Temple & Webster Group Ltd · ASX:TPW
Temple & Webster — H1 FY2018 Earnings Presentation
29 slides from Temple & Webster's earnings presentation, Feb 20, 2018
Slide 1: H1 FY18 Results
H1 FY18 Results Mark Coulter CEO Mark Tayler CFO Page 1
Slide 2: Contents
Contents CEO Update Page 3 - 14 FY18 H1 Financial Results Page 15 - 20 Strategy & Outlook Page 21 – 26 Q&A Page 2
Slide 3: CEO Update
CEO Update Mark Coulter CEO Pg 26 Page 3
Slide 4: H1 FY18 Highlights: Phase 1 of the turnaround is complete
H1 FY18 Highlights: Phase 1 of the turnaround is complete • H1 Net Loss After Tax & EBITDA improved by 84% H1 Financial Performance • Near break-even Q2 (EBITDA loss of $150k) • H1 Revenue of $34.4m • H1 Cash Flow positive with closing cash of $8.8m • All businesses successfully integrated, maintain
Slide 5: H1 FY18 Financial Highlights: H1 loss improved by 84%
H1 FY18 Financial Highlights: H1 loss improved by 84% Bottom line improvements have been driven by margin growth and cost base initiatives, while maintaining revenue base. Business now has a strong platform from which to grow. H1 Net Loss H1 Revenue H1 Gross Margin Operating Costs ($ million) ($ mil
Slide 6: Growth platform in place: We are still the online market leader
Growth platform in place: We are still the online market leader Page impressions (MONTHLY) Active customers (LTM) 11m+ ~175k Website users (MONTHLY) Product listings 1.1m ~130k Email subscribers (WEEKLY) Sub-categories 1.4m+ ~200 Social media reach Average time to dispatch ~400k ~2 days Source: All
Slide 7: Growth platform in place: Improved margins and cost base show a clear path to profitability
Growth platform in place: Our improved margins and cost base show a clear path to profitability FY16 FY17 H1FY18 Revenue 100% 100% 100% Gross Margin 39.9% 42.7% 44.2% Delivered Margin (after all 21.7% 27.6% 30.8% distribution costs) Customer Service & Merchant 4.9% 4.7% 3.2% Fees Marketing 19.4% 12.
Slide 8: Growth platform in place: The business is now re-entering a growth phase
Growth platform in place: The business is now re-entering a growth phase Phase 3: 2019+ Phase 2: 2018 • Accelerate top-line growth • Reach profitability within • Invest in marketing and existing cash reserves adjacent growth plays • Focus on growth of core • Look at organic and inorganic Phase 1: Co
Slide 9: Award winning offer: Our strategy is based on range, inspiration and service
Award winning offer: Our strategy is based on range, inspiration and service Our Core Belief • We believe everyone wants to live more beautifully. Our Vision • Our vision is to make the world more beautiful, one room at a time. • Our mission is to deliver beautiful solutions for our customers’ homes
Slide 10: Award winning offer: Customer satisfaction is at record levels
Award winning offer: Customer satisfaction is at record levels NPS Improvement: ↑ 30% Net Promoter Score (score range: -100% to 100%) ▪ Australia’s leading independent review site ▪ Awards based on highest customer satisfaction 60.00% ▪ Number 1 out of 346 Home & Garden Shops in 2017 50.00% ▪ Averag
Slide 11: Growing customer base: Active customers are growing
Growing customer base: Active customers are growing, driven by repeat and first time customer growth ↑13% Active Customers Repeat and First Time Orders 180,000 170,000 45,000 160,000 40,000 35,000 150,000 30,000 140,000 25,000 20,000 130,000 15,000 10,000 120,000 5,000 0 110,000 4Q16 1Q17 2Q17 3Q17
Slide 12: Growing customer base: Revenue per Active Customer & Conversion rate increasing
Growing customer base: Revenue per Active Customer & Conversion rate is increasing, while customers are profitable in Year 1 Revenue per Active Customer1 ($) Conversion Rate2 Year 1 Marketing ROI 2.30% $400.00 2.10% 112 $350.00 1.90% 1.70% $300.00 1.50% 58 1.30% $250.00 1.10% 0.90% $200.00 0.70% $15
Slide 13: Growing customer base: Trade & Commercial accounts and orders growing strongly
Growing customer base: Trade & Commercial accounts and orders are growing strongly ↑13% Number of Trade & Commercial Accounts Repeat and First Time Orders 8,150 1,200 7,150 Trade & 1,000 Commercial 6,150 800 accounts have 5,150 high repeat rates. 600 Next phase is 4,150 investment in 3,150 400 new c
Slide 14: H1 FY18 Key Launches: We continue to innovate our offering
H1 FY18 Key Launches: We continue to innovate our offering Page 14
Slide 15: FY18 H1 Financial Results
FY18 H1 Financial Results Mark Tayler CFO Page 15
Slide 16: Profit and loss
Profit and loss A$m FY16 FY17 H1FY17 H1FY18 • EBITDA loss of $0.8m vs a loss of $4.9m last year, an improvement of Revenue 61.7 64.5 34.0 34.4 84% YoY Cost of Sales (37.0) (37.0) (19.7) (19.2) Gross Margin 24.6 27.5 14.3 15.2 • Gross margin up 2.1 percentage points with delivered margin (after Gross
Slide 17: Operating costs and margin levels improving as we scale
Operating costs and margin levels improving as we scale Gross Margin % Operating Costs to Sales % 45% 65% 43% 41% 55% 39% 45% 37% 35% 35% H1 FY16 H2 FY16 H1 FY17 H2 FY17 H1 FY18 H1 FY16 H2 FY16 H1 FY17 H2 FY17 H1 FY18 • Increases in gross margins have been predominately driven by • Wages are 17% low
Slide 18: The group is nearing profitability
The group is nearing profitability EBITDA $000 H1 FY16 H2 FY16 H1 FY17 H2 FY17 H1 FY18 - (2,000) (4,000) (6,000) (8,000) • As a result of revenue growth, improved margins and a lower cost base, the EBITDA position continues to improve as the Group pushes towards profitability EBITDA is a non-IFRS me
Slide 19: Balance sheet & cash flow
Balance sheet & cash flow A$m 31-Dec-17 Cash & Cash Equivalents 8.8 • Strong balance sheet position with no debt Inventories 2.0 Other current assets 1.2 • Cash balance stabilised between $8m-$9m Intangibles, (inc. goodwill) 7.6 over the past 4 quarters with H1FY18 cash flow PPE 0.2 positive Total A
Slide 20: Inventory metrics continue to improve
Inventory metrics continue to improve Average inventory Weeks of cover Ageing profile 22 3,000,000 25% 20 2,500,000 18 20% 2,000,000 16 15% 14 1,500,000 12 10% 1,000,000 10 500,000 5% 8 0 6 0% H1 FY16 H2FY16 H1 FY17 H2FY17 H1 FY18 H1 FY16 H2FY16 H1 FY17 H2FY17 H1 FY18 H1 FY16 H2FY16 H1 FY17 H2FY17 H
Slide 21: Strategy & Outlook
Strategy & Outlook Page 21
Slide 22: Our core category is a $12.9 billion market, with only ~4% online
Our core furniture and homewares category is a $12.9 billion dollar market, with only ~4% migrated online Furniture and Homewares Market (AUS) Furniture and homewares online penetration rates by country from CY12 to CY16. Total 16% 15.1% A$12.9b 13.6% 14% 12.9% 11.7% 11.5% 12% 10.5% 10.0% 9.5% 10% 8
Slide 23: Demographic and structural changes will drive strong market growth
Demographic and structural changes will drive strong market growth for years to come 1 Millennials are now entering our core demographic 2 Structural changes in our favour Hypothetical distribution of homewares • New logistics entrants and furniture spend by age eg. SingPost, Japan Post • Faster int
Slide 24: Our plan to grow our market leadership in online furniture and homewares
Our plan to grow our market leadership in the online furniture and homewares market Add depth and Leverage scale to Increase brand breadth across our core obtain cost advantage awareness through categories, expand and exclusivity on new digital and non-digital private label offering product ranges c
Slide 25: We are setting the business up for future growth horizons
We are setting the business up for future growth horizons Offline New business Addressable Office furniture & Adjacent lines, new markets furniture & homewares Categories geographies Online fitout (retail) furniture & ~$12.4b homewares ~$0.5b Maintain and Accelerate Continue to Broaden current Trial
Slide 26: Outlook
Outlook This calendar year has started well, with trading from 1 Jan to 15 Feb (unaudited) showing year on year revenue growth of 21%. The Company remains confident that the current trajectory will deliver our plan of reaching profitability during CY18, with FY19 being the first full year of profit.
Slide 27: Q&A
Q&A Page 27
Slide 28: Disclaimer
Disclaimer This presentation (Document) has been prepared by Temple & Webster Group Limited ACN 608 595 660 (T&W Group or the Company). This Document is a presentation to provide background information on the Company and its subsidiaries and is not an offer or invitation or recommendation to subscri
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Temple & Webster Group — H1 FY2018 Earnings Presentation on 6ix