AMA Group Limited (AMA) Earnings Call Transcript & Summary

Good afternoon, everyone, and welcome to the meeting of AMA Group Limited. I'm Brian Austin, obviously, Chairman of AMA Group Limited. I'm advised that we have a quorum present and now officially open the Annual General Meeting for AMA Group Limited. Thank you to everyone who's joined today's meeting in person, online and listening by phone. Firstly, I'd like to introduce my director colleagues, in no particular order, Ray Smith-Roberts, David Goldstein, welcome, Dave. He's come all the way from the U.S.A., Jo Dawson, and we're all standing for election today. Makes it an exciting day. Matt Cooper, our CEO; and Domenic Romanelli is our CFO; and some of our EGMs of our business here as well. I welcome them all and thank them for their efforts and those of their teams during the year. We also have in attendance, AMA's audit partner from KPMG, Maritza Araneda, who is also available to answer any questions on the audit and related matters and the group's legal counsel, Leath Nicholson [ with her in the table ]. The online platform is now open for shareholders' questions, which I encourage you to submit as early as possible. To ask a written question, please follow the instructions as displayed on the screen. Please note that while you can submit questions from now on, I will not address them until the relevant time of the meeting. Please also note that your questions may be moderated or if we receive multiple questions on one topic, amalgamated together. For those shareholders who wish to ask a verbal question, an audio question facility is available during this meeting. To use this service, please pause the broadcast on the Computershare platform and dial in via phone using the dial-in number as displayed under the broadcast window. I'm going to test everybody on this to make sure they get this right. You'll be granted access and will listen to the meeting until you are introduced to ask your question. Good luck, Leath. You're the moderator of all that. For those shareholders in person today, if you have any questions or comments on a particular item of business, please state your name and the organization you represent before doing so. Finally, due to the time constraints, we may not get to answer every question. If this happens, we will answer them in due course. The voting process. Voting today will be conducted by way of a poll on all items of business. Instructions on how to vote through the Computershare platform are displayed on the screen. To provide everybody with the opportunity to vote and in case anybody cannot stay for the whole meeting, I will now formally open the poll on all resolutions. I'll give you a warning before I move to close voting. For those voting holders physically in the room with me today, you will have received a voting card upon registration. Please complete the reverse of the voting card. Should you require assistance to do this, we'll have Computershare staff available to assist you. You can change your vote up until the time I declare voting closed. Okay. This has been a year of change at the Board and management level of AMA, and I express my thanks for the trust you, the shareholders, have placed in myself and my fellow directors. I'd like to thank our shareholders for their continued support and faith they have shown in AMA Group as we recently completed our $125 million equity raise. This recapitalization resets our balance sheet and provides funding certainty, allowing the business to focus on profitable growth. 2024 financial year saw exceptional operational improvement as the group continues its turnaround. The group delivered 125.1% increase in normalized pre-AASB 16 EBITDA in the 2024 financial year compared to the 2023 financial year. I do hold great optimism for our future. We have a leaner Board structure, which I'm sure all shareholders would be aware of with lower fees while ensuring a depth of experience. This reflects a lean organization cost culture from the Board down. The Board took a decision to sell ACM Parts and have a clear focus on collision repair in the future. We are working to complete the divestment in the coming months. We actually had a very brief meeting this morning on that very topic. With a reset balance sheet and extended debt facilities, the business can focus on the remaining business repair along with strong growth opportunities that are before it. We can further focus on building a stronger relationship with our insurance customers and deliver a strong quality of service to both them and their policyholders and members. To my fellow shareholders, thank you for your continued support and confidence you have placed in the Board. Just on a side note, and it's a little bit off script. Matt Cooper and myself did meet the CEO of Suncorp yesterday in Sydney. He's again, one of our larger customers, one of our larger insurance partners. And I have to say the reception was very good and very positive for the company. I'm going to now hand you over to Matt, and he's going to give you a bit of an overview. Thanks, Matt. I might leave this here, if I may, Matt, just so -- I won't. That will confuse you.

Thanks, Brian. I'd also like to welcome everyone who's joining us today. In FY '24, revenue was up 7.8% to $894.8 million and we delivered pre-AASB 16 EBITDA of $49 million, up 125.1% on FY '24. We continue to grow our team, increasing by 146 team members in FY '24 and reduced turnover by 8.4 percentage points. Capital SMART performed ahead of expectations, delivering on Project SHIFT after pricing and scope criteria under the Suncorp contract were reset effective 1 July '23. The AMA Collision Network is building upon foundations but has more work to do to restore volume and to grow the team. This business was most impacted by the liquidity challenges of FY '24. The Wales Heavy Vehicle Repair business outperformed and we removed bottlenecks -- residual bottlenecks and improved production throughput. The Specialist businesses were established as a separate business unit to allow the right focus. Techright was launched to provide ADAS calibration solutions for the group. ACM continued to grow the core parts business and was announced as an asset held for sale. AMA is now positioned to focus on future growth opportunities. In Q1 FY '25, the group overall is trading in line with expectations. Pre-AASB 16 earnings of $14.8 million is 8.8% ahead of prior year. Capital SMART and Wales have continued to trade well with additional capacity from site conversions now embedded. AMA Collision is continuing to focus on key areas of capacity, volume efficiency, method of repair and customer service. Good progress has been made. However, there is still significant room for further improvement. Wales continues to deliver strong results with strong work provision. Specialist businesses are growing, Techright and Trackright initiatives are taking shape and the ACM sale process continues and is expected to be concluded in the coming months. AMA maintains its outlook guidance that FY '25 pre-AASB 16 EBITDA will be ahead of FY '24 performance. I'll now hand you back to Brian.

Thanks, Matt. Okay. I confirm that Joe Tombino from our share registry, Computershare, has been appointed to act as a returning officer for the purpose of conducting and determining the results of the poll. I have written advice on the previous -- on the proxies received to date prepared by our share registry. Proxy votes received represent circa 50.04% of the issued share capital of the company. As Chair of the meeting, I will vote in favor of all open proxies for all resolutions to be put to the meeting. The Notice of Meeting was made available to shareholders on the 18th of October 2024. And unless there are any objections, I will take the notice, including explanatory notes as read. Now, the first item of business is to receive and consider the company's financial statements, directors' report and auditor's report for the financial year-ended 30 June 2024. A copy of our 2024 annual report was made available to shareholders on the 23rd of August '24 and is also available on the AMA Group's website. There is no formal resolution to put to the meeting in relation to the adoption of the 2024 annual report. However, I will respond to questions or comments from shareholders in relation to the annual report. Maritza of KPMG is also available to respond to any questions or comments relating to the audit and the financial statements. We'll also take questions about or any comments you may have in relation to the management of the company. I will first take any questions or comments that have been received online. Leath, have any questions online been received?

No, we haven't.

Okay. I will now take questions from those in attendance in person, if there are any.

Yes. This Is this when you can ask...

My goodness, Hugh Robertson. They have to be all the way down Collins Street. Is this when we can ask general questions?

No.

I will give you an opportunity to do later, Mr. Robertson. Later. So again, the adoption of the remuneration report, Resolution 1. In accordance with the Corporations Act, a resolution to adopt the remuneration report included in the 2024 annual report is required to be put to shareholders of the company. The vote on this resolution is advisory only and nonbinding on the company. However, the directors recognize the outcome of the resolution as an indication of shareholder sentiment in relation to the 2024 remuneration report. I will now respond to any questions, comments in relation to this resolution. And again, Leath?

No questions.

Thank you.

I'll just check with Chester if there are any telephone questions.

Checking with...

Chair, there's no verbal questions on the phone.

Okay. Take questions -- anyone has a question in attendance? No, Hugh Robertson. There being no further questions and comments, I'll move to the next item of business. This is the proxy voting results. As the next item of business relates to me, I'll hand over to my fellow Director, Ray Smith-Roberts, who will chair this resolution. Over to you, Ray. Can you just...

Absolutely. We're now up to the resolution for Brian being reelected as a director. Resolution 2, the explanatory notes in the Notice of Meeting contains particulars of Brian's skills and experience, which we all know very well, and I want to go back over now. If there are any -- we'll respond to questions relating to this resolution. Any coming from you, Leath?

None online. Chester, any on the phone?

Chair, there's no verbal question on the phone.

Anyone here like to ask a question? [indiscernible] well with questions. We must have done such a good job with explaining to everyone. So, the proxy results are on the screen, are they or everyone can see them. As we can see for what's been voted, it's very, very strongly in favor. Do I need to be asking the cards here, Leath or not?

They'll be done at the end. All the voting will be done at the end.

Perfect. Okay.

Thank you very much, Ray. Okay. Resolution 3, relates to the election of Ray Smith-Roberts, who retires in accordance with the company's constitution and being eligible, has offered himself for election. The explanatory notes in the Notice of Meeting contains particulars of Ray's skills and experience, which I won't repeat here. We will now respond to any questions. Leath?

There are no online questions. Chester?

Chair, there are no verbal questions on the phone.

Okay. There being no questions or comments. Or are any questions from the floor? No. There being no further questions or comments, please see the proxies on the screen. This resolution, okay, Ray. We'll move on. Election of David Goldstein as a director. Resolution 4. Resolution 4 relates to the election of David Goldstein, who retires in accordance with the company's constitution and being eligible, has offered himself for reelection. The explanatory notes in the Notice of Meeting contain particulars of David skills and experience, which I will not repeat here. As I mentioned before, David is from the U.S. So again, welcome, David. You've traveled a long way. We'll now respond to any questions or comments. Leath?

None online.

Chester?

Chair, there's no verbal question on the phone.

Thank you. Questions from the floor for David. No? Okay. Thank you. Proxies on the screen, the proxies received for the resolution. Looks like you'll be okay, too, Dave. Well done. We'll move to Resolution 5, if we may. It relates to the election of Joanne Dawson, who retires in accordance with the company's constitution and being eligible, has offered herself for election. The explanatory notes in the Notice of Meeting contains particulars of Joanne's skills and experience, which I will not repeat here. Leath, questions?

None online.

Chester?

Chair, there's no verbal question on the phone.

In the audience? No. Thank you very much. There being no further questions or comments, the proxies on the screen. Jo, you'll be fine, too. Thank you. Okay. Resolution 6 is the renewal of the AMA performance rights share plan resolution. So, Resolution 6 seeks approval for the renewal of the AMA performance rights plan and for the issue of securities under the plan in accordance with ASX Listing Rule 7.2, Exception 13(b). I will now respond to any questions or comments. Leath?

None online.

Chester?

Chair, there's no verbal question on the phone.

Happy days. There being no further questions or comments, proxies. That will be okay, too. We'll move on to Resolution 7. It seeks approval for the ratification of the issue of -- this is where we get a bit, 592,618,961 shares pursuant to the unconditional placement as announced to the ASX on the 22nd of July 2024. I'll now respond to any questions to this resolution. Leath? Chester?

Chair, there's no verbal questions.

Floor? Proxies? That's perfect. Thank you. Now that actually concludes the formalities of the meeting today and thank you all very much for your attendance and all those questions. If you have not already voted, please cast your votes now as the poll will close shortly. The results of the poll will be released on the ASX company announcements platform as soon as they are available this afternoon. On behalf of the Board, I'd like to thank all our shareholders for ongoing support for AMA during what has been a challenging year. Now, before I declare the meeting closed, Hugh, I just didn't want to upset you. If you wanted to -- if there are any questions.

I want to -- firstly, I want to congratulate you as a Board and management for what you've achieved. So, that's the first bit because this is quite an effort. And I've got 2 questions flow from there. And one is, well, the first is the sort of -- it's not a negative issue, but to a degree AMA was...

Just remember, I could have closed the meeting here.

No Well, the cost side, does the company and the Board and management believe that the costs for this company have been brought back to where they should be? I know you've done a great job, but is that part of the cleaning out of the business over?

No. Look, I can answer that and Matt can answer that as well, but as can the other directors, I think we're still working. It's a work-in-progress. I think the Board what we did, lead by example, save a lot of money on directors' fees. I think that's important. That hopefully filters down the culture through the business that we're all serious. We are here to save money for shareholders. We are here to get the better profitability going, that on a day-to-day basis and Domenic, they're very focused on costs and that remains a vigil every day. Matt, do you want to add anything more to that?

I don't think so.

You got out of that easy.

My final question, then I show up so somebody else is actually directed at you. If I look at the map of Australia that AMA is in, there seem to be some gaps. So, because I have a bit of a history with the company. There are certain gaps around the place. What's your plan there? Do you think there are opportunities to -- I think from memory, one was Tamworth. I don't think -- not Tamworth. [indiscernible]. So, there are opportunities to actually fill in the gaps?

Yes, there is. And the way we're looking at network planning is we're looking at basically towns with populations over 30,000, where we can sustain a decent panel shop. And that means we will look at acquisitions and greenfields nationwide. And we're already working on a number of opportunities that are greenfields and also a number of opportunities that are acquisitions as well.

So, how would you see the breakdown between greenfield and acquisitions?

Yes. So, Capital SMART is more likely to do a greenfield or we're more likely to do a greenfield in a town where there's additional capacity required rather than us just not being present in that town. So, we will do an assessment of the market, talk to the insurers, understand what sort of backlogs there are in town and whether there's additional capacity needed. And then we'll move based upon that sort of feedback. In terms of acquisitions, they're more likely to be done in the Collision business as opposed to the Capital SMART business. Capital SMART generally operates in metro areas and it has quite a full coverage of those metro areas today. It does have some larger areas that it could extend into. So, towns and populations of 200,000 to 300,000 places like Newcastle, for example, further presence in places like Adelaide and Hobart and those sorts of areas. But generally, they're going to be greenfields and acquisitions.

So, I've got one other question up. In terms of...

We're moving on.

In terms of efficiency within the country, both in terms of geographical spread and efficiencies in the country, where would you rate yourself out of 100? Where do you think you are?

What do you mean by efficiencies?

Geographical spread would be 75% or 65% in terms of how large the network can get to.

We only...

Sorry for interrupting, but I'm just going to close the poll. Okay.

I mean we haven't defined publicly put out targets around the size of our network. But what we do know is we're only 13% to 14% of the market share today. And that represents -- that for us says there's a great deal of opportunity for us to be a much larger share of the overall market. And I think we'll define that more over time as we move forward and we've got Collision fixed. We've got Capital SMART absolutely humming at the moment. We'll get Collision fixed. And then I think you'll see us in future put out more strategic targets as to what that share could look like.

That opportunity is a bit dynamic. It moves based on -- you've got greenfield areas and what's changing in policies and what's happening with coverage. So, it's not something you can -- it changes regularly. So, you can look at it, you work with it each year. So, what it looks like in 2 years may be a bit different than what it looks like today. So, there's plenty of opportunity.

So, lots of room for growth and a geared balance sheet.

There's opportunity for growth. And exactly as Matt said, we're only 14% of the market today. And how do you get a bigger share of that? Well, there will be some strategic decisions of where we land. There's better payoff in some areas than others.

Having accommodated Hugh Robertson, which is very important, very important because he was instrumental again in helping us raise some of the capital. So, we thank you for that in his efforts. I now declare the meeting closed and welcome to have a chat during a cup of coffee, tea, whatever, mingle, you're so inclined. Thank you all for your attendance.