EBITDA down 43.9% but pre-lease FCF held as capex fell from NZ$13.0m to NZ$1.4m

What changed

Revenue declined 5.8% to NZ$158.3m and reported EBITDA fell 43.9% to NZ$12.3m, with normalised EBITDA disclosed at NZ$13.2m (above the December 2023 guidance range of NZ$11.5m–NZ$12.5m). The PBT loss widened from NZ$3.7m to NZ$14.2m, and the NPAT loss widened from NZ$1.5m to NZ$10.7m. The larger gap at the NPAT line reflects a tax benefit of roughly NZ$3.9m this period plus the absence of the NZ$1.9m discontinued-operations surplus that flattered HY23 — PBT is the cleaner operating read.

Segment mix shifted materially. Freight revenue fell from NZ$80.9m to NZ$61.7m (share down from 45.4% to 39.0%), though its segment loss narrowed to NZ$0.8m. Contract Logistics revenue was broadly flat at NZ$77.5m but segment result jumped from NZ$6.4m to NZ$14.9m (≈19.3% margin), making it the clear profit engine. International swung from a NZ$0.8m profit to a NZ$1.2m loss.

Operating cash flow halved to NZ$10.3m, but capex collapsed from NZ$13.0m to NZ$1.4m, leaving pre-lease FCF broadly flat at NZ$8.8m. Gross borrowings fell to NZ$28.9m; net debt eased to about NZ$16.9m.

What matters

• The earnings decline is real, not optical. PBT worsened by NZ$10.5m on a NZ$9.7m revenue drop, and the year-on-year EBITDA gap of NZ$9.6m dwarfs any normalisation bridge (reported NZ$12.3m vs normalised NZ$13.2m is only a NZ$0.9m adjustment). The beat against guidance is on a lower bar, not a recovery.
• Leverage weakened despite lower absolute debt. Net debt fell roughly NZ$4.7m, but EBITDA fell faster, pushing net debt/EBITDA from ~0.98x to ~1.37x. ROE deteriorated from -2.0% to -16.6%, and equity is down 10.9% to NZ$64.2m.
• Earnings quality is increasingly concentrated. Contract Logistics generated NZ$14.9m of segment EBITDA against a group total of NZ$12.3m, i.e. it is carrying the loss-making Freight business and corporate overhead. The "Project Blueprint" benefits are explicitly flagged for 2H24, so HY24 does not yet show them.

Expectations

No formal FY24 revenue or EBITDA target was supplied. Against the FY23 shape — where HY23 was 48.8% of full-year revenue and 46.3% of full-year EBITDA — simple annualisation of HY24 revenue gives ~NZ$316.5m, roughly 7.9% below FY23's NZ$343.9m. If the second-half skew holds, implied 2H24 EBITDA would need to exceed HY24 to match FY23, which management's Project Blueprint commentary implicitly underwrites but does not quantify. The only hard yardstick passed is the December 2023 normalised EBITDA guidance range, which the result exceeded by NZ$0.7m at the midpoint.

Quality of result

Mixed. The durable signal is Contract Logistics' margin expansion to ~19.3%, and the working-capital improvement (receivable days from ~61 to ~52, OWC down ~NZ$10.8m on disclosed items) looks genuine. The less durable elements are material:

• Pre-lease FCF held up only because capex was cut ~89% to 0.9% of revenue (from 7.7%). That is not a maintainable run-rate for a logistics group with meaningful fleet and property requirements.
• Cash conversion (OCF/EBITDA) fell from ~97.7% to ~83.4%, so cash quality weakened even before the capex step-down.
• The NZ$0.9m gap between reported and normalised EBITDA is not bridged in the supplied excerpts, and the balance sheet restatement relating to previously discontinued operations is referenced but not itemised.

Unresolved

• What is in the NZ$0.9m normalisation bridge, and are any of those items recurring?
• Is the HY24 capex run-rate (NZ$1.4m) a timing deferral or a sustainable post-investment level, and what is the implied maintenance capex for Freight specifically?
• Freight revenue fell 23.6% year on year — how much is deliberate re-set versus lost volume, and at what revenue base does the segment breakeven?
• What are Project Blueprint's quantified 2H24 benefits, and what share of the NZ$9.6m EBITDA shortfall is it targeted to recover?
• No dividend, concentration, forward-work backlog, or NTA-per-share data was provided.

This briefing cannot assess post-lease free cash flow, customer concentration, or valuation, because lease payments, concentration disclosure, and NTA per share were not in the supplied materials.

Key metrics

Segment breakdown

Analytical metrics

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This analysis was generated using Annolyse, an AI-powered tool that analyses NZX company announcements. The analysis is based on available company filings and standard Annolyse calculations. This is general information only and does not constitute financial advice. The analysis may contain errors. Always read the original company filings and consult a licensed financial adviser before making investment decisions.