Release Date: August 30, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Gale Pacific Ltd (ASX:GAP, Financial) achieved significant revenue growth in Latin America, with an 81% increase year over year.
- The company secured an exclusive distribution agreement with Australia's largest distributor of print consumables for its Ecobanner product.
- Net cash from operating activities increased significantly to $26.7 million, up from $8.4 million in FY23.
- Net debt was reduced to $0.7 million, a substantial improvement from $15.5 million in FY23.
- The company made strides in expanding its market presence in the United States, including the national launch of outdoor roller shades with HeatShield technology at Lowe's and expanded placements in the pet category at Walmart.
Negative Points
- Revenue declined by 7% to $174 million, and EBITDA fell by 31% to $14.2 million.
- Profit before tax was a loss of $1.4 million, compared to a profit of $5.3 million in FY23.
- Adverse weather conditions and supply chain disruptions negatively impacted revenue in key markets.
- Increased operating expenses, including a $5 million investment in a new ERP platform, contributed to lower earnings.
- The company experienced reduced sell-through rates across major retail partners in both Australia and the United States due to cost-of-living pressures and high inflation.
Q & A Highlights
Q: Can you provide an update on the ERP implementation and the associated costs?
A: Our ERP implementation is on track for a go-live date of October 1. We expect to incur additional costs of approximately $2 million to $2.5 million in FY25. (Troy Mortleman, CEO)
Q: Will there be a shift in strategy towards optimizing the business for profitability rather than growth?
A: We aim to balance both growth and profitability. While we focus on growing our market share, particularly in the US, we are also committed to improving margins and reducing costs. (Troy Mortleman, CEO)
Q: Given the strong cash flow in FY24, is this level of cash flow sustainable going forward?
A: Yes, we expect to maintain strong cash flow, supported by effective working capital management and lower IT costs post-ERP implementation. (Sheryl Smith, CFO)
Q: How did the growth rate progress throughout the year, particularly in the US?
A: The first half was impacted by customer destocking, but we saw better run rates in the second half. However, high inflation rates dampened consumer spending during the peak season. (Troy Mortleman, CEO)
Q: What are the plans for management in Australia and North America following recent changes?
A: I will continue to manage Australia and New Zealand. We have a strong leadership team in the US, and we aim to maintain a balanced leadership structure across our global operations. (Troy Mortleman, CEO)
Q: Why did the Board lose faith in the previous CEO, and what went wrong with the US strategy?
A: It's not appropriate for me to comment on leadership changes. However, the US remains a significant market with substantial growth potential, and we are committed to optimizing our strategy there. (Troy Mortleman, CEO)
Q: What are the specific cost reduction measures planned for FY25?
A: We are reviewing both margin improvement and operating cost reductions. Our focus is on simplifying our corporate structure and improving operational efficiencies without compromising growth. (Troy Mortleman, CEO)
Q: How much drawn debt do you expect to carry over into FY25, and is there capacity to decrease its utilization?
A: Our net debt ended FY24 at $0.7 million, and we anticipate further improvements. We expect increased efficiencies from our new facility structure. (Sheryl Smith, CFO)
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
