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RDX - Redox Limited

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Redox Limited supplies and distributes chemicals, ingredients, and raw materials in Australia, New Zealand, the United States, and Malaysia.

It offers organic commodity chemicals, such as organic salts, hydrocarbons, and alcohols; inorganic commodity chemicals, including mineral and other salts, concrete and cement additives, acids, alkalis, and oxides; specialty chemicals comprising ingredients, antioxidants, rheology modifiers, UV stabilisers, specialty coatings, adhesives and sealants, surfactants, corrosion inhibitors, and trace elements.

The company also provides plastics and rubbers consisting of polyethylene, polypropylene, plastic films, and synthetic rubbers; and proteins, starches, vitamins, and amino acids. It serves human health and nutrition, crop production and protection, industrial, animal health and nutrition, household and personal care, surface coatings, mining and explosives, and watercare, as well as plastics, rubber, and foam industry sectors.

The company was founded in 1965 and is headquartered in Minto, Australia.

It is anticipated that RDX will list on the ASX during July 2023.

redox.com

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Redox is a leading chemical and ingredients distributor active in more than 1000 specialty and commodity products.
redox.com redox.com
 
not the usual minnow
Listing date03 July 2023 #
Company contact detailshttps://redox.com
Ph: 61 2 9733 3000
Principal ActivitiesRedox is a supplier and distributor of chemicals, ingredients and raw materials in Australia, New Zealand, Malaysia and the US.
industry groupTBA
Issue PriceAUD 2.55
Issue TypeOrdinary Fully Paid Shares
Security codeRDX
Capital to be Raised$402,000,000
Expected offer close date27 June 2023
UnderwriterOrd Minnett Limited (Underwriter), UBS Securities Australia Limited and Ord Minnett Limited (Join Lead Managers
 
“Redox has identified multiple potential acquisition targets in its major operating jurisdictions and intends to continue analysing and evaluating potential acquisition targets applying a disciplined inorganic growth framework focused on strategic merit .
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Redox sells chemicals and ingredients to 6400 customers across industries including food, beverages, vitamins, crop protection, animal nutrition, paint and plastics. The company’s 391 staff will each receive $1000 of free shares in the float, which is priced at $2.55 a share.

Redox chairman Ian Campbell also emphasises that expansion in the United States and Asia will be an important growth plank. It set up its first US office in Los Angeles in 2015.

“Redox also intends to continue growing its offshore presence in the United States and Asia and will continue to assess the financial and strategic merit of acquisition opportunities within a currently highly fragmented market,” he said.

Chief executive Raimond Coneliano said Redox had shown over an extended period that it was able to perform solidly in tougher economic times because so many of the products it sells go into everyday products. “Our growth despite recent macroeconomic volatility demonstrates the resilient nature of our business,” Mr Coneliano said in the prospectus.

The group’s top-five suppliers accounted for 12 per cent of total revenues in 2021-22. Redox forecasts that revenue will rise by 15 per cent to $1.24 billion in 2022-23, and then by 6.8 per cent to $1.33 billion in 2023-24. Net profit after tax on a pro forma basis is forecast to be $81.3 million this year, increasing to $97.4 million in 2023-24.
 
could be a RDO

... Redox IPO at 2.55 and started trading at 12:00 today .... so far, no stag

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doing well ... runs on board since listing

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Commenting on the result, Chief Executive Officer, and Managing Director Raimond Coneliano said:
“The first half of 2024 was challenging with global commodity price deflation and weaker demand impacting sales revenue which fell 8.4% versus PCP. Revenue declines were most evident in the Crop Production & Protection market segment as customers continued to destock but was in part offset by strong revenue growth in the Mining & Explosives segment which benefited from successful product launches in the Lithium and Uranium subsectors.”

“With respect to our sales volumes, Redox continued to demonstrate robust growth, particularly in the Animal Health & Nutrition and Plastic, Rubber & Foam segments of the business. Gross Profit Margins were strong at 23.1% in the first half, driven by improvements in our product portfolio mix and by selling a larger proportion of smaller but more profitable transactions.”

“Pleasingly, Redox was able to maintain its strategic leadership in its core market of Australia and New Zealand, delivering important gains in share of wallet with some of our larger customers, which was supported by adding exciting new products to our diversified portfolio. The Company also completed two small but strategic acquisitions in the first half of the year, enhancing and growing our diversified product range and distribution capability.

“In the US, a key growth market for Redox, we continued to expand our geographic presence and grow our sales volumes. This was a good result, despite the challenge of price deflation which has impacted revenues.

“Following our successful IPO last July, we have continued to deliver strong cashflow, generating $80.3 million in cash from operations. As a result of the IPO, our net debt position has been extinguished. Supporting our growth strategy, the strong balance sheet will ensure we have the financial flexibility to execute on growth opportunities as they arise.”
“Finally, the Board was pleased to announce a dividend of 6 cents per share for the six months to 31 December. This is our first dividend as a listed company. The dividend represents a payout ratio of 80% of statutory profit and was at the top-end of our full-year target payout range of 60% to 80% of statutory profit.”
 
Started doing some research & analysis on this one, it has a lot to like about it from my perspective. Usually dont go near recent IPOs, but may make an exception here.
 
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Cash flow from operations and working capital
Cash flow from operations fell $19 million to $116 million, resulting in a free cashflow conversion rate of 87.6% in FY24. This reflected the turnaround in the business’ working capital from FY23 which fell $18 million. Redox finished FY24 with a net cash position of $177 million.
Net working capital as a percentage of revenue increased 1.5 percentage points to 30.8% in FY24, in line with its long-term historical average.

Dividend policy
The Board has declared a final FY24 dividend of 6.5 cents per share, payable on 20 September 2024, taking the full-year FY24 dividend to 12.5 cents. This represents a payout ratio of 73% of statutory net profit, in line with our policy of distributing 60%-80% of NPAT.

Outlook
During FY25 Redox will continue to expand our geographic footprint in North America, bolster our product portfolio, increase our share of wallet and grow our client base. We remain focused on driving organic revenue growth and anticipate strong volume growth at or above historical average in FY25. We continue to review strategic M&A opportunities which will contribute to positive momentum.

Due to uncertain geopolitical and macroeconomic conditions the company has chosen not to give specific guidance currently, however the company believes that price deflation and destocking to be largely complete.

Gross Profit Margins are expected to ease towards the longer-term average in the medium term because of expected expansion in the US and commodity sales volume increase.
Redox’s strategy and resilient business model has delivered consistent long-term growth and business expansion.
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Has appeared in Mirrabooka top 20 as #17 at end-Oct with $10.9M ... had a holding of $8M at 30 June
 
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