AMA Group Chair Caroline Waldron told shareholders at the Annual General Meeting that the company’s improving operational performance, reduction in costs, and investment in ADAS technology point to a more prosperous future.
In her AGM address, Waldron said AMA has tightened its FY2024 guidance following strong trading in the first quarter of financial year 2024 and October trading in line with expectations. AMA increased the bottom of the guidance range – now at $89 million to $96 million normalised post-AASB 16 EBITDA, or $42 million to 49 million normalised pre-AASB 16 EBITDA. However, Waldron said the company is heading into the seasonally weaker summer period, which is expected to be reflected in the quarterly results.
“This update in guidance follows a tough year ending 30 June 2023,” said Waldron. “We were faced with external headwinds of industry-wide labour constraints and related throughput challenges, combined with parts and wage inflation, while operating under largely fixed price repair contracts.”
“As a result, the Group reported an FY2023 normalised post-AASB 16 EBITDA of $65 million. While this represented a $43 million increase on the prior year, with quarterly EBITDA improving throughout the period, it was short of our original FY2023 guidance of $70 to $90 million – a big disappointment both for us and you, our shareholders, and the value of your company suffered.
“The better news is that, as evidenced by our most recent quarterly trading update, the operating performance of our business has improved over the last six months. While our return to growth may not be linear, on balance it gives us greater confidence in our ability to deliver our FY2024 guidance.”
Waldon also told the meeting about the AMA’s three operational priorities.
“First, the refinancing of our debt facilities, including providing a clear solution for the current $50 million of convertible bonds which, while maturing in March 2027, have a cash redemption option for bondholders in March 2025. Today we have formally launched the process with a group of prospective lenders who have shown strong interest in the transaction, and we expect to be well progressed with the refinancing by the release of our half year results in February 2024.
“Our second operational priority is to deliver on Project SHIFT. This involves operational initiatives, including enabling a full spectrum of drivable repairs at the majority of Capital S.M.A.R.T locations, to improve efficiency and best meet our customers’ needs in the long-term.
“The final operational priority is optimising our business so that we can sustainably return to growth.”
AMA BEGINS ADAS INVESTMENT
According to Waldron, as the largest collision repairer across the combined Australia and New Zealand market, AMA is “uniquely positioned” to deliver a consistently high-quality service to insurer customers and vehicle owners, allowing it to become the repairer of first choice. “To do this in a sustainable way, we are driving revenue opportunities to enable us to invest in technology, and training and developing our team while continuing our disciplined approach to cost management and prioritising the safety of our team, who are critical to our success,” she said.
Waldron announced the company’s first-phase investment in fixed ADAS technology, to be delivered by AMA Group’s dedicated ADAS solutions business, Tech Right ADAS Solutions. The technology will initially be installed in six sites across the network, with the intent to also service AMA’s nearby repair facilities. Tech Right’s business performance will be assessed over the coming months, at which point further investment decisions will be made, including adding the technology throughout the network.
AMA also announced the appointment of Brian Austin to its board, effective 1 December 2023, and Simon Moore’s intention to retire from the board.
Mathew Cooper, the outgoing COO and new CEO, updated shareholders on changes to AMA facilities. “AMA Collision officially opened the flagship site at Arundel in Queensland, and our RMA Hallam team have moved into the reopened RMA Dandenong site in Victoria, which is a larger and more productive site,” said Cooper. “We have a new prestige site underway in Gosford in New South Wales, which will see the Harris & Adams team moving into this new, far larger site once completed.
“In Townsville in Queensland, soil has been turned for a greenfield facility which will relocate an existing facility and provide significantly more capacity than the existing site to service growing demand in the area. We are also well underway with plans to reopen the hibernated Craig Hall site in the Australian Capital Territory in the 2024 calendar year.”