LaserBond (ASX:LBL) surface engineering repair


by Jessica Amir

LaserBond Limited (ASX:LBL) CEO Wayne Hooper discusses the company's 1H19 results, how it reduces down-time and replacement costs on expensive machinery, investments during the half to increase its capability and capacity at its plants, and licensing revenue from its technology division.

Jessica Amir: Hello, I'm Jessica Amir for the Finance News Network at FNN's Small Cap Investor Event today with LaserBond (ASX:LBL) CEO Wayne Hooper.

Hello, Wayne, and welcome back.

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

Jessica Amir: Thank you for coming along again. So for those who are unfamiliar, LaserBond (ASX:LBL) provides a range of services to the mining and construction sector extending the life of their equipment. Just give us an update on how the business is tracking.

Wayne Hooper: It's not just about those industries, but the mining is a big part of our business as well as construction. We also do a lot of work for the power industry and many others industries as well, any industry that has equipment with components that wear out, and we help them extend the life of those components so they get higher productivity from their equipment. So all of those industries benefit from a longer life and our shareholders have noticed that we are actually growing very strongly and benefitting from the uptick in the mining industry, but many other industries as well.

Jessica Amir: Changing pace now to financials and your first half 2019 results. A great set of numbers. What were the highlights?

Wayne Hooper: We grew very strongly. Revenue up about 45 per cent on the PCP, EBITDA about 300 per cent, and bottom line about 600 per cent, so that of course reflected in the earnings per share and we paid a higher dividend, and we've been paying dividends for many years, all fully franked of course.

Jessica Amir: Well done. Now, operationally, what are the highlights?

Wayne Hooper: Well, our products and services divisions both grew very strongly during the period, and we continue that growth. We have been investing quite heavily, or significantly, over the last few years to increase our capacity both in terms of equipment and people and training people to actually deliver the results for our customers, so obviously achieving that high increase in revenue requires the resources to do that, and it's paying dividends for us now. The technology division, we did receive an order from a UK-based multi-billion dollar engineering company for their licence agreement, so that will be delivered in the second half and the revenue recognised at that point. And we continue to invest in R&D to increase the applications for our codings and develop new ones.

Jessica Amir: And Wayne, can use just remind us about your strategy and what it's really going to take to double the firm in size?

Wayne Hooper: You know we've just had tremendous growth, we intend to continue that organically. In addition to that there are opportunities for our services division if we expand, or as we expand geographically. We're currently in New South Wales and in South Australia, but there are opportunities in other parts of Australia for growth, and we can either do that through green fields or acquisitions in putting our technology in those areas. In addition to that, we've got international product sales that we're growing, we've got a business development manager that's kicking some goals at the moment, particularly in the steel industry in the US, and of course our licensing or technology sales to licencees around the world.

Jessica Amir: And Wayne, your share price has gone up 200 per cent year on year. Just tell us the make-up of the share registry and what your stake in the company is.

Wayne Hooper: Well I personally have a significant stake. My family, or my extended family have got about 47 per cent of the shareholding. That's related to founding the company back in the early '90s.

Besides that there's quite a number of investors and there's one or two that have close to 5 per cent, but beyond that they're relatively small shareholdings. We're pleased that the number of shareholders actually increased significantly in the last 12 months, so it's about 20 per cent increase in the number of shareholders, which is great for liquidity, so it's going well. Share prices have gone up rapidly because people are recognising increase in profits that we're generating, and the dividends, and so there's a lot more people getting involved in our company than there has been in the past.

Jessica Amir: And just a general question about technological surface repair: how has the industry changed over the past 10 years, and going forward for the next decade, what will it look like?

Wayne Hooper: Well it's changed because people are actually recognising the benefits that can be delivered by surface engineering, in particular laser cladding, and we've spent a lot of effort in developing our surfaces or our offering to provide the best results. It's not a one size fits all customer. You have to have the right method, the right materials to suit every application. That has changed. In addition to that we've got far more efficient at doing it, so the costs have come down and we're actually delivering results, tremendous results for our customers. For the future, yeah, there's other technologies on the horizon, including other surface engineering technologies. Cold spray is fairly well established these days, but it has some applications. Additive manufacturing technologies are closely related. We are effectively doing additive manufacturing, so we're always keeping on top of that and developing applications for our equipment.

Jessica Amir: And just lastly, Wayne, before we conclude, is there anything you wanted to leave with shareholders today?

Wayne Hooper: Yes, we've just released some guidance for the FY19. Revenue's going to be up about 40 per cent on FY18, EBITDA up around 100 per cent, and bottom line profit up around 140 per cent. So it's growing, continue to grow strongly. You'll have to wait until we announce dividends later on when we decide.

Jessica Amir: Well a brilliant set of numbers and congratulations on your share price growth. Thank you so much for your time, Wayne Hooper.

Wayne Hooper: Thank you, Jessica.


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