Keller Group Plc · LSE:KLR
Keller — FY2023 Earnings Presentation
45 slides from Keller's earnings presentation, Mar 5, 2024
Slide 1: Audited Preliminary Results for 2023
Keller Group plc Audited Preliminary Results for 2023 5 March 2024 Building the foundations for a sustainable future
Slide 2: Cautionary statements
Cautionary statements This document contains certain 'forward-looking statements' For a more detailed description of these risks, uncertainties with respect to Keller's financial condition, results of and other factors, please see the Principal risks and operations and business and certain of Keller
Slide 3: Agenda
Agenda 1 Summary 2 Financial results 3 Business performance 4 Strategic progress 5 Summary and outlook 6 Questions and answers
Slide 4: Summary – Record performance
Summary – Record performance Underlying Underlying Underlying operating operating diluted Revenue profit margin EPS2 Order book 2023 dividend £2,966.0m £180.9m 6.1% 153.9p £1.5bn 45.2p +1% +67% Up from 3.7% +53% Up 10%1 +20% (+1% CC1) (+67% CC1) Record performance with significant progress made in
Slide 5: Financial results
Financial results } KELLER
Slide 6: Summary income statement
Summary income statement 2023 2022 Non- Non- Underlying Total Underlying Total underlying underlying Revenue 2,966.0 - 2,966.0 2,944.6 - 2,944.6 Operating costs (2,764.6) (22.5) (2,787.1) (2,834.6) (29.7) (2,864.3) Net impairment loss on trade receivables and contract assets (21.3) (0.4) (21.7) (2.9
Slide 7: Summary income statement - underlying
Summary income statement - underlying 1. Revenue £m CC% 2023 2022 FY 2022 2,944.6 FX (15.5) Underlying Underlying North America (120.5) -6.4% Europe 27.8 +4.2% Revenue 2,966.0 2,944.6 1 AMEA 129.6 +34.1% Operating costs (2,764.6) (2,834.6) FY 2023 2,966.0 +1.3% Net impairment loss on trade receivabl
Slide 8: Underlying operating profit bridge 2022 to 2023
Underlying operating profit bridge 2022 to 2023 North America Europe AMEA Central items £m Up £88.0m to £169.6m Down £27.8m to £1.8m Up £16.2m to £22.6m Cost up £4.1m 210.0 to £13.1m 22.2 (8.1) (3.6) 3.7 190.0 1.8 (4.3) (17.3) 4.5 77.5 (4.1) 14.2 (11.0) 180.9 170.0 (3.2) 150.0 130.0 110.0 0.0 108.6
Slide 9: Summary income statement – non-underlying
Summary income statement – non-underlying 2023 1. Non-underlying items Non- Underlying Total underlying Cash items £m Revenue ERP costs (7.5) 2,966.0 - 2,966.0 Restructuring (1.3) Operating costs (2,764.6) (22.5) (2,787.1) Loss on disposal (0.1) Net impairment loss on trade receivables and Other ope
Slide 10: Net debt flow
Net debt flow £m 2023 2022 1. Depreciation/Capex 2023 2022 Underlying operating profit 180.9 108.6 Net capex/depreciation 96% 101% Depreciation, amortisation and impairment 112.2 1 97.0 Gross capex/depreciation 114% 110% Underlying EBITDA 293.1 205.6 Non-cash items (4.0) (1.1) Decrease/(Increase) in
Slide 11: Balance sheet
Balance sheet 1. Intangibles incl. goodwill Opening £m 137.9 Additions 0.2 £m FY 2023 FY 2022 Impairment (12.1) Intangibles incl. goodwill 114.6 137.9 Amortisation (5.5) 1 FX (5.9) Closing 114.6 Managed assets Tangible fixed assets 480.2 2 486.5 2. Tangible fixed assets £m Opening 486.5 Debtors and
Slide 12: Net debt profile (£m)
Net debt profile (£m) 2022 2023 331 294 296 296 282 263 257 254 249 255 242 250 245 244 235 237 224 219 210 209 192 194 160 146 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec • Net debt1: £146.2m decreased by £72.6m, down 33% (2022: £218.8m) • Average month-end net debt1: £225m, down 11% (2022: £25
Slide 13: Financial modelling considerations
Financial modelling considerations 2023 experience 2024 considerations Trading NA – Foundations Substantial improvement in profitability, other Expect to sustain improved operational performance items ~ net to zero NA – Suncoast Large non-recurring margin benefit: extended lag Performance to reflect
Slide 14: Business performance
Business performance > KELLER
Slide 15: Safety and wellbeing
Safety and wellbeing Performance • AFR is 0.10, flat year on year Accident Frequency Rate • TRIR is 0.60, an improvement of 26 fewer recordable injuries year-on-year Key actions • More in-depth approach to assurance with audits done by senior HSEQ and operations personnel Total Recordable Incident R
Slide 16: Carbon performance
Carbon performance Scope 2 Scope 1 Scope 3 Net zero 2030 Net zero 2040 Operations net zero 2050 Scope 2 tCO2e tCO2e tCO2e/£m revenue Scope 1 9,000 250,000 100 Scope 3 8,000 90 Operational 7,000 200,000 80 6,000 70 Decreasing 5,000 150,000 60 direct control 50 over emissions 4,000 100,000 40 3,000 30
Slide 17: A robust year-end order book at £1.5bn
A robust year-end order book at £1.5bn Geographic mix (full order book) North America1 Europe1 AMEA1 £904.6m +25% £317.6m -7% £266.9m -5% Order book (£m) 1,800 1,600 1,400 1,200 1,000 800 RECON LNG, NEOM and HS2 600 orders COVID-19 Post COVID-19 400 recovery 200 - 2019 2020 2021 2022 2023 Order book
Slide 18: North America Operating review
North America Operating review £m 2023 2022 Constant South Carolina £m £m currency USA Revenue 1,770.0 1,896.1 -6.4% Underlying operating profit 169.6 82.0 +107.8% Underlying operating margin 9.6% 4.3% +530bps Order book 904.6 761.3 +24.6% • Revenue: down driven by lower volume at RECON and Suncoast
Slide 19: Europe Operating review
Europe Operating review £m 2023 2022 Constant Gdansk currency Peterborough Poland UK Revenue 686.0 649.3 +4.2% Underlying operating profit 1.8 29.1 -93.9% Underlying operating margin 0.3% 4.5% -420bps Order book 317.6 347.5 -7.3% • Revenue: up modestly, driven by large infrastructure projects; offse
Slide 20: AMEA Operating review
AMEA Operating review £m 2023 2022 Constant Melbourne currency Australia Revenue 510.0 399.2 +34.1% Underlying operating profit 22.6 6.6 +253.2% Underlying operating margin 4.4% 1.7% +270bps Order book 266.9 298.4 -5.1% • Revenue: increased by 34.1% driven by strong trading at Keller Australia, deli
Slide 21: Strategic process
Strategic process . KELLER
Slide 22: Our Strategy
Purpose Strategy Objectives Actions To be the preferred international geotechnical specialist contractor focused on sustainable markets and attractive projects, generating long Our term value for our stakeholders Strategy Our local businesses will leverage the group’s scale and expertise to deliver
Slide 23: Strategic progress in 2023
Strategic progress in 2023 Portfolio • Focused on quality of existing portfolio and earnings • Reorganisation of BUs in North America – created South Central • Decision to exit Egypt, Kazakhstan, Sub-Saharan Africa, CynTech • Obtained full control of operating business in Saudi Arabia Performance •
Slide 24: Strategic priorities for 2024
Strategic priorities for 2024 Portfolio • Further refinement of our organisation structure (NA, EME, APAC) • Targeted acquisitions to accelerate market share development • Organic market penetration in chosen local markets Performance • Turnaround in Europe • Maintain momentum with focus on profitab
Slide 25: Summary and outlook
Summary and outlook } KELLER
Slide 26: Summary and outlook
Summary and outlook 2023 Summary – Record performance • Record results that provide a new foundation for future growth Sustainable improvement in performance in NA Foundations Suncoast gained from a material non-recurring margin benefit Several other external and internal impacts that balance
Slide 27: Questions and answers
Questions and answers > KELLER
Slide 28: Reporting – new structure proforma
Reporting – new structure proforma Effective 1 January 2024 Revenue Operating profit Operating profit margin % 2023 2022 2023 2022 2023 2022 £m £m £m £m % % North America 1,770.0 1,896.1 North America 169.6 82.0 North America 9.6% 4.3% Europe 686.0 649.3 Europe 1.8 29.1 Europe 0.3% 4,5% MEA1 122.0 9
Slide 29: Keller overview
Keller overview } KELLER
Slide 30: Keller today
Keller today Every day millions of people around the world live, work and play on ground prepared by Keller Three divisions Our purpose Our vision Our values 17 business units To build the To be the Integrity foundations for leading provider a sustainable of specialist Collaboration 160 future geote
Slide 31: Building the foundations for a sustainable future
Building the foundations for a sustainable future • Diverse geographies Resilient • Diverse market sectors revenues • Diverse products • Diverse customers • Specialist project profile Firm Sustainable • Improved focus on quality of margin foundations margins • Strong competitive position • Proprieta
Slide 32: Well balanced in terms of geography and sector
Well balanced in terms of geography and sector • Operating globally in a number of sectors gives us the resilience to trade through national cyclicality • Good access to all markets with no overweight exposure • Geopolitically secure Revenue by geography (2023) Revenue by sector (2023) AMEA AMEA 14%
Slide 33: The best solutions
The best solutions • Projects often require a variety of techniques • With access to our global knowledge base and industry leading product portfolio, our engineers can design the best solutions that reduce materials, cost and time for our clients • Our project management capabilities mean we can al
Slide 34: Diverse customer base
Diverse customer base • Our large client spread means we’re not overly reliant on certain customers • Contracts over £5m revenue make up around 2% of the number of contracts, but account for 40% of total revenue Revenue by contract size (2023) Number of contracts (2023) Above £5m - 2% £1m to £5m - 8
Slide 35: Geotechnical market size
» »> Astrong position but plenty of room to grow 1. Global geotechnical contracting market 2. Addressable markets Geotechnical market size Share of addressable market €23bn* 1 Sources: Keller accounts, IHS Global Insight, GlobaData and otherlocal sources KELLER 3. Core markets where we choose to ope
Slide 36: Keller’s emissions
Keller’s emissions 171,184 tonnes of CO2e (Scope 1 and 2) 171,184 4,764 Not tracked Not tracked Scope 1 Scope 2 Scope 3 Scope 3 Operational Materials Direct emissions Indirect emissions Transport of materials, >60% of site (eg fuel use on site) from electricity use business travel and emissions for
Slide 37: Specialist versus generalist business model
Specialist versus generalist business model Project lifespan Keller General contractor Ground engineering General construction • Early stage • Longer, larger projects • Lower cyclicality • National focus • Specialist design capability • Higher cyclicality • A mix of contracts • Integration of multip
Slide 38: Market demand trends play to our strengths
Market demand trends play to our strengths 65m people will be added to urban population 01 Urbanisation and more large- scale development projects by every year. 67% of the world’s population will live in metropolitan regions by 2040 Increasing land shortage, 02 driving a need to use more brownfield
Slide 39: Factors to consider in geotechnical engineering
Factors to consider in geotechnical engineering Site conditions Requirements Loading Constraints conditions • Sand, silt, clay, • Performance • Neighbouring rock, organic (allowable • Spread, low buildings settlements) intensity • Loose, soft, stiff, • Noise, vibration hard, porous • Schedule • Slen
Slide 40: Full product range
Full product range Right combination of products leads to optimal solutions for the soil conditions and structure type 40
Slide 41: Value engineering with an equipment advantage
Value engineering with an equipment advantage • World’s largest equipment fleet with flexibility to move between markets to match local demand • 1,600 engineers; some focused purely on design • 40% of projects are ‘design and build’ where value engineering can substantially reduce cost and save time
Slide 42: The people advantage
The people advantage Enabling high performance by investing in our people and expertise Learning and development programmes • Project Manager Academy • Field Supervisor Academy • Business Development Academy Emerging talent • More than 100 graduates, 38 apprentices and 40 interns and coops • Pitcair
Slide 43: Financial performance since listing in 1994
43 2023 2022 2021 2023 2020 2022 2019 2021 2020 Financial performance since listing in 1994 2018 2019 2017 2018 2016 2017 TSR of c.16% CAGR vs. 7.7% FTSE All Share CAGR (2023) 2015 Underlying operating profit (£m) 2016 2014 2015 2013 2014 2012 2013 2011 2012 2010 2011 2009 2010 2008 2009 2007 2008 2
Slide 44: Keller fact sheet
Keller fact sheet • Established 1860, now world’s largest geotechnical specialist • Approx. 40% of our contracts are design and build. contractor globally • Contracts over £5m revenue make up around 2% of the number • Revenue by division: North America 60%; Europe 23%; AMEA of contracts, but account
Slide 45: Investor Relations contact
Investor Relations contact Caroline Crampton Group Head of Investor Relations +44 20 7616 7575 caroline.crampton@keller.com 45