Full Year 2026 Vulcan Steel Ltd Earnings Call

August 24, 2026

Speaker #1: Thank you for standing by, and welcome to the Vulcan Steel Ltd VSL FY26 results briefing. There will be a presentation, followed by a question-and-answer session.

Operator: Thank you for standing by, and welcome to the Vulcan Steel Limited VSL FY26 results briefing. There will be a presentation followed by a question and answer session. If you wish to ask a question, you will need to press the star key followed by the number 1 on your telephone keypad. I would now like to hand the conference over to Gavin Street, Managing Director and Chief Executive Officer. Please go ahead.

Operator: Thank you for standing by, and welcome to the Vulcan Steel Limited VSL FY 2026 results briefing. There will be a presentation followed by a question-and-answer session. If you wish to ask a question, you will need to press the star key followed by the number one on your telephone keypad. I would now like to hand the conference over to Gavin Street, Managing Director and Chief Executive Officer. Please go ahead.

Speaker #1: If you wish to ask a question, you will need to press the star key followed by the number 1 on your telephone keypad. I would now like to hand the conference over to Gavin Street, Managing Director and Chief Executive Officer.

Speaker #1: Please go ahead.

Speaker #2: Thank you, everyone, for joining the call for the FY2026 results for Vulcan. On the call today, we have our CFO, Caio Yo; Adrian Casey, our COO; and Luke Cavanagh, New Zealand leader; and myself, Gavin Street.

Gavin Street: Thank you everyone for joining the call for the FY26 results for Vulcan. On the call today, we have our CFO, Kar Yue Yeo; Adrian Casey, our COO; and Lou Cadman, our New Zealand leader; and myself, Gavin Street. If we turn to the agenda on page 8. In this call this morning, we will cover the overview of results, financial operations, priorities and outlook, and we will also leave some time for some Q&A. If we go to the overview on page 6, to cover off a few points on the performance of our business for the FY26, revenue was NZD 1.159 billion, up 22% on the prior year and included 9 months of sales from our acquisition of Roofing Industries. Underlying business growth with momentum building into the H2. Adjusted EBITDA was up 16% to NZD 130 million and included the impact of Roofing Industries from 1 October.

Gavin Street: Thank you everyone for joining the call for the FY 2026 results for Vulcan. On the call today, we have our CFO, Kar Yue Yeo; Adrian Casey, our COO; and Lou Cadman, our New Zealand Leader; and myself, Gavin Street. If we turn to the agenda on page 8. In this call this morning, we will cover the overview of results, financial operations, priorities and outlook, and we will also leave some time for some Q&A. If we go to the overview on page 6, to cover off a few points on the performance of our business for the FY 2026, revenue was NZD 1.159 billion, up 22% on the prior year and included 9 months of sales from our acquisition of Roofing Industries. Underlying business growth with momentum building into the H2.

Speaker #2: If we turn to the agenda on page 8, in this call this morning we will cover the overview of results, financial operations, priorities, and outlook. We'll also leave some time for Q&A.

Speaker #2: If we go to the overview on page 6, to cover a few points on the performance of our business for FY26: revenue was $1.159 billion, up 22% on the prior year, and included nine months of sales from our acquisition of Roofing Industries.

Speaker #2: Underlying business grew, with momentum building into the second half. Adjusted EBIT was up 16% to $130 million, and included the impact of Roofing Industries from October alone.

Gavin Street: Adjusted EBITDA was up 16% to NZD 130 million and included the impact of Roofing Industries from 1 October. Underlying business was steady compared to prior year. Gross margin was down 1% to 33.2%, reflecting the impact of mix and addition of Roofing Industries and gross profit per ton was relatively flat. The Vulcan board has approved interim dividend of NZD 0.045 per share, taking the full-year dividend to NZD 0.07, up 16%. If we turn to page 7, the key strategic and operational highlights. The final payment for Roofing Industries in January 2026. The integration of the business has gone very well. We are very pleased with the performance of the business. There is a strong culture and alignment to the Vulcan values. Improving underlying volume with year-on-year growth, and we also saw increased momentum into the H2 of the year.

Speaker #2: Underlying business was steady compared to the prior year. Gross margin was down 1% to 33.2%, reflecting the impact of mix and additional roofing industries, and gross profit over time was relatively flat.

Gavin Street: Underlying business was steady compared to prior year. Gross margin was down 1% to 33.2%, reflecting the impact of mix and addition of Roofing Industries and gross profit per ton was relatively flat. The Vulcan board has approved interim dividend of NZD 0.045 per share, taking the full-year dividend to NZD 0.07, up 16%. If we turn to page 7, the key strategic and operational highlights. The final payment for Roofing Industries in January 2026. The integration of the business has gone very well. We are very pleased with the performance of the business. There is a strong culture and alignment to the Vulcan values. Improving underlying volume with year-on-year growth, and we also saw increased momentum into the H2 of the year.

Speaker #2: The Vulcan Board has approved an interim dividend of 4.5 cents per share, taking the full-year dividend to 7 cents, up 16%. If we turn to page 7, you'll see the key strategic and operational highlights: the final payment for Roofing Industries is set for January 2026. The integration of the business has gone very well—we are very pleased with the performance, and there is a strong culture and alignment to Vulcan values.

Speaker #2: We saw improvement in underlying volume with year-on-year growth, and we also saw increased momentum into the second half of the year. The team has continued to focus on our delivery and pull-on-time, our dive height metrics, and ensuring we have the right stock in the right location at the right time.

Gavin Street: The team has continued to focus on our delivery and full on time, our DIFOT metrics, ensuring we have the right stock, the right location at the right time. We are continuing to execute on our hybrid locations with a new location added in Queensland in the H2 of FY26. Costs have continued to be closely monitored. Underlying costs have been impacted by inflation, investment into hybrid sites, and increasing capacity to support growth and customer service levels. We have continued to generate cash flow and manage working capital to support the investment in our business and are focused on reducing debt cover to 2.9 times. If we turn to page 8, we will cover the half yearly volume and financial trends. The graph here provides year H1 trends in revenue, tons per day and EBITDA. All graphs includes the impact of Roofing Industries.

Gavin Street: The team has continued to focus on our delivery and full on time, our DIFOT metrics, ensuring we have the right stock, the right location at the right time. We are continuing to execute on our hybrid locations with a new location added in Queensland in the H2 of FY 2026. Costs have continued to be closely monitored. Underlying costs have been impacted by inflation, investment into hybrid sites, and increasing capacity to support growth and customer service levels. We have continued to generate cash flow and manage working capital to support the investment in our business and are focused on reducing debt cover to 2.9 times. If we turn to page 8, we will cover the half yearly volume and financial trends. The graph here provides year H1 trends in revenue, tons per day and EBITDA. All graphs includes the impact of Roofing Industries.

Speaker #2: We are continuing to execute on our hybrid locations, with a new location added in Queensland in the second half of FY26. Costs continue to be closely monitored, with underlying costs being impacted by inflation, investment into hybrid sites, and increasing capacity to support growth and customer service levels.

Speaker #2: We have continued to generate cash flow and manage working capital to support the investment in our business, and our focus on reducing debt cover to 2.9 times.

Speaker #2: If we turn to page 8, we'll cover the half-yearly volume and financial trends. The graphs here provide you with half-year trends in revenue, turns per day, and EBITDA.

Speaker #2: All graphs include the impact of Roofing Industries. Improvement in revenue year-on-year and underlying business was increased momentum in the second half; total sales, or turns per day, increased year-on-year, with underlying sales revenue up on the prior year. Adjusted EBITDA reflects the inclusion of Roofing Industries and an improvement in the underlying performance of the business in the second half.

Gavin Street: Improvement in revenue year on year in underlying businesses increased momentum in the H2. Total sales or tonnes per day increased year on year with underlying sales revenue up on the prior year. Adjusted EBITDA reflects the inclusion of Roofing Industries and an improvement in the underlying performance of the business in the H2. If we go to page nine, we will go to the Vulcan business highlights. With the purchase of Roofing Industries, we now operate in seven verticals, four divisions under our Steel segment, which now includes Roofing Industries and Roll Forming and Folding, and three existing divisions under Metals. New Zealand represented 40% of our sales and Australia 60%. Importantly, as we look at some of the growth opportunities into Australia, Queensland is the largest state representing 23% of total group sales.

Speaker #2: If we go to page 9, we'll go to the Vulcan business highlights. With the purchase of Roofing Industries, we now operate in 7 verticals: 4 divisions under our Steel segment—which now includes Roofing Industries, and Roll Forming and Folding—and 3 existing divisions under Metals.

Speaker #2: New Zealand represented 40% of our sales, and Australia 60%. Importantly, as we look at some of the growth opportunities in Australia, Queensland is the largest state, representing 23% of total group sales.

Speaker #2: If we turn to page 10, we have the map of our current footprint and A and Z. With the addition of Roofing Industries, we now have 82 sites across Australia, up from 81 with the addition of our new site in Toomba.

Gavin Street: If we turn to page 10, we have the map of our current footprint in ANZ. With the addition of Roofing Industries, we now have 82 sites across Australia, up from 81 with the addition of our new site in Toowoomba. We are supported by over 1,660 employees serving over 26,000 customers. On page 11, we have our growth strategy, and under here we have some very clear principles that we have had in place for a long time on how we grow our business, and we will continue to look at opportunities to improve and expand further. If we turn to page 13 and the operating backdrop during FY26. In Australia, we have seen increased interest rates, geopolitical risk, and domestic fiscal policies have provided some uncertainty with moderating activity in some segments.

Gavin Street: If we turn to page 10, we have the map of our current footprint in ANZ. With the addition of Roofing Industries, we now have 82 sites across Australia, up from 81 with the addition of our new site in Toowoomba. We are supported by over 1,660 employees serving over 26,000 customers. On page 11, we have our growth strategy, and under here we have some very clear principles that we have had in place for a long time on how we grow our business, and we will continue to look at opportunities to improve and expand further. If we turn to page 13 and the operating backdrop during FY 2026. In Australia, we have seen increased interest rates, geopolitical risk, and domestic fiscal policies have provided some uncertainty with moderating activity in some segments.

Speaker #2: We're supported by over 1,660 employees, serving over 26,000 customers. On page 11, we have our growth strategy, and under here we have some very clear principles that we've had in place for a long time on how we grow our business, and we'll continue to look at opportunities to improve and expand further.

Speaker #2: If we turn to page 13 and the operating backdrop during FY26, in Australia we've seen increased interest rates, geopolitical risk, and domestic fiscal policies have provided some uncertainty, with moderating activity in some segments.

Speaker #2: Importantly, activity on our east coast of Queensland, New South Wales, and Victoria has continued to be positive year-on-year. FY26 turns per day increased, with strong improvements in the second half.

Gavin Street: Importantly, activity on our East Coast of Queensland, New South Wales and Victoria has continued to be positive year on year. FY26 tonnes a day increased with strong improvements in the H2. In New Zealand, interest rates supporting our improved economic activity from a low base. Some uncertainty remains with the impact of geopolitical activity. FY26 tonnes a day increased year on year with more pronounced impact in the H2 of FY26. From a global and economic perspective, there is still some uncertainty in geopolitical environment. Metals product prices have increased in FY26, with more significant impact in the H2 of FY26, driven by aluminum and nickel increases. From a cost pressure perspective, we are continuing to focus on cost and the inflation impact across ANZ. I will now hand over to Kar Yue, who will take you through the financial performance.

Gavin Street: Importantly, activity on our East Coast of Queensland, New South Wales and Victoria has continued to be positive year on year. FY 2026 tonnes a day increased with strong improvements in the H2. In New Zealand, interest rates supporting our improved economic activity from a low base. Some uncertainty remains with the impact of geopolitical activity. FY 2026 tonnes a day increased year on year with more pronounced impact in the H2 of FY 2026. From a global and economic perspective, there is still some uncertainty in geopolitical environment. Metals product prices have increased in FY 2026, with more significant impact in the H2 of FY 2026, driven by aluminum and nickel increases. From a cost pressure perspective, we are continuing to focus on cost and the inflation impact across ANZ. I will now hand over to Kar Yue, who will take you through the financial performance.

Speaker #2: In New Zealand, interest rates are supporting our improved economic activity from a low base. Some uncertainty remains with the impact of geopolitical activity. FY26 turns per day increased year-on-year, with a more pronounced impact in the second half of FY26.

Speaker #2: From a global and economic perspective, there is still some uncertainty in the geopolitical environment. Metal product prices have increased in FY26, with a more significant impact in the second half of FY26, driven by aluminium and nickel increases.

Speaker #2: And from a cost pressure perspective, we will continue to focus on cost and the inflationary impacts across A and Z. I'll now hand you over to Caio, who'll take us through the financial performance.

Speaker #3: Thank you, Gavin. Good morning to everyone on the call. I'd like to spend the next couple of minutes on slide 14. Our 22% year-on-year revenue growth in financial year 2026 was a combination of two things.

Kar Yue Yeo: Thank you, Gavin. Good morning to everyone on the call. I would like to spend the next couple of minutes on slide 14. Our 22% year-on-year revenue growth in financial year 2026 is a combination of two things. First, nine months of contribution from the addition of Roofing Industries. Second, an improvement in our underlying business volume, of which the vast majority started to come through in the June H1. Underlying business margins in 2026 were steady year on year. Although gross margins, as Gavin mentioned, was down 1%, this was due to the percentage mix between our underlying business and Roofing Industries.

Speaker #3: First, there were nine months of contribution from the addition of roll forming. Second, we saw an improvement in our underlying business volume, the vast majority of which started to come through in the June period.

Speaker #3: Our 18% increase in volume was a combination of roll forming and acquisition, and significant improvement in our underlying business in the June period. Underlying business margin in 2026 was steady year-on-year.

Speaker #3: Overall gross margin, as Gavin mentioned, was down 1%. This was due to the percentage mix between our underlying business and roll forming. Encouragingly, gross profit dollars per ton were up slightly, a result of better underlying steel and metals dollar profitability, higher dollar per ton profit for roll forming, and some currency translation impact from our Australian operations.

Kar Yue Yeo: Encouragingly, gross profit NZD per tonne was up slightly, a result of better underlying steel and metals dollar profitability, higher dollar per tonne profit for Roofing Industries, and some currency translation impact from our Australian operations. Our earnings before interest, tax, depreciation, and amortization, or EBITDA, for the year increased 16%, with profit contribution from Roofing Industries as well as underlying improvement in our underlying business in the June H2, which helped offset the declines that we recorded in the H1 of our financial year just completed. Operating cash flow increased 30% in the year. This reflected the benefits to operating cash flow in the previous year, from significant reduction in working capital in FY25. Our return on capital employed, while respectable relative to industry peers, is well below our internal expectations.

Speaker #3: Our earnings before interest, tax, depreciation, and amortization, or EBITDA, for the year increased 16%. With profit contribution from roll forming as well as underlying improvement in our business in the June in our underlying business in the June half, which helped offset the declines that we recorded in the first half of our financial year just completed.

Kar Yue Yeo: Our earnings before interest, tax, depreciation, and amortization, or EBITDA, for the year increased 16%, with profit contribution from Roofing Industries as well as underlying improvement in our underlying business in the June H2, which helped offset the declines that we recorded in the H1 of our financial year just completed. Operating cash flow increased 30% in the year. This reflected the benefits to operating cash flow in the previous year, from significant reduction in working capital in FY25. Our return on capital employed, while respectable relative to industry peers, is well below our internal expectations. As shown on the next slide, virtually all of our EBITDA improvement in the year was a result of volume growth, including the addition of Roofing Industries and improvement in underlying steel segments.

Speaker #3: Operating cash flow decreased 30% in the year. This reflected the benefits to operating cash flow in the previous year from a significant reduction in working capital in financial year 2025.

Speaker #3: Our return on capital employed, while respectable relative to industry peers, is well below our internal expectations. As shown on the next slide, virtually all of our EBITDA improvement in the year was a result of volume growth, including the addition of roll forming and improvement in the underlying steel segment. Higher volume contributed $61 million to profitability.

Kar Yue Yeo: As shown on the next slide, virtually all of our EBITDA improvement in the year was a result of volume growth, including the addition of Roofing Industries and improvement in underlying steel segments. Higher volume contributed NZD 61 million to profitability. Operating expenditure, or OpEx, increased NZD 44 million during the year. This reflected a combination of additions of Roofing Industries, the additional Roofing Industries, currency translation of Australian operations, and investment in additional employees to support growth, not just during FY26, but also for beyond. At the segment level on the next slide, our steel results benefited from the Roofing Industries acquisition as well as improvement in underlying volume, especially in the June H2.

Kar Yue Yeo: Higher volume contributed NZD 61 million to profitability. Operating expenditure, or OpEx, increased NZD 44 million during the year. This reflected a combination of additions of Roofing Industries, the additional Roofing Industries, currency translation of Australian operations, and investment in additional employees to support growth, not just during FY 2026, but also for beyond. At the segment level on the next slide, our steel results benefited from the Roofing Industries acquisition as well as improvement in underlying volume, especially in the June H2. A 19% lift in gross profit dollars ton in 2026 contributed to EBITDA improvement, as I mentioned earlier on, driven by the addition of Roofing Industries, as well as improvement in underlying business in the June H2. Turning to our metals segment, the performance was mixed across Australia and New Zealand. EBITDA in aggregate for this segment fell 10% in the year.

Speaker #3: Operating expenditure, or OPEX, increased by $44 million during the year. This reflected a combination of the addition of roll forming, the additional roll forming, currency translation of Australian operations, and investment in additional employees to support growth, not just during financial year 2026, but also beyond.

Speaker #3: At the segment level, on the next slide, our Steel results benefited from the roll-forming acquisition, as well as improvement in underlying volume, especially in the June half.

Speaker #3: A 19% lift in gross profit dollars per ton in 2026 contributed to EBITDA improvement, as I mentioned earlier on, driven by the addition of roll forming as well as improvement in the underlying business in the June half.

Kar Yue Yeo: A 19% lift in gross profit dollars ton in 2026 contributed to EBITDA improvement, as I mentioned earlier on, driven by the addition of Roofing Industries, as well as improvement in underlying business in the June H2. Turning to our metals segment, the performance was mixed across Australia and New Zealand. EBITDA in aggregate for this segment fell 10% in the year. Volume in the metal segment was broadly steady. Gross margin declined in the year, but did show improvement in the June H2 on a year-on-year basis. On the next slide, as mentioned earlier, our operating expenditure increased NZD 44 million in 2026 financial year. This reflected the addition of Roofing Industries, the increase in underlying business volume, currency translation impact of a stronger Australian dollar into New Zealand dollar, as well as user cost inflation. Excluding Roofing Industries and the currency translation impact, our underlying OpEx increased 9% year-on-year.

Speaker #3: Turning to our metals segment, the performance was mixed across Australia and New Zealand. EBITDA, in aggregate, for this segment fell 10% in the year.

Speaker #3: Volume in the metals segment was broadly steady. Gross margin declined in the year, but this showed improvement in the June half on a year-on-year basis.

Kar Yue Yeo: Volume in the metal segment was broadly steady. Gross margin declined in the year, but did show improvement in the June H2 on a year-on-year basis. On the next slide, as mentioned earlier, our operating expenditure increased NZD 44 million in 2026 financial year. This reflected the addition of Roofing Industries, the increase in underlying business volume, currency translation impact of a stronger Australian dollar into New Zealand dollar, as well as user cost inflation. Excluding Roofing Industries and the currency translation impact, our underlying OpEx increased 9% year-on-year. The majority of those coming in people costs to support growth in 2026 and beyond. Turning to our cash flow on the next slide. Our business generated NZD 73 million in cash from operations, from which NZD 26 million was recycled into capital expenditure and NZD 31 million used for repayment of lease liabilities.

Speaker #3: On the next slide, as mentioned earlier, our operating expenditure increased by $44 million in the 2026 financial year. This reflected the additional roll forming, the increase in underlying business volume, currency translation impact of a stronger Australian dollar into New Zealand dollar, as well as unit cost inflation.

Speaker #3: Excluding roll forming and the currency translation impact, our underlying OPEX increased 9% year-on-year, the majority of that coming in people costs to support growth in 2026 and beyond.

Kar Yue Yeo: The majority of those coming in people costs to support growth in 2026 and beyond. Turning to our cash flow on the next slide. Our business generated NZD 73 million in cash from operations, from which NZD 26 million was recycled into capital expenditure and NZD 31 million used for repayment of lease liabilities. The NZD 94 million capital raised in the H1 of our financial year was used substantially for the purchase of Roofing Industries, as well as to pay for related transaction costs. Including further investment into Roofing Industries as well as unspent carryover projects from 2026, we expect to spend between NZD 30 to NZD 35 million in FY27 for capital expenditure.

Speaker #3: Now turning to our cash flow on the next slide, our business generated $73 million in cash from operations, from which $26 million was recycled into capital expenditure and $31 million used for repayment of lease liabilities.

Speaker #3: The $94 million capital raised in the first half of our financial year was used substantially for the purchase of Roofing Industries, as well as to pay for related transaction costs.

Kar Yue Yeo: The NZD 94 million capital raised in the H1 of our financial year was used substantially for the purchase of Roofing Industries, as well as to pay for related transaction costs. Including further investment into Roofing Industries as well as unspent carryover projects from 2026, we expect to spend between NZD 30 to NZD 35 million in FY27 for capital expenditure. Finally, on our 2026 financials on slide 19, as Gavin mentioned earlier on, our final dividend has been set at NZD 0.045 per share, up NZD 0.01 from a year ago, bringing total dividends for the year to NZD 0.07 per share. Our final dividend will be fully franked. Net debt finished at NZD 227 million, which translated to 2.9 times net debt post rent, EBITDA cover, an improvement from the 3.4 times from a year ago. Handing position back to you, Gavin.

Speaker #3: Including further investment into roll forming, as well as unspent carryover projects from 2026, we expect to spend between $30 million and $35 million in the 2027 financial year for capital expenditure.

Speaker #3: Finally, on our 2026 financials, on slide 19, as Gavin mentioned earlier, our final dividend has been set at 4.5 cents per share, up a cent from a year ago, bringing total dividends for the year to 7 cents per share.

Kar Yue Yeo: Finally, on our 2026 financials on slide 19, as Gavin mentioned earlier on, our final dividend has been set at NZD 0.045 per share, up NZD 0.01 from a year ago, bringing total dividends for the year to NZD 0.07 per share. Our final dividend will be fully franked. Net debt finished at NZD 227 million, which translated to 2.9 times net debt post rent, EBITDA cover, an improvement from the 3.4 times from a year ago. Handing position back to you, Gavin.

Speaker #3: Our final dividend will be fully distributed and franked. Net debt finished at $227 million, which translated to 2.9 times net debt post-rent to EBITDA cover.

Speaker #3: An improvement from the 3.4 times of a year ago. Pending decision. Back to you, Gavin.

Speaker #2: Thanks, Caillou. Now I'll turn to page 21, and we'll go through the priorities. We'll continue to focus on driving our organic growth with a focus on customer service and margin improvements.

Gavin Street: Thanks, Jayu. Now on turn to page 21, we will go through the priorities. We will continue to focus on driving our organic growth with a focus on customer service and margin improvements, catalyzing opportunities across ANZ through the improvement across the business cycle and in growth segments. Continue to support the integration and invest in Roofing Industries to build on a solid base. Develop our people and leverage investment in our high-risk sites and explore opportunities to further grow our business across ANZ. We now turn to page 22. Whilst conditions are still challenging in both countries, we are beginning to see some signs of recovery. In New Zealand, supportive interest rate environment with some segments already showing signs of improved activity. Building and construction activity has stabilized. Commercial activities may take a little bit longer. But overall, the recovery momentum is anticipated to strengthen throughout 2027.

Speaker #2: Capitalized on opportunities across A and Z through improvement across the business cycle and in growth segments. Continued support and integration, and investing in roofing industries to build on a solid base.

Speaker #2: Develop our people and leverage investment in our hardware sites, and explore opportunities to further grow our business across A and Z. We now turn to page 22.

Speaker #2: Whilst conditions are still challenging in both countries, we're beginning to see some signs of recovery. In New Zealand, the supportive interest rate environment has led to some segments already showing signs of improved activity.

Speaker #2: Building construction activity is stabilized. Commercial activity may take a little bit longer. But overall, the recovery momentum is anticipated to strengthen throughout 2027.

Gavin Street: But overall, the recovery momentum is anticipated to strengthen throughout 2027. In Australia, the high interest rates potentially to cap the rates of economic growth. The Olympic build will start to impact Queensland, where we have 23% of our business. Safeguard measures for fabricated steel currently being considered by the Australian government in FY27, if introduced, likely to have a positive impact. We will continue to focus on driving our high-risk site initiatives to deliver some volume benefit. That is our presentation. I will now open up for any Q&A.

Speaker #2: In Australia, the high interest rates could potentially cap the rate of growth or raise of economic growth. The Olympic build will start to impact Queensland, where we have 23% of our business.

Gavin Street: In Australia, the high interest rates potentially to cap the rates of economic growth. The Olympic build will start to impact Queensland, where we have 23% of our business. Safeguard measures for fabricated steel currently being considered by the Australian government in FY27, if introduced, likely to have a positive impact. We will continue to focus on driving our high-risk site initiatives to deliver some volume benefit. That is our presentation. I will now open up for any Q&A.

Speaker #2: Safeguard measures to protect the steel industry are currently being considered by the Australian government for FY27. If introduced, they're likely to have a positive impact, and we'll continue to focus on driving our hybrid-side initiative to deliver some volume benefits.

Speaker #2: That's our presentation. I'll now open it up for any Q&A.

Speaker #1: Thank you. If you wish to ask a question, please press *1 on your telephone and wait for your name to be announced. If you wish to cancel your request, please press *2.

Operator: Thank you. If you wish to ask a question, please press star 1 on your telephone and wait for your name to be announced. If you wish to cancel your request, please press star then 2. If you are using a speakerphone, please pick up the handset to ask your question. The first question today comes from Grant Swanepoel from Jarden. Please go ahead.

Speaker #1: If you're using a speakerphone, please pick up the handset to ask your question. The first question today comes from Grant Swanepoel from Jarden. Please go ahead.

Speaker #3: Good morning, team. That was an impressive 12-minute presentation. I love your brevity. Roofing EBITDA—look, this result is meaningless without you guys giving some color on that acquisition.

Grant Swanepoel: Good morning, team. That was an impressive 12-minute presentation. I love your brevity. Roofing EBITDA. Look, this result is meaningless without you guys giving some color on that acquisition. Can you supply some volume statistics, EBITDA, and anything else relating to Roofing that is within this result?

Speaker #3: Can you supply some volume statistics, EBITDA, and anything else relating to roofing that's within this result?

Speaker #2: Yes. So, in our annual report, we actually state the volume that we've got for the nine months. Revenue, we've got for the five months for the roofing industry.

Gavin Street: Yeah. So in our annual report, we actually state the volume that we have got for the 9 months revenue. We have got the 5 months for Roofing Industries, so it is NZD 135 million for the 9 months. So I think, Grant, that should give you ability to backfill some of your numbers.

Speaker #2: So it's $135 million for the nine months. So I think, Grant, that should give you the ability to backfill some of your numbers.

Speaker #3: Not really.

Grant Swanepoel: Not really.

Speaker #2: Yeah, I'll tell you.

Gavin Street: Yeah. I will tell you something more later.

Grant Swanepoel: At first glance, you more or less indicated that EBITDA was NZD 5 million for Roofing, and it was on track to about NZD 14, 15 million for the year. Did it come out about NZD 14, 15 million on a post EBITDA basis?

Speaker #3: First off, you more or less indicated that EBITDA was $5 million for Roofing, and it was on track to about $14–15 million for the year.

Speaker #3: Did it come out to about $14–15 million on a post-EBITDA basis?

Speaker #2: Right. So Grant, obviously there are some commercial sensitivities in regards to talking specifically about margin and EBITDA. But what I can help you bridge to, that analytics that you're looking for, is if you look at one of the acquisition notes in our notes to the accounts, as Gavin mentioned, there's $135 million in revenue for the 9 months' contribution.

Kar Yue Yeo: Right. Grant, obviously, there are some commercial sensitivity in regards to talking specifically about margin and EBITDA. But what I can help you bridge that analytics that you are looking for is if you look at one of the acquisition notes in our notes to the account, as Gavin mentioned, there is NZD 135 million in revenue for the 9-month contribution. Obviously, most of that is the net profit after tax relating to Roofing that came from Roofing Industries for the 9 months was just a little bit over NZD 8 million. That is net profit after tax basis. What I can share with you also is that there is no funding cost associated with that net profit after tax of just over NZD 8 million. Now, that is for 9 months.

Speaker #2: Obviously, we're also set at the net profit after tax relating to roofing, that came from the roofing industry for the 9 months, was just a little bit over $8 million.

Speaker #2: That's net profit after tax basis. What I can share with you also is that there is no funding cost associated with that net profit after tax of just over $8 million.

Speaker #2: Now, those nine months, we did also say in the same note that if we had owned the whole business for the full 12 months, the net profit after tax would be closer to $10 million.

Kar Yue Yeo: We did also say in the same note that had we owned the whole business for the whole 12 months, the net profit after tax would be closer to NZD 10 million. Now, if I draw your attention back to when we first acquired it back in September 2025, the depreciation amortization on a post-rent basis was the tune of between NZD 6 to 7 million. So if you can rework the net profit after tax back to PBT, given there is no funding cost, you can get a number that is pretty close to what you are looking for in terms of helping to bridge those numbers for you.

Speaker #2: Now, if I draw your attention back to when we first acquired, back in September 2025, the depreciation on a post-rent basis—depreciation and amortization on a post-rent basis—was, to June, between $6 to $7 million.

Speaker #2: So if you can rework the net profit after tax from back to PDT, given there's no funding cost, you can get a number that's pretty close to what you're looking for in terms of helping to bridge those numbers for you.

Speaker #3: Very helpful. Thanks, Caillou. And then, was there any inventory benefit in the final quarter? That was a really good half year on year. Is there anything that comes out in the wash in terms of extra costs that were passed on to customers in that half?

Grant Swanepoel: Very helpful. Thanks, Caillou. Was there any inventory benefit in the final quarter? That was a really good half year-on-year. Is there anything that comes out of the wash in terms of extra costs that were passed on to customers in that half?

Speaker #2: No, there wasn't really any major inventory benefit that came through in the second half. You see the impact of volume has built over the quarter.

Gavin Street: No, there wasn't really any major inventory benefit that came from the H2. You see the impact of volume has built over the quarter. There has been some impact of inflation for some of our metals distribution business. But no, there was no major impact of any inventory adjustments for that for the H2, particularly in the last month.

Speaker #2: There has been some impact from inflation on some of our metal distribution business, but no, there was no major impact from any inventory adjustments to that.

Speaker #2: For the second half, particularly in the last months.

Speaker #3: Thanks. Thank you. My final question—just on the fairly conservative dividend payout of 47%, are we going to move back to the mid of that range as things continue to pick up—of 40% to 80% payout of NPAT?

Grant Swanepoel: Thank you. My final question, just on the fairly conservative dividend payout of 47%, are we going to move back to mid that range as things continue to pick up of 40% to 80% payout of NPAT?

Speaker #2: Yeah, so I think we've kept it at 47% for the year. We think that's the right level for the current year, given where we're managing our debt profile, our earnings, and returns.

Gavin Street: Well, I think we've kept it at 47% for the year. We think that's the right level for the current year, given where we're managing our debt profile, our earnings and returns. As we've indicated to the market, it depends on where we are. We'll range between 40% and 80% throughout the next period of time. Obviously, as we continue to improve, we'll see opportunities to change that dividend percentage.

Speaker #2: And as we've indicated to the market, it depends on where we are. We'll range between 40% and 80% throughout the next period of time.

Speaker #2: And obviously, as we continue to improve, we'll see opportunities to change that dividend.

Speaker #3: Thanks. Answering my questions.

Grant Swanepoel: Thanks for answering my questions.

Speaker #1: Thank you. The next question comes from Harry Saunders from ENP. Please go ahead.

Operator: Thank you. The next question comes from Harry Saunders from E&P. Please go ahead.

Speaker #4: Good morning, Gavin, Caillou. Thanks for taking my questions. Firstly, just on strong second half momentum—can you talk through the anticipated seasonality benefit in the first half of 2027 versus the second half of 2026?

Harry Saunders: Good morning, Gavin and Caillou. Thanks for taking my questions. Firstly, just on strong H2 momentum. Can you just talk through the anticipated seasonality benefit in H1 2027 versus H2 2026, alongside the extra 3 months of Roll Forming and Folding, before we then look at layering on any end market improvement? Is it fair your other comments in aggregate are calling for end market pick up across both segments and geographies?

Speaker #4: Alongside the extra 3 months of role performing, before we then look at sort of layering on any end market improvement and sort of is it fair your outlook comments in that group are calling for end market?

Speaker #4: Pick-up across both segments and geographies.

Speaker #2: Sorry, Harry, you're just breaking up a little bit. Can you run that through again?

Gavin Street: Sorry, Harry, you are just breaking up a little bit. Can you just run that through again?

Speaker #4: Yeah, sure. So, just on the strong second-half momentum, can you talk through the anticipated seasonality benefits in the first half of 2027 versus the second half of 2026?

Harry Saunders: Yeah, sure. So just on the strong H2 momentum, can you talk through the anticipated seasonality benefits in H1 2027 versus H2 2026, alongside the extra 3 months of Roll Forming and Folding, before we look at end market improvement? Is it fair your outlook comments in aggregate are calling for end market pick up in both segments and both geographies?

Speaker #4: Alongside the extra three months of role forming, before we then look at end-market improvement, is it fair your outlook comments in aggregate are calling for end-market pickup in both segments and both geographies?

Speaker #2: Yeah, look, I think from us, the key point we saw in the FY26 result was that momentum is building for the second half. We'll have five extra days in the first half of FY27.

Gavin Street: Yeah, look, I think from us, the key point we saw in the FY26 result was the momentum is building into the H2. We will have five extra days into H1 FY27 over the H2. So that is the seasonal impact and the adjustment we will see. I do think we are going to have the extra 3 months, obviously, from Roofing Industries coming to the numbers. So I think you will need to take that into account when you contemplate what FY27 looks like. But for us, the momentum is building and the intent is to continue to work through that improvement in both metals and steel across both countries, and build that into the H2, which, as I have mentioned, have five extra days.

Gavin Street: Yeah, look, I think from us, the key point we saw in the FY 2026 result was the momentum is building into the H2. We will have five extra days into H1 FY27 over the H2. So that is the seasonal impact and the adjustment we will see. I do think we are going to have the extra 3 months, obviously, from Roofing Industries coming to the numbers. So I think you will need to take that into account when you contemplate what FY27 looks like. But for us, the momentum is building and the intent is to continue to work through that improvement in both metals and steel across both countries, and build that into the H2, which, as I have mentioned, have five extra days.

Speaker #2: Over the second half, so that's the seasonal impact and the adjustment we will see. And I do think we're going to have the extra three months, obviously, from Roof Industries coming into the numbers.

Speaker #2: So, I think you'll need to take that into account when you contemplate what FY27 looks like. But for us, the momentum is building, and the intent is to continue to work through that improvement in both metals and steel across both countries.

Speaker #2: And build that into the second half, which, as I've mentioned, has five extra days.

Speaker #4: Thanks. And then, even though this is non-cash, could you just talk through the drivers behind the increased D&A that we saw in the guidance, just to help us with modeling?

Harry Saunders: Thanks. Just even though this is non-cash, could you just talk through the drivers behind the increased D&A that we saw in the guides just to help us to model it?

Speaker #2: Sorry. All right. Just picked up your question, in reference to cash. Is that right?

Kar Yue Yeo: Sorry, I just picked up your question referenced in cash. Is that right?

Speaker #4: No, I'm just asking in reference to the increased depreciation and amortization in the result handling and the guides. Even though this is non-cash, could you just talk through the drivers for us all, please?

Harry Saunders: No, I am just asking in reference to the increased depreciation and amortization in the result and the guides, even though this is non-cash. Could you just talk through the drivers for us all, please?

Speaker #2: Yeah, sure. Thanks for that question. So, Harry, what's happened is, obviously as rates continue to rise in some shape or form, both in Australia and New Zealand, we obviously have got an obligation to rework our capitalized lease obligation requirement.

Kar Yue Yeo: Yeah, sure. Thanks for that question. Harry, what's happened is obviously, as rates continue to rise in some shape or form, both in Australia and New Zealand, we obviously have got an obligation to rework our capitalized lease obligation requirements, and that effectively then led to some increases coming through from the interest expense side. As terms and condition changes for our lease as we continue to roll forward with renewals with some of our landlords across the portfolio, that then requires us to reassess the right-of-use asset values, which then finds its way into depreciation amortization for the rights of use component. In a sense, the old convention of looking at EBITDA

Speaker #2: And that effectively then led to some increases coming through in terms of the interest expense side, and obviously, as terms and conditions change for our leases, we continue to roll forward with renewals with some of our landlords across the portfolio.

Kar Yue Yeo: As terms and condition changes for our lease as we continue to roll forward with renewals with some of our landlords across the portfolio, that then requires us to reassess the right-of-use asset values, which then finds its way into depreciation amortization for the rights of use component. In a sense, the old convention of looking at EBITDA post-rent basis in terms of how we've measured it. Us providing that guidance range relating to FY27 is to make life a little bit easier for people that don't necessarily have the same level of detail as a company as we do.

Speaker #2: That then requires us to reassess the right-of-use asset value, which then finds its way into depreciation and amortization for the right-of-use components.

Speaker #2: So, in a sense, the old convention of looking at EBITDA on a post-rent basis has always helped us measure it. But us providing that guidance range relating to financial year 2027 is to make life a little bit easier for people that don't necessarily have the same level of detail as we do as a company.

Kar Yue Yeo: Post-rent basis in terms of how we've measured it. Us providing that guidance range relating to FY27 is to make life a little bit easier for people that don't necessarily have the same level of detail as a company as we do.

Speaker #4: Understood. And sorry, it was a bit of a bad line, but were you indicating that negotiations are leading to higher rent costs, or is this just purely rate driving the right-of-use reassessment?

Harry Saunders: Understood. Sorry, it was a bit of a bad line, but were you indicating that negotiations are leading to higher rent costs or is this just purely rate-driving the right of use reassessment?

Kar Yue Yeo: It's a combination of the two. As and when we roll forward with our rent, we obviously have to revisit whether the right of use asset is stated as impairment.

Speaker #2: It's a combination of the two. As we roll forward with our rent, we obviously have to revisit whether the right-of-use asset has stayed at a fair level.

Speaker #4: Got it. And just a final one. I know you've highlighted this, and we discussed it on the last call. If you could just give a bit more of an update on the Productivity Commission's inquiry into imported fabricated steel—I think the interim report is due in September.

Harry Saunders: Got it. Then just a final one. I know you've highlighted this and we discussed on the last call, just if you could give a bit more of an update on the Productivity Commission. So they've got an inquiry into imported fabricated steel, I think interim report due in September. Just what protection could be implemented? What do you see as a benefit to the industry and yourselves? Thanks.

Speaker #4: What protections could be implemented? What do you see as benefits to the industry and to yourselves? Thanks.

Speaker #2: Yeah. So the Productivity Commission has been in contact with key players in the marketplace. Earlier this year, they've got, as you mentioned, Harry, they've got an interim report that's due out in the next couple of weeks in September.

Gavin Street: Yeah. So, the Productivity Commission's been in contact with key players in the marketplace earlier this year. As you mentioned, Harry Saunders, they've got an interim report that's due out in the next couple of weeks in September. They'll update on what they're finding, what their intent is going to be, and then they'll expect to announce in November. As we've stated before, we see that the imported volume coming in of fabricated steel has basically doubled in the last couple of years. The intent is that I think they'll put some sort of a safeguard metric, which could be some sort of an additional charge or cost on top to bring the steel in from overseas locations, which will then put more capability and funds back into our customers, which are the fabricators.

Speaker #2: They'll update on what they're finding, what their intent is going to be. And then they're expecting to announce in November. So as we've sort of stated before, we see that the volume of imported fabricated steel coming in has basically doubled in the last couple of years.

Speaker #2: And the intent is that I think they'll put some sort of a safeguard metric, which could be some sort of an additional charge or cost on top to bring steel in from overseas locations.

Gavin Street: The intent is that I think they'll put some sort of a safeguard metric, which could be some sort of an additional charge or cost on top to bring the steel in from overseas locations, which will then put more capability and funds back into our customers, which are the fabricators. I think that has a very good chance of being an uplift for our customers but also for us if that gets delivered into the end of the year, into the early H2 of FY27.

Speaker #2: Which will then put more capability and points back into our customers, who are the fabricators. So, I think that has a very good chance of being an uplift for our customers, but also for us if that gets delivered by the end of the year or into the early second half of FY27.

Gavin Street: I think that has a very good chance of being an uplift for our customers but also for us if that gets delivered into the end of the year, into the early H2 of FY27.

Speaker #4: Great. Thank you.

Harry Saunders: Great. Thank you.

Speaker #1: Thank you. The next question comes from Tom Payton from RBC Capital Markets. Please go ahead.

Operator: Thank you. The next question comes from Tom Peyton from RBC Capital Markets. Please go ahead.

Speaker #4: Hi again, how are you? Thank you very much for the question. Just a quick one—if you could just offer some greater colour around the grounds on the Melbourne market.

Tom Peyton: Hi, Gavin. How are you? Thank you very much for the question. Just a quick one. If you could just offer some greater commentary around the grounds on the Melbourne market, especially with the upcoming state election, and more broadly, the Australian market as well. I think you called out Queensland, New South Wales, and Victoria were all seeing positive signs. Thank you.

Speaker #4: Especially with the upcoming state election, and more broadly the Australian market as well, I think you called out Queensland, New South Wales, and Victoria were all seeing positive signs.

Speaker #4: Thank you.

Speaker #2: Yeah. So, the Melbourne market—thanks, Tom, for asking that question. Obviously, I'm based in Melbourne, so I'm experiencing that activity firsthand. Look, for us, the market's actually come from quite a low over the last 12 months.

Gavin Street: Yeah. The Melbourne market, good question. Thanks, Tom, for asking that. I am obviously based in Melbourne, so I am experiencing that activity in that space. Look, for us, the market has actually come from quite a low the last 12 months to stabilizing, and I think we have had some solid results in our locations in Melbourne and seeing some improvement. Activity has actually continued to be reasonably solid in Victoria. We are expecting the state election, as we know, in November. There has been a change, as everyone knows, of Premier. That has probably given them a little bit of a bounce in polls. But the expectation is going to be pretty close for a change in government. I think that is going to be positive overall for the state. But we are still expecting activity to be pretty solid for us.

Speaker #2: The stabilizing, and I think we've had some solid results in our locations in Melbourne and are seeing some improvement. Activity is actually continuing to be reasonably solid in Victoria.

Speaker #2: We're expecting the state election, as we know, in November. There's been a change, as everyone knows, of Premier. That's probably given them a little bit of a bounce.

Speaker #2: In polls, expectations can be pretty close to a change in government. I think that's going to be positive overall. But we're still expecting activity to be pretty solid for us.

Speaker #2: Bearing in mind we only have three locations in Victoria, we've got plenty of opportunity to gain market share and market capability in that space.

Gavin Street: Bearing in mind we only have three locations in Victoria, so we have got plenty of opportunity to get market share and market capability in that space. But it has been reasonably consistent for the last 12 months in Victoria. I think we have had some competitive pressures down there, which have eased a little bit. We have had some consolidation of one of our competitors in that marketplace, which has been positive. Likewise, across the East Coast, we have also had a consolidation of a competitor in sites in Sydney and Brisbane, which I think has been beneficial for the market. And we have got, as I said, 23% of our business is in Queensland, and we are starting to see reasonably strong activity start to pick up in Queensland. But saying that, we have not seen any major projects being released since the Olympic build.

Speaker #2: But it has been reasonably consistent for the last 12 months in Victoria. I think we've had some competitive pressures down there, which have eased a little bit.

Speaker #2: We've had some consolidation of one of our competitors in that marketplace, which has been positive. Likewise, across the East Coast, we've also had a consolidation of a competitor in sites in Sydney and Brisbane, which I think has been beneficial for the market.

Speaker #2: And we've got—20, as I said—23% of our business is in Queensland. And we're starting to see reasonably strong activity start to pick up in Queensland, but saying that, we've not seen any major projects being released to Olympic build.

Speaker #2: And we know that demand is going to be coming pretty strong and hard at us in the next couple of months. And I think for Australia in general, and for trades in general in Australia, that's going to be a high-demand activity that needs to be taken into account, around all the other pressure points that are hitting Australia at the moment, around underbuilds and data center builds and so forth.

Gavin Street: We know that demand is going to be coming pretty strong and hard at us in the next couple of months. I think, for Australia in general and for trade in general in Australia, that is going to be a high-demand activity that needs to be taken into account around all the other pressure points that are hitting Australia at the moment around under builds and data center builds and so forth.

Speaker #4: Awesome, thank you. Just a follow-up from me—you called out engineering steel and commented on the resources sector and maintenance spend.

Tom Peyton: Awesome. Thank you. A follow-up from me. You called out the engineering steel and commenting on the resources sector and maintenance spend.

Speaker #2: Yeah.

Gavin Street: Yeah.

Tom Peyton: Can you offer any indication of that, as how significant things are as a portion of Australian EBITDA?

Speaker #4: Offer an indication of that. I guess, how significant are those things as a portion of Australian EBITDA?

Speaker #2: So, any indication as to—sorry—the EBITDA? Oh, no, we don't break it down. But just to give an indication of where we see from the engineering steel, it has been a slightly tougher market.

Gavin Street: So any indication as to, sorry, the-

Gavin Street: So any indication as to, sorry, the—

Tom Peyton: EBITDA.

Gavin Street: EBITDA. We do not break it down, but just to give you indication of where we see from the engineering steel, it has been a slightly tougher market, and that is really the maintenance spend that is coming through the miners at this stage has been on the lower end of the scale. We are expecting that to gradually pick up as maintenance cycles will need to be invested back into. But we have not seen major signs of that really accelerating to the point we think it is going to be. We obviously know our market share in that space. There is a couple of the key or one key competitor. We know where they sit, we know where we sit. So I think our position is we have held market share reasonably well in that space.

Gavin Street: —EBITDA. We do not break it down, but just to give you indication of where we see from the engineering steel, it has been a slightly tougher market, and that is really the maintenance spend that is coming through the miners at this stage has been on the lower end of the scale. We are expecting that to gradually pick up as maintenance cycles will need to be invested back into. But we have not seen major signs of that really accelerating to the point we think it is going to be. We obviously know our market share in that space.

Speaker #2: And that's really the maintenance spend that's coming through the miners at this stage. It has been on the lower end of the scale. We are expecting that to gradually pick up as maintenance cycles will need to be invested back into.

Speaker #2: But we haven't seen major signs of that really accelerating to the point we think it's going to be. We obviously know our market during that space.

Speaker #2: There's a couple of key, or one key competitor—we know where they sit. We know where we sit. So, I think our position is we've held market share reasonably well in that space.

Gavin Street: There is a couple of the key or one key competitor. We know where they sit, we know where we sit. So I think our position is we have held market share reasonably well in that space. We are expecting the miners to start investing more in the capital expenditure, as equipment starts to wear and I think there is an opportunity that will come into probably calendar year 2027 for that investment.

Speaker #2: And we are expecting other miners to start investing more in capital expenditure as equipment starts to wear, and I think there's an opportunity that will come into play probably in calendar year '27.

Gavin Street: We are expecting the miners to start investing more in the capital expenditure, as equipment starts to wear and I think there is an opportunity that will come into probably calendar year 2027 for that investment.

Speaker #2: But that investment.

Speaker #4: Okay, great. And then one final one, and I'll jump back into the queue—just around the comments earlier about momentum. And maybe this is hard for you to exactly put a finger on.

Tom Peyton: Okay, great. One final one, and then I will jump back in the queue. Just around the comments earlier around momentum, and maybe this is hard for you to exactly put a finger on. Are you able to speak to, I guess, that balance between is it market lifting or is it market share gains? Can you be any more specific around that?

Speaker #4: But are you able to speak to, I guess, that balance between is it market lifting or is it market share gains? Can you be any more specific around that?

Speaker #2: Yeah, so it's a good question. I think there are a couple of points. If I talk about New Zealand, I think there is some opportunity for us to get—we have been getting—some market share in that space.

Gavin Street: Yeah. It is a good question. I think there is a couple of points. If I talk about New Zealand, I think there is some opportunity for us to get We have been getting some market share in that space. I think if you look at some of our competitors, they have obviously announced either given some interim amounts or will have announcements tomorrow, I think from one of our other competitors, which will show where they sit. So, we will get a very good idea of where we sit from a market share perspective. I think generally from what we have seen and heard, I think we have got some market share and opportunity in New Zealand. So I think that helps. Plus, I think we have also seen some recovery and activity of the economy in general.

Speaker #2: And I think if you look at some of our competitors, they've obviously announced, either given some interim amounts or will have announcements tomorrow. I think from one of our other competitors, which will show where they sit.

Speaker #2: So we'll get a very good idea of where we sit from a market share perspective. And I think, generally, from what we've seen and heard, we've got some market share and opportunity in New Zealand.

Speaker #2: So I think that's helped. Plus, I think we've also seen some recovery in activity and in the economy in general. In Australia, I think it's a bit of a combination of, again, one of the major competitors winding down their sites—six or seven sites have been closed across the East Coast of Australia.

Gavin Street: In Australia, I think there is a bit of a combination of, again, one of the major competitors has been winding down their sites. Six or 7 sites have been closed across the East Coast of Australia, and that has been beneficial, I think, for the market and I think for us. Then I think there has been some solid activity in various segments that we have been able to capitalize on. I think there is, look, without being able to break down the detail, I think there is a combination of both across there, Tom.

Speaker #2: And that's been beneficial, I think, for the market, and I think for us. And then, I think there has been some solid activity in various segments that we've been able to capitalize on.

Speaker #2: So I think there’s—look, without knowing the—without being able to break down the detail, I think there’s a combination of both across there, Tom.

Speaker #4: Appreciate that, Kevin. Thanks very much.

Tom Peyton: Appreciate that, Gavin. Thanks very much.

Speaker #1: Thank you. Once again, to ask a question, please press star one on your phone. The next question comes from Rohan Corman-Smith from Forsyth Barr.

Operator: Thank you once again. To ask a question, please press *1 on your phone. The next question comes from Rohan Corman-Smith from Forsyth Barr. Please go ahead.

Speaker #1: Please go ahead.

Speaker #4: Morning, guys. Just on the underlying OPEX, I think it's been a bit higher than expected. I know there's some FX in there, but when you look at that and maybe working capital, do you need to invest further in '27 as the volumes pick up, or is this kind of a base to leverage off?

Rohan Corman-Smith: Morning, guys. Just on the underlying OpEx, I think it has been a bit higher than expected. I know there are some effects in there, but when you look at that and maybe working capital, do you need to invest further in 2027 as the volumes pick up, or is this kind of a base to leverage off?

Rohan Koreman-Smit: Morning, guys. Just on the underlying OpEx, I think it has been a bit higher than expected. I know there are some effects in there, but when you look at that and maybe working capital, do you need to invest further in 2027 as the volumes pick up, or is this kind of a base to leverage off?

Speaker #2: I think it's a pretty solid base for us to leverage off. Look, if I talk about, and the people cost—you're right there, Rohan.

Gavin Street: I think it's a pretty solid base for us to leverage off. Look, if I talk about, and the people cost, you're right there, Rohan. We've got inflation, in fact, that comes with that number, which is a reasonable size number as we've consolidated cost to cost into NZD. What we see is we've had a headcount increase, and I think we've stated about a 4% increase in headcount from year-on-year. That headcount has been focused on basically four main areas. One is an increased capability, particularly in our processing area. So as our volumes increase, that's a good part of our business. We want to make sure we can service that capability. So we've invested headcount into there. We've invested headcount into stainless.

Speaker #2: We've got inflation, in fact, that comes with that number, which is a reasonable-sized number as well—consolidated costs across into NZ dollars. What we see is we've had a headcount increase, and I think we saw about a 4% increase in headcount from year on year.

Speaker #2: And that headcount has been focused on basically four main areas. One is increased capability, particularly in our processing area. So as that volume's increased, that's a good part of our business.

Speaker #2: We want to make sure we can service that capability, so we've invested headcount into there. We've invested headcount into either stainless, and as we've rolled out a hybrid size and our presence in Australia, we wanted to make sure we've got the right resources and capabilities.

Gavin Street: As we've rolled out our Harkness sites and our presence in Australia, we wanted to make sure we've got the right resources and capabilities. So for me, that's an investment upfront. I'm not expecting that to grow substantially in the next 12 months. Then the other thing we've invested in is basically we've talked about in our annual report, we've got a graduate program which we'll continue to invest in our future and our future capability, and we put seven grads on this year. Then we'll also continue to invest in our leadership capability across both ANZ. So I think it's been a lot of that investment is building for the future, and it's important we've taken that position in FY26 to set ourselves up for FY27 and beyond.

Speaker #2: So, to me, that's an investment up front. I'm not expecting that to grow substantially in the next 12 months. The other thing we've invested in, as we've talked about in our annual report, is our graduate program, which will continue to invest in our future and our future capability.

Gavin Street: So for me, that's an investment upfront. I'm not expecting that to grow substantially in the next 12 months. Then the other thing we've invested in is basically we've talked about in our annual report, we've got a graduate program which we'll continue to invest in our future and our future capability, and we put seven grads on this year. Then we'll also continue to invest in our leadership capability across both ANZ. So I think it's been a lot of that investment is building for the future, and it's important we've taken that position in FY 2026 to set ourselves up for FY27 and beyond. But I think as volume increases, we expect to be able to absorb a lot of that volume increase in current infrastructure.

Speaker #2: And we put seven grades on this year. And then we've also continued to invest in our leadership capability across both A and Z. So I think a lot of that investment is building for the future.

Speaker #2: And it's important. We've taken that position in FY26. We've set ourselves up for FY27 and beyond. But I think as volume increases, we expect to be able to absorb a lot of that volume increase in our current infrastructure.

Gavin Street: But I think as volume increases, we expect to be able to absorb a lot of that volume increase in current infrastructure.

Speaker #4: Thanks. And then, maybe going back to the question about what the underlying steel business was doing, excluding roofing. If you look at the second half, you had revenue growth of—what is it?

Rohan Corman-Smith: Thanks. Then maybe coming back to the question about what the underlying steel business was doing ex Roofing. If you look at the second half, you had revenue growth of, what was it? It looks like, sorry, one second. 22-ish percent year-on-year.

Rohan Koreman-Smit: Thanks. Then maybe coming back to the question about what the underlying steel business was doing ex Roofing. If you look at the second half, you had revenue growth of, what was it? It looks like, sorry, one second. 22-ish percent year-on-year—

Speaker #4: It looks like sorry, one second. '22-ish percent year on year, 23% year on year. That kind of suggests if average selling price is on the up, low single digits, then you had double digit volume growth, almost 20% volume growth in steel.

Gavin Street: Yeah

Gavin Street: Yeah.

Rohan Corman-Smith: 23% year-on-year. That kind of suggests if average selling price is only up low single digits, then you had double-digit volume growth, almost 20% volume growth in steel. Is that kind of the ballpark and then when you go further down the P&L, if you back out Roofing Industries as per your suggestions before

Rohan Koreman-Smit: —23% year-on-year. That kind of suggests if average selling price is only up low single digits, then you had double-digit volume growth, almost 20% volume growth in steel. Is that kind of the ballpark and then when you go further down the P&L, if you back out Roofing Industries as per your suggestions before—

Speaker #4: Is that kind of the ballpark? And then, when you go further down the P&L, if you back out Roofing Industries as per your suggestions before, gross profit margins may be back above 30%?

Gavin Street: Yeah

Gavin Street: Yeah.

Rohan Corman-Smith: gross profit margins maybe back above 30%? Is that kind of close to where we exited 2026?

Rohan Koreman-Smit: —gross profit margins maybe back above 30%? Is that kind of close to where we exited 2026?

Speaker #4: Is that kind of close to where we exited '26?

Gavin Street: Yeah. So definitely, if you talk about total steel, so across ANZ, that will be your +20% that you mentioned. So that is a very strong H2 for steel. And that is a mix of obviously New Zealand and Australia seeing growth in both those locations in the double digits. So, it has been, I think, a solid H2, particularly around steel in both countries and both locations has been the driver in some of our H2 performance.

Speaker #2: Yeah. So definitely, if you talk about steel—total steel—so across A and Z, that'll be plus 20 that you mentioned. So that's a very strong second half for steel.

Speaker #2: And that's a mix of, obviously, New Zealand and Australia. It's seen growth in both those locations in the double digits. So it has been, I think, a solid second half, particularly around steel.

Speaker #2: In both countries and both locations, they've been able to drive some of our second-half performance.

Speaker #4: And then dropping down to margins as well. From my calculations, it feels like margins improved in the second half.

Rohan Corman-Smith: And then dropping down to margins as well. From my calculations

Rohan Koreman-Smit: And then dropping down to margins as well. From my calculations—

Gavin Street: Yeah

Gavin Street: Yeah.

Rohan Corman-Smith: It feels like margins improved in the H2.

Rohan Koreman-Smit: —it feels like margins improved in the H2.

Speaker #2: Definitely have. So, again, yeah, margins have improved in the second half. So we've seen a lot of work done in that space from the team.

Gavin Street: Definitely have.

Rohan Corman-Smith: Have you?

Rohan Koreman-Smit: Have you—

Gavin Street: Yes, margins have improved in the H2, so we've seen a lot of work done in that space from the team and making sure that we continue to provide the disciplines around margin management, which, to be honest, we really haven't seen a lot of that from our competitive landscape perspective. We focus on what we do, and we focus on our capabilities.

Speaker #2: And making sure that we continue to provide the disciplines around margin management, which, to be honest, we really haven't seen a lot of from our competitive landscape perspective.

Speaker #2: But we focus on what we do, and we focus on our capabilities.

Speaker #4: Excellent. That's all from me at the moment. I'll let someone else have a go.

Rohan Corman-Smith: Excellent. That's all from me at the moment. I'll let someone else have a go.

Rohan Koreman-Smit: Excellent. That's all from me at the moment. I'll let someone else have a go.

Speaker #2: Thanks, Rohan.

Gavin Street: Thanks, Rohan.

Speaker #1: Thank you. The next question is a follow-up from Harry Saunders from E&P. Please go ahead.

Operator: Thank you. The next question is a follow-up from Harry Saunders from E&P. Please go ahead.

Speaker #4: Hi, thanks for taking my follow-ups. Firstly, regarding working capital requirements in FY27—given the positive outlook commentary and the strong run rate, would you anticipate some build in '27? But then, I think you're also calling for lower net debt to EBITDA as well?

Harry Saunders: Hi. Thanks for taking my follow-ups. Firstly, working capital requirements in FY27, given, I guess, the positive outlook commentary and the strong run rate, would you anticipate some build in 2027? I think you're calling for lower net debt to EBITDA as well.

Speaker #2: Yeah, so we will expect inventory builds to continue as we go through an improved environment in both A and Z. And I think one thing that we see has been critical is that we need to make sure we've got the right stock in the right location at the right time.

Gavin Street: Yeah. So we will expect inventory builds to continue as we go through an improved environment in both ANZ. I think one thing that we see as being critical is that we need to make sure we've got the right stock rotation at the right time. So that's a real mandate for us. It's been a mandate and focus for us for a period of time. Actually, we're seeing some of the stock shortages and outages as being a bit of an issue, particularly here in New Zealand. So I think that's an opportunity for us to continue to show our service and our capability, which will help us continue to grow the top line.

Speaker #2: So that's a real mandate for us. It's been a mandate and focus for us for a period of time. And actually, we're seeing some of the stock shortages and outages are being a bit of an issue, particularly here in New Zealand.

Speaker #2: So, I think that's an opportunity for us to continue to show our service and our capability, which will help us continue to grow at the top line.

Gavin Street: So I think that's an opportunity for us to continue to show our service and our capability, which will help us continue to grow the top line. So yeah, big focus for us, understanding the customer needs, what they require, when they expect it for the future is something that any distributor wants to make sure they understand in quite clarity, particularly in a growing environment.

Speaker #2: So, yeah, a big focus for us is understanding customer needs—what they require and when they expect it. For the future, that's something that any distributor wants to make sure they understand with quite a bit of clarity, particularly in the growing environment.

Gavin Street: So yeah, big focus for us, understanding the customer needs, what they require, when they expect it for the future is something that any distributor wants to make sure they understand in quite clarity, particularly in a growing environment.

Speaker #4: Perfect, thanks. And last one from me—just given the continued investment in hybrid sites this year, the new site, and voting for locations, can you just talk through the benefit you'd expect from this in '27? And would you expect to continue to invest in these next year?

Harry Saunders: Okay, thanks. Last one from me, just given the continued investment in hybrid sites this year, the new site and vetting 4 locations, can you just talk through the benefit you'd expect from this in 2027 and would you expect to continue to invest in these next year?

Speaker #2: Yeah, and we do. So, we've got a couple of sites, again, planned for FY27. We see this as a natural fit for us as we continue to grow our hybrid positioning.

Gavin Street: Yeah, and we do. So we've got a couple of sites again planned for FY27. We see this as a natural fit for us as we continue to grow our hybrid positioning. But it takes time, right? So you need to build customer presence, customer capability, product understanding, and then we need to grow that into the marketplace. So, we'll continue on the journey. We know that where we've put it in place and got it working well, it works very well for us. We think it's a good fit from a customer base perspective, and we think it's great from a regional perspective as well.

Speaker #2: But it takes time, right? So, you need to build customer presence, customer capability, and product understanding. Then we need to grow that into the marketplace.

Speaker #2: So, we'll continue on the journey. We know that where we're putting it in place and have it working well, it works very well for us.

Speaker #2: We think it's a good fit from a customer base perspective, and we think it's great from a regional perspective as well. So, yeah, we've got sites already planned in order to add hybrid capability.

Gavin Street: We think it's a good fit from a customer base perspective, and we think it's great from a regional perspective as well. We have site-building plans in order to add hybrid capability across our business, and I think that is something that we see as being an opportunity for us to continue to get better at and continue to drive that service and capability for our customers.

Gavin Street: We have site-building plans in order to add hybrid capability across our business, and I think that is something that we see as being an opportunity for us to continue to get better at and continue to drive that service and capability for our customers.

Speaker #2: Across our business, and I think that's something that we see as being an opportunity for us to continue to get better at, and continue to drive that service and capability for our customers.

Speaker #4: Thank you.

Harry Saunders: Thank you.

Speaker #1: Thank you. At this time, we're showing no further questions. I'll hand the conference back to Gavin Street for any closing remarks.

Operator: Thank you. At this time, we are showing no further questions. I will hand the conference back to Gavin Street for any closing remarks.

Speaker #2: Okay, I just wanted to thank everybody for dialing in this morning and appreciate you taking the calls and your interest in our business. And, yeah, I look forward to catching up with various members over the next couple of days and the next couple of months.

Gavin Street: I just wanted to thank everybody for dialing in this morning and appreciate taking the call. We appreciate our business. We look forward to catching up with various members over the next couple of days and next couple of months. So appreciate your time and thank you for joining the call today.

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