Omni Industries, the first company listed on the Junior Market of the Jamaica Stock Exchange in 2024, reported results for the nine months to September, with the first full quarter after the IPO offer in May. The result for the quarter is promising, with pre-tax profit moving from $32 million to $38 million and after tax from $24 million to $38 million with the listing resulting in no taxes payable for another 5 years on profits, since listing on the Junior Market.
For the 9 months to September, earnings before tax amounted to $184 million and after the provision of $38 million corporate profit tax, ended with a net profit of $146 million. Based on the average number of shares outstanding, earnings per share ended at 6 cents instead of the 10.4 cents reported by the company and 1.5 cents for the September quarter instead of the reported 2.7 cents per share that was based on the 1.4 billion shares instead of approximately 2.375 billion units. For the year to December the company used the same number of shares as they used for the September results to compute per share earnings and provided no EP for 2023. Instead of EPS of a loss of 1.8 cents for the December quarter and 8.6 cents for the full year, earnings per share are actually a loss of 1-.4 cents for the last quarter with 2023 being 7 cents and 5 cents for the full year with 2023 being 6.7 cents.
The performance achieved with the Gross profit margin climbing is probably the most telling feature of the results if it is sustainable. Margins surged in the third quarter from 37 percent in 2023 to more than 50 percent in 2024, pushing the nine months to September to 47.4 percent from 37.5 percent in 2023. Unfortunately, this performance was not carried into the final quarter in December with the margin dropping to 38 percent down from 45 percent in 2023 and helped in plunging the company into a loss in the final 0224 quarter of $25 million versus a loss before tax in 2023 of $21 million, with the full year profit coming in at $135 million before tax versus $180 million in 2023.
Revenues declined by 12 percent to $427.5 million for the three months to September 2024, compared to $488 million in the same period in 2023. Revenues declined marginally, to $1.51 billion for the nine months in 2024 from $1.57 billion in 2023. The decline is “largely attributed to adverse weather conditions, including Hurricane Beryl in early July and ongoing heavy rains impacting the island. Additionally, a cement shortage has affected the construction industry, which directly impacted our revenue streams,” the company managing director, Patrick Kumst informed shareholders in his commentary on the results.
Administrative costs rose by a third from $60 million to $80.4 million for the quarter and up 43 percent from $162 million to $230 million for the nine months. Selling expenses jumped by 30 percent for the quarter to $33.5 million from $26 million in 2023 and for the year to September, it increased by 16 percent to $111.5 million from $70 million in 2023. For the reporting quarter factory expenses rose by 10 percent to $56 million, from $51 million and increased by 9 percent to $163 million for the nine months to September from $150 million in the 2023 period.
The managing director went on to state, “this rise in administrative costs was primarily due to higher professional fees, marketing, and other expenses related to our IPO. Selling expenses year‐to‐date were driven mainly by haulage and export-related costs, while the 9 percent increase in factory expenses resulted from increased repair and maintenance costs. With our ongoing strategic retooling and new equipment acquisitions, we anticipate a reduction and improved optimization of these expenses in the near term. Finance costs for the quarter totalled $9.8 million, reflecting a 20 percent decrease compared to the same period in 2023. Year‐to‐date finance costs amounted to $29 million, a 32 percent reduction from the prior year. This decrease primarily stems from the company’s proactive debt reduction efforts, resulting in lower interest expenses for the period.”
“Retooling process has commenced, and the additional capital raised post‐IPO will be utilized to acquire further equipment. Currently, we are in the negotiation phase with suppliers, and one machine has already been commissioned as of September 2024.”
The operations generated gross cash flows of $211 million, with increased working capital consuming it, leaving a cash deficit of $153 million before capital spend of $67 million. After accounting for $239 million from the IPO the company ended with a cash flow deficit of $50 million and a reduction of funds on hand to $62 million. Loans net of new funding amounting to $40 million were repaid and a dividend of $24 million was paid out before the IPO.
Current assets ended the period at $1.2 billion, including trade and other receivables of $469 million, inventories of $661 million cash and bank balances of $61 million. Current liabilities amount to $432 million. Net current assets ended the period at $513 million.
The company ended with Shareholders’ equity of $946 million and long term borrowings at $312 million and no short term loans. Net asset value ended the period at $0.38 with the stock selling at 2.8 times book value, compared to the Junior Market average of 1.8.
Another error in the quarterly report is that the share capital is still being stated as $20.09 million in the statement of changes in equity but that has been increased by $250 million new shares that were issued in the IPO, as such the caption headed share capital should reflect the change but it is not. The company should seek the advice of a knowledgeable accountant to get the presentation and computation right as they clearly don’t have that in house.