Steel & Tube Shareholder Newsletter June 2023

SHAREHOLDER
NEWSLETTER
June 2023

DEAR SHAREHOLDER
KIA ORA, TĒNĀ KOUTOU
The 2023 year to date has certainly presented
challenges, from the weather events that
impacted people, businesses and communities,
through to the macro-economic trends
including ongoing inflationary pressures and
skilled labour shortages.
Our thoughts go to all those affected by the
flooding and Cyclone Gabrielle. The rebuild
will take years and cost billions but we hope
that the outcome will be a more resilient built
environment, that can withstand extreme
weather events.
In this edition of our regular newsletter, we
are pleased to share with you stories from our
business and initiatives underway to drive value
for our company.
2H23 TRADING UPDATE
Steel & Tube is now in its 70th year of trading
and we have a track record of effectively
navigating changes through economic cycles.
We recently provided an update on trading for
the 10 months of the financial year to date, and
full year earnings guidance for the 12 months
ending 30 June 2023.
The company continues to perform well
against the backdrop of tightening economic
conditions and weather events. Residential
construction has softened, however robust
demand and undersupply of housing underpin
long term growth in this sector. Commercial
construction and manufacturing remain
steady. A positive trajectory is forecast for
infrastructure. Steel & Tube’s diversified
strategy remains of value, limiting exposure to
any one sector.
Revenues have continued to grow driven by
elevated international pricing, with higher
input prices and cost pressures impacting
margins. While we are expecting volumes
to be 10% to 15% lower in the second half of
the financial year compared to the first half
year, we have a resilient platform exhibited
by significant reductions in debt and
inventory positions, and solid underlying cash
generation.
Steel & Tube is well positioned to respond
to the more challenging economic cycle
and to take advantage of new market and
product opportunities, and the rebuilding
programme
We are actively managing the current market
challenges and we see the medium to long
term outlook as positive for our company.
Steel & Tube has a strong balance sheet and
substantial bank facilities in place to fund
growth and to take advantage
of opportunities.
We are focussed on strengthening the core
business platform as well as investing in
higher value products and services. These
new strategic initiatives now account for 7.5%
of Distribution earnings, with one example
being the recent expansion of Steel & Tube’s
aluminium offer which is proving popular.
There are significant opportunities for our
business, across both Infrastructure and
Distribution. We have a healthy pipeline
of work in place across a diverse range of
industries and are well positioned to support
the Cyclone and floods rebuild.
Susan Paterson Chair
Mark Malpass Chief Executive Officer
COMPANY UPDATE

STEEL & TUBE’S UNAUDITED
10-MONTH PERFORMANCE
TO END-APRIL
FY23 EARNINGS GUIDANCE
Given the recessionary operating environment and lower
volumes, Steel & Tube is forecasting FY23 normalised EBIT of
between $28m and $32m and normalised EBITDA of between
$48m and $52m.
1
We are undertaking a comprehensive cost out
programme focusing on $5m of operating costs in FY24. As a
result, we expect that FY24 operating costs will be flat to FY23.
You can read the full announcement on our website here.
1
Normalised EBITDA and Normalised EBIT have been adjusted to exclude non-trading adjustments of approx. $0.9m primarily relating to Software as a Service costs.
$MILLIONS
FY23
10 MONTHS
FY22
10 MONTHS
FY21
10 MONTHS
Revenue489.0479.3384.6
EBITDA40.853.629.5
Normalised EBITDA41.754.028.6
EBIT23.637.914.8
Normalised EBIT24.538.313.8
N PAT12.424.17.4
Operating Cash flow77.9(38.1)20.5
Dividends paid19.114.62.0
Inventory152.2200.9108.3
Net (Debt)/Cash(9.2)(43.5)19.7
NZX
VIRTUAL
INVESTOR
EVENT
Steel & Tube was pleased to recently present
as part of the first NZX Virtual Investor Event
of 2023. This was an opportunity for us to
provide more information on our company,
our growth strategy and the opportunities for
our business.
You can view the webcast here.
The presentation is available for viewing on
Steel & Tube’s website here.

The Government has estimated the
cyclone and flooding rebuild costs at
between $9 billion and $14.5 billion, with
half of that related to public infrastructure
- bridges, roads, rail links, power
substations and the like. In addition, there
is an estimated need for around 4,000
new houses plus repair work to damaged
residential properties.
Steel is an essential construction material,
as demonstrated in the Canterbury
rebuild, and Steel & Tube has the capability
and capacity, as well as the expertise to
deliver innovative solutions to assist with
rebuilding vital assets.
Following the Cyclone, Steel & Tube’s
local sales team have been helping out
impacted businesses and farmers with
discounted fencing products which
has supported a number of customers,
including the defence force.
• Steel is a lightweight but strong product
that provides durability, and is 100%
recyclable and reusable
• As demonstrated with the Canterbury
rebuild, steel is an optimal choice of
construction material – builds faster with
less disruption, flexible, extends building
life, minimal waste, optimal thermal
performance
• Steel is infinitely recyclable, durable, non-
toxic and inert
STEEL OFFERS A NUMBER OF ADVANTAGES IN A FUTURE
WHERE CLIMATE CHANGE AND EXTREME WEATHER
EVENTS ARE LIKELY TO BECOME MORE COMMON
CYCLONE AND
FLOODING REBUILD

STRENGTHENING THE CORE
NEW PLUMDEK ROLL FORMER
MACHINE IN CHRISTCHURCH
With the help of a new roll former machine,
Steel & Tube can now supply trademarked
roofing profiles direct from our production
facility in Christchurch. The machine
specialises in thicker material Plumdek®
roofing products in 0.40mm and 0.55mm
profiles. This new machine is in addition
to those already in place in Tauranga and
Auckland, providing Steel & Tube’s roofing
customers with better access and service
across New Zealand.
Plumbdek® is one of many roofing profiles
on offer at Steel & Tube. The five-ribbed
trapezoidal design offers great looks,
economy and exceptional performance, in a
range of material options and colours.
INVESTING IN HIGH
VALUE PRODUCTS,
SERVICES AND SECTORS
HIGH DEMAND ALUMINIUM
PRODUCTS NOW ON OFFER
FROM STEEL & TUBE
Our strategy to invest in higher value products,
services and sectors is focussed on extending
what we can offer to our customers. This
includes adjacent materials and value-added
services. While our primary focus is on
organic growth, we also continue to consider
opportunities via programmatic smaller M&A
in adjacent sectors.
Our most recent initiative has been our entry
into the aluminium market from February
2023. This is targeted towards a select range
of high demand, high value products, largely
servicing existing customers. This product
diversification provides scale, customer share
of wallet growth and was immediately earnings
accretive. Although this is a new product
range, we have been able to leverage our
existing sales and operating model to minimise
costs.
Customer feedback has been very pleasing,
with sales of some products exceeding
expectations. We have already received
additional shipments and are holding stock
in multiple locations to meet local demand.
Given the popularity of this new offer, we are
now investigating options to further expand
the range.
OUR STRATEGY IN ACTION

PROVIDING STRONG
CAREER PATHWAYS
One of Steel & Tube’s unique advantages is
our abilty to develop talent through access
to multiple career paths across 27 locations
nationwide.
During the past three months we’ve celebrated
a number of internal promotions and career
changes – 15 members of our team have been
successful in promotions which have seen
them move into exciting career development
roles across the company, and at the same
Steel & Tube has saved valuable time and cost
associated with external recruitment.
Most of those promotions have occured in
our operations teams, but we’re shining the
light on our finance team where two of our
employees have just stepped into key roles.
Jasmine Kok (right)
Jasmine Kok started with us as a Senior
Financial Accountant in 2020. In July 2022
she was promoted to the role of Finance
Manager with increased responsibilty within
the business and team leadership, and then
this year – as part of our career and succession
planning processes – she stepped into the
role of Group Financial Controller reporting
to the Chief Financial Officer. In addition to
gaining hands-on exposure to new work and
projects across the organisation, Jasmine has
been attending the Global Women – Activate
Leaders Programme to gain additional
leadership training and exposure to a broader
network of female leaders.
Sam Teal (left)
Also within the finance team, Sam Teal has
recently been promoted to Finance Business
Partner for our Rollforming Business –
providing finance leadership support for
our Roofing, Comflor and Coil Processing
Businesses. Sam started with us in 2021 as a
Corporate Accountant, and was promoted in
2022 to Finance Analyst before his most recent
appointment. The knowledge of our business,
team and processes has proven to be highly
valuable in enabling both members to hit the
ground running in their new roles.
W H AT M AT TE R S

CUE Haven is the vision of Aucklanders Thomas &
Mahrukh Stazyk, who bought the 24-plus hectare
property and created a native nature reserve for
the community to use and enjoy into perpetuity.
CUE stands for Cultivating Understanding and
Enlightenment. Since 2008, over 4,500 volunteers
have planted over 170,000 native trees and built
over 3.5 km of walking tracks.
In 2020, the CUE Haven Community Trust built a
viewing platform – Te Rite o Taranaki - overlooking
the Kaipara Harbour. Fortress was pleased to be
one of several business to donate materials for the
construction.
The viewing platform was designed as a thesis by
a Masters in architecture student at Unitec and is
an amazing work of architectural and engineering
design which will last for several generations.
The carvings are by a Unitec architecture student
and tell the story of CUE Haven and the viewing
platform project. Areas have been levelled out
for seating and there are benches for visitors to
relax after their long climb up hill to the viewing
platform.

SUPPORTING OUR
COMMUNITIES

We were pleased to recently introduce our first EV
vehicle to our fleet in Christchurch. The BYD Atto 3
is efficient and safe and stylish and, with a range of
345km, will be ideal for use in the wider Christchurch
area. This pool vehicle will be available to all teams
needing to move around Christchurch and will also
help reduce the current reliance on rental vehicles for
out of town staff.
With around 250 cars and light commercials (utes
and vans) in Steel & Tube’s fleet, this is the first in a
longer term transition to electrical and alternative fuel
vehicles.
DRIVING CHANGE
OUR LONG TERM AIM IS TO OPERATE OUR BUSINESS IN A WAY THAT IS FINANCIALLY
REWARDING FOR OUR SHAREHOLDERS & POSITIVE FOR OUR PEOPLE, OUR CUSTOMERS,
OUR COMMUNITIES & THE ENVIRONMENT.
STEEL & TUBE’S
SUSTAINABILITY
MANAGER RUNNER UP IN
PRESTIGIOUS AWARDS
Trent Brash was recently named as runner up
in the HERA industry awards. Held every two
years, recipients are selected by their peers,
making the acknowledgement even more
meaningful. The Next Gen Leadership Award
celebrates people who get things done.

CASE STUDY: USING STEEL
STEEL & TUBE HELPS
BRING NEW LIFE TO
OLD BACH
When purchasing a dilapidated cottage on
Christchurch’s Marine Parade, directors
of JD Homes, Jesse and Marcella De Wys,
knew that refurbishment would have its
challenges.
The couple’s vision was to rework the small
cottage into a classic Kiwi bach. Starting at
the top, the couple have replaced the rusted
corrugated iron roof with Plumbdek® by Steel
& Tube, providing a modern look without
losing the building’s essential character. The
house was then clad in a mix of Plumbdek and
timber weatherboards, with the grey of the
steel combining with the pop of yellow painted
boards.
In deciding to rebuild what was a nearly ruined
house, Jesse and Marcella were also making
a statement about sustainability to support a
low-emission industry. Extending the life of a
structure enables more value to be extracted
from the resources invested to build, operate
and maintain it.
This made steel roofing an obvious choice.
Steel is one of the world’s most essential and
sustainable building products – permanent,
forever reusable and the most recycled
substance on the planet, with up to 85% of steel
from New Zealand demolition sites returned to
steel mills for recycling.
The result is a bright, playful and sustainable
seaside retreat, fondly named the ‘Splash Hut’.
‘We’ve made a splash with the new materials
and colours,’ says Jesse. ‘And while it’s a small
hut, it gives us everything we need for a
modern-day dwelling.’

STRONGER
TOGETHER
THANK YOU
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CONTACT US:
Steel & Tube Holdings Ltd
7 Bruce Roderick Drive, East Tamaki, Auckland 2013, New Zealand
PO Box 58880, Botany, Auckland 2163, New Zealand
Tel: +64 4 570 5000 Email: investor.relations@steelandtube.co.nz
www.steelandtube.co.nz