Release Date: October 03, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Galliford Try Holdings PLC (FRA:3WC, Financial) reported a strong revenue increase of 27% to GBP1.8 billion, demonstrating significant growth across all divisions.
- The company achieved a 40% increase in profit before tax, reaching GBP32.7 million, indicating strong financial performance.
- A final dividend of 11.5p was announced, bringing the total dividend for the year to 15.5p, up 48% from the previous year, benefiting shareholders.
- The order book stands robust at GBP3.8 billion, with 92% of high-quality work secured for the current year, providing strong future revenue visibility.
- Galliford Try Holdings PLC (FRA:3WC) maintains a strong balance sheet with no bank debts or pension liabilities, enhancing financial stability and flexibility.
Negative Points
- The company faced exceptional costs of GBP2.6 million related to digital systems implementation, impacting overall expenses.
- There was a temporary revenue hiatus due to disciplined risk management and contract selection, affecting short-term revenue flow.
- The effective tax rate benefited from one-time deferred tax asset increases, which may not be sustainable in future years.
- PPP portfolio valuations have reduced due to capital redemptions and higher interest rates, impacting asset valuations.
- The infrastructure margin was held at 2.5%, partly due to delays in project mobilization, affecting potential margin improvements.
Q & A Highlights
Q: Are you seeing any hiatus in government-related activity due to the changing government, and what is the status of the water sector pipeline following the Southern and Wessex wins?
A: The transition to the new government has been smooth with no hiatus in public sector contract awards. In the water sector, we've had a strong run in AMP8 with Southern and Wessex wins. We have one significant outstanding bid and a few smaller ones, but we've established a solid foundation for the next decade in water. Infrastructure margins were affected by delays in mobilization, but these issues are resolving.
Q: What is your view on the impact of ISG on the industry?
A: Our sympathies are with ISG's people and supply chain. The industry needs more people, so many will find new roles. The supply chain has likely mitigated risks with ISG, and we have not seen significant contagion. We conduct enhanced financial due diligence on our suppliers, and only two suppliers were affected, but they are managing well. Overall, the industry remains stable with well-run Tier 1 contractors.
Q: How do you expect water spend to progress from 2024 to 2026?
A: Typically, there is a hiatus between AMPs, but we saw strong AMP7 spending last year. We expected a flattening this year, but spending remains strong. Water companies have secured quality supply chains, and we are well-placed with AMP8 wins. Our capital maintenance and water technologies frameworks, which are higher-margin activities, are advancing well.
Q: What are your thoughts on Labour's focus on decarbonizing social housing?
A: We are not involved in decarbonizing existing housing stock. However, there is a continued focus on decarbonizing new buildings, particularly in the Department for Education. We expect this focus to shift from net zero operation to net zero embedded carbon over time, but we are not in the social housing decarbonization market.
Q: What are the key pressures your supply chain is facing, and how are they addressing them?
A: The supply chain seeks to work with companies with strong balance sheets that offer safe, productive work environments. Inflation and material availability issues have subsided, with only occasional pinch points in certain trades. We pay our supply chain promptly, which helps attract the best partners.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
