Freightways Group Limited · NZX:FRW
Freightways — Shareholder Meeting (October 2019)
50 slides from Freightways's shareholder meeting presentation, Oct 31, 2019
Slide 1: Annual Shareholders Meeting
ANNUAL SHAREHOLDERS MEETING 31 October 2019
Slide 2: A Heritage That Started in 1964
A HERITAGE THAT STARTED IN 1964
Slide 3: Chairman: Mark Verbiest
Mark Verbiest CHAIRMAN 3 © Freightways 2019
Slide 4: Agenda
AGENDA 1. CHAIRMAN’S INTRODUCTION 2. CEO’S REVIEW & TRADING UPDATE 3. RESOLUTIONS 4 © Freightways 2019
Slide 5: General Highlights
1. CHAIRMAN’S INTRODUCTION GENERAL HIGHLIGHTS 5 © Freightways 2019
Slide 6: Highlights: Express Package & Business Mail
1. CHAIRMAN’S INTRODUCTION HIGHLIGHTS EXPRESS PACKAGE & BUSINESS MAIL • Overall year-on-year revenue, earnings and dividend growth • Completed a number of business-critical IT projects to enable our new Pricing For Effort initiative for residential deliveries • Improved route density, in residential
Slide 7: Highlights: Information Management
1. CHAIRMAN’S INTRODUCTION HIGHLIGHTS INFORMATION MANAGEMENT • Improved utilisation in our Australian document storage footprint by 10% (from 61% to 67%). While this was short of our goal of 70%, it reflected a strong step forward in generating improved returns in our document storage business • The
Slide 8: Financial Highlights
1. CHAIRMAN’S INTRODUCTION FINANCIAL HIGHLIGHTS NOTES FY19 FY18 Increase Note (i) Operating profit before interest, tax and $M $M % amortisation, before non-recurring items (ii) Operating profit before interest, tax and Revenue 615.7 580.9 6.0 amortisation (iii) Net profit after tax (NPAT), before n
Slide 9: Express Package & Business Mail
1. CHAIRMAN’S INTRODUCTION EXPRESS PACKAGE & BUSINESS MAIL FY19 FY18 Change $M $M % Operating Revenue 453.0 428.8 5.6 EBITDA 80.0 74.8 6.9 EBITA 72.2 67.9 6.3 EBITA Margin 15.9% 15.8% 9 © Freightways 2019
Slide 10: Information Management
1. CHAIRMAN’S INTRODUCTION INFORMATION MANAGEMENT FY19* FY18* Change $M $M % Operating Revenue 164.5 153.8 6.9 EBITDA* 35.3 35.4 (0.1) EBITA* 29.3 29.8 (1.9) EBITA Margin* 17.8% 19.4% NOTES * Excluding non-recurring items 10 © Freightways 2019
Slide 11: Dividend
1. CHAIRMAN’S INTRODUCTION DIVIDEND • FINAL DIVIDEND: 15.5 cps • IMPUTATION CREDITS: 6.0278 cps (fully imputed at 28% tax rate) • SUPPLEMENTARY DIVIDEND: 2.7353 cps • RECORD DATE: 13 September 2019 • PAYMENT DATE: 1 October 2019 • NO DRP WAS OFFERED IN RESPECT OF THIS DIVIDEND 11 © Freightways 2019
Slide 12: Dividend Payment History
1. CHAIRMAN’S INTRODUCTION DIVIDEND PAYMENT HISTORY YEARS ENDED 30 JUNE 12 © Freightways 2019
Slide 13: Freightways Acquires Big Chill Distribution
FREIGHTWAYS ACQUIRES BIG CHILL DISTRIBUTION • Announced acquisition, subject to OIO approval • Market leader in temperature-controlled express freight • Aligns with FRE core capabilities – Pick up, Process, Deliver 13 © Freightways 2019
Slide 14: Corporate Governance
1. CHAIRMAN’S INTRODUCTION CORPORATE GOVERNANCE • Compliance with the NZX Corporate Governance Code • 2019 annual report expands on Freightways’ strategy and a range of ESG initiatives • Sustained strong cash generation from both divisions, leading to reduced debt gearing levels 14 © Freightways 201
Slide 15: CEO: Mark Troughear
Mark Troughear CEO 15 © Freightways 2019
Slide 16: Agenda
AGENDA • BUSINESS STRATEGY • ACQUISITION ACTIVITY • ESG INITIATIVES • TRADING UPDATE • OUTLOOK 16 © Freightways 2019
Slide 17: Proven, Market-Leading Brands
2. CEO’S REVIEW & TRADING UPDATE PROVEN, MARKET-LEADING BRANDS New Zealand Couriers DX Mail TIMG Australia & Shred-X Post Haste Couriers Dataprint New Zealand Med-X Castle Parcels TIMG NZ NOW Couriers SUB60 Kiwi Express Security Express 17 © Freightways 2019
Slide 18: Express Package & Business Mail
2. CEO’S REVIEW & TRADING UPDATE EXPRESS PACKAGE & BUSINESS MAIL 18 © Freightways 2019
Slide 19: Looking Ahead: Express Package
2. CEO’S REVIEW & TRADING UPDATE LOOKING AHEAD: EXPRESS PACKAGE 1. Continue to drive the industry standard for contractor earnings, service quality and productivity 2. Improve revenue and margin per item through Pricing for Effort and improved revenue capture 3. Utilise technology to improve visibil
Slide 20: PFE Residential Average Pricing
2. CEO’S REVIEW & TRADING UPDATE PFE RESIDENTIAL AVERAGE PRICING 20 © Freightways 2019
Slide 21: Looking Ahead: Business Mail
2. CEO’S REVIEW & TRADING UPDATE LOOKING AHEAD: BUSINESS MAIL 1. Continue to target customers that require superiorservice levels 2. Provide a bundled digital & physical mail delivery service 3. Improve productivity by 5% through the postie network 4. Retention of our volume post customers despite N
Slide 22: Information Management
2. CEO’S REVIEW & TRADING UPDATE INFORMATION MANAGEMENT 22 © Freightways 2019
Slide 23: Looking Ahead: Information Management
2. CEO’S REVIEW & TRADING UPDATE LOOKING AHEAD: INFORMATION MANAGEMENT 1. Improve margins in AU by improving the utilisation of our facilities by 20% over the next 2 years 2. Exploit our digitalisation capability in NZ and AU to target scale opportunities 3. Develop new services to market to our lar
Slide 24: Secure Destruction
2. CEO’S REVIEW & TRADING UPDATE SECURE DESTRUCTION 24 © Freightways 2019
Slide 25: Looking Ahead: Secure Destruction
2. CEO’S REVIEW & TRADING UPDATE LOOKING AHEAD: SECURE DESTRUCTION 1. Continue to add density to our networks through market share and bolt-on acquisitions 2. Develop new lines of business which share common capability: Product and eDestruction 3. Improve our ability to quickly integrate acquisition
Slide 26: Acquisitions & Alliances
2. CEO’S REVIEW & TRADING UPDATE ACQUISITIONS & ALLIANCES FY19 FY20 YTD SSS Destruction Green Team Secure Destruction • Sustained strong cash generation from (WA)both divisions, leading to reduced debt gearing levels (SA) Country Hygiene Medical Waste - (NSW) Formfile Records Storage - (VIC) Back On
Slide 27: Overview of Big Chill Distribution
2. CEO’S REVIEW & TRADING UPDATE OVERVIEW OF BIG CHILL DISTRIBUTION 27 © Freightways 2019
Slide 28: Market Leading Operator
2. CEO’S REVIEW & TRADING UPDATE MARKET LEADING OPERATOR Big Chill is New Zealand’s leading temperature-controlled transport operator 200+ 2million 11,000sqm Chiller / freezer truck Shipments in 2018 Purpose-built depots and trailer fleet1 over 9 sites nationwide, growing 3PL facilities Highly exper
Slide 29: Growth Opportunities
2. CEO’S REVIEW & TRADING UPDATE GROWTH OPPORTUNITIES • Expansion of Auckland facility to 9,300 pallets to be Auckland expansion completed in March 2020 in response to customer Cold 3PL demand expansion • Favourable supply-demand imbalance in the current temperature-controlled 3PL market • Stron
Slide 30: Financial Overview & Transaction Funding
2. CEO’S REVIEW & TRADING UPDATE FINANCIAL OVERVIEW & TRANSACTION FUNDING • Initial purchase price payment in cash of $117m for 100% of Big Chill, representing 80% of Big Chill’s enterprise value (EV), adjusted for completion adjustments, and a final payment later in 2022 • To be funded through exis
Slide 31: ESG Initiatives
2. CEO’S REVIEW & TRADING UPDATE ESG INITIATIVES SDG 3 Good health and well-being SDG 8 Decent work and economic growth SDG 9 Industry, innovation and infrastructure SDG 13 Climate action SDG 16 Peace, justice and strong institutions 31 © Freightways 2019
Slide 32: ESG Initiatives: Decent Work and Economic Growth
2. CEO’S REVIEW & TRADING UPDATE ESG INITIATIVES SDG 8 – DECENT WORK AND ECONOMIC GROWTH Driven a 7% increase in average contractor earnings to $103.5k per annum Maintained wage rates above minimum wage for FRE employees Put 216 of our team through personal improvement training to assist them develo
Slide 33: ESG Initiatives: Good Health and Well-being
2. CEO’S REVIEW & TRADING UPDATE ESG INITIATIVES SDG 3 - Good health and well-being Established a companywide physical and mental health well-being campaign to engage staff and contractors across NZ and AU Lead partner for KidsCan Shoes for Kids programme 33 © Freightways 2019
Slide 34: ESG Initiatives: Climate Action
2. CEO’S REVIEW & TRADING UPDATE ESG INITIATIVES SDG 13 – CLIMATE ACTION Implementation of run intensification programme and fleet modernisation has assisted in achieving a further reduction of in Co2 emissions Emissions per revenue unit have decreased by 5% Actively reviewing new technology vs the
Slide 35: Q1 Trading Update
2. CEO’S REVIEW & TRADING UPDATE Q1 TRADING UPDATE 35 © Freightways 2019
Slide 36: First Quarter Consolidated Performance
2. CEO’S REVIEW & TRADING UPDATE FIRST QUARTER CONSOLIDATED PERFORMANCE Quarter ended: (unaudited) NOTES Underlying results (pre-leasing) (i) Operating profit before interest, tax, depreciation and amortisation (ii) Operating profit before interest, tax and amortisation Q1 FY20 Remove Q1 FY20 Q1 FY1
Slide 37: Q1 Express Package & Business Mail
2. CEO’S REVIEW & TRADING UPDATE Q1 EXPRESS PACKAGE & BUSINESS MAIL * Unaudited and excludes new lease accounting Q1 FY20 Q1 FY19 OPERATING REVENUE $116m $114m EBITDA $20m $19m EBITA $18m $18m EBITA MARGIN 15.2% 15.4% 37 © Freightways 2019
Slide 38: Q1 Express Package & Business Mail Commentary
2. CEO’S REVIEW & TRADING UPDATE Q1 EXPRESS PACKAGE & BUSINESS MAIL COMMENTARY 1. EP&BM incurred significant aircraft disruptions in Q1, with two 737’s offline with maintenance requirements, resulting in an additional $0.75m in costs incurred. All three aircraft are back in service as of Q2. 2. Prev
Slide 39: Organic Growth Trend
2. CEO’S REVIEW & TRADING UPDATE ORGANIC GROWTH TREND 3.0 2.5 2.0 1.5 1.0 0.5 0.0 FY19 Q1 FY19 Q2 FY19 Q3 FY19 Q4 FY20 Q1 -0.5 -1.0 -1.5 -2.0 39 © Freightways 2019
Slide 40: Q1 Information Management
2. CEO’S REVIEW & TRADING UPDATE Q1 INFORMATION MANAGEMENT * Unaudited and excludes new lease accounting Q1 FY20 Q1 FY19 OPERATING REVENUE $42m $42m EBITDA $8m $9m EBITA $6m $8m EBITA MARGIN 14.3% 18.7% 40 © Freightways 2019
Slide 41: Q1 Information Management Commentary
2. CEO’S REVIEW & TRADING UPDATE Q1 INFORMAITON MANAGEMENT COMMENTARY 1. Shred-X relocated its NSW facility in Q1, incurring $0.4m in relocation costs 2. TIMG AU incurred equipment and labour cost to scale up for a digitalisation project expected to commence in Q2 3. Print and copy services performa
Slide 42: Outlook
2. CEO’S REVIEW & TRADING UPDATE OUTLOOK 42 © Freightways 2019
Slide 43: Outlook
2. CEO’S REVIEW & TRADING UPDATE OUTLOOK • Incremental growth in Pricing For Effort returns through FY20, from $0.55c to $0.75c per residential item by year end • We would expect to see improving organic trade from EP customers through Q2, slowly improving in the second half of the financial year •
Slide 44: Resolutions
RESOLUTIONS 44 © Freightways 2019
Slide 45: Resolutions
2. RESOLUTIONS 1. Re-election of Director: Kim Ellis 2. Re-election of Director: Mark Verbiest 3. Approval of Directors’ fees 4. Authority to fix Auditor’s remuneration 5. Approval of amended Constitution 45 © Freightways 2019
Slide 46: Re-election of Director Kim Ellis
2. RESOLUTIONS Re-election of Director Kim Ellis 46 © Freightways 2019
Slide 47: Re-election of Director Mark Verbiest
2. RESOLUTIONS Re-election of Director Mark Verbiest 47 © Freightways 2019
Slide 48: Resolutions
2. RESOLUTIONS 1. Re-election of Director: Kim Ellis 2. Re-election of Director: Mark Verbiest 3. Approval of Directors’ fees 4. Authority to fix Auditor’s remuneration 5. Approval of amended Constitution 48 © Freightways 2019
Slide 49: Thank You
THANK YOU Disclaimer. This presentation has been prepared by Freightways Limited ("Freightways") for information purposes only. This presentation is not a product disclosure statement, prospectus or investment statement. Nothing in this presentation constitutes an invitation to subscribe for shares,
Slide 50: Annual Shareholders Meeting
ANNUAL SHAREHOLDERS MEETING 31 October 2019
Freightways Group — Shareholder Meeting (October 2019) on 6ix