Hi, everyone. Thank you for joining us.

With me is Richard Smyth, Steel & Tube's Chief Financial Officer. Today, we'll talk through our 2026 half-year financial results, and then we'll take questions at the end.

Steel & Tube is a cyclical business that's primed for the upside as the cycle recovers. There's no doubt that the first 6 months of 2026 financial year was very challenging.

In fact, July was one of the slowest months on year due to weather. Despite what many economists and businesses were hoping for, the rate of economic recovery has been patchy.

On the positive side, we did see a gradual improvement in November and December, which has flowed through to the start of this year. That's despite wet weather in January and the impact of weather events in February.

It is tepid recovery so far, but it is heading in the right direction. The highlight of this first 6 months is the outperformance of the Perry's Galvanizing business, which we acquired in May last year.

We knew at the time that Perry's was a large transaction for a company our size at the bottom of the cycle. We're now focused on rebuilding our balance sheet capacity and carefully controlling our cash, inventory, and working capital, which we'll cover later on.

Perry's is performing well ahead of its expectations. It's done exactly what we wanted, providing consistent, high-value earnings, which have helped to offset the margin squeeze in the base business.

Looking forward, we see some positive signs. Manufacturing demand is on the rise, fast-track projects will support the infrastructure pipeline, and lower interest rates should flow through to the commercial and construction sectors.

We have significantly improved the business platform over the last 2 years, making it leaner and more efficient, which means that as demand and volumes recover, will our margins and earnings. Looking at our top-line results, the Perry acquisition was a real game-changer and the primary driver behind our revenue uplift, helping to offset the lower results in the base business.

That said, volumes were also the key improvement area from our base business. Normalized EBITDA remained positive, even at the bottom of the cycle, as did operating cash flows.

The benefits from our cost-out and efficiency programs are being realized and help to support margins alongside the increased demand for high-value products and services. The improvement in the product margin is largely driven by Perry's, which we'll discuss later in the presentation.

The increased net debt year-on-year includes the $30 million of debt that we took on for the Perry's acquisition. This chart demonstrates the cyclical nature of our business, and you can see it's been a long trough due to the recessionary impact of negative GDP per capita, which has obviously been tough, particularly in the construction and manufacturing sectors.

Putting aside COVID-impacted 2020 and '21, our volumes and revenues have been at historic lows. If you look at that orange line on the graph, which represents the low point in the cycle, you can see we've gone deeper than previous cycles.

In response, we initiated three waves of structural cost reductions that have removed about $12 million of cost over the last 2 years, which is essentially offset inflationary pressures. Another $6 million of annualized savings has been initiated in the first half of this financial year, which Richard will talk to shortly.

As well as structural cost savings, we've also changed the shape of our business over the last couple of years, where we've invested in our strategy to grow higher-value products and services, which makes Steel & Tube a lot more resilient going forward. These additions include inorganic growth, such as the acquisition of Perry's Galvanizing and Kiwi Pipe and Fittings.

We've also grown organically, adding expanded aluminium range, plate processing, as well as a trucking fleet. We believe the cycle floor is now past, and we are seeing the early stage of a recovery, which will drive demand and revenue growth.

We have diversified exposure across growth markets. Manufacturing makes up nearly 40% of our revenues and has been improving, with the PMI in expansionary mode for 10 of the last 12 months.

We have a lot of customers in this manufacturing sector, and they're mostly buying high-value products and services from us, like engineering steel, sheet and coil, aluminium, and fasteners. Commercial, or sometimes referred to as non-residential, has been impacted by higher cost of money, business confidence, and government spend.

Infrastructure has the potential for us to double or even triple as the government responds to New Zealand's infrastructure deficit. Our diversification across these sectors means we are well placed as different sectors of the economy recover.

The broader construction sector is just over half of our revenues. Long-term outlook is positive, with forecast growth across commercial, residential, and infrastructure.

In the short term, while the economy and sector measures are improving, we've yet to see any consistent, material increase in demand. The rollover of fixed mortgages at lower interest rates and easier access to credit will help stimulate construction.

There will also be near-term demand in infrastructure from the fast-track projects. Longer term, the National Infrastructure Pipeline recently concluded that there's $181 billion of initiatives either underway or in planning.

The pipeline of products includes land transport, hospitals, social infrastructure, energy, water, and education. These are all areas where there is a need for a lot of steel and a quality supply chain.

Perry's was a measured move at the bottom of the cycle, and it's delivered well above expectations. In fact, we've only owned it for 8 months, and it's already exceeded its first-year target.

It puts us in a strong position to pick up more share of wallet in an economy which is slowly improving. We've already seen significant growth from Perry's customers as we realize the benefits of dealing with one company for both their steel product supply and also galvanizing needs.

The acquisition price and terms were favorable, including an ongoing equity investment by the vendor, Simon Perry, who has significant undeveloped land holdings that we will be advantaged by. We have currently paused our M&A program while we optimize our recent investments and strengthen our balance sheet.

However, M&A remains an important part of our long-term growth strategy, and we'll always look for deals if a great opportunity comes to us. As mentioned, the Perry's acquisition has ticked a lot of boxes and has significantly exceeded our expectations.

Integration is well on track and proceeding well. We've got a very structured program on how we absorb businesses and a lot of internal experience in buying and selling businesses.

Health and safety and operational resilience are areas that we've carefully invested in to bring Perry's up to the standards that we have across Steel & Tube. We are actively managing market challenges with close control over our cash and also our cost initiatives.

We're very focused on our competitive advantage, which is really grounded around cross-selling a wide range of high-value products and services to our loyal customer base, and also ensuring that we're preferred choice when activity returns. Perry's obviously improves our resilience over time.

However, that increased our short- to medium-term debt, which has been closely controlled. The uplift in revenue is driven by Perry's, and pleasingly, customer satisfaction scores remain high, and our team is doing a great job of maintaining base business market share and winning new customers who are looking for a one-stop shop alongside great service, quality products, and technical know-how.

Volumes in the base business are starting to improve. However, demand is still fairly lumpy.

The modest improvements have continued into the new year, although bad weather impacted January and February. It's fairly standard practice that at this stage in the cycle, we always see volume lead ahead of an improvement in margins.

The Perry's acquisition has driven the recent improvement in product margins alongside the benefits from inventory efficiency program that we've deployed over the last few years. The base business margin has been under pressure, mostly due to a highly competitive environment.

While we have had to shed some margin to retain volumes, we still are very disciplined around pricing and adding value through our service offer. The recent improvements we've seen in the base business pricing across the sector are very encouraging.

Although it's early days, we're hopeful that's representative of a more rational market behavior. I'll now hand over to Richard to talk to our financials in more detail.

Thanks, Mark. As Mark has said, the results reflect the lower-demand environment, particularly for commodity steel, partially offset by the strong performance from Perry's.

We have significant operating leverage, and a return in demand will drive profit expansion. An annualized $6 million cost-out program looking at both direct costs and OPEX is underway, further strengthening our leverage.

Normalized EBITDA remains positive, as do operating cash flows. We reported a net loss after tax for the 6-month period of $12.4 million.

The board has made the prudent decision not to declare a dividend, reflecting careful stewardship of funds and capital. Over the past 2 years, we have reduced costs by $12 million, offsetting inflationary pressure.

These have been focused on back-office functions, site consolidations, efficiencies, and close control of discretionary spending. A third wave of cost-out is now underway, and we expect $3 million annualized OPEX benefit from this in FY '27.

Excluding growth investments, normalized OPEX was maintained in line with first-half '25. Normalized EBITDA remained positive at $2.8 million and with a slight improvement on the prior year.

Looking at the waterfall on this page, you can see the strong impact of the growth investments, largely driven by Perry's and our freight initiative. Volumes in our base business have increased.

However, this has been more than offset by the decline in base business margin. The impact of inflation is less than recent periods and has been almost fully offset by our OPEX cost-saving initiatives.

We expect our various cost initiatives will save $3.5 million in direct and operating expenses in FY '26. We have a disciplined approach to the use of funds, particularly in the current economic cycle.

The focus on this over the short term is on rebuilding that balance sheet capacity and capturing value from our recent investments and growth initiatives. We completed a capital structure review at the end of last year, and the board is comfortable that our structure remains appropriate.

We recently agreed new debt facility terms with the ANZ, with maturity moving to March 2027 and revised covenants in place until that time. Net debt over total debt plus equity sits at 20%, which compares well to peers.

Net operating cash was $5.6 million for the period, with the year-on-year debt increase due to the Perry's acquisition, as well as support for the ongoing operations. Working capital continues to be prioritized, with close cash control mechanisms in place.

We have taken some additional steps to protect cash through the cycle low, including a pause on M&A, CAPEX restrictions, the forementioned third wave of cost control, and a hold on dividends. We are also undertaking a comprehensive review of our lease portfolio to ensure our sites remain fit for purpose and to identify further lease consolidation opportunities.

We continue to carefully manage inventory, with a focus on higher-value products and ensuring we have sufficient stock to meet current and near-term customer demand. As demand has fallen over the last few years, we have reduced our inventory levels, which are now at $115 million at period end.

As we move back towards the mid-cycle, we expect this could increase to up to $130 million. We have carefully reduced the number of SKUs and are down from 23,000 in December 2023 to about 15,000 today, with a greater emphasis on higher-value products that our customers want.

Thank you. We're happy to take questions at the end of the presentation, but in the meantime, I'll pass you back to Mark.

The economy continues to remain challenging. We're starting to see some recovery in demand.

However, we remain cautious and expect any sustained improvement to be slow and steady over the 2026 calendar year. Planned residential construction work appears to be increasing, and manufacturing demand is on the rise.

There will also be some additional short-term infrastructure work as a result of the recent weather events. Reinforcing provides an early view of what's coming up.

We're seeing a modest lift in demand off a very low base. Tender activity is increasing, and the pipeline is starting to build.

The team are doing a great job winning projects, including the Te Papa Biodiversity Center and University of Waikato School of Medicine. As the economy continues to improve, we expect this improving demand trend will flow through to our other end markets.

With the current suppressed-margin environment, we are seeing some market consolidation occurring as well. We're focused on maximizing the recovery and returning to growth.

Our short-term focus is on continuing to rebuild the balance sheet capacity and to optimize inventory and supply chain. We have a clear pathway to improving our performance and returns, and in the medium term, our plans are to reduce debt, recommence dividends, and continue with our M&A strategy.

As a cyclical business, we're very attuned to the economy, and as it does recover, we will benefit. We have significant operating leverage, and we are well placed to deliver a material earnings uplift as the demand builds.

Thank you. I'll now hand back to the operator to manage questions.

Good morning, Mark and Richard. Good to see some improvement in revenue run rate over the last 2 months of the half, but I guess just focusing on EBIT, your first-half losses worsened year-on-year despite the contribution from Perry's, which I estimate to be about $4 million based on the past numbers you've provided.

Yourselves and two of your competitors have signaled ongoing margin compression and no material lift in activity levels until calendar year '27. I guess just on that basis and sort of triangulating it with your outlook commentary, what would you see as a reasonable outcome for the second half?

Would it be losses in line with last year at around $12 million, or are you expecting some improvement there?

Hi Kieran. Mark.

Look, we are seeing some improvement in demand, as I mentioned. You can see on the charts that we've shown the January and February-to-date numbers there starting to lift a little.

As I mentioned, it's fairly tepid, but we are seeing an improvement there. We're also seeing those product margins starting to firm, which indicates perhaps a more rational market as volumes do increase.

It's typically what we see in other cycles. We've gone back over three various cycles, and you do see that sort of volume precipitate the margin improvements.

With the backdrop of a reasonably solid manufacturing sector, just that PMI 10 of 12 months in expansionary mode, big part of our revenue exposures, as well as the lower interest rates, cost of money coming down, a little bit of improvement in business confidence starting to come through in the private sectors, we can expect that, I think our EBIT will start lifting in the second half. Getting back to break-even is obviously key for us, which we're expecting in the coming months in terms of monthly performance.

There is a backdrop there that is reasonably encouraging. I think all of our competitors have recently noted similar backdrop.

We should see a better second half than what we've seen in the first half. We're not giving any guidance at this stage, sorry, Kieran.

Yeah.

No problem. I guess just again on your outlook, given your exposure to non-resi, are you concerned at all by the trajectory of consents in that area, where it still seems quite soft?

Look, as it's fairly patchy, and confidence is the key here. I think we are starting to see, just the reinforcing business that I mentioned earlier, quite a few projects coming through with dates on them, that we'd seen probably last year, Richard, I would have thought less than 40% actually had start dates.

Now we're seeing somewhere 80% or 90% of those projects have start dates on them, which gives a little bit of confidence. That's at the front end of the construction cycle that we are seeing activity building.

We know that sort of second, third quarter this year, there's a fair bit of work in the pipeline that's actually got start dates on it. Although there has been delays in this first quarter, we're fairly comfortable that that early-phase construction, and a lot of it is commercially

driven near Kieran, rather than government infrastructure stuff.

Cool, that's helpful. Thanks.

Next question is just on your balance sheet positioning. Obviously, net debt's continued to rise despite the $15 mil unwind in net working capital through the half.

Just given it's quite an important consideration at the moment, can you clarify what your revised covenant thresholds are, how much headroom you have available against those, and just sort of whether any of these CAPEX restrictions or the pause on M&A is sort of being dictated by the banks as opposed to just internal decisions?

Hi, hi Kieran. We we don't typically say exactly what our covenants targets are, but we do disclose that they're clearly they're not our standard ones that are linked to ratios, because the minute you're a dollar in loss, they don't work.

They're related to absolute EBIT, normalized EBIT targets and an absolute quarterly net debt position. We are managing those.

Our projections have us us reasonably comfortably meeting those in in the future. The question on CAPEX and and M&A, it's a little bit of of both.

We we're making decisions because we're managing the cash flows anyway. It would be fair to say that the bank is very supportive of those of those restrictions as well.

We're very comfortable with the decisions that we are making on CAPEX, and we're still still investing on CAPEX that's essential. We're just carefully managing and ensuring that every item of CAPEX should be spent now and is going to deliver value, either immediate value uplift or health and safety concerns.

You can see, I'd just add, Kieran, you can see the working capital there that we're, continue, as we have done for a long period, manage working capital carefully, but the key for us is obviously customer availability. We've actually probably the fullest or most availability that we've ever had in terms of making sure our A-line and B-line products are available for our customers, because this is a really important point in the market where we have to have that working capital on the ground available for customers, right place, right time, and at the right price.

We've been not holding back on our working capital investment. I guess the CAPEX, we've spent about $3 million year-to-date on productive plant, new purlins lines, new folding machines, all that sort of stuff.

We continue to invest in productive capital. We're just being careful to obviously manage our debt down and rebuild that balance sheet, given Perry's was a sizable transaction for us, and so obviously puts some debt on the balance sheet.

We're fairly comfortable. We've got the 20% debt to debt plus equity, we're not in a stressed situation there.

I guess I'm just looking at the absolute level of net debt, and given the fact you're loss-making, all of your comments make sense, but are you able to give us a steer on working capital movements and expected net debt by year-end?

We don't give precise guidance, but as we did mention, over time, inventory will need to track up. That 130 is not what we're targeting per se, but it is what we think will happen in the medium term, clearly we have to fund that.

We keep control, a very tight control, on both cash inflows and outflows. When we are increasing debt and spending a little bit of money on inventory, we are very careful to manage cash inflows from our customers as well.

We've maintained a really high collection rate on our debtors.

Great. Then I'll just finish with one last one on Perry's.

You mentioned a number of times that it's outperforming expectations, which is great to hear. Can you just give us some specifics around what the revenue and EBIT in that business did through the first half relative to its historical track?

Because I guess you've sort of benchmarked it against your internal targets, but just to sort of let us know how it's going?

We haven't actually published specifics, or we did at the time of transaction, Kieran, but we are up on prior period, both revenue and EBIT is up on prior period, EBITDA and EBIT are up on prior period. It is performing well.

It's not like most businesses where you capture a lot of cost synergies. There's been, as expected, very small cost-out synergies between the two businesses, but we've seen significant revenue uplift as we've been able to pick up customers that Perry's had on their books that we didn't have, and so there's been sort of a lot of activity in terms of driving Steel & Tube sales into those customers.

We've also seen, conversely, Steel & Tube customers that we've been able to convert across to Perry's Galvanizing. There's been a really nice synergistic play there, as well as some actual incremental stuff that we hadn't anticipated through, we've got a national network of branches, and of course, there's four galv plants across the country, being able to pick up the rest of our network where we've got trucks going back and forwards that can offer a great galvanizing services to customers that traditionally haven't been able to get access to a galvanizing service in those more rural locations.

There's another silver lining to it that's starting to build as well.

Great. Thank you.

That's all from me.

Morning, guys. Maybe just to pick up on Kieran's last question, can you talk to your product margins excluding Perry's?

I know there's been a tick up, but Perry's has no tonnage, but obviously, you're including the gross margin in your group gross margin to show the tick up in product margin. I was just wondering what happened to underlying product margins in the half versus last year and maybe even second half of '25?

Hi Rohan. Mark.

Look, on that, yeah, you can see that there's only about, I think it's 439-odd tonnes in Perry's in galvanizing, whereas the rest of our business is plus 54,000 tonnes. It is less than 1% of our actual tonnage, it does have a sort of inflationary impact on those margin-per-tonne numbers.

If we were to exclude Perry's from those numbers, we've still seen about a $30-per-tonne growth in base business, or excluding Perry's margins. We've gone from second half '25, about $942 up to about $971 in the first half of '26, which gives you an indication that we have seen those margins, kind of as I was mentioning on the call, that we've had an improvement in that base business product margins, despite Perry's.

Look, if you look at a percentage perspective, we've gone from sort of 26-odd up to about 27 roughly percent of product margin, which is encouraging.

Okay. That's helpful, thank you.

I guess going back to the balance sheet, you talked about an absolute level of EBIT, and you're quite comfortably within that in your projections. What's the key driver of getting EBIT to that absolute level, given you're kind of suggesting you're going to be loss-making for another few months?

Is it volumes and margin? Is that EBIT a 12-month rolling number, or is it a 3-month annualized?

What sort of metric are they looking for in terms of the business being stabilized?

They are, well, first of all, the targets in the short term are negative, our commitment is to not lose as much as the number. They're actually a little bit of a combination.

We've agreed precise numbers for FY '26, which are sort of related to the FY '26 results, and then in '27, we have another set of targets from the bank as well.

Thank you. Then when you look at the working capital and the debt reduction, it looks like you received more from your customers because your receivables are down and your payables are up.

Is it really just a time in the year, and kind of, I guess, what's happened on the payables side for that to lift as much as it did? Has there been any change in terms of trade, and should that normalize out going forward?

We've, and

I think we've been talking about this probably for a couple of years, we've been on a constant strategy of extending to the greatest extent possible all of our vendor terms. In some cases, for some of the overseas mills, we have up to 120 days credit.

That doesn't change, that will continue. When we place orders, we have choices of where we place those orders, we try to maximize the credit terms, minimize the price that we pay, minimize the minimum order quantity, etc.

At the same time, for our customers, we've been focusing on carefully managing our exposure in this current economic environment. You see in the paper quite frequently about liquidations increasing.

We've been very careful, and we've had very, very little downside from that, but it is because we stay very close to our debtors.

Cool. Thank you on that one.

Then just on the comments about break-even in a few months, to get back, and semantics of accounting numbers, but are you talking after all lease payments? Are we talking kind of an old world EBIT break-even, or are we talking the new world as in you've still got the interest on your leasing to pay?

It's new world, our normalized EBIT. That includes the depreciation on those right-of-use assets, but clearly because the interest is part of I, it doesn't include the interest.

Cool, sorry. Two more.

I know you talked about SKUs and rationalization and that you've got good cover on your top end of your SKU range. I'm just kind of curious in terms of you're rationalizing SKUs at the bottom of the market, you're potentially rationalizing your network at the bottom of the market, you're taking headcount out at the bottom of the market, what leverage are you losing to the cycle?

8,000 SKUs out of 23,000 is quite a big chunk, and I'd assume that's historically a decent amount of your revenue, otherwise you wouldn't have carried them for this long. I'm just wondering what sort of leverage you're losing to the cycle and market share you're giving up in doing this?

It's a really good question, Rohan. I think we've actually been trimming back our SKUs for a number of years now.

We've come down from north of 40,000 SKUs down to 15,000 what we call active SKUs today that we're actively buying to. We still have a number of SKUs that are what we call our D-lines, that are really SKUs that have become redundant, that we no longer see a market for, that we've replaced with either new products.

We're watching, scanning, we have product managers looking all around the world in terms of new products and higher-value products that we can bring into the market. That's a net number you're seeing there, where we actually bring in new SKUs.

We also have a number of lines that have expired that we're trying to move through the system. It's a bit like listening to Rod Duke on Briscoe's the other day, was constantly specialing off the low end of your SKUs.

We have the same thing where we discreetly manage our SKUs that are retiring, but we have 15,000 planned SKUs, and we anticipate that we can probably take another couple of thousand out of those planned SKUs over the next few years. We think we've really made a good job of getting it down to a base level.

You do drive a lot of complexity and cost around SKUs. One of our core competitive advantages is that we have a wide range of products, it's absolutely critical to your point that we maintain a breadth of SKUs that our customers value, but at the same time, we don't want a very long tail, because you end up with that tail getting old and long, and you carry product where prices are moving around quite frequently.

We try and hold on average no more than 4 months of inventory on the ground at any one time on average, and so there's obviously a mix inside that, but it goes to the efficiency of the overall business model, and it's really important. We're moving that inventory through frequently at accurate pricing for our customers, but also the SKUs that our customers value and care about.

We're pretty happy with that. We monitor NPS really closely.

We're talking to our P1, top 1,000, and P2 top 2,000 customers on a regular basis to understand how their mix is changing and what they want. It's quite a bit of science behind this, and it's something that we've certainly found to be very important in our distribution business, just getting that SKU capacity right.

Can I just also add, it's not a set-and-forget, we do talk to our, as Mark said, our top couple of thousand customers, and if they need something and that we can agree on appropriate price, we can and will order to get that in for them. It's not set-and-forget.

Rohan, you mentioned you had a couple of other questions there?

Sorry, I had muted myself because there was a bit of noise in the office. Thank you, that was helpful.

You gave Jackie heart palpitations, Rohan.

Oh, no, it's all right. The sorry, I'm just trying to remember my questions after my faux pas.

I'm just looking at your banking facilities. You say you got $80 million available.

What is, I guess, the ability to draw on the the balance, because you've got $50 drawn so far, and you've got a little bit of cash here to get through, but it could get a little bit tight in the months in the coming months?

One of the things that we are managing is the peakiness of our cash flows. We have a quite a high peak intra-month debt level.

What we typically find is our customers pay from the 20th to the last day of the month, but our outflows are throughout the month. The reason we have $80 million as opposed to the amount that we've got drawn at the moment is because we draw down intra-month and then we pay back for basically the last 10 days of the month.

What we have been doing, as well as the initiatives that we outlined before, is we're looking at initiatives to manage down the peak debt and sort of try to smooth out some of those outflows. We have the ability to draw down the well, I guess the whole $80 million, but we don't need that towards month-end.

We just need more debt in the peak period. It peaks between the 14th and the 20th of the month.

Thank you, and sorry, the last one, and I've taken a lot of time, but you stopped M&A in the short term, but has there been any pressure from the bank to maybe sell some businesses?

No, not at all. Yeah.

We're always looking at that with our board in terms of capital recycling, but no.

Thank you.

Hi, all. Just one question from me.

I saw that great chart on page 4. Am I correct in assuming that graph includes Perry in it?

Then my question would be, excluding Perry, how did underlying like-for-like volumes trend for the half, particularly into that final quarter?

Hi Harrison. I guess that the the volumes is is reasonably small.

It's less than, 1%, probably about 0.7% of our overall volume mix. That volume line doesn't really it's not influenced that much by Perry's.

The revenue, there is a little bit of influence there, but so does that answer your question?

Yes, thank you.

Thanks operator. Let's close the call.