Full Year 2026 FOS Capital Ltd Earnings Call
[Company Representative] (FOS Capital): Jumping on this call and hearing the update. As usual, this video is being recorded and will be available and distributed later on today. If you want to ask questions, there is the option of putting either your hand up through the raise hand option or through the Q&A button. There has been a number of questions that have been submitted. I will be incorporating those questions in the presentation as I go through it. But anyone else who wants to jump in, just let us know. Obviously, 2026 was not the year we wanted it to be. We have recorded a sales down and a significant loss for the year. When I stood here at the half year update, we also had that half year loss. At that time, the roots were there that we thought the bounce back would come in the H2. It has taken longer than that.
[Company Representative] (FOS Capital): Jumping on this call and hearing the update. As usual, this video is being recorded and will be available and distributed later on today. If you want to ask questions, there is the option of putting either your hand up through the raise hand option or through the Q&A button. There has been a number of questions that have been submitted. I will be incorporating those questions in the presentation as I go through it. But anyone else who wants to jump in, just let us know. Obviously, 2026 was not the year we wanted it to be. We have recorded a sales down and a significant loss for the year. When I stood here at the H1 update, we also had that H1 loss. At that time, the roots were there that we thought the bounce back would come in the H2. It has taken longer than that.
Speaker #2: Joined, jumping on this call and hearing the update. As usual, the video is being recorded and will be available and distributed later on today.
Speaker #2: And if you want to ask questions, there's the option of either putting your hand up through the raise-hand option, or using the Q&A button.
Speaker #2: There have been a number of questions submitted. I will be incorporating those questions into the presentation as I go through it, but if anyone else wants to jump in, just let us know.
Speaker #2: So obviously, 2027—sorry, 2026—was not the year we wanted it to be. And we've recorded a sales decline and a significant loss for the year.
Speaker #2: When I stood here at the half-year update, we also had that half-year loss. At that time, the roots were there, and we thought the bounceback would come in the second half.
Speaker #2: It's taken longer than that, and it's resulted in that second half being fairly miserable, in line with the first half, and ended with this full year result as that loss.
[Company Representative] (FOS Capital): It resulted in that H2 being fairly miserable in line with the H1 and ended with this full-year result as that loss. I will go through a little bit of what involved that to happen and how it got there and then move to where we are today because the picture has changed significantly in the last two or three months. The slowdown came based on general industry slowdown, but it just took a long time for orders to get placed. Things were delayed through the various activities, both locally and around the world. Although we were quoting and designing jobs and expecting orders, they just did not fall in that period. That led to the order book reducing, and that led to the sales being lower.
[Company Representative] (FOS Capital): It resulted in that H2 being fairly miserable in line with the H1 and ended with this full-year result as that loss. I will go through a little bit of what involved that to happen and how it got there and then move to where we are today because the picture has changed significantly in the last 2 or 3 months. The slowdown came based on general industry slowdown, but it just took a long time for orders to get placed. Things were delayed through the various activities, both locally and around the world. Although we were quoting and designing jobs and expecting orders, they just did not fall in that period. That led to the order book reducing, and that led to the sales being lower.
Speaker #2: I'm going to—I'll go through a little bit of what was involved for that to happen, and how we got there. Then I'll move to where we are today, because the picture has changed significantly in the last two or three months.
Speaker #2: So the slowdown came based on the general industry slowdown, but it just took a long time for orders to get placed. Things were delayed through the various activities, both locally and around the world.
Speaker #2: And although we were quoting and designing jobs and expecting orders, they just didn't fall in that period. That led to the order book reducing, and that led to the sales being lower.
Speaker #2: Given what our cost structure was throughout that year, we couldn't get the recovery with sales where they were. So, as that year was unfolding, we decided we would also move to remove costs from the business to try and get us into a leaner position going forward, to avoid that problem happening again.
[Company Representative] (FOS Capital): Given what our cost structure was throughout that year, we could not get the recovery with those sales where they were. As that year was unfolding, we decided we would also move to remove costs from the business to try and get us into a leaner position going forward to avoid that problem happening again. As we have announced a couple of times throughout the last few months, we have undertaken a AUD 2 million cost reduction program. AUD 1 million of that has already been executed. The other AUD 1 million is in progress to be done over the next few months. It has involved headcount reduction. It has involved removing certain overheads. It has involved reducing occupancy costs by renegotiating terms of certain leases. We have also implemented a new imported product line to replace one of our manufactured product lines.
[Company Representative] (FOS Capital): Given what our cost structure was throughout that year, we could not get the recovery with those sales where they were. As that year was unfolding, we decided we would also move to remove costs from the business to try and get us into a leaner position going forward to avoid that problem happening again. As we have announced a couple of times throughout the last few months, we have undertaken a AUD 2 million cost reduction program. AUD 1 million of that has already been executed. The other AUD 1 million is in progress to be done over the next few months. It has involved headcount reduction. It has involved removing certain overheads. It has involved reducing occupancy costs by renegotiating terms of certain leases. We have also implemented a new imported product line to replace one of our manufactured product lines.
Speaker #2: So, as we've sort of announced a couple of times throughout the last few months, we've undertaken a $2 million cost reduction program. $1 million of that has already been executed.
Speaker #2: The other million is in progress to be done over the next few months. And it's involved headcount reduction; it's involved removing certain overheads; it's involved reducing occupancy costs by renegotiating terms of certain leases.
Speaker #2: And we've also implemented a new imported product line to replace one of our manufactured product lines. That's enabled the cost of that product to be reduced dramatically and improved margins.
[Company Representative] (FOS Capital): That's enabled that cost of that product to be reduced dramatically to improve margins. All of that work was being actioned over the past six to nine months, but effectively didn't really get any direct benefit of it until now. Like I said, the first AUD 1 million has already been done, and the second AUD 1 million is earmarked for the next few months. That'll bring our cost base lower going into 2027. That, combined with the sales increase, which I'll come to, should put us right back on track to where we were a year ago. In relation to the Aldridge ATS business, we've stripped out the cost in that business and shown you the loss of AUD 1.3 million just to identify it, what we had to go through the year. When we bought that business in June of last year, we bought it out of administration.
[Company Representative] (FOS Capital): That's enabled that cost of that product to be reduced dramatically to improve margins. All of that work was being actioned over the past six to nine months, but effectively didn't really get any direct benefit of it until now. Like I said, the first AUD 1 million has already been done, and the second AUD 1 million is earmarked for the next few months. That'll bring our cost base lower going into 2027. That, combined with the sales increase, which I'll come to, should put us right back on track to where we were a year ago. In relation to the Aldridge ATS business, we've stripped out the cost in that business and shown you the loss of AUD 1.3 million just to identify it, what we had to go through the year. When we bought that business in June of last year, we bought it out of administration.
Speaker #2: So, all of that work was being actioned over the past sort of six to nine months, but effectively, we didn't really get any direct benefit from it until now.
Speaker #2: So, like I said, the first million has already been done, and the second million is earmarked for the next few months. That'll bring our cost base lower going into '27.
Speaker #2: And that, combined with the sales increase—which I'll come to—should put us right back on track to where we were a year ago.
Speaker #2: In relation to the Aldridge ATS business, we've stripped out the cost in that business and shown you the loss of $1.3 million just to identify it.
Speaker #2: For what we had to go through throughout the year, when we bought that business in June of last year, we bought it out of administration.
Speaker #2: There were no staff. We had to rebuild it from scratch. We had to put a team together. We had to get stock back in line.
[Company Representative] (FOS Capital): There were no staff. We had to rebuild it from scratch. We had to put a team together. We had to get stock back in line. We had to see suppliers and get them back on board because they'd been burnt through the administration process. Effectively, because that business was shut for the best part of six months, really any work that was available, we had to start from scratch. We did that in that first six months between July and December. All of that work was done, and we started quoting jobs and designing jobs. Then coming into the H2 of 2026, we started to see the results of that work, and we announced the Eastern Freeway project, which is one stage of that Eastern Freeway project. There were two orders that made up AUD 0.7 million.
[Company Representative] (FOS Capital): There were no staff. We had to rebuild it from scratch. We had to put a team together. We had to get stock back in line. We had to see suppliers and get them back on board because they'd been burnt through the administration process. Effectively, because that business was shut for the best part of six months, really any work that was available, we had to start from scratch. We did that in that first six months between July and December. All of that work was done, and we started quoting jobs and designing jobs. Then coming into the H2 2026, we started to see the results of that work, and we announced the Eastern Freeway project, which is one stage of that Eastern Freeway project. There were two orders that made up AUD 0.7 million.
Speaker #2: We had to see suppliers and get them back on board because they'd been burnt through the administration process. Effectively, because that business was shut for the best part of six months, really any work that was available—we had to start from scratch.
Speaker #2: So, we did that in that first six months, between July and December. All of that work was done, and we started quoting jobs and designing jobs.
Speaker #2: And then coming into the second half of '26, we started to see the results of that work. We announced the Eastern Freeway project, which is one stage of that Eastern Freeway project. There were two orders that made up $0.7 million, and that's the first sort of significant order from Aldridge that we've received in that 12 months.
[Company Representative] (FOS Capital): That's the first sort of significant order from Aldridge that we received in that 12 months. In effect, it took us that 12 months to get that business in line and running properly, and getting out to see the customers and getting re-engaged. The pleasing thing from where we sit now with the ATS business is that there are more Eastern Freeway contracts soon to be let, and we're confident we're in a good position for those. We are also quoting a bunch of other contracts around Australia. We have about AUD 8 million worth of work that is tendered at the moment for ATS. I strongly believe that we're in a really good position with ATS going forward in the next one, two or three years.
[Company Representative] (FOS Capital): That's the first sort of significant order from Aldridge that we received in that 12 months. In effect, it took us that 12 months to get that business in line and running properly, and getting out to see the customers and getting re-engaged. The pleasing thing from where we sit now with the ATS business is that there are more Eastern Freeway contracts soon to be let, and we're confident we're in a good position for those. We are also quoting a bunch of other contracts around Australia. We have about AUD 8 million worth of work that is tendered at the moment for ATS. I strongly believe that we're in a really good position with ATS going forward in the next one, two or three years.
Speaker #2: But, in effect, it took us that 12 months to get that business in line and running properly, and getting out to see the customers and getting re-engaged.
Speaker #2: So, the pleasing thing from where we sit now with the ATS business is that there are more Eastern Freeway contracts soon to be let.
Speaker #2: And we're confident we're in a good position for those. We are also quoting a bunch of other contracts around Australia. We have about $8 million worth of work that is tendered at the moment for ATS.
Speaker #2: And I strongly believe that we're in a really good position with ATS going forward in the next one, two, or three years. And it's giving us a revenue stream into a new area outside of the commercial lighting industry.
[Company Representative] (FOS Capital): It's giving us a revenue stream into a new area outside of the commercial lighting industry, that we think will put us in good stead going forward. ATS is really one of only two or three products that are specified on roadways. It's just going to take us that little bit of time to get the runs on the board. But once that starts happening, which it sort of has, we expect that will continue, and it'll be a profitable cost center for us. We have no regrets about the ATS acquisition. We're very happy with it, and we're in a good spot going forward. Similarly, with Glowing, we bought that also just over 12 months ago. We've had a good time sort of integrating that within the broader business.
[Company Representative] (FOS Capital): It's giving us a revenue stream into a new area outside of the commercial lighting industry, that we think will put us in good stead going forward. ATS is really one of only two or three products that are specified on roadways. It's just going to take us that little bit of time to get the runs on the board. But once that starts happening, which it sort of has, we expect that will continue, and it'll be a profitable cost center for us. We have no regrets about the ATS acquisition. We're very happy with it, and we're in a good spot going forward. Similarly, with Glowing, we bought that also just over 12 months ago. We've had a good time sort of integrating that within the broader business.
Speaker #2: That we think will put us in good stead going forward. ATS is really one of only two or three products that are specified on roadways.
Speaker #2: And it's just going to take us that little bit of time to get the runs on the board. But once that starts happening, which it sort of has, we expect that will continue, and it'll be a profitable cost center for us.
Speaker #2: So we have no regrets about the ATS acquisition. We're very happy with it, and we're in a good spot going forward. Similarly, with Glowing, we bought that also just over 12 months ago.
Speaker #2: We've had a good time sort of integrating that within the broader business, and the purpose for Glowing was—it's a design business that allows us to generate specifications of our lighting products onto the jobs that they design.
[Company Representative] (FOS Capital): The purpose for Glowing was it's a design business that allows us to generate specifications of our lighting products onto the design. We're reporting that we've already got about AUD 3 million worth of specifications generated that are active in the quote space at the moment. That's progressing the way we expect it to do as well. That's the sort of work that was being done in the last 12 months with the two acquisitions, and the cost reductions that we had to do whilst we sort of rode out what was a fairly horrible year. Having said that, things have changed. The last few months, the activity that we thought was going to happen in the second half has started to come through.
[Company Representative] (FOS Capital): The purpose for Glowing was it's a design business that allows us to generate specifications of our lighting products onto the design. We're reporting that we've already got about AUD 3 million worth of specifications generated that are active in the quote space at the moment. That's progressing the way we expect it to do as well. That's the sort of work that was being done in the last 12 months with the two acquisitions, and the cost reductions that we had to do whilst we sort of rode out what was a fairly horrible year. Having said that, things have changed. The last few months, the activity that we thought was going to happen in the second half has started to come through.
Speaker #2: And we're reporting that we've already got about $3 million worth of specifications generated that are active in the quote space at the moment.
Speaker #2: So that's progressing the way we expect it to as well. That's the sort of work that has been done over the last 12 months with the two acquisitions.
Speaker #2: And the cost reduction that we had to do while we rode out what was a fairly horrible year. Having said that, things have changed.
Speaker #2: So, over the last few months, the activity that we thought was going to happen in the second half has started to come through. Quotes have increased again.
[Company Representative] (FOS Capital): Quotes have increased again, and the phone is ringing a lot louder at the moment with the order book now starting to flow. Our orders have increased, and our order book currently sits at about AUD 10 million, which is really the second highest level it's been for, sorry, the highest level it's been for at least the last two years. Our measure of sales going forward is directly reflected by the size of that order book. As it sits at 10, and we expect it to increase over the coming months because we can see the work that's been generated, and we can see what's coming through. We expect that order book to increase from where it is at the moment. As a result, that will translate into higher sales into full year 2027.
[Company Representative] (FOS Capital): Quotes have increased again, and the phone is ringing a lot louder at the moment with the order book now starting to flow. Our orders have increased, and our order book currently sits at about AUD 10 million, which is really the second highest level it's been for, sorry, the highest level it's been for at least the last two years. Our measure of sales going forward is directly reflected by the size of that order book. As it sits at 10, and we expect it to increase over the coming months because we can see the work that's been generated, and we can see what's coming through. We expect that order book to increase from where it is at the moment. As a result, that will translate into higher sales into full year 2027.
Speaker #2: And the phone is ringing a lot louder at the moment, with the order book now starting to flow. So our orders have increased, and our order book currently sits at about $10 million.
Speaker #2: Which is really the second highest level it's been for—sorry, the highest level it's been for at least the last two years. And our measure of sales going forward is directly reflected by the size of that order book.
Speaker #2: So as it sits at 10, and we expect it to increase over the coming month because we can see the work that's been generated, and we can see what's coming through, we expect that order book to increase.
Speaker #2: From where it is at the moment—and as a result, that will translate into higher sales in full-year '27. We will most likely give an update in the next few weeks about how we're tracking for that first quarter.
[Company Representative] (FOS Capital): We will most likely give an update in the next few weeks about how we're traveling for that first quarter. We're possibly going to put a bit of an outlook for full year 2027 coming up in the next few weeks as things stabilize. But we're quite bullish about 2027 compared to what happened in 2026. The signs are there that we're back on track to where we left off. I want to thank our staff and our suppliers who we've all sort of gone through a rugged period, but we've sort of come out the other end. I want to thank shareholders for sticking with us and supporting us through this period. Believe me, we've got much greener shoots ahead. I have some questions. The question just come through about full year 2027 guidance.
[Company Representative] (FOS Capital): We will most likely give an update in the next few weeks about how we're traveling for that first quarter. We're possibly going to put a bit of an outlook for full year 2027 coming up in the next few weeks as things stabilize. But we're quite bullish about 2027 compared to what happened in 2026. The signs are there that we're back on track to where we left off. I want to thank our staff and our suppliers who we've all sort of gone through a rugged period, but we've sort of come out the other end. I want to thank shareholders for sticking with us and supporting us through this period. Believe me, we've got much greener shoots ahead. I have some questions. The question just come through about full year 2027 guidance.
Speaker #2: And we're possibly going to provide a bit of an outlook for full year 2027 in the next few weeks, as things stabilize. But we're quite bullish about 2027 compared to what happened in 2026.
Speaker #2: And the signs are there that we're back on track to where we left off. I want to thank our staff and our suppliers—who have all sort of gone through a rugged period.
Speaker #2: But we've sort of come out the other end. I want to thank shareholders for sticking with us and supporting us through this period.
Speaker #2: And believe me, we've got much greener shoots ahead. I have some questions. So, the question just came through about full-year 2027 guidance. We are working on—that's what I just alluded to—coming up with something in the next few weeks.
[Company Representative] (FOS Capital): We are working on, that's what I just alluded to, about coming up with something in the next few weeks. We're not ready to give that right this minute, but we will be giving some guidance over the next couple of weeks, maybe three or four weeks, which is something we haven't really done before. We've sort of avoided really coming out with guidances because we're still a young company. There's still a lot of moving parts. But this year, we're lining that up and we expect to come out with something shortly. I have another question about revenue targets for ATS. We're aiming broadly to try and do around about AUD 3 million in sales for ATS in the full year 2027, moving to AUD 5 or AUD 6, maybe even AUD 7 million in the following year.
[Company Representative] (FOS Capital): We are working on, that's what I just alluded to, about coming up with something in the next few weeks. We're not ready to give that right this minute, but we will be giving some guidance over the next couple of weeks, maybe three or four weeks, which is something we haven't really done before. We've sort of avoided really coming out with guidances because we're still a young company. There's still a lot of moving parts. But this year, we're lining that up and we expect to come out with something shortly. I have another question about revenue targets for ATS. We're aiming broadly to try and do around about AUD 3 million in sales for ATS in the full year 2027, moving to AUD 5 million or AUD 6 million, maybe even AUD 7 million in the following year.
Speaker #2: We're not ready to give that right this minute, but we will be giving some guidance over the next couple of weeks—maybe three, four weeks.
Speaker #2: As part, which is something we haven't really done before, we've sort of avoided really coming out with guidance because we're still a young company and there are still a lot of moving parts.
Speaker #2: But this year, we're lining that up, and we expect to come out with something shortly. I have another question about revenue targets for ATS.
Speaker #2: Yeah, so we're aiming broadly to try and do around about $3 million in sales for ATS in the full year 2027, moving to $5 or $6 million, maybe even $7 million, in the following year.
Speaker #2: To put that into perspective, three years ago, when ATS was under TT and before they got themselves into trouble, that business was doing over $10 million a year—just the ATS business itself, not TT as a whole.
[Company Representative] (FOS Capital): To put that into perspective, three years ago, when ATS was under TT and before they got themselves into trouble, that business was doing over AUD 10 million a year. I'm just talking about the ATS business itself, not TT as a whole. Was doing about AUD 10 million a year, and had about a 10% to 20% market share of that industry. Our goal is to get it, and has always been to get it back to that level within the space of a couple of years. At this stage, we believe we're on track for that. I also have a question about equity raise. We have been balancing a tight rope in the last six months, not hiding away from that. There's been no decision made at this stage about whether we do or don't need a raise. We're working through it at the moment.
[Company Representative] (FOS Capital): To put that into perspective, three years ago, when ATS was under TT and before they got themselves into trouble, that business was doing over AUD 10 million a year. I'm just talking about the ATS business itself, not TT as a whole. Was doing about AUD 10 million a year, and had about a 10% to 20% market share of that industry. Our goal is to get it, and has always been to get it back to that level within the space of a couple of years. At this stage, we believe we're on track for that. I also have a question about equity raise. We have been balancing a tight rope in the last six months, not hiding away from that. There's been no decision made at this stage about whether we do or don't need a raise. We're working through it at the moment.
Speaker #2: We were doing about $10 million a year and had about a 10 to 20 percent market share of that industry. So, our goal is to get it—and has always been to get it—back to that level within the space of a couple of years.
Speaker #2: At this stage, we believe we're on track for that. I also have a question about the equity raise. We have been balancing a tightrope over the last six months.
Speaker #2: We're not hiding away from that. There's been no decision made at this stage about whether we do or don't need a raise. We're working through it at the moment.
Speaker #1: Okay, that is all the questions I have sent to me. As you know, my stuff is short, sharp, and to the point.
[Company Representative] (FOS Capital): That is all the questions I have sent to me. As you know, my stuff is short and sharp and to the point. Again, thank you for the support. Thank you for jumping on this call, and feel free to reach out to me directly anytime you like. Have a great day.
[Company Representative] (FOS Capital): That is all the questions I have sent to me. As you know, my stuff is short and sharp and to the point. Again, thank you for the support. Thank you for jumping on this call, and feel free to reach out to me directly anytime you like. Have a great day.
Speaker #1: Again, thank you, for support. Thank you for jumping on this call. And feel free to reach out to me directly anytime you like. Have a great day.
Operator: Goodbye.
Operator: Goodbye.
