TLL FY18 Results Announcement
TIL LOGISTICS GROUP REPORTS STRONG YEAR ON YEAR UPLIFT
Full Year Results Announcement for the 12 months ended 30 June 2018
- TIL Logistics Group has delivered a strong year on year result though below PFI.
- The Group has seen benefits from growth driven by acquisition and increasing sales.
- Major customer contract wins have been achieved in FY19 and businesses across the Group are experiencing higher activity levels.
- The Board is confident in the ability of TIL Logistics to deliver continued growth and to increase shareholder value.
- A dividend of 2.3 cents per share has been declared for FY18.
Listed transport and logistics group, TIL Logistics Group Limited (NZX:TLL), which is one of the largest domestic freight and logistics businesses in New Zealand, has reported higher than expected sales and a strong year on year uplift in results.
The company joined the NZX main board in December 2017 with plans to grow both organically and through acquisition, and a number of new businesses have been integrated into the group, delivering synergies and expanding the service offer.
FY18 results were significantly ahead of the previous year, although down on the expectations at the time of the reverse listing due to factors including unexpected pressures within the construction industry, where many of the major players are long term and valued clients of TIL, as well as bad weather and storms impacting on transport needs and higher than expected operating costs.
Sales revenue for FY18 of $325.6 million was a 38% increase on the previous year, driven in part by newly acquired businesses. The positive sales trend seen in the first half of FY18 continued into the second half of the year. Total income of $331.5 million was ahead of the FY18 statutory revenue forecast (PFI).
Operating expenses were higher than PFI forecast due to:
- Rising fuel prices;
- Increased wage costs as an acute shortage of drivers has led to increased wage rates across the industry;
- Increased property rent costs reflecting additional warehouse capacity; and
- Higher fleet lease costs with TIL now leasing more trucks rather than purchasing them outright.
The result includes non-trading adjustments of $19.3 million comprising costs associated with the reverse listing process and share based payments (as noted in the PFI) and the revaluation of deferred consideration related to the acquisition of MOVE Logistics.
Including non-trading costs, Earnings (EBITDA) was $6.9 million. Excluding these non-trading costs, adjusted EBITDAii was up 49% on the prior period to $26.2 million. TIL’s net loss after tax was $(12.2) million, with an adjusted net profit after tax of $7.1 million, up 20% on the prior year.
Directors have declared a 2.3 cents per share dividend for FY18. The new Dividend Reinvestment Plan (DRP), which was released on 28 August 2018, will be available for those shareholders who wish to receive the Dividend in the form of shares. Major shareholders have confirmed that they will participate in the DRP for the FY18 dividend.
Overall, Group performance was pleasing as acquired businesses delivered synergy benefits and strengthened the company’s ability to service all customer supply chain requirements.
The Freighting division, which comprises a number of regional, national and specialist trucking brands, delivered a year on year uplift in revenue and EBITDA. Revenue was $220.8 million (68% of group revenue), and EBITDA was $7.2 million. Bad weather and big storms were problematic in the second half of the financial year, closing transport routes and impacting on the transport needs of large customers, particularly in the aquaculture and viticulture sectors. In addition, rising wage and fuel costs as well as higher fleet lease costs affected results. Initiatives are in place to deliver trading improvements in the businesses, with benefits expected to flow through in FY19.
The Pacific Fuel Haul business performed above targets and continues to be a solid performer for the Group. Since year end, the business has renewed its partnership with Z Energy, with the signing of a long-term, exclusive strategic supply agreement.
The Logistics division, which provides warehousing and third party logistics primarily through MOVE Logistics, delivered a pleasing first year performance. Revenue was $97.3 million (30% of group revenue) and EBITDA was $7.3 million. Following the acquisition of MOVE Logistics in 2017, a number of new customer contracts were acquired. While these contracts will provide strong cashflows and profitability over the long term, short term costs to set up resourcing were incurred in FY18. Technology is a big enabler for the business and a new Warehouse Management System was implemented in FY18. This will further enhance Logistics’ performance in FY19 and future years.
The Asset Management division comprises the majority of the Group’s trucks and trailers and earnings are generated from the leasing of assets to TIL Logistics Group businesses. EBITDA was $11.4 million for FY18.
CEO Alan Pearson said: “While below PFI forecasts, the results are a significant uplift on the prior year and the company is well positioned for continued growth. We have been investing in our company, particularly in technology, systems and health & safety, and are continuing to upgrade our fleet of some 900 trucks and 1,110 trailers.
“We have a number of initiatives underway to deliver improved trading performance, including the commissioning of three new MOVE warehouses and technology improvements which will drive efficiencies. These initiatives will provide long term benefit and deliver shareholder value. Major customer contract wins have been achieved in FY19 to date and businesses across the Group are experiencing higher activity levels.”
Activity levels across the industry remain high and the long term outlook for the industry is positive. Since year end, a number of new customer contracts have been negotiated.
TIL Logistics expects to report an increased net profit for the June 2019 year and half yearly dividend payments are expected to continue in FY19 in line with the company’s dividend policy. An additional $2.5 million in costs related to the commissioning of three new warehouses and increased fleet lease costs are expected in FY19, compared to PFI. An update on performance will be provided at the Annual Meeting later in the 2018 calendar year.
Chairman of TIL Logistics, Trevor Janes, commented: “TIL Logistics has successfully integrated a number of businesses to become one of the largest transport and logistics groups in New Zealand. The company has an experienced management team, sophisticated operating and IT systems, a focus on health & safety and a strong reputation in the industry.
“We have a number of acquisition opportunities which are being carefully assessed against strict criteria to ensure they add value to the group. Management also remain focused on organic growth - increasing freight volumes, improving utilisation, expanding the offer and driving efficiencies.
“There is growing demand for high quality, end to end freight and logistics supply chain solutions, and TIL has the reputation, expertise and capability to take advantage of this. The Board is confident in the ability of TIL Logistics to deliver continued growth and to increase shareholder value.”
This announcement should be viewed alongside the Financial Statements and other information released to the market in 28 August 2018.