Yes, I had a listen. Steve Boland might have own-goaled a little...

Yes, I had a listen.

Steve Boland might have own-goaled a little while back with his foray into small scale but inappropriate trading in the company's shares. However, his eloquence and consistency in communicating his brief cannot be faulted.

A key feature of his presentation was to unbundle and demolish the Macromonitor graph showing a peak in civil infrastructure work by 2024. He said he simply doesn't believe it, because shortages in labour and equipment supply availability, and in raw material availability will create a longer and flatter profile for existing civil infrastructure work which could see the current boom extend for at least 5 years and up to a decade.

He noted that most major projects such as Snowy Hydro are subject to significant cost and time overruns and for a company like Acrow, that's good news (in a perverse sort of way) because the company does not do lump sum contracts - it does hire work which gets charged out the day the equipment leaves the depot and stops the day it's returned to the depot.

The suggestion was made by Steve Boland that the recent upgrade in guidance could be followed with a further upgrade before the end of FY23 and that this would become announceable if several initiatives that he expects to come together in the next couple of months do actually come together as he expects.

He sees growth largely being organic and complemented by the introduction of a number of new products to nascent growth markets like WA - albeit products which are already well entrenched in more mature markets like Qld and NSW

He did note that Acrow's growth profile is dependent on winning $5 million to $6 million worth of new work per month, which is expected to be well achieved through FY24 due to the quality and quantity of the company's projected sales pipeline.

In the brief Q&A, one Q&A that caught my interest was Steve Boland's comment that the company listed 5 or 6 years ago with a dividend policy of returning 30% to 60% of "free cash" (which I presumed to mean NPAT) to shareholders as dividends. He said that thus far the company achieved a return of 25% of free cash as dividends to shareholders, so I expect that there is room for dividend growth in that regard, as well as through growth in NPAT. He also suggested that from FY 24 he expects that the company will be able to pay fully franked rather than partially franked dividends.

So, rounding things up, I have no reason to dispute Steve Boland's assertion that the company is in "rude health".

zeno9