Eagers Automotive Limited · ASX:APE
Eagers Automotive — FY2018 Earnings Presentation
35 slides from Eagers Automotive's earnings presentation, Feb 20, 2019
Slide 1: 2018 Full Year Results Presentation
2018 Full Year Results February 2019 Presentation 2018 Full Year Results Presentation 20/02/2019 1
Slide 2: 2018 Full Year Highlights
2018 Full Year Highlights A strong performance in challenging market conditions • Statutory profit before tax $133.7m, down 1% • Statutory profit after tax $101.2m, up 3% • Statutory (basic) EPS of 52.0 cents, a increase of 3% • Record full year dividend of 36.5 cents, up 1% • Record results from VI
Slide 3: National Vehicle Sales
National Vehicle Sales After three record years, 2018 saw a 3% decline in new vehicle sales Historical National Vehicle Sales 1,300,000 1,200,000 1,100,000 All Other Brands 1,000,000 Mercedes Benz Kia 900,000 Honda 800,000 Subaru 700,000 Volkswagen 600,000 Mitsubishi Nissan 500,000 Ford 400,000 Hyun
Slide 4: Australian New Vehicle Sales – 2018
Australian New Vehicle Sales – 2018 Total Australian Market Share by State • Total new vehicle market down 3.0% (VFACTS) ACT 2% • TAS up 3.3% WA 8% • NSW down 6.6%, NT down 4.7%, ACT down 1.9%, SA down 1.9%, VIC down 1.8% NSW 32% VIC 29% • QLD and WA remain static • Light commercial vehicle market s
Slide 5: APE Vehicle Sales - 2018
APE Vehicle Sales - 2018 APE New Vehicle Sales by State APE Used Vehicle Sales by State Total 59,663 -1.0% (5.2% of National Market) Total 24,118 +0.4% (est. 2.0% of National Market) 5% 2% 5% 10% 12% 20% 6% 5% 3% 4% 17% 28% 40% 43% Cars - NSW Cars - NT Cars - QLD Retail Cars - NSW Retail Cars - NT R
Slide 6: 2018 Full Year Highlights - Financial
2018 Full Year Highlights - Financial • Underlying(1) operating profit before tax of $125.7m, up 2% • Statutory (basic) EPS of 52.0 cents, an increase of 3% • Fully franked final dividend of 22.5 cents • Cash flow from operations of $89.0m, reduction on pcp due to higher tax payments and timing of n
Slide 7: Financial Summary
Financial Summary $ Million 2018 2017 Change Revenue 4,112.8 4,058.8 Up 1.3% EBITDA 173.5 176.7 Down -1.8% EBIT 160.3 160.2 Up 0.0% PBT 133.7 135.6 Down -1.4% PAT 101.2 98.2 Up 3.1% Cash from operating activities 89.0 145.0 Down -38.6% NTA/share 1.79 2.49 Down -28.1% Net gearing excluding bailment d
Slide 8: Balance Sheet - Summary
Balance Sheet - Summary 2018 • New vehicle inventory funded by bailment ($M) debt CA - CL (excl. held for sale) 103.8 • Parts and majority of used vehicle inventory is balance sheet funded Freehold Property (incl. held for sale) 331.7 Other Non Current Tangible Assets 84.5 • Increased investment in
Slide 9: Earnings Per Share
Earnings Per Share Statutory EPS increased by 3.4% year-on-year Earnings Per Share 56.0 (0.5) 2.7 54.0 cents 52.0 52.0 (0.1) (6.2) 2.5 2.4 50.3 50.0 0.9 0.0 FY17 Operational Restructuring Costs AHG Investment Profit on Sale Property SOH, Impairment, Tax Expense Dilution FY18 Result (net of interest)
Slide 10: Financial Summary – Cashflow Comparison
Financial Summary – Cashflow Comparison Cash Flow Bridge 200.0 (26.5) 150.0 (41.0) $ million 100.0 156.5 64.6 (70.2) (87.2) 50.0 22.3 (10.4) 18.9 10.8 0.0 Opening Cash Operating Cash Interest Paid Tax Paid Dividends incl DRP Capital Mgmt Proceeds from Debt (Repayment)/ Payments for assets Closing Ca
Slide 11: Financial Trends – Operating Margin
Financial Trends – Operating Margin Operating Margin Operating Earnings Margin % Linear (Operating Earnings Margin %) 5.0% 4.8% 4.6% 4.6% 4.5% 4.4% 4.5% 4.3% Percentage 4.1% 4.0% 4.1% 4.0% 4.0% 3.6% 3.5% 3.0% 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 * Operating Earnings is EBITDA Under
Slide 12: Financial Trends - EPS
Financial Trends - EPS EPS Statutory (Basic) June - first 6 months December - second 6 months 60.0 55.4 52.0 47.6 50.3 50.0 43.0 40.0 29.2 24.3 36.4 24.9 Government 34.0 23.1 stimulus Cents 30.0 24.3 24.4 25.5 18.2 17.7 21.0 20.0 13.0 13.4 10.4 26.2 27.7 24.5 25.4 10.0 18.2 18.7 16.3 11.0 10.6 12.5
Slide 13: Financial Trends – Dividend
Financial Trends – Dividend 10 consecutive years of dividend growth Dividend 40.0 36.0 36.5 Interim Dividend Final Dividend 35.0 35.0 32.0 30.0 27.0 25.0 22.5 22.5 23.0 22.0 Cents per Share 20.0 20.0 20.0 18.0 16.0 15.0 15.0 12.4 12.8 13.0 11.6 10.4 10.0 8.8 8.6 8.2 7.6 7.2 8.0 6.6 7.2 4.4 13.0 13.5
Slide 14: Segment Results
Segment Results Increase in return on net assets reflecting operational improvements Car retailing Segment Contributions Record results in VIC operations, QLD 2017 2018 performed well, SA and TAS stable, 160.0 challenging market conditions impacted NSW. Strong trading in parts and service 140.0 135.
Slide 15: Segment Results – Car Retailing
Segment Results – Car Retailing 2018 2017 ($M) ($M) • Segment Underlying profit before tax of $95.8m (excludes $0.3m of GST Revenue 3,670.6 3,661.6 refunds), up from $89.6m in 2016 (excludes $5.2m of one-off re- structuring costs) Segment Profit before Tax 95.8 84.4 • Record results for VIC dealersh
Slide 16: Segment Results – Truck Retailing
Segment Results – Truck Retailing 2018 2017 ($M) ($M) • Record results in 2018 reflecting management strength, efficient Revenue 428.0 381.7 business and favourable market conditions Segment Profit before Tax 10.9 9.0 • Segment represents 10.4% of revenue and 2.1% of net assets Total Assets 122.5 10
Slide 17: Segment Results – Property
Segment Results – Property 2018 2017 ($M) ($M) • Divestment of 2 properties in 2018 versus 5 properties in 2017, primary driver for Revenue 24.4 27.5 lower profit before tax on pcp Segment Profit before Tax 16.8 26.6 • Revaluation gain of $13.7m, including Revaluation surplus/deficit $2.4m through t
Slide 18: Segment Results – Investments
Segment Results – Investments 2018 2017 ($M) ($M) • Substantial asset balance Revenue 13.9 14.5 • Profit before tax excludes unrealised Segment Profit before Tax 10.3 14.5 revaluation loss on investments Revaluation surplus/deficit (181.4) (22.9) • Decline in returns due to reduced before tax divide
Slide 19: AHG Investment
AHG Investment 28.8% strategic investment in Automotive Holdings Group • 28.8% strategic investment in ASX listed Automotive Holdings Group – 95,632,358 shares owned (28.8%) valued at $149.2m at $1.56 (31/12/18) • Unrealised revaluation loss of $181.4m in investment segment – $1.56 (Dec18) v. $3.64
Slide 20: 2018 Full Year Highlights – Operational & Strategic
2018 Full Year Highlights – Operational & Strategic • New Risk Based Pricing (RBP) financing model implemented and performing well in response regulatory change – Provides highly transparent and ultra-competitive pricing with interest rates tailored to individual customer profiles – Early evidence o
Slide 21: Industry Risk Based Pricing – Focus on Penetration
Industry Risk Based Pricing – Focus on Penetration Achieving 80% penetration will significantly increase finance income on 2018 LFL vehicle sales • Penetration rates driven Key drivers of Penetration change - RBP / GFV / LRC by a combination of RBP arrangements; Penetration F&I Revenue Guaranteed Fu
Slide 22: Property Portfolio
Property Portfolio • Flexible land buildings portfolio – 40 Properties (QLD / NSW / VIC / SA) owned $332m (37%) – 175 Leased Properties nationwide approx. value $568m (63%) – Average lease expiry 2 years 8 months – (Adjusted to reflect $ value) Average lease expiry 3 years 3 months • AP Eagers well
Slide 23: BNE Auto Mall, Brisbane Airport
BNE Auto Mall, Brisbane Airport • Commenced design phase on automotive retailing and mobility hub at Brisbane Airport – Investment in world-class automotive retailing experience for our customers of the future – Executed agreement for 64,124 sqm of land at Brisbane Airport (BNE) Auto Mall – Key moto
Slide 24: BNE Auto Mall, Brisbane Airport
BNE Auto Mall, Brisbane Airport 2018 Full Year Results Presentation 20/02/2019 24
Slide 25: Newstead Property Portfolio
Newstead Property Portfolio • Proposed sale & leaseback of Newstead Property portfolio as part of the Company’s BNE Auto Mall strategy • Comprises 2.86 hectares of prime real estate, capitalising on attractive development opportunity 2018 Full Year Results Presentation 20/02/2019 25
Slide 26: Outlook and Strategy
Outlook and Strategy • Continue to outperform industry: solid foundations, disciplined approach, multi-profit drivers • Grow EPS from (2016 & 2017) acquisitions inline with historic trends • Implement new Risk Based Pricing (RBP) finance models from our multiple financiers • Through superior process
Slide 27: Disclaimer
Disclaimer • The information in this document (information) does not contain all information necessary for investment decisions, is not intended to be an offer, invitation or recommendation with respect to shares, is not financial product advice, and is intended to be general background information
Slide 28: Appendix
Appendix 2018 Full Year Results Presentation 20/02/2019 28
Slide 29: A.P. Eagers Company Profile
A.P. Eagers COMPANY PROFILE 2018 Full Year Results Presentation 20/02/2019 29
Slide 30: AP Eagers Today (December 2018)
AP Eagers Today (December 2018) • 106 year old automotive retail group founded in 1913 (January 2019) • 62 years as a listed public company – dividend paid every year • A.P. Eagers owns $332m of prime real estate • Represents all 19 of the top 20 selling vehicle brands in Australia and 27 car brands
Slide 31: AP Eagers Volume Car Brands
AP Eagers Volume Car Brands Represents the top 10 selling volume car brands in Australia 2018 Full Year Results Presentation 20/02/2019 31
Slide 32: AP Eagers Luxury Car Brands
AP Eagers Luxury* Car Brands Represents 9 of the top 10 selling luxury car brands in Australia * Luxury is defined as luxury vehicle selling more than 500 units annually (V Facts) 2018 Full Year Results Presentation 20/02/2019 32
Slide 33: AP Eagers Truck and Bus Brands
AP Eagers Truck and Bus Brands Representing 10 truck and bus brands 2018 Full Year Results Presentation 20/02/2019 33
Slide 34: Revenue by State / % of group Revenue
Revenue by State / % of group Revenue AP Eagers $4.11 billion revenue $0.16bn (4%) $1.78bn (43%) $0.0bn $0.74bn (18%) $0.76bn (18%) $0.48bn (12%) $0.20bn (5%) 2018 Full Year Results Presentation 20/02/2019 34
Slide 35: Income Opportunity Franchised Dealership
Income Opportunity Franchised Dealership NEW CAR SALES: + Accessories + Finance + Insurance + Car Care + Trade-In USED CAR SALES: + Accessories + Finance + Insurance + Car Care + Trade-In VEHICLE SERVICE: - Value add products i.e. Tyres, wheel alignments, batteries, wiper blades. VEHICLE REPAIR: - W