Hill & Smith Plc · LSE:HILS
Hill & Smith — H1 2017 Earnings Presentation
27 slides from Hill & Smith's earnings presentation, 2017
Slide 1: 2017 Interim Results
Half Year Results 2017 Interim Results Six Months Ended 30 June 2015 Six months ended 30 June 2017 Derek Derek Muir Group Muir Group Chief Chief Executive Executive Mark Pegler Mark Pegler Group Finance Group Director Finance Director Hill & Smith Holdings PLC
Slide 2: Key messages
Key messages Another strong performance − Record first half revenue & profitability − Organic revenue growth 5% (at constant currency) − Operating profit* up 13% (at constant currency) − Operating margin* 13.3%, up 100bps Active Portfolio Management − One acquisition and one disposal completed −
Slide 3: Underlying Trading Results
Underlying Trading Results FX impact: H1 H1* FY Revenue +£15.0m 2017 +/- 2016 2016 Operating Profit +£2.3m Organic growth +5% Revenue (£m) 291.8 13% 259.3 540.1 (at constant currency) Organic growth +4% Operating profit (£m) 38.8 21% 32.0 70.6 (at constant currency) Strategic initiatives driving Ope
Slide 4: Utilities
Utilities H1 H1 Organic Operating 2017 2016 Growth £m Revenue Profit 2016 100.4 4.7 Revenue (£m) 107.1 100.4 2% F/X 5.9 0.4 Operating profit (£m) 7.6 4.7 8% Acquisitions 8.0 0.6 Operating margin (%) 7.1 4.7 240bps Non-US Pipes (9.5) 1.5 Organic 2.3 0.4 UK − Overall mixed performance, AMP6 delays c
Slide 5: Roads
Roads H1 H1 Organic Operating 2017 2016 Growth £m Revenue Profit 2016 77.5 9.0 Revenue (£m) 93.8 77.5 9% F/X 2.5 0.1 Operating profit (£m) 10.2 9.0 1% Acquisitions / 6.7 1.0 Operating margin (%) 10.9 11.6 -70bps Disposals Organic 7.1 0.1 UK (68% of revenue) 2017 93.8 10.2 − Government’s Road Inves
Slide 6: Galvanizing
Galvanizing H1 H1 Organic Operating 2017 2016 Growth £m Revenue Profit Revenue (£m) 90.9 81.4 3% 2016 81.4 18.3 F/X 6.6 1.8 Operating profit (£m) 21.0 18.3 5% Organic 2.9 0.9 Operating margin (%) 23.1 22.5 60bps 2017 90.9 21.0 UK − Wider infrastructure investment driving 6% volume growth − Operati
Slide 7: Free cash flow and net debt
Free cash flow and net debt H1 H1 FY £m 2017 2016 2016 Underlying Operating Profit 38.8 32.0 70.6 Working capital £16.6m Depreciation and amortisation 9.6 8.7 18.4 − H1 outflow reflective of seasonal trading patterns/organic growth Underlying EBITDA 48.4 40.7 89.0 − Zinc price c.£5m impact on inve
Slide 8: Strategic KPI's
Strategic KPI’s Organic revenue growth Operating margin 8% 14% 6% 13% 4% 12% 2% 11% 0% 2011 2012 2013 2014 2015 2016 H1 2017 10% -2% 9% -4% 2011 2012 2013 2014 2015 2016 H1 2017 Driving 6-Yr Average Returns Underlying cash conversion * Return on invested capital 22% 120% 20% Group Target - 20% 100%
Slide 9: Strategy and Outlook
Strategy and Outlook Derek Muir 2017 Interim Results 9
Slide 10: UK Infrastructure
UK Infrastructure ENERGY RAIL Offshore wind - landing platforms CP5 - markets remain strong Biogas anaerobic digestion HS2 - contracts awarded - construction commences 2018 Solar with battery storage Five year security upgrade on electrification and renewals Energy from Waste New tra
Slide 11: Highways England: Road Investment Strategy ('RIS')
Highways England: Road Investment Strategy (‘RIS’) Temporary Safety Barrier Crash Cushions Permanent Safety Barrier Variable Message Signs ROTTM Sign £m 4,000 Major improvement schemes £1bn annual fund for councils to improve or replace the most important A-roads in England Profile of investment £15
Slide 12: UK Market for HVM products
UK Market for HVM products Hostile Vehicle Mitigation (‘HVM’) Pedestrian Protection Varioguard / Multibloc / Maxibloc Increased demand for our market leading range of temporary and permanent, steel and concrete products in key locations as the threat of terrorism increases. 2017 Interim Results 12
Slide 13: US Infrastructure
US Infrastructure HIGHWAYS RENEWABLES Fixing America’s Surface Transportation (‘FAST’) Act 5 year extension to solar investment tax credits (ITC) $305bn five year bill to 2020 Utility sector ITC to increase by 73% Long-term funding certainty and project visibility Suniva petition under S
Slide 14: Developing International Markets
Developing International Markets Zoneguard temporary safety barrier - Further penetration in Australia & USA - Potential new markets - Canada - New Zealand - Middle East Bristorm Zero & Bristorm Impeder - Increasing demand for hostile vehicle mitigation products to protect key locations. Products te
Slide 15: Acquisitions Update
Acquisitions Update Acquired 24 March 2017 Acquisition cost: $7.235m Annual revenue: $10m Kenway Corporation, a specialist in technologically advanced composite design, manufacturing and field service work across a broad range of industries including marine, power, pulp and paper, transportation and
Slide 16: Outlook
Outlook US/UK infrastructure investment outlook strong UTILITIES Pipe Supports delivering improved profitability and returns UK Road Investment Strategy underpinning spend ROADS Opportunities to grow International businesses US/UK operations in sweet spot of infrastructure plans GALVANIZIN
Slide 17: Disclaimer
Disclaimer Cautionary statement This presentation contains forward looking statements which are made in good faith based on the information available at the time of its approval. It is believed that the expectations reflected in these statements are reasonable but they may be affected by a number of
Slide 18: Appendices
Appendices 18
Slide 19: Business Segments
Business Segments INFRASTRUCTURE GALVANIZING UTILITIES ROADS USA FRANCE UK Interim Results 30 June 2014 2017 Interim Results 19
Slide 20: Segment and geographical analysis
Segment and geographical analysis Revenue: £291.8m Revenue: £291.8m By segment By end market geography Galvanizing Roads 31% 32% USA UK 49% Non Gov 51% UK Utilities Gov 37% A well balanced business: Operating Profit: £38.8m products, Operating Profit: £38.8m By segment markets & By plant location ge
Slide 21: Segment analysis
Segment analysis PS H1 Closure H1 £m 2017 Organic M&A Impact FX 2016 Utilities • UK mixed, security fencing/housing strong • Absence of larger projects in US Revenue 107.1 2.3 8.0 (9.5) 5.9 100.4 • Improved Pipe Supports profitability Underlying operating profit 7.6 0.4 0.6 1.5 0.4 4.7 Margin 7.1% 4
Slide 22: Margin
Margin Margin H1 2017 H1 2016 Target % % Range % Infrastructure Products 8.9 7.7 8 – 11 - Utilities 7.1 4.7 7 – 11 - Roads 10.9 11.6 9 – 13 Galvanizing Services 23.1 22.5 19 – 22 Group 13.3 12.3 11 – 14 Utilities improving; Pipe Supports improvement assists Roads within range Strong performanc
Slide 23: Return on Invested Capital
Return on Invested Capital 12m to 12m to Group H1 17 H1 16 ROIC% Operating Profit (£m) 77.4 61.7 before tax Av. Invested Capital (£m) 390.2 331.1 22% ROIC % 19.8 18.6 20% Group Target - 20% 18% Group ROIC 12m to 12m to 16% Divisional (%) H1 17 H1 16 Utilities 17.3 12.5 14% Roads 20.4 22.5 12% Infras
Slide 24: Foreign exchange sensitivities
Foreign exchange sensitivities H1 H1 FY 2017 2016 Change 2016 Average rates Euro 1.16 1.28 9% 1.22 Ready reckoner for annual translation impact of movement in FX rates US$ 1.27 1.43 11% 1.35 Sensitivity to +/- Operating Closing rates Revenue 1 cent move in: profit Euro +/- £0.6m +/- £50k Euro
Slide 25: Non-underlying items
Non-underlying items H1 H1* FY 2017 2016 2016 Operating items Business reorganisation costs (2.0) (9.2) (10.5) Acquisition costs (0.2) (0.7) (1.8) Amortisation of acquisition intangibles (2.0) (0.9) (2.6) Pension settlement gain 0.2 - 0.2 CA Traffic - profit on sale/intangible impairment 0.6 - (4.1)
Slide 26: Availability and usage of debt facilities
Availability and usage of debt facilities Maturity Net Debt by Currency On 2017 £m Net Debt Facility demand to 2020 2021 Committed 134.8 230.6 On demand - 9.6 9.6 1.4 229.2 £ + other US $ 44% 48% Cash (25.7) - 109.1 240.2 Euros 8% Principal facility in place until April 2021 Facilities provide s
Slide 27: Earnings and Dividend
Earnings and Dividend Earnings per share (p) Dividend (p) 70 60 2017 Change 2016 Change 2015 50 40 +22% Interim dividend per share 9.4p 11% 8.5p 20% 7.1p 30 Final dividend per share 17.9p 32% 13.6p 20 10 Total dividend per share 26.4p 28% 20.7p 0 2011 2012 2013 2014 2015 2016 H1 2017 Dividen
Hill & Smith Holdings — H1 2017 Earnings Presentation on 6ix