Ebos Group Ltd (EBOSY) (Q4 2024) Earnings Call Transcript Highlights: Strong Revenue and EBITDA Growth Amid Strategic Investments

Key financial metrics show robust performance, with notable gains in both the Healthcare and Animal Care segments.

Summary
  • Revenue: Increased by 7.8% to $13.2 billion.
  • Underlying EBITDA: Increased by 7.3% to $624 million.
  • Underlying Net Profit After Tax: Increased by 7.7% to $303 million.
  • Underlying Earnings Per Share (EPS): Increased by 6.8% to $1.579.
  • Leverage Ratio: 1.89 times.
  • Final Dividend: NZD 0.615 per share, bringing full-year dividends to NZD 1.185 per share, an increase of 7.7%.
  • Healthcare Segment Underlying EBITDA: Increased by 6%, with Australian business growing by 9.4%.
  • Animal Care Segment Underlying EBITDA: Increased by 13.2%.
  • Return on Capital Employed (ROCE): 15.3%.
  • Operating Expenses: Reduced by 24 basis points as a proportion of revenue.
  • Community Pharmacy Revenue Growth: 6.8%, with GOR growth of 4.9%.
  • Institutional Healthcare Revenue Growth: 11.5%, with GOR growth of 7.2%.
  • Symbion Hospitals Revenue Growth: 16%.
  • MedTech Business GOR Growth: 10%.
  • Contract Logistics GOR Decrease: $4.5 million, down just under 3%.
  • Underlying Cash Flow from Operations: $367 million.
  • Capital Expenditure: $118 million.
  • Net Debt: Just over $1 billion, with a gearing level of just under 1.9 times net debt to EBITDA.
  • Dividend Payout Ratio: Just under 70%.
  • Guidance for FY25 EBITDA: Expected to be between $575 million to $600 million.
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Release Date: August 20, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

  • Ebos Group Ltd (EBOSY, Financial) achieved a 7.8% increase in revenue, reaching $13.2 billion for FY24.
  • Underlying EBITDA grew by 7.3% to $624 million, indicating strong operational performance.
  • The Healthcare segment saw a 6% increase in underlying EBITDA, driven by 9.4% growth in the Australian business.
  • Animal Care segment experienced a 13% increase in underlying EBITDA, supported by resilience in the pet food category and new product launches.
  • The company declared a final dividend of NZD 0.615 per share, bringing the full-year dividends to NZD 1.185 per share, a 7.7% increase from the previous year.

Negative Points

  • The conclusion of the Chemist Warehouse Australia contract at the end of FY24 resulted in a normalization of EBITDA growth to approximately 8%.
  • New Zealand's Healthcare performance was impacted by a decline in nonrecurring COVID-19 activity within the Contract Logistics division.
  • The wholesale business Lyppard saw a 4% decline in revenue due to a key supplier bypassing the wholesale channel.
  • The company experienced a reduction in GOR for Contract Logistics in New Zealand due to decreased activity related to COVID-19 products.
  • Net debt increased by over $250 million compared to the prior year, largely due to M&A investments, bringing the total net debt to just over $1 billion.

Q & A Highlights

Highlights of EBOS Group Ltd (EBOSY) Earnings Call

Q: Can you provide an update on the working capital release from Chemist Warehouse?
A: The working capital release remains at $75 million as previously mentioned. (John Matthew Cullity, CEO)

Q: What was the growth in the pharmacy business in the second half, excluding Chemist Warehouse?
A: The growth was 5%, slightly above market expectations. (John Matthew Cullity, CEO)

Q: Can you provide details on customer wins and utilization of the new Sydney facility in Contract Logistics?
A: Growth came from existing customers due to new government regulations and a few new wins. Utilization of the new facility is around 75%. (Brett Barons, CEO - Symbion)

Q: What portion of the $25 million to $50 million cost savings has been realized in FY24, and what is expected in FY25?
A: Some savings were realized in FY24, particularly in administration costs. For FY25, we expect to realize $25 million, with savings coming from cost of goods sold and other expenses. (John Matthew Cullity, CEO)

Q: What is the contribution of FY24 acquisitions to the FY25 EBITDA guidance?
A: The contribution from FY24 acquisitions is minimal, and no further acquisitions are included in the FY25 guidance. (John Matthew Cullity, CEO)

Q: Can you elaborate on the cost increases outside of the cost savings program?
A: Costs are increasing due to volume growth, investments in growing businesses, new products, and significant IT costs. (John Matthew Cullity, CEO)

Q: What are the potential sources of the $300 million in new pharmacy revenues?
A: The target includes continued growth in the TerryWhite Chemmart network, aiming for 35 to 40 new stores in FY25. (John Matthew Cullity, CEO)

Q: What are your expectations for the new pharmacy wholesale agreement with the government?
A: We expect the agreement to be successfully concluded within the next six to eight weeks, ensuring a sustainable supply of medicines. (John Matthew Cullity, CEO)

Q: How should we think about the margin trajectory for the Animal Care segment?
A: Margins are expected to remain around current levels without significant uplift. (John Matthew Cullity, CEO)

Q: What was the impact of price versus volume in the branded products' results?
A: Most of the growth was driven by volume, with the inclusion of the Superior acquisition contributing significantly. (John Matthew Cullity, CEO)

For the complete transcript of the earnings call, please refer to the full earnings call transcript.