Release Date: February 19, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Q: The full year revenue and impact guidance implies a meaningful reduction in operating margin in the second half. Can you explain this expectation and to what extent it includes warranty provision assumptions? A: The second half forecast is based on the projects we are completing and their phases. We expect a higher level of site services in the first half, which affects utilization and profitability. Additionally, we anticipate a small increase in provisions as we deliver projects, which is typical and not indicative of any issues.
Q: Can we get some idea of what the warranty provision is likely to be in the second half of FY25? A: Our guidance includes expected warranty provisions. The impact guidance we provided already accounts for any warranty provisions we anticipate needing to address.
Q: Can you clarify the 10% net profit margin aim? Are recent levels unsustainable? A: We target a 10% net profit margin as a good return for our efforts. While recent margins have been higher, they depend on the blend of work, such as EPCM and EPC projects. Higher margins are possible with more EPC projects, but our target remains 10% for sustainable returns.
Q: Can you give a thumbnail sketch of the SAXUM balance sheet at the point of acquisition? A: SAXUM had no debt at acquisition and sufficient capital to operate independently. We do not anticipate needing to provide additional working capital.
Q: Can you describe how the company was introduced to SAXUM and the due diligence process? A: We discovered SAXUM by chance and saw potential synergies. After initial contact, we conducted a thorough due diligence process over three months, covering financial, legal, and operational aspects across multiple jurisdictions. We were satisfied with the findings and proceeded with the acquisition.
Q: What is pushing the margin down in H2, and why is guidance lowered for the full year? A: We initially anticipated involvement in large copper projects, which did not materialize due to contractual disagreements. This affected our capacity utilization. However, we maintain a strong pipeline of work and prioritize risk management over taking on high-risk projects.
Q: How dependent is SAXUM on government contracts in Argentina, and what impact might political changes have? A: SAXUM's work is not heavily reliant on Argentina, with significant operations in other Latin American countries and globally. The acquisition provides access to a skilled workforce and new markets, reducing dependency on local political conditions.
Q: Can you elaborate on the cement opportunity globally with the new acquisition? A: SAXUM's expertise in the cement industry, coupled with our geographic presence, opens new markets. SAXUM works with major global cement companies, and we expect to leverage this to expand into new regions, including Africa.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
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