The guidance provided on 8 February 2016 stated that they expected EBIT for the full year to be in the region of $7.5 million.
Yesterday's announcement said the EBIT is actually $7.1 million, about 5% less than the prior target.
The new warehouse at Pemulwuy had been designed with the next 10-15 years of growth in mind. Therefore, SNL is unlikely to re-incur the one-off cost associated with the move any time soon.
In terms of workflow process efficiency, the new facility is a few notches above the old one which was suffering from inadequate space.
With the move behind them, now is the time for management to concentrate on implementing the new sales initiatives and grow their revenue to $100 million and restore their EBIT margin back to 10%.
The sooner they can do this, the sooner they can fractionalise their increased supply chain costs.
There are several things that I will pay special attention on when the result comes out next month:
1. Operating cash flows
2. Operating lease commitments
3. Fixed charge coverage ratio
4. Stock turnover ratio
Hopefully these number do not deteriorate too much, or otherwise I will get quite worried.
SNL Price at posting:
$2.01 Sentiment: Hold Disclosure: Held
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