Thank you for standing by, and welcome to the Fletcher Building briefing. All participants are in a listen-only mode. There will be a presentation followed by a question-and-answer session. If you would like to ask a question, you will need to press the star key followed by the number one on your telephone keypad. I would now like to hand the conference over to Mr. Andrew Reding, incoming CEO and Managing Director. Please go ahead. Good morning, everyone, and thanks for joining us on this presentation and Q&A session regarding the equity raising we've announced this morning. My name is Andrew Reding, and I'm the incoming CEO. With me is Nick Traber, the Interim CEO, and Kevin Burke, the Group Treasurer. Through this session, I'll be referring to the presentations that we put up on both stock exchanges this morning, and then we'll take questions after that. Moving past the disclaimer slide and starting on page nine. Today, we've announced that we are raising NZD 700 million of our pro rata and non-renounceable entitlement offer. We consider this a proactive response to continuing macro pressures, placing the business in a good position by improving financial stability and resilience in the current environment. This raising has been sized to strengthen our balance sheet. Firstly, our pro forma leverage at June 2024 reduces to 1.22x towards the bottom end of our 1x- 2x target range. And secondly, pro forma gross leverage at June 2024 reduces from 4.15x- 3.38x, supporting our commitment to maintain an investment-grade credit rating. Market conditions are challenging, and this raising provides headroom and flexibility for the company to focus on operational performance. And as we continue to assess our portfolio composition, we can do so at a time when we can achieve fair value. As we said at our FY 2024 results recently, we are dealing with very challenging markets with regards to Australia and New Zealand, particularly in the residential sector. That said, we have strong and well-positioned businesses with leading market positions, and we continue to focus on cost reduction to mitigate further market downside risk. With significant... Apologies. With significant operating leverage once market volumes recover. Turning to slide 10. Our investment thesis underpinning Fletcher Building remains strong. Starting on the left-hand side of this slide and working our way across, the company operates in attractive markets with favorable long-term dynamics and demand tailwinds. And our ability to capitalize on these opportunities can be driven by a leading portfolio of high-quality businesses. We acknowledge that legacy construction projects have had a significant impact on the company, however. However, we are close to completing these. Outside of this, the combination of appealing markets, quality businesses, prudent management, and capital allocation decisions has generated attractive returns on invested capital over time. Admittedly, this excludes significant items which have been impacted by legacy construction projects and recent business impairments. Turning to Slide eleven. Despite the challenging market conditions, we have continued to execute on key operational and strategic initiatives. We've made significant progress on appointing new board and management team members, with a permanent chair being the main outstanding role to be filled. We're focused on putting in place operational performance initiatives, including cost outs and reducing and deferring CapEx spend where sensible. And the signing of the divestment of Tradelink is also a milestone in improving balance sheet strength, with settlement expense expected at the end of this month. On Slide twelve, we provide a recap of two material matters. Firstly, we've made meaningful progress in relation to WA Plumbing, with the in-principle agreement of the Joint Industry Response announced at the end of August. Importantly, this JIR will take product recall off the table. As previously disclosed, we recorded a provision of AUD 155 million. This is mainly comprised of the estimated share of repair costs and the supply and installation of leak detectors for all eligible WA homes with Typlex. We think this assessment is appropriately conservative. Cash flows are expected to be phased over five years, and formal documentation of the JIR is being targeted later this calendar year. Meanwhile, our legacy projects remain on track and in line with the update we provided as our FY24 results. Each of the NZICC, P2W, and WIAL projects are tracking to expectations, with circa NZD 170 million cash outflow in the first half of FY25 and circa NZD 70 million cash inflow in the second half of FY25 remaining unchanged. Turning now to recent trading and our near-term outlook on Slide 13. As we indicated at our FY24 results, we're experiencing volume declines of 10%-15% year on year, a trend which we expect to continue for the rest of the financial year. However, it is a volatile market, and we are vigilant to the possibility of further market weakness and are aggressively attacking costs to partly offset this. We continue to see good cash flow performance, including in July and August, which is stemming from focused working capital management. The near-term outlook is expected to remain challenging. However, our underlying business remains strong, and this equity raising further enhances our balance sheet position and ability to withstand market headwinds. On Slide 14, we provide a snapshot to contextualize the market backdrop. Overall, as noted at the bottom of this slide, Fletcher Building revenue is weighted more than 50% to residential construction across New Zealand and Australia. On the charts, we see the material decline in Australia and New Zealand residential sector activity from their respective market peaks to March 2024. This is one of the key factors weighing on performance. However, the underlying business is well positioned, with significant operating leverage expected once the volumes recover. The quality of Fletcher Building businesses and market positions will allow the company to capitalize on this. On Slide 15, we provide an update on our near-term priorities. A key priority is costs. We're continuing to aggressively take out costs, targeting 180 million in gross overhead costs out in FY25. This excludes inflation, and not all will flow to the bottom line. As we've already said, we also have a key focus on working capital and CapEx, making sure these are managed to respond to current market conditions. On Slide 16, if you put all this together, Fletcher Building has a group of well-positioned and well-run businesses. The underlying investment thesis remains sound, with the businesses operating in appealing medium to long-term markets and having historically delivered attractive returns on capital. We're experiencing continued challenges in the market, however, resetting the balance sheet gives us headroom and gives us the ability to best position the business for an economic recovery. On Slide 17, we note that funds received will be applied to reduce borrowings, with net debt expected to reduce from NZD $1.8- NZD$1.1 billion at June 2024 on a pro forma basis. As mentioned, this will also have a meaningful impact on the company's leverage and credit metrics, which are covered on the next page. On Slide 18, we note that on a pro forma basis at June 2024, leverage reduces towards the bottom end of our 1x- 2x target leverage range, and the pro forma gross leverage at June 2024 also materially reduces. This is one of the key metrics used by Moody's in its credit rating assessment. Offer details are outlined here on Slide 19 and are within the supporting documentation released this morning. And finally, Slide 20 notes details of the timetable, which is also included in the supporting documentation released this morning. That concludes the presentation, and with that, I'll now hand back to the operator to run through your questions. Thank you. If you wish to ask a question, please press star one on your telephone and wait for your name to be announced. If you wish to cancel your request, please press star two. If you're on a speakerphone, please pick up the handset to ask your question. Your first question comes from Andrew Scott with Morgan Stanley. Please go ahead. Thank you, and good morning. Andrew, I'm just trying to understand a little bit more about the overhead reduction program. It seems to come very quickly, particularly given as far as I'm aware, at least, you haven't formally started in the CEO role. So, I'm also conscious of the NZD $200 million program through COVID. So I just really want to understand who's driven this? Is this already in train before you've started, or has it come about very quickly? And just how much science or analysis is behind the NZD $180 million figure? Okay, a very good question. So coming into this year, we were already focusing on costs out, and Nick and the team had done a good job on that. So we'd initially budgeted for NZD 120 million in costs out, but as we've seen the volatility of the market, we've now done a further exercise to make that NZD 180 million. But it is a bottom-up exercise, not just a demand from centers. So each business unit has a granular target and map of what they are committed to achieving, and they can be monitored against it. That's helpful, and you referred to a gross number. Could you talk to us about any one-off costs to deliver that? Certainly. So last year, we had taken 16 million of restructuring costs last year to achieve the costs out there. This year, we're expecting to take 15 million in restructuring costs. That's helpful. Thank you. And just one more. The raise certainly keeps the wolves from the door. Are we still considering a capital partnership for the Resi business, or was that really a reaction in response to a stretched balance sheet? That is, that's a process that's undergoing. We have some people we're still talking to, but I don't think that'll be a quick conclusion to that process, and we'll obviously update accordingly. Great. Thank you very much. Your next question comes from Rohan Koreman-Smit with Forsyth Barr. Please go ahead. Hi, Andrew, and Nick. Look, just a couple of quick ones. Gross leverage seems to be a new metric you're talking to, and, you know, the leverage ratio changed from, I think, it was two to three times EBITDA to one to two times, with the implementation of IFRS 16. And it's kind of had a mismatch versus the covenants for a long time. I was just wondering if you can give us some color on what you think the appropriate leverage through the cycle for Fletcher's is, and, and if, you know, it's still that range you previously put out there? Nick, can you- Yeah, sure. You're right, you're right. We have had that policy for a long time, since two thousand and nineteen. I think as part of this process, we may look to reassess what makes sense for the group going forward, but it remains one to two times for now. And you're right, there is a mismatch to the banking, so the leverage ratio, and you've also mentioned the Moody's one is a different one again. So yes, it needs to be reassessed, and we'll do that in due course. Thanks. And I guess you talk about quality positions in the Fletcher Building businesses, and if you look over, you know, the last twenty years or so, you know, you've lost small amounts of share consistently. So I'd probably argue the positions aren't what they used to be. Andrew, can you give us some comments around maybe how different, I guess, the businesses are now versus when you left Fletcher Building, what was it, 20 years ago? 18. Let's not exaggerate. No, so what I was seriously worried that what we'd done was taken focus away from a major strength of Fletcher Building, which is its strategic business units. And I've spent quite a lot of time in the previous four weeks going around the businesses, and what I've actually found is that we have got the focus back on them. I've met a number of extremely competent general managers and staff at the front end. So I think we still have our strategic business unit strength. I'm just trying to challenge your perception that we've necessarily lost market share. Certainly I started in Fletcher in the concrete industries, and I would say they are stronger today than they were when I was around. First, they've certainly picked up market share. Golden Bay has definitely picked up market share, and Winstone Aggregates are stronger today than they were when I was around. Winstone Wallboards has maintained its position. So I don't think you can say that we don't have strong businesses well-positioned. Okay, don't go look at the steel division or insulation then. Oh, no, no, stop. Insulation is still a very, very strong position. And steel, well, we don't have much of steel left now. It's Easysteel. Pacific Coilcoaters has maintained its market share. The one area we have had real problems with is PlaceMakers, and that was the. We attacked that late last year by getting the pricing right on frame and truss. So, I do challenge your contention that we haven't got strong market positions. Okay, okay, and then maybe one final one. You know, you talked about having lifted the budget for cost out from, you know, 120- 180. Yeah. Is it fair to assume that you're kind of, you know, thinking that maybe volumes will be more towards the 15% end of the 10%-15% range versus maybe the top end of that range earlier? Is that kind of what's driven your thinking? We are seeing extreme volatility, and look, we're being very prudent in trying to anticipate where the market might go so if one can take costs out ahead of needing to, there's nothing wrong with that, I don't think. Thanks. I'll Thank you. I'll leave it there. Thank you. Your next question comes from Keith Chow with MST. Please go ahead. Good morning, everyone. First question, just around the sizing of the capital raise. I know there are a lot of pro forma numbers, FY24, that have been provided to the market, but, you know, quite clearly, you're not raising to defend a balance sheet position in the past. So can you give us a sense of how you've decided to size up the capital raise on a go-forward basis? You know, is the thinking that you're raising enough to be closer to the midpoint of the current target range for leverage at trough cycle earnings? Can you give us a sense if that's, it's a fair way of looking at how the capital raise has been sized up, please? Thank you. So, look, we carried out a sufficiency exercise to ensure that what we were raising was going to be all we would need to raise. The gearing ratios obviously cycle through as we move through the year, given the seasonality of some of our business. So all I can say is we took a forward look and looked at the volatility of the market that we're in at this moment in time. This capital raise was deemed adequate to cover our needs. I guess, is it suffice to say that, you know, at the top end of the current target range of two times, you know, even in the very worst case scenarios, you'd have enough to cover the top end of the range, if earnings were to be severely depressed in FY 25? So, yeah, Kevin? Sure. As Andrew has said, we've run the sufficiency analysis. Obviously, we've used the covenant amendments we have in place, and that's been modeled out in various assumptions, and we're satisfied we've adequate headroom through FY25. Thank you. And then on the cost out program, the NZD 180 million, is that simply a function of, cyclical cost outs, rather than structural? I I mean, presumably, you know, you're not reducing the cost of the business by NZD 180 million permanently, and when the cycle does come back, hopefully sooner rather than later, those costs will have to be put back into the business. Well, I mean, it's certainly a right sizing exercise, and therefore, you, you're sort of right. At the moment, out of that 180, we think we're taking out about two-thirds of it will be from SG&A, and the balance is from warehousing, handling, and distribution. Okay, so what proportion of that therefore would be structural versus cyclical? I couldn't answer that off the top of my head, I'm afraid. Okay, thank you. I'll circle back. Okay. ... Your next question comes from Phil Campbell with UBS. Please go ahead. Yeah, morning, guys. Just a couple from me. Andrew, is there a reason why there was no FY25 EBIT guidance provided? And I know there's a trading update in the ASM, but will we get a kind of forecast number at that point? Or another way is, are you happy with the consensus numbers for FY25 in terms of EBIT? I think we are aware of what the consensus numbers are, and we're also totally cognizant of our responsibilities vis-à-vis that, so. Okay, great. I suppose just another question, just, the first time we've kind of engaged with you, I'd be just interested in your kind of, your plans going forward in terms of strategic review, and just maybe some comments around kind of your management style, maybe compared to some of the previous CEOs at Fletchers? So in terms of any strategic reviews, we will be carrying out one. It won't be complete before the start of next year. It'll be a deep dive review. Can't predict the outcome because obviously I haven't started it. In terms of my management style, I'm very much a decentralist. It's very much strategic business units, getting as much decision-making and empowerment at the line that serves our customers as possible. Great. Awesome. Thank you. Okay. Thank you. Your next question comes from Stephen Hudson with Macquarie Securities. Please go ahead. Morning, Stephen. Hi, Andrew. Welcome. Just a couple from me. I think in the risk section, you talk about the allocation of carbon units that Golden Bay Cement receives as being a central risk. I think literally the decision is due out this week from the MfE. The reason that I raise it is, I think the prior CEO said there's quite a large CapEx envelope envisioned for Golden Bay Cement contingent on that release. I just wondered if you can update us on your expectations for what the MfE are going to say and what that means around the Golden Bay Cement CapEx envelope. I think I'll ask Nick to answer that. Yeah, hi, Stephen. This is Nick. I picked that one up. As we always said, we have some sizable decarbonization investments at Golden Bay, which are dependent on clarity on the next 10 years' NZ ETS allocation, and we stick to that. We are in discussion with the government on that, but if I remember well, this week is just about the kind of regular cycle of allocation, not the long-term outlook. But we are in intense discussion to make sure we get a certainty about CO2 allocation for at least a 10 years period, because that's what we need to make such investment decisions. I think they are actually releasing the allocative baselines this week. Yeah, but that's just a baseline, you know? We also need clarity of the legislation around that, and that's just the allocation of the baseline, okay? Sorry, just going back to the sort of previous comments made by execs. I seem to recall the outgoing CFO saying that the cost out covered was relatively bare. You've given some good detail on you know, where the 180 lies. But, Andrew, what's your confidence that you're not gonna be cutting into muscle here? Look, it's very high. Look, we know we're in a cyclical business. We know there will be an upturn. It would be wrong to take out fundamental capability, so it will be right-sizing for the volatility of the market at the moment, and we will not be cutting muscle. And then just a couple of quick further ones. Just the silicosis liability. I think the former CEO had said that he expected to take an actuarial estimate at some point of that provision. What is your thinking around the current management estimate and the need for an actuarial assessment? Look, Steve, as we have highlighted during the annual results, we are a small piece of this industrial allocation of those costs, as people unfortunately suffer from the consequences of silicosis. We adjust provision if it needs to be, but it is, as you have seen, it's pretty fairly stable, so no change there from what we have said in the annual results. Okay? And then just obviously, the chair timing, I think it's sort of, the market's waiting with bated breath for the announcement of the, the permanent chair. Can you give us an update, or if the acting chair is there, she may like to give an update on the, on the timing there? Look, I mean, I think as I said earlier on, getting the right person is more important than the timing of it. So, we are undergoing the search, and at the moment, that's all I can say. Actually, I might just slip in one final one. You talk in the risk section about the core ERP being suspended in June. What's your expectations as to whether or not that restarts or is abandoned? Sorry, the what? ERP. The core- Oh, sorry, sorry. ERP. We can't predict today. It's subject to intense review, and we'll keep our eyes on it and monitor it. But we, the important thing is that all the businesses have computer systems which are operating, and we're servicing, so. ... Excellent. Thanks very much. Thank you. Your next question comes from Al Harvey with JP Morgan. Please go ahead. Yeah, morning, team. Just a one follow-up from me on the Resi and Development sell down. I guess, just wanna just step through, the timing against the decision to raise, just given your comments around, wanting to realize the full market value for the asset. Was there some disappointment in early market feedback on the Resi Development Division? And is that what kind of drove the decision to go ahead and raise today? No. The decision to raise today was more about having quantified the West Australian plumbing situation. Resi and Development will, it's always gonna be a complicated process because the number of people who could buy it in New Zealand is limited, and if it's somebody from offshore, you've got OIO involvement and so on. So no, very little impact on our thinking on the capital raise. No worries. Thanks. Okay. Once again, if you wish to ask a question, please press star one on your telephone. Your next question comes from Rohan Koreman-Smit with Forsyth Barr. Please go ahead. Hi, sorry, just one follow-up. Just on slide 10, where you have the ROFE over time, and you've got ROFE, including significant items at the bottom there. Do you adjust the funds employed for the historical write downs, or is it just, you know, taking reported EBIT versus kind of your underlying EBIT number? Charles, do you have that bit? I can come back to you on that. So no, in terms of fund base, the fund base we keep consistent. It's just the inclusion of significant items in that metric that is different between those two calculations. Okay, thank you. That was all. No probs. Your next question comes from Sam Seow with Citi. Please go ahead. Hi, morning, all. Thanks for taking the question. Just wanted to clarify, the NZD 180 million cost out sixty mil higher than the NZD 120 original. Yeah. Does that mean your EBIT expectations are 60 million higher now than a month ago? Or, yeah, could you outline any other factors there? I don't know. I think maybe what we're doing is recognizing the volatility in the marketplace and right-sizing accordingly. Like I said earlier on, we're aware what consensus is, and we're aware of our responsibilities around that, so. If I might just add to that, you know, the 120 was in the budget, and the budget gets normally done April, May. Yeah. Then obviously we came into the annual results and met with all of you guys, and we kind of put that 10%-15% market volume, Decline. Decline in there, and that's what has triggered us to lift, obviously, proactively the cost out again, okay? Just to kind of, that you see that this has been pretty much in sync as we went through the slowdown, as we flagged during the annual results to stay ahead and be prudent and proactive. Okay, thank you. Cheers. Your next question comes from Keith Chow with MST. Please go ahead. Hi, Andrew. Thanks for taking my follow-up question. Just wanna go back to a point in the equity raising announcement release material. So in the second bullet point on the first page, there's a comment on there which points to preserves optionality in relation to its portfolio and reduces short-term pressure to realize assets at below intrinsic value. Mm-hmm. Certainly sounds to me like there are more divestments that could be on the table. Can you give us a sense of... You know, I know it's pretty early stage, but you know Fletcher Building quite well. Which parts of the portfolio could be non-core at this stage? And secondly, I don't know, you know, who on the call could answer this, but if you've sold Tradelink, you know, when you've been under some financial duress, why not just, you know, hold off on that one for a couple of months to potentially get more value when you've actually done the capital raise? Because clearly there's a recognition that you're better off having a solid balance sheet before selling assets. So, you know, maybe Nick, you're on the line, maybe you can have a go at answering that one. I'm quite happy to comment on Tradelink. You know, we tried Tradelink to turn it around for many years, unsuccessfully. We even had a chief executive of that division who came from Ferguson. You know, it doesn't get better in terms of the leadership. And this was a strategic decision, which we took very early in this calendar year, and we already discussed it end of last year. So this was a well-thought-through decision, and we also believe it has been a good deal, and we got a really fair value of this business. So on Tradelink specifically, we don't see that holding on to that, it would we would have realized more value. Yeah, and then the capital raise, back to your earlier point, is to allow us the time to be able to do a proper evaluation of our portfolio, and I wouldn't preclude... Sorry, I wouldn't presume what the outcomes of that will be yet. I think it's too early. Okay, thank you. Thanks a lot. Thank you. Cheers. Your next question comes from Grant Swanepoel with Jarden. Please go ahead. Sorry, Grant, we can't hear you. Apologies. Grant has dropped off. As there are no further questions at this time, I'll now hand back to Mr. Reding for closing remarks. Thank you very much indeed. I appreciate you joining our call today, and have a great day.