AMA Group continued positive turnaround momentum during the second quarter of financial year 2023-2024, according to its latest Quarterly Cash Flow and Activities Report for the Australian Securities Exchange.
The company ended the period with a cash balance of $34.3 million and unused available finance facilities (undrawn bank guarantees) of $1.7 million, including the pay down of $35 million of bank loans in December 2023.
AMA generated positive operating cash flows of $1.8 million during the quarter after including $7.8 million in principal elements of leases. The operating cash flow for the quarter includes a payment of $1.5 million accrued interest on the $35 million pre-payment made in December 2023.
The company spent $4.1 million on property, plant, and equipment during the quarter, including $1.7 million of growth capital expenditure initiatives to increase vehicle repair capacity, and $1.6 million invested into Capital S.M.A.R.T’s Project SHIFT transformation. Additionally, $0.6 million was spent on a new Harris & Adams Prestige site and $0.3 million preparing the hibernated Craig Hall site in Canberra for production and various end-of-life replacements.
Make-good expenditure of approximately $1.2 million is reflected in operating cash flows for Q2 FY2024. The cash impact of onerous leases and exit costs on closed but not yet exited sites is $2.9 million for FY2024 year-to-date and projected to be approximately $6.7 million for the full year, with the majority of this cash spend not expected to continue into FY2025.
According to the report, AMA had an unaudited Q2 FY2024 post-AASB 16 EBITDA of $16.8 million, which was tracking to expectations, while the H1 FY2024 EBITDA was significantly above the minimum EBITDA covenant.
Group EBITDA decreased by $1 million from the prior corresponding period, including an unfavourable $2.5 million reduction in non-cash make-good accounting impacts and $0.1 million Fluid Drive earnings, which were recorded in Q2 FY2023. Excluding these items, Group EBITDA increased by $1.6 million, driven by improved pricing and gross margins while offset by reduced volume impact. AMA also reported that EBITDA decreased by $10.7 million from Q1 FY2024, reflecting expected seasonality. The company said it continues to target profitable growth through the ongoing turnaround.
AMA projects positive total cash flows in FY2024, including all lease payments, changes in working capital, capital expenditure, and before net benefits of equity raising and debt repayment, while the debt refinancing process is progressing as planned.
Guidance was maintained at $89 million to $96 million normalised post-AASB 16 EBITDA, or $42 million to $49 million normalised pre-AASB 16 EBITDA.
Vehicle Collision Repair business units performed ahead of expectations in Q2 FY2024, with revenue up 12.7 per cent on Q2 FY2023, while volumes reduced 5.8 per cent following network rationalisation activities in FY2023. The result reflects a higher average price of repair.
Capital S.M.A.R.T continued to deliver operating results ahead of expectations in the quarter, but AMA Collision EBITDA margins were impacted by factors including ramp up of newly opened sites and ongoing labour constraints.
Heavy Motor business unit revenues were up 10.9 per cent on Q2 FY2023, reflecting increased throughput in the existing network and the benefit of incremental capacity at the new South Australian site. Heavy Motor H1 FY2024 unaudited post-AASB 16 EBITDA is up 21.0 per cent on H1 FY2023.
ACM Parts sales of parallel and aftermarket products increased 67.6 per cent in H1 FY2024 compared to H1 FY2023, but lower scrap commodity prices impacted reclaimed product margins by 9.9 per cent in H1 FY2024 compared to H1 FY2023. As a result, ACM EBITDA is tracking below expectations, but AMA said there are solid signs of continued growth in the core focus areas of parallel and aftermarket products.