Bananas Revenue number in the second-half - $250m, compared to $212m in DH20 (so up 17%).
Over it's limited history there is no evidence of sales seasonality, which implies that the company would be on a $500m annualised Revenue base.
This is meaningfully ahead of the $460m notional combined revenues at the time of the T4U acquisition 18 months ago. But - given the Covid-induced distortions in the market - it is not known if this is market share gain or if there was abnormally high demand, overall, for tyres in the JH21.
(I'm going to be conservative and say its mostly a case of the latter.)
Where the second-half result was also boosted was in the GP Margin, which at 31% in JH21 was the highest level since 2018 (when, no surprises, the A$:US$ exchange rate was similar to the JH21 average level):
View attachment 3535256That strong second-half top line performance, combined with the strong GP margin, resulted in Gross Profit coming in at a significant 28% higher than DH20 and (22% higher than my modelling had indicated... but that is probably as much a comment on what a crappy modeller I am as it is the out-performance of the business).
Gross ProfitDH20 = $60.2m
JH21 = $77.3m (+28%)
But what has happened below the GP line is, I believe, the most significant part of the JH21 result and that is that there is evidence that they have taken a big chunk of that GP uplfit and re-invested it back into the business in the form of marketing, branding, systems, digitisation, synergy capture, efficiencies, etc.
Without going into detail, CoDB rose by a massive 23% compared to DH20 (and remember, DH20 already included the T4U costs for the entire period, so that's not the explanation for the sharp jump in non-CoGS overheads:
CoDB:DH20 = $41.7m
JH21 = $51.5m (+23%)
Therefore, it occurs to me that while the top- and gross profit lines were stronger than expected, because of the investment in costs ("good" costs, presumably) in the second-half, the second half result could easily have been $3m or $4m higher than the $16.7m Pre-Tax Profit number (excluding NRIs).
So, I think it can be argued that second-half result is easily 15% to 20% under-stated.
Which is a good thing because the lockdowns in NSW and VIC is undoubtedly going to impact demand, so some prudential padding of this result is going to be needed to provide a buttress for the current half-year result.
(And then I expect the JH22 result will be another abnormally strong one as the demand which will be muted in DH21 gets deferred into JH22).
So, quite hard to get a feel for the true underlying performance of the business given the compressions and rarefactions in short-term trading conditions due to lockdowns, so all we can do is take our cues from the quality of underlying earnings.
From the vantage point of this observer, the quality of this NTD result is a lot better than the headline number suggests.
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(20min delay)
