Adrad Holdings Limited

ASX:AHL

Adrad Holdings Limited

ASX:AHL
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$1.040 (+4%)
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#31
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29
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Forum Topics AHL AHL ASX Announcements

Pinned straw:
Jimmy
Added 2 years ago

DOWNGRADED GUIDENCE:


Over recent months AHL has seen a softening of demand across its businesses.

The Heat Transfer Solutions business specialises in the development of custom designed and manufactured products predominately for the Australian environment.

As part of new product development there are continuous innovations leading to improvements in design.

One particular product for a high growth market has required an upgrade to enhance its performance.

In conjunction with the customer, HTS has been undertaking an upgrade program, which will incur an additional one-off cost of ~$1.5m to ~$2.0m in the FY24 year.

This additional investment is expected to secure orders for this product into the future.

Over the last few months there has been a deferral or cancellation of a number of projects such that the revenue from these projects will no longer be included in the FY24 results, with the majority of these projects expected to move into the FY25 year.

Demand in Distribution market has also softened, particularly for industrial radiators.

Overall AHL now expects that FY24 Forecast Revenue will be~$140m to $144m, being flat to ~3% above FY23 actual.

FY24 EBITDA (post AASB16) is forecast to be between $18m and $19m, which is between 6% and 10% below FY23 actual.

Heat Transfer Solutions revenue is forecast to be ~1% below FY23 actual owing to customer deferrals or cancellations of projects as outlined.

Many of these projects are expected to come to fruition in FY25.

FY24 EBITDA is forecast to be ~20% below FY23 actual due to the combination of the deferrals of projects and product upgrades as outlined above.

Distribution is forecast for revenue to increase ~5% above FY23 actual with forecast EBITDA ~10% above FY23 actual.
Tom73
Added 2 months ago

Darryl Abotomey has resigned as a director of Adrad...

Non-market sensitive announcement just out.

Well, I would almost rank it as market sensitive - it is to me. Having Darryl involved initially as acting CEO and then as a director was an important part of supporting the commercial acumen of the management and board.

So we have had a new CEO in July, a new Chair on 9 September now this.

Time to review this investment in detail!

25
Strawman
Added 2 months ago

Yeah that was a very brief announcement @Tom73

Always difficult to know what's happening behind the scenes, but as a general rule it feels like the shorter and more perfunctory the resignation announcement, the more bad blood there is..!

21
lowway
Added 2 months ago

Agreed @Tom73 & @Strawman, something a little fishy in amongst this in the absence of better information. Add to that, it's always hard to gauge the market sentiment with this type of holding, as the volumes are so low in trading that any small move seems to generously help or hinder the closing price. All I can go on today is the volume of 2500 which is no indication of a poor mark from Mr. Market to this info.

Further research required.

14
Tom73
Added 6 months ago

NZ Exit (11/6/25)

The company had just announced it is exiting NZ operations in FY25. Previously it downgraded operation from manufacturing to just distribution in FY23, but will now cease all operations due to lack of scalability in the small market limiting profitability.

FY25 will have a $0.9m abnormal cost impact to NPAT, but FY26 is expected to be favourable by $0.3m NPAT due to removal of the NZ operations.

Looks like a sensible move, it better focuses the companies capital and management focus on Australia and potentially SEA.

Disc: I own RL

22
Strawman
Added 6 months ago

Agreed @Tom73 -- this feels like a far smarter move than pouring more time and capital into trying to fix a small, low-margin market where Adrad doesn’t have a clear edge. Exiting NZ frees up management to focus on better opportunities and should translate into stronger net profits, even if top-line revenue dips. As they say: revenue is vanity, profit is sanity!

The forecast $300k NPAT uplift in FY2026 might seem modest, but it’s not trivial; it represents ~5% of FY2024’s full-year NPAT.

At the risk of (again) drawing a flattering comparison, we’ve seen a similar strategy work well at Stealth Group (though, obviously, different business & different dynamics). They shut down unprofitable stores and ended weak contracts to lift margins and cash flow. While it doesn’t guarantee the same outcome here, it’s still a rational move to tighten focus and improve returns.

25
PortfolioPlus
Added 6 months ago

Ah yes Strawman,

Sales for vanity

Profit for sanity

but only cash in the Bank puts gas in the tank!

Maybe Elon might disagree here.

18
Arizona
Added 2 years ago

@Jimmy Quite a bumpy ride for the share price this morning.

9
Strawman
Added 2 years ago

I cant make the investor call, but the share price reaction today feels a little overblown -- a 14% drop on news revenue will be flat and operating profit will be between 6-10% lower. Especially when the issues don't appear structural and margins will be crimped by an upgrade program (especially as this relates, in part, to a new product for a high growth market).

No doubt things are exacerbated by low liquidity, but it doesn't feel as though the medium to long term opportunity has shifted in any material way. And a lot of the operational improvements that Darryl touted are yet to bear fruit (and he's got as lot of form on that front).

The company's enterprise value ($50m) is now about 2.7x forward EBITDA

14
Tom73
Added 2 years ago

Investor call at 11am on downgrade.

See bottom of attached notice for link: Trading-Update.PDF

ASX announcement if that doesn't work.

9