• Revenue: $211.5 million for the half, down 3.3% year-on-year, and down 9% like-for-like.
• Gross Profit: $55.7 million, a 3.6% decline on the prior period.
• Gross Profit Margin: Flat year-on-year, up 76 basis points on the second half of FY24.
• EBITDA: $14.8 million, down 26% year-on-year, but up 17.5% on the second half of FY24.
• Net Profit After Tax (NPAT) Before Significant Items: $2.5 million, a 63.8% decrease year-on-year.
• Cash Conversion: 78.4%, down from 98% in the prior period.
• Interim Dividend: $0.02 per share, fully franked, with a 69.4% payout ratio.
• Net Debt: Increased by $2 million.
• Gearing Ratio: Increased by 4% due to impairment charge.
• Number of Sites: 25 sites, including 8 manufacturing facilities.
• Panels Division Revenue: Up 10.7% with the addition of SLQ, down 8.4% like-for-like.
• Construction Division Revenue: Up 2.4% on the second half of FY24.

• Warning! GuruFocus has detected 9 Warning Signs with ASX:BRI.

Release Date: February 18, 2025

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

Positive Points

• Big River Industries Ltd (ASX:BRI) saw strong growth in BRI manufactured products, increasing from 18% to 23% of revenue, reinforcing vertical integration.
• The company has a diversified geographic footprint across Australia and New Zealand, with Queensland showing strong market growth.
• The Panels division experienced a 10.7% revenue increase with the addition of SLQ, indicating potential market recovery.
• Big River Industries Ltd (ASX:BRI) maintained a strong balance sheet, enabling continued organic growth and acquisition strategies.
• The company declared a fully franked interim dividend of $0.02 per share, reflecting a commitment to shareholder returns despite challenging conditions.

Negative Points

• Revenue for the first half was down 3.3% year-on-year, with a 9% decline on a like-for-like basis, primarily due to a soft residential market.
• EBITDA decreased by 26% compared to the first half of the previous financial year, impacted by lower volumes.
• The company recognized a non-cash impairment charge of $20 million related to intangible assets, reflecting challenging market conditions.
• Operating expenses increased, although they were managed well on a like-for-like basis at a 2.9% increase.
• The New Zealand market was particularly soft, with decreased market volumes impacting performance.

Q & A Highlights

Q: Can you elaborate on the outlook for the second half of the year, particularly regarding Queensland's performance? A: John Lorente, CEO, explained that while the second half typically has lower volumes due to fewer days, Queensland is expected to perform stronger in terms of volume compared to the first half. However, some softness in other markets is anticipated, leading to a slight revenue daily run rate improvement in the second half.

Q: Could you provide more details on the cost initiatives and their expected impact? A: John Lorente, CEO, highlighted that the cost initiatives include front-end pricing improvements, manufacturing efficiencies, and supplier consolidation. These efforts have already resulted in better cost of goods sold and margins. While the market remains competitive, these initiatives are expected to yield modest growth and improved results as the market recovers.

Q: How are the branch migrations progressing, and what impact do they have on costs? A: John Lorente, CEO, stated that several sites have been amalgamated to improve operational efficiencies. While no decisions have been made on future migrations, the company continues to evaluate its property portfolio. John O'Connor, CFO, added that cost efficiencies from these migrations will primarily be reflected at the segment level, particularly in operating expenses and depreciation.

Q: Can you provide insights into the performance and outlook for SLQ, especially after the impairment? A: John Lorente, CEO, mentioned that SLQ's performance has been satisfactory, although some market segments have been challenging. The company is integrating SLQ well, with synergies being realized. The impairment was a non-cash charge due to market conditions, but there are no concerns about SLQ's future viability.

Q: What indicators are you seeing that suggest an acceleration in growth for FY26 and beyond? A: John Lorente, CEO, noted that customer confidence is improving, and industry forecasts from associations like HIA and MBA indicate growth. While recovery may not be rapid, there is a clear requirement for housing, which supports a positive outlook for the medium to long term.

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