See that new guy spent many years at Wellington Drive ……but shouldn’t hold that against him
Printable View
See that new guy spent many years at Wellington Drive ……but shouldn’t hold that against him
Interesting... new guy is the one to bring in if you want to sell up.
Trouble is the $60m debt.
Reporting time looms again
Have the Big Boys stopped showing interest as the SP sags .. or just waiting for a few more
nails to be driven into the coffin ? ;)
https://www.nzx.com/announcements/422573
Metroglass provides 1H24 results (unaudited)
• The Group delivered earnings result in line with August guidance supported by solid profitability in Australia. Residential construction sector softness impacted the New Zealand business.
• New Zealand revenue declined 13% year on year partially offset by the increase in higher value LowE sales. Easing supply chain costs helped drive margin recovery.
• AGG delivered further profitability growth with an EBIT before significant items up 79%, to $4.6 million.
• Group EBIT before significant items improved 33% to $7.5 million supported by increased LowE sales, easing supply chain costs, and the cost-out programme in New Zealand, and solid AGG earnings.
• Net debt at the end of the period was $52.8m, in line with August guidance.
• A $9.1 million impairment to intangible assets due to the outlook for the New Zealand construction sector resulted in a statutory net loss after tax of $9.2 million, down from $0.6 million profit in 1H23.
Metro Performance Glass (Metroglass) today reports its financial results for the 6 months to 30 September 2023 (1H24), achieving profitability growth in Australia as softer market activity impacted the New Zealand business.
Group Revenue for the six months to 30 September 2023 of $130.2 million was 6% lower than the prior year, with New Zealand down 13% and Australia up 13%. Group EBIT before significant2 items rose 33% to $7.5 million in line with August guidance.
NPAT before significant items3 increased on the prior year to $2.1 million profit. A $9.1 million impairment of intangible assets resulted in a statutory net loss after tax of $9.2 million.
Net debt decreased $6.3 million to $52.8 million at 30 September 2023 also in line with August 2023 guidance. The reduction was driven by a reduced working capital in the form of inventory as supply chain reliability improved. Debtor and creditor profiles reduced also as a direct result of the softer trading conditions. Metroglass’ net debt to EBITDA ratio improved to 2.69x at 30 September 2023 from 3.8x in the prior period.
New Zealand
Revenue declined 13% to $87.0 million with softer market activity partially offset by a higher mix of LowE glass sales. Gross profit margin recovered as supply chain pressures eased.
In the highly competitive residential channel, revenue of $54.8 million was 16% below the prior year primarily as lower activity was partially offset by increased LowE glass sales. The commercial glazing channel was steady with revenue flat on the prior year at $19.0 million, however the time between tender and project acceptance has extended. The business has a small number of legacy contracts at pre-price increase rates which impacted profit margins. Retrofit revenue declined 16% to $13.2 million as cost-of-living and interest rate pressures deferred consumer spending with many customers opting for partial house retrofit rather than full house.
Mr Mander said “It has been a challenging year for the New Zealand business, while supply chain volatility has eased, economic pressures have softened the construction sector. These challenges are expected to continue, and our focus remains firmly on operational efficiency and positioning the company to meet the needs of a changing market.”
Australian Glass Group (AGG)
AGG delivered stable and resilient performance with the high performing double-glazing market appearing to be holding. AGG achieved further profitability growth in the first half. The business remains focused on optimising volume and pricing as a result of the slowing residential market.
In February 2023 Metroglass announced a sale process for AGG which continues to advance, the board is targeting an announcement in the near future. If a suitable deal can be concluded the board will bring the offer to shareholders at an extraordinary meeting in the new year.
Market conditions and outlook
In New Zealand the 12-month rolling residential consents have declined and while they are still above long-term trends, glass demand has fallen significantly.
Demand for construction materials decreased across the sector and forecasts remain uncertain for FY24. It is the company’s view that these conditions are likely to continue until inflation pressures and interest rates ease.
While ensuring we deliver quality products, safely and with excellent customer service, the company is resizing itself to ensure it is efficient for the changing market demand.
With current market volatility it is difficult to forecast New Zealand earnings for the balance of the year, however it is anticipated that the New Zealand business will continue to be operating cash positive.
In Australia the number of detached dwelling commencements declined in all states. However, the increasing use of double glazing in residential buildings is expected to partially offset the declines in residential construction activity.
As previously announced in the sale process, for the 12 months to 31 March 2024, management forecasts are for AGG to achieve revenue, EBITDA and EBIT of approximately AUD 79.0 million, AUD 11.5 million, AUD 7.5 million respectively.
Note: all non-Generally Accepted Accounting Principles (GAAP) financial measures are defined to a GAAP measure on slide 13 of the 1H24 results presentation, available here: https://www.metroglass.co.nz/investo...presentations/.
1 All prior period comparisons are to the half year ended 30 September 2022 (1H23) unless otherwise stated.
2 Earnings before interest, tax, and significant items (1H24: Impairment of New Zealand intangible assets, restructure of New Zealand operations, AGG divestment (See note 2.2 of the 1H24 financial statements), 1H23: none).
3 NPAT before significant items (1H24: Impairment of New Zealand intangible assets, restructure of New Zealand operations, AGG divestment (See note 2.2 of the 1H24 financial statements), 1H23: none)
Ends/
MPG share price slip sliding away and heading back into the 12’s
Like their service levels progress on sale of Aust outfit and debt reaction is very slow.
Wonder what Masfen and Wells are scheming now …..
18 cents last July sounds good now
The lunar new year is upon us, and still not a peep.
It'd be a hard sell to get a good price for the Aus operations, if that's more than the perceived value of the entire company. That is, unless the sales pitch convincingly values the NZ arm as less than worthless.
Me: Holding, but happy to sell up for 18c if the offer's still on the table. That's per share, mind you.
MPG share price up 9% on Friday
Must have sold Australian outfit?
Nothing in AFR though
Oh dear …seems to be bad news
http://nzx-prod-s7fsd7f98s.s3-websit...530/414369.pdf
B&g-r - down 12% just like that .. but hey - we all knew this was the likely scenario :)
There wasn't much noise coming out of the glass box to reflect much excitement ..
A fast fix might be to sell the Kiwi Job & move to an Aussie ASX listing
Someone is bound to come along sooner or later wanting to take over what's left .. the Aussie Job & Company
for a fairly good bundle .. maybe the same suckers who took a shine to the Kiwi side but who knows ? :)
Happy days all round for those who lasted the ups, downs & long wait ;)
They do already have the ASX listing, MPP.ASX. There's no liquidity there, so it's easy to ignore most days.
So yeah, domiciling in Aus could be a straightforward step, maybe in the right direction.
Let's hope the leaner, refreshed board is more open to alternative possibilities to selling the AGG arm. It's clear by now that it's not good timing to sell, and the approach hasn't washed well with the market or major shareholders.
The more you carve up a company, the weaker and more vulnerable the parts become. Rolling it all up into a larger vertical (that is, a full acquisition) would make more sense, and should've happened years ago.
Goodness gracious ……. MPG share price went below 10 cents today
No wonder Chair resigned the other day …..embarrassing ….and wouldn’t want to front up at another ASM
That’s a pity …..ASM we’re a great watch lol
Edit. Deleted reference to Waterman …my bad
.10 wow, I guess this was always going to happen and a very long way from its 2016 $2.00, Q is will they survive and if so HOW ?
Huge issues which seem hard to resolve:
- debt is still @ $55m.
- revenue will decline for the next 2 years following building consents
They can cut costs on the margins and raise prices, but only so far. I think the $55m anchor will drag them down.
Wow the new director Jen Bestwick didnt last very long, had no idea what she was getting into obv.... next time she might do some due diligence
SML has assets. Not sure MPG have anything to sell that will be good for the company... If they sell Oz part of the business they are left with an under performing NZ outfit with high fixed costs and overheads....
Need an equity raise (like 2 years ago), to get rid of the debt. Been following this company for ages. I sold out at 45c or so I think.... waiting for them to turn the corner or raise some equity.
might be in need of a necessary deed of chucking the side of the ditch's operations with least favourable prospects to improve on the block for some other poor sucker to take away to play games with for whatever gets thrown in the begging bowl - to avoid the whole lot falling off the chocks if no improvement likely within a couple of years.. otherwise how will it survive ?
Or perhaps even a nasty Reverse dividend / aka Cap Raise @ say 5 cps- no tax credits or withholding tax needed into MPG's begging bowl likely to go down well with all the long suffering boys & girls - on Doctor's orders to keep the outfit out of the ditch for a while ? ;)
MPG down through 10c today.
Residential market for glass in decline, as new building comes off the highs... this will just smash profitability, as sales lower on a fixed cost base.
Need a quick $50-60m or so to pay off the debt, but total market cap only $20m at this point....
If they dont want to hand the keys back to the bank, they need to do a highly discounted cap raise IMO (what other way out is there). My rough calc is they need to issue 1 billion new shares at 5c per, to get the $50m needed. 200mill shares on issue now, so may as well just use them as tissues to wipe the tears of shareholders up and then bin them. Luckily the board and exec havent bought any shares, so should be sweet.
Looking forward to their May update!
Mander gone, Aussie sale fallen through, cap raise incoming.
$15m cap raise. This still leaves $35m debt, with reducing revenue impacting ebitda. Who is going to buy this cap raise.
They paid the price for ignorance and Arrogance. Now they can't win it back. Losing biggest customer hasn't helped as they haven't replaced it with anything substantial.
Just liquidate the business.
Good luck to you shareholders.
So the Olympic yachtsman is leaving Metro after 5 years ..amazed he’s lasted that long.
Going to do a lot with that $15m …..’ progress a capital raise to further reduce its debt level, create the conditions for AGG to grow and improve the New Zealand business.’
So ‘company are in the process of updating their outlook for FY25 and will provide an update when this process is complete.’ Bought back memories from 2018/19 when I ‘assisted’ them in updating their forecasts.
They told me I was too pessimistic about market size etc and couldn’t see the big picture ha ha ……and went ahead with their forecasts. In retrospect I was too optimistic but haven’t been surprised with the number of downgrades and sad stories since.
The ASX listing awoke from a months-long slumber today, and is now down almost 50% - and still hovering above the NZX closing price :scared:
I hope the board takes that as a vote of no confidence for the recapitalization plans, and a big 'For Sale' sign aimed at anyone interested in buying a $250M-a-year glass processor at a bargain price.
Doesn't have to be cash, will consider equity swap for the likes of VSL, STU or even (yikes) FBU. It'll need some investment, but the rate of return should be pretty good as it's offsetting bank debt.
From the perspective of a shareholder with shallow pockets, anything will be better than this cap raise, which is likely to be nothing short of homeopathic in its dilutory effect.
I suspect that at the time, it would've passed a shareholder vote to proceed to negotiation, had a special meeting been called. But I'm also skeptical that it could've eventuated in a sale - maybe it was just a pretext to peek at the books.
This scenario plays out time and time again, with seemingly generous takeover offers being shunned by boards, who are supposed to be acting in shareholder interests. And often those board members hold negligible shares themselves, instead having a rational self-interest in continuing to bank director's fees as long as they can. STU, MPG, SKT, ERD, RAK, ... and no doubt more that we know of, and more that we don't.
Not sure if my MP is listening, but I'd suggest some reform for public company governance:
- Directors must have at least an X% or $Y shareholding interest, and their fees are not to exceed Z% of the value of that interest.
- Takeover offers at a premium of at least W% to market cap must be announced, and put to a shareholder vote.
I suppose each company's corporate charter could enshrine provisions like these, but having it legislated across the board (heh) would be for the good of the public.
I agree bulltrap. Low quality board members lacking focus and a stake in the company.
7.5c holy smoke. Hard to raise capital at this price.
Basically any cap raise is doing a favour to the banks who are on the hook for >$50m.
IMHO "if" one goes back and reads the prospectus/ floating docus it does not surprise me that me that this outfit is where they find themselves at present, I think that the current or former fish heads stripped all of the readies from the blance sheets and replaced that with borrowing and then to add insult I dont think that they were major investors in the rebatched company.
Talk about Feltex sometime.
Be sweet if the old owners came through and re-capitalised, took private, replaced the board, loaded up with debt and refloat in 2026...
Not quite true about the borrowings
Post IPO wasn’t excessive but it blew out with large capital spend on modernising plant and borrowing to acquire that Aussie outfit
Theybthen have struggled to generate much in the way of cash from operations ….hence their dcurrent dilemma
Sad really
This thing should just be liquidated. If there were serious about saving this they would see there property they sit on and lease it back.
They will need to raise 300m shares @ $0.05ea. to get that $15m assuming share price doesn't go below, then a month later maybe do a share consolidation and then do another CR to raise more money to stay afloat.
Fancy turning down $0.18 takeover and putting shareholders thru this.
Private Equity is only hope as they own 1 of their major competitors in NZ and they perform.
MPG is even less likely for previous owners to come back in?
I'm sure they've well and truly moved on