Rs Group Plc · LSE:RS1
Rs — H1 2021/22 Earnings Presentation
51 slides from Rs's earnings presentation, Nov 4, 2021
Slide 1: Making amazing happen for a better world
Electrocomponents plc Making amazing happen for a better world Results for the half year ended 30 September 2021 2021/22 half-year results 4 November 2021
Slide 2: Safe harbour
Safe harbour This presentation contains certain statements, statistics and projections that are or may be forward-looking. The accuracy and completeness of all such statements, including, without limitation, statements regarding the future financial position, strategy, projected costs, plans and obj
Slide 3: Lindsley Ruth: Introduction
Lindsley Ruth Chief Executive Officer Introduction 2021/22 half-year results
Slide 4: Our people underpin our outperformance
Our people underpin our outperformance > Our people have delivered our outstanding results Our strong performance in each region reflects a > change in mindset We have empowered our teams and seen increased > operational ownership Our teams, especially within our distribution centres and Our > procu
Slide 5: The drivers of our market share growth
The drivers of our market share growth Distribution sector revenue per day growth indexed to Sep-15 Our needle movers 170 Electrocomponents 164 160 150 140 136 129 130 130 118 Product breadth Omni-channel 120 110 103 100 100 90 80 Sep-15 Sep-16 Sep-17 Sep-18 Sep-19 Sep-20 Sep-21 Product and Speciali
Slide 6: David Egan: Financial Performance
David Egan Chief Financial Officer Financial Performance 2021/22 half-year results
Slide 7: Ongoing market share gains and momentum
Ongoing market share gains and momentum > Very strong like-for-like growth, on a one and two-year basis > Increased profitability and margins in all regions > Significant improvement in profit performance in Asia Pacific > Strong free cash flow generation despite additional inventory investment > Re
Slide 8: Strong profitable revenue growth and cash performance
Strong profitable revenue growth and cash performance Revenue growth Profitability Returns and cash Total (£m) Adjusted operating profit (£m) Adjusted free cash flow (£m) 106 78 145 14 979 909 1,209 85 85 H1 2019/20 H1 2020/21 H1 2021/22 H1 2019/20 H1 2020/21 H1 2021/22 H1 2019/20 H1 2020/21 H1 2021
Slide 9: H1 driven by our people, differentiated offer and supply expertise
H1 driven by our people, differentiated offer and supply expertise Income statement Like-for-like Two-year £m H1 2021/22 H1 2020/21 Change change H1 2019/20 change Revenue 1,209 909 33% 31% 979 24% Gross margin 43.7% 43.2% 0.5 pts 0.9 pts 43.7% 0.0 pts Operating profit 139 59 136% 158% 91 53% Adjust
Slide 10: Revenue driven by volume and average order value
Revenue driven by volume and average order value Revenue bridge (£m) 1,300 1,209 1,200 1,100 1,000 979 909 900 800 700 979 H1 2019/20 909 H1 2020/21 Volume Average Inflation Acquisitions Day FX H11,209 2021/22 order including impact value revenue synergies 10 2021/22 half-year results
Slide 11: Our customer base and average order values have grown
Our customer base and average order values have grown B2B customer weighting Customer numbers grew by 24% over the last two years B2B customers, at >95% of Group revenue, are most profitable and grew 18% over the last two years c.70% >95% Customers Revenue AOV increased due to larger number of
Slide 12: Adjusted operating profit margin growth despite cost pressures and investment
Adjusted operating profit margin growth despite cost pressures and investment Adjusted operating profit margin bridge (%) 16% 14% 12.0% 12% 10.8% 10% 8.5% 8% 6% 4% 2% 0% H1 2019/20 10.8% H1 2020/21 8.5% Revenue Gross RISE People & COVID-19 Inflation3 FX & Digital Acquisitions H112.0% 2021/22 growth
Slide 13: EMEA: Improved operational model and sales focus
EMEA: Improved operational model and sales focus Revenue (£m) Revenue growth similar across main markets 19%* Digital +21% like-for-like (two-year) with web +23% through: – Search engine optimisation (SEO) marketing 615 568 753 – Mobile-responsive website and improving content H1 2019/20 H1 2020
Slide 14: Americas: Invested in our people, product offer and distribution centre
Americas: Invested in our people, product offer and distribution centre Revenue (£m) Revenue growth consistent across the region: 27%* – Strong growth within automation & control (A&C) – Extending offer into maintenance, repair and operations (MRO) market 264 243 333 H1 2019/20 H1 2020/21 H1 2021/
Slide 15: Asia Pacific: Greater focus on revenue and margin opportunities
Asia Pacific: Greater focus on revenue and margin opportunities Revenue (£m) Revenue growth benefited from greater focus on higher revenue 29%* generating opportunities and stronger electronic sales Taking share in industrial product market 100 98 123 Digital and web both +35% like-for-like (t
Slide 16: Strong focus on cash returns
Strong focus on cash returns Adjusted free cash flow (£m) Working capital / revenue (%) Strong adjusted free cash flow despite inventory investment Adjusted operating cash flow conversion of 76.2% Capital expenditure lower as US DC 14 85 85 23.9 23.0 21.2 expansion completed in H1 2020/21 H1 2
Slide 17: Capital flexibility to invest in growth opportunities
Capital flexibility to invest in growth opportunities Net debt (£m) Adjusted earnings dividend cover (%) Net debt (including lease liabilities) reduced to £84 million Restructured our existing £300 million 3-year revolving 221 115 84 3.0 2.1 3.6 credit facility to be a H1 2019/20 H1 2020/21 H1 2
Slide 18: Exciting inorganic opportunities, but we remain disciplined
Exciting inorganic opportunities, but we remain disciplined Preferred characteristics Culture is key Our current Accelerates our growth ambitions state of play Sits within three strategic priority areas: Working on a number of live deals – Expands product and service solutions offer – Broade
Slide 19: Current trading: Momentum has continued into second half
Current trading: Momentum has continued into second half Good We have continued to see further good momentum across all regions momentum in the first five weeks of H2 2021/22 Challenging The external environment remains very challenging especially external within the supply chain and potential i
Slide 20: Lindsley Ruth: Our opportunity
Lindsley Ruth Our opportunity 2021/22 half-year results
Slide 21: Strong record of value creation so far, but there is much more to come
Strong record of value creation so far, but there is much more to come… Revenue (£m) Adjusted operating profit (£m) Having repositioned 2,003 188 our Group we are 1,266 now ready to 85 drive stronger profitable growth 14/15 15/16 16/17 17/18 18/19 19/20 20/21 14/15 15/16 16/17 17/18 18/19 19/20 20/2
Slide 22: We operate in many large markets
We operate in many large markets Segment size equates to 2020/21 revenue participation With less than 1% market by Electrocomponents share we want to accelerate our organic growth prospects with inorganic opportunities Our total addressable market is valued at c. £400bn Sources: Beroe (MRO, Fluid Po
Slide 23: We have become a global omni-channel product and service solutions provider
We have become a global omni-channel product and service solutions provider serving industrial B2B customers We were: We are: British | American Global Store | Catalogue | Phone Excel | EDI | Web Product distributor Omni-channel Aerospace, defence, Product and service manufacturing, chemicals, publi
Slide 24: We have a sustainability advantage
We have a sustainability advantage Sustainable and • We already offer products that improve sustainability for our customers > alternative products • Working with suppliers to extend our range of sustainable product solutions Energy-saving • Expanding energy-saving service solutions via RS Maintenan
Slide 25: For a better world
For a better world “Our 2030 ESG action plan is an integral part of our Destination 2025 strategy, and key for us to become a truly great company.” Lindsley Ruth 25 2021/22 half-year results
Slide 26: Andrea Barrett: For a better world
Andrea Barrett VP Social Responsibility and Sustainability For a better world 2021/22 half-year results
Slide 27: We have made strong ESG progress to date
We have made strong ESG progress to date ENVIRONMENT CUSTOMERS AND PEOPLE, HEALTH COMMUNITY SUPPLIERS & SAFETY • 62% reduction in Scope 1 and 2 • Sustainable product and service • Global employee engagement • Engaging 1.1m DesignSpark emissions from premises’ energy solutions score of 74 members, st
Slide 28: Introducing our 2030 ESG action plan
4 GLOBAL Introducing our 2030 ESG action plan GOALS BY 2030 1. ADVANCING 2. CHAMPIONING 3. EMPOWERING 4. DOING BUSINESS SUSTAINABILITY EDUCATION AND OUR PEOPLE RESPONSIBLY INNOVATION • Global employee engagement score of 74 • 44% Board is female including Chair • 57% reduction in All Accident Freque
Slide 29: Our key commitments
Our key commitments • Global employee engagement score of 74 • 44% Board is female including Chair • 57% reduction in All Accident Frequency rate since 2017/18 EMPOWERING Working towards 40% women and 25% ethnically diverse leaders • Major focus on health, wellbeing OUR PEOPLE and inclusion through
Slide 30: Our strategic plan
Our strategic plan 2021/22 half-year results
Slide 31: Destination 2025 – The needle movers, operating better and acquisitions
Destination 2025 – The needle movers, operating better and acquisitions 1 2 3 Needle movers drive Be amazing at the Strategic acquisitions top line and market basics to drive can accelerate share growth operational leverage growth Growing product and Improve product buy-in Strategically and se
Slide 32: The building blocks of our Destination 2025 target
The building blocks of our Destination 2025 target Improve operating efficiencies Drive geographic expansion Market share Increase product growth and service solutions and Improve customer mid-teen experience adjusted Grow B2B customer operating base profit margin Develop specialist own-brand target
Slide 33: We see the opportunity to deliver stronger profitable growth
We see the opportunity to deliver stronger profitable growth Greater operational ownership Wider product offer and better margin We are a good management operator but …to Increase customer life time value our strengths become can be truly Leverage database and digital deployed great advantage better
Slide 34: Delivering Destination 2025: case studies
Delivering Destination 2025: case studies 2021/22 half-year results
Slide 35: Americas case study: Changing our mindset to drive profitable growth
Americas case study: Changing our mindset to drive profitable growth Team Distribution Team Sales Centre • Empowering our • Proactive sales team • Doubled throughput people • Growth-focused capacity • Large change in sales mindset • Advanced leadership team • Customer service automation • ‘Why not’
Slide 36: Case studies: Where sustainability is driving revenue
Case studies: Where sustainability is driving revenue Synovos RS Maintenance Solutions Synovos won a new contract with the largest US RS Maintenance Solutions has partnered with based semi-conductor manufacturer, based on Amazon on their development of an end-to-end our comprehensive service and exc
Slide 37: Summary
Summary 2021/22 half-year results
Slide 38: Summary
Summary We have a strong team in place to drive stronger growth and a Well positioned differentiated offer We are committed to delivering For a better world, and we are For a better world positioned to benefit from a more sustainable future We are on track but see greater opportunity for Desti
Slide 39: Q&A
Q&A 2021/22 half-year results
Slide 40: Appendix
Appendix 2021/22 half-year results
Slide 41: Who we are
Who we are Working with over Circa Digital market leader 2,500 60,000 63% suppliers for our stocked parcels shipped of Group revenue through product range daily digital channels Over Operations in Over 650,000 32 1,200,000 stocked and 3 million unstocked countries customers high-quality industrial a
Slide 42: Five key reasons to invest
Five key reasons to invest 1 2 3 4 5 Uniquely positioned Market share gains Leveraging our lean Strong cash conversion ESG integrated within an attractive driven by being first and scalable operating and attractive returns throughout, driving market choice model higher ratings <1% share c. 25% uplif
Slide 43: Gaining share across our markets
Gaining share across our markets UK France Germany Apr-20 Jun-20 Aug-20 Oct-20 Dec-20 Feb-21 Apr-21 Jun-21 Aug-21 Apr-20 Jun-20 Aug-20 Oct-20 Dec-20 Feb-21 Apr-21 Jun-21 Aug-21 Apr-20 Jun-20 Aug-20 Oct-20 Dec-20 Feb-21 Apr-21 Jun-21 Aug-21 Italy Iberia USA Apr-20 Jun-20 Aug-20 Oct-20 Dec-20 Feb-21 A
Slide 44: Specialist product breadth, depth and expertise
Specialist product breadth, depth and expertise The breadth and depth of our product Providing product and …across a broad range of offering continues to set us apart from service solutions… industries our more transactional competition – We are expanding our range into new and innovative products
Slide 45: ESG frameworks, standards and ratings
ESG frameworks, standards and ratings 45 2021/22 half-year results
Slide 46: 2021/22 half-year results
46 2021/22 half-year results
Slide 47: Basis of preparation
Basis of preparation Unless otherwise stated Figures have been prepared using UK-adopted International Financial Reporting Standards (IFRS) Adjusted excludes amortisation of intangible assets arising on acquisition of businesses, acquisition-related items, substantial reorganisation costs, subst
Slide 48: Guidance points
Guidance points Trading days > Expect around £9 million benefit on revenue from additional trading days in 2021/22 Other guidance points Net capital expenditure forecast to be c. £50 million in 2021/22 > We expect the effective tax rate to rise due to corporate income tax rate increase in the
Slide 49: Financial key performance indicators
Financial key performance indicators Financial key performance indicators Like-for-like Two-year H1 2021/22 H1 2020/21 Change change H1 2019/20 change Like-for-like revenue growth 31% Adjusted operating profit conversion 27.4% 19.8% 7.6 pts 8.7 pts 24.7% 2.7 pts Adjusted operating profit margin 12.0
Slide 50: Cash generation strong despite additional inventory investment
Cash generation strong despite additional inventory investment Cash flow £m H1 2021/22 H1 2020/21 EBITDA 171 86 Increase in inventories (46) (13) Other movements in working capital (2) 36 Movement in provisions (2) 12 Other 4 3 Cash generated from operations 125 124 Net interest paid (3) (4) Income
Slide 51: Net debt fell to £84m
Net debt fell to £84m Net debt We have maintained a strong financial position, and are looking at £m H1 2021/22 H1 2020/21 acquisitions that will accelerate our Net debt at 1 April (122) (190) growth ambitions Adjusted free cash flow 85 85 Lease liabilities of £55 million Acquisition of business