Transcription of The Stock Network Interview with Tasmea (ASX:TEA), Managing Director Stephen Young
Lel Smits: Tasmea, a diversified provider of essential trade services to blue chip asset owners across Australia has delivered a strong first half result highlighted by record revenue, solid earnings growth and continued balance sheet strength. The result was driven by organic growth across key segments, contributions from recent acquisitions and strong demand across mining infrastructure and electrification sectors alongside disciplined capital management and high cash conversion. Ahead of presenting at TIP Group’s Emerging Wealth Winners Conference, I’m joined by Managing Director of Tasmea, Stephen Young, to discuss its growth strategy integration of WorkPak and Outlook for the year ahead.
Stephen, welcome to the Stock Network.
Stephen Young: Thank you very much. It’s a pleasure to be here.
Now, Tasmea has delivered standout first half growth with revenue up more than 60% and strong increases in EBIT and net profit after tax. This is alongside excellent cash conversion as well, but I’m keen to hear from you what were the key drivers behind this performance and also really in the long term, how sustainable is this level of growth, do you think, into the second half and beyond? So maybe just to start putting the first half into perspective, over the last five years, we’ve delivered earnings per share growth year on year of 47%. So our results are stellar, but consistent.
And answering your last question first, I think sustainable. We have a twin pillar growth strategy. And what you see is a combination of us growing organically, and also growing by way of acquisition.
We buy businesses to integrate them with our other subsidiaries, whilst keeping them independent. And we cross-sell growing organically. Respect to the front end of your question, the first half was 44 million. And we’re confident that the second half will be bigger than that for a number of reasons. And we’ve guided the market to an EBIT of 117 million for the full financial year.
Lel Smits: Excellent. And in terms of your outlook with the successful acquisition and integration of WorkPak, really a very strong pipeline of programmatic acquisitions and record secured revenue for the second half. Tasmea appears to be well positioned, but how are you thinking about really balancing organic growth with acquisitions? And what are your key priorities as you execute on your guidance for the year ahead?
Stephen Young: I guess it’s interesting. Culturally and organizationally, we’ve got a walk and chew gum.
So we do have twin pillars. We need to grow the businesses that we own organically. And we need to bring on board businesses like our most recent acquisition WorkPak.
WorkPak, as many of our investors will be aware, is an unusual acquisition for us. We were finding it very difficult to recruit labour. And we decided the best strategy to recruit labour was to go out and buy Australia’s best blue-collar labour recruiter.
Putting that in perspective, all of the Tasmea companies before WorkPak required about 400 new recruits a year to grow the business at 15% organically. WorkPak recruit 15,000 people per year. And we’ve been able to bolt that very established and successful recruitment engine on the front of our businesses to continue to grow Tasmea subsidiaries.
In terms of acquisitions, which was the question you asked me, we’ve got a very strong pipeline. We come from a mergers and acquisitions background, and we’ve got more opportunity and we’ve got people to implement and integrate those opportunities.
Lel Smits: Fantastic. Well, I really appreciate the update from Tasmea, Stephen, and look forward to hearing you on stage at Tip Group’s Emerging Wealth Winners Conference in Sydney.
Stephen Young: We look forward to being there and we’re excited about the opportunity to present. Thank you very much for your time.
Ends