Release Date: August 27, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Annual sales grew by 30% year-over-year, reaching $15.7 million.
- Industrial sector revenue increased by 35%, amounting to $15.1 million.
- Operational cost savings of $4 million were achieved in FY24.
- Cash at bank stands at approximately $10 million, ensuring the company is fully funded for future growth.
- Q4 EBITDA turned positive for the first time in a long time, indicating a significant financial turnaround.
Negative Points
- Healthcare sales continue to decline and are expected to stabilize at around $0.5 million annually.
- Operating EBITDA, although improved, remains negative at minus $3.5 million for FY24.
- North America experienced a mixed year with a 9% decline in annual revenue, despite a strong second half.
- Consumable growth was slightly behind expectations due to declining healthcare sales and the lifecycle of new product launches.
- The company is still transitioning away from healthcare sales in Asia, which may take time to establish industrial market presence.
Q & A Highlights
Q: Can you elaborate on the factors driving the 30% revenue growth in FY24?
A: Graham Mclean, CEO: The 30% revenue growth was driven by our industrial-led growth strategy, which saw industrial sector revenue grow by 35% to $15.1 million. This contrasts with $8 million in FY22. Additionally, we delivered $4 million in operational cost savings and launched new innovative products over the last 18 months, focusing on our top six priority markets globally.
Q: What are the expectations for FY25 in terms of financial performance and strategic goals?
A: Graham Mclean, CEO: For FY25, our goals are to achieve positive EBITDA and positive cash flow for the year, along with 30% revenue growth. We have started FY25 with continued trading momentum, and our July cash flow result was positive. We plan to self-fund investments to drive growth and expect strong growth in all our priority markets.
Q: How has the company managed to improve its cost base and cash flow?
A: Graham Mclean, CEO: We achieved $4 million in operational cost savings in FY24 and rightsized our cost base. Our cash flow improved significantly in H2, with a net reduction in working capital. We reduced materials inventory by over $1 million in H2 and anticipate further reductions in FY25. Our trade debtors are under good control, and we have no bad debts.
Q: What are the key regional performances and their contributions to the overall growth?
A: Graham Mclean, CEO: Europe was the standout performer with 65% of total sales and 43% growth, driven by the UK, Germany, and France. Asia-Pacific, primarily Australia, saw 30% growth. North America had a mixed year but showed strong momentum in H2 with 60% growth. Our top four markets—France, UK, US, and Australia—accounted for 78% of our revenue.
Q: Can you provide more details on the new product launches and their market reception?
A: Graham Mclean, CEO: We launched Ultra and Pro at the end of FY23, which are now our leading technology platform products, representing more than half of our sales in FY24. We also launched CS Work in Europe and Australia in April FY24, which has been very successful. We expect to launch CS Work in the US in the fall, pending NIOSH approval.
Q: How is the company addressing the legacy issues from previous years?
A: Graham Mclean, CEO: We have resolved many legacy issues, including high healthcare sales, COVID-related inventory, and a high cost base. These issues are now largely behind us, allowing us to focus on our industrial-led growth strategy and new product launches.
Q: What is the company's strategy for future growth and market expansion?
A: Graham Mclean, CEO: Our strategy focuses on deep penetration into the industrial respiratory sectors and six priority markets. We will continue to innovate and expand our product portfolio, build consumable revenue streams, and manage costs and cash tightly. We believe the total addressable market is approximately AUD3 billion, growing at 6% to 8% annually.
Q: How is the leadership transition being managed, and what are the expectations for the new CEO?
A: Graham Mclean, CEO: I will step back from the CEO role later this year and remain on the Board as a Non-Executive Director. We are confident in a smooth transition and believe the new CEO will continue the growth momentum. The senior leadership team is strong, and we have recently appointed new leaders in key regions to support our growth plans.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
