusted Underlying Earnings per Share (cents)¹ -26.5% 134.1 96.7 97.3 36.8 96.7 69.9 66.3 87.6 69.9 21.3 58.0 42.9 58.0 31.2
Slide 14: HY24 Financial Summary
ELDERS LIMITED FINANCIAL RESULTS HY24 Financial Summary Improved outlook for the second half following return to average seasonal conditions Key metrics ($m) HY24 HY23 Var Var % Sales revenue 1,341.8 1,657.3 (315.5) (19%) Gross margin 285.4 305.8 (20.4) (7%) Gross margin % 21.3% 18.5% 2.8% n/a
Slide 15: Gross Margin Diversification
ELDERS LIMITED FINANCIAL RESULTS Gross Margin Diversification Continued focus on product diversification through organic and acquisition growth -22.4% Total Gross Margin ($m) 80.9 82.2 79.2 326.4 305.8 285.4 -12.8% 62.8 64.0 HY22 HY23 HY24 55.8 +8.0% +22.5% 37.8 +2.3% 35.3 35.4 -3.8% 32.7 33.3 -5.7%
Slide 16: Product Performance
ELDERS LIMITED FINANCIAL RESULTS Product Performance Cropping and livestock markets negatively impacted by subdued client sentiment Change in product margin ($m) Quarterly Performance³,4 Retail Products HY23 50.6 ▪ Sales impacted by cautious consumer sentiment Q1 Q2 NPAT ▪ Margin pressure driven by
Slide 17: Industry Backdrop – Rural Products
ELDERS LIMITED FINANCIAL RESULTS Industry Backdrop – Rural Products Volume growth unable to fully offset negative sales impact from lower input prices compared to prior corresponding period FY23 HY24 FY23 HY24 Glyphosate 95%¹ ($/kg) UREA Index ($/tonnes)¹ -714 (-64%) 14.0 -9.0 1,200 9-Yr Mean 3.2 St
Slide 18: Continued Volume Growth Across Key Products
ELDERS LIMITED FINANCIAL RESULTS Continued Volume Growth Across Key Products Continued sales volume growth unable to offset lower crop protection prices against prior period Volumes (Tonnes’ 000) 637 42 Animal Health Crop Protection ▪ Marginal volume growth impacted by ▪ Volumes and client sentiment
Slide 19: Industry Backdrop – Livestock
ELDERS LIMITED FINANCIAL RESULTS Industry Backdrop – Livestock Strong rebound in livestock markets improving second half outlook FY23 HY24 EYCI ($/Head) ▪ FY24 Q2 experienced a positive revision (+61%) since September 2023, with the index recently trading in line with the 10-year mean 2,500 -130 ▪ T
Slide 20: Real Estate in Focus
ELDERS LIMITED FINANCIAL RESULTS Real Estate in Focus Growing our Real Estate earnings, consistent with the geographic and product diversification strategy Elders Market Growth Opportunity Real Estate Gross Margin ($m) $167b TOTAL REAL Property Management 6.6 ESTATE MARKET4 ¹ (+22.8%) Broadacre +21.
Slide 21: Geographical Diversification
ELDERS LIMITED FINANCIAL RESULTS Geographical Diversification All states impacted by below average seasonal conditions in H1 18% 20% 30% WESTERN SOUTH VICT O RIA AND AU ST R AL I A AU ST R AL I A RIVERINA $11.7m $13.2m $19.9m -53% YOY -29% YOY -33% YOY 25% 6% 1% NEW SOUTH Q U EEN SL AN D AN D T ASM
Slide 22: Cost Drivers
ELDERS LIMITED FINANCIAL RESULTS Cost Drivers Investment in future growth driving cost uplift Costs ($m) Underlying Cost Base ($m) HY24 vs HY23 HY23 Costs 223.0 +13.0% ³ People: ▪ 183 additional FTE, incl acquisitions (2 graduates, 131 network 448 and business growth) 421 People 12.8 363 ▪ Wage grow
Slide 23: Cost Growth Excluding New Business: Year to Date
ELDERS LIMITED FINANCIAL RESULTS Cost Growth Excluding New Business: Year to Date FY24 cost target on track through disciplined cost management Cost Increase excl. Growth Growth Adjusted Cost Movement² ($m) and Transformational Commentary Initiatives ($m) Base Target: ▪ CPI increase to be partially
Slide 24: Capital Allocation
ELDERS LIMITED FINANCIAL RESULTS Capital Allocation Return on capital forecast to improve in second half following progress on working capital efficiency Return on Capital (%) Working Capital at Balance Date ($m) Trade and Other Receivables¹ ($m) Average -39 -180 Balance Date (-22.7%) 892 853 795 73
Slide 25: Cash Flow
ELDERS LIMITED FINANCIAL RESULTS Cash Flow Focus on capital efficiency evident in cash conversion Operating Cash Flow ($m) Cash Conversion (%)2 +511 12.2 (10.0) 75.0 (44.3) 339% 34.4 48.7 38.4 (114.4) 146.1 -172% HY23 HY24 AASB 16 adjusted Cash Conversion (%) (13.7) EBIT Depreciation Other non Inter
Slide 26: Net Debt and Financial Ratios
ELDERS LIMITED FINANCIAL RESULTS Net Debt and Financial Ratios Accounting leverage expected to return to within target range of 1.5 – 2.0x by FY25 H1. Elders maintains significant headroom to all banking covenants. Leverage ratio Interest cover Gearing ratio Net debt, balance date ($m) Balance date
Slide 27: Strategy and Market Outlook
Strategy and Market Outlook Presented by Mark Allison (Managing Director and CEO) 27 Elders Limited
Slide 28: New Format, simplified priorities
Option 3 – New Format, simplified priorities Compelling shareholder returns Industry leading sustainability outcomes Most trusted Agribusiness brand 5-10% EBIT and EPS growth through the cycles at across health and safety, community, environment and in rural and regional Australia minimum 15% ROC go
Slide 29: Our Strategic Priorities – Transform
ELDERS LIMITED STRATEGY Our Strategic Priorities – Transform Gross margin growth and efficiency through product expansion ELDERS WOOL¹ Enhanced client experience through state-of-the-art wool handling facility ▪ Modern, efficient, and scalable Business Model ▪ Economies of scale through volume and c
Slide 30: Our Strategic Priorities – Transform
ELDERS LIMITED STRATEGY Our Strategic Priorities – Transform Gross margin growth and efficiency through platform modernisation SYSTEMS MODERNISATION¹ Modernising our platforms to deliver more efficient business processes Spend ($’m) Total Spend Wave 1 CAPEX 12.4 Completed (Procurement) OPEX - non un
Slide 31: ABARES March Market Outlook
ELDERS LIMITED OUTLOOK ABARES March Market Outlook Agricultural exports forecast to fall 14% to $67 billion in 2023-24, as drier conditions drive a 20% decline in nominal gross value crop production and crop prices Beef and Veal1 Sheep1 Wool1 Winter Cropping2 Summer Cropping2 Average saleyard prices
Slide 32: Market Outlook
ELDERS LIMITED OUTLOOK Market Outlook Favourable cropping outlook with expectations of reduced volatility from livestock and cropping input prices FEED AND RURAL AGENCY REAL FINANCIAL COSTS AND PROCESSING PRODUCTS SERVICES ESTATE SERVICES CAPITAL SERVICES ▪ Average seasonal ▪ Cattle and sheep ▪ Marg
Slide 33: Questions
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Slide 34: Appendix
Appendix 34 Elders Limited
Slide 35: Key Performance Indicator Trends
ELDERS LIMITED APPENDIX Key Performance Indicator Trends Elders diversified business model provides earnings resilience against market volatility Agency Services: Cattle Volume (‘000) Agency Services: Sheep Volume (‘000) Rural Products: Gross Margin ($m) Real Estate Services: Property Management Ear
Slide 36: Business Model
ELDERS LIMITED APPENDIX Business Model Geographic and product diversification mitigate impact of individual market volatility Feed and Digital and Rural Products Agency Services Real Estate Services Financial Services Processing Services Technical Services Retail Wholesale Product and Fee for Servic
Slide 37: Gross Margin Sensitivity
ELDERS LIMITED APPENDIX Gross Margin Sensitivity Geographic and product diversification mitigates the impact of individual market volatility $m 5 4 3 2 1 +$50 +100k head +$10 +500k head +$25m +50bps +100bps +100bps +10% 0 -$50 -100k head -$10 -500k head -$25m -50bps -100bps -100bps -10% -1 -2 -3 -4
Slide 38: Elders Capital Management Framework
ELDERS LIMITED APPENDIX Elders Capital Management Framework Elders Eight Point Plan aspires to deliver Total Shareholder Return (TSR) in the top quartile of ASX200 companies at investment grade risk Capital Management Framework Key Features of our capital management framework Compelling Total Shareh
Slide 39: Elders Limited
Elders Limited