Laserbond (ASX:LBL) surface engineering specialist


by Rachael Jones

Laserbond (ASX:LBL) CEO Wayne Hooper talks FY18 results, how its technology reduces down-time and replacement costs on expensive machinery for a range of industries, long term licensing revenue and FY19 outlook.

Rachael Jones: Hello, I'm Rachael Jones for the Finance News Network. Joining me today from LaserBond (ASX:LBL) is CEO, Wayne Hooper. Wayne, welcome to FNN.

Wayne Hooper: Thank you. It's great to be here.

Rachael Jones: Now, first up, Wayne, can you start by giving us an introduction to your company?

Wayne Hooper: We are in the business of making wearing components last longer, for capital-intensive industries. Imagine these industries have equipment with components that wear out. We actually repair and reclaim those components, give them a longer life between maintenance cycles so that they can increase the productivity and uptime of their equipment.
We have a range of technologies, generically called surface engineering, which we use to increase the life of wearing components for a large range of industries.

Rachael Jones: Now, before we go to your results, can we talk about the opportunity for Surface Engineering applications, and the size of the market?

Wayne Hooper: The industries we deal with typically have equipment that's operating in severe environments. And this equipment is worth millions, tens of millions, even hundreds of millions. When it's out of service, it costs them a lot of money in terms of lost production.

What we are about is actually increasing the life of those weakest links in that equipment, to make sure that they can increase the time that it is in production. That is where we deliver savings for our customers.

The market is actually huge. We have technology that is new, that applies high-performance surfaces that haven't been able to be applied before, and it helps our customers reduce the costs of downtime, and increase their productivity.

Rachael Jones: And now to your financial year 2018 results. What were the highlights? Starting with financials.

Wayne Hooper: On the financial side, we had excellent growth last year. Revenue was up by 13.8 per cent, and that was from our services and products division. That 13.8 per cent increase didn't include the technology sale, in the previous year we had a technology sale. So, overall, those divisions grew quite strongly.

That, in turn, delivered high profits to the organisation. We did have an impairment of some slow-moving stock. The board thought it was necessary or prudent to write down some stock. Doesn't mean it has been written off, it just means that we have taken an impairment on that.

But after that impairment, which obviously was a non-cash transaction, we had great profits, and we increased our dividends by 20 per cent.

Rachael Jones: And what can you tell me about your operations?

Wayne Hooper: Our operations, for the financial year, were extremely well. We have had to invest in recruiting and training of new personnel, because we have had exceptional growth, and that growth continues this year.
Our numbers of employees are up by 40 per cent. We have also invested in new equipment, and we continue to do that so we are investing to deliver future growth.

Rachael Jones: Thanks, Wayne, and now to your strategy and share price. How is the strategy going, and how are you progressing?

Wayne Hooper: Our strategy is to actually grow the business, both domestically, through organic growth, and that is continuing very strongly. In this financial year alone, the first quarter of this financial year, we have revenue that is up 44 per cent on the previous corresponding period, so excellent growth coming organically.

We are also expanding internationally. We've got a business development for our products to be exported around the world. Our original equipment manufactures (OEM) customers that are in the mining and minerals processing area, and other areas, they are also growing strongly, so we are growing with them, so the growth is continuing.

We are, for our technology, we have a lot of interest from overseas in our technology, and how we can help other companies through licensing. So we're exploring those opportunities as well.

And in fact very recently, we announced that we have sold a technology license to a UK-based multinational engineering company. They see our technology as a way of differentiating their product. That revenue will be recognised in the second half of this year so growth this year is going to be fantastic, and will continue.

Rachael Jones: And can you provide a comment on the share price?

Wayne Hooper: Well, it is undervalued. I know we are a small cap, we are not on many people's radar. But the growth we are delivering is continuing, and the share price can only go up, in my opinion.

Rachael Jones: And to the last question now, Wayne. What is the outlook for the financial year 2019, and why should investors consider adding LaserBond (ASX:LBL) to their portfolios?

Wayne Hooper: Well, as I mentioned, the outlook for 2019 is continuing very strong growth, with the technology sale and organic growth that we have been achieving, the first quarter is a demonstration of that. We have recently announced that increase in revenue for the first quarter, and we expect it to continue for the full financial year. With the technology sale, it is going to be a great year.

In terms of the shares, we are a growth company. We are delivering strong growth. We have got a history of making good profits, and we have got a history of fully franked dividends, which we intend to continue.

So, why wouldn't you add it to your portfolio?

Rachael Jones: Wayne Hooper, thanks for the update.

Wayne Hooper: Thanks for the opportunity, Rachael.



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