Boom Logistics (ASX:BOL) talks transformation and new markets


by Jessica Amir

Boom Logistics (ASX:BOL) MD and CEO Brenden Mitchell talks its business transformation, key growth areas, wind farms and entry into labour hire.

Jessica Amir: Hi I’m Jessica Amir for the Finance News Network. Joining me now from Boom Logistics (ASX:BOL) is MD and CEO, Brenden Mitchell. Hi Brenden and welcome to the Network.

Brenden Mitchell: Thank you Jessica.

Jessica Amir: First up for those investors new to the company, could you give us an introduction?

Brenden Mitchell: Boom Logistics is an industrial services group that supplies integrated lifting solutions, to Australian industry. It involves specialised equipment, skilled labour, engineering expertise and a broad range of labour services to Australian industry.

We were listed in 2003 on the Australian Stock Exchange, employ around 1,000 people across Australia. We have a fleet of 300 cranes, up to 750 tonne in capacity and 200 travel towers with reach up to 70 metres. And all the ancillary equipment required to deliver on those services.

Jessica Amir: You spoke about the key new exciting markets. Maybe you can tell us about your strategy and what your timeframe is?

Brenden Mitchell: The last two or three years has been about transforming our business to be more cost effective and flexible to meet our customer requirements. That strategy’s having an effect right now, it’s evidenced by the winning of work in mining services and winning over the travel tower work. In addition to that the Readi business, which has only recently been established, has delivered $8.5 million worth of revenue in the first four months of the financial year, and positive unit earnings. But importantly, it’s also delivered real cost improvements to our Boom Logistics business. We’re now billing that business to be more competitive in serving its mining customers in particular.

Jessica Amir: Can you tell us about the key areas that you operate in and what you’re really focused on?

Brenden Mitchell: In the last financial year, we had 54 per cent of our business came from or revenue came from, mining and resources. 17 per cent came from infrastructure and construction, 14 per cent from telecoms and other utilities and 13 per cent from industrial maintenance. As far as the revenue breakup goes, we had 80 per cent coming from the eastern states including South Australia and 20 per cent coming from WA. When we look at where we’re actually working and we’re working in the Bowen Basin in coal, the Hunter Valley in coal. We’re in Victoria, regional Victoria supporting the power utilities, Olympic Dam in South Australia and we’re serving alumina and gold, in southwest WA.

Our travel towers service the telecommunication and energy sectors, all throughout Australia and we take our major assets for infrastructure, wherever they’re required. And Readi, our labour hire business, operates in the same markets as our mining services business. Mainly because we understand the safety, quality and assurance practises, those customers need.

Jessica Amir: So you’ve got quite a lot of big names under your belt, maybe you can tell us about your FY17 results. What were the key highlights?

Brenden Mitchell: I think the first key highlight was the improvement of the second half over the first half, against the seasonal trend, reflecting the considerable work we’ve done to transform our business in the period.

I think secondly, was the $20 million of the revenue growth we achieved in the wind farm market. That’s critical for us going forward, that’ll all be in this FY18 year.

Thirdly was the establishment of our Readi labour hire company. Now this business is only recently established, it’s delivered $8.5 million in the first four months of the financial year from internal and external sources, and its delivered profit in its own right of $0.5 million.

So going forward, this is going to be a critical business both to grow revenue without capital and at the same time, giving our own business more flexibility to meet our customer requirements. And not to be understated would be the safety performance of the business. We’ve been putting more people into the business, we’ve been serving our customers and growing our revenue. And whilst we’ve been doing that, we’ve been able to improve our safety performance.

Jessica Amir: Just closing Brenden. What can investors expect out of news flow over the next six to 12 months and beyond?

Brenden Mitchell: What our investors should be looking for is firstly our half-year results, to see how that compares with the first four months of the financial year, which we’ve talked about. Then if we look at just how much that result is over and above the prior corresponding period. That’s a good indicator to our investors as to whether we’re on the right track or not. Secondly, we’ll be delivering to our shareholders, information on revenue growth and contract wins.

Because we have a relatively fixed depot infrastructure and overhead base, every dollar of revenue increase, delivers significantly great proportion in percentage terms of EBITDA. So one dollar of revenue might be a ten per cent increase, well we’ll get a greater than 10 per cent increase in operating performance. If our shareholders are seeing revenue growth, then they have a sense that we’re on the right track and we’re going to continue to deliver more out of the business, and reach our desired returns.

Jessica Amir: Brenden Mitchell, thank you so much for the introduction.

Brenden Mitchell: It’s a pleasure, thanks for your time.


Jessica Amir

Finance News Network
Jessica joined FNN in January 2017 after having worked in financial advising for seven years and in TV journalism for seven years, specialising in finance, equities and analysis. She has interviewed former Prime Ministers of Australia, Tony Abbott, Julia Gillard and Kevin Rudd and ex Treasurer Jo Hockey. Jessica has worked as a journalist with Sky News Business, ABC 1, ABC's The Business, ABC24 and has also been a regional Channel 7 and 9 TV reporter with Prime7 and Win News.