• Revenue: Sales decreased by $190 million, down 6% year-on-year.
• Gross Margin: Increased by $18.6 million to $637.6 million, up 3% year-on-year.
• Underlying EBIT: Finished at $128 million, just below the midpoint of guidance.
• Net Debt: Increased by $177 million to $437 million.
• Return on Capital: Decreased from 16% to 11.3% in FY24.
• Dividend Per Share: Maintained at $0.18, franked at 70%.
• Operating Cash Flow: Inflow of $82.9 million.
• Inventory: Decreased by $94 million.
• Debtors: Increased by $157 million.
• Acquisition of Delta Ag: $475 million acquisition, with expected synergies of $12 million over three years.
• EPS Accretion: Mid-digit pre-synergies, double-digit post-synergies.

• Warning! GuruFocus has detected 8 Warning Signs with EDESY.

Release Date: November 17, 2024

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

Positive Points

• Elders Ltd (EDESY) demonstrated resilience in a challenging market, achieving a full-year EBIT of $128 million, which is near the midpoint of their guidance.
• The company maintained a strong cash flow and declared a stable dividend of $0.18 per share.
• Elders Ltd (EDESY) successfully executed 13 acquisitions in FY24, contributing to a diversified product and service portfolio.
• The Delta Agri acquisition is expected to be EPS accretive pre-synergies, enhancing Elders' geographical diversification and technical expertise.
• The company has made significant progress in sustainability initiatives, including centralized waste control and solar upgrades, aligning with their climate targets.

Negative Points

• Elders Ltd (EDESY) faced a difficult first quarter in FY24, impacting their overall financial performance and return on capital.
• The company's gross margin was negatively affected by competitive pressures and lower crop protection prices, particularly in the first half of the year.
• There was an increase in debtors due to a delayed winter crop and higher demand for seasonal finance, impacting working capital.
• The company's return on capital decreased from 16% to 11.3% in FY24, falling below their target of 15%.
• The acquisition of Delta Agri is subject to ACCC approval, which could pose risks if there are concerns about market concentration.

Q & A Highlights

Q: Could you provide an update on the business performance over the last 1.5 months and the outlook for the first quarter of FY25? A: Paul Rossiter, CFO: The start of FY25 is in line with expectations, continuing the recovery seen in the second half of FY24. We are seeing a continuation of themes in livestock recovery and stability in wholesale and real estate sectors.

Q: Can you elaborate on the $12 million synergies expected from the Delta acquisition and the timeline for realizing these synergies? A: Mark Allison, CEO: The synergies are primarily from backward integration, expected to be realized over three years. The process involves identifying off-patent products and leveraging Titan's backend for the Four Seasons brand. The timeline accounts for ACCC approval and the need to respect existing supplier relationships.

Q: How comfortable are you with the consensus expectation of $170 million EBIT for FY25, excluding the Delta acquisition? A: Mark Allison, CEO: We don't provide annual guidance but focus on 5% to 10% growth through cycles. We assume average seasonal conditions and maintain high financial discipline. The benefits from sys mod and streamline initiatives are expected to contribute towards the second half of FY25.

Q: What are the expectations regarding ACCC approval for the Delta acquisition, and are there any potential risks? A: Mark Allison, CEO: We are confident in our submissions and the competitive nature of the market. However, the decision is ultimately with the ACCC. We are prepared for potential divestments if required, similar to past experiences with other acquisitions.

Q: Can you explain the significant uplift in gross profit for the real estate services business and the impact of acquisitions? A: Paul Rossiter, CFO: The uplift is predominantly driven by acquisitions. We will need to provide further details offline to separate organic growth from acquisition contributions.

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