Vulcan Steel Limited (VSL) Earnings Call Transcript & Summary

Thank you for standing by, and welcome to the Vulcan FY '24 results. [Operator Instructions] I would now like to hand the conference over to Mr. Rhys Jones, Chief Executive Officer and Managing Director. Please go ahead.

Thank you, and welcome, everybody. Can we move to Slide 6, please, to start. Okay. Look, what I would first like to comment on is that the past 12 months has been a very challenging environment. This is reflected in our volume being down 9% and also our gross profit for dollars per tonne being down 7%. These 2 statistics demonstrate the severity of the market downturn. Despite that, we made $148 million EBITDA and an adjusted net profit after tax of $40 million. One of the positives we had in the past year as we reduced operating costs by 1.7%, in the fact that we had 11 months of aluminum in '23 versus 12 months of aluminum '24. We also include in our cost or our expenses and development of our new sites for expansion. So the total reduction in operating costs, given the inflationary environment, we believe, is a credible result. In addition, ATAs for the second half '24 versus second half '23 was up 3.6%. Again, we believe that is worth noting. The operating cash flow of $169 million was a highlight. We believe there was a reflection of both reduced inventory due to the slower market, but also the average cost of material was down. That year overall produced a return on capital employed pre-IFRS of 20%. We believe that's a critical result in an environment, which is probably the harshest we've had for many years. If you can move to the next slide, please. This slide talks about our different verticals. We've got 6 verticals, 3 in steel, 3 in metals. In terms of geography, we're widespread right across Australasia from Tasmania to Western Australia to the South and North Island Queensland, New South Wales, et cetera. So a very widespread geographically. Therefore, exposed to the different economic environments in each parts of Australasia, which do vary. In terms of market segments, as you can see there, our different product range enables us to service a wide variety of segments from mining, engineering, manufacturing, construction, roll-forming, food segment, wine, transport, a wide variety of segments. Lastly, I'd like to comment that we're not dependent on a small number of clients. Of our top 20 clients, they represent 9% of our sales that compares previously to 13%. So since the addition of aluminum, we've become a lease reliant on a core number of large clients. Therefore, nearby we've got good geographic spread, good market segment spread and a very widespread group of clients buying off us. The next slide, please. Just to summarize our growth strategy and update. As we've indicated previously, we've got a strategy of ongoing growth within our existing businesses targeting new clients. We've also expanded into new geographies. And we've talked about the platforms we have aluminum, stainless and engineering, there's all new platforms we've developed in the last 5 to 10 years. We've acquired 11 businesses since 1995, most recent of which was Ullrich Aluminium, and we see opportunities for further consolidation in coming periods. In terms of our business improvement initiatives, very big focus on offsetting cost inflation, as I've already referenced with productivity gains. We've also highlighted the fact we're getting growth in our revenue out of 17 different growth initiatives we identified in FY '22, and we're also focusing heavily on geographic spread and product footprint. So we have stainless and aluminum, for example, in new geographies. And lastly, customer engagement absolutely ensuring, particularly in aluminum, the customer experience, product availability in [indiscernible] that of other Vulcan products. The next slide, please. What you'll notice in this slide gives you a good sense of our wide network of operations, but also it's gone down from 72% to 66%. This really reflects the fact that we've had a co-located some sites onto 1 thereby reducing cost and improving efficiency and ensuring customer service and one-stop shop availability has improved. You'll note also we've got 22,500 clients. This includes aluminum over the last 6-month period. The next slide, please. This slide talks about aluminum. The aluminum business is a core part now of our Metals division. We've got a good team in place, and we've introduced our core competencies on our business model into aluminum. Certainly, the costs, the logistics side, the stock availability, the principles and Ethos focus on health and safety, the idea also that we always want to do a fantastic job for the client, no matter what, that's enabled by the IT system that's now well in [indiscernible] bedded in. We've exited 7 aluminum sites, of which 6 were integrated into our existing sites, and also, we have created a brand-new hybrid site, which will be aluminum and stainless and [indiscernible]. The real mix step in our aluminum plan is to ensure that we start reducing our other disciplines of sales force effectiveness and improved customer service levels. That is really starting to take a [indiscernible] in New Zealand. Early days in Australia, but we're certainly making some progress, and we believe that will be beneficial in the coming periods. We want to grow our customer base, improve our depth -- our customer engagement, and we want to absolutely lock in the benefits of having an improved logistical in freight handling system in Australia. Next slide, please. In terms of health and safety, we're working hard on health and safety as a business that's opening up new hybrid sites new greenfield sites and acquiring businesses, we have an ongoing challenge in introducing health and safety systems and standards to the new environment. We've introduced a Safety Step Change Program where senior leaders are actively engaged, and we make it part of our core principles and ethos when we talk to all employees about the need to improve health and safety, get their genuine engagement and record near -- identify hazards and really focus on the root-cause analysis [indiscernible] health and safety. Separately, in the environmental space, we've measured Scope 1 and Scope 2. And you'll see there that in FY '24 increased by 9.15% per tonne of output. This really reflects our volume decline and the fact that a lot of our emissions come from our trucking fleet, and our trucks are not as fully loaded as they were previously were due to the slow economy. What should be noted, however, that our total overall emissions are down 1%. And that is compared a 12-month period with aluminum versus an 11-month period the previous year. So our actual underlying improvement is above 1%. So we believe we're on the way to improve further in that area. Next slide, please. This is the operating backdrop during FY '24 and if I start with New Zealand for a moment, I would say that this is one of the most challenging economic environment we've had in New Zealand well before the [ GFC ], a very, very tough environment. Within our current environment, Australia as well has been very subdued. So we've had really quite a difficult environment in the last 12 months, a lot of destocking, overstocking due to rapid slowdown, all of that led to very much reduced activity and a lot of inflationary cost pressure as well. So in total, a very negative environment. [indiscernible] across the global scene, we saw steel pricing in New Zealand, Australian dollars declined by 4%, stainless steel by 14%, which is a significant number, and aluminum, the only bright spot improved by 3%. So as you can see, the puts and takes in FY '24 would very much skewed towards the negative and challenging. Now I'd like to hand over to Kar Yeo to start on the group financial performance.

Thank you, Rhys, and good morning to everyone on the call. To echo on Rhys' comment in regards to the 9 million -- 9% year-on-year decline in volume and 7% drop in our group gross profit dollar per tonne, that translated to a 33% decline -- year-on-year decline in our EBITDA, earnings before interest, tax and depreciation with strong effort from our team in containing costs while still investing for our future growth, we're able to mitigate some of these negative impacts on our financial year 2024, net profit after tax to a 55% year-on-year decline in financial 2024. As a result, we were still able to deliver a sound return on capital employed of 13%. But if you adjust that to exclude the impact of right-of-use assets and capitalized lease obligation on this measure, our return is equivalent to 20% for the financial year 2024. Turning to the next slide on Slide 15, please. In terms of the earnings bridge from financial '23 to '24, volume contributed to a $40 million decline in EBITDA, while margin as measured in gross profit dollar per tonne contributed to approximately a $30 million decline or drop on a year-on-year basis. As you can see on the next slide, in terms of segmental firstly, on steel, revenue fell by 21%, a combination of selling price and volume. EBITDA as a result fell by 37% year-on-year, as I mentioned, reflecting lower volume, which fell by 11% and gross profit dollar per tonne, which was up approximately 13%. On the next slide in relation to our Metals segment on Slide 17. Revenue fell by 9%. Again, a combination of slightly softer selling price and a drop in volume. As a result, EBITDA fell by 22%, driven by, as I mentioned, a 3% decline in terms of volume and some weakness in gross profit dollar per tonne. On our OpEx, look, on the next slide, regardless of market or inflation landscape, cost efficiency, as Rhys mentioned, is an ongoing core competency and discipline that we practice. As outlined on this slide here, OpEx was broadly flat if you include the full 12-month impact from our aluminum business. But on a like-for-like basis, the underlying decline delivered around $4 million worth of savings or 1.7% lower in terms of year-on-year comparison. Before I hand it back to Rhys, I just want to touch on a couple of more slides. Firstly, on cash generation on the next slide. We delivered $169 million in financial year 2024 in terms of operating cash flow, up 16%, a significant portion of it, obviously, is to do with the discipline that we continue to practice and manage in terms of our working capital and stock level. Net capital expenditure in financial year 2024 reached $24 million. In financial year 2025, we expect to spend somewhere between $30 million to $35 million. approximately $18 million -- $17 million to $18 million of this will be maintenance CapEx. The balance will be for a combination of cost reduction initiatives as well as growth opportunities going forward. And final point on the following slide on Slide 20, in regards to dividend and balance sheet based on a $40 million net profit after tax, it has been determined that we would pay a final dividend of $0.12 per share, bringing our total dividend for the year to $0.24 per share. The final dividend will be fully franked for Australian tax resident and 30% imputed for New Zealand tax resident. Balance sheet-wise, we think we're still in a very strong position to fund any future growth initiatives ahead of us. I would like now to turn it back to Rhys to conclude our presentation.

Thank you, Kar Yeo. As I mentioned earlier, Vulcan's geographically spread, and we've got a wide variety of customers and market segments we operate in throughout 6 verticals. So we do anticipate as the economies of both New Zealand and Australia and time and prove, we'll have direct exposure to that improvement. The recent Reserve Bank of New Zealand decision to bring forward the easing of the interest rate by 0.25 will definitely have a positive mindset improvement in the New Zealand market, but we don't anticipate to see any real change in volume until the new calendar year. Similarly, in Australia, they've still got a restrictive monetary policy, so we do not see any change in demand in Australia in the near term until those restrictions are eased. So to be specific, we anticipate the first half of FY '25 to have similar volumes as the second half of FY '24. In the new calendar year FY '25, we do anticipate some improvement. We're also seeing the rate of inflation come down, but the underlying element of inflation is that is still embedded in most costs. So we're still going to be very focused on reducing costs. And also, we'd also like to highlight that the rental adjustments as they come up are on the high side. So we're getting significant cost increases in inflation into rent. In terms of our business improvement program, as I've indicated earlier, we are pleased about the 3.6% year-on-year improvement in second half year '24 versus '23 on ATAs, ongoing focus on improving our ATA and customer focus. We're also going to really focus hard on ensuring we gain new customers, particularly in aluminum as we improve in that area. As I've referenced several times, productivity and cost improvement, we've absolutely focused on, and we'll be unrelenting in that area. Our aluminium integration program is moving into the revenue generation phase or our sales force effectiveness. So we believe that we'll have some benefit for us in coming quarters. We're also planning to expand our coverage of our hybrid sites through existing replacement and new locations. And now just to finish on the next trading update, the company has not provided earnings guidance for FY '25 in light of the ongoing uncertain market conditions, but we will update on our trading at the Annual General Meeting in November 2024. That concludes our presentation. I'd now like to invite anybody with any questions.

[Operator Instructions] Your first question comes from Lee Power with UBS.

Rhys, just your outlook commentary around similar activity levels in first half '25 versus second half '24. Can you just maybe talk a little bit about what you're seeing in July, August so far? I mean, obviously, take your comments around recovery, not coming to a CY '25, but I'd just be interested to know if you're kind of already running at that second half '24 run rate? Or does it assume some recovery into the back half of the year? Obviously, some -- one of your peers yesterday mentioned a very tough July.

Okay. Look, I would -- just a very quick comment. The last few quarters is up and down between months. I wouldn't read anything to one particular month. If you look at the average volumes, the last 2 quarters, they've basically been flatlined, would you agree with Kar Yeo. So we don't really anticipate that to pick up until the new year at the earliest. Lee, I think the New Zealand environment people are saying, okay, the interest rate cuts is going to lead to a stimulating the economy. I've got no doubt that it is. And we're certainly getting some customers talking about projects that are going to be repriced and likely to go forward. But the reality is these things take time. So it takes quite a long time to that pipeline to fill orders to actually be placed, et cetera. So we believe the New Zealand uptick will be starting sometime in '25. But in Australia, we've still got restrictive environment there. So we still have a high level of uncertainty. So net-net, we probably see that just carrying on the same volume as what we had in the first half of this financial year and be very similar to the second half of the last financial year. Any comment from Kar Yeo or Adrian?

Sure. Thanks, Rhys. Yes, Lee, thanks for the question. So I would say in the context of sentiment among our customers, it certainly has turned positive from what was quite a negative sentiment in New Zealand. As to when that sentiment actually translates to actual work on the ground, that remains to be seen.

Okay. And then just on costs, like you obviously did a great job in the second half. You also called out potential rent adjustments and then that kind of ever present inflation. Do you want to give a little bit more color on that? And do you think you'll be able to offset them in first half '25 given cost or productivity improvements?

Okay. So I'll have a crack at that Lee. This is somewhat [indiscernible], but I'll give you my best ever. Look, the reality is we've got some increases occurring. So you just can't avoid that. As the anniversary comes up, there's a rent increase. But on the other side, we'll be consolidating some sites, so we've been reducing rent. But on the other side, again, we've had -- we've expanded some sites. So we've increased more costs, actually increasing our potential coverage. So that needs to be taken into account. But for pre-existing businesses, excluding that expansion, I would anticipate to offset those costs. So we're specific about it. We have a very detailed sessions within the company by unit with detailed cost programs managing that appropriately. We don't make redundancies. They are quite rare, but what we do is we have a [indiscernible] policy and looking at moving people across or between businesses. So we're certainly focused on that. The other comment I'd make Lee, which is a bit beyond the question, but any uptick in volume, we won't be increasing our costs. We've got plenty of scale capacity there. So we benefit directly without any cost increase. Do you want to comment, Adrian because you're strong in this area?

So look, just to endorse Rhys' comments, it becomes a little bit complex, giving you an exact answer to this. Yes, we do have rent and outgoing increases, but when we form the hybrid sites, we go from 2 sites to 1 typically. So there is a saving there as well. So as they come on board, that negates to a certain degree, some of the rent increases. And from a cost point of view, as Rhys had mentioned, the detailed program that's just ongoing. So everything is looked at and it's a very detailed project. So managing cost, we are hopeful of retaining the progress we've made this year and to the forthcoming year.

Your next question comes from Shaurya Visen with Bank of America.

Look, one question on your balance sheet. So could you talk us through what level of leverage are you comfortable with? And if you could just talk about a few numbers, right? And thinking about, say, net debt-to-EBITDA 2.6x. I think in the past, you've told us that sort of comfortable in that 1 to 2 range. So to go back to the question. Firstly, do you think that this range has gone up? And secondly, as you say, markets remain quite uncertain. Have you considered working on the covenants to make them more flexible?

Sure. I'll have a go at that question. Thanks, Shaurya. So the -- if you think about our overall where we are in the economic cycle, we would like to think we're near the bottom, if not at a bottom of the economic cycle in both Australia and New Zealand. Then the context of 2.6x, yes, it's higher than what we'd like to see. But our view is that the improvement will come typically what ends up happening as you can as you can appreciate, we are a stock and debtors business. So working capital changes and management and initiatives typically lag by up to 6 months. And so whilst we've been successful in reducing our debt level and continue to do so. My expectation is that there'll be further improvement to come in terms of our working capital position. Part of it is also we are a growth company. We are positioning ourselves for growth. So at a low point in the economic cycle, we're saying -- relatively sanguine in terms of where we are positioned from a leverage standpoint.

That's helpful, Kar Yeo. And just the second part of the question, just have you thought about working around the covenants? Or you think we'll be quite comfortable below that?

That's right.

Sorry, I missed it, sorry.

That's correct. Yes, we are comfortable with where we sit.

Sure. And Kar Yeo, a very quick one. Just thinking about the freight costs. You've obviously made some comments on some charts on freight cost. Some of our [indiscernible] suggest that maybe sort of a surcharge on goods coming from, say, China to Australia, like surcharge was introduced a couple of months back. Can you just comment on that? And how do you see the freight cost over the last month or so?

We'll get Adrian to respond. Thank you.

Yes. So yes, we have seen the increases. And obviously, due to the Red Sea issues and freight through Singapore, especially, so freight has increased over the last month or 2. It is by a couple of percent, as you correctly point out. We do see this -- it could increase further into the fourth quarter. We're taking discussions at the moment. But from an overall point of view, it's not completely relevant to a complete business. So it depends what percentage comes from overseas. So we are comfortable with the increases that are coming through.

Your next question comes from Rohan Koreman-Smit with Forsyth Barr.

Congratulations on a good result in a pretty tough period. Just going back to your revenue and you talked about volumes down, and you gave some color there on the run rate. Your comments on Aussie being weaker, are we to take that as Australia could be kind of backwards this year in terms of volumes comparing year-on-year and '25, and that's partially offset or mostly offset by an improvement in New Zealand?

Like guidance. Yes. Okay. Yes, I can't provide specifics on that. But what I would say is that -- when we think of Australia, we think of the different parts of Australia. So if I just give you some general color on that, you see that particularly in Queensland with the Olympic construction should be a positive. Mining is still stable. There could be some downward pressure on mining, but Victoria is definitely quite weak as an economic environment. So we see that as plot struggle. And in New South Wales, have probably got some upside. So I think there's puts and takes across all of that Rohan. So it's actually quite hard to estimate. But our general comment was that Australia is lagging behind New Zealand in terms of when it's going to start cutting interest rates. So we're quite dependent on that. I think when interest rate cut starts coming in Australia, you will see some improvement in sentiment in demand later.

Do you think there's a risk that Australian volumes are softer in the 12 months ahead than they've been in the past 12 months? And given the...

Well, I think just the general comment I'd make is that in this coming 6 months, we think it's probably going to be some of the last 6 months. And in the new calendar year, depending on what happens with interest rates and the like, you could get an uptick or you may not. We just don't know it.

Yes. Just to add to Rhys' comment and to the rest of the call, I appreciate you want more sort of quantitative guidance, whether it's volume margin or overall earnings. But dealing with a turning point in the economic cycle, both in Australia and New Zealand, depending on one's view on each of the monetary policy and what impact -- lasting impact it has in the next 6 to 12 months, it is very hard to generalize. One, if you're asking, could it be softer, yes, it possibly could be as one of the scenarios. We're not providing any specific comments on that front at this stage.

Yes. I appreciate that. Just on the gross profit dollars per tonne, it looked like it kind of came off quite a bit in the second half of the year across most of them. Can you just give us some color on there's obviously been the [indiscernible] outage and you've got imports and long steel [ Vale ] is back on board. Can you just give us some color on pricing on both sides of the Tasman and maybe a little bit of color by product and where you're seeing pressure?

Again, I'll get Adrian to comment as well. There's no question that steel distribution in Australia has been quite challenged in the recent past, moved [indiscernible] disruption, imports coming in. And obviously, the book to business very focused on cash generation because the big outage, which presumably cost them tens of millions of dollars in [indiscernible]. So that definitely had a disruptive effect no question about that. I don't believe that's sustainable, but we just don't know. In terms of aluminum, we've been working very hard on maintaining and improving our market offer in aluminum. So we believe that our margins and the like pricing outlook is pretty good. Engineering, ups and downs quite a challenging market on occasions, but overall, pretty steady. And then in the New Zealand market, we've certainly seen some erratic pricing behavior, and you probably picked up on it wrong with the results of some of the other listed companies, you'll probably recognize that some quite serious levels of desperation are out there with a very, very slow market in New Zealand. Now whether that's sustainable or not, I'm not sure, our overall margin decline, we believe, has been quite well managed and we're actually relatively happy with it. And I'll invite Adrian who has been through these cycles many times and have a good view on it as well.

Yes. So Rohan, just your comment on [indiscernible]. Obviously, importing, there's 3 or 4 options into Australia and New Zealand, from a pricing point of view, net even. So there's no disadvantage in boarding from a price point of view compared to buying locally out of [indiscernible]. They're very even. So from affecting GP dollars per tonne, that doesn't come into it.

Your next question comes from Owen Birrell with RBC.

Just a couple of questions for me. First one is just on the CapEx. The $13 million to $18 million of growth and cost initiatives. Just wondering if you could us a sense of I guess, more specifically what those are and whether that CapEx is going into, I guess, sort of hard infrastructure or more systems and so forth.

Sure. I'll have a go at that question. Thanks, Owen. So on that $13 million to $18 million roughly of growth-driven initiatives and cost reduction, approximately 30% of that relates to cost reduction. The balance is on growth. The growth really is a combination of trucks, a combination of hard assets. We're talking about crane. We're talking about laser machine and that type -- that nature of investments.

And new sites as well.

And new sites as we continue to either refresh or expand on pre-existing [ brownfield ] sites.

That's perfect. And just second question for me. Just looking at the competitive landscape, both I guess, by state in Australia and across New Zealand. Can you just give us a sense of, I guess, how your competitors are acting? And also give us a sense of what degree of channel inventories are in the system. Where we are in the cycle, I guess, from channel inventories perspective.

Okay. I'll have a crack and then I'll get Adrian to have a go as well. But if I just start with long steel products, so distribution steel. So what we're finding in New Zealand and in Australia, both places, there's a high level in New Zealand, the economic environment is so tough. It's a high level of desperation amongst our competitors. So we've seen that. But we have seen the deterioration of stock availability and service levels. So we've got a pretty sticky client base, and we're very much focused on service and the like. The irony is when things are tough, you've got to be 100% reliable. Otherwise, client has started hanging around with no steel. So there's a [indiscernible] on what you expect in terms of the benefit in the environment. In Australia, what we're saying is the [indiscernible] business is often selling for just pure cash generation purposes and it's certainly creating a lot of stress and tension within the Australian market. So that's the general comment. So the landscape is to be highly competitive in Australia and highly competitive in New Zealand. If I go to coil, probably in New Zealand, we've got a very big decline in manufacturing. So that's quite tight. But the clients seem to be more tied to people, so not so challenging. Plate processing across Australasia, [indiscernible] on transport industry in forestry, particularly in New Zealand, that's holding, but it certainly had some significant decline. We're seeing a number of players really struggling to make ends meet we believe. We're not certain about that, what we think so. Then I go across to aluminum across the board in Australasia, we're seeing quite a big decline in demand in New Zealand at the moment due to the fact that window-based products are really slowing down as residential construction stops. But we're -- overall, we're pretty happy with that, but we basically improved the service and availability. So in Australia, we're probably seeing a similarly competitive environment. But overall, in the aluminum, we think is stable. Stainless is relatively stable, possibly even improving somewhat with infrastructure and water, wine and food processing and the lower exchange rate dairy industry and our expansion into hybrids. So we're making some progress there. And the engineering, steel is very much related to the mining segment and manufacturing. Manufacturing is definitely quiet. We've seen some -- no real change in competitor intensity, but the volume declines from 1 month, there's puts and takes from month to month. So it can be some erratic pricing on occasions, but it's not widespread. So if I summarize all that, I would say still long products are the main concern. And that's just through vertical construction is really a low point in both Victoria, Auckland and Sydney and Brisbane at the moment. And until that comes back, it's going to be a real challenge. And on top of that, the [indiscernible] businesses are really struggling for volume. Do you want to comment, Adrian? I don't think we can [indiscernible] intensity is getting worse. I think it's principally located long product steel.

Yes. No, I agree. So just to add to that, the 1 point I would make with [indiscernible] stopping production for a couple of months in Australia, a lot of imports come into Australia. So there's an overstock situation for 3 or 4 months, which increased the competitive element just in Australia, not so much in New Zealand. So that's where I'll add to it.

Your next question comes from Grant Swanepoel with Jarden.

Three quick ones from me. I see in the second half, your ATA has actually dropped from the first half, is that just noise? Or is that because your cost out program is reducing competitiveness? Or has the industry competitors picked up on that one?

Yes, yes. So Grant, that's entirely related to trading days. So in the second half of the year has a lot lease trading days in the first half of the year. That's what we do year-on-year like-for-like half year comparisons.

So that means some people don't trade with you in half a year.

Correct. That's right. So the way we measure these numbers to provide both year-on-year and sequential time frame so that you understand in the second half, the customers that trade at least once with us in the last 6 months is how we measure our active trading accounts. And so there are occasionally customers that would only actually end up trading with us once in the last 6 months. And they can be large chunky transactions. They're not just smaller transaction values.

My second question, just the last time we discussed acquisitions. You said you had 3 or 4 potential ones you were looking at with your net debt now at 2.6x EBITDA. Are you still looking at acquisitions? How do those 3 or 4 progress?

Correct. Yes. Okay. So a quick comment on that. We are definitely looking at more acquisitions, grant, and we are working away diligently on civil. That's still an early phase, but they're quite significant in size. So we're just working away doing our homework in due course, we hope one or both come off. But I'll maybe hand to Kar Yeo in terms of the balance sheet component of that, which I think probably you'll push in [indiscernible].

Thanks, Rhys. So really the gearing position in itself is not a cap or a limit to our appetite for growth, be it through organic or acquisition. I think we do a good job in securing the right asset that fits with our model and the right vertical. And we buy at a fair price. I think our shareholders will provide support for us to do an exactly those.

And my final question, now that you've got 6 hybrids underway. I think in the last time we chatted, you were targeting 18. Is that still the case over the next couple of years?

Yes. So the plan is to roll out and explore opportunities for more hybrid site. We're just mindful that we're focusing on doing what we do best, which is just continue to execute at our own pace and at our cadence.

The quick observation I made, Grant, is that our goal is to do as many as we can, but we want to do the more to high standard is what we're saying. So we don't want to put a time frame on it, but we've certainly got left.

[Operator Instructions] Your next question comes from Liam Schofield with Morgans.

All my questions have been asked.

There are no further questions at this time. I'll now hand back to Mr. Jones for closing remarks.

Thank you very much for attending this briefing and certainly appreciate your support. Thank you.

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