Coventry Group (CYG) H2 2024 earnings summary

Executive summary

• Achieved seventh consecutive year of sales and EBITDA growth, with FY24 sales up 3.4% to AUD 378 million (or $370.8m) and EBITDA up 22.4% to AUD 20.8 million.

• Statutory net profit was AUD 700,000, down from AUD 2.5 million in FY23, impacted by AUD 9.1 million ERP upgrade and acquisition costs.

• Completed Steelmasters acquisition, strengthening the specialist fastener business and contributing to revenue and margin improvement.

• Declared a fully franked dividend of 3.75 cents per share, fourth consecutive dividend.

• Net debt rose to AUD 47.3 million due to ERP project, Steelmasters acquisition, and capital expenditure.

Financial highlights

• Sales grew 3.4% year-over-year to AUD 378 million ($370.8m); EBITDA up 22.4% to AUD 20.8 million; EBIT up 26.9% to AUD 19.8 million.

• Gross margin improved by 2.3% to 40.5%.

• Net tangible assets at AUD 34.7 million; net assets at AUD 143.1 million.

• Cash conversion rate at 112.1%, slightly below last year’s 112.5%.

• Net debt to EBITDA increased due to investment and acquisition activity.

Outlook and guidance

• Market softness in eastern Australia and New Zealand expected to be short-lived, with robust key markets (mining, manufacturing, recycling, transport, agriculture, defense).

• Targeting 10%+ EBITDA margin over the medium term and net debt/EBITDA below 1.5x by end of FY25.

• ERP project benefits expected to start materializing in the second half of FY25, accelerating into FY26.

• Focus on profitable organic growth, inventory optimization, and digital transformation.

• FY25 cash flow expected to benefit from ERP completion, Steelmasters, organic profit growth, and tax loss utilization.