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 $370.8m (AUD 378m) and EBITDA up 22.4% to $20.8m compared to FY23.

• Statutory net profit was $0.7m, impacted by $9.1m ERP project costs and acquisition expenses.

• 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, up from 3.5 cents in FY23.

• Net debt rose to $47.3m, mainly due to ERP investment and Steelmasters acquisition.

Financial highlights

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

• Gross margin improved by 2.3% to 40.5%.

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

• Net tangible assets at $34.7m; net assets at $143.1m as of 30 June 2024.

• 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; demand remains positive in mining/resources and WA/QLD.

• Targeting 10%+ EBITDA margin over the medium term, with further margin and organic growth initiatives.

• Anticipates sales growth as a key priority for FY25, with plans for organic growth, acquisitions, and store network expansion.

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

• Targeting net debt/EBITDA below 1.5x by end of FY25.