TZ Limited Achieves Positive Cash Flow and Net Profit in Q4 2024
TZL (TZL) Share Update July 2024 Monday 29th
TZ Limited Reports Positive Cash Flow and Profit for Q4 2024
TZ Limited (ASX: TZL) has released its Appendix 4C - Quarterly Cash Flow Report for the quarter ended 30 June 2024, showcasing a significant turnaround with positive cash flow and net profit for the first time in five years.
Instant Summary:
- Net cash from operating activities: $0.5 million positive inflow.
- Receipts from customers: $2.2 million.
- Payments for product manufacturing and operating costs: $0.7 million.
- Revenue for the full year to 30 June 2024: approximately A$14 million.
- Reduction in staff costs from $7.6 million to $4.4 million.
- Repayment of $200K of the secured debenture facility with First Samuel.
- Positive EBITDA performance of circa $700K.
- Net bottom line profitability of circa $100K.
Quarterly Performance
TZ Limited reported a net cash inflow from operating activities of $0.5 million for Q4 2024. This marks a continuation of the strong profitable performance observed throughout the fiscal year. The company received $2.2 million from customers while incurring $0.7 million in product manufacturing and operating costs, $0.8 million in staff costs, and $0.1 million in administration and corporate costs.
For the full year ending 30 June 2024, TZ Limited expects revenue to be around A$14 million, consistent with the previous year's turnover. This stability in revenue is particularly noteworthy given the significant reduction in staff costs from $7.6 million to $4.4 million over the past 12 months.
Business Update
Over the last year, TZ Limited has undergone major restructuring and realignment of its operations. These changes have resulted in a successful business turnaround. The company delivered $14 million in top-line revenue, a positive EBITDA performance of approximately $700K, and a net bottom line profitability of around $100K. This is the first time in the last five years that TZ Limited has achieved a true net profit.
Key business highlights include right-sizing the operational structure, improving gross margins (especially in the US from 30% to over 50%), streamlining business systems, simplifying the supply chain, and resolving legacy inventory management issues. Additionally, the company has refocused its sales efforts, optimized its cloud services, grown its annuity revenue business by 20%, and updated its software offerings to remain competitive.
Outlook
With the stabilization of operations and implementation of a sustainable business model largely completed, TZ Limited is now focusing on growth. The company is exploring potential acquisitions in the Tenant App space, which would complement its smart locker, locking, and access control security businesses. This diversification is expected to uplift the business potential significantly.
The positive cash flow and net profit reported by TZ Limited are likely to boost investor confidence and positively impact the company's stock price. The significant reduction in staff costs without affecting top-line revenue demonstrates effective cost management, which is a positive sign for future profitability. The company's focus on growth and potential acquisitions could further enhance its market position and drive long-term value for shareholders.
Investor Reaction:
Analysts have reacted positively to TZ Limited's quarterly performance, noting the successful turnaround and effective cost management. Investors are optimistic about the company's future growth prospects, especially with the planned acquisitions in the Tenant App space.
Conclusion:
Investors should closely monitor TZ Limited's strategic moves and potential acquisitions in the coming months. The company's successful turnaround and focus on growth present a promising investment opportunity. Staying informed about TZ Limited's developments will be crucial for making well-informed investment decisions.