The biggest takeaway from the AGM was this slide from the CEO, Michael Sainsbury’s, Presentation:

Michael said the business model is changing from day to day projects to larger projects with longer time frames. He said the order backlog has grown from $62 million to $92 million in the 12 months from October 2023, up 50%, and the average monthly orders are up 39% compared to 1H24. These orders will be eventually invoiced and come through in the revenue. He expects 2H24 to be much stronger than 1H25.

His said construction has slowed but will come back (sort of contradicts the order book story) but will come back. He did have a little slip of the tongue when talking about the cost base relative to sales revenue, saying “we have controlled the bleed”. He quickly covered up by saying that was a poor choice of words. Did the truth slip out? I guess we’ll find out in about 10 months time.

Interesting that Data Centre revenue is growing at 25% per year and currently makes up 12% of the revenue.

i come away thinking the business seems to have enormous potential. I’ve come away with a bit more confidence the business is on the right track. If the order book backlog does converts to invoices and revenue we should see good growth return. However, we need to trust management on this and take a big leap of faith. I’d like to see the order book included in each trading update going forward if this is the “new” business model. If we don’t hear about the order book backlog going forward, that won’t be a good sign.

Held IRL (tiny)

The market has reacted very negatively to IPD Group’s Earnings guidance today, down over 11%. Is this an overreaction, or is it warranted?

1H25 EBIT guidance is $19.2 million to $19.8 million, mid-point $19.5 million. Assuming a 30% tax rate, that’s $13.6 million net profit before interest. Assuming 2H is similar that’s about $25 million before interest for FY25 which is a miss on analyst expectations of c. $30 million.

CEO, Michael Sainsbury, said margins will be impacted in 1HFY25.

What do others think?

Not held.

ASX Announcement

Based on unaudited results for the 4 months ending October 2024, and management forecasts for November and December, the Company provides the following earnings guidance range for 1H25:

The Company also notes that:

• Revenue for 1H25 is forecast to exceed the pcp (Pro Forma);

• Average monthly orders received has grown 39% in Jul-Oct 2024 Vs 1H24 (Pro Forma); and

• Order Backlog (as at end October 2024) has grown to $93.1m, a 50% increase on the pcp (Pro Forma).

Michael Sainsbury, IPD Group Limited CEO, said: “We are pleased to remain on track to deliver another half of revenue growth in a challenging environment. Amidst the wider macroeconomic challenges in the commercial construction sector, we have seen our order book transition from daily trade to larger and more complex orders, which typically have longer lead times and less certainty around delivery timing. This has resulted in a proportion of orders that would previously have already become invoiced Revenue now sitting in our Order Backlog. We have made additional investments into our operating cost base to generate and deliver these additional orders, which will impact margins for 1HFY25. Our operating cost base however is well placed to service future growth. We remain excited by IPD’s ongoing evolution and the continued improvements to our overall value proposition and look forward to providing more details around today’s update at the Company’s AGM on Tuesday, 26 November 2024.”