Darryl introduced the new CEO Kevin Boyle who started in April and spoke well for the short time in the business and the team seemed relaxed and at ease with each other and the call.

The downgrade is centred around the Heat Transfer Solutions (HTS) business, with Australian mining and powergen customers mostly deferring projects to FY25 rather than cancelling.

The Distribution (Aftermarket) business is also softer than expected but will still beat the segments last years Sales ($69.6m) and EBITDA ($10.2m). Added the figures because an analysist on the call asked for them and was told to check last years accounts have these figures… maybe he was just testing their knowledge (got-ya questions).

Additional $1.5-2.0m investment required to meet current and future customer needs is an additional cash outlay, but they had $17m in the bank in December, so hardly an issue.

A question was asked if the HTS business was servicing Data Centres, the answer was yes they formed a significant part of current and expected future sales.

Investor Day will likely now be after FY24 results to allow Kevin more time to settle in and to avoid complications of previewing results – which I think is sensible and should have always been the case.

The CEO appeared to be open and honest (noting it’s easy to do at the start), the company is profitable and has a lot of cash. The issues seem to be market rather than company related and they continue to focus on lowing costs to increase margins.

Have bought more on the dip, but would be concerned if market conditions deteriorated significantly more or worse that they started to have operational issues.

Disc: I own RL+SM