ARB Corporation Limited (ARB) Earnings Call Transcript & Summary

Good morning, ladies and gentlemen, and welcome to the ARB Corporation 2023 Full Year Financial Results Presentation. My name is Lachlan McCann, Chief Executive Officer at ARB, and joining me today is Damon Page, ARB's Chief Financial Officer and Company Secretary. Today, Damon and I will take you through a financial update of the results and present to you the business's domestic and international sales and operations. Some housekeeping before we commence. During the presentation, questions can be made through the chat box. At the lower right-hand corner of your screen, you'll see a blue circle with a hand icon. By clicking on this, it will open a chat box for you to enter your questions. At the conclusion of the presentation, Damon and I will endeavor to answer these questions. I'll now hand over to Damon to take you through the financial results of the business.

Thanks, Lachlan, and good morning, and welcome to our presentation today. All of our year-end documents were lodged with ASX earlier this morning and are available on the ASX website, along with a copy of this presentation that we'll step through today. We report that ARB achieved sales revenue of $671.2 million for the financial year ended 30 June, 2023. This compares with last year's sales revenue of $694.5 million, a decline of 3.4%. Sales revenue improved throughout the course of the financial year after reporting a decline of 10% for Q1 at the Annual General Meeting in October 2022 and a 5.1% decline at the half year. Sales have broadly consolidated the growth since 2020 with compound average growth of 13% over the last 3 years. Profit before tax of $122.1 million was achieved. This compares with the profit before tax last year of $165.7 million and is a decline of 26.3%. The decline in profit before tax is slightly improved on the half year results, which reported a decline of 29.7%. Now a number of factors impacted on the profit result, which are called out at the bottom center of Slide 4. High inflation impacted the business throughout all of the financial year. Now whilst management has sought to manage operational costs very tightly, inflation had a significant impact, particularly on cost of sales. In terms of both procured goods from third-parties and internally manufactured products with raw materials, such as steel and power costs, experiencing significant price increases. Whilst ARB put through a number of sales price increases to counter the inflationary impact, the sales price increase has trailed the cost increases, and it has taken some time for these price increases to take full effect given the continued sizable customer order book. The weaker Australian dollar increased those cost of sales manufactured in our [ Thai ] factories and those procured from around the world, which are often denominated in U.S. dollars. The company's exposure to U.S. dollars has historically been closely hedged through its income generated in the U.S.A., which declined this year, leaving the company more exposed to that currency, and Lachlan will talk more to the decline in U.S. sales shortly. The company built stock significantly over the last 2 years to mitigate against supply chain disruptions, which resulted in an over recovery of fixed costs in prior years, which has not occurred again in this financial year. And finally, the company has increased its noncash provisions for inventory obsolescence and warranty costs by $3.1 million and $1.2 million, respectively. In line with sales, the compound average growth in profit before tax since 2020 is 16.1%. On the right-hand side of Slide 4 there, we see the profit after tax of $88.5 million was achieved. The decline of 27.5% is slightly higher than the decline in profit before tax due to higher earnings generated in higher taxing jurisdictions, specifically in Australia. Moving across to Slide 5 where we look at the group sales by channel, being the sales into the Australian aftermarket, export sales and sales to the original car manufacturers or OEMs. Sales into the Australian aftermarket continued to grow and reached $383.5 million, an increase of 2.6% over last year. This particular market or channel includes sales from ARB's 3 subsidiaries: SmartBar producing and selling cross-linked polymer products from its roto moulding factory in Adelaide; Kingsley, operating out of Sydney, designing and wholesaling 4x4 accessories; and GoActive Outdoors, representing the Swedish brand Thule here in Australia. Now the Thule brand was a beneficiary during the COVID period when sales within the bicycle industry really took off. GoActive sales of Thule products pulled back materially this financial year. The Australian aftermarket sales, excluding GoActive’s Thule decline in sales grew by 5.2%. In the middle of the slide there, export sales achieved $245.2 million, which is a decline of 8.7% compared with last year. This is in line with the decline reported at the half year. The decline in export sales is largely attributable to the U.S., which was particularly impacted by the trade sale and subsequent restructuring of ARB's largest customer in the U.S., which has since downsized its retail network. On the right-hand side of the slide there, sales to OEM are more volatile based on the timing of contracts, starting and ending, and the timing of motor vehicle releases. Sales revenue of $42.4 million for the financial year ended 30 June, 2023 were down 18.5%, a turnaround, as we've previously flagged to the market from the decline of 36.9% at the half year. The second half sales to OEMs were up 19.7% on the first half. New contracts are already in place with the OEs, which will underpin solid growth in net sales channel in both FY 2024 and FY 2025. Slide 6 includes a graph detailing dividends paid by the company over the last 10 years. All dividends throughout this period have been fully franked at the 30% corporate tax rate. Pleasingly, dividends have been fully funded from operating cash flows. Total dividends of $0.62 per share this year represents a dividend payout ratio of 57%, which compares with a dividend payout ratio of 48% last year. The record date for the final dividend is 6 October, 2023, and the dividend will be paid on 20 October, 2023. Both the Dividend Reinvestment Plan and the Bonus Share Plan will be in full operation for the final dividend with a 2% discount applied. Slide 7 provides us with an overview of the company's profit and loss statement, including year-on-year movements against last year and expenditures shown as a percentage of sales in each year. Having spoken to sales already, the key items to focus on is the materials and consumables used line, which highlights the decline in sales margins with materials and consumables used increasing to 47% of sales in the financial year ending 30 June, 2023 compared with only 44% in FY 2022. Now I spoke earlier to the key items driving the decline in sales revenues or sales margins, I beg your pardon, being cost inflation, the subsequent lag in ARB's sales price increases and lower factory recoveries. Employee expenses increased 4% during the year, broadly reflecting the annual wage reviews processed during the half year. Advertising expenses are notable and deliberate increase at $7.3 million for the year, which is an increase of 25% over last year and is really a return to historical levels of advertising and marketing. Occupancy expenses, whilst consistent at 2% of sales, increased 6.5%, reflecting the impact of inflation, particularly in respect of power costs. Other expenses increased $4.2 million or 37% with employee traveling returning both domestically and internationally and insurance premium costs continuing to rise. Now we provided substantial information around the noncash adjustments to Truckman-related balances at the half year. Specifically, the $13.7 million write-back to profit of contingent consideration that is unlikely to be paid due to performance post-acquisition, which is broadly offset by an adjustment against goodwill, both noncash items. Lachlan will talk to Trackman's turnaround later in the presentation. Management made a concerted effort to closely manage operational costs during the financial year, and we're pleased to report that gross profits in Q1 of FY 2024 have returned to historical levels. Across on Slide 8, the company generated cash flow from operations of $90.4 million. This compares with the profit after tax of $88.5 million. Now 2 key factors impacting on cash flow from operations are: firstly, the higher inventory value of $9.6 million, noting that the increase in inventory values is attributable to the introduction of new product ranges and the cost impact of inflation and the weaker Australian dollar, that is, inventory volumes decreased over the period; and secondly, the payment of taxes with a $9 million provision carried over from the previous year compared with a $3 million tax receivable recorded at the end of the financial year. Last year's tax installments were yet to reflect the increase in profits resulting in the large year-end provision, whereas the installments this year did capture the impact of those higher profits, resulting in an overpayment this year. The company invested $40.6 million in property, plant and equipment, with $21.6 million spent on property and $19 million spent on plant and equipment. The company has taken on a significant property expansion program over the last 2 years with its fourth factory completed in Thailand late last calendar year, the expansion of its national warehouse in Melbourne, which was completed in July this year, and the ongoing development of its corporate head office in Melbourne and its sites in Hamilton, New Zealand, where the Beaut Utes and Proform businesses will be consolidated. The company also paid $45.3 million in fully franked dividends being last year's final dividend paid in October 2022, and this year's interim dividend paid in April 2023. The DRP and BSP take-up represented 15% of the total dividends. At the end of the financial year, the company had $44.9 million in cash and had no debt. I'll now hand the time back to you, Lachlan.

Thank you, Damon. Let's start with a look at the Australian sales and those vehicles call to ARB's business. In the year, we saw a slower recovery to vehicle sales, a combination of factory supply constraints, Australian port disruptions and competing demand from other markets on OEMs constrained vehicle sales, particularly in the first half. Both the Ford Ranger and the Toyota Hilux 4x4 models, recorded strong growth in the year of 30.1% and 18.3%, respectively. We understand the order banks for these models remains high, and we expect to see strong deliveries through the first half of the new financial year. There were some inconsistent results, however, in other 4x4 pickup models. The Mitsubishi Triton has an impending model change, and the Isuzu supply for D-MAX and Toyota supply for Landcruiser 70 Series has been constrained despite strong demand. ARB was very pleased to see sales of the iconic Landcruiser 300 Series, previously 200 series, return to historical levels. We'll now move on to domestic and international sales. And firstly, to the domestic business. ARB's aftermarket business in Australia is comprised of sales through corporately owned stores, independent ARB stores, stockers, various forms of wholesale resellers and new vehicle dealerships and fleet. As Damon mentioned, also included in these numbers is ARB subsidiaries, GoActive Outdoors representing Thule Sweden in Australia, Kinsley Enterprises and SmartBar in South Australia. Some areas of the business operations constrained sales. And while ARB's pleased with the increased revenue, we're cycling off a higher COVID base. Some areas of the business were materially impacted as we worked our way out of COVID. As Damon mentioned, GoActive Thule products are a good example of this and the challenges of the bike industry globally are well documented. Representing 71% of ARB's core sales, we have an incredibly engaged and reliable distribution network. From independent ARB flagship store owners all the way through to family owned garages in regional and remote Australia, ARB has a motivated and diverse distribution network, underpinning the largest part of the ARB's business. ARB's core aftermarket business -- excuse me, we're just moving forward. ARB's core aftermarket business performed well ahead of the reported 2.6% revenue growth. Our total orders remained at historically high levels. The longer-term fleet order book remains high as vehicle supply catches up with demand. The business is very focused on short-term workshop output as vehicle supply continues to improve, particularly over the next 6 months. On to Slide 13. ARB derives its strength from being a branded house and not a house of brands. The launch of the Earth Camper, which will be discussed later, is a great example of how ARB's uniquely positioned to leverage our product innovation, brand and quality of Australian distribution network to put products to market efficiently and effectively. ARB has had a frustrating month in new store development. There are a number of stores at 80-plus percent completion that we'd expected to have opened now, which we look forward to providing more details on at the upcoming AGM. The business has a strong plan to accelerate new store rollout. ARB's store road map for the coming years is very well developed and underpins our continued growth in Australia. On to Slide 15. As mentioned earlier, the order bank remains an opportunity for ARB both corporately and for our own independent store network. We have been constrained by access to labor for fitting. We have 4 key strategies within the business to address this. Number one is upskilling our workforce, improvements in training and engagement with the existing employee base to support the diversity of their skills and career development. Number two is targeted induction programs. Site-specific programs where we inject, handpick trainees working with experienced ARB technicians and qualified trainers on an 8-week fast-track program. Technician pathways. Many ARB branch managers and even select state managers started their career at ARB as [ seniors ], providing clear milestones in the breadth and the depth of fitting competencies in ARB workshops as a technician, then moving people and moving the team towards people and branch management has engaged and motivated our teams. And then finally, ARB Corporation and our independent distribution network has employed offshore workers. These employees have commenced at ARB stores, and the program is currently under assessment. On to Slide 16 and our engagement with Ford in Australia. The Ford License Accessory program is where ARB has partnered with Ford Australia to deliver in excess of 180 branded accessories, ARB branded accessory products for the Ford Ranger and Everest platforms available through Ford dealerships with Ford's full 5-year warranty. Both Ford and ARB are very happy with the program. The [ persona ] packs have been particularly engaging with Ford's range of clientele and the partnership has delivered new fleet opportunities with our combined offering. The Ford and ARB dealer network have been very supportive of the program as we continue to look at new opportunities for future expansion. Ford's endorsement of ARV continues to strengthen our brand position in the Australian aftermarket. On to our OEM business. ARB's OEM business had a weak 12 months with sales declining 18.5%. This was by forecast and reflects the cyclical nature of this business. An OEM full-service supply contract typically has a 2 to 4 year development cycle. And currently, ARB's OEM engineering team is running at a capacity with a record number of future projects on hand. Sales are expected to grow in the financial year 2024, particularly in the second half. On to Slide 18 and the U.S.A business. The U.S. business had a challenging 2023 financial year amidst continued restructuring of key accounts. In response to this, ARB's broadened its wholesale customer base, both geographically and by product segment. Demand for ARB products in the U.S. remains strong. Structuring the right channels to market continues to be our focus. As a part of our U.S. strategy, 2 direct -- key direct-to-consumer initiatives are due to launch in the current financial year. The e-commerce platform is nearing completion and is planned to launch in September 2023. We're conscious, we're late to the party in this B2C direct online initiative, but we remain incredibly excited about gaining new customer insights, digital sales activation and enhancing our U.S. customers' purchasing experience with ARB U.S.A. The second initiative is the development of our flagship store due for launch in the second half of the new financial year. Design plans are complete as our council approvals, and we're on track to commence construction imminently. Further initiatives to grow the U.S. business are well progressed, and we look forward to presenting more information on these initiatives at the upcoming AGM. A further exciting development in the U.S. is ARB Corporation's work with Toyota U.S.A, who we've been engaged with for a number of years now. Toyota has identified ARB as a core brand partner as a part of its strategy to position Toyota vehicles in the overlanding space. The Toyota Tacoma Trailhunter pictured on screen, is a halo model vehicle and peer to the TRD Pro, which focuses on the overlanding market. Within this partnership, ARB's worked with Toyota Engineering to develop 5 core vehicle accessories pitched on this slide, which will be factory fitted by Toyota and are part of the standard equipment on this platform. The partnership has afforded ARB opportunity to demonstrate our OEM capabilities as an engineering and manufacturing company, which we're confident will provide more opportunities into the future. Toyota globally are leaders in automotive marketing. They invest heavily in all marketing channels for their halo platform vehicles. This exposure for ARB and Old Man EMU products in the U.S. as the Trailhunter goes to market, is very exciting and builds long-term brand recognition in a very large and complex market. ARB has won additional contracts with Toyota U.S.A, which we look forward to elaborating on in future presentations. Continuing on, the Ford partnership with Ford U.S.A continues to grow. In terms of revenue, Ford U.S.A has become a key global account for ARB. The new Ford Ranger release is imminent and while the vehicle looks the same as the Australian model release, aside from the steering wheel being on the wrong side, there are other key structural differences to the U.S. model which has kept our engineering team busy. ARB has worked with Ford engineering on the development of more than 15 core accessories that have been validated by Ford, including extensive crash validation on the new Xenith style front bumper. These accessory products will be available at launch through Ford's various sales channels, including wholesale distributors, direct online and dealer channel. ARB continues to work on taking both the Ranger and Bronco products up channel and have them as core content fitted prior to dealer delivery. Now on to Slide 21, and ARB's export business. The export business outside the U.S. and New Zealand had a very positive 12 months. Strong growth through ARB's office in Prague was a highlight, underpinned by new account development and improved pickup vehicle availability in market. This growth has pushed us to expand in the coming months from our current 3,000 square meter site in Prague to a new 5,000 square meter warehouse. Pleasingly, sales through Truckman have recovered in the second half of the financial year 2023. The sales uplift is directly correlated with improved vehicle availability in market and is expected to trend positively in the new financial year. Proform Plastics are part of ARB, New Zealand and manufacturer of extruded ABS plastic sheet and thermoform parts, struggled in financial year 2023. Proform has healthy exports of plastic sheet and supplies various OEM and global aftermarket customers with thermoform products. Persistently high outbound container freight costs from New Zealand and high customer stock levels post-COVID, impacted Proform sales. We do expect this to recover in the new financial year. ARB set off expansion in Hamilton, providing new warehousing space and a flagship showroom is due to be complete later this calendar year. And finally, an insight piece, ARB markets, and it sells to diverse and emerging markets, and as a point of interest today, I wanted to highlight some recent work in Mongolia. A typical winter in Ulaanbaatar, capital of Mongolia, will see temperatures drop to below minus 40 degrees Celsius, affecting various parts of the vehicle, including shock absorbers. Understanding this, our engineering team worked closely in market to upgrade and improve the premium BP-51 shock absorber used extensively in Mongolia by recreational fleet customers to function in these extreme conditions. On to products and operations. Earth Camper. Following a 6-year engineering and manufacturing development, ARB has launched the all new Earth Camper, the company's first foray into the caravanning sector. The Camper is a ground-up development and beautifully showcases the diverse capabilities of ARB's engineering and manufacturing teams. The product is proudly manufactured in-house using existing and new production equipment. We are finding our feed in production and carefully controlling and executing the quality of the Camper build. The launch was a huge success, both in Australia and overseas. Following the Melbourne 4x4 show at the weekend, we have now exceeded 1,000 registrations of interest in Australia and surpassed 500 registrations of interest overseas. At launch, the Earth Camper trended 32nd most viewed video on YouTube with Walk Around video reaching 0.5 million views online. The online viewership in the U.S. exceeded that of Australia, which we are observing very closely. The Camper has commenced sale in Australia and units are being retailed today. At this -- at the time of -- at this time, the Camper is only available in Australia. However, we do expect in the new financial year to sell the Camper to the U.S. and other overseas markets. Its first -- it will make its first public appearance in the U.S. at the SEMA Show in October 2023. Now for those of you who missed the launch of the Camper online, we'll just play a quick video so you can get some insights into this fantastic new product. [Presentation]

We hope you enjoyed that video, and we look forward to updating the market as this fantastic new initiative from ARB develops. On to the next slide. And the ARB engineering machine continues to churn out new products. In the last week, ARB launched out airbag and parabolic leaf spring solution, which enables customers to carry variable vehicle payloads, high and low, with one spring solution, maintaining excellent ride control and comfort. Using the ARB base track dovetail design for accessory attachment, ARB has also launched the ARB BED Rack. This low-profile tub rack will provide customers with a flexible solution to carry [indiscernible] types of accessories and integrates with the ARB BASE Rack. The BED Rack range will be a focus for the U.S. model vehicles. The Volkswagen Amarok has recently launched in Australia. This vehicle has been developed at the Ford Ranger platform and as such, at launch ARB had near a full complement of accessories ready for market, an important lineup in Australia, but also for the European market with the Amarok sells very well. The rugged ARB HardLid manufactured from steel tread plate material has recently launched. The heavy-duty lid provides high load carrying capability, and again, integrates ARB's dovetail design. And finally, this Friday, ARB will launch a long-term development products. This a globally -- this is a global product designed and manufactured in-house and falls in our Old Man EMU suspension category. Watch this [ face ] -- this Friday for this exciting launch. On to Slide 26. ARB will soon release addition to the ARB sustainability review through our website. Key callouts in this update include our renewed investment in global education of our employees, suppliers and contract workers on safe work practice, including the importance of mental health and workplace. ARB holds framed agreements with global ad agencies, including UNHCR, World Food Program, Red Cross, amongst others. ARB supports and guides ad agencies globally in their fleet preparation for remote area travel. ARB is now a member of the Australian Packaging Covenant Organization. We have made our first submission on ARB's packaging consumption, developed an action plan for improvement and received from APCO a good progress rating. And finally, ARB's access to global OEMs, including Rivian, Toyota and Ford, uniquely position us at the forefront of accessory compliance with electric and hydrogen platforms as this vehicle population grows. And on to [ ARB-U ], we have continued to invest in our people culture as we expand globally, while daily in-person interactions with our staff are fundamental, the addition of our online platform, [ ARB-U ], has been an efficient, effective tool to onboard and educate our employees on the company's history, safety, products and best practice in product fitting manufacturing and sales. We have almost 2,000 registered users, nearing 100 online ARB course-specific completions and multi-language capability and an exciting rollout of the customer management experience in the store. And finally, to the company outlook. The company's outlook remains positive with ongoing healthy demand for ARB products, improving new vehicle supply around the world, stronger gross margins and new products recently and soon to be released to the market. The Board anticipates sales and profits to grow in the 2024 financial year. Pleasingly, the company's gross profit percentage has recovered to historical levels with recent price increases now fully in effect and product costs moderating after a period of strong global inflation. The Board is pursuing a number of exciting long-term opportunities focusing on export markets, new partners, the release of new products, further expansion of ARB store network and improved distribution in Australia and internationally. ARB is well positioned to achieve long-term success with strong brands around the world, loyal customers, a capable senior management team and staff and a strong balance sheet and growth strategies in place. That concludes the presentation today, and we'll move on to questions that are being filed on the online chat form during the presentation, and I'll hand over to Damon.

Okay. Thanks, Lachlan. We'll just kick off with a couple of questions related to financial area. We have a question here about an improved outlook for OEM supply in FY '24 and what impact that change in sales mix will have on group margins. ARB's historically had OE sales of up to 10%. We haven't really had OE sales exceed 10% previously. I think we're sitting at about 6.5% for this financial year. So we expect to fluctuate between 6% and 10%. So we're not going to move outside of our historical boundaries there. The OE margin is obviously a little bit less than what we achieve on our branded sales, but they do contribute quite significantly, of course, to our overhead recoveries through the factories. And so whilst we'll have some increased sales through that particular channel in the coming 2 years, it won't materially impact on the gross profits of the margins achieved by the group. So I'm just getting some feedback there through the host. So the impact on group margins is not expected to be material. It won't shift the dial materially, but it will have slightly dragged down the group margin, but that will be recovered through the overhead recoveries.

Okay. Moving through the questions, I'll take one. What are the expected costs associated with the national fitting performance program? Could you please provide an update on your ability to secure figures versus the constraints you're expecting earlier in 2023? In line with recent data around unemployment, we have seen improved access to staff. There are a couple of states and metropolitan areas, in particular, that continue to cause concerns. However, more broadly, there is improved access to fitting employees. And we've also [ mature ] newer employees into the business to have them become more efficient and effective. In terms of the costs associated with the fitting performance programs, they're very measured. We have invested in [ ARB-U ] as mentioned, and the course completions, we've found particularly helpful and insightful to educate new fittings into the business cost effectively and in a short amount of time. So that program is really cost minimal to the business. Has Seattle store being delayed originally indicated in Q1 calendar year 2024? So we did experience a delay in council. The site, which will be beneficial long term is actually next to a bus terminal. The bus terminal is undergoing reconstruction, which had delayed and created some issues in the short term with the local council. We are now past those. But yes, to the question, it was a delayed of the program. We are still definitely looking within this financial year to launch it, but definitely in the second half of the current financial year to get the Seattle store up and running.

Yes. I think there's just been a little bit of confusion there, because previously, we said Q1 calendar year -- calendar 2024, and there was a reference there to second half FY 2024. So still within the first half of calendar 2024. There's a question as to what the company plans to do with its $45 million cash balance. The company is still -- it has over the last couple of years to undertaken a fairly significant capital expansion program in property, particularly, but also through -- in acquisitions of plant and equipment. This program continues, and we'll see the remaining 2 major projects complete in calendar 2024, being the construction of a corporate head office in Melbourne and also the consolidation of the Beaut Utes and Proform sites in New Zealand. So there's still some capital expenditure to come in those 2 projects. We're also yet to fully complete the fit-out of our fourth factory in Thailand as well. So there's some capital expenditure to come there. But I think as we look historically, ARB's operational cash flows have typically been spent, about half of it on capital expansion and half of it on payment of dividends. With the cash surplus at the moment, we noted earlier in the presentation that the board has increased the dividend payout ratio from high 40% last year to 57% for this financial year. So that cash we expect to continue to be used in capital expansion and any surplus funds, I guess, will be at the discretion of the board to pay out in dividends.

There's some additional questions regarding the e-commerce business case. What is the business case for the e-com platform? What is the investment level? They're commercially confident information. We have invested heavily in the platform. It's a new foray for the business. We have sought professional advice. It's an extremely competitive landscape in the online space. But we do understand and we do know the brand-specific and corporately owned direct-to-consumer sites do have high success levels. And particularly, when we consider the Toyota partnership, the Ford partnership, the brand exposure that we are getting in our organic channels to market and being able to market to those platforms, we do expect the platform to be a success. However, we'll be able to talk about more to that more after launch. There were some questions also around the expense of our retail business. We want to understand the success of the Seattle store first to understand how quickly and where we will roll stores out? We are continuing to look at other short-term opportunities to expand our retail presence in the U.S. And again, we hope to be able to update investors on this progress at the AGM.

A question of return to -- margins returning to historical levels. What we're seeing in Q1 2024 is that our margins have returned to those levels that we've experienced over the last couple of years, with sales price increases taking full effect against -- mitigating against recent inflation?

There's a question on the retail price of the Earth Camper. The Earth Camper retails for around $75,000 fully [ option ]. So the Camper comes with a range of different options, [ showers ], [ fitters ], a number of other fitted items with -- bolt-on to Camper accessories. After the $74,000 ticket price of the base unit we topped out at around $95,000. In terms of the timing, there's a question around timing of the Toyota Tacoma U.S. partnership. Look, I recommend for that one, that's not our business to talk to the launch timing of Toyota's programs, but please feel free to jump on to U.S. automotive forums to look at that. Our understanding is that it will be within this financial year. There's a question online, so we're just reading as we consider. Could you please provide more details on your Australian store rollout program? How many per year? And what was the total network size that you see is possible? We -- again, commercially confident. We won't provide those details. We will say that we're not happy with the volume of stores that we've brought to market in the last financial year, and we're investing and have invested in the last 6 to 8 months in accelerating that program so that we can get more stores up and running, including independent stores. So this is not just ARB investment, but this is also the independent network. We are very hungry within the existing independent store network ownership to expand the number of stores they have within their portfolio.

A question here to the backlog of orders compared with 12 months ago. Effectively, we've spoken to this over the last couple of years. Our order book is sitting -- continues to sit at the same level it has over the last 12 to 18 months. So we haven't made inroads into dropping that order book. It's currently sitting at about 3x the level it was pre-COVID. But we now have -- as Lachlan's described, we now have more fitters coming on board, and we have healthy orders coming through on a daily basis. So to answer the question, it's sitting at 3x its pre-COVID level and the same level it was at about 12 months ago. Question here on provisioning for stock obsolescence and warranties. In the annual report, we disclosed the provision for warranties at $1.2 million. That compares with no provision last year. We historically haven't carried a provision. So no, there's no additional warranties being incurred or warranty expenses being incurred. We just thought of [ prudence ] to take up a provision on this occasion, which should carry forward year-on-year and move only in line with the expenditures. Provision for obsolescence, ARB has always been historically or has been conservative in many respects and continues to be so in relation to its inventory levels in provisioning. The provision sits at about $15 million against inventories of about $230 million.

And just conscious of time, and probably the last question. This been repeated a couple of times, around the prospects for export sales increasing to a positive growth in FY '24. And we've just been through an exercise -- well, we've been through our exercise for goal setting and sales growth. And yes, at this time, we are confident of rebounding to growth in export business in the new financial year. Okay. I think we'll wrap it up there. That was -- just checking, is there any last question, Damon. Yes, well, there's a lot of questions coming through on the [ fall parts relationship ], but it's really not our business to talk about the ownership of [ 4 parts ] and Wheel Pros. You can certainly research a lot of that information online and at least the analysts will have their access to information, but we won't comment on the Wheel Pros' business. That's not our place.

Question around U.K. goodwill impairments. The goodwill was impaired to $13.4 million -- an impairment loss of $13.4 million in December 2022. We anticipate that, that will be the extent of the goodwill impairments. We're tracking that business obviously on a daily and monthly basis. And at this stage, based on our projections, our cash -- profit and cash flow projections, we don't anticipate any further write-down in goodwill.

All right. Well, look, we'll wrap it up there. Thank you very much, everyone, for joining online. It's typically rainy here in Melbourne, for those of you outside of Melbourne. But again, thanks for joining today, and we look forward to talking to you again at the AGM. Thank you very much.