Fleetwood Limited · ASX:FWD
Fleetwood — Merger or Acquisition (July 2018)
56 slides from Fleetwood's merger presentation, Jul 25, 2018
Slide 1: Fleetwood Australia: From Turnaround to Growth
For personal use only Fleetwood Australia: From Turnaround to Growth July 2018 © Copyright 2018 Fleetwood Corporation
Slide 2: Acquisition Target
Acquisition Target: For personal use only © Copyright 2018 Fleetwood Corporation 2
Slide 3: Acquisition Target
Acquisition Target: For personal use only © Copyright 2018 Fleetwood Corporation 3
Slide 4: Acquisition Target
Acquisition Target: For personal use only © Copyright 2018 Fleetwood Corporation 4
Slide 5: Important Information and Disclaimer
Important Information and Disclaimer For personal use only NOT FOR RELEASE OR DISTRIBUTION IN THE UNITED STATES OF AMERICA This investor presentation (Presentation) has been prepared by Fleetwood Corporation Limited (Fleetwood). This Presentation has been prepared in relation to an institutional pla
Slide 6: Important Information and Disclaimer (continued)
Important Information and Disclaimer (continued) The Retail Entitlement Offer will be made on the basis of the information to be contained in the retail offer booklet to be prepared for eligible retail shareholders in Australia and New Zealand For personal use only (Retail Offer Booklet), and made a
Slide 7: Important Information and Disclaimer (continued)
Important Information and Disclaimer (continued) This Presentation contains certain “forward-looking statements” and comments about future matters including but not limited to projections, guidance on future revenues, earnings, margin For personal use only improvement, other potential synergies and
Slide 8: 1. Equity Raising Overview
For personal use only 1. Equity Raising Overview © Copyright 2018 Fleetwood Corporation 8
Slide 9: Equity Raising Overview
Equity Raising Overview For personal use only Offer Size and • Equity raising to raise approximately $60.0 million, comprising: Structure – An Institutional Placement to raise approximately $22.0 million; plus – An Accelerated Non-Renounceable Entitlement Offer to raise approximately $38.0 million •
Slide 10: Source and Uses of Funds
Source and Uses of Funds For personal use only Sources A$M Uses A$M Gross Proceeds from the equity raising 60.0 Acquisition of MBS 34.2 Acquisition of NRV 10.0 Transaction costs and general working capital 15.8 Total Sources of funds 60.0 Total Use of Funds 60.0 © Copyright 2018 Fleetwood Corporatio
Slide 11: Equity Raising Timetable
Equity Raising Timetable For personal use only ASX Announcement of Offer Wednesday, 25 July 2018 Institutional Offer and Institutional Bookbuild Wednesday, 25 July 2018 Record Date for Participation in ANREO Friday, 27 July 2018 Trading Halt Lifted and Return to Trading on ASX Friday, 27 July 2018 R
Slide 12: 2. Turnaround Update
For personal use only 2. Turnaround Update © Copyright 2018 Fleetwood Corporation 12
Slide 13: Turnaround Update
Turnaround Update For personal use only Challenges 3 years ago: • High debt-level • Four of the group’s five businesses losing money (Searipple, West Coast Modular business, Flexiglass and Caravan Manufacturing) Fleetwood today: • Minimal debt • Flexiglass and Caravan Manufacturing businesses sold •
Slide 14: 3. Growth Opportunity
For personal use only 3. Growth Opportunity © Copyright 2018 Fleetwood Corporation 14
Slide 15: Growth Opportunity
Growth Opportunity For personal use only Fleetwood plans to acquire two businesses: • Sydney-based Modular Building Systems (MBS) for $34.2m. • Melbourne-based Northern RV (NRV) for $10.0m. Compelling Strategic Rationale: • MBS gives the Modular Accommodation (MA) business a large and modern facilit
Slide 16: Acquisition Fundamentals
Acquisition Fundamentals For personal use only Modular Building Additional Costs Pro - Forma Systems FY18 Northern RV under FWD FY2018 P&L 3,4 4 $ million (MBS) FY18 (NRV) Combined Ownership 1 Impact Revenue 49.6 15.7 65.3 - 65.3 EBITA 9.4 4.7 14.1 (1.9) 12.2 EBITA Margin 19% 30% 22% 19% Acquisition
Slide 17: 4. Modular Building Systems (MBS)
For personal use only 4. Modular Building Systems (MBS) © Copyright 2018 Fleetwood Corporation 17
Slide 18: Modular Building Systems (MBS)
Modular Building Systems (MBS) For personal use only • 9,000sqm facility in Smithfield, Western Sydney • Approximately 80% of FY18 revenue derived from NSW Government modular prison cell contracts. Balance of revenue from education and commercial markets. Strategic Rationale: Provides a strong entry
Slide 19: Overview of MBS
Overview of MBS For personal use only Murray Shaw commenced trading in 1998 as ‘Site Establishments’ before a name change to ‘Affordable Portable Buildings’ in 2001 and to ‘Modular Building Systems’ in 2007. • MBS is based in NSW and specialises in the manufacture and installation of prefabricated m
Slide 20: Market Segments Targeted by MBS
Market Segments Targeted by MBS For personal use only Detention: Modular building prison projects sourced from government. Contracts are generally large and standardised in nature. Education: Modular building projects for independent schools as well as reoccurring projects for Catholic and Anglican
Slide 21: MBS Management Team
MBS Management Team For personal use only Murray Shaw – Founder and Managing Director: Murray has over 20 years experience and founded MBS. Murray is a licensed builder in NSW, ACT and QLD. He will remain with the business post-acquisition as a consultant with a focus on oversight, business developm
Slide 22: 5. Northern RV (NRV)
For personal use only 5. Northern RV (NRV) © Copyright 2018 Fleetwood Corporation 22
Slide 23: Northern RV (NRV)
Northern RV (NRV) For personal use only • 2,200sqm premises in Campbellfield, Victoria • Provides plumbing kits and labour to over 6,000 of the 22,000 caravans manufactured annually in Australia. • Secondary revenue streams derived from repair and warranty services, and retailing caravan parts and a
Slide 24: Overview of NRV
Overview of NRV For personal use only NRV is an established supplier of products and services to the Melbourne caravan manufacturing sector, having been founded in 2006 by licensed plumber, David Slorach. David will remain with the business post-acquisition. • Core offering centres on providing spec
Slide 25: 6. Combined Group Profile
For personal use only 6. Combined Group Profile © Copyright 2018 Fleetwood Corporation 25
Slide 26: Existing Business – Base Earnings
Existing Business – Base Earnings For personal use only • Post-sale of RV all businesses are profitable. • The profit-and-loss now treats RV as a discontinued business. • Trading to May 2018 EBIT guidance of $18.5m1 in EBIT excluding RV. • Finished FY18 with no net debt. Underlying EBIT ($ million)
Slide 27: Pro Forma Transaction Impact
Pro Forma Transaction Impact For personal use only The combined effect of the transactions is approximately 14% eps accretive on a pro-forma FY18 basis 1. Interest is assumed to be 2x H1 interest costs. 2. Tax is applied at 30% in the above analysis. 3. Shares on issue assume 33.3m new shares are is
Slide 28: Profile of the Combined Group
Profile of the Combined Group For personal use only MA becomes the dominant business (pro forma FY181) Pre acquisition EBITA by division1 Post acquisition EBITA by division1 1. Unaudited and pre contract intangible amortisation © Copyright 2018 Fleetwood Corporation 28
Slide 29: Pro Forma Balance Sheet
Pro Forma Balance Sheet For personal use only MBS at NRV at Pro-forma Item $m Dec-17 acquisition acquisition Offer Dec-17 Cash $9.3m $(34.2)m $(10.0)m $57.0m $22.1m Working capital assets $126.6m $8.3m $1.8m $136.7m Fixed assets $47.4m $1.8m $0.1m $49.3m Intangibles $52.7m $28.7m $8.1m $89.5m Other
Slide 30: 7. Summary and Outlook
For personal use only 7. Summary and Outlook © Copyright 2018 Fleetwood Corporation 30
Slide 31: Summary and Outlook
Summary and Outlook For personal use only • Following the sale of RV all Fleetwood businesses are now profitable. • MBS gives the Modular Accommodation (MA) business a large and modern facility in the key Western Sydney Market and access to the growing detention market. • MBS also helps Fleetwood’s
Slide 32: A. Risk Factors
For personal use only A. Risk Factors © Copyright 2018 Fleetwood Corporation 32
Slide 33: A. Risk Factors – Key Risks
A. Risk Factors For personal use only i) KEY RISKS This section sets out some of the key risks associated with: • Fleetwood and its existing business; • the Acquisitions; and • participation in the Offer and share ownership. The risks set out in this section are not listed in order of importance and
Slide 34: A. Risk Factors – Fleetwood Risks
A. Risk Factors For personal use only ii) FLEETWOOD RISKS Economic conditions Fleetwood's operating and financial performance is influenced by a variety of general economic and business conditions including the level of inflation, interest rates and exchange rates and government fiscal, monetary and
Slide 35: A. Risk Factors – Fleetwood Risks
A. Risk Factors For personal use only ii) FLEETWOOD RISKS Competition risk Increased competition in the areas in which Fleetwood operates could result in price reductions, under-utilisation of personnel, assets or infrastructure, reduced operating margins and/or loss of market share, which may have
Slide 36: A. Risk Factors – Fleetwood Risks
A. Risk Factors For personal use only ii) FLEETWOOD RISKS Customer service Fleetwood's ability to maintain relationships with major customers is integral to its financial performance. This in turn depends on its ability to offer competitive service standards and pricing. Poor performance in either a
Slide 37: A. Risk Factors – Fleetwood Risks
A. Risk Factors For personal use only ii) FLEETWOOD RISKS Environmental risk National and local environmental laws and regulations may affect Fleetwood's operations. Standards are set by these laws and regulations regarding certain aspects of health and environmental quality, and they provide for pe
Slide 38: A. Risk Factors – Fleetwood Risks
A. Risk Factors For personal use only ii) FLEETWOOD RISKS Foreign exchange risk Fleetwood is exposed to foreign exchange risk and movements in the foreign exchange rate may affect the price of capital equipment or materials acquired outside of Australia. These risks may affect Fleetwood’s financial
Slide 39: A. Risk Factors – Fleetwood Risks
A. Risk Factors For personal use only ii) FLEETWOOD RISKS Taxation Changes in tax law (including goods and services taxes and stamp duties), or changes in the way tax laws are interpreted, may impact the tax liabilities of Fleetwood. In addition, the ability of Fleetwood to obtain the benefit of any
Slide 40: A. Risk Factors – Fleetwood Risks
A. Risk Factors For personal use only ii) FLEETWOOD RISKS Government policy and regulation Fleetwood's operations are affected by government policy and legal and regulatory oversight. Any changes to these matters may have a material adverse effect on Fleetwood's future financial performance and posi
Slide 41: A. Risk Factors – Acquisition Risks
A. Risk Factors For personal use only iii) ACQUISITION RISKS Completion risks Fleetwood may terminate the MBS share purchase deed and the NRV business purchase agreement in certain circumstances, including in the circumstance where certain conditions precedent have not been satisfied. If such termin
Slide 42: A. Risk Factors – Acquisition Risks
A. Risk Factors For personal use only iii) ACQUISITION RISKS Contract risks (.cont) In addition, certain of MBS's and NRV's contracts may be subject to termination for convenience by customers without cause. In the event of a contract termination, Fleetwood may not be able to redeploy the assets and
Slide 43: A. Risk Factors – Acquisition Risks
A. Risk Factors For personal use only iii) ACQUISITION RISKS Changes to government policy A significant portion of MBS's business is dependent on the demand for education and detention facilities, which are affected by a range of laws and regulations and are highly influenced by the capital expendit
Slide 44: A. Risk Factors – Acquisition Risks
A. Risk Factors For personal use only iii) ACQUISITION RISKS Analysis of Acquisitions Fleetwood has undertaken financial, business and other analysis on MBS and NRV in order to determine their attractiveness to Fleetwood and whether to pursue the Acquisitions. It is possible that such analysis, and
Slide 45: A. Risk Factors – Acquisition Risks
A. Risk Factors For personal use only iii) ACQUISITION RISKS Reliance on information provided If any of the data or information provided to and relied upon by Fleetwood in its due diligence process and its preparation of this presentation proves to be incomplete, incorrect, inaccurate or misleading,
Slide 46: A. Risk Factors – Acquisition Risks
A. Risk Factors For personal use only iii) ACQUISITION RISKS Historical liability in respect of MBS As the acquisition of MBS is structured as a share sale, Fleetwood may become directly or indirectly liable for any liabilities that MBS has incurred in the past as a result of prior acts or omissions
Slide 47: A. Risk Factors – Offer and Share Ownership
A. Risk Factors For personal use only iv) RISKS RELATING TO THE OFFER AND SHARE OWNERSHIP Trading price of Fleetwood shares There are risks associated with any share market investment. It is important to recognise that share prices and dividends might fall or rise. Factors affecting the operating an
Slide 48: A. Risk Factors – Underwriting Risk
A. Risk Factors For personal use only iv) RISKS RELATING TO THE OFFER AND SHARE OWNERSHIP Underwriting risk Fleetwood has entered into an underwriting agreement under which the Underwriter has agreed to fully underwrite the Entitlement Offer, subject to the terms and conditions of the underwriting a
Slide 49: A. Risk Factors – Underwriting Risk (cont)
A. Risk Factors For personal use only iv) RISKS RELATING TO THE OFFER AND SHARE OWNERSHIP Underwriting risk (.cont) The events which may trigger termination of the underwriting agreement include where: • a statement contained in the offer materials (including this presentation and all ASX announceme
Slide 50: A. Risk Factors – Risk of Dilution
A. Risk Factors For personal use only iv) RISKS RELATING TO THE OFFER AND SHARE OWNERSHIP Risk of dilution You should also note that if you do not take up all of your entitlement under the Entitlement Offer, then your percentage security holding in Fleetwood will be diluted by not participating to t
Slide 51: B. International Offer Restrictions
For personal use only B. International Offer Restrictions © Copyright 2018 Fleetwood Corporation 51
Slide 52: International Offer Restrictions
International Offer Restrictions For personal use only This document does not constitute an offer of new ordinary shares ("New Shares") of the Company in any jurisdiction in which it would be unlawful. In particular, this document may not be distributed to any person, and the New Shares may not be o
Slide 53: International Offer Restrictions
International Offer Restrictions For personal use only New Zealand This document has not been registered, filed with or approved by any New Zealand regulatory authority under the Financial Markets Conduct Act 2013 (the "FMC Act"). The New Shares are not being offered to the public within New Zealand
Slide 54: International Offer Restrictions
International Offer Restrictions For personal use only Singapore This document and any other materials relating to the New Shares have not been, and will not be, lodged or registered as a prospectus in Singapore with the Monetary Authority of Singapore. Accordingly, this document and any other docum
Slide 55: International Offer Restrictions
International Offer Restrictions For personal use only United Kingdom Neither this document nor any other document relating to the offer has been delivered for approval to the Financial Conduct Authority in the United Kingdom and no prospectus (within the meaning of section 85 of the Financial Servi
Slide 56: Thank you
For personal use only Thank you © Copyright 2018 Fleetwood Corporation 56