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Speaker 1: Welcome to Shared Lunch. I'm Luke Smith of Shares's and

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Speaker 1: today we're talking to Mike Chrisman CEO of Scott Technology,

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Speaker 1: a one hundred and twelve year old ki we automation

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Speaker 1: success story. Scott has evolved from humble engineering roots into

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Speaker 1: a global leader in automation or robotics across protein materials, handling, appliance,

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Speaker 1: manufacturing and mining. Today we're here at rock Clabs, it's

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Speaker 1: mining automation site. Before we get started, here's some important information.

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Speaker 2: Investing involves the risk you might lose the money you

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Speaker 2: start with. We recommend talking to a licensed financial advisor.

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Speaker 2: We also recommend reading product disclosure documents before deciding to invest.

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Speaker 2: Everything you're about to see and here is current at

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Speaker 2: the time of recording.

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Speaker 1: Well, Mike, thanks for hosting us today.

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Speaker 3: You're very welcome. Welcome to Rock Clubs.

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Speaker 1: There's a bit going on here and it's a big site.

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Speaker 1: Tell us what is rock Clabs and what do you

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Speaker 1: do here? So?

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Speaker 3: Rock Clubs is our center of excellence for the mining industry.

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Speaker 3: This is where we design, build and manufacture solutions and

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Speaker 3: equipment for the mining industry globally.

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Speaker 1: Stiffing back around, Scott Technology. You were founded in nineteen thirteen,

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Speaker 1: humble routes, I believe and motor appears and now the

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Speaker 1: successful automation company. Who is Scott Technology? And can you

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Speaker 1: tell us about that story?

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Speaker 3: So Scott Technology founded, as you say, back in the

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Speaker 3: early nineteen hundreds, Yeah, motor repairs originally. As the years

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Speaker 3: have gone on, we've moved more into automation and automation products.

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Speaker 3: And who is Scott Technology? Well, we're an automation company

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Speaker 3: that effectively provides solutions for our customers that move manual

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Speaker 3: processes into fully automated processes. We manufacture things from robotics

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Speaker 3: right the way through to the AMS systems that you

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Speaker 3: see behind us, so effectively we bring value to our customers.

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Speaker 1: So what is the difference between robotics and automation and

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Speaker 1: what are some examples of how you do that here

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Speaker 1: at Scott Technology.

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Speaker 3: Okay, so you're asked in the question for the gigs

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Speaker 3: amongst us, So that's a difference between the two. So

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Speaker 3: automation is where we move something from point one to

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Speaker 3: point two with dumb conveyors. The robotic side of thing

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Speaker 3: is far more complicated. That's where we have AI learning.

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Speaker 3: So if I take an example of a beef processing

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Speaker 3: or a lamb processing system. We will have an AI

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Speaker 3: vision camera with an X ray vision technology, actually look

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Speaker 3: at an animal carcass, work out where the bones are,

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Speaker 3: where the muscle is, and the robotic system will then

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Speaker 3: cut that carcass in certain angles and different directions, and

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Speaker 3: it's unique to every single carcass that goes through the system.

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Speaker 3: So robotics is sorry, automations just moving from A to B.

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Speaker 3: Robotics is almost a bespoke action for each and every

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Speaker 3: single action.

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Speaker 1: Yeah, that's fascinating. Are there any other examples of that

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Speaker 1: type of robotics.

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Speaker 3: Yeah, So if I take automated guided vehicles as an example,

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Speaker 3: and actually one of our new technologies called next spot.

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Speaker 3: So historically forklifts are just a fork lift that somebody

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Speaker 3: will drive it will pick something up. On our new technology,

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Speaker 3: we have a fork lift that's fully automated, no driver.

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Speaker 3: It will pick something up, move it. But then the

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Speaker 3: system will detach itself from the forks and the back end,

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Speaker 3: change the front end for a different set of forks

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Speaker 3: or a different lifting mechanism, go to a different area,

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Speaker 3: pick something up on a different weight, and then it

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Speaker 3: will just keep changing the front and the back end

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Speaker 3: of the system as it seems fit to deliver the solution.

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Speaker 1: Possibly slightly cheeky, Christion, but some of the sounds expensive.

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Speaker 1: Do you mind me asking what sort of range could

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Speaker 1: some of these products cost to clients?

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Speaker 3: Well, I think when you look at the value it

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Speaker 3: brings to a customer, obviously from our point of view,

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Speaker 3: we need to make sure that it does bring value

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Speaker 3: and it does fit in the business case. But you know,

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Speaker 3: some of these technologies can range from tens of thousands

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Speaker 3: to hundreds of thousands into millions of dollars, so a

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Speaker 3: broad spectrum.

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Speaker 1: And what is special about Scott and then your DNA

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Speaker 1: that's allowed you to last across quite a long period

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Speaker 1: of time doing some quite cool things.

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Speaker 3: Well, I think, actually this is a really good question

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Speaker 3: to ask me, to be honest, because I've only been

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Speaker 3: here a year. So what I feel in the DNA

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Speaker 3: is it's such an innovative engineering company with some great

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Speaker 3: people really focused on bringing value, very much on the

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Speaker 3: engineering side, and I think if that element of our

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Speaker 3: DNA has been there since concept, actually that's why we're

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Speaker 3: still here, that's while we're thriving, and that's why we

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Speaker 3: continue to throw.

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Speaker 1: So talking about your product lines, can you give us

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Speaker 1: an overview of what it does you do and the

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Speaker 1: types of problems that you're solving for customers.

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Speaker 3: Sure, so if you look at what Scott actually does,

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Speaker 3: we break it down into four categories, so four clear domains,

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Speaker 3: so material handling, logistics, protein appliances, and as you say

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Speaker 3: here mining and we effectively what we do is we

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Speaker 3: take away those manual processes, so we improve performance, we

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Speaker 3: improve safety, we bring value to our customer. That's what

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Speaker 3: we're really here to do.

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Speaker 1: What are some examples of customers and a couple of

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Speaker 1: those product lines and some things that Scott is doing

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Speaker 1: that's really improving their operations.

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Speaker 3: If you take the mining system that we have behind

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Speaker 3: us here. So historically, when a mining company goes to

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Speaker 3: a new site, they dig, they test, and they have

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Speaker 3: to crush the rocks. They have then pulverize them, they

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Speaker 3: have to do all this special testing on it. And effectively,

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Speaker 3: what we can do here is they extract the rocks,

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Speaker 3: but we take it through that entire process that used

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Speaker 3: to be manual, time consuming in hot industry, hot areas,

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Speaker 3: and we fully automate that process. So we give them

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Speaker 3: the results with little to know manual input. So there's

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Speaker 3: a bed on across the four product lines. How do

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Speaker 3: you structure.

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Speaker 1: Yourselves to manage quite distinct offerings.

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Speaker 3: I think it's a really good question. I think first

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Speaker 3: and foremost, what we have to make sure is that

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Speaker 3: we think about Scott in the enterprise level, so the

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Speaker 3: whole company. Yes, we have four distinct areas and an

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Speaker 3: exec member that manages each of those areas, but really

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Speaker 3: for us, it's around moving that silo way of thinking

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Speaker 3: into the enterprise way of thinking and actually using technologies

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Speaker 3: from each of those domains in the other domains. So

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Speaker 3: a good example would be protein, where we process livestock

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Speaker 3: and we use material handling and logistics solutions in that

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Speaker 3: same environment, so we can cross pollinate our technology between

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Speaker 3: different sectors. So it enables us to think about the

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Speaker 3: enterprise rather than just the silo or.

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Speaker 1: The audience to ground what it does you're doing. Who

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Speaker 1: would you describe as the key competitors that are no

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Speaker 1: one out there to what you're doing?

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Speaker 3: Well, I think it's a good question. Again an interesting answer.

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Speaker 3: I'll spin it around a little bit that actually I

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Speaker 3: think the key competitor is ourselves and actually is our

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Speaker 3: customers and their ability to think automate rather than manual process.

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Speaker 3: So I think that's our biggest competition, to be honest,

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Speaker 3: our own customers that want to move from manual to automation.

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Speaker 3: Of course, we have competitors out there in forms of

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Speaker 3: other companies, but you know there's lots in the material

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Speaker 3: handling world, a fairly limited amount in both protein and mining,

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Speaker 3: but nonetheless they're there. But for us, the competitive advantage

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Speaker 3: is really bringing that value across the whole life cycle.

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Speaker 1: Yeah right, So really reframing that airs working smarter, not harder,

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Speaker 1: and thinking about how to do things in a.

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Speaker 3: You know, we don't just want to sell a product

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Speaker 3: to a customer. You know, we're there to give them

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Speaker 3: a solution, a solution right from concept right the way

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Speaker 3: through the full life cycle of the product. You know,

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Speaker 3: that's I think the key differentiator for us here.

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Speaker 1: So to appreciate the scale of Scott Technology, what are

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Speaker 1: the markets you're operating in globally?

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Speaker 3: So we operate in the material handling logistics market that's global.

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Speaker 3: So North America and Europe is our biggest presence. Protein,

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Speaker 3: so New Zealand and Australia is the biggest presence of

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Speaker 3: protein at the moment with a very very fast and

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Speaker 3: growing North America market, mining predominantly Australia, South Africa. And

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Speaker 3: then appliance is generally a global product but manufactured out

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Speaker 3: of our China, China central of excellence.

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Speaker 1: Right and revenue. As we're recording us on the twenty second,

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Speaker 1: you've just released your yesterday full year results yesterday two

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Speaker 1: hundred and seven million dollars.

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Speaker 3: And five million dollars.

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Speaker 1: Yet looks flat year on year, but it looks like

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Speaker 1: there might be a story of two halves there, and

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Speaker 1: what are the key highlights for you and those results?

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Speaker 3: I think the key highlights for me really if you

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Speaker 3: look back at the first half of financial year twenty five,

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Speaker 3: we were, you know, way behind budget. You know, we've

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Speaker 3: started to implement our strategy, so that really is starting

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Speaker 3: to show dividend and actually we we achieved you know,

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Speaker 3: the full amount for the year, so we actually you know,

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Speaker 3: got back to a flat line position. But it's not

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Speaker 3: just about that. We've increased our profitability. Our net profit

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Speaker 3: after tax has gone up and our gross margin's gone up.

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Speaker 3: So yeah, you're right, we're seeing a story of two

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Speaker 3: halves and actually the latter half of last year really

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Speaker 3: started to deliver on our twenty thirty strategy.

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Speaker 1: And what's driving that operational and margin improvements on the business.

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Speaker 3: So you'll see from the strategy we've got this pillar

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Speaker 3: called one scot so we're unifying some of our systems

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Speaker 3: around the world. At the moment, we've got multiple systems

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Speaker 3: for HR, for I for finance, and we're really bringing

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Speaker 3: those single systems together, so we've got one system rather

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Speaker 3: than the seven or eight. So there's efficiencies there, there's

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Speaker 3: focus on delivery, and there's you know, really looking towards

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Speaker 3: how we how we deliver projects and products, and we're

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Speaker 3: far more focused on that efficient delivery. So I think

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Speaker 3: it's a culmination of things, but I kind of come

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Speaker 3: back to focus is probably the big driver here.

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Speaker 1: So I want to shift to you personally, Mike to

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Speaker 1: recently join the hot seat as CEO in twenty twenty four,

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Speaker 1: and you had a senior global executive role at the

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Speaker 1: Dutch logistics automation company vanderaland as Axis. Vandalander got that right,

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Speaker 1: so keen to understand the story of moving from the

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Speaker 1: UK to New zealand joining a smaller company like Scott Technology.

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Speaker 1: What did you see and it has made you say

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Speaker 1: this is worth moving for?

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Speaker 3: Okay, well, first of all, it's it's an absolute privilege

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Speaker 3: to be here and to be able to lead Scott. Yeah,

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Speaker 3: working for a large organization, as you can imagine, you know,

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Speaker 3: sometimes doesn't bring the rewards that you want. It's hard

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Speaker 3: to make change and really, you know, you use afraid

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Speaker 3: smaller company, But actually I would spin that around and

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Speaker 3: say it's a bigger company for opportunity. So this is

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Speaker 3: it's a blank canvas here. So I absolutely see and

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Speaker 3: saw the opportunity of growth. I saw the opportunity to

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Speaker 3: implement some of the things I've done before in terms

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Speaker 3: of customer The talent here is just phenomenal. So I'm

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Speaker 3: you know, blessed to lead a really talented company. And

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Speaker 3: I guess the other personal thing for me is when

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Speaker 3: you're in a role for fifteen years, you can become stale.

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Speaker 3: I think you have to be so very self reflective

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Speaker 3: and ask yourself, am I delivering and being the best

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Speaker 3: I can? And actually that move for me sort of

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Speaker 3: I thought, no, it's the right thing to do. And

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Speaker 3: final thing for me is my family actually live in

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Speaker 3: New Zealand they have done for thirty years, so made

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Speaker 3: the transition a little bit more pleasant and easier. Not

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Speaker 3: a bad place, not a bad place at all.

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Speaker 1: And how are you finding it? What have you found so?

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Speaker 3: For I absolutely love it. I think, you know, coming

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Speaker 3: from London where the weather it's always golden, and we're

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Speaker 3: coming here on a day like this actually is a

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Speaker 3: bit wet. But now I love the subtropical you know environment.

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Speaker 3: I love the culture. You know, I deem myself as

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Speaker 3: a global citizen. I'm really enjoying learning the culture. It's

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Speaker 3: just a beautiful place to be. There is a there

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Speaker 3: is a culture here in New Zealand that I think

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Speaker 3: for me the UK lost a little while ago, which

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Speaker 3: is everyone is happy, people engage, people talk, there's the

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Speaker 3: pleasantries and for me it just really it really feels

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Speaker 3: like the UK fifteen years ago. And that's a positive statement. Yeah,

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Speaker 3: just loving the culture, loving the people, loving the beauty.

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Speaker 1: I want to shift slightly to the JBS factor. So

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Speaker 1: in twenty fifteen Scott's sold a majority stake fifty three percent.

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Speaker 1: I think it is to JBS. So for our listeners

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Speaker 1: who don't know JBS, who are they and what did

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Speaker 1: that unlock for.

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Speaker 3: You strategic Okay, So JBS are the world's largest meat producer,

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Speaker 3: originally Brazilian based, but they have a footprint now pretty

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Speaker 3: much everywhere in the world. They are, as i say,

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Speaker 3: the world's biggest the meat producer. For us, it's unlocked

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Speaker 3: a number of things. But actually it's not just about unlocking.

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Speaker 3: It's about the challenge of becoming better. So they're a

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Speaker 3: stakeholder and a customer, and you know that is a

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Speaker 3: challenging thing to manage. And as a stakeholder they push

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Speaker 3: us hard, and as a customer they demand new technology,

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Speaker 3: new innovation. And of course it goes without saying they've

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Speaker 3: opened us opportunities to innovate for them and to install

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Speaker 3: in some of their sites. So I think all in all,

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Speaker 3: JBS have really pushed us to be the best scot

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Speaker 3: that we can possibly be in terms of shareholder and

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Speaker 3: customer relationship.

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Speaker 1: And being a major shareholder. How much sway do they

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Speaker 1: have over the future focus and the direction of the business.

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Speaker 1: For example, does it look like, given their background, protein

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Speaker 1: processing is going to be a key focus moving forward?

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Speaker 3: Well, protein is a key focus for us. Anyway, JBS

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Speaker 3: are complementary and they really are positively supportive of Scott

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Speaker 3: So they are not telling us where to go and

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Speaker 3: what to do. They allow us to go back to

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Speaker 3: them and say, hey, this is where we're forging the

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Speaker 3: market positively disrupting. Of course sometimes they might get the

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Speaker 3: first benefit of that, but they're very supportive of us

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Speaker 3: in what we do. So, yes, a big influencer, but

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Speaker 3: they really support us.

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Speaker 1: So talking about your strategy and some of the Sheerzest

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Speaker 1: team actually attended your in person investeday where you did

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Speaker 1: a reveal of Destination twenty thirty plan, which is around

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Speaker 1: growing revenues from where they are today to five hundred

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Speaker 1: and thirty million by twenty thirty. So what are the

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Speaker 1: shifts that you're making as a business and that plan

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Speaker 1: and how are they enabling that growth path towards that

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Speaker 1: half a billion number. It's a big number.

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Speaker 3: Yeah, so it's a big number. It's a big challenge,

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Speaker 3: but it's more than achievab lively. But what are the

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Speaker 3: big shifts? So I think there's four key shifts, but

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Speaker 3: it's underpinned by one thing. So customer first mindset. We

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Speaker 3: need to really put the customers at the heart of

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Speaker 3: everything we do. We need to understand our markets very clearly.

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Speaker 3: We need leading edge technology, so we need to develop

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Speaker 3: for the market, and we need high performing teams. So

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Speaker 3: those three things are those four things are really important

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Speaker 3: to us. But I think the biggest driver that we

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Speaker 3: have is changing from an engineering mindset to a customer

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Speaker 3: first mindset. Historically, Scott has been great at developing amazing

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Speaker 3: products and then we work out who we're going to

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Speaker 3: sell them to. What's the size of the market. We

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Speaker 3: need the market and our customers to drive our technology development.

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Speaker 3: So high performing teams innovation big things.

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Speaker 1: For us in each of your four domains. So let

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Speaker 1: me get the threat. You got the protein, the materials, handling, appliance,

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Speaker 1: and minerals mining. They've all got different growth potentials. And look,

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Speaker 1: we all have a favorite child. Let's be honest. Do

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Speaker 1: you have a favorite or which one are you picking

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Speaker 1: as going to be, you know, the key growth driver

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Speaker 1: or growth engine moving forward.

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Speaker 3: Well, I think I think my role is not to

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Speaker 3: have the favorite. My role is to look at the group.

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Speaker 3: Of course, there's areas that I'm probably more comfortable with

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Speaker 3: from my background, so material handling and logistics, But actually

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Speaker 3: I think that does push me towards learning the other

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Speaker 3: domains that we have. I think, you know, we have

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Speaker 3: great potential in the protein market. You will have seen

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Speaker 3: recently the significant appliance wins that we've had, and obviously

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Speaker 3: you know we have a very disruptive technology sitting here

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Speaker 3: behind us. So I like all of them, but Scott

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Speaker 3: Technology as the group is my focus.

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Speaker 1: You have acquired multiple brands to get to this point.

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Speaker 1: Is that the plan moving forward?

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Speaker 3: So within the organization, you know, you've always got an

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Speaker 3: element of organic growth, which is the five hundred and

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Speaker 3: thirty by year thirty, But all companies will look at

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Speaker 3: inorganic acquisition. So we will of course continue to look

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Speaker 3: outside and see whether there's anything that we can acquire

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Speaker 3: that is complementary to our business and obviously advances our customers.

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Speaker 3: So of course, yes, we will always keep an eye

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Speaker 3: on what we can possibly integrate.

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Speaker 1: When you're forming your strategy and your destination twenty thirty,

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Speaker 1: you're obviously thinking about challenges and risks that exist in

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Speaker 1: the market. What would you describe are those key challenges

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Speaker 1: and risks for Scott?

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Speaker 3: Yeah, I think the challenges that we've really seen over

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Speaker 3: the last couple of years are the decline since covid.

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Speaker 3: We've seen a reluctance to invest from some of our customers,

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Speaker 3: but I think that is now starting to change. So

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Speaker 3: that's one thing. And then I think the geopolitical situation

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Speaker 3: is a risk to us. It's an ever moving position

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Speaker 3: and we have to do our best with the footprint

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Speaker 3: that we have globally to manage that. So the customers

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Speaker 3: and the geopolitical situation.

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Speaker 1: M shifting to retail vistas. And you know, I'll frame

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Speaker 1: I'll be honest. The first time I heard and learned

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Speaker 1: about Scott Technology, my initial reaction was, there's not a

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Speaker 1: lot of people who know I have heard of Scott

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Speaker 1: Technology or know what you do, and it's quite a

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Speaker 1: vast and including myself, And so what why do you

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Speaker 1: think that is and what are there any plans to

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Speaker 1: change it?

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Speaker 3: So, yeah, I think it's a good point. I don't

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Speaker 3: think we've promoted ourselves enough in the past, but there's

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Speaker 3: probably a lot of things that people don't know. So

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Speaker 3: if you look at if you look at some of

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Speaker 3: the major key names in the white goods market, we

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Speaker 3: are the power behind those names. So we manufacture a

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Speaker 3: lot of equipment and a lot of product for sub

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Speaker 3: zero Medea, Bosh General Electric. So you might not see us,

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Speaker 3: but we probably have. You know, we probably are in

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Speaker 3: your kitchen somewhere. But yes, we've got to change. Is

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Speaker 3: that we've got to promote ourselves. We've got to lift

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Speaker 3: the Scott brand. We've got to market ourselves better. Will

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Speaker 3: would be a household name? I don't know, but we

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Speaker 3: certainly need to have much more of a presence and

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Speaker 3: with the stock market as well as our retail customers.

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Speaker 1: What do you think and Vista's looking at Scott potentially

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Speaker 1: ander appreciate or you think they should know about Scott.

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Speaker 3: I think we want investors to know our footprint, the

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Speaker 3: segments that we work in, some of the products that

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Speaker 3: we actually manufacture that you probably don't realize that we're there.

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Speaker 3: You know, you take protein as an example. Effectively, you

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Speaker 3: know from field to farm and to shop. You know,

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Speaker 3: we are part of that process. So I think, yeah,

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Speaker 3: that's our job to really to cascade that and make

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Speaker 3: that known in the market. I think that's going to

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Speaker 3: be our challenge going forward. We really need to can

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Speaker 3: we become a household name? I think we need to

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Speaker 3: push ourselves become a known name. Yeah.

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Speaker 1: Yeah. And closing what what is it that is exciting

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Speaker 1: you about that path four?

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Speaker 3: I think the thing that excites me is is we

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Speaker 3: have an exceptionally talented team of people globally. We have innovation.

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Speaker 3: We have a passion to improve. We've just got to

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Speaker 3: harness that. We've got to focus it in one direction.

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Speaker 3: It's got to be led and it's got to be

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Speaker 3: let free. So the excitement for me is the five

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Speaker 3: point thirty by thirty. Yeah, that's going to be a

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Speaker 3: hell of a challenge, but actually it's it's achievable, and

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Speaker 3: I think we can push the boundary and go even further. Yeah,

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Speaker 3: it's good to have ambitious skulls. Absolutely, we need to

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Speaker 3: have a goal. We need to have a goal for direction.

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Speaker 1: Yep. Well look, thank you very much for a hosting

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Speaker 1: us well and for our she Is E's she at

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Speaker 1: Lunched audience. It's been able to understand more about scott

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Speaker 1: technology and your growth plans. I found it really interesting

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Speaker 1: and I found it really worthwhile. So glad to be here.

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Speaker 3: Thank you very much.

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Speaker 1: M Serain stern Stan