Release Date: August 26, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- IVE Group Ltd (ASX:IGL, Financial) reported a solid FY24 result, meeting all key guidance metrics.
- Strong uplift in operating cash flow with gearing below the target of 1.5 times pre-AASB16.
- Successful completion of the Ovato integration ahead of schedule, with full-year run rate synergies reflected in FY25 outlook.
- Revenue of almost $970 million, slightly up on PCP, with EBITDA of $127.8 million, up 7.5% on PCP.
- IVE Group Ltd (ASX:IGL) declared a fully franked final dividend of $0.085 per share, taking the full-year dividend to $0.18 per share.
Negative Points
- Base revenue down circa 4% relative to a strong PCP, largely due to softer second-half FY24 economic conditions.
- Increased net finance costs due to higher interest rates and JacPak acquisition funding.
- Non-operating items of $23 million pre-tax, including $13.1 million of restructuring costs.
- Lasoo operating loss of $5.8 million, with breakeven now expected in FY28, delayed from FY26.
- Capital expenditure expected to be around $24.5 billion in FY25, including significant investment in packaging capacity build-out.
Q & A Highlights
Q: Great set of results, strong cash flows in the group, and gearing now below our targets. Given the expectations on profit growth, where is the excess capital going?
A: (Darren Dunkley, CFO) We will continue to pay down our senior debt and maintain flexibility on our balance sheet for future opportunities and capital management initiatives.
Q: Can you talk us through the exit run rate across each of the different businesses? How should we think about revenue growth heading into FY25?
A: (Darren Dunkley, CFO) The CX and data and commercial printing businesses were softer between February and April but have since improved. We haven't given specific revenue guidance, but the revenue supports the impact growth from the $45 to $50 million guidance.
Q: For web offset, is there any step-up in cancellations or pressure from customers to drop prices?
A: (Matt Aitken, CEO) No step-up in cancellations. In fact, there are inquiries from retailers looking to return to the catalog channel, indicating stability and potential growth.
Q: Can you talk about the progress with new business wins and filling the additional $15 million capacity in JacPak?
A: (Matt Aitken, CEO) We have won new contracts since acquiring JacPak, with a pipeline of opportunities north of $40 million. The $150 million expansion over five years is achievable, potentially with organic growth and bolt-on acquisitions.
Q: What are your assumptions around freight and paper costs?
A: (Matt Aitken, CEO) Both are expected to remain stable. Paper contracts range from 6 to 12 months, and freight contracts are typically 12 months.
Q: The impact range is wider than last year. What factors might drive it towards the lower or upper end?
A: (Darren Dunkley, CFO) Lower end factors include economic conditions similar to H2 FY24. Upper end factors include continued strong trading conditions as seen in July.
Q: Can you provide an update on the uniform tender with the major American fast food chain?
A: (Matt Aitken, CEO) The trial is concluding, and we are in the evaluation stage. We expect to find out soon if we are the chosen supplier.
Q: Can you expand on the national company uniform supply?
A: (Matt Aitken, CEO) We supply uniforms for companies like Toll and SecureCorp, leveraging our sourcing capabilities in Southeast Asia and our national 3PL business.
Q: What are the ambitions for Lasoo, and why does the profitability timeline keep changing?
A: (Matt Aitken, CEO) Lasoo's strong performance has led us to invest further to scale faster, deferring breakeven to FY28 but aiming for a GTV of $150 million. We constantly review the consumer marketing spend and adjust as needed.
Q: How do you see the prospects for material gross margin (MGM) normalizing back to pre-COVID levels?
A: (Darren Dunkley, CFO) Our current MGM is at pre-COVID levels, and we expect it to remain stable moving forward.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
