Gwa Group Limited · ASX:GWA
Gwa — H1 FY2020 Earnings Presentation
35 slides from Gwa's earnings presentation, Feb 17, 2020
Slide 1: Financial Results Presentation for the Half Year Ended 31 December 2019
17 February 2020 ASX On-Line Manager Company Announcements Australian Securities Exchange Dear Sir Financial Results Presentation for the Half Year Ended 31 December 2019 We enclose the following document for immediate release to the market: • Half Year Results Presentation On 17 February 2020 at 10
Slide 2: Results Presentation
Superior Solutions for Water Results Presentation Half Year ended 31 December 2019 17 February 2020
Slide 3: Disclaimer
Disclaimer This presentation contains non-IFRS financial measures to assist users to assess the underlying financial performance of the Group. The non-IFRS financial measures in this presentation were not the subject of a review or audit by KPMG. Financials have been adjusted for IFRS16 Leases unles
Slide 4: Agenda
Agenda 01 Overview and key themes 02 Financial results 03 Strategic progress 04 Summary and outlook 05 Appendix 3
Slide 5: Overview and key themes
01 Overview and key themes IG Seti | METHVEN dorf
Slide 6: Solid performance given weaker Australian residential housing conditions
Overview Financial results Strategic progress Outlook Appendix Solid performance given weaker Australian residential housing conditions Group EBIT within guidance ‒ Revenue impacted by market conditions in Australia and retailer de-stocking in Q1 and Q2 FY20 ‒ Revenue growth in New Zealand and Inter
Slide 7: Financial results
02 | Financial results |G wa | METHVEN dorf Group Limited
Slide 8: Operational discipline delivers EBIT within guidance range
Overview Financial results Strategic progress Outlook Appendix Operational discipline delivers EBIT within guidance range Normalised¹ from continuing operations² includes Methven in 1H FY20 but not 1H FY19 1H FY19 1H FY20 ‒ EBIT of $38.1m within $37-41m guidance range A$m Normalised¹ % Change Exclud
Slide 9: Operational discipline maintains EBIT margin
Overview Financial results Strategic progress Outlook Appendix Operational discipline maintains EBIT margin Normalised¹ from continuing operations² (pro forma) includes Methven in 1H FY20 and 1H FY19 Pro Forma ‒ Revenue reflects the decline in residential new build and A$m Normalised¹ 1H FY19 1H FY2
Slide 10: Market share growth in Australia including Methven
Overview Financial results Strategic progress Outlook Appendix Market share growth in Australia including Methven Market Data¹ ‒ Trading conditions deteriorated in 1H FY20 Market Segment 1H FY20 vs C ha nge v s prio r c o rre s po nding pe rio d 1H FY19 predominantly in detached and multi-residentia
Slide 11: New Zealand performance improving and growth in International continues
Overview Financial results Strategic progress Outlook Appendix New Zealand performance improving and growth in International continues Continuing operations¹ (pro forma) includes Methven in 1H FY20 and 1H FY19 Pro Forma ‒ Australia revenue impacted by weak market partially A$m Revenue 1H FY19 1H FY2
Slide 12: Strong cost management and Methven synergies
Overview Financial results Strategic progress Outlook Appendix Strong cost management and Methven synergies Normalised¹ continuing operations² includes Methven in 1H FY20 but not 1H FY19 Normalised¹ Continuing Operations EBIT Bridge (A$m) ‒ Volume/Mix: impacted in Australia by weak market and trade
Slide 13: Good progress on Methven integration
Overview Financial results Strategic progress Outlook Appendix Good progress on Methven integration ‒ Earnings improving (up 50% on 2H FY19) ‒ Methven now in growth in New Zealand following three years of decline ‒ International growing strongly; UK business growing market share ‒ Methven Australia
Slide 14: Cash generation remains strong
Overview Financial results Strategic progress Outlook Appendix Cash generation remains strong Continuing operations¹ (pro forma) includes Methven in 1H FY20 and 1H FY19 Pro Forma ‒ Working capital adverse due to higher inventory relating to Cash flow from Continuing 1H FY19 1H FY20 Operations A$M In
Slide 15: Strong financial position maintained
Overview Financial results Strategic progress Outlook Appendix Strong financial position maintained Continuing operations¹ includes Methven from 30 June 2019 but not in prior periods Metrics² 30 June 2017 30 June 2018 31 Dec 2018 30 June 2019 31 Dec 2019 ‒ GWA remains in a strong financial position
Slide 16: Strategic progress
CAROMA Aegan U-e 03 | Strategic progress Soesepenvercen noes bathroom collection. We've paired beautiful sustainable Tasmanian timbers with sophisticated gunmetal finishes to create a unique collection that is grounded in practical, functional and sustainable design princi The EWvire collection incl
Slide 17: GWA strategy for growth
Overview Financial results Strategic progress Outlook Appendix GWA strategy for growth We make life better with superior solutions for water Build GWA as the most trusted and respected water solutions company Maximise shareholder value creation – NPAT growth, ROFE, TSR CUSTOMER FOCUSED CONSUMER DRIV
Slide 18: Caroma Smart Command generating positive market engagement
Overview Financial results Strategic progress Outlook Appendix Caroma Smart Command® generating positive market engagement Progress ‒ Strong customer engagement in multiple commercial segments ‒ Caroma Smart Command® installed in 36 sites across Australia and New Zealand, with solid bank of addition
Slide 19: We continue to invest behind our core brands
Overview Financial results Strategic progress Outlook Appendix We continue to invest behind our core brands ‒ Continued investment in our core brands enhances our engagement with consumers: ‒ Launched Caroma Elvire premium range ‒ Extensive media across outdoor, online and TVC¹ ‒ Continued momentum
Slide 20: Investment in new distribution network enables integration of Methven portfolio
Overview Financial results Strategic progress Outlook Appendix Investment in new distribution network enables integration of Methven portfolio, improved customer service and network efficiencies ‒ Consolidated distribution network to four key Distribution Centres in NSW, QLD, VIC and WA ‒ The new ne
Slide 21: Strategic initiatives focus on generating medium-term revenue growth
Overview Financial results Strategic progress Outlook Appendix Strategic initiatives focus on generating medium-term revenue growth underpinned by operational discipline Corporate priority Progress made Continue to: ‒ strengthen merchant customer relationships via joint business planning and core ra
Slide 22: Continuing to strengthen Water Solutions over the medium-term
Overview Financial results Strategic progress Outlook Appendix Continuing to strengthen Water Solutions over the medium-term A$m FY15 FY16 FY17 FY18¹ FY19¹ ² 1H FY19¹ ² 1H FY20¹ ² Water Solutions³ Revenue 330.0 342.0 350.4 358.6 381.7 182.6 206.3 Normalised EBIT 65.5 70.9 74.3 76.2 78.1 39.1 38.1 EB
Slide 23: Summary and outlook
04 | Summary and outlook 22 | (Sy awa CAROMA METHVEN CLARK dorf Group Limited
Slide 24: FY20 outlook – Guidance maintained: Normalised EBIT $80-85m
Overview Financial results Strategic progress Outlook Appendix FY20 outlook – Guidance maintained: Normalised¹ EBIT $80-85m Key area FY20 commentary ‒ Trading conditions to remain challenging in the short term, however forward indicators moving back into balance will provide a solid platform for gro
Slide 25: Results Presentation
Superior Solutions for Water Results Presentation Half Year ended 31 December 2019 17 February 2020
Slide 26: Appendix
05 | Appendix 3lG Geosnted | meTHveN | cLae« | dorf
Slide 27: FY20 Key Assumptions
Overview Financial results Strategic progress Outlook Appendix FY20 Key Assumptions • D&A (depreciation and amortisation) is expected to be ~$7–8m excluding the impact of IFRS 16. Including the impact of IFRS 16 D&A is expected to be ~$20-21m. (refer slide 27 for reconciliation) • Interest costs exp
Slide 28: IFRS 16 Leases - impact on key metrics
Overview Financial results Strategic progress Outlook Appendix IFRS 16 Leases - impact on key metrics Continuing operations¹ (pro forma) includes Methven in 1H FY20 and 1H FY19 1H FY19 1H FY20 Inc lude s M e t hv e n Inc lude s M e t hv e n A$m Previously Restated IFRS 16 Pre IFRS 16 Post IFRS 16 IF
Slide 29: Reconciliation – Reported NPAT to Normalised NPAT
Overview Financial results Strategic progress Outlook Appendix Reconciliation – Reported NPAT to Normalised¹ NPAT Continuing Operations² includes Methven in 1H FY20 but not 1H FY19 1H FY19 1H FY20 E xc lude s M e t hv e n Inc lude s M e t hv e n A$m Continuing Discont'd Group Continuing Discont'd Gr
Slide 30: Increased presence in R&R segment and improved geographic diversification
Overview Financial results Strategic progress Outlook Appendix Increased presence in R&R segment and improved geographic diversification provide resilience through the cycle Resi Segment 18% Category Valves Basins, Sinks, 1% Tubs & Baths 18% Resi Multi-Resi Sanitary R&R 10% ware 43% R&R 59% Comm R&R
Slide 31: Solid history of increasing dividends paid to shareholders
Overview Financial results Strategic progress Outlook Appendix Solid history of increasing dividends paid to shareholders Historical dividends paid (cents) 20.0 18.0 16.0 1.0 14.0 9.5 9.5 12.0 9.0 8.0 10.0 8.0 6.0 8.5 9.0 4.0 7.5 8.0 7.0 5.5 6.0 2.0 - - - FY14 FY15 FY16 FY17 FY18 FY19 FY20 Special F
Slide 32: Existing housing turnover has declined significantly in FY19
Overview Financial results Strategic progress Outlook Appendix Existing housing turnover has declined significantly in FY19 but is beginning to show signs of recovery 70 60 50 '000s per month 40 30 20 10 0 95 97 99 01 03 05 07 09 11 13 15 17 19 Number of dwelling sales, Australia Linear (Number of d
Slide 33: Number of loans for construction and purchase of new dwellings
Overview Financial results Strategic progress Outlook Appendix Number of loans for construction and purchase of new dwellings 8,500 8,000 Number of loans, per month 7,500 7,000 6,500 6,000 5,500 5,000 32 Source: ABS
Slide 34: Annual net overseas migration & Australian population growth
Overview Financial results Strategic progress Outlook Appendix Annual net overseas migration & Australian population growth Annual net overseas migration & Australian population growth 350.0 2.5 300.0 2.0 250.0 1.5 200.0 150.0 1.0 100.0 0.5 50.0 0.0 0.0 Annual net overseas migration ('000s) Australi
Slide 35: Results Presentation
Superior Solutions for Water Results Presentation Half Year ended 31 December 2019 17 February 2020