Turners Automotive Group Ltd · NZX:TRA
Turners Automotive — FY2020 Earnings Presentation
40 slides from Turners Automotive's earnings presentation, June 2020
Slide 1: FY20 Results Presentation
FY20 Results Presentation For the twelve months ending 31 March 2020 1 ••FY20 RESULTS PRESENTATION
Slide 2: Agenda
Agenda 1. Results summary 2. Business update - Q1 3. Business update - FY21 4. Financial results 5. Segment results 6. Summary and Q&A 2 • FY20 RESULTS PRESENTATION
Slide 3: FY20 Results Overview
FY20 Results Overview FY20 Financials Q1 Update Key Themes for FY21 • NPBT $29.1M in line with FY19 • Auto Retail: fully operational with • Accelerate market share gains and guidance ($28m – $30m) sales stronger than expected • Leverage high trust brand • Underlying NPBT $28.8m up 11% • Finance: Cre
Slide 4: Results Summary
1 Results Summary 4 • FY20 RESULTS PRESENTATION
Slide 5: FY19/FY20 Revenue bridge
FY19/FY20 Revenue bridge Revenue stable at $333m (FY19 $337m) • Auto Retail revenue flat year on year • Finance revenues have increased through Turner’s origination and 3rd party origination • Insurance reflects fewer policies sold as higher risk vehicles re-priced and fewer used cars sold in the ma
Slide 6: FY19/FY20 Net profit before tax (NPBT) bridge
FY19/FY20 Net profit before tax (NPBT) bridge NPBT of $29.1m inline with FY19 and guidance • Inline with both FY19 and at mid point of $28-$30m net profit before tax guidance (prior to COVID-19, was tracking to exceed slightly) • Auto retail decrease due to Albany property settlement of $3.4m in FY1
Slide 7: Reconciliation: NPBT to underlying NPBT
Reconciliation: NPBT to underlying NPBT $Millions FY20 FY19 Var Reported profit before tax 29.1 29.0 0.3% • Pleasing growth in underlying earnings despite impact of COVID-19 Oxford strategic review costs 0.2 - • Property sale in FY19 relates to the sale of 133 IFRS 16 Lease Accounting changes (0.5)
Slide 8: FY19/FY20 Underlying NPBT bridge
FY19/FY20 Underlying NPBT bridge Underlying PBT increased from $26.0m to $28.8m Underlying Profit Before Tax • Auto Retail heavily impacted in key month of March 20 by COVID-19 • Finance improvement driven by growth in higher quality lending, improvement in arrears and reducing funding costs • Insur
Slide 9: Business Update – Q1
2 Business Update – Q1 9 • FY20 RESULTS PRESENTATION
Slide 10: Thank You to Our Team, Landlords and Business Partners
Thank You to Our Team, Landlords and Business Partners Speed - Work from home plans executed at speed and teams adapted very quickly. Technology investments and quality of team, have put us in a strong position. Committed - Many people have been asked to take additional annual leave, work reduced ho
Slide 11: React Rethink Rebuild
Our approach to lockdown… React Rethink Rebuild Ensure survival of business Avoid a dilutive capital raise “Eyes on the prize” and “cash is king” approach prepare for opportunities • Safety of staff and customers • Close communication with • Disciplined cost control • Rapid WFH setup completed funde
Slide 12: Key Messages on Near-term Environment
Key Messages on Near-term Environment Lockdown - Naturally, all four businesses experienced substantial new business drops during L3/L4 lockdown. Group revenue down 57% in April 2020 v April 2019 Priorities - 1. Ensure the business survives 2. Avoid a dilutive capital raise 3. Ensure the business is
Slide 13: FY21 YTD Update - Early Metrics
FY21 YTD Update - Early Metrics Change v pcp Mar-20 Apr-20 May-20 Jun-20 MTD • Launched 100% online car selling “BuySafe” – sold 600 cars during L4 lockdown Auto Retail Revenue (33%) (80%) (6%) (2%) • Continuing marketing spend focusing on Turners “trusted Car Units Sold (40%) (74%) (13%) 2% brand”
Slide 14: Near Term Priorities
Near Term Priorities Auto Retail • Cost discipline – property and people • Continue to invest in promoting the Turners brand - build market share • Retail optimisation – Exit Penrose and launch Westgate, Mt Richmond Finance • Keep improving credit quality • Continued focus on arrears and rehabilitat
Slide 15: Business Update – FY21
3 Business Update – FY21 15 • FY20 RESULTS PRESENTATION
Slide 16: Key themes for FY21
Key themes for FY21 Turners well placed to continue market share gains. Used #1 Opportunity to accelerate market share car market rationalisation likely to accelerate post COVID. During the GFC, the number of dealers dropped by 15% Leverage our scale and brand equity. Our scale offers multiple #2 Le
Slide 17: Opportunity to accelerate market share
1. Opportunity to accelerate market share Turners Public Market Share (3 Month Rolling Average) 8.00% • During the GFC, the number of dealers dropped by 15% 7.00% • Turners has adapted rapidly to remain robust and to be in a position to realise any new opportunities that 6.00% emerge from a disrupte
Slide 18: Leverage the high trust Turners brand
2. Leverage the high trust Turners brand Scale Most trusted brand Our scale offers multiple advantages: Trust will be even more important in the new economy: • During challenging environments, Turners benefits • Turners is consistently NZ’s leading used auto retail from its scale and diversification
Slide 19: Diversified business
3. Diversified business • Turners is a purposefully diversified business • Each business has different business cycles… % of Total Operating Profit by Business Division 100% • Annuity revenues from finance and insurance help offset the 90% short-term decline in the activity-based revenue businesses
Slide 20: Digital advantage
4. Digital advantage • Turners is committed to creating competitive advantage from technology investments, and will double down on these efforts to Group IT Spend ($Millions) 7.0 further broaden its technology advantage 6.0 • Technology team: 26 FTE (Applications 15, Infrastructure / Operations 11)
Slide 21: Balance sheet has capacity to support growth
5. Balance sheet has capacity to support growth • Our balance sheet is a major competitive advantage, which will Funding Mix ($M) Limits Drawn enable continued growth in a consolidating market. Finance Receivables Funding Securitisation 230 180 • Our balance sheet is robust; • The group continues to
Slide 22: Financial Results
4 Financial Results 22 • FY20 RESULTS PRESENTATION
Slide 23: FY20 Results snapshot
FY20 Results snapshot Revenue 400 Revenue Shareholders’ Equity 300 2H Millions $332.7m -1% YoY $223m as at 31 March 20 200 1H 100 Underlying Net Profit Before Tax Q3 Dividend 6.0 cps 0 $28.8m +11% YoY FY Div 14.0 cps FY15 FY16 FY17 FY18 FY19 FY20 Net profit after tax Net Profit Before Tax 25 $29.1m
Slide 24: Capital Management and Dividends
Capital Management and Dividends Dividend per Share (Cents) Dividends fully imputed from FY17 onwards 0.20 • In March directors deferred Q3 dividend payable in April 0.18 0.18 as a precautionary step due to uncertainty of L4 0.16 lockdown period. 0.145 0.14 0.14 0.13 • Given April and May trading ha
Slide 25: Balance sheet
Balance sheet • Cash boosted by pre-emptive drawdowns as we entered $Millions FY20 FY19 L4 lockdown and uncertainty around timing Cash and cash equivalents 32.8 15.9 Financial assets at fair value 65.0 66.3 • Inventory increase reflects COVID-19 slowdown and Inventory 44.4 38.9 lockdown Finance rece
Slide 26: Funding mix
Funding mix Borrowings Borrowings by Utilisation ($Millions) As at 31 Mar 2020 $Millions Limit Drawn Undrawn Receivables – Securitisation (BNZ) 230 180 50 Receivables – Banking Syndicate (ASB/BNZ) 60 49 11 Receivables – MTF 13 13 0 Inventory Corporate & Property [incl Bond] 95 83 12 Inventory (ASB)
Slide 27: Segment Results
5 Segment Results 27 • FY20 RESULTS PRESENTATION
Slide 28: FY20 by Segment
FY20 by Segment Auto Retail • Growing retail market share • Better buying disciplines leading to improved margins • Continued optimisation for retail Finance • Finance continued focus on targeting high quality borrowers • Risk pricing refinement • Continue to make investments in digital and system i
Slide 29: Automotive retail
Automotive retail Revenue $224.9m 0%, Segment Profit $13.8m -24% Underlying Segment Profit $13.3m (FY19 $14.9m) • NZ used car markets down 3% with dealer channels down 4% in FY20 Auto Retail Breakdown FY19 to FY20 ($Millions) • BuyNow (retail sales) down 0.5% with new North Shore Branch coming on st
Slide 30: Finance
Finance Revenue $45.7m +4%, Segment Profit $12.2m +10% Underlying Segment Profit $12.1m (FY19 $10.3m) • Finance improvement driven by writing higher quality new business and the resulting improved arrears performance. In addition a COVID-19 overlay has been FY19 to FY20 Receivables Bridge applied to
Slide 31: Insurance
Insurance Revenue $44.1m -9%, Segment Profit $6.2m -25% Underlying Segment Profit $6.2m (FY19 $5.2m) • Combined loss ratio 62% (FY19: 64%), MBI loss ratio at 66% (FY19 at 75%). • New policy generation system for retail performing well and providing agility and flexibility on risk pricing. • Continue
Slide 32: Credit management
Credit management Revenue $17.9m -1% Segment Profit $6.5m +3% Underlying same as reported Debt Collected FY19 to FY20 ($000s) • Total debt load down 5% to $225m, debt collected up 14% to $67m • Commission earned from debt collected up 21% to $10m. • Xero and MYOB integration completed, 420+ customer
Slide 33: Summary And Q&A
6 Summary And Q&A 33 • FY20 RESULTS PRESENTATION
Slide 34: FY20 Results Overview
FY20 Results Overview FY20 Financials Q1 Update Key Themes for FY21 • NPBT $29.1M in line with FY19 • Auto Retail: fully operational with • Accelerate market share gains and guidance ($28m – $30m) sales stronger than expected • Leverage high trust brand • Underlying NPBT $28.8m up 11% • Finance: Cre
Slide 35: Outlook
Outlook • Due to the level of unprecedented uncertainty in the economy it will be difficult to issue guidance for FY21. We will update over coming months with progress, and plan to give guidance around the AGM in September. • At beginning of lockdown we modelled out 3 scenarios (Worst, Likely and Be
Slide 36: Questions
Questions 3636 • FY20 • FY20 RESULTS RESULTS PRESENTATION PRESENTATION
Slide 37: Appendix
Appendix 3737 • FY20 • FY20 RESULTS RESULTS PRESENTATION PRESENTATION
Slide 38: Finance drill down
Finance drill down Improving Customer Credit Scores 600 Average customer Equifax 550 Total Lending by Asset Class Credit score 500 450 400 11% 350 1H17 2H17 1H18 2H18 1H19 2H19 1H20 2H20 Oxford Finance Consumer Instalment Arrears by Channel 19.3% 20.0% 89% 14.4% 15.0% 10.0% 5.0% 2.7% 2.3% 0.1% 0.3%
Slide 39: Disclaimer
Disclaimer 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 on behalf of, the com
Slide 40: Contact
Contact Todd Hunter Group CEO T: +64 21 722 818 E: todd.hunter@turners.co.nz Aaron Saunders Group CFO T: +64 27 493 8794 E: aaron.saunders@turners.co.nz 40 • FY20 RESULTS PRESENTATION
Turners Automotive Group — FY2020 Earnings Presentation on 6ix