Thank you, Darcy. Good morning, and thank you for joining us for our FY 2025 results presentation. My name is Samantha Cheetham, the Chief Executive Officer, and with me today is John Slaviero, our Chief Financial and Operating Officer. While the result is flat on last year, I'm pleased to report that we have continued to make significant progress on product development, on our Montrose project, and saw further improvement in our gross margins with another 80 basis point gain over the year. The only soft spot in the result was the amalgam sales, which continue to decline, now representing 13% of total sales. Now let's look at today's agenda. Next slide. I will begin the presentation with our performance highlight, which will include sales by business unit and by region, followed by sales by category and the current product trends.
I will then turn over to John, who will run through the financials before returning to me to outline our key business updates that have occurred throughout the year before concluding with our strategy and outlook. Next slide. FY 2025 saw sales of $110.4 million for the group, down 0.7% on the prior corresponding period. Gross profit margin increased 80 basis points to 62.9% due to stronger performances in our higher margin products, as well as stronger regional mix and increased efficiencies across production. EBITDA fell by 2.7% to $21.6 million on the prior corresponding period, with operating expenses well managed for the period. A final dividend of $0.019 per share was in line with the prior corresponding period, with normalized net profit after tax of $10.5 million, an increase of 0.1% on the prior corresponding period.
In terms of our business updates, revenues were flat with a mix of regional performances. The gross margin improvement of 80 basis points was largely attributable to product mix and increased efficiencies in production. As we move into FY 2026, we expect this trend to continue with the new machines becoming fully operational. During the second half of the year, the Pola Tooth Whitening product range undertook a branding upgrade and was well received in the market. Stella, a posterior restorative product that forms part of our aesthetic product range, continues to reach broader acceptance in the market with continuing strong take-up. Finally, we have made significant progress on our Montrose site relocation with the permit process the last step before we begin construction. Let us now turn to sales by business unit. Next slide. This slide shows sales by business unit.
During the year, we saw good growth in Europe but was offset by weaker direct exports. The Australian unit sales, which also captures the Australian export markets, were down 10.5%, with Australian direct exports decreasing 15.3% when adjusted for our currency movements. These sales were materially impacted by a reduction in sales from the Middle East and Asian regions. The North American market was down 3% in local currency, primarily due to a 16.6% decline in amalgam sales in the region. The European unit sales were up 5.8% in local currencies, driven by demand for aesthetic products in most European markets. Brazilian sales increased by 9.7% in local currencies due to a major distributor returning to normal business after reducing inventory in the prior period. Now onto our sales by region. Next slide.
Sales by region reflect strong growth in the European markets, which were aided by strong demand for aesthetic products. All other regions were weaker, with the Middle East and Africa experiencing some local challenges given the conflicts in this region. Next slide. This slide details our sales by category. In local currencies, aesthetic sales continue to show solid growth of 4% in local currency terms, with growth across most regions partly offset by a decline in Australian direct export sales, which were down 10.2%. Whitening product sales were up 2% in local currency terms, with good increases in North America and the Australian domestic market. Equipment, which is largely a complementary product and represents our smallest product category, was down 2.2%. However, Brazil and Europe saw good growth with 4.4% and 18.3% respectively. Finally, amalgam sales continued recent declines, falling a further 21.9% in local currency terms.
The declines were in most markets, particularly in North America, which was down 16.6% over the year. Let's now turn to the financials, which John will take you through. Next slide.
Yeah. Thanks, Sam. We are now onto the profit and loss slide 8. As was mentioned by Sam, sales declined by 0.7% in the period, with good growth in the European and Brazilian markets, offset by declines in the Middle Eastern and Asian markets, and the continued decline in amalgam product sales. Normalized net profit after tax was up 0.1% to $10.5 million, with EBITDA down 2.7% to $21.3 million. Gross product margins increased by 80 basis points to 62.9%, reflecting operational efficiencies plus geographical and product mix. Total operating expense in Australian dollars increased by 3.6%, reflecting a return to a more normalized inflationary environment. Turning to the balance sheet, next slide.
Cash increased by $2.7 million after investing $4.1 million in property, plant, and equipment, $4.4 million in product development expenditure, reducing inventory by $1 million, and reducing debt by $7.1 million, following the recent receipt of funds from a sale of a property. The company has unused working capital facilities of $10 million, a $23 million unused building construction facility, and $9 million cash in bank. Now turning to the cash flow statement. Next slide, please. Okay. Operating cash flows was up strongly in the period, boosted by a reduction in working capital and a normalizing of operating expenses back to more normal levels of inflation. There was a further repayment of borrowings following the sale of a property, and we also made a payment for the interim dividend for the half year 2025.
I will now hand back to Sam to run through the operational update and the strategy and outlook section.
Thanks, John.
Next slide.
I am now on the operational update. During the year, as mentioned earlier, Stella continued to gain traction and acceptance in the market, with $2.5 million in sales recorded this year. This is one of the best performances of a new product launch we have seen. As we continue to roll out to new regions, we expect this momentum to continue. Turning to our investment in automation, we have continued to invest in automation to improve manufacturing efficiencies and capacity, and are seeing operational efficiencies reflected in gross margins. The updated table on this slide details the machines we have invested in and their current progress stages. All machines have a remarkably short estimated payback period.
As can be seen from the operational dates in the table, the first two machines were only operational in the second half of the financial year, and we expect to see continued benefits in FY 2026. I will now move to ESG. Next slide. Over the past year, we've continued delivering on our ESG roadmap while also preparing for the new Australian sustainability reporting standards that came into effect on January 1st, this year. For SDI Ltd, being a Group 3 reporting entity means that by FY 2028, we will publish a sustainability report integrated with our financial results, covering climate-related risks and opportunities that could reasonably be expected to materially affect the company's financial position, as well as how our governance strategy, risk management, and metrics and targets will be used to monitor and manage them.
ESG has always been part of how we run the business, both in our operations and in our products, and we're ensuring this approach positions us well for the future and for meeting these new requirements. We look forward to continuing to share our ESG journey and progress with you. Next slide. Turning to Project Montrose on slide 15, the tendering process began, and we have received construction tenders around $26 million. The next stage will be the due diligence on the preferred tender. The planning permit for our project is expected to be received by the end of September, although the exact timing of this can be hard to be definitive. As shared recently, the project will be fully funded by the combination of the sale and leaseback of the current premises plus debt.
We're excited about the project, including the capacity it will add and the efficiencies it will generate for the business. Next slide. Project Montrose. Here we see an approximate updated timeline of Project Montrose. We're currently still on track to be relocated by December 2027. Next slide. Strategy and outlook. The company's strategic priorities remain unchanged. Aesthetics and whitening continue to be our focus for new product development. Stella and Revis and Order Mix were the latest product launches, and I look forward to updating you all through the year of the positive growth of these products, particularly Stella, given its unique characteristics. We continue to focus on improving operational manufacturing efficiencies via automation and Project Montrose, expanding our sales capacity to over $200 million.
The research and development team will remain focused on product development, with the aim to have one to two products released to market in the next 12 months. We attended the International Dental Show in Germany in March. It was a great success, as we were able to showcase some of our most innovative products. Thank you for your participation today, and I'll now turn to questions. Thanks, Darcy.
Thank you. If you wish to ask a question via the phones, you will need to press the star key followed by the number one on your telephone keypad. If you wish to ask a question via the webcast, please type your question into the ask a question box. Your first question comes from Mark Topy from Select Equities. Please go ahead.
Good morning, Sam and John. Just a first question just about some of those markets who've seen disruption in the Middle East. Can you give us some commentary around the outlook and the factors involved in that a little bit? Is there any normalisation or improvement in some of those markets that you're seeing?
Yes. I mean, it's been a bit tricky even getting stock in that customers will order and we can't ship it because of various reasons. There are no planes going in there, or perhaps they haven't paid their bill from, you know, they're a bit overdue, so we have to manage that as well. One country, we had some tenders, and they've sort of slowed those tenders down. For the future, for the FY 2026, we are expecting certainly a turnaround. I guess these conflicts probably, they probably treat it as business as usual. I certainly know the Israelis do.
Okay. Even South America, what's sort of the outlook there?
No, that's very good. I mean, Brazil is our strongest country, and they're focusing on the growth and their targets for the year. That will certainly eventuate the rest of South America. It's a huge market, a growing market, and they are all very positive for the year.
Yeah. Also, Mark, when you look at the South American sales, that's in AUD. Unfortunately, the currency has not gone in our favor. You can see that when you look at the Brazil business unit sales, in AUD, they're a couple of percent down, but in Brazilian real, they're up over 9%. There is a bit of currency in that South American market.
Right. Okay. That's obviously due to some of the pressures that they're facing from the U.S. or the economies?
Yeah.
Yeah, no, fair enough. On the Stella side, just in terms of the ramp-up, the feedback from Europe, and where you see that going over the next year, can you be a bit more, give us a bit more detail on that?
As Stella, you know, we're really pleased about Stella. As I said, it had a really good launch. It's going much, much better than other launches we've had. Stella is still rolling out. We have it registered in Europe, North America, Australia, Brazil, and some of the countries we're very focused on. We're still rolling it out and getting registration in other regions. We don't have it everywhere we sell. It does take time for, in the existing markets, for a product to get going. We're investing in research, proving that the product's right. This is through universities, through evaluation companies. Once everybody sort of gets to understand the results, key opinion leaders start talking about it. We certainly are getting key opinion leaders talking about it right now, but there'll be more and more that catch on to that. Stella is our product for the future.
It's very much a company maker, and it's really helping us get it be well known, more well known in the aesthetics category.
Would the priorities be around Europe in the next year, or how do we see the kind of the balance of the business?
For Stella?
Yeah.
No, the priorities are the key markets, North America, Europe, and Australia. Europe will be growing with Stella plus some of the other products in the aesthetics and whitening categories.
How do you see Stella as a sort of leading product against some of the competitors in the space?
Yeah, it really has no competitors there. You know, some people, some companies say, "Hey, we're similar," but we just have to prove to them that we're not.
Sure. John, on the net cash, I presume that is a function of that left, is a function of some of the costs coming down, or could you just elaborate on?
Yeah, look, the cash, it's been, you know, we've managed our inventory quite well. I think June last year was probably about $1 million overstocked. We've managed that and brought it down. Collections, you know, finance team has been very focused on collecting on the collections. Yeah, we've put a lot of effort in the cash flow. Also, as you say, there's also a reflection on our operating expenses. You know, we don't have the, particularly overseas, you know, we don't have 5%- 8% inflationary pressures. They're all coming back. Yeah, it's all been quite good.
Very good. All right. I might just jump back into the queue. Thanks for that.
Thanks, Mark.
Thanks, Mark.
Thank you. Your next question, it comes from Peter Stora, private investor. Please go ahead.
Hello, Sam and John. Peter Stora here, shareholder. The new machines have got quite a short payback period. In terms of the cost, are they expensed or capitalized?
They're capitalized, Peter.
They're capitalized over what? Over the payback life or a long?
It's probably around, on average, it'd be about somewhere around 10 years.
Okay. Great. Thanks. With the Montrose tender, is that close to being fixed cost, or is it, given the way materials are moving at the moment, is there wriggle room for the tender or for contingency for those additional costs?
I haven't seen, because we haven't appointed anybody, I haven't seen an actual contract yet, right? We do have a preferred one. We're doing financial due diligence on that company. Once we get that satisfied, we'll get the contract. We'll obviously have to pass it through lawyers. I'll have a better idea of what's going to be included in those contracts and also the stage in which we have to do repayments and therefore drawing down on debt. I'm hoping it'll all come a lot clearer in the next couple of months. Put it that way.
Great. Okay. Thanks. Finally, given that more than 20% of sales are North American, the big question is how will Mr. Trump's tariffs affect the company? Do we have stuff coming through from China that's going to pick up a higher tariff, or are we basically?
There is some in our equipment category. There is some available, but that's a very small category to us. That'll be an interesting one because I believe that our competitors will be hit with the same. That's LED lights and curing lights and the mixing machines. We're looking at it, trying to put, looking at the rules and maybe moving some of the content into Australia rather than a whole lot in China. We're still working through that one. The rest of it, the 10%, we've already started paying that, and we will absorb that with future price increases. We don't see that to be a big issue for us.
Great. Thanks. That's all from me.
Thank you. There are no further phone questions at this time. I'll now hand back for any webcast questions.
Thanks, Darcy. We've got a number of questions here, John and Sam. First question, you dealt with with respect to the tariffs. I'll move on to the next one. Post completion of the move to Montrose and the sale of Bayswater site, roughly how much debt will SDI Ltd have?
It'll be sitting around $23 million. I can confirm that once I've got all the, you know, the more detail in the tenders. Yeah.
Thanks, John. Next question. Given the change in the U.S. with Robert F. Kennedy Jr. leading the HHS, are there any regulatory concerns for selling amalgam into the U.S.?
No. If anything, he's sort of a bit more focused on fluoride, and we haven't had any concerns about that yet for the amalgam part, yes.
Thanks, Sam. John, a couple for you. Can you provide an update on production equipment capital expenditure expected for the Montrose upgrade?
Yes. We expect our capital expenditure once we do move to Montrose, for the first couple of years, will be around $4 million- $5 million because there's some machinery which we want to order we haven't yet. When we get a clearer picture, when we start moving, we'll put the orders in because they won't fit where we are now. I would expect our capital expenditure for the next, say, three to four years, would be around $4 million- $5 million.
Thanks, John. Very clear. A very simple question here. Why is there so much cash on the balance sheet when the company is carrying debt?
The company's carrying the Montrose purchase debt, right? That's a facility that we have separate to working capital. Apart from that, we have not drawn down on our $10 million worth of capital. We're sort of more or less fixed in on that. We are fixed in on a repayment plan at about $1 million a year. That could be something we look at in the future at the next facility to review.
Thanks, John. Sam, this one would be with respect to Stella. Obviously, good result in the year. This investor is asking the question on the revenue. You reported $2.5 million in FY 2025 on $1 million in FY 2024. Do you anticipate Stella will continue on this growth trajectory? Obviously, the math's being done here. $10 million for FY 2026, $20 million for FY 2027. Is it still the early stage expected to be circa $5 million in FY 2026? Some guidance being sought here by this investor.
Right. We don't usually give out any guidance, but it certainly wouldn't be on the first $10 million. We will absolutely, I mean, we have forecasts that it will absolutely grow on that $2.5 million.
Great. Thank you, Sam. This could be for you, John. One of the features of the result is the good for capital management, obviously, good cash flow. Could you indicate how much of the additional inventory in dollar terms is expected and will need to be held in the process of moving manufacturing to Montrose?
I don't see that it'll be material because I think I've explained this in previous investor meetings, that our manufacturing is quite modular. We'll move, for example, we would move our composite manufacturing first, get that settled in. We'll build a little bit of composite stock. Once that's settled in, we go back to normal stock levels, and then we might move, say, whitening the next one and build a little bit of stock. I don't see a material blowout of inventory levels in that move.
Thanks, John. Sam, one for you. Can you give some detail on the sales cycle of new products, primarily Stella? Do customers generally order small amounts and scale up as they test products and gain confidence? Do you have a target for the Stella revenue as a percentage of total in the few years to come?
I just answered the sales target question before. In terms of how does a customer buy, they will start off with smaller, like an individual dentist will probably buy one box, which will probably have about 15, 20 fillings available to you. Once it becomes a normal habit, they'll buy more and more. That will just ramp up, yes.
Thanks, Sam. Can you comment on the status of the marketing team in the U.S.? Is that department now appropriately resourced?
My team over there will probably say no. However, we do marketing. The marketing is based here in Australia. We have a team, and we do it globally from here. We give out all the styles, etc. We have one person dedicated here for the North American market, and it's going very well. Probably, if anything, we'd love to spend more money on advertising and key opinion leader development, but we do that gradually. Yes, I believe it's sufficiently resourced in terms of that part.
Thanks, Sam. John, difficult one to answer this one because, as you know, the rules continue to change in the U.S., so it's difficult to know what happens from one period to the next. Are you concerned about Trump's mooted 30%- 50% U.S. branch profits tax?
That's probably quite a complicated question to answer. We will stick by our transfer pricing policies, which, you know, are based on comparative businesses. Most of the profit is here in Australia, but that's handled by our transfer pricing policies. We will get expert advice as we get more clarification on that. At this point in time, I'm not very concerned, but we will be getting some advice as it becomes clearer what's going to happen.
That's great. Thanks, John. Darcy, that's all from the webcast. Back to you for any on the line.
Thank you. We have a follow-up question from Mark Toby from Select Equities. Please go ahead.
Hi, Sam. Just on the gross margin improvement, John, just wondering if you can remind us on with the automation you're now looking to put into place with the new plant and so forth, just that trend over the next few years in terms of that gross profit margin.
Yeah, Mark, yeah, look, we expect the margins to go up. We don't figure out where we expect it to be, but we do, we're slightly a bit disappointed that it came back 0.1% from the half year. That has to do with mainly product mix and geographical mix. We do expect it to improve in the next 12 months, probably more improvement in the second half of the year than in the first half of this financial year.
Right. As you introduce that automation and reduce the headcount, how do you see the longer term?
The headcount is something that we're always very conscious of. We are very much in the belief for Australian manufacturing to survive, it's got to be automation. That's where we're spending all the money in. Part of that payback, you see the payback, most of that is headcounts.
Yeah, got it. All right. Okay. Thanks again.
Thank you. There are no further phone questions at this time. I'll now hand back to Ms. Cheetham for any closing remarks.
Darcy, before we hear from Sam, there is just one follow-up question on the webcast, which I'll read out and then pass back to you, Sam. Operating cash flow growth was very strong year on year. Do you anticipate an improvement in operating cash flow in FY 2026 compared to FY 2025?
Yeah, I anticipate some improvements. I guess we're investing more into marketing, into marketing. Also, we're investing more into our compliance team here to do with the additional requirements of this European MDR, which is quite hefty, resource-heavy. We will be spending a bit of money there because we need to get all of our products. We've got a timeline that we need to get all our products registered under the MDR. Generally, the environment around that, like under the Rate of Affairs and QA, globally, the environment is becoming a lot stricter. We do have to put some more resources in there.
Thanks, John. Sam, I might hand back to you for closing remarks then.
Thanks, Adrian. Thank you, everyone, for being on the call. It's our first year. It's a really exciting year. We'll start our build at Montrose. It's to put SDI Ltd ahead for the future and give us the efficiencies and help us with the innovation of our products. The other exciting part of this year will be the growth of Stella, which we're all watching. Our increase in market share for our tooth whitening, the Pola, where we've rebranded. The team, everyone's behind our strategy, and it's definitely going to be a good year. Thanks, everybody.
Thank you. That does conclude our conference for today. Thank you for participating. You may now disconnect.