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PSQ Value Recovery - Complete Information Presentation on PSQ Plus Proposal
PSQ Value Recovery - Complete Information Presentation on PSQ Plus Proposal
PSQ’s share price has declined 50% in the last 12 months with no dividends issued.
This is directly attributable to the decisions of the PSQ Board. The impact of 24 months of unchecked, accelerated dental centre network expansion from 94 to 127 centres (35% increase) at a time of great uncertainty in the Australian and global economy is clear.
Many PSQ shareholders have no confidence in a Board that has presided over such a significant erosion of value with no clear plan to re-establish profitability.
Moreover, Company earnings in FY2021 were propped up with short lived measures including Job-Keeper and temporary rent reductions.
Many PSQ shareholders have no confidence in a Board that has presided over such a significant erosion of value with no clear plan to re-establish profitability.
Moreover, Company earnings in FY2021 were propped up with short lived measures including Job-Keeper and temporary rent reductions.
When these were withdrawn in FY2022 the economic impact of the aggressive network roll-out became obvious.
Accelerated network expansion resulting in a decline in revenue per chair and EBITDA per centre
The 'shopping centre model' is now over represented in the portfolio, impacting group margin
- PSQ management have accelerated the rollout of shopping centres from 27% to 70% in 2015 and 2022 respectively
- Smaller format centres operate on significantly lower margins due to fixed overheads being spread over fewer chairs and typically higher per square metre
- Phase 2 of PSQ Plus will reset the balance with a focus on larger centres in strategic locations
FY22 chair utilisation is down over 20% from long-run average
Despite the pandemic easing, chair utilization and profitability have continued to decline – directly attributable to the ill-timed decision to aggressively build out capacity ahead of patient demand and with a tightening dentist labour market.
Failure to monitor and act
The PSQ Board failed to monitor the results of their accelerated network expansion strategy and to act in a timely manner. The CEO was recently quoted as saying that he does not believe operational leverage (margin) will return until the company reaches 250 clinics.(Transcript of PSQ.AX earnings conference call or presentation 17-Aug-22 1:00am GMT)
This presents a grim prospect for earnings over the next 7 years.
In summary, PSQ shareholders cannot have confidence in a Board that has presided over such a significant loss of company value with no clear plan to resurrect earnings in the short term
Board renewal and an effective transformation program are necessary to immediately re-establish market confidence in PSQ and rebuild investor returns.
The PSQ Board failed to monitor the results of their accelerated network expansion strategy and to act in a timely manner. The CEO was recently quoted as saying that he does not believe operational leverage (margin) will return until the company reaches 250 clinics.(Transcript of PSQ.AX earnings conference call or presentation 17-Aug-22 1:00am GMT)
This presents a grim prospect for earnings over the next 7 years.
In summary, PSQ shareholders cannot have confidence in a Board that has presided over such a significant loss of company value with no clear plan to resurrect earnings in the short term
Board renewal and an effective transformation program are necessary to immediately re-establish market confidence in PSQ and rebuild investor returns.