Release Date: November 19, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Trifast PLC (LSE:TRI) is on track to deliver a successful FY25 financial year, with a clear strategy focused on execution.

• The company has achieved improvements in both gross margin and EBIT margin, driven by pricing and sourcing activities.

• Trifast PLC has made significant progress in reducing net debt, with a leverage ratio now below one.

• 95% of new business wins are in the target strategic market sectors of automotive, smart infrastructure, and medical equipment.

• The company has seen accelerated growth in North America, with more than 20% growth in smart infrastructure year on year.

Negative Points

• Revenue was broadly flat compared to the previous year, impacted by challenging economic conditions and PMI indices below growth numbers.

• The company exited approximately 1,100 customers, including some strategic long-term customers, to focus on margin improvement.

• Trifast PLC faced headwinds in the markets, with demand down and softness in Europe and Asia.

• A bad debt provision of 1 million was taken due to the administration of a Swedish automotive entity.

• The company anticipates a 0.5 million impact from the UK autumn budget changes, including national insurance and minimum wage adjustments.

Q & A Highlights

• Warning! GuruFocus has detected 8 Warning Signs with LSE:TRI.

Q: What impact will the autumn budget in the UK have on Trifast's results going forward, especially regarding national insurance changes? A: Kate Ferguson, CFO: We have estimated the impact of the autumn budget on our FY26 budget to be about half a million pounds, including national insurance and minimum wage changes. We will work hard to mitigate these additional costs.

Q: Where was the bad debt of 1 million, and what steps are being taken to prevent reoccurrence? A: Ian Percival, CEO: The bad debt is related to a Swedish automotive entity entering administration. We have tightened control on receivables and are using D365 data to avoid excess inventory exposure. We continue trading in Scandinavia and are seeking recovery of the debt through the administrator.

Q: Are there any significant CapEx or other one-off cash costs required this year? A: Kate Ferguson, CFO: We expect higher CapEx in the second half of the year to support long-term growth and maintain production and distribution capabilities. No other significant one-off cash costs are forecasted.

Q: What are the target EBIT margins for FY25 and FY26? A: Kate Ferguson, CFO: Our strategic objective is to achieve a 10% EBIT margin in the midterm. We are on a trajectory towards that goal, improving from the current 6.2% EBIT margin.