Announcement

HALFYR: STU: Steel & Tube 1H22 Interim Results Announcement 08:31am 
STU
23/02/2022 08:30
HALFYR
PRICE SENSITIVE
REL: 0830 HRS Steel & Tube Holdings Limited

HALFYR: STU: Steel & Tube 1H22 Interim Results Announcement

Steel & Tube Reports Record Six Month Revenue and Earnings

Steel & Tube Holdings Limited has reported its unaudited interim results for
the six months to 31 December 2021, with record half year revenue and
earnings driven by strong sector demand, our focus on customer service,
operational performance and disciplined supply chain management.

o Revenue of $282.2m, up 25% on prior comparative period (pcp), with strong
trading pre and post the Covid-19 lockdown in August and September 2021

o EBITDA of $31.9m, up 87.3% on pcp

o EBIT of $22.6m, up 166% on pcp

o Net profit after tax of $14.3m, up 253% on 1H21

o Interim dividend of 5.5 cents per share (1H21: 1.2cps).

$m / 1H22 / 1H21 / Change
Revenue / 282.2 / 226.3 / ?
EBITDA / 31.9 / 17.0 / ?
Normalised EBITDA* / 31.8 / 16.8 / ?
EBIT / 22.6 / 8.5 / ?
Normalised EBIT* / 22.5 / 8.3 / ?
NPAT / 14.3 / 4.1 / ?
Net Cash / 1.2 / 23.9 / ?
Total Dividends (cps) / 5.5 / 1.2 / ?

* 1H22 and 1H21 Normalised EBITDA and Normalised EBIT have been adjusted to
exclude non-trading adjustments. Further details are included in appendix to
the Investor Presentation.

CEO Mark Malpass commented: "Steel & Tube has traded well during the period,
delivering solid volume and sales growth and margin improvements, while
continuing to invest into the business, our workforce and growth
opportunities. The priority over the last six months has been on maintaining
availability of critical products and high levels of service for customers
while navigating global steel mill and supply chain constraints, a higher
pricing environment and Covid-19 restrictions. I'd like to acknowledge the
efforts of our team who continue to deliver day in and day out for our
customers and shareholders during these challenging times.

"The strong foundation built over the last few years has resulted in a
concentrated focus on our customers, coupled with a structurally lower cost
base and improved margin disciplines. Cost savings have now been embedded
with cost increases in the first half of the financial year limited to salary
and wage inflation and incentive accruals, resulting in operating costs as a
percentage of sales continuing to decline. We have been disciplined in our
focus on customers and product mix, targeting products and sectors that have
allowed us to improve our overall margins.

"Supply dynamics have been tight - steel mill customers continue to be on
allocations, lead times have increased both locally and offshore, and there
have been significant cost price escalations. Steel & Tube has utilised its
cash position to increase stock levels of high demand items and ensure
availability for customers. Using data analytics, our experienced team has
been able to hold inventory unit turns in line with previous periods
(excluding goods in transit). Careful planning and strong partnerships with
shipping and freight forwarding suppliers has helped manage long lead times
and increased costs."

Capital expenditure has been reduced to depreciation levels during the
Covid-19 period. Increased investment is expected in 2H22 as the company
expands and builds into new and existing growth sectors and continues to
build out its digital strategy.

Business scorecard measures - safety, customer satisfaction, employee
engagement and greenhouse gas emissions - continue to show improvement.

The Board is pleased to declare an unimputed interim dividend of 5.5 cents
per share.

Outlook

The strong demand for steel is expected to continue. Commercial building and
manufacturing sectors are both expanding, and infrastructure is benefitting
from Government investment and spending, while the current residential
activity is expected to be maintained in the short term. No significant
change in sector headwinds (supply chain, labour, supplier costs) is
anticipated in the next six months.

Omicron is expected to escalate over the next few weeks and cause disruption
for a number of months. A vaccination mandate has now been implemented and
careful planning has been undertaken to minimise the risks to its employees,
customers and supply chains. The company is also registered as a critical
service as part of the close contact exemption scheme.

The focus for the second half of the financial year remains on continued
gross margin dollar improvement, investing in growth areas and leveraging
Steel & Tube's digital platform. The company has a long pipeline of secured
contract work and is well positioned to take advantage of identified
opportunities in a range of sectors. A sizeable investment has been made in
new plate processing equipment to build share in this higher margin sector,
along with further investment in steel framed housing processing equipment.
We are also pursuing new product growth opportunities.

Steel & Tube has completed a significant turnaround and is focusing on
capturing growth opportunities. Subject to the impact of Omicron, Steel &
Tube anticipates continued earnings momentum and dividends in the second
half, which has eight less trading days (6%) than the first half.

Results Call

The company is hosting an Investor and Analyst Call today at 10am to discuss
the half year result. Access details for the call can be viewed here
https://www.nzx.com/announcements/386020.

ENDS

For media or investor enquiries, please contact: Jackie Ellis Tel: +64 27 246
2505 or
email: jackie@ellisandco.co.nz

For further information please contact:

Mark Malpass
Steel & Tube CEO
Tel: +64 27 777 0327
Email: mark.malpass@steelandtube.co.nz

or

Richard Smyth
Steel & Tube CFO
Tel: +64 21 646 822
Email: richard.smyth@steelandtube.co.nz
End CA:00387715 For:STU Type:HALFYR Time:2022-02-23 08:31:05

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