Big River Industries Limited (BRI) Earnings Call Transcript

Good day, and thank you for standing by. Welcome to the Big River Industries' 2021 Full Year Results. [Operator Instructions] Please be advised today's conference is being recorded. I'd now like to hand the conference over to your speaker today, CEO, Mr. Jim Bindon. Thank you. Please go ahead.

Okay. Thanks, Kevin, and thanks, everyone, for joining this morning. I seem to say this every year, but I know it's a busy time of the year for small companies reporting. So I'll try and skip through the presentation fairly quickly, if that's okay. Just quickly I want to run through the results presentation documents that up later this morning, so I'll just be reading from that just starting for those who have got in front of the first page, I just thought I'd mention there in this Olympics year now that all of Australia are super fans and experts in both skate boarding and next you'll notice here on the front page some photos of stapled rings. We've got a good customer on the front, [indiscernible] has actually supplied over 1,000 of these in the last 6 years where we supply all the materials, including 3 different types of plywood, so this would be a useful trivia for you, just on that front page. So just moving on to the third slide, folks, it's just an update of the mix of our business there on Page 3. So just some key challenges really as this is a slide that we included in each of the presentations, both half year and full year. So just in the top right category there just on the key product categories for the group, the major change there, obviously, the panel business, which has grown to 35% of our business with the full acquisition of Timberwood, which was announced in the first half results as well as the New Zealand business, which we acquired a couple of years ago. On top of that, you may have seen this morning an announcement about the acquisition of Revolution Wood Panels, which is another strong panel-based business in Queensland. So that ratio will probably tick up towards about 37% when that new business is included. Just the mix of our construction segments, obviously, quite diverse the ratio changing every year. Commercial segment just down a touch as you'd expect when that construction type has been hit quite hard through pad with retail, office, airport type work, obviously, particularly soft. On the flip side, detached housing is strong at 35%. Both medium density and high-rise construction there is only around 18% of our business here being 22% and 23% in years gone past. Obviously, that multi-res side of construction has been quite soft and is well below mid-cycle, in fact, probably at the trough of the cycle for those 2 segments. The manufacturing or the OEM and the alterations and additions and civil sort of up there towards 10%. So a good mix in our business there. Just on the asset mix, I think it's just worth noting here that we have manufacturing assets in all 3 of our key segments. So Formwork materials with steel and form in building products for frame and truss plants, which we have in Adelaide, Geelong and Perth. And adding panels, the plants in Auckland in Victoria and also the main plywood side graft. And so I think we've got a good mix between direct importation, in-house manufacturing and obviously, partnerships with local suppliers in all 3 categories sell good diverse supply chain. And then just finally, on the bottom right there, just the mix of our business now, Victoria or southern region as we call it, they are quite strong now with 2 old business sale, particularly strong in Southern Australia. Those number of trading accounts will be up over 9,000 now with the addition of the Revolution business we announced today. So I think a really good pleasing diverse mix in our business there. So just moving on to Page 4 -- this is a slide I haven't included before just with respect to ESG. Obviously, a company has been around 120 years. In my view has got a really strong story around ESG. And particularly timber, just on the environmental front, I think certainly not very well understood by the industry, but I think general public is learning about this pretty quickly. And that is the hugely sustainable nature of timber products. This particular graph refers to the greenhouse gases emitted during the manufacturing process and how it uses a standard house and the various components of it as the example. So the floor structure, the floor covering, the wall framing, the roof frame and indeed the windows. And without going through all the detail, you can see the timber for all of those categories, where timber is used in those applications, the greenhouse gases emitted is far, far lower than any other building material. Obviously, what goes hand in hand with that is the timber has got the lowest embodied energy of all building materials. And part of that comes from obviously the carbon sequestration nature, growing forest and a working forest. It's certainly worth noting that a working forest well managed, whether that be a regrowth or plantation will certainly [indiscernible] more carbon than a mature forest left to its on devices. So I think there's a really good news story in good effective and sustainable working forest in Australia, and we're certainly part of the major solution for climate change there. And then from our perspective, all of our manufacturing sites are certified with the European standard PEFC, which is one of the benchmarks in chain of custody certification for tracing the source of old logs that are processed. So I think there's some very positive stories there. With respect to timber general, and I think that's been recognized now you may have heard of some high-profile projects around tall buildings there, I think, including some in Australia, some of the tallest timber building in the world are now being highlighted in multiple countries up to 50 and 60 stories. So I think the use of timber products in conjunction with other products, even in large-scale construction is being well understood and it's a great story there. Just on the social front, just a couple of examples. Again, a business like us support a whole range of community programs and so forth. But certainly worth highlighting one with respect to our partnership with the Clarence Correctional Center. That's part of, obviously, the corrective services industry because it's at a 15 new partnership with corrective services. This particular jail facility here. We supply will apply wood for a really important program called Toys Saves Lives, which is an indigenous inmate program. It's more like art to be honest. You can see those images. It's beautiful and we supply all of the ply for that as well as having a 2-way partnership with the correctional center where we supply product and the workshop, obviously using human labor adds value to those products. So that's something that we're very proud of. And over 30 years of contribution to the helicopter services in both Australia and New Zealand. We've had long partnerships with that organization with the employee contributions or payroll deduction has been going on for many years. And then from a governance point of view, look, our industry is heavily governed and the illegal logging legislation, which is federal legislation is something that we obviously very closely manage both locally and also with a lot of our international suppliers, so to the chain of responsibility, accountabilities. Modern Slavery, we've rolled out during the year to all our international suppliers. And then from a Board perspective, just currently in the process of recruiting a couple of directors given the change of status of one of our existing directors just to ensure that independent ratio, which is obviously, which is good governance and best practice. So I think we've got some really good stuff going on. And I could talk a day about the ESG story, but I won't because I think there's great news in a business like ours here, and it's can have a real impact on the climate change story. Just moving on to Page 5 of the folks just a couple of images and believe we've got these, I think it goes to the story about our diversity and the strength of our results. And that is the vast and varied products that all of our -- that -- or sorry, I should say, applications that our products go into. So fully prefabricated timber bridge there, which we installed in one day, right through to the big renovation of the Taronga Zoo and a major formwork construction site there in Brisbane, obviously, being the casino project and then if you went back to the front page as well apart from the skateboard range, you've got a commercial fit out of a major hotel, I mean, obviously a large residential project with [indiscernible]. So there's some really good applications there, which shows how diverse our range of products are. So just moving to Page 6, guys, on the headlines of the results. I think, yes, certainly a very pleasing year in my view, the revenue of $281 million, which is up 13%. I think more importantly, good growth on a like-for-like basis, which we haven't seen for some years as the construction sector has declined, so 4% like-for-like growth across the year or indeed 7% in the second half. And the most important part of that was that growth accelerated every quarter from Q1 to Q4. The underlying EBITDA there of 22.5%, up 30% on last year or if EBIT in this sort of post-AASB 16 world is a language you prefer, is at $13.1 million, up 47% on last year. Net PAT, again, underlying given we had some significant items we identified in the first half results, up 68% despite substantially higher tax plan. So good news there and the EPS growth also up about 25%. Just worth noting that builds on the 5% EPS growth last year. So know there's some particularly good ratios and numbers for the company this year, often because they had a pretty average last year. But I think in FY '21 -- etch out sales, EBITDA, net PAT and EPS growth during a pretty tough over the year, we've built on that, obviously, with even more growth this year. And then just finally on that first section, the treatment of the closure of the Wagga site, which we detailed in the first half, that consolidation project, the net effect of that project, negative $4.5 million after tax. Now we actually reported minus $9.4 million in the first half, so you'll see that's obviously an improvement as the full project, including the government grant has been brought to account in the first half. Steve might talk a little bit more about that when we get to the financials. Just a few of the operating highlights here in the middle section, still on Page 6, folks. Margin continues to expand. It's been a good news story from the day we listed. We've had some other challenges, but the expansion of gross margin has been a really good story and at another 150 basis point improvement for the year despite those pressures of international supply movements and the real challenges in freight. So I think that's been a good news. So more importantly, growth across all product categories, panels, building products and formwork, there was an expansion of margin in all of those categories. And from a weighting perspective as well, that's certainly been a contributor now our business is up at circa 35% from that panels category. As some of you may be aware that is the highest margin category in our business, and the acquisitions there are continuing to weight up that. So that product mix is certainly a factor in that growth of margin. And then from a plywood point of view, again, we've referenced the consolidation strategy and the looming closure of Wagga but a good turnaround in our applied manufacturing business contribution up 80% on last year and volume growth of 5% after many years of decline is a new story, I think. A good mix of products, labor efficiencies, energy costs all were positive in terms of the result. And just finally, on Page 6 here just from a strategy perspective, I talked about gross margin, but it's just worth noting that some of that's come from starting to get some good traction with our new ERP system we put in last year. Obviously, they are simple projects. And when you start to yield some good results from it, that's particularly pleasing. Timberwood, we've already talked about, obviously, that's expanded the company's sites to 21. And again, from a strategy point of view, trying to fix the squeaky wheels as always the goal for everyone, and the fact that we got profit growth from every region and every business category was pleasing, and it certainly shows that, that upswing in the construction cycle has created much more favorable conditions for us. So that's pleasing and certainly a part of the improved performance. Just moving on to Page 7, guys. Just a little bit more color on some of the operating metrics, certainly revenue, I've already talked about. I won't go through that. It is worth saying about the formwork category in New South Wales was the only area where we really did decline. Obviously, large exposure the company has got there to both high-rise construction and commercial, the 2 soft segments. So the fact that we held that segment decline to only 3% when there were some considerable pressures around supply chain and indeed soft markets, I think, was a pretty good result. At an overall level, the growth in the overall addressable market of about 2% after a few years of decline. I think that's pleasing but obviously still being impacted by the weakness in the multi-resi the commercial market. So they're not bad overall and really good to season growth starting, but certainly still held down by some of those large markets where we have a significant exposure. Supply chain has been talked about a lot during the last year in the press and everyone seems to be able to quote the lumber index now which is interesting. So that has had some impact on our business, and so it's had some impact on builder's ability to roll out homebuilder program as quickly as they'd like. But notwithstanding some of those real shortages of structural timber products, we actually grew the product categories that were kind of most affected by 15% on the prior year. So I think we've managed that particularly well. And it hasn't held our business back, it's fair to say, albeit that we'd like to have more, but that's just a reality of a supply-constrained market. And then obviously, once we dropped down sort of SKU level, the fact we got growth across 90% of our SKUs again, that's just highlights the breadth of the market recovery. This is not just a great lumpy result from one little corner of our businesses across the board, which is the most pleasing component of the result. Just quickly on manufacturing ops, look some really good internal controls, just continuing to do better there. I think the ERP system helps and just maturing as a small public company is all part of that. So from a stock performance point of view, aged debt and hence, our EBITDA margin. We've got really good improvements in all 3 of those metrics. Plywood manufacturing I've already talked about and really good to see some volume growth there, again, which sets us in a really good position for when we consolidated onto the one manufacturing side. We've got a good strong base of demand, and that's a good way to go into that particular project. And look, investment in inventory, you're seeing Steve's notes there that we did grow the inventory for the year, which sounds a bit counterintuitive where there's been some shortages, but I think we have taken advantage of our scale and our strong supplier relationships and the diversity of our supply, and that's certainly helped somewhat with the revenue growth, which I touched on and the margin expansion during times when there's been some real shortages. So I think we manage that side of the business well. And just on acquisition, the final category there. Just worth noting that the New Zealand business achieved the maximum earn-out for the second year of that earnout schedule. So that's obviously pleasing. And goes to the strength of the New Zealand result, even though commercial construction is quite weak in New Zealand as it is in Australia. And we do have a reasonable exposure to commercial there. So a really good result to sort of hit the top category of EBITDA targets there. Strong start from Timberwood only Q1 -- sorry, out of Q4 contribution from the Timberwood business, but the run rate is certainly tracking ahead of our numbers or expected number for it's a pleasing start. And then of all the acquired businesses, one of the things we focus on is trying to broaden the product range and to add some of the other Big River specialty products to their core. And in all cases, those noncore categories to those new businesses all grew at a higher rate than the rest of the growth in Big River. So I think that suggests good positive revenue synergies as we integrate those businesses. So a good news story there as well. Just my final slide before I hand on to Steve, for the actual financials. Just a quick update on the strategy. Some of these points have already covered off, so it should be able to move through quite quickly. But yes, that product diversity has really been a good news story throughout the year and that certainly helped with our results. Obviously, the execution of Timberwood helped that deal. The geographic diversity has been particularly important during these periods of lockdown. There's been modeled lockdowns in certain states. ACP construction's down at the moment, as is New Zealand, Victoria's being cut back materially, Sydney has still got restrictions. But the fact we've been spread all over Australia and New Zealand, I think that's worked in our favor. Like-for-like revenue growth accelerate every quarter, I touched on that earlier, that's there's some real momentum in the market. and the consolidation project remains on track. So good news there and we continue to roll out that plan we've outlined for some time. Growing scale, obviously, a critical part of our overall strategy. We've already spoke about both Timberwood and Revolution. So we continue to expand our network there. And particularly pleasing that all of those businesses are in the highest margin category and the most specialized where there's distinct product differentiation, which is not the case in all market segments we're involved with. So I think that's pleasing. And there's a really good traction on our in-house organic growth as well, a range of civil products. We've expanded during the year. We've got particularly good growth in FY '21, and there's some really good prospects for the new financial year as well. So blending that organic and nonorganic growth is a critical part of the strategy. I think we've done well on both those fronts. And then financially, obviously, we believe we do need to improve the financial performance of the business. And we've been achieving that in the last 2 years. So gross margin, I've already talked about. Underlying EBITDA margin's up 100 basis points, which is pleasing. Good cost control, margin expansion and revenue growth. So all 3 levers of the business have played a part in that, it's not just about stripping costs or anything like that. We've got good contribution from those 3 levers. And we talked about supply chains despite the fact we've had to invest more in some of our international supply chains, I think working capital and into cash conversion stayed within our target range, notwithstanding a little bit of growth in inventory, but that certainly set ourselves up well for the future period as well. So let's just finished on Page 8 there here, folks. So just hand over to Steve to run through a couple of financial pages, and then I'll sum up at the end, if that's okay, with the outlook. Thanks, Steve.

Great. Thanks, Jim. Yes, just on that Page 9 there with the earnings summary, it's about headline revenue up there, 13% on the previous financial year coming at $281 million. That includes 3 months from the Timberwood acquisition that contributed revenue of about $15 million into those numbers. That overall growth saw distribution EBITDA up 22.7% from $19.1 million in the previous year up to $23.4 million this financial year. And that's sort of flowing from those increased margins that you mentioned and also that increased sales flowing to the bottom line an extra revenue. For a business like ours, it's good to see that dropping to the bottom line. The manufacturing sites there at Wagga and Grafton, increased EBITDA by 86%. So that was particularly pleasing going from $1.8 million up to $3.3 million. That's on the back of some of those lower energy costs that we had this year. some of the higher-margin products that we've been selling out of Grafton in particular, in some good cost efficiencies which obviously after some of the recent years we have had declines in that particular category. Our corporate costs there will grow roughly about $0.5 million, mainly from the improved financial performance as funny that sounds from resulting payment of bonuses to the senior executive team as it was minimal, that was paid in the last year. And that led to our overall EBITDA -- operating EBITDA before significant items being up 30% at $22.5 million, so particularly pleasing results. There are those significant items include the Wagga and restructure costs, some acquisition costs and some share-based remuneration that we've had for the first time there. We use that operating EBITDA metric, just to try and give some clarity on the underlying EBITDA. So we can see exactly what's happening there with the business. The largest item there in that significant items is the Wagga Wagga impairment and restructure costs. We've got that sitting there at a net $4.5 million amount and that drop sort of breakup on that is about $12.3 million worth of property, plant and equipment, some restructure costs, things like redundancy and rehabilitation of the site, et cetera, adding up to about $4.3 million. There's also the government grant that we all brought to account in there of about $7.7 million. I'll touch on that in a little bit more detail in a sec and then the tax benefit that we get from that impairment, a write-down of about $4.4 million. So that comes down to that net expense that we've got in the accounts here of $4.5 million. So just on that government grant, so that's non-accessible income. So the fund itself is actually $10 million. Then we've only brought $7.7 million into the and to offset against some of those associated expenses because part of that site consolidation involves some capital expenditure of around about $6 million at the Grafton site. So we're expanding our operations at Grafton as part of the site consolidation. So that remaining $2.3 million gets recognized over the life of the capital assets as we spend that money at Grafton. And so overall, I think we've mentioned this at the half year. But overall, the Wagga to Grafton site consolidation is actually going to free up circa around about $1.5 million worth of cash after we take into account the receipt of that government grant and the release of some working capital from the longer site utilization of those future tax benefits and the sale of the land and buildings as well in due course, of course, the capital expenditure investment at Grafton and some of those restructuring costs that we'll have to pay as part of the process. So that bottom line, overall net PAT before significant items, up 68% to $7.8 million. A very strong result. Bottom line, obviously, read a little bit less than that with those impairment charges and things going through the NPAT coming in at $1.8 million versus last year at $4.4 million and just, I guess, the earnings per share that we've got coming through there before significant items at $0.11 per share, up 49% on the previous year. So again, good results. Moving on to that next page, Page 10 on the balance sheet. Trade working capital is always for a business like ours that remain to be focused. And it's pleasing to see that we managed to come in at 17.9% average for the year, despite some of those increases in inventory and the first year working capital requirements for the Timberwood acquisition as well. That was roughly about $2 million of working capital contribution for the business, but that's -- we've had that for the first quarter now, so we wouldn't expect to see any further working capital requirements for that business. Excluding Timberwood, we had an increase in stock of about $4.5 million, and that was mainly due to some price increases for some stock line items plus, of course, the additional stock that we took on board just for those products that have been in demand, just to try and make sure that we're not caught with any shortages or anything in that strong demand environment. Pleasingly, debtor days had a significant improvement down to 49 days. So we did have some increase in provisioning during the year, but we still had a P&L impact of less than 0.4% of sales. And some of the new businesses and things that we've acquired over the years help with those debtor days as well. It is reliant on formwork customers, which traditionally have higher debtor days. And the other large movements here in the balance sheet are mainly all related to the Timberwood acquisition with the stock, fixed assets and intangibles all increasing. The net bank debt pretty much finished the year where we started off just under $22 million. And our gearing based around that net bank debt is around about 18.7%. So just, I guess, factoring into account the recent -- or today's announcement of the Revolution Wood Panels acquisition that would take our bank debt up to about $28 million on a pro forma basis and gearing sitting around about 23% thereafter. We still have a bit of headroom in our acquisition facility to do a similar sort of sized deal. But after that, we need to look to raise capital as part of some further acquisitions and things further down the track. That final slide for me, just on Page 11, here on the cash flow. Cash conversion is at 77%, jumps up a tad to 80% when you exclude all the water-related one-off type payments and restructuring items in there. Again, particularly pleasing given our growth in stock and some of those first year working capital requirements on Timberwood. And those 2 items partially offset by the improvement in debtor days. But there were some impacts from some product sourcing that we changed from local to imported that did impact working capital a little bit. But again, that's, I guess, finished in terms of we wouldn't see any further impact from that in terms of FY '22. So we'll be looking to see an improvement on that cash conversion ratio in FY '22. Off the government grant side, I think we actually received $4 million of the cash in FY '21. So there's still a further $6 million to be received, and we'd expect to get the majority of that through in FY '22, if not all of it, and that will obviously help us meet some of those -- closure costs as well. CapEx just mainly stay in business-type CapEx, some initial payments from the Grafton site expansion, but we will have circa $5 million to $6 million over the next 12 to 18 months as that site expansion is rolled out and completed. A couple of [indiscernible] the cash flow, just the acquisitions, which the cash component for the Timberwood deal. And there's further payments to the vendor over the next 3 years, depending on our targets in there. It was pleasing to see that the vendor did take up $4 million worth of Big River shares as part of that acquisition. So that underpins the commitment to the future success of the Timberwood business. So that was pleasing. And the net proceeds from the capital raise that we undertook during that period coming in at around about $19 million. And just finally, the dividend payments that we've paid during the year and the -- of $3.4 million and the dividend that we've determined, the final dividend that was determined in respect of FY '21 there of $0.03 per share. So that's up 25% over last year's final dividend of $0.024. That's it for me then.

All right Steve, thanks, mate. Yes, look, I'm just trying to steer through this outlook slide fairly quickly to leave a few minutes for some questions. So yes, the outlook, there's a few moving parts that's fair to say. Certainly, we expected the overall market in FY '22 to grow by circa 4%. That's our addressable market. Assuming no significant lockdown impacts. Now of course, that's a bit of a strange statement given there is already considerable restrictions in place. But having said that, we've continued with that growth pattern that we saw throughout FY '21 has continued in FY '22. So sales started off particularly strong in the first 7 weeks, notwithstanding some of those restrictions and lockdowns we've actually lost about 6% of our working day equivalent so far when you take the shutdowns in Sydney, Woolongong, ACT, Adelaide and New Zealand on a cumulative basis, that's sort of ended up being 6% of our available cumulative working days. So notwithstanding that, we're still growing at a faster rate than we did in FY '21 in the first 7 weeks. So the fundamental market is strong, albeit that as further restrictions get put in place, obviously, that creates some down for us. So housing, as I mentioned before, I think, continues to be strong here. And construction lags approval. So everyone focused a lot on the approval numbers. But cumulatively on our assessment in FY '21 and for the rest of FY '22, there will be a cumulative 22,000 shortfall in starts versus approval. So that's obviously just extends out that overall pipeline of the detached housing market, obviously, partially into the home builder scheme, which just further underpins FY '23 and onwards. So we're planning a bit to catch up the in part because of the shortages and in part just because of the strength of that particular market. Look, there are some good things going on in multi-res albeit at its low point, there's some good new projects being announced, particularly from the big players, the Tier 1 developers. So I think growth is expected from 2023, and that's obviously been a drag on the overall addressable market in recent times. We actually see the next peak in construction being FY '24. So that's a bit of a cumulative assessment of all the major forecasting bodies in Australia and all their expectations for the main 6 segments we're exposed to there in construction. If you use the sort of the average data across all those organizations that that's when the next peak of the cycle is expected to be. That would be in line with our thinking, and works on the normal 8- to 9-year phase, which has been consistent for many, many years. So we think it's not just a story about growth in FY '22. There's still a good 2 to 3 years of growth as we swing up the cycle. Look, I've already mentioned the fourth point there is just some of those restrictions in place. We just deal with those. And it's crimping our business a little bit. We're certainly pleased with the run rate so far. And freight is an issue. You've seen some press about that, perhaps the freight rates have skyrocket again, particularly leading up to Christmas, and there's about 25% of our business is exposed to direct importation. And hence, obviously, those international freight rates. But again, we're well diversified there. So I'm sure we can manage that. And some of the supply restrictions that have been talked about a lot. I think there's some positive signs there, some of the lockdown scenarios in terms of construction has allowed manufacturers and so forth to catch up a little bit. So we're seeing some easing in some of the sort of the key structural products that have been in short supply per touch better. Just from a strategy point of view, the project we've talked about a time and as Steve mentioned, still $6 million in cash to come in under the grant there. Strong synergy extraction from our panels category, which is growing really nicely in recent years. So there's some really good synergies with our manufacturing operations there as well as product extensions, there's some good profitability upside in the future there. I probably talked about the Revolution Wood Panels again, that will contribute from quarter 2. And we continue to assess other acquisitions as well, and we certainly expect them to contribute to the FY '22 results with some initiatives well advance there as well. And then finally, just on the financial side, obviously, a fair moving feast, but my best expectation is sales revenue in the range of $335 million to $350 million sort of circa 22% growth on FY '21, if you take the midpoint there. Now again, obviously, that does assume there's no major problems for the industry. And that does include the contribution for 3 quarters from the Revolution Panels business. And then from a profitability metric, whether you look at EBITDA, net PAT or EPS, we expect that to be at least in line with or above revenue growth with some of the operating leverage the company is seeing at the moment. And cash conversion to certainly be within our long-term averages there of around 80% to 90%. So that's it, ladies and gentlemen, I won't go through the appendix. I'll just leave that there for people to mull over. But perhaps I could throw back to the facilitator now and see if we have any questions.

[Operator Instructions] Our first question comes from Raju Ahmed from CCZ.

Two questions or 3 groups of questions, I should say. The first one is, Jim, on your guidance, what is it, $335 million to $350 million in revenue subject to market conditions. I presume that has factored in the Greater Sydney construction shutdown. Can you just give us a sense of what's going to be the split first half, second half? And also the missed revenue, I suppose over that period of time, will there be a catch-up? Or is that sort of lost forever, so to speak?

Yes. Okay. So a few points there. So yes look, that revenue guidance assumes all the different lockdown scenarios. So it's not specific to Sydney. I guess, we're in an environment with some limited operating conditions in Sydney as we are in Victoria. So that's just assumed. I haven't made an assumption here that that's going to fix itself in any particular period of time. I think, on balance, that is still our estimate unless there's major shutdown recurring, which at this stage don't seem to be planned, particularly in New South Wales, where obviously the COVID situations are worse. So in general, that's the answer to that question. With respect to the catch-up, how much have we lost, but I guess the only -- the best guide I can give you is that cumulative 6% of lost days. I think there's about 770 working days if you take the 35 days so far in 7 weeks times our 21 sites, and we've lost 55 working days out of that 770 if you take every individual site. So that's 6%. So could our revenue be 6% higher if none of those state-based construction lockdown had occurred. That's possibly a number for you there ranging in terms of the total loss. And our view is it's not necessarily caught up the next day because -- or the next month, to be able to kind of all of a sudden do twice the work for a week or a month to catch up those lost days. What it does do is extend out the pipeline. So where it would otherwise have been finished in FY '22 extends the '23 and so on. So Look, there will be some additional over time, maybe construction work start working or Saturday, there's a bit of a catch-up. But in general, we think more stretches the pipeline rather than there being a month or so where there's a big catch-up. And seasonally, which is the third question, I think, Raj, we just -- our business has always been very close to 49%, 51% first half since second half, even though we've got some of these restrictions in place, we don't see any material change to that long-term seasonality of the business we're at.

Okay. That's helpful. The next question is around the gross margin, solid margin expansion there. I just wanted to get a sense of -- you talked about products procurement scale and that sort of stuff, more than offsetting some of the supply side challenges that's fairly clear right now. Can you just give us a sense of what is -- how much of that margin accretion is from any changes in product mix? And how much of that is through scale of the business? Is it possible to give that sort of [indiscernible]?

Yes. Look, yes, we've been able to give you the answer to the second decimal place. And effectively, about half of that growth is due to enhanced product mix. So that's obviously, as we increase higher margin categories. So that's a product weighting impact. And the other half, so 75 points is due to improvement in both procurement and pricing discipline. So you can put those 2 together in terms of like-for-like products. But us doing better -- I mean, as we change some of the supply chain that Steve talked about as we directly imported versus bought locally that does come with a small working capital cost, but it means higher margin effectively taking out of the chain, dealing directly with overseas factories. So there is higher margin albeit that the working capital requirements touch higher. So that puts that into both the procurement and pricing control, and the other half of that growth is due to the enhanced product mix. So I think of [indiscernible]

Yes, it does. The last one is the enhanced product mix. Is that something you expect to be sustained for the foreseeable future? Or do you -- should we anticipate variations through the cycle?

I think it will continue for the next 12 months because obviously, we're going to have the full 12 months of Timberwood. We've got 9 months of Revolution. And then some of the other in-house organic growth in those differentiated several manufactured products I talked about. So I think there's still contribution to be had. But then at some point in time, we hit sort of equilibrium as such there you and then obviously, building products and formwork is still a critical part of our business, and they certainly add to our diversity story. And then at some point, we'll find our natural sort of level. And I think the growth from product mix will start to change. And obviously, they will have to focus on things like procurement with scale and pricing discipline to continue to etch out improvements in gross margin.

Our next telephone question comes from Sean Kiriwan from Moelis Australia.

Congrats on a good result. Just hoping you can just talk a bit more about the acquisition announced today, Revolution Wood Panels, just in terms of the product mix, the margins and I guess what it brings you to your business [indiscernible] to do?

Yes. Sean, look, a really synergistic business with the Timberwood panels acquisition that we made 3 or 4 months ago. So really similar product range in plywood and overlaid panels from -- with end applications from an architectural perspective from a joinery industrial and civil products. So very, very consistent product mix with Timberwood and with the Big River core plywood business. So in our view, highly synergistic there. Revolution was actually a very large customer of Timberwood with a really strong position in Queensland. So there's a lot of familiarity between the founders of Revolution and the Timberwood business and also Big River, we've known the guys there and particularly one of the founders there who had a long stream plywood industry before establishing the business. So it's about as leases you can get, Sean what I'd say. It's really synergistic. It's absolutely core to what Big River been doing for 80 years, and it gives us a really good market extension into Queensland for a critical high-margin product range.

Got it. And in terms of margins, can we assume sort of similar the [ Timberwood ] business then?

Yes, correct, correct. And Yes, yes, it's sort of in there between the Timberwood and the New Zealand. The goodness is the margin sits up at that level, which is materially higher than the rest of the Big River group.

Yes. Got you. And going forward, is the strategy to continue to look at the [indiscernible] acquisitions?

Yes, sure. It is in all 3 segments, obviously, the last couple of acquisitions have been in this panel space, but that's not say that there's not still really good growth opportunity in building products and formwork material. We think there is, and we think that diversity is what's held us in such a good state in the last few years. So we want to continue to make sure that we've got strong position in all 3 of those product categories. And hence, we're looking at acquisitions in all of those categories, Sean, and then also in all geographies, all 4 of our operating regions. So I think that's an important part of the acquisition strategy. And certainly, absolutely, as I mentioned in the strategy update, slide then. Yes, we're certainly continuing to look at more acquisitions, and we still see the thesis in terms of industry consolidation, aging business owners, they have a succession plan that absolutely holds true. And it might be only being enhanced with lots of people thinking about their future in this COVID environment, particularly aging business owners. So I think there are great opportunities to continue with that [indiscernible] I think has worked well for us so far, and certainly, we can extend it much further than what we've already achieved.

Got it. Just a couple more from me. With the guidance, revenue of $335 million to $350 million, what's the recent opportunities in terms of coming in at the bottom end or top end of that business sort of assumptions have you made around providing that guidance range.