MPG - Metro Glass

[winner69]

One assumes they are comparing npat to npat. Not normalised npat to npat.

Rigby is (conveniently) comparing F18 guidance ($18.5m to $20m) to the reported F18 NPAT of $19.4m

I'm just pointing out that on a normalised basis it should be compared to $21.3m. No abnormals reported in H1 but bet your bottom dollar the guidance doesn't include any either.

good to hear he reckons he is being conservative ....only time will tell

[JeremyALD]

There's a long interview with Mr Rigby on NBR too where he talks about MPG very positively.

To be honest I'm getting pretty annoyed with their communication style. He was asked about the SP and shrugged it off like it was no big deal. Where's the apology? One thing I liked about FBU is they took accountability and apologised. In fact MPG never admits they've had a poor half / year etc because they always blame it on market conditions.

Mr Goulter also finally leaves and everyone acts like this was the plan all along and that they announced it at the ASM - which they didn't. Hiring Peter Griffins who has been part of the mess doesn't build that much confidence either.

MPG is full of excuses and constantly talks about machinery efficiencies over and over. When will the results be delivered? We can never be sure because it gets pushed out and out. Their strategy day was also a lot of rot because they've pretty much stopped talking about all those targets.

I'm still holding my half because I think all the negativity has been factored in. However at some point they need to acknowledge the disappointment and loss of money they've contributed to for pretty much every investor to ever buy the company.

I've definitely learnt my lesson with this stock and I'll be gladly selling out when it hits a level I deem acceptable.

[James108]

Rigby is (conveniently) comparing F18 guidance ($18.5m to $20m) to the reported F18 NPAT of $19.4m

I'm just pointing out that on a normalised basis it should be compared to $21.3m. No abnormals reported in H1 but bet your bottom dollar the guidance doesn't include any either.

good to hear he reckons he is being conservative ....only time will tell

I thought the normalised NPAT accounted for the amortization of customer relationships. There should be a similar amortization this year and indeed in H1 as this is amortised on a straight line basis.

Edit: Oh never mind I think the above is wrong. However there will presumably still be a $1.5M amortisation expense for customer relationships included in the NPAT figure (as per FY17). Checking if they are amortising things like goodwill and customer relationships is something I usually do.. then add the figure back in to my model.

[Beagle]

Rigby is (conveniently) comparing F18 guidance ($18.5m to $20m) to the reported F18 NPAT of $19.4m

I'm just pointing out that on a normalised basis it should be compared to $21.3m. No abnormals reported in H1 but bet your bottom dollar the guidance doesn't include any either.

good to hear he reckons he is being conservative ....only time will tell

You earn reputation over time and by very clearly articulating what is and is not included in your profit forecast and then consistently proving your forecasting is in fact conservative by soundly beating it year after year. They should come out and state what they expect the cost of the multi month comprehensive business review is expected to cost and whether this is or is not included in the profit forecast. If as I suspect this is a seven figure sum, then until they clarify one way or the other shareholders are still a little in the dark about the estimated normalized profit for 2H aren't they ?

Talk about being conservative is just talk. The "value" of such a claim if any will only be known with hindsight and in my opinion the company has a fair few bridges to cross to rebuild investor trust. If I was an investor I would be assuming right at the lower end of guidance range ($18.5m) as they have something of a record of over promising and under delivering and in the absence of any concrete information otherwise based on their track record you'd have to assume the operational review costs come off that.

Notice how Metro don't talk about the cost of that review do they ! Perhaps they haven't even asked for a review quote, there's a scary thought, and of course there are no cast iron guarantees that the very expensive review will guarantee future economic returns is there ?.

Why do they have to hire outside consultants to tell them how to manufacture and supply glass ?...I still reckon this simply beggars belief...just like Fletchers hiring outside consultants to tell them how to construct a cost model for bidding for construction contracts LOL. This hound reckons both these examples are a very sad indictment on the skills of the management and directors of both companies.

[winner69]

I thought the normalised NPAT accounted for the amortization of customer relationships. There should be a similar amortization this year and indeed in H1 as this is amortised on a straight line basis.

Edit: Oh never mind I think the above is wrong. However there will presumably still be a $1.5M amortisation expense for customer relationships included in the NPAT figure (as per FY17). Checking if they are amortising things like goodwill and customer relationships is something I usually do.. then add the figure back in to my model.

In F18 they they had $1m in Australian acquisition costs and $1m in a prior year tax adjustment re the IPO. Metro said these were non recurring and called them abnormal items to come up with their much touted normalised profit of $20.3m last year)

They also have a thing called NPATA they use as a profit figure to assess dividend payout. This adds back amortisation related to acquisitions, the numbers you have quoted above.

[percy]

You earn reputation over time and by very clearly articulating what is and is not included in your profit forecast and then consistently proving your forecasting is in fact conservative by soundly beating it year after year. They should come out and state what they expect the cost of the multi month comprehensive business review is expected to cost and whether this is or is not included in the profit forecast. If as I suspect this is a seven figure sum, then until they clarify one way or the other shareholders are still a little in the dark about the estimated normalized profit for 2H aren't they ?

Talk about being conservative is just talk. The "value" of such a claim if any will only be known with hindsight and in my opinion the company has a fair few bridges to cross to rebuild investor trust. If I was an investor I would be assuming right at the lower end of guidance range ($18.5m) as they have something of a record of over promising and under delivering and in the absence of any concrete information otherwise based on their track record you'd have to assume the operational review costs come off that.

Notice how Metro don't talk about the cost of that review do they ! Perhaps they haven't even asked for a review quote, there's a scary thought, and of course there are no cast iron guarantees that the very expensive review will guarantee future economic returns is there ?.

Why do they have to hire outside consultants to tell them how to manufacture and supply glass ?...I still reckon this simply beggars belief...just like Fletchers hiring outside consultants to tell them how to construct a cost model for bidding for construction contracts LOL. This hound reckons both these examples are a very sad indictment on the skills of the management and directors of both companies.

Management skills or lack of.
Ryman did not have to bring in any outside help after the ChCh earthquakes.Had all the skills in house.
Ebos has done over 20 acquistions over the past 20 to 25 years without one consultant.
Freightsway.No out side consultants .
Mainfreight.No outside consultants.Get an acquisition wrong.Fix it.
Why is this so?
Because these companies know their business better than any consultants,and have all the skills in house.
I see HBL.HLG ,SUM ,THL,and TRA in the same mode.

[winner69]

Sad thing about all this Strategic review stuff at Metro is that because of all the hype they themselves created it’s all out in the open.

Metro have been doing things well for decades and too a large extent are still doing things well (not good enough for greedy demanding shareholders with high expectations). Over those decades they have probably had some form of continuous improvement program. I recall being on such a team in the 80’s. Former owners lived glass and glazing and were very successful.

Metro is a great example of what damage private equity can do to a company. Since 2006 when catalyst paid over the odds for Metro and essentially drove it into bankruptcy before taking a haircut and resurrecting it I would hazard a guess most of the things that made Metro a good company (culture, passion etc etc) have gone, Metro were I’ll prepared to become a listed company and the results are plain to see.

In any good strategic reviews and continuous improvement programs etc etc are day to day and ongoing with costs absorbed into budgets etc - touting we are a doing a strategic review is an admission of failure.

Bit sad all this is out in the open for Metro because fundamentally it still is a good business and doing things well (pretty high EBIT margins for instance) ....but expectations for the future still remain unrealistically high. I think the market will remain ‘unhappy’ for a long time.

[winner69]

Management skills or lack of.
Ryman did not have to bring in any outside help after the ChCh earthquakes.Had all the skills in house.
Ebos has done over 20 acquistions over the past 20 to 25 years without one consultant.
Freightsway.No out side consultants .
Mainfreight.No outside consultants.Get an acquisition wrong.Fix it.
Why is this so?
Because these companies know their business better than any consultants,and have all the skills in house.
I see HBL.HLG ,SUM ,THL,and TRA in the same mode.

Those mentioned do occasionally engage specialists (consultants if you wish) on and off ......but that is part of running a good business and no need to tell the world about it eh

Betcha they all do Strategic reviews every year as well

[winner69]

Ironically in some respects shareholders are the root cause of where Metro finds themselves now.can only blame themselves.

[percy]

Those mentioned do occasionally engage specialists (consultants if you wish) on and off ......but that is part of running a good business and no need to tell the world about it eh

Betcha they all do Strategic reviews every year as well

Any successful business do ongoing Strategic reviews.
That is why they can react so quickly to market changes and challenges.