Beacon Lighting Group Limited (BLX) Earnings Call Transcript & Summary

Good morning, and welcome to this AGM of Beacon Lighting Group Limited. As is 10 a.m., and a quorum is present, I declare the meeting open. My name is Ian Robinson, and I'm your Chairman. Attending today's meeting is Glen Robinson, CEO, Eric Barr, Deputy Chairman; Neil Osman, Non-Executive Director; David Speirs, CFO; Tracey Hutchison, Company Secretary. Notice of the meeting has been made available to you and download on the company website, and I'll take it as read. As you know, in accordance with government COVID-19 guidelines, we are holding a fully virtual meeting today. There is no physical venue. If you wish to ask questions, please feel free to do so online now or at any time during the meeting, and questions will be passed through to me to respond to. The way in which you can ask questions by using the chat function. Send your questions and my name of the entity that you're [Technical Difficulty] just apologize. I think we might have some technical difficulty.

You might have to get back to the start.

Okay. We'll go back to the start. Okay. Sorry about that, ladies and gentlemen, let's restart. As it is now, 10:05. Good morning, and welcome. This is the Beacon Lighting Group Limited at 10:05 and a quorum is present, I declare the meeting open. My name is Ian Robinson, I'm the new Chairman. Attending today's meeting are Glen Robinson, CEO; Eric Barr, Deputy Chairman; Neil Osman, Non-Executive Director; David Speirs, CFO; Tracy Hutcheson, Company's Secretary. Notice of Meeting is being available to you to view and download on the company website, and I'll take it as read. As you know, in accordance with government COVID-19 guidelines, we're holding a fully virtual meeting today, and there is no physical venue. If you wish you ask any questions, please feel free to do so, online now or at any time to the meeting. And the questions would pass through to me to respond to. The way in which you can ask questions by using the chat function, send your questions and the name of the entity that you are representing to Tracy Hutchison. Voting on all items of business will be conducted using online voting. You can lodge your vote online now or at any time prior to the close of the meeting. And you do not need to wait towards the end of the meeting in order to do so. And you're encouraged to lodge your vote sooner rather than later in order to mineralize any technical difficulties. To vote online, you will need to visit the website dated in the materials center shareholders. Details are repeated on the screen about how to do so. Please share that you have all the information you need to vote online. If you note assistance or encounter any different lease, please refer to the online voting user guide described in the meeting details. The first item of business is to review and consider the financial statements. Directors report and auditors report for the year ending the 27th of June 2021. The company's annual report for 2021, which includes the financial report, the directors' report and the new audit report can be accessed on the company's website. There is no formal resolution to be voted in relation to this item of business. And the Company's Secretary, Tracey Hutchinson and please advise that there are any questions that have been received in this regard.

No questions seen.

As there are no questions or comments, I'll take the financial statements, director's report quarter report for the year ending the 27th of June 2021, as reviewed and considered. We now come to the formal resolutions. Details of proxy votes received on the resolutions are displayed on the screen. Resolution 1 relates to the reelection of Eric Barr's Director. I move that Eric Barr is reelected as a director as set out in Resolution 1 of Notice of Meeting. Can the company Secretary, Tracey Hutchison, please advise there any questions have been received in this regard.

No questions seen.

As there are no questions or comments. There are no questions or comments Resolution 1 to the meeting. The voting is open and can occur online. Resolution 2 relates to the adoption of the remuneration report for the year ending the 27th of June 2021. I move for the remuneration report is adopted as set out in the notice of meeting. Can the company Secretary, Tracey Hutchison, please advise if any questions have been received in this regard.

No questions seen.

There are no questions or comments. As there are no questions or comments, I'll put resolution to the meeting. Voting is open and can occur online. Resolution 3 relates to the issuing of performance rights to Glen Robinson as set out in the notice of meeting. Can Tracy, please advise if any questions have been received in this regard.

No questions.

As there are no questions or comments, I put resolution 3 to the meeting. Voting is open and concur online. Shareholders should vote now if they haven't done so. As mentioned, please follow the voting instructions and reach out if you have any different in doing so. While shareholders are voting, CEO, Glen Robinson, will provide a presentation to you. And the presentation given please submit during the presentation given, please submit any questions in relationship you may have, and we'll respond to it as we were given. Glen, I'll pass it over to you now.

Thanks, and welcome to shareholders to the Beacon Lighting AGM. Today, I'd like to briefly our shareholders on our 4 key pillars of growth that we'll focus on this year and into the years ahead. Along with our current outlook and take any questions that you may have. If you have any questions, please send them through to Tracy within the chat function, and she'll pass it on to me. Our 4 strategic pillars of growth that have been developed -- have been developed to make it absolutely clear the areas that we'll continue to invest in and build over the coming years. These pillars do not change from year to year. Instead, they act as a guiding light for business to stay on track of its growth ambitions. The 4 key pillars of growth are retail, trade commerce and new businesses. Starting with Retail. Retail is the lifeblood of the business. Is what has been created over 50 years of hard work developing, refining, searching for new sites, new products and the best lighting experts to support our customers. During the last year, every store has enjoyed amazing growth while navigating the challenging circumstances around COVID and adapting to new ways to exceed our customers' expectations. The group currently has 116 stores with a store network plan for a potential 184 stores in the future. Currently, the group is well positioned with a strong market share estimated to be around 22% of the retail lighting market. The store network goal for the year ahead will be to increase our trade sales by better partnering with our current and new trade customers, understanding their business and providing them with exceptional services whether that be fast delivery, in-stock availability, a learning trade loyalty club or our ability to complete lighting designs for their customers free of charge. Harnessing the motivation of 1,100 team members across our stores and [ 116 ] stores to better service the trade. In financial year 2022, we will have our largest investment in stores. We will open new stores in Ellenbrook, which is just opening is trading well, Alban, Bunderberg, Teralgan, Butler and Melton. We will also enhance our customer experience within the stores by relocating and upsizing stores in Port Macquarie, Burley, Camberwell and Lake having. Our Trade pillar. This is our most significant opportunity for growth for the next 10 years for Beacon Lighting and our customers. During the year, the trade task force has worked through many enhancements for our trade customers. Like opening stores at 7:30 a.m., developing new trade exclude lines, carrying greater depth of stock availability, dedicated marketing to engage with our new -- with our trade customers and trialing a trade counter at a number of stores. With the initiatives so far, we have been able to grow our trade sales and our trade loyalty club membership substantially from 35,000 members to 44,000 members. However, there are so many opportunities ahead of us in Beacon Lighting only having an estimated 2.6% market share of the lighting and electrical accessories industry for the residential home. Our goal for the year ahead in relation to trade is to improve our service offering. Our product offering and becoming a more important partner to our owned and new trade customers. We'll do this by completing 21 individual projects, all focused around connecting our trade to more to help them to enhance their own businesses. One of those projects will be the launch of our new Trade Club. We will allow our customers to view their special pricing, review their Beacon Rewards, stock up on trade exclusive range and so much more digitally. Our next growth pillar is e-commerce. E-commerce has probably never been more important. We saw a massive uptick in online sales as an effective way for our customer to get the lighting, ceiling fans and electrical accessories products that they wanted whilst also still being up to socially distance. During the year, the group launched its new website, which saw record results throughout the month and finished out the year at $26 million or 9.8% of total retail sales. We continue to see the e-commerce channel performing very strongly in the recent months with customers restricted from getting our Victoria Victoria and New South Wales stores. However, even in unrestricted states, the uplift in e-commerce sales has been significant. The goal for the year ahead will be to drive e-commerce trade sales growth by 90% over last year. We'll do this with further investment to our trade website, integrating the website into our trade club and providing 3-hour fast delivery to our trade and retail customers living in major capital cities. In addition, the group has now launched our direct-to-consumer website in the U.S.A., which will focus on selling the price that we developed here in Australia into the substantial U.S. market. That website is www.beaconlighting.us, if you want to have a look. The final strategic growth pillar is our new businesses. These emerging businesses offer the group opportunities to invest and grow the business outside of its retail and trade core. Each one of these new businesses could be significant contributors to the success of the group in time to come. Beacon International remains a standout performer in nice growth pillar. Beacon International leverages the items designed and developed for our Australian customers and uses those products to generate sales in countries all over the world with wholesale sales, e-commerce sales, agency sales and marketplace sales as their major channels for sales. And the group for the first time established this year, a property company to acquire suitable sites for Beacon lining doors. The goal for the year ahead is to grow the international sales through new customers, new sales channels and growing our product offering to our international customers. We'll do this by building on the sales from the recently launched direct-to-consumer website in the U.S., while also growing our product offering within the China market within the TMall global marketplace. And from a property perspective, we will develop new sites for Beacon Lighting stores in Orban, Traralgon and Autport. On the outlook. So first quarter trading from a comparative stores and like trading conditions, has resulted in a 4.7% comparative sales decline against Q1 FY 2021. To compare against like trading conditions, New South Wales stores have been taken out of this year's in last year's numbers as they are obviously in the lockdown at the moment, whereas Victoria has been left in as they were in lockdown for a similar period last year as they are this year. So that's how we got to the comparative number. As a reminder, last year, we had experienced comparative store trading in the first quarter with a positive 26.6% growth. So to achieve a [ 4.9% ] decline this year is still, in my belief, a relatively strong result. As you can see from the strategic pillars, our key focus across retail trade e-commerce is centered around growing our trade business. We've developed a great retail business over the years, but there is still so many more -- so much more that we can offer our trade customers. The broader macroeconomic environment is looking supportive for Beacon Lighting for the year ahead. lockdowns do and will continue to affect retail sales, but with the homes still being a more important place for our customers and our customers adapting to the restrictions. And as we see those restrictions becoming lighter, we are seeing improving sales. This year will be the biggest investment into our stores and with new stores and refurbishments. We will remain focused on our 4 key pillars of growth and supporting our customers in Australia and in international markets with the latest in lighting, ceiling fans and electrical. Thank you for your time. If you have any questions, I'm happy to take them now. Tracy, can you advise if there's been any questions on the presentation.

Yes, we have a couple of [indiscernible]. First is from John Whittington, from the Australian Shareholders Association. John says, good morning. My name is John Wittington and I am a volunteer company monitor for the ASA. Mr. Chairman, congratulations to the whole team on a great performance in difficult times. Looking at the present and near future, it seems many companies are experiencing supply issues due to both lack of transport and/or workers being quarantined, how significantly is this affecting the company at the moment?

I'll let Glen answer that question.

Yes. Thanks. And yes, John, it is a good question, and I'm personally very close with our buying team, and we work very closely with our teams through our supply chain. We've got a very strong team based in Asia to help us through all the challenging circumstances that are happening within the supply area. It has certainly been disruptive from a COVID point of view with some cities in China being shut down. We've also had port delays, container shortages because of increased demand. We've also had increased freight costs. So it is a dynamic situation at the moment. I think we're in a pretty reasonable position at the moment because we do have quite a lot of stock here in Australia and Beacon Lighting as a business does choose to carry quite a lot of stock to be able to service our customers, and in particular, our trade customers, we do know that they do like to have stock continuity at a pretty high level. So we do like to be able to provide that. So at the moment, at any point in time, Beacon Lighting will be holding up to 8 months at the stock and that can see us through a lot of these bumps that we do see. Looking out into the future, what does it mean for supply. I think any business that is vertically integrated as our business is, we need to be diversifying our product mix into different countries and whether that be across Asia Europe and also maybe considering some more manufacturing here in Australia. We've got a small manufacturing plant here doing architectural products. but there is opportunity for us to be able to expand that. So as I said, it is dynamic, and we are adjusting our business to the situations and make it more sustainable for the future as well. Thanks, Tracy. Do we have another question?

We do. And they actually relate to the resolution. So we'll just [indiscernible] these ones.

Sure.

So again, this questions from John Whittington again. Would this relates to Resolution 1 for Eric. Would Mr. Barr speak to his election. This is the only time once every 3 years that shareholders get a chance to hear him and understand how he has contributed to the Board in the last 3 years?

[indiscernible].

Yes, you can speak [indiscernible].

[indiscernible].

Yes, yes.

We'd be just one moment.

Thanks, John. I do recall you last year. Yes. And in answering your question. I don't want to be self-serving. It's -- look, I've been here for 25 years. I -- 25 years ago, we didn't make any money, right? And we set out then to do something about it. And wow, have we gone places. So It's wonderful to be associated with an organization with a structure where so many different parts of it have contributed. Obviously, I can take some credit for some of that. We've introduced no new capital in that period. We've got to profits like this with by the performance of individuals and a wonderful team event here. And we've got a wonderful morale. It's an honor to be associated with with this place. Our procurement team has done a wonderful job in Asia, et cetera, et cetera. So yes, and there's a lot of certain structural stuff that I'm involved with considerably and it's confidential whatever. But I think that's pretty well the best answer I can give you. I would say to you that it's nice, we've got a procurement team have done a great job our sales team, our people in the stores our IT team, marketing, our marketing team has done a wonderful job. And I'm pretty proud to be involved in that.

I might take the opportunity to also to speak on Eric's behalf in regard to these achievements, particularly hard for someone to speak about themselves. But Eric is a very valuable member of the team. I've been with us for quite some time. His expertise in tax, his experience and his knowledge of corporate tax and ramifications of not doing it right is the highest level. We're very, very fortunate to have someone of Eric's caliber to be part of the team of Beacon Lighting. And his guidance that is shown, particularly in this year, has been invaluable. And it certainly leads the remuneration committee and a resolute type of way being some issues with families being involved. It's important to have an independent director that knows what we're trying to achieve and can look as what we can't really make decisions on. So his independence is very important to us and his understanding of the business and his integrity of making sure that we're compliant in -- particularly in tax, which is a very complicated area is invaluable to the company. Tracey, we have other questions?

Yes, we do. Mr. Whittington says, thank you, Eric. Great to hear from you. Resolution #2, Mr. Chairman, it's John Whittington from the ASA. Could I ask you to include a table of the actual take-home remuneration of the KMP in future -- in future remuneration reports. This is now done by the majority of ASX 200 companies. Our members really find remuneration reports quite challenging to grasp and a simple table of what was taken home helps a lot.

I'm sure we'd certainly look to any recommendations on how we can improve transparency and make you the availability of to understand how the room is structured as easy as possible, and we take that on board. Thank you.

And 1 more from Mr. John Whittington. Mr. Chairman, a final question from John Whittington from the ASA. If things are back to normal next year, what type of AGM do you envisage holding? A normal face to face one or a hybrid or a virtual meeting?

Well, I think all of us would like to get back to having a virtual meeting. It's certainly a different circumstances to be talking to a camera instead of talking to an audience I can tell you, the camera doesn't have a lot of personality. So we would certainly prefer virtual. Thank you

Thanks, Ian. And Mr. Whittington says, very well said Mr. Chair.

Okay. So that's the last question we have for a second?

That's it. Thank you.

Okay. Just one moment, please. Okay. Thank you, Glen for your presentation. Very exciting. It was a very challenging year. Fabulous results have been achieved. And I think the business has been exciting and will remain exciting for quite some years to come. Please note that we're shortly going to close the online voting. As far as I'm aware, there are no outstanding queries regarding voting. Does anyone need further time to finalize the voting, Tracy, please advise if there any questions for further time.

No further questions.

Okay. So there no further time requests have been received, I now close online voting. Results of the voting will be announced to the market on the [ SX ] once available. That concludes the formal business of the meeting, and I warmly thank you for your attendance. I'd like to declare the meeting closed. Thank you.