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SND - Saunders International

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Yesterday's Ann of supplying tanks to the dept of Defence bought in some buying but quickly snookered by today's half yearly and more of same.

(Not T-34s but fuel tanks)
 
galumay said:
Just thinking about SND, and I have held for years, is that one of the advantages of buying businesses that have no debt and nice clean financials is that they can stumble along for a long time looking for ways to turn things around. ......... For those reasons I havent minded having it in my bottom drawer all this time.
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Gee are they really talking about Saunders?
From the January investment report of the Naos Emerging Company's fund (ASX:NCC) which, by the way, is trading below after tax NTA , has a good dividend history apparently and has an ex -dividend date coming up (Mar 13 I think). I am not a holder of NCC.

Naos cmments on SND:
"The highlight for the month came from SND which made three significantly positive announcements. The first of these related to the award of a $15 million contract from Sydney Water to build a new reservoir in Penrith.

The second was a contract win worth in excess of $30 million from Rio Tinto to provide repair and maintenance services for up to 16 precipitation tanks. And finally, SND announced that the 1HFY20 result is expected to be between $1.2-$1.6 million EBITDA on revenues of circa $30 million, with the balance sheet having a healthy cash balance of $9.4 million.

In our view, these announcements show that SND is shaping up for potentially its best 2-3-year period in the company’s long history. It is also key to note that one of SND’s three major competitors being CB&I, which is owned by Dow Jones listed McDermott’s (US: MDRIQ) filed for bankruptcy protection in January, effectively limiting a competitor for the foreseeable future. Pleasingly the guidance released by SND shows that the business has returned to an EBITDA margin level of ~5% in a time where few if any major projects were recorded.

We believe with a much improved cost base and operational structure SND has the ability to grow revenue from circa $50-$60 million to closer to $100 million, and also to increase margins from the recently announced 5%
to a figure closer to 8%-9% once the benefits of increased scale are realised and more rational pricing occurs as a result of the more benign competitive landscape."
 
finicky said:
Naos comments on SND:
"The highlight for the month came from SND which made three significantly positive announcements.
- The first of these related to the award of a $15 million contract from Sydney Water..
- The second was a contract win ...from Rio Tinto to provide repair and maintenance services...
- And finally, SND announced that the 1HFY20 result is expected to be between $1.2-$1.6 million EBITDA on revenues of circa $30 million, with the balance sheet having a healthy cash balance of $9.4 million.

In our view, these announcements show that SND is shaping up for potentially its best 2-3-year period in the company’s long history.."
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and a Covid-19 impact update from NCC
• We do not expect any significant change to existing operations.
• SND currently have the largest order and tender book in the company’s history with Tier-1 clients i.e. RIO, Australian Defence Force and Sydney Water.
• Well capitalised with circa $9.5 million of cash, no bank debt and a further circa $9.5 million in PPE as at 31 December 2019.
 
I recently read that the Australian government was buying oil at low prices to strategically store. But they are are storing it in the USA because we don't have our own storage facilities (tanks). Seems pathetic. Saunders makes tanks. Might have something to do with our fairly non existent refining capabilities as well?
 
Saunders updating on Wuhan Virus impacts on its business today. Not too bad, they'll still make a reduced EBIT in fy20 against several CV19 hindrances and they forecast fy21 to be much improved in revenue and operating margin. But maybe there'll be a global deflationary bust starting Q1-Q2 fy21, see @DaveHcontrarian on twitter!

From Ann:
On February 26 2020, Saunders released revenue guidance for FY20 of $70 million and at the time, Saunders was not aware of COVID-19 or the potential impacts it could have on our projects and supply chain. The productivity and supply chain delays are reducing some margins and have pushed project revenue into FY21.

The revised revenue guidance for FY20 has been amended to circa $66 million - $70 million with EBIT margin forecast between 1.8% - 2.3%. Saunders has reported $77 million in project wins in FY20-H2. The combination of our record order book (in excess of $107 million) combined with the above re-phasing of revenue of existing projects has led to a target budget for FY21 of $100 million. The EBIT margin in FY21 is forecast to be circa 3.75% - 4.75%.
 
Still getting bits of work - project wins in FY20 H2 up to $90m now.

Not related directly to this but I still idly wonder whether some time a light bulb might switch on and the Fed Govt might make increased strategic fuel reserves a part of infrastructure policy and spending. Saunders would be in the cat seat for that. I guess the refineries are elsewhere now though. All that cheap oil and we're not buying and storing it.
I don't think anything will get me to buy more SND though while this M.D reigns - maybe a super cheap price.

SAUNDERS INTERNATIONAL SECURES TANK OVERHAUL WORKS FOR BP BULWER ISLAND
Sydney – 23 June 2020

Saunders International Ltd (ASX:SND) is pleased to announce it has been awarded the mechanical refurbishment and upgrade of two further tanks for BP at their Bulwer Island site, worth approximately $12 million. This award is a follow on to Saunders works for BP’s Bulwer Full Fuels Project which includes the refurbishment of three tanks and two separate piping projects.

Saunders scope of works for the two tanks includes; mechanical refurbishment, cleaning, protective coating and civil services. This contract will contribute revenue from FY21-H1 through to FY22.

Chief Executive Officer Mark Benson said: “This project further strengthens and extends Saunders long standing valued relationship with BP and reflects Saunders position as a leading maintenance service provider to the oil and gas industry in Australia.”

“Pleasingly this award, previously announced as part of Saunders preferred contractor projects, follows on from our recent announcements and increases new wins in FY20-H2 to over $90m”.
 
from the NCC monthly:

SND announced its 6th major contract win for 2H FY20 with a $12 million contract for the mechanical refurbishment and upgrade of two liquid storage tanks at Bulwer Island.
In terms of potential future opportunities, it is also worth noting that the Federal Government recently announced a Request for Information (RFI) process for potential liquid storage projects around Australia. The purpose of the RFI according to Government is to strengthen local industry, as well as enhance Australia’s onshore fuel security.
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We estimate that if Australia is to store its recently acquired fuel onshore (currently stored in the US), the total spend on storage facilities to reach the necessary capacity, prior to the acquisition of any land and buildings, would be between $1 - $1.5 billion. Submissions close on the 10th of July and we expect a decision to be made later in the calendar year
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Saunders International reported a full year net profit after tax of $1.3 million, compared to a loss of $1.6 million recorded a year ago.

Revenue rose to $66.5 million, from $50.1 million last year. Work in hand at the end of June was 110.5 million, up from $60.5 million. It is experiencing strong growth in core services and sectors.
Saunders is experiencing strong growth in its core services and sectors and an increasing level of new contract business enquiries and requests for tenders in emerging services and sectors, Defence and Energy. Tendering activity shows the value of live tenders at $303.8 million. The pipeline (yet to be tendered) is at $367.6 million.
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Whilst we continue delivering on our recent growth the economic outlook both locally and internationally remains uncertain due to COVID-19. Although the COVID-19 pandemic is likely to lead to further economic stimulus, which should be positive for Saunders, the financial performance of the Group will be dependent on how the continued pandemic impacts our clients and our people. Our FY21 budget is based upon a revenue target of $100 million with EBIT margin of 3.75% to 4.75%.
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So_Cynical said:
11 million in cash and no final dividend, in fact no dividend since 2018. A 1c dividend would only cost them a little over a million bucks...
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the company, in its prudent cash conserving way, did comment on this (and remember revenues would be lumpy)
Mr Benson further said “Whilst we remain cautious of the current economic climate we are positive about continued improvement in FY21 and will be focussed to build on the foundations we have set as a result of the implementation of our renewed operating model and the continued strategic diversification into new sectors and services.”
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DIVIDEND
The Board has declared that the best protection for Saunders against any unforeseen impacts of COVID-19 will be to maintain a strong balance sheet with a net positive cash balance. As a result of this prudent decision there will not be a final dividend payable for FY2020. (FY2019 final dividend NIL).

maybe they'll pay in the future?
 
As a long term holder I am happy to forgo the divvy and see the business through the current volatile climate.

At least they are not like the unethical companies that accepted $100k's of JobKeeper payments and then went and increased dividends!
 
Oil refiners and fuel storage providers will from Monday be able to bid for grants of up to $33.3 million from the Morrison government to build diesel storage facilities in a move intended to increase the country's fuel security and provide a lift for struggling refineries.

Federal Energy Minister Angus Taylor will on Friday formally advise of the opening of the competitive tender worth up to $200 million....

not a ripple.
 
galumay said:
Probably need to see some contracts before there is any action. Its a rather quiet registry!
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The grants/ tender have been telegraphed for a while. ... and yes, the volume is negligible.

Naos is a long term holder, which is how I first became interested in SND. Last commentary is from NCC Sept update
SND announced one of its largest contract wins to date, with a $26 million contract to assist in the redevelopment of fuel infrastructure within the Larrakeyah precinct in Darwin. This win further highlights the diversification strategy that SND has embarked on in terms of both client base and the range of projects. In addition to having a record order book, given there is a number of large government tender opportunities concluding over the few months, we believe the opportunity exists to continue this recent momentum.
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It was also pleasing to see the appointment of Nick Yates (former CEO of BSA) as an Independent Director, who possesses significant contracting and public company experience. Over time, we believe a transition to a majority independent board with an independent Chairman would be in the best interests of all shareholders.
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Some one must have noticed! Popped up 5% today, its back up to what I paid for it many years ago! One of my original positions in my personal portfolio. I have held the faith.
 
galumay said:
Some one must have noticed! Popped up 5% today, its back up to what I paid for it many years ago! One of my original positions in my personal portfolio. I have held the faith.
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The miracle of compounding losses, thanks god we have dividends not...
A bit cynical as i actually believe it is a good time to invest with these guys
 
Another of my holdings that has had a great H1 2021, looks like the business is really getting back on track.
 
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