Lycopodium Limited (LYL) Earnings Call Transcript

Good morning, everyone, and welcome to Lycopodium's Full Year FY '25 Results Call. My name is Sam Wells from MWR. And joining me from the company today is Managing Director and CEO, Pietro De Leo; as well as CFO, Justine Campbell. Following a summary of the results released to the market this morning, investors and research analysts will have an opportunity to ask questions. [Operator Instructions] We will endeavor to get to all questions asked in some cases, combining submitted questions on the same or similar topic. For the analysts asking verbal questions, we kindly ask that you just limit your questions to 2 or 3 during the live session on today's call. So with that, I'll pass it over to you, Peter.

Thanks a lot, Sam, and welcome, and thank you, everybody, for calling into Mike's full year investor presentation. So we will ran you through a little bit about Lycopodium, particularly for those of you that are perhaps new to Lycopodium or you going to go that the business or on the financial highlights, the operational highlights talk about our forward strategy and then provides somewhat of now. So that's -- we're an engineering project delivery company. It delivers projects legally. We found here in Perth in Western Australia. So this is our 30th year come up in September. We have over 300 staff globally. We are a professional services income business. We don't critically employ training as we go. So 300 people are basically engineers project and project delivery portal, et cetera, Central quite a large and quite a significant bench strength of individuals. We sharing across our project delivery business. So we do in from the evaluation local delivery right away through optimization. I'll talk a little bit more about that later on. And we work across 3 centers, rail resources and resources infrastructure and industrial processes. Again, a little bit more on that for the later. As I mentioned, we work across the full project delivery seton from everything from the evaluation concept studies sees only started work or work on projects visibility on projects or, I guess, not a new business for us on track. We then get involved in the process optimization come up with the right process or for the exploitation of particular resource projects. The detailed engineering in the project delivery, project controls, construction management project, et cetera, et cetera, et cetera. And then into optimization part of our business which sees very, very well. And again, very, very broad business and we're really [indiscernible] across the organization. Over the course of several decades, the businesses have steadily grown. We've been able to grow our operations to deliver a diverse portfolio of projects delay. Just last year, we managed over 15.7 million man hours, controlled or we manage for our clients in the delivery of their projects. We're currently working on a very high number of studies, which is how much future level. We'll see in terms of detail projects. We have a different resource projects. We are currently work in hand of over $390 million of services across a lot across years. The CapEx projects are currently managing. It's over $10 billion and sorry, $10 million of Capex studies that we're currently working on and currently manage CapEx is over $5 billion. So from workload, a very strong order book and a very strong forward order pipeline in terms of the opportunities. I touched on the operating segments. But really at our operating the call Resources segment and resources, but we are complemented by the strategically aligned industrial process resources in the stain projects across multitude commodities, gold, [indiscernible] critical minerals and now [indiscernible], will talk a little bit more about later Senators well as hosting. We've worked for a diverse range of clients industrial processes. We work in pharmaceuticals, food, beverage, manufacturing, specialty chemicals like as well as a lot of what we're doing in the renewable grades a infrastructure. Similarly, a lot of engineering design enduring forward rate infrastructure management services to so operators, [indiscernible] and the like and again across the business on [indiscernible] of our business next business. The financial highlights for the year Again, really seen another strong year in what has been a history of really good financial performance. The earnings levels upon what we target. We started to do a 10% impact. If everything going well in the business. We want to see us large to see a 10% impact return. We exceeded that this year, and we've considered that in recent years as well. And really the businesses results for the last financial year, have been largely driven by delivery of PCs services, all we haven't had it last year, which we did have in some of the propriety impact of contribution of some of the case where we are in 1 form or other in contract on delivery projects, really in the last 2 months at around us delivering our results pretty much highly on the sale of manhours again, really strong outcome and really less booked. In terms of the specific financial highlights, almost $34 million in revenue, $60 million in PBT impact. I will note that both our revenue and our impact was towards the top end of the events to be provided at the half year in February, very, very strong cash in bank and we need to do and on cash last the year and I'll talk a little before about that when we talk about the balance sheet. But yes, 12.4% at margin, which really again, means we're achieving what we want to achieve and more. So we're very close to that. And also I just want to talk about cash is down, keeping in mind that we have a strong cash back now made a acquisition as well. So we've done that from cash reserves or rate and dilution shares balance sheet, certainly, we have seen a cash increase basically due to the very strong cash inflows from our activities seeing 7 million cash employment. So I work capital needs are around the sales over last year. We've seen an increase in provisions in our divisions in paying off a rate projects, and we hate those projects. Again, in system and price taken every year seeing our product or an at a really strong increase in [indiscernible]. The way of ratios is 1 of the big things for us this year, and we call strategies, which I'll set a little later. But the geographical expansion, obviously, the acquisition of [indiscernible] I think at sauces in Argentina and Brazil and in the U.S. We also opened our Vancouver office, and we continue to strengthen our lead office across the new remote across the last 12 months. In 2014, we give something that we just reached a section or major interest in helical AP. We've now rebranded that company, July simplifying mother market and decide to do that. We continue to invest in our systems and our processes to make sure lot work share to drive consistency actually we build a high quality across the business. We continue to invest in our people. I said earlier, were 100 people and high-quality people. They need the right tools, they need to log platforms, and we've given them all that and more in terms of our people strategy more color to that later on. And really importantly, we've done everything we've done delivered over median at man hours and control about a 15 million man ounce delivery of projects were done at an exceptional sector record we maintain a very, very high industry leading change record across the globe, across our operations [indiscernible]. In terms of sort of highs and resources, I want to see a fantastic year. We've seen the taco project for West Asian Resources completed enacted or in June of -- for this year. The good strategy for Gold and other projects tenant clients with decile projects. We finance in Canada in the same month. The Boto project. I have to report recase has also [indiscernible] manager in similar schedule and project just a little exceptional well. We started new projects, the Kona Gold project or Montana, a sea Pills in Namibia and ag versus line, of course. So strong listed projects, which we started this year. And we've achieved the award of strategic projects the goal of lactate expansion project. So we're working on Phase I extension and Phase 2 expansion, very material project. We will see us all things being equal having a very, very significant Canadian project, project British Lumba delivered on CM basis across the next [indiscernible]. This is a list so but that have been looking at my volume for volume recognize this chart. It clearly just shows you the projects that are in the stages. Those that are on site and the late savers in delivery and those that have been delivered during the course of the year. And you can see that there's a good strong list of projects across commodities and resources old complemental sands, focal minerals, [indiscernible], we're working on a coming project in South Africa at the moment. You ran in a number of rain projects as well. So we are really strong and very interesting business projects we're working on. And importantly lost less of very opioid have very strong moving industrial processes. Again, that I mentioned that our business not only works in social chemicals manufacturing to beverage in the light paraceuticals but also very much in the pipeline onsite a lot of the great energy layed initiatives. We have completed the design of 1 facility for the actual recycling. It's a modular movable facility. We've been involved with the [indiscernible] couple of nickel projects over the new test plant there, and we've been molded with a range of protection and price and we detailed engineering that on top of an isopach as C clears, tales and others in a range of other activities. In terms of our infrastructure, and very, very busy year, a good year. It continues to be a high-quality business, delivering icon services to the large ARCC [indiscernible] National Horizon with very good prospects it. We're working to work on the land a project on a bunch of precisions projects as well as on room services, like international and multi-car contracts. So we're very pleased in plantar business and the process and the acquisition for us, just as probably the main highlight of our not saying the excellent 1 we've done, the delivering projects in selling Safran. That's us. That's what we've been doing for many, many years and to ex acquisition gives us an opportunity to do that in a new geography. And so it took us some years to find this business. We looked at many businesses. We identified Latin America in particular as a part of the future Lycopodium story and enabling us to deliver projects for existing and user clients and to our into what is a very, very significant resource market and we're able to secure this on safe of a very culturally aligned business. It's a longer business. It's a bolt-on micro right. But still a state network for us here is new officers has given us exposure in new jurisdictions to clients. in sits very culturally along with being typical business. It's common and we do -- we consider we're also going to enhance our capability silently because they did about half of their working in the industry and part of the work in the resources, but also to still see, they're a very high-quality group of engineers, particularly in the structural sales, chemical engineering, electrical engineering space I believe that Pipa will become another interaction for us seeking structural engineering, high-end in lining and the like, which is growing through the Ant in Latin America, having a lot of that capability just and they're going to make a contribution financially in this financial year coming and really from, we believe, what the business cost us potential upside is really due to set transformation to in [indiscernible]. We continue to support the communities in which we live in work across the world. We have some fantastic examples of that. We support those communities by the lifting foundation. What you see on the screen there to the repo initiative in Tanzania in consort of them, and we continue to support Quantaco Australia, basis organization in Gara as long as the Hunton so Africa came down. So just very small contact. We're really focused and we talk about the like industry, the life a foundation enormity really supporting education and use integration has an opportunity to a property and to improve peace standards. We've supported that or thinking in or time of the university here in Australia and elsewhere on a number of key initiatives and coarse in terms of some of the case studies in the resources space. Again, we do what we do is in the resources space. So I've spoken about Gold project. We provided 40% services for African resources on the project been second of their project. That's been a transformational project for that certain from single asset operator to a multi-asset operator, that raise on budget, and shed and gold early, as I noted earlier, as a fantastic current future operations for Safran nurses. We completed the [indiscernible] on sources in full on that project, not Samita trials with regards to the lithium market. There is a fantastic project for operating assets fantastic infrastructure, wonderful example of really only in June that due onstream all projects we sell in our case side those can to effectively and which is proven to be titan we do is doing that very quickly. And then the third 1 is the footprint production project for an American plan in South Africa. This ladies transformational for no plans as well because see line along the lifetime extension project that transforms economics of that project. And in fact, made to us now being involved with the second larger project in the whole core South cost which will we talk about until next year. So in terms of strategy. This is a consistent with what we have seen most of you committed but really consistent and consolidation of things that big a really important point continue to drive across the future. We're in the business, and we want to make sure that across our business, we have we case. We're -- we've got a lot of initiatives that we have in place and have introduced across the last time years to do that. We have a strong focus on succession planning across the organization. A strong focus on developing a fit. So our leadership development plans are really launch, I believe, provide a real rate across the business. On leverage so that we're investing across the last 3 or 4 years per [indiscernible] we had IRS new delusions, the more leveraging across rest. We are using a into not only in that even within systems or as just use, but also to into our very, very significant IP and motivation stores on reference stocking section, making that information more about, more accessible to our people so they can do time efficiently and achieve our high-quality or at best being on the best. We are continuing and a sharp I guess our focus on client project excellence I want to make sure that policy we've been an extremely successful organization for 3 years and we successful present across the last 12 months, but we don't take that granted and we are lenti client focus, manta oversight of doing really good work and that we prioritize cycle work over hybrid. But we also look to systemic we want to maintain what we're both in a very mature [indiscernible] African market, a position that we want to rotate be part of that and could lead us to be part of the pools. And we also want to do additional things incremental and on our ability. So we bring our expertise in expertise delivery expertise into new potent. So certainly, we're not saying still dramatic do that. due to try to improve to lens. We are diminished when I'll show you a chain the slide, it says that we are 96% resources in [indiscernible] resources and 3% investor processing infrastructure really what we've seen look at us in any of those sectors [indiscernible]. We've got really good geographic diversification. We've got client diversification across the major global the emerging. We've got excellent diversification of our sales and our projects, as you can see those on our charts across commodity. So -- and what that means is it takes a lot of the lumpiest to talk in the market continues to prosper. We'll continue to do very well, and we'll continue to focus on how inornate [indiscernible] Lycopodium a disciplined approach to risk management. We have a really robust risk approach. We whether it be technical delivery, operational delivery, safety, corporate garments, contractual, the like. We want to work. We want to be big. We love doing what we do. We want to do it for the right people in the right place and in the right way. And we think that's been a financial element of our success I'm trying to manage out the end of our contract, the solid contracts you have in the business from those who sooner detach opportunity location product or a deal to get a look for somewhere with is we're a little less risk, a little less return, but at the end of the day, a lifestyle portfolio of projects that are going to see us well for a given year. And we're a capital-wide approach. We don't have high capital to have to commit strong capital to yes ago. Some people talk about Solenis working in the country for example consumes in post security set that there's no decision around capital and sovereign risk in the end of the day. We are people and that offset our IP. That is all very, very low on. So that's again 1 of the uses in our organization. And core to us as an organization engineering organization in [indiscernible] not culture to the onus improve. So to say that you don't need to appreciate you must be a cinema let affect. But we had a change so you see many of them were the digital engineering are involved entities. What we do with the [indiscernible] platform. There's many, many other examples being some mutualization of equipment at the market. There's lots of examples across the business of Australia individual engineering, and this is really important as you got to move it back in, do have parts and compare when looking at us as the that the target drive. And we need to be working hard to make sure that we're thinking of bringing in a car optimal sources. So just by way of the outlook, I guess, obviously to last you July, we believe that the macro economics, but we're very fab. We believe the demand for our services has seen it remain very high. We're seeing that. We continue to see that in new markets with new clients. We continue to see it sometimes with a client like we work with them a little go and try some that to us. And that's purely because you do say we're going to do and we'll do it successfully. The critical minerals is probably anemia and so on of upper or some were poised to participate in any uptick in that area with our experts across critical minerals Caara, et cetera. Latin America due from a huge amount of those resources. We have an ability to tap into Latin America now of course. So still very strong waters, I would say, probably wrote to the engineer compete remains person part of our business and not a banking quite a novel new projects long up to go. Projects have been saved for some time now with a strong price led to move ahead. So 1 very important to us next 12 months. And also just on the industrial process is on infrastructure, future main Australian agenda really for us means that you see originally goodbye industrial processes business in East Sanand. What we're doing on we're seeing as a growing demand as well in investment also investment in rail. So we see the market on a retainer meeting of certainly quite realities. But what we will do is by guidance as you all as we have done traditionally around our AGM in November of this year, the first is cycle. But our view is baseload what we're seeing is that we're going to be very, very busy and just by performance costs ex also actually is for the formal presentation for a moment, that perhaps Sam have any questions.

[Operator Instructions] We do have a handful of questions coming through. We'll kick off with Saxon. There's a number of questions relating to Saxon. Firstly, just in terms of the integration, how is that progressing? How much has been spent on the integration thus far? And what are the remaining hurdles around the Saxon integration?

So we want to jump on the integration. In fact, even prior to finalize the deal. We started doing a lot of the whereas we have done a lot of work on through the duties and I think that we're very, very well advantaged we rolled out the ERP or HRS, so fasten have been rolled out. our Internet to all the procedures, our process ologies like come roll out to taxed a number of teams that visited a transaction all in or onto. There is more as already been in of the business return planning in respect to the operational conversations. There's the work share that's already occurring. We have a number of trees in 1 at the moment, which tabulator us. We have a number of people that have done and our investing to continue to sell the extraction everything we've seen today is something and mostly for there's been passing surprises. It's not going to take long for us to integrate in fact, answer [indiscernible] course is all the opportunities to get into traction in some of those opportunities. And we see that's going to start occurring in us great agitation in a few years in the next 2, 3, 4 years. Example that, we have representation some in a budget poised be in sold and the sales promising a bunch of opportunities there. So far in excellent. The way we've structured the deal and the whole -- the coming set of the organization was that we're not changing a operations not changing their leadership, founder, stain the business for 7 years. He's you reported in this part of our structure really effectively and so far we Great. Just on pipeline opportunity. How should we think about conversion of those opportunities? And specifically, what portion would you reasonably expect to the things -- a lot of the work that we unis series business to existing clients and a lot of the work that we secure as we find feasibility say work will easily then the to project. And I was saying, all things are being on this project going strong. This is in so obviously, depending into execution and we've done the study on expanded unexpected we would be more post the time we will be steering that work and doing that work. If we have a continuing also curious, it's -- we don't tender everything. We -- as I've mentioned will prioritize by were over just award going to all every tonne we probably in for some time. met the work that we do and most of the projects you see still 2 years be doing and were in constant for a long time.

Okay. And some of the new contract awards, specifically Twin Hills, neither and Blackwater. Could you just provide a little bit more detail around the ramp-up time line of these projects and how should we think about the incremental revenue expected from Blackwater Phase 2?

Yes. So at the moment, I'll start with that as page on expansion in Phase 2. At the moment, we're working on the Phase I expansion entering an early works and in the same Phase I estate than the current labor the patient range will take the Blackwater project from so on some on to almost in some grounds Phase 1 expansion in the Phase 2 project. And so it's meningeal body of work on it. And we've got a very relationship at car. We're evolved actually and want to see help them emission and their protests going to be great work. Now the main volume of that work will happen line happen through a of services. But then the line share that we'll have following a and that's really important work. And the other 2 ranges you mentioned ago, we could kick off 3 mills early this calendar year and that on a sale of 8 months. It's probably in the order of $35 to $40 million with services. And it's a difficult sort of kind difficult goal curve we see on the strain terms of the onetime procurement efforts and then into the site and truck management is for cetera. So on across 27 months. So essentially in December and January this year. And as I can say, actually, although we only we announced our Slide 12 contracting units we'll be working on that project or so shares earlier, et cetera. And again, that backroom period of time, 26 months. And using low well for us.

Great. Thank you. We'll just move to a verbal question from Ali Porter at Euro lease. Ali, please go ahead and unmute your line.

Just a couple of quick ones for me. Just on the workforce. How are you thinking about it over the next 12 months? Are you looking to add talent? And if so, how are you finding that market in general relative to the last few years.

Again, we are looking to add to the workforce, Ally. We're in an upload a number of projects. I mentioned some of them already, but there's a lot of that table sort it has of projects. You can see there's a lot of projects in the case that need to ramp up. So we expect our count to grow over the next 12 months. In terms of the amount of resources better in some markets as to say but what I will say is consistent and constant and something I've reported on previous year to start equity. So that's why we go to early on, we get a portion to develop them. And we also work very hard on 1 away from macerate and an eye rolling out roll out the great some program into cases. So we know and we've seen and we do the benefit of our teams. A lot of people have come through lighter and the growing loan and extremely careful confidence is timescale in the market, the university life. We need to develop that level because we're not being developed also. And so are available, but it's never as are high.

Okay. Fantastic. And 1 more. You mentioned incrementally broadening your capabilities. Can you give me an example to what sort of adjacent capabilities are on that short list?

Well, it represents going into new commodities in the resins, for example, as we start to or new fees, for example, and there's a challenge of that. We haven't done a lot with plan on playing [indiscernible] work on an increase with a couple of projects there multi-seller as well as we see. So there's also where we've given borders offering. And again, all our for example, across the last couple of years and there's a number on engine sort of opportunities in and run infrastructure business at the part of the structure business is asset management plan and asset management occupation line. We've already started this year working some of the local counties providing asset management services. They're using digitalization of the of their assets. So that's. I mean this is quite a number as are that have opportunity to grow. And the last 1 is really the capabilities that sensor, and we stinkers today also service other markets, filling oil and gas in Texas and in other locations. So to with that.

Fantastic. I'll Pass it on.