Gale Pacific Limited (GAP) Earnings Call Transcript & Summary

Thank you for standing by and welcome to the Gale Pacific Limited FY '23 Earnings Release. [Operator Instructions] I would now like to hand the conference over to Mr. John Paul Marcantonio, Chief Executive Officer and Managing Director. Please go ahead.

Thank you very much. Good morning to everyone in Australia, afternoon, good evening to anyone else who may be in other parts of the world today. I'm John Paul Marcantonio, CEO and MD of Gale Pacific Limited. With me on the call this evening or this morning is Sheryl Smith, the Chief Financial Officer of Gale Pacific. And we're happy to be able to take you through this information today, and I'm glad that you joined us this morning for this release. A bit about the company, if there's anyone on the line or listening today that doesn't know specifically about who we are and what we do. Gale Pacific is one of the world's largest leading technical fabric and technical textile manufacturers. We go to market under primarily 2 brands, Gale Pacific Commercial fabrics brand and the Coolaroo brand for consumer applications. And we have several end-use markets that we lead in, agricultural coated fabrics being one of them, architectural shade fabrics being another, and then a host of consumer products based on those fabrics that you find in some of the world's largest retailers and online merchants. We have 4 primary principles when we're thinking about developing products, manufacturing them and then servicing them around the world, and that's dependent on product design, comfort for the people that are using them, protection for the things that our fabrics do protect and then increasingly so, the level of sustainability with which our product portfolio is manufactured and continues to develop into time. If you have the time, I'd encourage you to spend a few moments, maybe reading some of the company milestones in history. Gale Pacific was found in 1951. And over the last 72-odd years has achieved many individual milestones in the company's history and today operates an organization of over 550 employees worldwide in the likes of the United States, Australia, New Zealand, China, and into the Middle East in Dubai. And also, we have team members across the globe in Europe and in Asia as well. So a diverse business mix as well as a diverse set of people building and operating the company. And we produced to manufacture quite a bit of material over the last several years enough so to weigh as much as the Sydney Harbor Bridge and enough fabric [ and leadership team ] to wrap the world twice. So we are a major supplier in this marketplace, a manufacturer and branded distributor of goods in technical fabrics in commercial and consumer applications. The main part of today's presentation will be to discuss the results overview from the 2023 financial year. And then I'll ask Sheryl to give a more detailed review of the company's financial release today. I'll then transition back and talk about a regional overview of our individual operating segments in the United States or the Americas, then followed by Australia, New Zealand and then finally, with the developing markets. We'll talk a bit about our strategy and how the elements in the Growth Acceleration Plan are coming to life in this past year's results and how they're fueling the 2024 plan and then give a bit of an outlook on what we're seeing in the marketplace for this 2024 financial year as well. So to start first with our results overview from FY '23. I think it's important to note some of the transitions and the backdrops in the market throughout the FY '23 year. And we started the year, we were still in the midst of a relatively robust demand environment at the beginning of the year. And then over the course from July to this June, encountered some pretty large macro shifts in the marketplace, notably, the historically aggressive interest rate rise by central banks, specifically impacting our U.S. and Australia business and how that fed into broad market inflation for consumers and end users putting a drag on household expenditure. The other factors of note, the transition throughout the year that affected our core business' backdrop was the consumer shift in spending to outdoor goods and into travel and services. And then also some very broad market housing challenges primarily in terms of affordability and availability of housing in many of the markets that we serve today, but notably in the U.S. And then as we noted previously, some rather poor weather conditions in the front half of FY '23, notably across the East Coast of Australia, which impacted our consumer and our commercial business and then in the U.S. in quarter 3 and much of quarter 4 and the U.S. prime selling season. And so in that context, we delivered a result that was $187.6 million of revenue, which was backwards just about 9% on prior year with an EBITDA figure of $20.7 million, but improvements in net cash from operations and then several other notable key achievements in the year, managing the environment that we encountered. Most notably was the working capital management. We were able to glide down our global inventory across the group by $27 million or just over 34% -- or just about 34% for the company in about a 7.5-month period from November to the end of the year in June. We've also enacted a few -- 2 notable restructuring programs exiting FY '23 that will pay benefits for the coming years in terms of operating costs being lower and net productivity savings for the company of over $5 million over that 3-year period. Our teams in procurement, logistics, quality and manufacturing in total delivered over $4.7 million worth of savings through operational excellence initiatives in this year. And all the while, we continued our investments into developing and designing the company's new operating infrastructure in terms of a new ERP system. And so, we've completed the design phase for our transition to cloud-based Dynamics 365 and early in the 2024 financial year, we'll be moving to implementation and further development of that program. We also reduced product lead times for manufacturing globally by just about an average of 50% for the company, opened up a new headquarters in Charlotte, North Carolina at the end of March, transitioning from our previous facility in -- just outside of Orlando, Florida, and also launched 2 of the most significant pieces of innovation in the company over the last several years in the financial year of 2023, notably by launching HeatShield technology across our [ noted ] portfolio of products and then also launching the world's first -- Australia's first manufactured Ecobanner branded sustainable away-from-home advertising material that you will see in the coming materials. With that, I'd like to hand over to Sheryl who will take us through the results for FY '23 in more detail, and then I'll come back and will talk a bit about our regional results. So, Sheryl, over to you.

Great. Thank you, John Paul. Good morning, good afternoon, good evening to everybody. A few highlights I want to mention on our financial results. As John Paul mentioned, revenue for the year came in at $187.6 million. This was 9% below prior year. That was mainly due to those poor weather conditions that John Paul mentioned and a shift in consumer spending as well as the destocking we saw in the inventory levels at our customers. This was up 20% when you compare it to pre-pandemic sales. On the EBITDA line, we came in at $20.7 million. This was down 10% versus prior year. That was from the lower volumes as well as we had some manufacturing overhead cost absorption inefficiencies. So that's when you think about our China plant as well as our Australia plant and the volumes being down in those plants. So we did have some inefficiency from an absorption perspective of those fixed overhead costs. PBT $5.3 million -- came in at $5.3 million. Net profit after tax was at $3.7 million, and our basic EPS was $0.0134. On the next slide, we'll look at from a cash perspective. We had net cash from operating activities at $8.4 million. This was up over the prior year, which was $7.2 million. That was mainly attributed to the lower working capital, in particular, the lower inventory levels that John Paul will talk a little bit more about. It was offset by some higher income taxes. So in China, we had some higher income taxes that we had to pay that included unrealized FX gains. So in China, Europe, you include the unrealized. So with the strong U.S. dollar that did impact us there as well as some higher taxes in Australia, which we will get return to us in FY '24. On the net debt side, we are at $15.8 million net debt. This was up from $5.5 million in the prior year. That was mainly due to capital expenditures related to the Microsoft Dynamics 365 project as well as the higher income taxes that I mentioned a moment ago. Thank you. Back to you, John Paul.

Thank you, Sheryl. Next, we'll go through an overview of the regional results starting first in the Americas. And revenue for FY '23 in the Americas was $91.9 million, which was down about 4% as compared to FY '22. As we mentioned earlier, poor weather conditions in Q3 and the beginning -- or a majority of Q4 really led to that --some headwinds in the second half of the year, which we had not anticipated at the beginning. That drove lower-than-expected sell-through across retail channels and customers in the U.S. and the shift in overall spending in the U.S. versus the prior year in the face of inflation as well as some of the shifting spend away from goods to travel and entertainment also put -- had some headwind impact on the result. As we mentioned in the release, improvement in global supply chain conditions, primarily in capacity, really helped us improve product delivery lead time across the company, but notably so in the U.S., which when you couple that with the lower demand that existed across many markets in the world, that actually had the benefit of helping us reduce on-hand inventories across the network. But it also meant that our customers were able to do so to unwind the pandemic level inventory investments that were needed due to the inefficiencies in the global supply chain. So we saw a major destocking as a result of that in the Americas region specifically, and that also had a negative impact on FY '23. EBITDA was down 6% in the Americas region, primarily driven by higher-than-forecasted average weighted product costs due to lower trading volumes. As we mentioned, the inefficiency impact of those lower manufactured volumes through our facilities and then also increases in year-over-year warehousing costs in this region specifically. When you take a comparator versus pre-pandemic 2020, the [ reach ] is still up 25% in terms of overall revenue and with comparable EBITDA as we continue to make investments to drive a larger business in the Americas region over time. And so that's our purpose plan to make those investments in this region. We also had improved profit margins exiting the year, which we anticipate should help going into FY '24 as well, and that's primarily due to lower inbound freight costs in the second half of the year and the maintenance of some existing price increases as well as the efficiency initiatives outlined. The Americas team, I think, did a reasonable job of reducing on-hand inventory in this region. It was a figure of USD 12.4 million at the end of the calendar year, and that was a reduction of over USD 10 million from late November FY '23. So in about 7 months where we bring the inventory level down nearly 45%. And also, that was driven primarily from improved demand planning and forecasting and then also our decision to make sure that we aligned production capacity with what we anticipated to be second half demand as it unfolded in the second half of the year. Our teams did achieve distribution expansion initiatives and customer and consumer availability improvements for core product ranges in the second half of the year, both new and existing customers with new placements in shade sails and fabric and roller shades and pet products as well as in commercial fabrics for the company, featuring each HeatShield technology across product categories in the U.S. Of note, in the Americas region was a record-setting quarter 4 in terms of commercial architectural shade fabric revenue in the region. On the back of some -- also some destocking in the commercial channel that occurred throughout the first half of the year and into the beginning part of the second half of the year. We're also seeing that continue into the early stages of FY '24, which is encouraging for our commercial architectural shade fabric business in the U.S. market. And as I mentioned earlier, we completed a headquarters location -- relocation project into Charlotte, North Carolina as at the end of the 30th of March. And now the executive team is in place and the Americas regional team is now in place with some significant improvements in capability and capacity across key revenue-generating and profit-generating functions such as marketing, engineering, selling, product development and program management to help deliver and drive the results that we're endeavoring to deliver based on the Growth Acceleration Plan and the lead growth market. Turning next to Australia and New Zealand. Revenue of $82.2 million was down just under -- just over 12% from the prior year, driven primarily by unseasonably cool and historically wet weather across the East Coast of Australia in the first half of the year. And as I mentioned, that impacted both consumer and commercial end markets, notably as well our agricultural grain fabrics used [ in great handloom ]. We had unit -- comparably lower unit sell-through across our consumer channels as well as categories. And again, similar retail price inflation infecting -- or affecting negatively Australian consumers as well as a shift in spend from goods to travel, entertainment and services. EBITDA declined 10% in the financial year for a similar reason as in the Americas, and that was due to higher than forecasted weighted average costs driven by the lower trading volumes, as I cited, as well as the inefficiency impact of lower production volumes at our China facility as well as our Braeside, Victoria facility in the year. Still, despite those headwinds, regional revenue was up 27% as compared to pre-pandemic FY '20 and earnings have nearly doubled during that time frame. And that's a direct result of the team's focus on profitability improvement initiatives as well as margin accretive growth programs for our business in the ANZ region. As we also mentioned, profit margins, we expect to continue to increase slightly as we enter into FY '24 based on some of the similar factors we mentioned earlier. Another strong performance in terms of working capital in the ANZ region with regional inventory at $21 million at the close of the financial year, which represented an $14.3 million or a 40% decrease in inventory levels from the November peak, again, driven by forecast accuracy improvements and the reduction in manufactured products resulting from lower volumes on the base of the demand headwinds. We had record rainfall across much of the east coast grain belt, which had a dilutive effect of a downward effect on our agricultural fabrics business. However, we do believe that market share remained consistent throughout that time and that our fabric ranges in that category remain the benchmark for performance across that agricultural sector in Australia. We were able to increase share across horticultural end markets during the same time frame with our differentiated Orchard Netting products driving growth in some of the country's largest fabricators for that segment. And we were able to achieve incremental placements coming into FY '24 for some of our core ranges in some of the consumer shading products which will show up in our retail partner Bunnings in the beginning half of this FY '24 financial year, which will position us well for the coming spring and summer selling season, which is anticipated to be warmer, hotter and drier than previous year, which should improve trading conditions for our retail ranges. We also launched in the year a piece of innovation, which I'll speak a bit in more detail about later, but referencing our capability to develop an away-from-home advertising product in a fully PVC-free closed-loop recycling end-of-life solution for banner -- for billboards and banner products. That allowed us to launch in FY '24, and we anticipate will help us diversify revenue and profit streams coming into the FY '24 year and beyond and continue to leverage our expertise to enter into more sustainable product categories over time for our ranges and our customers in that region. Turning next to the developing markets. Revenue was a bit more challenged there, down 17% at $13.4 million due mainly to the constrained demand in our Middle East region from continued implementation and execution of our improved and more strict credit disciplines, collection disciplines on long-dated debtors in the region. And due to those policies, we were able to reduce long-dated outstanding debtors in that region by over 34% throughout the FY '23 financial year. We were able to maintain a tighter decline in EBITDA due to improvements in margins for our commercial architectural shade fabric ranges as well as with tight cost control across the region in a more challenging demand environment. And pleasingly, our European and Southeast Asian, though small, but growing regions were up 20% due to further conversion of our commercial shade fabric ranges and customers throughout this past year. And we'll continue to invest in driving growth plans and new penetration plans into these marketplaces over time with some investments we made in Europe to develop our ranges of sustainable coated fabrics as well as across Asia for both consumer and commercial. Turning next to the company strategy, and then I'll follow up with our outlook for FY '24. We've maintained the strategy. Our teams go through an annual budgeting and a 3- to 5-year strategic planning process every year. But we still believe very firmly that the strategic framework we've developed is the right path to this company over the coming years. And simply, that's to invest in product innovation, driving category growth with and through our customers, improving our operations, both in terms of service and quality but also in cost and then driving and developing new entries into new markets for the company. And if we do that well, we think we're going to build Gale Pacific into a faster-growing world-class global fabrics technology business as a consequence of that. And as we stated previously, our growth acceleration plan is really designed to focus energy effort, investment, people, teams, all in service of the strategic framework. And that vision is surrounded by on-purpose choices for what categories we'll participate in in the short and medium term, what we value as people in our organization, how we go to market with what type of team that we have and also the markets in which we'll participate over time. And the framework to deliver that is this 5-pronged approach to grow more quickly, our categories, our markets our people, our capabilities and our supply chain. And every day great execution is a cornerstone of how we operate when we're thinking about how to bring these strategic levers to life. We're then taking those goals that we have for the long term and then breaking them down into actionable chunks of work for ourselves and our team to endeavor to work with our customers, our suppliers and other stakeholders to deliver growth for the company. And as we look into each one of these individually, I can give -- provide some evidence for the work that's been done to date and some of the delivery in FY '23 for that work. And if you think about growing our categories over time, a key tenant to that is developing and launching breakthrough products in our core categories. This year, we launched HeatShield technology, which blocks both infrared and ultraviolet rays from the sun and gives a more comfortable cooler environment for people, pets and assets below. That's a patented innovation that our R&D teams developed in-house. So we manufacture in-house today, and it's being well received in the marketplace as we go and attempt to drive greater distribution gains, but also drive the size and overall growth opportunity in the categories that we participate in today. I mentioned earlier, we launched Ecobanner, which is a PVC [ trendable ] banner fabric capable of a 100% closed loop recycling and reuse solution. Why that's important is because we want to accelerate new and near neighbor category entry for the company to diversify and build revenue and profit streams in growing end markets where we can make a meaningful difference with not only our manufacturing capabilities and our technical capabilities, but with our selling and marketing and conversion capabilities as well. And I think our team has done an excellent job in both of these areas in FY '23. And if we get that part right, then we have an opportunity to accelerate telling consumers about that by accelerating our penetration in households and with some of our largest possible customers. with leadership brand activation and commercialization. And on the back of our HeatShield launch in the fourth quarter of FY '23, our brand marketing team in the U.S. was able to drive a digital and in-store awareness campaign that led the trial that was greater than previously achieved before and also led the record sell-through and impressions with target consumers in this marketplace. So those 3 things working in concert can help us grow our categories and also become a partner of choice for growth with our customers. Over time, we want to help develop markets as well. In FY '24, we really want to focus on driving category growth in -- with and through our customers. We'll be launching, as I mentioned earlier, shortly, a breakthrough new program for umbrellas in Bunnings in just a few short months that will position both Bunnings and ourselves in a leadership way to help drive overall category growth in this coming year. We were recently awarded a national promotion for elevated pet beds with HeatShield, which we'll launch in the second half of FY '24 across Walmart stores in the United States, which allows us to rapidly expand distribution and availability in this large U.S. market. We've also made mention of extending our borders into other jurisdictions, and we've been awarded and have achieved core share and pet placement expansion across LATAM customers like Home Depot, Mexico, Posco Mexico as well as PriceSmart in Central America. And we're also investing to understand the opportunity and build a bigger, larger business with our more sustainable fabrics like [ Apex ] and Ecobanner across Europe as well. So planting the seeds for the future growth of the company. Central to the plan is the right people to do the work and deliver the growth opportunities. And in FY '23, we took meaningful steps forward in this area. How do we develop our leadership and our functional capabilities throughout the organization. We launched a brand-new leadership capabilities and behaviors throughout our organization. We developed new training and talent development tools in FY '23 and launched them. And we've really refined individualized development plans for all of our employees through our talent management process. We've launched and can measure global engagement for our organization, and it's well above benchmarks for consecutive years as we screen this. We ask our team exactly how well we're doing. It brought up a couple of areas for improvement, and that's notably being around recognition for the people in the organization who are doing the work. And in FY '23, we took significant steps with recognizing our team members who are actually delivering the work to help us achieve our results and regularly communicating them through bimonthly global town halls and monthly -- offsetting monthly regional town halls as well as launching engagement teams across the United States, Australia and China, with the same common framework to really get the best out of our organization and really drive an engagement level that also helps develop ourselves and our business. And lastly here, really the building and power of the team by becoming a power -- by becoming an employer of choice for top talent to grow their careers. We have reorganized executive functional and regional leadership teams now in place. We've got a new high caliber capability and capacity in our Americas team in place to help deliver the growth aspirations over time since our office launch in late March. And I think that team is coming together really well. It should really help us fuel the growth plans over the coming years in this region and others. We talk about developing our capabilities. And importantly, as we try to build the size and scale of the company, we want to make sure that it's clean, efficient, easy, simple to operate and that we're definitely making sure we're clear in our execution with ourselves and with our customers. And so we have a reorganized streamlined team with clear operating processes and a defined set of accountabilities for improved dotcoms and efficient outcomes over time. We mentioned earlier that it's important for us foundationally to be able to build and implement the right global IT tools, strategy, structure and team. I mentioned earlier that we've completed the design phase for our transition to cloud-based Dynamics 365. We'll soon award that business to a partner implementation company, and then we'll then build the global ERP system to help us become more efficient while being very transparent on data and also increasing our security posture. And look, one of the things that fuels the growth plan is the product innovation, but one of the things that fuels the product innovation funnel is getting more close to our consumers and our target end users in our consumer and our commercial end markets. And we're currently in the field with a consumer study in the United States to further unlock usage and attitude insights to our consumer sun protection platforms for people, pets and assets. And we expect that that over time will help us develop even greater levels of innovation, ownable, protectable IP and then transitioning that to help fuel category growth as well as drive differential growth for Gale Pacific at the same time. And last but certainly not least is our growth acceleration plan around our supply chain. And so as I mentioned earlier, we had a pretty significant reduction in on-hand inventory across this calendar year. We also reduced lead times significantly because of improvements to process people and capability. And that's really a testament to our one Global Gale Supply Chain team who is well integrated across planning, procurement, manufacturing, delivery, distribution and service. And I think we're starting to really see the benefits of that reorganization effort that we undertook 12 to 18 months ago reading through in terms of the results at this stage. Enhancing utilization and efficiency and flexibility across global supply chain and operations is critically important. We've announced exiting the FY '23 year 2 distinct restructuring programs in Australia and in the U.S. The program in the U.S. is designed to give ourselves the ability to get to a best-in-class pot structure as well as a scalable operating footprint to really drive growth in our custom roller shade business over time in the U.S. market. And our restructuring plan in Australia was designed to not only lower structural regional costs, but to redeploy some of that costs back in to more closely match our growth aspirations in our commercial end market channels. So these decisions are never easy, but they are necessary to make sure that we match our existing operations with where we need to go as an organization to fuel the growth plan as well as to match the environment we're operating in. And since we've been on this journey for 3.5 years, we've been very focused in expanding productivity and attack track cost of failure. And over this past year, as I mentioned earlier, we have $4.7 million saved in FY '23 because of those focus on reducing structural costs coupled with operational excellence initiatives and sourcing, manufacturing, global logistics and quality. And in summary, before moving into the outlook, there's a few things that separate Gale Pacific from those people that are our competitors but also make us valuable to our partner customers and other stakeholders in this market with category and market-leading brands that are comprised of high-quality and innovative products that are -- that we enjoy deep long-standing customer partnerships over many decades with some of the world's largest retailers in some of the world's largest producers and fabricators of products that use our fabrics. We're diversified relatively well across commercial and consumer end markets of distribution. Our product portfolio by design over many, many decades is sustainable in nature. And most of the materials we produce can be recycled or reused in some form of fashion today. And as you saw earlier in the presentation, we're really focusing on sustainability and product design and then how we manufacture and reutilize materials over time to inform not only how our products need to be made, but what types of benefits they could serve our end users with. And that comes from a long-standing, deeply ingrained set of technical fabrics experts in our organization and those individuals who have helped very quickly onboard and upscale the people that are new to our organization over the last 6 to 12 months become more quickly --become closer to experts as our existing experts are. We have vertically integrated manufacturing facilities across Australia and China. That's really helped us fast track our innovation agenda and going more quickly than ever before from concept to manufacturing sample lot on to testing and then the full-scale production runs. It's been critically important for us as we look to continue to develop the portfolio over time. We also have global distribution and a supply chain that's, despite the challenges over the several years, has operated reasonably well and has maintained high levels of service to some very important customers around the world. And I think that's been a differentiator for us over time. As noted by many customers globally coming out of the pandemic and noting our service and thanking us for working with them to make sure that we kept them well stocked to be able to operate their businesses. What we make in manufacture and sell and distribute around the road is on trend, and it's very squarely positioned to 2 key trends about developing and extending outdoor environments for safety and enjoyment, both at home and in commercial places. And look Australia is one of the world leaders in sun safety awareness that is developing in other parts of the world, most notably in the United States. And we've taken the leadership stand with our very valued partnership with Cancer Council Australia. We're taking a lot of that learning and now looking to extend it in other markets, notably in the U.S. And over time, the health benefits of our fabrics now they can contribute to -- on sun safety as well as comfort and protection will be a key differentiator for us as we design, develop, distribute and help build categories for the company over time. So for the coming financial year of FY '24, we do anticipate that first half trading conditions will remain challenging with continued demand headwinds, most notably for the factors that I outlined earlier. As I mentioned, we're doing something about that. We're looking to -- we're looking to enhance profit and lower structural costs through the productivity initiatives that I mentioned earlier in Australia and the U.S. We've actioned those exiting the FY '23 financial year, and they will benefit FY '24 and beyond. We'll continue to accelerate productivity and operating efficiency initiatives at manufacturing facilities that we own in China and Australia and we'll also work with our suppliers to a greater degree to help them with their facilities to unlock productivity benefits and products and process. We'll continue to invest in growth, focusing on increasing distribution primarily in the U.S. in retail and commercial and Australia in the commercial segment through product innovation, demand generation and further expanding our reach in both of those key markets as well as our developing markets. We have secured, as I mentioned earlier, key growth programs across both of the core anchor markets for FY '24. And we are on the back of those achievements as well as noting all of the both headwinds and opportunities in front of us, we are planning for full year revenue and profit growth in FY '24 primarily driven by growth in the Americas in the second half to offset a lower revenue and profit profile in the first half, driven by some challenging conditions in our agricultural sector and commercial in Australia, then offset by more positive weather conditions for our consumer business in the first half in Australia as well. And one other point to note about the first half versus the second half, as I mentioned earlier, global capacity and supply chain is improving. It has improved throughout this financial year. And as a result of that, we expect that some of our promotional volumes, specifically into the U.S. for the customers to be more efficient with their inventory and get closer to the promotional windows, which needed to extend quite frankly, into November and December due to the lags in the global supply chain and availability. So we're seeing that regulate as well. And further to that, we'll update everyone as we get closer to our Annual General Meeting or at our Annual General Meeting, which will take place on the 19th of October in 2023. And with that, and in closing, I'd just like to say thank you all for spending some time with us today. Your continued support is noted. We are dissatisfied with the financial results this year, but we've taken a very serious look at all levers for us to pull and all actions for us to take to be reasonably aggressive in making sure that we're managing costs in that environment, while also not sacrificing the long-term investments needed to really ensure that we drive the growth plan and scale the company over the coming years. And hopefully, we've given you some evidence of that throughout today's presentation and with the materials that we've released a short time ago with the annual report and some of the other materials. So with that, I'd like to say thank you, and hand it back over to the operator to facilitate a question-and-answer session. Thank you.

[Operator Instructions] There are no phone questions at this time. I'll now hand over to Mr. Marcantonio to moderate the webcast questions.

Yes. The first question we have on -- from write in, I think Sheryl is probably best -- answered by you and it relates to financing -- refinancing the company's debt facilities. And the question is, what's the plan for the refinancing program now that the update and the extension has been achieved since it's been pushed out to August of 2024.

Yes. Thank you, John Paul. Yes. So as many of you know, we have been looking at --looking at global solutions for our credit facilities and our treasury management platforms. We have extended our current U.S. and Australia facilities with ANZ Bank through August 30, 2024. We did in May move the facilities for the China piece, that facility with ANZ Bank that was refinanced with Ningbo Bank, so the China portion of the facility is already refinanced. And we are in the process now of negotiating the term sheets from the RFP participants, and we'll be moving that forward to look at what the best solution is for the company going forward. Thank you.

Thanks, Sheryl. And another question regarding inventory. It says inventory has decreased quite considerably throughout the financial year. Could you please provide details on how your customers have changed in terms of managing their stock levels and what this has meant for Gale Pacific? I mean, it's a good question. I mentioned it earlier, some information relative to unwinding on hand -- needed on-hand inventory levels at some major retail partners and quite frankly, commercial distribution and commercial fabrication partners over the last several years. I think the most notable thing is that we don't have very many, if any, at all, instances of losing share during the last several years. We've actually picked up share, I think, in some instances because of our ability to service the market and our investments and continuing to make sure that our facilities run as effectively as possible given these constraints. But I do think that all businesses right now have a higher cost of capital, higher cost of debt. And as they're looking to manage their working capital levels more efficiently and effectively to not stunt the growth opportunity in their business, but also make sure that they're being smart with their investment in inventory. We are seeing those inventory levels drop and have seen them drop across the market. We think almost all of that is completed and contained in the FY '23 year at this stage, save for a few pockets. But I do think you'll see customers globally manage their inventory more effectively just as we have. But I don't think that that will hinder us, as I mentioned, we went from -- we made a statement that we -- our manufacturer lead times went down 50%. During the head of the pandemic, we were seeing from order to shelf dates somewhere in the neighborhood of 150 to 170 days in some instances at the height of it. We're now operating with manufacturing lead times from customer order on shelf somewhere in the neighborhood of 75 to 90 days, which is kind of back to where things used to be pre-pandemic. So we're comfortable that we can operate within those constraints and that we'll do well to service our customers. Another question for the write-in on the screen here was around the macro backdrop. So thank you for the detailed presentation. My question refers specifically to the slide where you talk about macro -- the macro backdrop and the results driver of the business. Which drivers are you most concerned about looking forward? And what's the company doing to mitigate some of these challenges. Now I think it's a really good question. I think those -- the challenge is around interest rates increasing the transition from goods to travel and entertainment. And I think more broadly, the housing challenges that we're seeing in the United States as well as other markets of the world, where affordability is stressed, it's more -- how it was less affordable than it's been due to the interest rate environment as well as the run-up in housing prices as well as some of the challenges relative to the overall availability of housing. There's still a, by most measures, a shortage of housing in some of our major growth markets. So look, what we do is we focus on what we can control, which is developing products that people want to buy. We partner with customers to help grow categories. And I think when you're focused on product innovation, developing new benefits that people want to hopefully spend at least as much if not more for because they're providing benefits that are differential. And you can work with major customers to help grow the size of the categories, you become more of a value partner to help drive growth over time. instead of just trading sand in a sandbox and trying to get a larger slice of an ever-decreasing size of the pie, what we're trying to do is drive category growth and expansion. And 1 way to do that is to drive customers to bring more users into the category. Another way is to have them use more of our products and then also bring new benefits that we charge more for. And I think HeatShield is a great example of doing all 3 of those at one time, right? So we can bring more people into the category that weren't there today. We can then also get them to buy more than 1 product. So if somebody comes in and buys a roller shade or a roll of shade fabric and then they also find the benefit that HeatShield provides to be significant. And also in the past, that HeatShield benefit also plays out extremely well in terms of skin contact or fur contact with pets. So we then grow the size of other categories as a result of that innovation. And as a result of development and innovation, consumers are willing to pay more for that -- those products and our retailers are able to charge more for them. So you can margin mix up over time as well. That's really how we're approaching developing our way through some of these macro challenges. We'll note them. We'll monitor them closely. We'll be nimble and move with speed to counteract them. But at the end of the day, if we're working with customers and consumers to drive growth, that's really how we'll run this, I think. That's a good question relative to the headwinds. And there's a question regarding the ERP process. What are new key -- new milestones to be achieved in the coming year? And what's the indicative timeline for completion? So we'll move quickly now into finalizing the award for implementation partner, finalizing and the build-out and design of those tools and then look to accelerate implementation and go live across our global platforms and businesses and regions by -- the goal is by late Q4 FY '24. So in the May or June time frame of this coming calendar year. We've completed the design phase. We've, I think, done a reasonable job of documenting the processes we need moving forward to help the company achieve its growth ambitions and do so efficiently and with the appropriate transparency. And we're really looking forward to that we go live into not only reap the benefits of the ERP investment but also to put it behind us and get on with driving and growing business. Another question relative to product innovation. You produced and introduced some really interesting new and innovative products this year. Can you please provide some initial market feedback on any of these products? We mentioned earlier, our shade sail business in the U.S. grew to record levels of sell-through as a result of the launch of HeatShield shade sales in the U.S. We've had a very, very strong positive response to every customer we showed this to. We'll have placements in Bunnings this coming year. We'll have across the U.S. market in retail. I think it's most notable to know as well that -- or additionally notable that we'll roll this out -- this technology out across our commercial fabrics, primarily in architectural shade, commercial shade. And look, it's a patented benefit -- patent-pending benefit that's unique to us. Our team has done a wonderful job in developing that and putting that through manufacturing in a relatively compressed time frame. We've done the testing. We know it works. We've done third-party validated testing with universities. We know that the benefits we are claiming are real. And so we're looking to accelerate that to drive growth in commercial and in our consumer ranges throughout FY '24. And you'll see that start to expand more and more over this year. And as we work throughout this year, we'll tell you -- we'll continue to communicate the success of those ranges as they come to market. I think the last question here is regarding the restructuring programs and questions says the restructuring program is delivered. You're saying deliver -- will deliver $5 million in 3-year savings. Can you please be more specific about where these savings come from? And what type of initiatives are driving these savings? And I'll start in the U.S. and then I'll move to Australia. So in the U.S., we're -- we've made the decision to transition our custom roller shade manufacturing to a partner in South Carolina with a much larger footprint and an opportunity to drive overall lower cost in product costs and system costs there. It also gives us the ability to work with that partner to invest in capacity over time to introduce some really compelling new products in that range. And some of the technologies that we've launched this year will find their way into the custom range, and we wanted to make sure that we had best total cost of production for those goods and we found a partner we think is able to provide us that. And so we've made the hard decision to transition the assembly of those goods there. I'm very confident in that transition, and I'm very thankful to our team who have got us to a point where we're at on the program today. In Australia, we've made the hard decision to make some lower headcount decisions in key areas of the business, and those are our network fund decisions, but we're respectful of the team. And when we made some transition we've met our transition plans appropriately reflective of contributions and the requirements in that region. We've also redeployed some of that headcount and investment back into generating demand and revenue-generating headcount for our commercial business to help expand on things like Ecobanner and drive new placements and generate new awards for that business to drive greater scale in our nonwoven coated paper fabric or paper business and being leveraged into single-use plastic transition out of the Australian market, things like food container, single-use food containers. And so over time, it just may transition some of those investments in service of the growth strategy to best fueling our growth opportunities. But the $5 million 3-year savings of those programs combined, we think it's a relatively conservative number. But that doesn't take into account any of the additional market share and growth opportunities. We think they will be presented themselves in Australia as a result of the pivoting in some of that spend more profit and revenue-generating activities. That's all for the written-in questions. I don't know if anybody had any other voice questions they'd like to have now, operator. But if not, let me know I'm happy to close the call.

There are no phone questions at this time.

Well, thank you. I certainly appreciate everyone's time this morning. As I mentioned earlier, we're dissatisfied with the full year financial results. I did want to make sure that we were relatively thorough in our explanation of what we're doing about it. I will tell you that our team is engaged in improving the company every single day. A lot of the projects that you've seen described today and you'll read about in the annual report are real. They're not ideas. They're actually happening. And I think over time, what you'll see is those improvement projects hopefully pay dividends in terms of not only their strategic importance, but earnings generation and revenue generation for the company. And I do want to say thank you to all of our shareholders who are on the call today, all of you that support the company and those stakeholders, our audit partners and all of the team members of Gale Pacific who have contributed greatly to this result. And I just want to say thank you to you all. And if there's no more questions, I'd like to close the call for this morning and this evening and say thank you for your continued support, and we'll look to talk to everybody in a few short months at the Annual General Meeting at the end of October. So thank you.

Thank you.

Thank you. That does conclude our conference for today. Thank you for participating. You may now disconnect.