Release Date: August 22, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Revenue increased by 8% to $69.8 million, and EBITDA rose by 10% to $48.1 million, reflecting strong financial performance.
- The company announced a new 10-year jet fuel storage contract with Z Energy, expected to generate approximately $55 million in additional revenue.
- Channel Infrastructure NZ Ltd (NZRFF, Financial) maintained a strong safety record with zero process safety incidents in the first half of the year.
- The company has delivered an additional $75 million of contracted revenue over the last six months, showcasing successful execution of growth opportunities.
- The interim dividend was increased by 5% from the previous year, reflecting confidence in financial stability and shareholder returns.
Negative Points
- Normalized free cash flow decreased slightly due to the timing of GST payments and increased interest costs.
- Depreciation and financing costs have increased, reflecting higher net debt and interest rates.
- The economic environment remains uncertain, which could impact future financial performance.
- There is potential for increased costs related to the New Zealand government's fuel security study, though specifics are currently unclear.
- The company faces ongoing inflationary pressures and increased compliance costs, which could affect future profitability.
Q & A Highlights
Q: Can you discuss your strategy on managing operational expenses (OpEx) and any potential risks of cost leakage?
A: Alexa Preston, CFO: We provided OpEx guidance earlier this year and have not changed our view. The current costs reflect investments for world-class operations and inflationary pressures, which are common across industries. We actively manage our costs, focusing on areas within our control, such as rates and IT costs.
Q: Could you elaborate on the LNG opportunities and your role in potential projects?
A: Rob Buchanan, CEO: Marsden Point is identified as a potential site for LNG, but our focus is on current growth opportunities in fuel infrastructure. We are cautious about investing shareholder funds in LNG projects without clear future needs. We are participating in discussions but are prioritizing existing projects.
Q: Is there confidence in a decision regarding the Seadra extension by the end of September?
A: Rob Buchanan, CEO: Nothing has changed from our previous statements. The extension agreement with Seadra involves confidential plans, and the decision remains at their discretion. We have received USD 4.7 million related to the option agreement and continue to work closely with them.
Q: Why is the new energy storage project taking longer to complete?
A: Rob Buchanan, CEO: The new contract involves tanks that need conversion, requiring a significant capital works program similar to previous private storage projects. The timeline aligns with our capital works schedule.
Q: How does the private storage deal impact the dividend decision?
A: Rob Buchanan, CEO: The board considers the current dividend policy, future CapEx profile, and free cash flow, excluding growth CapEx, when deciding dividends. The private storage deal is part of these considerations.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
