In This Article:
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Revenue: $70.7 million from continuing operations, with $62.5 million from core brands.
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Underlying EBITDA: $2 million.
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Gross Margin: 58.7%, slightly behind the prior comparative period.
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Net Cash Position: $11.6 million.
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Core Brand Performance: Manicare achieved $23.9 million, Swisspers $10.5 million, Lady Jayne $9.6 million.
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Employee Cost Savings: $1.7 million due to rationalization and restructuring activities.
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Advertising and Promotions (AMP) Spend: Front-weighted with a $4.1 million increase for core brands.
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International Sales Decline: Down $1.5 million, primarily due to Dr. LeWinns brand.
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Operating Cash Flow: $1.8 million, with a cash conversion rate of 137%.
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Expected Incremental EBITDA Benefit: $4 million to $5 million from FY26 due to new operating model.
Release Date: February 26, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
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McPherson's Ltd (ASX:MCP) achieved revenue of $70.7 million from continuing operations, with $62.5 million from core brands.
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Four out of five core brands showed growth, with Manicare, Swisspers, Lady Jayne, and Fusion Health performing well.
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The company maintains a healthy net cash position and a strong balance sheet, providing flexibility for transformation.
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The new route to market model is expected to unlock $4 million to $5 million in underlying EBITDA by FY26.
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The company has successfully reduced employee costs by $1.7 million through strategic rationalization and restructuring.
Negative Points
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Revenue declined by $5.8 million compared to the prior half, primarily due to exiting non-strategic and lower margin brands.
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Dr. LeWinns brand underperformed, with a 5.6% decline in sales, impacting overall core brand performance.
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The transition to a new route to market model will impact approximately 65 roles within McPherson's warehouse team.
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The company expects to incur one-off cash and non-cash costs of $9 million to $11 million in FY25 due to the transformation.
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The current direct-to-store model is not competitive, leading to extended lead times and distribution challenges.
Q & A Highlights
Q: What do you expect the net working capital benefit under the 3PL model on average over the course of a full year? A: Mark Sherwin, CFO: We expect the net working capital benefit to be significant, though we haven't specified exact numbers. Currently, we hold 120 to 150 days' worth of inventory, and we aim to reduce this by 25% to 40%, which would result in a substantial cash flow benefit in the millions.