Turners Automotive Group Ltd · NZX:TRA
Turners Automotive — HY22 Earnings Presentation
39 slides from Turners Automotive's earnings presentation, Nov 18, 2021
Slide 1: HY22 Results Presentation
HY22 For personal use only Results Presentation For the six months ending 30 September 2021 1 ••HY22 RESULTS PRESENTATION
Slide 2: Disclaimer
Disclaimer For personal use only Turners Automotive Group the (company) is solely responsible for the content of this document. This document is not an investment statement or prospectus and does not constitute an offer of securities. This document or any other written or oral statements made by, or
Slide 3: Agenda
Agenda For personal use only 1. Overview of HY22 2. HY22 Results 3. Segment results 4. Our business in context 5. Outlook 3 • HY22 RESULTS PRESENTATION
Slide 4: Overview of HY22
For personal use only 1 Overview of HY22 4 • HY22 RESULTS PRESENTATION
Slide 5: Key highlights: Delivering growth despite lockdown
Key highlights: Delivering growth despite lockdown … For personal use only 1. We achieved 24% growth in NPBT in HY22 … a step change in the business performance despite the COVID-19 lockdown 2. Business tracking well in the conditions, expect profit to accelerate as restrictions ease 3. Strategic an
Slide 6: NZ used car market continues to be robust
NZ used car market continues to be robust • Auckland region transaction levels now recovering For personal use only NZ Used Car Change of Ownerships under extended L3 120,000 • Oct YTD total market transaction levels are tracking 100,000 6% below FY21 (Apr to Oct) and 12% below FY20 (Apr to Oct) 80,
Slide 7: HY22 Results overview
HY22 Results overview For personal use only Financials Key Drivers for HY22 Q3 Update • NPBT $23.2m +24% • Strong first 4 months to FY22 followed by • Auto retail: October vehicle unit • NPAT $16.9m +26% disruption from Covid lockdowns sales ahead of Oct-20 • Normalised NPBT $24.5m +55% • However, c
Slide 8: Monthly operating profit update
Monthly operating profit update For personal use only FY22 started with a step change from April through to July Group Profit excl Wage Subsidy ($m) CY21 v CY20 • Impact of August nationwide lockdown and extended 6.00 Auckland lockdown was significant 5.00 • Substantial recovery in October reflects
Slide 9: HY22 Results
For personal use only 2 HY22 Results 9 • HY22 RESULTS PRESENTATION
Slide 10: HY22 Results snapshot
HY22 Results snapshot Revenue For personal use only 400 350 300 Revenue Shareholders’ Equity Millions 250 2H $166.8m +13% $248m as at 30 Sept 2021 200 1H 150 100 Normalised Net Profit Before Tax Q1 Dividend 5.0 cps 50 $24.5m +55% Projected FY Div 22.0cps 0 FY16 FY17 FY18 FY19 FY20 FY21 FY22 Net Prof
Slide 11: HY21: HY22 Revenue bridge
HY21: HY22 Revenue bridge For personal use only Revenue increased from $148m to $167m • Revenue growth in Auto Retail reflects gains made in first 4 months of FY22. • NZ used car market has demonstrated continued resilience despite Covid lockdowns. • Finance revenue growth reflects market share gain
Slide 12: HY21: HY22 Net profit before tax (NPBT) bridge
HY21: HY22 Net profit before tax (NPBT) bridge For personal use only NPBT increased from $18.6m to $23.2m • Auto Retail result underpinned by market share gains and improved margins on owned inventory • Finance growth driven by writing higher quality new business and the resulting improved arrears p
Slide 13: Reconciliation: NPBT to normalised NPBT
Reconciliation: NPBT to normalised NPBT For personal use only $Millions HY22 HY21 Var • Significant improvement in underlying profit reflects improved efficiencies and margins, Profit before tax actual 23.2 18.7 24% increased market share in auto, finance and insurance, combined with improved group
Slide 14: Dividend Payments and Policy
Dividend Payments and Policy For personal use only Dividend per Share ($) 0.25 • Strong track record of growing dividends for 0.20 shareholders over time * Cents per Share paid • Q1 FY22 dividend declared at 5.0 cps in Oct, Q2 FY22 0.15 ** dividend = 5.0 cps. 0.10 • Based on the current dividend pay
Slide 15: Balance sheet
Balance sheet For personal use only $Millions HY22 HY21 • Inventory levels have remained stable as we Cash and cash equivalents 14.2 18.9 improve processing times and overall turn metrics Financial assets at fair value 65.4 65.1 Inventory 31.9 29.8 • Increase in Finance Receivables reflects growth i
Slide 16: Funding mix
Funding mix For personal use only Borrowings Borrowings by Utilisation ($Millions) $Millions Limit Drawn Undrawn As at 30 September 2021 Receivables – Securitisation (BNZ) 276 269 7 Receivables – Banking Syndicate 50 23 27 Inventory, (ASB/BNZ) $16m Receivables – MTF 1 1 - Property and Inventory Corp
Slide 17: Segment Results
For personal use only 3 Segment Results 17 • HY22 RESULTS PRESENTATION
Slide 18: HY22 by segment
HY22 by segment For personal use only Automotive $Millions Finance Insurance Credit Retail Revenue 115.1 20% 25.2 9% 20.8 (2%) 5.7 (19%) Segment Profit 10.2 32% 9.9 30% 5.8 28% 2.1 (31%) Note – HY22 reported NPBT of $23.2m includes corporate costs of $4.8m 18 • HY22 RESULTS PRESENTATION
Slide 19: HY22 by segment
HY22 by segment For personal use only Auto Retail Finance • Market share gains through brand promotion and • Finance continued focus on targeting high quality retail optimisation initiatives borrowers, attracting 50%+ of new lending in • Covid recovery and cost management premium risk business • Mar
Slide 20: Automotive retail
Automotive retail For personal use only Revenue 115.1m +20%, Segment Profit $10.2m +32% • “Tina” brand campaign working well, market share Turners Public Market Share (3 Month Rolling Average) continues to grow in key retail segment 11.00% • Secured large vehicle supply contract (~3,500 additional 1
Slide 21: Rotorua – Phase 1
Rotorua – Phase 1 For personal use only 21 • HY22 RESULTS PRESENTATION
Slide 22: Property asset keeps growing with a $14M unrealised valuation gain
Property asset keeps growing with a $14M unrealised valuation gain For personal use only Site Original 31-Mar-21 Unrealised Cost ($m) Valuation Gain/loss • We have been building up a portfolio of property Developed Sites over the last 7 years John Seddon Drive, Porirua 7,800 9,700 1,900 160 Roscommo
Slide 23: Finance
Finance Revenue $25.2m +9%, Segment Profit $9.9m +30% For personal use only Receivables growth by month • Growth and improvement in quality of the loan book 390 continues 370 350 • Lockdown lending has held up well 330 310 290 • Premium Tier business growing strongly and accounts for 270 250 50%+ of
Slide 24: Insurance
Insurance For personal use only Revenue $20.8m -2%, Segment Profit $5.8m +28% Gross Written Premium FY21 v FY20 ($M) • Market share gains driving strong policy sales in Q1, 4.5 but impacted during Q2 lockdown period 4.0 3.5 3.0 2.5 • Claims costs 13% down on H1 FY21, however 2.0 emerging signs of pa
Slide 25: Credit management
Credit management For personal use only Revenue $5.7m -19% Segment Profit $2.1m -31% Debt Collected HY21 to HY22 ($000s) • Total debt load up 9% for H1 FY22 to $61m, largely driven by improved debt load from NZ corporate customers. • AU customers still holding back on debt load due to extended lockd
Slide 26: Putting our business in context
For personal use only 4 Putting our business in context 26 • HY22 RESULTS PRESENTATION
Slide 27: The flywheel for our Auto ecosystem
The “flywheel” for our Auto ecosystem Data enabled sourcing More margin = more competitive For personal use only Use of data and tools to source cars we Higher transaction profitability can move quickly at the right price provides opportunity to pay “fair” Keep our diversified sources of supply pric
Slide 28: Our omni-channel model is at the intersection of physical + digital
Our omni-channel model is at the intersection of physical + digital TRADITIONAL EMERGING For personal use only Little to no physical presence: Typically offline, heavily TRADITIONAL EMERGING majority of sales originated and dependent on physical stores closed online and walk-in traffic PLAYERS DISRU
Slide 29: Disruption is enabling Turners to extend our competitive advantages
Disruption is enabling Turners to extend our competitive advantages… For personal use only Despite Covid lockdowns we have continued to develop our competitive moat, which is positioning us for an even stronger performance post lockdown • High trust “Turners” brand • Agility in finance and insurance
Slide 30: Outlook
For personal use only 5 Outlook 30 • HY22 RESULTS PRESENTATION
Slide 31: On track to exceed our FY24 target
On track to exceed our FY24 target Over three years we target 31% growth in Underlying NPBT 1 For personal use only Underlying Net Profit Before Tax ($M) 1 Dividends Paid (cps) 50 26.0 7.7% 24.0 CAGR 45 9.5% CAGR 22.0 40 20.0 35 18.0 16.0 30 2 14.0 25 12.0 20 10.0 FY18 FY19 FY20 FY21 FY24 FY18 FY19
Slide 32: Outlook – FY22 Guidance
Outlook – FY22 Guidance For personal use only • Prior to the most recent lockdowns, we were on track to deliver a 15% uplift in NPBT for FY22 (~$43m) • Assuming current L3/L2 restrictions continue to gradually ease over coming months, we expect a FY22 NPBT to be within the range of $40-$42m (~10% gr
Slide 33: Malua Tipi and family - Wheel of Immunity Winner
For personal use only Malua Tipi and family - “Wheel of Immunity” Winner on TV3’s The Project
Slide 34: Questions
For personal use only Questions 34 • HY22 RESULTS PRESENTATION
Slide 35: Appendix
For personal use only Appendix 35 • HY22 RESULTS PRESENTATION
Slide 36: Subscription uptake growing strongly pre-lockdown
Subscription uptake growing strongly pre-lockdown For personal use only Snapshot of Active Subscriptions by Month • Prior to lockdown strong growth, lockdown has impacted 80 due to stock largely located in Auckland 70 • Demand rebuilding as restrictions ease 60 50 • Looking to acquire more cars for
Slide 37: Our focus for FY22 - by business
Our focus for FY22 - by business For personal use only Auto Retail • Stock acquisition • Continue to invest in promoting the Turners brand, further building market share • Retail optimisation – launch and develop Rotorua, develop Nelson, identify further opportunities Finance • Keep improving credit
Slide 38: Resilient and well diversified, poised for further growth ahead
Resilient and well diversified, poised for further growth ahead For personal use only The business benefits from strong geographical and earnings diversification during restrictions. We expect stronger profit performance once restrictions ease 1. Used car market is resilient – strong sales expected
Slide 39: Contact
Contact For personal use only Todd Hunter CEO Turners Automotive Group Limited T: 64 21 722 818 E: todd.hunter@turners.co.nz 39 • HY22 RESULTS PRESENTATION
Turners Automotive Group — HY22 Earnings Presentation on 6ix