Release Date: August 29, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Fleetwood Ltd (ASX:FWD, Financial) reported a significant improvement in financial performance, with EBIT and net profit after tax increasing by 95% and 90% respectively compared to the previous year.
- The company has a strong cash position, generating $5.7 million in free cash flow with a closing cash position of $39.3 million.
- Fleetwood Ltd (ASX:FWD) has increased its dividend, reflecting the Board's confidence in the company's outlook.
- The Building Solutions segment returned to profitability with a positive EBIT margin, marking a $7.7 million turnaround year-on-year.
- The Community Solutions segment showed strong performance, with occupancy rates increasing significantly, particularly due to the Rio Tinto contract.
Negative Points
- The RV Solutions segment faced challenges due to cost-of-living pressures, resulting in reduced gross margins and a decline in market conditions.
- The company experienced delays in key project approvals within the Building Solutions segment, impacting the second half of the year.
- Fleetwood Ltd (ASX:FWD) is facing a soft market outlook for the RV Solutions segment, with a pronounced drop in the OEM segment over the last year.
- The company is dealing with high income tax expenses due to prior-year tax adjustments.
- Fleetwood Ltd (ASX:FWD) acknowledges that the near-term outlook for the RV Solutions segment remains soft, although the medium to long-term outlook is positive.
Q & A Highlights
Q: How should we think about CapEx in 2025 given the spend in 2024 at Searipple?
A: Bruce Nicholson, CEO: We will return to more normalized levels of CapEx in FY25. There are no large CapEx demands planned at this stage, and we will complete the upgrades at Searipple as intended.
Q: Can you provide more details on the occupancy rates and expectations for Searipple?
A: Bruce Nicholson, CEO: Occupancy in Q1 was strong due to major shutdowns, but it dropped significantly in Q3. We are contracted at 65% occupancy for FY25, which is a significant improvement and reflects a strong start to the year.
Q: What levers can you pull to maintain profitability in the RV Solutions segment?
A: Bruce Nicholson, CEO: We are conducting a product line and branch profitability assessment. We are also looking at cheaper raw materials and offshoring some components to reduce costs. There are no significant levers, but a detailed action plan is in place to optimize the business.
Q: How do you view the growth prospects for the Building Solutions segment?
A: Bruce Nicholson, CEO: We expect growth in both revenue and margins. The order book has increased significantly, and we are focusing on leveraging our national manufacturing footprint and improving procurement to capture savings.
Q: Can you explain the competitive landscape in the modular housing industry?
A: Bruce Nicholson, CEO: The market is quite opaque and varies by state. Fleetwood is the only national player with the scale and leverage to meet demand. We focus on disciplined bidding and maintaining a strong balance sheet to stay competitive.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
