Given the price sensitive information released on 26th March and the subsequent 'soggy share price' I thought my interpretation of what was said (below) might be of interest:Quote:
Originally Posted by Snoopy
"The business has been performing well during the period and we are expecting to announce double digit growth at both the revenue and EBITDA level. Borrowing, depreciation and lease costs will be higher than for the same period last year due to the positive momentum of the Scott Group’s underlying growth and performance. The company continues to experience positive growth drivers across all core sectors. Further information will be provided when we announce the half year results” commented Mr McLauchlan."
I am not surprised that lease costs will be higher, given over the last year Scott Europe have moved their Czech Republic unit to a much more spacious site in Podivin. Furthermore Rocklabs seems to have moved to a new leased site in the Auckland Airport precinct, from what I believe were company owned facilities also in Auckland. I am not sure of the fate of the company owned industrial premises in Auckland following this move. Under IFRS16 reporting standards, what used to be called rent has been 'split reclassified' as both a finance expense and a depreciation of a right to lease asset. This has the effect of increasing EBITDA in comparison with pre-IFRS16 reporting periods. This in turn means that any capital transaction that increases rent will likely increase EBITDA as well, because the earnings benefits of the more productive new premises flow straight to EBITDA but the associated increased costs do not.
Chairman McLauchlan was careful not to mention 'net profit after tax' in his announcement. That and the fact that the last major contract win (something that Scott's are usually keen to 'get out there' by way of a press release) was announced in the previous half year (3rd August) would suggest that even if Scott's have been 'trucking along fine' for six months, the next year may have a more sombre growth profile. So I would not be surprised if earnings go into a 'holding pattern' for the next 12-18 months. Adding to my speculation here is McLauchlan's use of the word 'core' as in:
"The company continues to experience positive growth drivers across all core sectors."
It is well known that under Chief Executive JK's leadership, the appliance production line business, that used to provide the majority of company earnings not that many years ago has been labelled 'non-core'. So if all of those clever engineering staff that put together these things are not being fully utilised, we have a temporary hit on profits right there.
This share is another of my 'silver anniversary' holdings, where I have held the shares for more than 25 years (albeit not in the quantities I do now). So even though I have 'lost money' on the shares I purchased at $3 the other day, my average holding price has only increased to 95.1c per share (excluding all dividend payments over the years). Having said that, I have now built my holding up to a level where I want it to be. So I won't be in the market for any more SCT shares myself for the foreseeable future. My estimate is that Mr Market is pricing these shares where they should be priced on an earnings basis for now. SCT today is what I would call a classic 'hold'.
SNOOPY
SCT - Scott Tech
Printable View
-
26-03-2024, 10:26 AMSnoopy
-
26-03-2024, 10:36 AMSnoopy
Oh, and here is a belated ditty showing that even engineers can have a sense of humour. (note the 'nicking of the cookie' on the LH side of the screen)
http://<a href="https://www.youtube....4F8tsA48fM</a>
SNOOPY -
27-03-2024, 08:23 AMwinner69
Jeez Snoops you been a shareholder since last century
Old papers in my box.of goodies shows in 1999 their sales were $27m and profit was $2.9m
They come a long way since eh
When tech was the rage around the turn ofvthe century one broker no long around was always touting Scott as a great tech company -
27-03-2024, 09:48 AMSnoopyYep my 'scruffy paper records' confirm your figures and here are a few more. Share price on 30-09-1999 was $2.24. There were just 19.590m shares on issue then. And the historic PER on that reference date was 15.1. Back then the company was largely a 'one trick pony' manufacturing appliance production lines. Now it is a global tech company across multi robotic disciplines with factory business units in China, Europe and the USA as well as Oz/NZ. Yet on a PER basis, SCT is cheaper today than it was back then. And some people say there is nothing worth buying on the NZX these days. Go figure!Quote:
Originally Posted by winner69
SCT saved me from going down various tech rabbit holes in the dot.com days. Any new investment I make has to stand out against a reference investment, and in the case of using SCT as a 'tech reference', none of those dot.com temptations did. It took me until 2015 before I found another tech company that beat my SCT comparative investment hurdle. You may have heard of that company. It goes under the moniker 'Skellerup'.Quote:
Originally Posted by winner69
SNOOPY -
27-03-2024, 10:00 AMwinner69First post on this thread in 2004Quote:
Originally Posted by OutToLunch
Think SCT has done better as a company than WDT ..now AOF ….and probably as an investment
You still around OutToLunch ..whst your thoughts 20 years on? -
16-04-2024, 11:32 AMSideshow Bob
https://www.nzx.com/announcements/429655
SCOTT TECHNOLOGY ANNOUNCES FY24 HALF-YEAR RESULTS
• Dedication to Scott 2025 strategy enabled delivery of sustainable growth, and achievements across the business see strategy extended out to 2027.
• Group revenue is up 11% to $141m, margins maintained at 26% with a focus on both core and service, supported by improved delivery of rest of business.
• Sales and service in Scott’s three core sectors delivered 85% (+8ps) of group revenue.
• Operating EBITDA increased 14% to $17m, outpacing revenue growth.
• Net profit after tax was down 42% to $4.5m due to one-off strategic review costs, higher lease and financing costs.
• Forward work of $161m remains positive, comprising of MHL, minerals, protein orders and service agreements.
• An interim dividend of 5 cents per share was declared, up from 4 cents in H1 F23.
Automation and robotic solutions provider, Scott Technology Limited (NZX: SCT), has today released its results for the six months to 29 February 2024 (H1 F24).
Dedication to the Engineering Scott to High Performance (Scott 2027) strategy, which emphasises core sectors and productisation, has enabled Scott to deliver sustainable growth and continued leadership across protein, materials handling (MHL) and minerals sectors.
The Scott 2027 strategy has continued to underpin the business’ focus and investment in the growth of its three core sectors with revenue up 11% to $141m and operating EBITDA up 14% to $17m.
The business’ sales pipeline remains positive and on strategy, with $161m in forward work comprising of MHL projects, continued strong minerals and protein product orders, as well as significant progress in secured service contracts.
Scott Technology CEO, John Kippenberger, says he’s pleased with the business’ solid H1 performance.
“With our emphasis on building a more sales-oriented organisation, and growing and investing in our teams, we are well positioned for continued success in the dynamic global markets.
“Our unwavering commitment to operational excellence is bolstered by investing in productisation and leading innovation. This ensures we harness the current momentum for continued success as we lean into 2025 and beyond,” says Kippenberger.
ESG update
The momentum driving Scott's ESG strategy has continued during H1 F24, marked by robust engagement across all levels of the organisation and support from the Board and Executive leadership. Significant strides have been made across each of the three pillars of Scott’s ESG commitment as the business remains steadfast in its dedication to leading a sustainable future.
Scott has now formalised its ESG governance structure, progressed carbon reduction programs, and witnessed a positive uptick in engagement scores from teams worldwide following the bolstering of its awards and recognition programs. Its approach extends to actively engaging with suppliers, and supporting customers' sustainability goals, reflecting Scott’s commitment to fostering environmental stewardship and social responsibility.
People
Employee health, safety and well-being remain the highest priority, and good progress has been made in all the key metrics in H1 F24. Improvement in lead indicators, including strengthened hazard reporting, has significantly decreased the Lost Time Injury Frequency Rate (LTIR) and Total Recordable Injury Frequency Rate (TRIFR). Following the launch of the Critical Risk program in November, Scott is poised to begin global critical risk workshops in its 2024 focus areas, Mobile Plant and Potential Energy.
The recent employee engagement survey results saw Scott's highest-ever level of participation of 80%, coupled with the highest-ever employee engagement score of 85%. Employee retention remains high, and turnover rates reduced on H1 F23, from 7% to 3%.
Results overview
Revenue for H1 F24 increased 11% on the prior comparative period (pcp) to $140.9m, as Scott’s strategy of generating more revenue from repeatable core products and services along with growing MHL and protein solutions in North America continued to deliver sales growth.
The group margin of 26% was maintained, despite the sales mix reflecting several lower margin, high value MHL and minerals solutions.
This strategic revenue and margin approach has resulted in operating EBITDA growth of 14% to $16.6m for the period.
Net profit after tax (NPAT) of $4.5m for the period (-42% on pcp) reduced due to the one-off costs of $2.4m associated with the strategic review; increased IFRS16 amortisation costs (+$1.3m) in relation to new leased premises; increased financing costs (+$0.9m) in relation to higher effective interest rates on term debt; and an increase in IFRS16 interest (+$0.3m) associated with the expanded footprint for Minerals and MHL businesses.
Operating cash outflow of $7.7m was due to timing associated with a number of significant projects currently underway with cash due to be received in arrears compared with pcp where a number of significant projects had received deposits in advance. Cash has also been applied to footprint expansion and other capital investments. This has resulted in the Group’s net debt position of $20.7m.
In recognition of the ongoing progress made by the company, the Directors declared a (partially imputed) dividend of 5.0 cents per share, payable on 15 May. The Dividend Reinvestment Plan will apply.
Core sectors
The Scott 2027 strategy continues to emphasize the imperative of growing sales through product areas where Scott has established world-leading technology and away from the more bespoke design projects which are unproven and present higher risk to the business.
This focus has seen core sector revenue grow by 22% in the period and move from 77% to 85% of total group revenue.
Materials handling and logistics (MHL)
• This sector largely comprises conveyors, automated palletizing and sortation equipment used in the warehousing operations of large food manufacturers and related industries. Customers include industry leaders such as Danone, Pfizer and McCain Foods.
• Revenue grew at 35% on pcp due to completion of the ASRS system for Alliance NZ, and progress made with JBS Brooks and McCain Canada, alongside continued strong growth in the existing Europe market.
• MHL continues to maintain a significant forward order book of $113m which includes an installation at Clarebout’s new facility in France, an installation at McCain Netherlands new AGV (Autonomous Guided Vehicle) business in North America with Logan Aluminum and long-term customer Bridgestone.
• Scott is currently developing a modular AGV solution for the growing AGV market in North America. A standardised offer of vehicles with a range of attachments is being developed with a prototype being available during H2 F24.
Minerals
• Anchored off strong and reliable Rocklabs sample preparation sales, the mining sector continues to be a core part of the Scott group. These products are well proven in the large global mining sector and produce high margins.
• Scott’s minerals business has delivered significant growth of 53% compared to pcp largely driven by Rocklabs automated solution for Mineral Resources Ltd and the automated energy transfer system (AETS) for Caterpillar.
• Although revenue increased by 53%, the shift in the mineral's product mix towards these new solutions resulted in a lower margin, from 46% to 34%.
• The launch of AMS has seen strong market engagement with several of the world’s largest mining companies trialing the demonstration unit with positive results.
• A renewed focus on product development will position the minerals business to expand into untapped markets in coming years.
Protein
• This sector largely comprises meat processing equipment which operates in the secondary processing operations of the large meat processors and related industries.
• While the period included the successful commissioning of the Silver Fern Farms Primal solutions and repeat trussing units from Costco, protein revenue declined 9% on pcp, impacted by global pressure on red meat reduces customer demand and meat processors investments.
• Despite those challenges, protein service revenue grew 39% on pcp due to the increased equipment installation base and a focus on securing long term service and maintenance agreements.
• The pipeline conversion for protein products has slowed for the reasons outlined above. Despite this, several long-term Australasian customers have signed up to long term service agreements worth over $10m.
• The successful installation of the first two Poultry Trussing lines into US retailer CostCo is opening up this channel with industry-leading companies looking to secure a safer, automated poultry trussing line. Other poultry prospects have shown a significant amount of Positive progress continues in the development of the world’s first fully-automated beef boning solution, with first beef chine modules prototype underway at JBS Brooklyn.
• Early-stage progress has been made on the lamb frenching automation which will increase yield and product quality while addressing labour challenges. This product is being developed in association with our partners Robotic Technologies and Meat & Livestock Australia.
Service and aftermarket business
Scott’s strategy of building its service and aftermarket business has been important for customers, maintaining Scott machine accuracy and reliability, and for shareholders as it provides important recurring revenue and lucrative margins.
The service business underpinning the core business segments saw strong growth of 13% in the period.
We have seen this important stream continuing to deliver sustainable profit growth as our customers look to the specialist skills of Scott technicians to support their own maintenance teams, on Scott’s highly specialised equipment.
The service business also contains a strong stream of high margin recurring consumables.
This growth is evident in the protein sector where service revenue grew 39% on pcp. The 2-year CAGR on protein service is 47% (H1 F22 to H1 F24) which follows protein equipment sales of 46% for the previous two years (H1 F21 to H1 F23). The service lag contributes to growth, especially during cyclical times, such as the current red meat headwinds, where equipment sales soften.
Service revenue also grew across the total group (including non-core business) by 10% and continued to deliver strong margins of 35%. This demonstrates the importance of the service / aftermarket business to the overall performance and profitability of Scott.
Regional business update
• New Zealand revenue reduced as the Alliance palletisation and Silver Fern Farms lamb boning room were commissioned. A focus on service resulted in a revenue increase of 29% on pcp.
• Australia income increased considerably based on the mineral AMS solution being produced for Mineral Resources. The aftermarket business grew by 11% on increased protein installation-base.
• Coming off the back of a strong prior period for BladeStop saw protein decline in Europe. However, the region delivered significant and continued growth in MHL, resulting in an increase of 15% in core revenue. The intentional contraction of the appliance sector resulted in total lower growth for the period.
• In North America the CostCo Poultry Trussing lines (protein), CAT energise solution (minerals), and JBS Brooks and McCain Canada (MHL) gave a strong presence for Scott as the North American MHL market is opened up.
• China and Rest of the World has seen growth in the minerals business through a solid account management focus working with agents in those areas. -
16-04-2024, 06:46 PMwinner69
Hey snoops I was going to ask you why cash flows looked really awful …but then I saw customers are now not paying in advance to the degree they once did.
Suppose a good enough explanation -
18-04-2024, 10:24 PMSnoopy
Now the half year result is out, it is time to find out how accurate my interpretation of Chairman McLaughlin's words really was.
What actually happened:Quote:
Originally Posted by Snoopy
Underlying EBITDA went from $14.560m to $16.587m, or +13.0%
Revenue went from $126.533m to $140.868m or +11.3%
So yeah, double digit growth as promised, but only just.
Depreciation and Amortisation cost went from $3.920m to $5.889m a rise of $1.969m or 50% - ouch! But were are told that $1.3m of that is 'IFRS16 amortisation', a cost that used to be called rent, in relation to the new rented premises for Rocklabs in Auckland and Alvey in the Czech Republic. These extra costs are incurred now. But the extra growth from these new premises is yet to come.
Borrowing Costs have risen from $1.025m to $2.226m a rise of $1.201m or 117% - double ouch! $0.3m of that was related to IFRS16, which is incremental rent on the new larger premises. The remaining $0.9m of increase was attributable to higher interest rates on long term borrowings.
The comment about 'growth in all core sectors' (which includes protein, minerals and materials handling and logistics) is collectively true. But actually revenue was down 10% in the protein section subsection, while margins reduced as well.
It looks like I was spot on about what was behind the rising lease costsQuote:
Originally Posted by Snoopy
Actual NPAT was $4.460m, down from $7.826m of the previous period. That is a drop of $3.366m or 57%. No wonder Chairman Stuart was coy! But included in that figure was the one off 'MacQuarie Capital Structural review', which cost the company $2.448m. Add that back in and the normalised result becomes: $4.460+0.72($2.448m)=$6.223m. That represents a profit drop of $1.603m. Add up the after tax effects of the rise in rent and interest rates and I get 0.72($1.6m+$1.2m)= $2.0m. These after tax increased costs more than exceed the NPAT profit drop. So there is definite growth in the revenue side of the business before incremental operating costs cast shadow on the result. To me this means the fall in operational NPAT of $1.743m for the half year is not cause for concern.Quote:
Originally Posted by Snoopy
Yet is does add up to 'no growth' for FY2024. So my 'holding pattern' remark looks spot on as well, or perhaps even optimistic?.
I don't find it easy to pick out what the appliance production line side of the business is doing from the half year report. China sales (100% appliance line manufacturing) are certainly up from $4.086m to $6.120m, It looks like all of the income in NZ in that sector over the half was $1.030m in servicing costs. But I don't think any North American sourced projects, that would have been built in New Zealand, and then shipped to the USA for installation, are included in that figure. Forward work contracts revenue outside of the Material Handling Business in Europe, totalled $48m at the half year balance date. Perhaps half of that, or $24m, relates to appliance line manufacturing contracts?Quote:
Originally Posted by Snoopy
I think if there was growth in the appliance line manufacturing business, somewhere in that interim report, it would have been mentioned.
Whether overall profits will be up or down this year, i think depends on the overall utilisation of the new larger Scott factory footprint.
SNOOPY -
27-04-2024, 07:22 PMwinner69
Sct shareprice down 13% since 1/2 year announcement …..punters must have noticed Snoops no growth comment
At 260 share price back to where it was a year ago
Depth was abysmal …doesn’t help does it
Seems only the converted faithful are interested …shame -
28-04-2024, 12:00 PMGTM 3442Oh good, I'm still ahead of the game - that $2.60 is still ahead of the $2.36 I bought in at in March 2000.Quote:
Originally Posted by winner69