Keller Group Plc · LSE:KLR
Keller — FY2011 Earnings Presentation
38 slides from Keller's earnings presentation, February 2012
Slide 1: Keller Group plc Full Year Results 2011
Keller Group plc Full Year Results 2011 February 2012
Slide 2: Overview
Overview • 2011 results in line with previous guidance, in a challenging year • Year-end net debt better than expected at £102.5m (1.4x EBITDA) • Recent major project awards, including: – £120m Wheatstone contract awarded in Australia, starting late 2012 – £30m Vale contract awarded in Malaysia, sta
Slide 3: Group Income Statement
Group Income Statement % Revenue up 7% on a constant £m 2011 2010* change currency basis - up 6% ex acquisitions Revenue 1,154.3 1,068.9 +8% Average exchange rates EBITDA 71.4 85.0 -16% - US$1.60 (2010: $1.55) - €1.15 (2010: €1.17) Operating profit 28.9 43.3 -33% - A$1.55 (2010: A$1.68) Net finance
Slide 4: Group Income Statement (continued)
Group Income Statement (continued) % 2010 goodwill impairment £m 2011 2010 change relates to Suncoast and Profit after tax 16.4 28.6 -43% Keller-Terra Goodwill impairment - £21.8m before tax (post tax) - (17.1) 16.4 11.5 Unchanged dividend Minority interests (0.5) (0.3) - 1.1x covered by underlying
Slide 5: Operating Profit & Margin – old divisional structure
Operating Profit & Margin – old divisional structure 2011 2010* Constant currency Op Op revenues up 7% £m Revenue Profit Margin Revenue Profit Margin − UK +8% − US +14% UK 53.6 (3.7) (6.9%) 49.6 (2.5) (5.0%) − CEMEA +0% US 471.1 12.0 2.5% 425.2 6.9 1.6% − Australia +5% CEMEA 407.9 18.1 4.4% 400.3 22
Slide 6: Operating Profit & Margin – new divisional structure
Operating Profit & Margin – new divisional structure 2011 2010* Suncoast broke even Op Op in 2011 £m Revenue Profit Margin Revenue Profit Margin N America 471.1 12.0 2.5% 425.2 6.9 1.6% EMEA result - excellent in Poland EMEA 384.8 8.4 2.2% 357.8 8.1 2.3% - eastern Europe difficult Asia 76.7 6.0 7.8%
Slide 7: Group Balance Sheet
Group Balance Sheet £m 2011 2010 Year-end exchange Goodwill/intangibles 100.6 106.8 rates very similar Property, plant & equipment 266.1 275.0 − US$1.55 (2010: $1.55) Other non-current assets 15.8 16.1 − €1.19 (2010: €1.17) 382.5 397.9 − A$1.52 (2010: A$1.52) Inventories 37.3 32.9 Receivables 334.7
Slide 8: Group Cash Flow Statement
Group Cash Flow Statement £m 2011 2010 Cash from operations Cash generated from operations 54.8 70.3 77% of EBITDA (2010: 83%) Capex – net (37.4) (28.6) Interest (5.1) (4.0) Tax (3.8) (10.2) Capex below depreciation Free cash flow 8.5 27.5 Acquisitions (0.2) (23.4) 2010 acquisitions Dividends (15.8)
Slide 9: Group Financing Position
Group Financing Position • £230m of committed facilities, mainly: Key Financial Covenants – £170m bank facility expiring April 2015 – US$70m private placement, payable October 2014 Test Status* • Comfortably within all financial covenants Net debt < 3x EBITDA 1.8x EBITDA interest cover > 4x 15x • A
Slide 10: Group Order Intake
Group Order Intake Recent order intake Monthly orders boosted by a number of £m (rolling 3 month average at constant currency*) significant projects 140 Crossrail; Victoria station; AP LNG MOF 120 Jan order book 40% up 100 from last year in constant currency 80 - excludes February Vale 60 award Whea
Slide 11: Group Analysis of Revenue
Group Analysis of Revenue 2011 Revenue by End Market 2010 Revenue by End Market Keller operates across all Total revenue £1,154m Total revenue £1,069m sectors of the construction industry 17% 16% 14% 14% Infrastructure/Public 51% 53% Buildings by far the largest sector in all four divisions 18% 17%
Slide 12: US Non-residential Construction Market
US Non-residential Construction Market $bn US Construction Put-in-Place Total US non-residential 400 construction market down 2% in 350 2011 (14% down in 2010) 300 Infrastructure/Public Buildings 250 down 4% - second year of decline 200 150 Office/Commercial/Leisure down 100 4% - > 60% off the peak,
Slide 13: North America Analysis of Revenue
North America Analysis of Revenue 2011 Revenue by End Market 2010 Revenue by End Market Infrastructure/Public Total revenue $754m Total revenue $659m Buildings remains the largest sector 20% 20% Year on year changes reflect movements in the 45% overall US construction 13% 11% 50% market 19% Signific
Slide 14: North America Foundations
North America Foundations Double digit revenue growth - foundation market earlier cycle than total construction market Margins remain under pressure - some small signs of over capacity reducing Good performance from Hayward Baker - national footprint gives supportive regional balance Actions taken t
Slide 15: North America Case Studies
North America Case Studies Piling Ground improvement Three Nations Bridge, Ontario Fuel storage tanks, California 14
Slide 16: North America Suncoast
North America Suncoast US Housing Starts (000s) US housing starts have stabilised − 500k – 600k range for 30 months 800 − April 2010 peak due to first-time buyer tax 700 credit − slight uptick in last quarter 600 500 400 Overhang of foreclosed properties remains an issue 300 200 Suncoast broke even
Slide 17: EMEA Analysis of Revenue
EMEA¹ Analysis of Revenue 2011 Revenue by End Market 2010 Revenue by End Market No major movements in Total revenue €443m Total revenue €419m revenue from end markets 15% 15% 49% 20% 46% Infrastructure/Public 20% Building proportion remains high 16% 19% Infrastructure/Public Buildings Infrastructure
Slide 18: EMEA Regional Split
EMEA¹ Regional Split 2011 Revenue by Region 2010 Revenue by Region Another strong year in Poland Total revenue €443m Total revenue €419m - signs of market cooling Good performance from 14% 21% 22% 15% Germany 5% 14% Further cost cutting in UK, 8% France and Spain 17% 7% 10% 10% 14% Work progressing
Slide 19: EMEA Case Studies
EMEA Case Studies Excavation pit Minipiles State Opera House, Berlin Lord Hill’s Bridge, London 18
Slide 20: Asia Highlights
Asia Highlights Strong performance from ground improvement in Singapore Difficult year for Resource Piling with tight pricing - order book and market activity now up Small but profitable contribution from Vietnam Recent award of circa £30m foundation contract for iron ore facility - repeat client, d
Slide 21: Australia Highlights
Australia Highlights The “two speed” economy continues - resource and related sectors remain very strong - commercial and infrastructure markets are much weaker Q1 adversely impacted by flooding in Queensland Disappointing year for Piling Contractors - action taken to refocus business and cut A$4m o
Slide 22: Australia – Wheatstone
Australia – Wheatstone Contract value in excess of A$180m - Keller Australia has good track record on complex projects Remote location at Onslow, Western Australia Scope of work 20,000 driven piles for the main onshore facilities Work requires the collective resources of Keller Australia Preparatory
Slide 23: Review of Strategy
Review of Strategy • Fundamental review following unprecedented changes in our markets • After significant cost reductions, still a need to improve performance • Externally-facilitated review initiated Q2, completed Q4 • Global exercise involving many senior managers from all divisions • Reaffirmed
Slide 24: Strategy and Strengths
Strategy and Strengths Review reaffirmed the Group’s existing strategy • To extend our global leadership in specialist ground engineering Strengths of the Group • Market positioning – global footprint – clear market leader in US, Australia and Poland – growing in developing markets • Technical leade
Slide 25: Business Improvement Initiatives
Business Improvement Initiatives Group wide initiatives • Increase revenue and profit from large projects – growing market segment – leverage experience and knowledge in the Group – further develop large project expertise and global client management • Reinforce risk management – new central, indepe
Slide 26: Case Study – Vale Project
Case Study – Vale Project • £30m contract in Malaysia awarded in February • Ground improvement market leader in Malaysia • Global capabilities exploited – technical support from Europe – operational input from Australia – equipment transfers from Europe /Middle East • Re-design capability and range
Slide 27: Outlook
Outlook • Recent data indicate that US construction markets may be turning the corner • European construction markets will remain very difficult – significant economic uncertainty – slow start to the year • Asia and Australian businesses well positioned for a better year • January order book up 40%
Slide 28: Appendix
Appendix
Slide 29: Introduction to Keller
Introduction to Keller • The world’s largest independent ground engineering contractor – ground engineering is a small, niche sub-sector of construction – growing faster than construction, reflecting: − more pressure to build on brownfield and marginal land − more ambitious development and infrastru
Slide 30: Ground Engineering Worldwide
Ground Engineering Worldwide % of 2011 Activities revenue Regions of use Applications Piling 38% NA/UK Foundation support Eastern Europe Earth retention Middle East Asia & Australia Ground improvement 26% North America Foundation support EMEA Seismic risk protection Asia Australia Speciality Groutin
Slide 31: History of Keller
History of Keller 1958 1960’s 1974 1984 1990 1994 2001 2002 2006 2007 2008 2009 2010 NOW Acquired Phi Acquired Acquired Est. 1958 Acquired Management Acquired (UK) Resource Systems Ground test Johann Keller buyout from Suncoast Piling Geotechnique services in Germany GKN plc (US) (Singapore) (UK) ma
Slide 32: Strategy
Strategy •Our Objective – to extend our global leadership in specialist ground engineering through: – organic growth, particularly in developing markets – targeted acquisitions • Our Execution – transfer of technologies and techniques within our current geographic regions – offering design and build
Slide 33: US Geographic Coverage
US Geographic Coverage MAINE WASHINGTON NORTH VERMONT MONTANA DAKOTA NEW HAMPSHIRE MINNESOTA OREGON WISCONSIN MASSACHUSETTS IDAHO NEW YORK SOUTH RHODE ISLAND DAKOTA MICHIGAN CONNECTICUT WYOMING PENNSYLVANIA NEW JERSEY IOWA NEBRASKA OHIO WASHINGTON D.C. DELAWARE NEVADA ILLINOIS INDIANA MARYLAND WEST
Slide 34: Europe Geographic Coverage
Europe Geographic Coverage SWEDEN UK NETHERLANDS GERMANY POLAND UKRAINE CZECH REP. SLOVAKIA FRANCE SWITZERLAND AUSTRIA HUNGARY HUNGARY ROMANIA SLOVENIA CROATIA PORTUGAL SERBIA SPAIN ITALY 33
Slide 35: Ten Year Track Record – Revenue
Ten Year Track Record £m Revenue 2002 – 2011 1400 (Continuing Operations) 1,196.6 1200 1,154.3 1,037.9 1,068.9 1000 955.1 857.7 800 685.2 600 526.2 505.4 447.5 400 200 0 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 North America EMEA Asia Australia 34
Slide 36: Ten Year Track Record – Operating Profit
Ten Year Track Record £m Operating Profit 2002 – 2011 (Continuing Operations) 140 119.4 120 107.4 100 89.3 77.3 80 55.3 60 43.3 33.8 * 33.4 40 31.5 28.9 20 0 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 -20 Head Office Costs North America EMEA Asia Australia *pre-exceptionals 35
Slide 37: Financial Performance
Financial Performance Operating margin* Dividend per share (pence) Operating 12% 0.25 margin at historic low 10% 0.20 8% 0.15 Dividend 6% increased every year since 1994 0.10 4% flotation until 2011 0.05 2% 0% 0.00 02 03 04 05 06 07 08 09 10 11 02 03 04 05 06 07 08 09 10 11 *from continuing operatio
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