Release Date: August 22, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Big River Industries Ltd (ASX:BRI, Financial) has a strong geographical and segment diversity, with a significant portion of revenue coming from local supply.
- The company has seen growth in commercial volumes, driven by a strong project pipeline.
- Big River Industries Ltd (ASX:BRI) has a solid footprint across Australia and New Zealand, with Queensland forecasted to be a significant growth region.
- The company has made significant investments in safety initiatives, achieving notable milestones in workplace safety.
- Big River Industries Ltd (ASX:BRI) has maintained a strong balance sheet and achieved a high cash conversion rate of 98.2%.
Negative Points
- Group revenue for the year was down 7.7%, impacted by a soft residential market.
- EBITDA was down 36% from record highs, affected by volume decline and reduced operational efficiency.
- Gross profit declined by 12.4%, with gross margin down by 142 basis points due to lower residential activity and increased competition.
- Operating expenses increased by 4.1% in a macro inflationary environment.
- The residential market is expected to remain soft for the next 12 months, posing challenges for revenue growth.
Q & A Highlights
Q: You've commented on an expected pickup in the residential markets come in the end of the calendar year '25. What forward indicators can you give us that give you confidence in this occurring?
A: The residential market is expected to remain soft for the next 12 months. However, positive signs are emerging from states like Queensland, South Australia, and Western Australia. Most associations and analysts predict an increase by the end of '25, driven by housing demand, low vacancy rates, expected interest rate decreases, and government initiatives.
Q: The gross margins declined in '24. Can you give a little bit of color on the breakup of the gross margins in the Construction Products and Panels, and the outlook for '25 and '26?
A: The majority of the margin decrease was due to Frame & Truss and their operational inefficiencies. The general building trade centers and Panels division also saw margin decreases. Market pressures and pricing competition are expected to continue, but initiatives in supplier purchasing and headcount management, along with the full-year contribution from SLQ, should help mitigate these challenges.
Q: Given the tough operating backdrop, how should we be looking at pricing and volume in the Construction Products and Panels into FY25?
A: The residential side will likely see tough volumes, while the commercial segment is expected to grow. Pricing is not expected to increase significantly over the next 12 months due to tight market conditions and easing inflationary pressures.
Q: Can you say more about potential site amalgamations this year?
A: We have amalgamated several sites, including moving two sites in Brandon into a new location and consolidating the SLQ business into the Brandon site. We are also looking at amalgamating the Climat and Albion Park sites due to subscale operations and lease expirations.
Q: How are you thinking about investments in platforms and systems for this year?
A: We will continue rolling out our ERP system across sites, focusing on training and aligning processes to achieve synergies. Cybersecurity remains a priority, and we are working on aligning our data centers to support future e-commerce and other platform launches.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
