Pinewood Technologies Group Plc · LSE:PINE
Pinewood Technologies — Pendragon — H1 2021 Earnings Presentation
41 slides from Pinewood Technologies's earnings presentation, Sep 15, 2021
Slide 1: Pendragon PLC 2021 Interim Results
PENDRAGON PLC 2021 INTERIM RESULTS 15TH SEPTEMBER 2021
Slide 2: Agenda
Agenda 1. Introduction Bill Berman 2. H1 2021 performance overview & divisional highlights Bill Berman 3. Group strategy update Bill Berman 4. Financial review Mark Willis 5. Guidance & outlook Mark Willis 2
Slide 3: H1 2021 performance overview
H1 2021 performance overview 3
Slide 4: H1 2021 Performance Overview
H1 2021 Performance Overview • Impact of enforced store closures in Q1 minimised by adapted customer proposition and right-sized cost base; >40,000 cars delivered in Q1 Operating • In Q2, the Group has benefitted from its supply chain sourcing advantages and capitalised on Highlights strong market c
Slide 5: Divisional operating highlights
Divisional operating highlights 5
Slide 6: Franchised UK Motor
Franchised UK Motor • Revenue up 56.9% to £1,673.8m (64.6% on a like-for-like basis), with a strong recovery vs the initial impact of the pandemic in H1 FY20 • Market outperformance in both new and used vehicles Franchised UK Motor • Gross margin of 10.9%, up from 10.2% in H1 FY20 o Used gross margi
Slide 7: Pinewood
Pinewood • Revenue up 12.0% to £12.1m • Operating profit up 13.6% to £6.7m (H1 FY20: £5.9m) Software – • 14% increase in international users Pinewood • Further investment in development capability • Multiple product developments to enable: • Enhanced group digital capabilities • Ability to sell fina
Slide 8: Car Store
Car Store • Revenue up 53.1% to £66.0m on a total basis (54.2% on a like-for-like basis) Car Store • Used gross margin rate of 8.0% (H1 FY20: 6.7%) • Underlying operating profit of £0.3m (H1 FY20: loss of £(1.7)m) • Positively contributing to Group result • Excellent progress made on development of
Slide 9: Leasing
Leasing • Revenue up 31.7% to £49.0m • 90% year on year increase in de-fleeted vehicle disposals following pandemic disruption in H1 FY20 Leasing • High margin on disposals, market conditions benefitting historic contracts • Operating profit up 72.3% to £8.1m (H1 FY20: £4.7m) 9
Slide 10: US Motor
US Motor US Motor • Disposal of final US Motor assets completed in H1 FY21 • Total proceeds of £106.0m before tax received since 2018 10
Slide 11: Group Strategy update
Group Strategy update 11
Slide 12: Recap: Vision & strategy
Recap: Vision & strategy “Transform automotive retail through digital innovation and operational excellence” 1. Unlock value in 2. Grow and diversify 3. Disrupt standalone used Franchised UK Motor Pinewood cars • Accelerate digital • Digital product extension • Re-brand innovation • Deliver material
Slide 13: Pendragon's advantages
Pendragon’s advantages 1. Unlock value in 2. Grow and diversify 3. Disrupt standalone Franchised UK Motor Pinewood used cars Strategic priorities • Leaner cost base & improved efficiency • Advanced digital • Vertically integrated assets • Intragroup supply scale for capabilities and capabilities Pen
Slide 14: Financial performance & targets
Financial performance & targets Transformative plan to restore Delivered from an improved cost Targeting a c.2% underlying PBT Capital expenditure averaging and improve underlying base following FY20 margin by 2025 c.£45m p.a. from 2021 – 2025 profitability restructuring Underlying PBT Performance,
Slide 15: Delivery progress
Delivery progress a) Progressed b) In development c) Future • 16 initiatives • 11 initiatives 1. Unlock value in • 7 initiatives • Omnichannel strength • Acquisition, management & Franchised UK • F&I upside • Warranty enhancements pricing platform Motor • Aftersales • Cost efficiencies • Preparation
Slide 16: 1. Unlock value in Franchised UK Motor: Progressed
1. Unlock value in Franchised UK Motor a) Progressed • Omnichannel strength: ― All websites transactional ― Automated, and real-time, online finance application & approval payment functionality 1. Accelerate ― Insurance products (regulated & non-regulated) online digital ― Sales+: consistent & compl
Slide 17: 1. Unlock value in Franchised UK Motor: Progressed
1. Unlock value in Franchised UK Motor a) Progressed • Warranty enhancements: ― Introduced a three-year product 2. Drive ― Pricing & proposition revision for existing one and two-year operational products excellence & ― Operational structure changed to drive focus best practice • Trade vehicle optim
Slide 18: 1. Unlock value in Franchised UK Motor: In development
1. Unlock value in Franchised UK Motor b) In development • Vehicle acquisition, management & pricing platform: ― Group-wide platform to drive metal margin & inventory turn ― PX / SYC use case in development addressing multiple areas of opportunity ― Data trials underway 1. Accelerate digital • Strat
Slide 19: 1. Unlock value in Franchised UK Motor: In development
1. Unlock value in Franchised UK Motor b) In development • Improving preparation speed / quality, and rectification spend, by process & procedure revision 2. Drive • Maximising vehicle health check conversion operational excellence & • Transitioning from a single warranty product to tailored and tie
Slide 20: 2. Grow and diversify Pinewood
2. Grow and diversify Pinewood • Pinewood development has enabled the Group with the following omnichannel capabilities: 1. Digital product ― Platform migration extension ― Payment online ― Finance & insurance online (Progressed) ― Sales+ ― Digital payments • The team at Pinewood are working on the
Slide 21: 2. Grow and diversify Pinewood
2. Grow and diversify Pinewood b) In development • International user growth of 14%, challenged by pandemic restrictions Standalone • BMW UK recently awarded Pinewood certified status for its DMS objectives and wider applications • Pinewood is now one of two global partners to support BMW’s Retail I
Slide 22: 3. Disrupt standalone used cars
3. Disrupt standalone used cars b) In development • New vision & brand launch late Q4 / early Q1 1. Re-brand • Brand values / behaviours progressing well • New look & feel to website and additional functionality • Clear propositions across buying; selling; and, aftersales to include: ― Group stock a
Slide 23: Summary
Summary • Delighted with the further progress we have made during the first-half • Cross-functional team continues to maintain a high pace of change Excellent progress & • Remain confident in the opportunity that our strategy provides, and how we are positioned upside in the evolving consumer and co
Slide 24: Financial review
Financial review 24
Slide 25: Key metrics: HY21
Key metrics: HY21 Gross profit Gross Underlying Underlying profit / Bank net Revenue operating (loss) before tax cash / (debt) margin % costs £1,815.6m £211.2m H1 2021 11.6% £159.3m £35.1m £9.5m (150 stores) +49.0% vs HY20 +56.1% vs HY20 (+62.6% LFL) (+70.2% LFL) H1 2020 11.1% £1,218.3m £135.3m £146
Slide 26: Financial summary: Income statement
Financial summary: Income statement Income Statement (£m) • Revenue increase of 49.0% ― Like for like revenue increase of 62.6% H1 2021 H1 2020 % Change ― Outperformed New & Used markets Revenue 1,815.6 1,218.3 +49.0% • Strong gross margins ― Improved margins in new, used and aftersales Gross Profit
Slide 27: Financial performance by quarter
Financial performance by quarter Underlying PBT by Quarter & Half Year, 2020 vs. 2021 £m 35.1 FY20 FY21 24.3 10.8 (2.3) (28.7) (31.0) Q1 Q2 Half Year • Changes to operating model allowed Q1 performance to be £13.1m ahead of FY20, despite lock-down impact: ― Over 40,000 cars delivered whilst showroom
Slide 28: Financial summary: Cashflow
Financial summary: Cashflow Summary Cashflow (£m) H1 2021 H1 2020 • Net debt reduction of £109.9m vs FY20 Underlying Operating Profit / (Loss) 51.9 (10.8) • £114.8m cash generated from operations Depreciation and Amortisation 19.1 22.2 o Strong trading driving cash inflows Share Based Payments 1.4 0
Slide 29: Financial summary: Balance sheet
Financial summary: Balance sheet Balance Sheet (£m) • Reduction in property Jun-21 Dec-20 Jun-20 ― Disposal of excess property together with depreciation ― Partially offset by capital investments Property 219.4 222.8 230.7 Plant & Equipment 178.8 204.0 215.5 • Plant and equipment reduction from disp
Slide 30: Summary & outlook
Summary & outlook 30
Slide 31: H2 Guidance & Outlook
H2 Guidance & Outlook • Capital expenditure expected to be H2 weighted. Further c.£20m expected in FY21 • £60m VAT timing benefit unwind during H2 • Shortfalls in new car supply from the ongoing impact of micro-chip shortages • Uncertainty over timing of normalisation in used car margins • Possibili
Slide 32: Appendix – Divisional financial summary
Appendix – Divisional financial summary 32
Slide 33: Franchised UK Motor
Franchised UK Motor Franchised UK Motor (£m) % Change H1 2021 H1 2020 % Change LFL Revenue 1,673.8 1,067.1 56.9% 64.6% Gross Profit 182.3 108.9 67.4% 75.0% Operating Costs (144.7) (127.0) -13.9% -24.2% Operating Profit 37.6 (18.1) n/a n/a Gross Margin % 10.9% 10.2% 0.7% 0.6% Operating Margin % 2.2%
Slide 34: Software - Pinewood
Software - Pinewood Software - Pinewood (£m) H1 2021 H1 2020 % Change Revenue 12.1 10.8 12.0% Gross Profit 11.2 9.9 13.1% Operating Costs (4.5) (4.0) -12.5% Operating Loss 6.7 5.9 13.6% Gross Margin % 92.6% 91.7% 0.9% Operating Margin % 55.4% 54.6% 0.7% 34
Slide 35: Car Store
Car Store Car Store (£m) % Change H1 2021 H1 2020 % Change LFL Revenue 66.0 43.1 53.1% 54.2% Gross Profit 5.3 2.9 82.8% 76.7% Operating Costs (5.0) (4.6) -8.7% -11.1% Operating Loss 0.3 (1.7) n/a n/a Gross Margin % 8.0% 6.7% 1.3% 1.0% Operating Margin % 0.5% -3.9% 4.4% 4.0% 35
Slide 36: Leasing – Pendragon Vehicle Management
Leasing – Pendragon Vehicle Management Leasing – Pendragon Vehicle Management (£m) H1 2021 H1 2020 % Change Revenue 49.0 37.2 31.7% Gross Profit 10.5 6.7 56.7% Operating Costs (2.4) (2.0) -20.0% Operating Profit 8.1 4.7 72.3% Gross Margin % 21.4% 18.0% 3.4% Operating Margin % 16.5% 12.6% 3.9% 36
Slide 37: US Motor
US Motor US Motor (£m) % Change H1 2021 H1 2020 % Change LFL Revenue 28.3 68.5 -58.7% - Gross Profit 4.0 9.0 -55.6% - Operating Costs (4.8) (10.6) 54.7% - Operating Loss (0.8) (1.6) 50.0% - Gross Margin % 14.1% 13.1% 1.0% - Operating Margin % -2.8% -2.3% -0.5% - 37
Slide 38: Franchised UK Motor - Aftersales
Franchised UK Motor - Aftersales Aftersales Market - UK Car Parc 10 .0 m 8.8m 8.8m 9.0 m 8.5m 8.1m 8.0 m 7.9m 7.9m 8.0 m 7.6m 7.6m 7.5m 7.3m 7.2m 7.1m 7.1m 7.1m 7.1m 7.0 m 7.2m 6.8m 6.7m 7.0 m 6.7m 6.4 m 6.1m 6.0 m 5.8m 6.0 m 5.6m 5.6m 5.3m 5.0 m 4 .7m 4 .4 m 4 .0 m 3.0 m 2.0 m 1.0 m - 0 -3 years 4
Slide 39: Franchised UK Motor - New: UK New Car Registrations
Franchised UK Motor - New UK New Car Registrations Market Average / Natural Level 1.82m Forecast 2.10 m Forecast 2.4 0 m 2.0 4 m 2.0 3m 2.4 8m 2.69m 2.34 m 2.54 m 2.63m 2.26m 2.37m 1.63m 1.94 m 1.99m 2.31m 2.13m 20 0 6 20 0 7 20 0 8 20 0 9 20 10 20 11 20 12 20 13 20 14 20 15 20 16 20 17 20 18 20 19
Slide 40: UK New Car Market Forecast
UK New Car Market Reg ist rat ions 3.0 m 2.0 m Fleet Fleet Fleet Fleet Fleet Forecast Forecast Fleet 1.0 m Ret ail Ret ail Ret ail Ret ail Ret ail Ret ail 0 20 15 20 16 20 17 20 18 20 19 20 20 20 21 20 22 Ret ail Fleet Forecast 40
Slide 41: Financial Summary – 3 Year View
Financial Summary – 3 Year View Underlying Profit Before Tax Underlying Operating Profit £35.1m £51.9m H1 20 19 H1 20 20 H1 20 21 ( £32.2m ) ( £31.0 m ) H1 20 19 H1 20 20 H1 20 21 ( £10 .7m ) ( £10 .8m ) Underlying Earnings Per Share 2.3p H1 20 19 H1 20 20 H1 20 21 ( 1.9p ) ( 1.7p ) 41