Speedy Hire Plc · LSE:SDY
Speedy Hire — FY2011 Earnings Presentation
55 slides from Speedy Hire's earnings presentation, 2011
Slide 1: Speedy Hire Plc Annual Results
Speedy Hire Plc Annual Results For the year ended 31 March 2011
Slide 2: Introduction
Introduction Significant improvement in operating margins (H2 on H1) as forecast Self-help has driven £110m cost savings since June 2008 Continuous trend of improving trading since April 2010 Year to date trading in line with expectations Underlying business shows strong recovery allowing
Slide 3: Justin Read, Group Finance Director
Justin Read Group Finance Director 3
Slide 4: Financial Highlights
Financial Highlights 2011 2010 £m £m Revenue £m 354.2 351.1 EBITDA* £m 63.4 68.2 EBIT* £m 8.3 8.0 PBT* £m (0.7) (6.2) Operating cashflow ** £m 49.7 62.9 Adjusted loss / earnings per share* pence - (1.4) DPS (UK GAAP) pence 0.4 0.4 *pre amortisation and exceptional costs ** pre changes in hire fleet
Slide 5: Segmental analysis
Segmental analysis 2011 2010 £m £m Revenue UK & Ireland Asset Services 343.5 347.4 International 8.4 2.4 Training & Advisory 2.3 1.3 354.2 351.1 EBITDA* UK & Ireland Asset Services 69.8 72.0 International 0.4 1.0 Training & Advisory (1.2) - Central (5.6) (4.8) 63.4 68.2 Operating profit* UK & Irelan
Slide 6: Revenue and EBITA P&L bridge
P&L Bridge 360.0 355.0 1.0 Revenue 350.0 3.9 6.0 Revenue (£'m) 345.0 340.0 351.1 354.2 335.0 330.0 325.0 2009/10 UK & Ireland Connaught International Training & Advisory Central 2010/11 16.0 14.0 12.0 1.7 5.6 2.4 EBITA* 10.0 EBITA* (£'m) 1.2 8.0 6.0 4.0 8.0 8.3 2.0 - 2009/10 UK & Ireland Connaught I
Slide 7: Disposal of Accommodation Hire Operations
Disposal of Accommodation Hire Operations Business and fixed assets disposal to Elliott, part of Algeco Scotsman, on 30 April 2011 £34.9m gross cash proceeds Equivalent to 7.6x FY11 EBITDA at contribution level Speedy retains working capital estimated to be c.£3.6m 3 year partnering agreem
Slide 8: Pro-forma P&L adjusted for disposal
Pro-forma P&L adjusted for disposal 2011 2010 Pro-forma Group Accom** Pro-forma Group Accom** Pro-forma variance £m £m £m £m £m £m £m Revenue 354.2 35.5 318.7 351.1 40.6 310.5 8.2 EBITDA* 63.4 4.6 58.8 68.2 6.8 61.4 (2.6) EBITDA* margin 17.9% 13.0% 18.4% 19.4% 16.7% 19.8% EBIT* 8.3 (4.5) 12.8 8.0 (2
Slide 9: Improving margins – Group
Improving margins – Group 20.0% % £'m H1 FY11 H2 FY11 Change Change 15.0% Turnover 177.3 176.9 (0.4) (0.2%) Operating costs (excl dep’n) (152.4) (138.4) 14.0 9.2% EBITA (pre-exceptionals) margin EBITDA* 24.9 38.5 13.6 54.6% EBITDA* margin % 14.0% 21.8% 10.0% Depreciation (29.5) (25.6) 3.9 13.2% EBIT
Slide 10: Improving trading – Group H1/H2 revenues
Improving trading – Group H1/H2 revenues Year on year change in half yearly revenue 30.0% 20.0% 10.0% 0.0% H1 FY09 H2 FY09 H1 FY10 H2 FY10 H1 FY11 H2 FY11 (10.00%) (20.00%) (30.00%) (40.00%) Hire & managed services revenue Total revenue (excluding disposals) 10
Slide 11: Improving trading – Group H2/H2 revenues
Improving trading – Group H2/H2 revenues 180.0 +4.4% -6.5% +133.3% +87.5% 23.2%* +8.1% 175.0 170.0 165.0 £'m 160.0 173.3 155.0 150.0 160.6 145.0 140.0 * Reduced intercompany trading Total revenue (excluding disposals) 11
Slide 12: Improving trading – UK Asset Services H2/H2
Improving trading – UK Asset Services H2/H2 H2 Revenue split 72% 10% 4% 14% 100% 30.0% Year on Year Change in Revenue (excl Disposals) 20.0% 18.0% 10.0% 6.1% 4.4% 0.0% -6.1% -10.0% -22.7% -20.0% -30.0% Tools, Lifting & Survey Accommodation* Engineering Services Power UK Asset Services * Accommodatio
Slide 13: Change in UK volume & yield
Change in UK volume & yield - rebased to March 10 Volume Monthly change in hire revenue vs 10.00 March 10 % 6.00 - -10.00 4.00 Product Mix 10.00 2.00 % - -10.00 % - Customer Mix Apr-10 May-10 10.00 Jul-10 Aug-10 Sep-10 Nov-10 Feb-11 Dec-10 Mar-10 Jun-10 Jan-11 Mar-11 Oct-10 -2.00 - % -10.00 -4.00 Ra
Slide 14: Total Group overheads
Total Group overheads 220.0 2.3 3.3 215.0 1.1 1.7 210.0 6.8 Overheads* (£'m) 205.0 214.5 200.0 205.9 195.0 190.0 2009/10 International & TAS Connaught Share options Bonus provision Other decrease in 2010/11 costs * Pre-exceptional costs and amortisation 14
Slide 15: Balance sheet
Balance sheet 2011 £m 2010 £m Non-current assets Property, plant and equipment 219.9 285.6 Intangibles 60.2 65.7 280.1 351.3 Current assets Inventories 10.2 11.3 Trade and other receivables 97.7 103.4 Assets held for sales 33.4 - Cash 0.2 12.5 141.5 127.2 Current liabilities (68.8) (80.8) Non-curren
Slide 16: Operating cash flow bridge – yoy movement
Operating cash flow bridge – yoy movement 70.0 5.5 15.6 Change in components of operating cashflow (£'m) 65.0 0.8 2.3 0.2 0.6 0.2 60.0 55.0 2.0 1.0 50.0 45.0 62.9 40.0 49.7 35.0 30.0 16
Slide 17: Cash flow statement
Cash flow statement 2011 2010 £m £m Change Cash generated from operations before changes in hire fleet 49.7 62.9 (13.2) Purchase of hire equipment (41.8) (33.6) (8.2) Proceeds from sale of hire equipment 16.2 22.6 (6.4) Cash generated from operations 24.1 51.9 (27.8) Interest paid (10.5) (14.3) 3.8
Slide 18: Summary
Summary Improving margins and returns Positive movement in hire rates, but remain below historical levels Net debt currently £76m Successfully completed the sale of Accommodation Hire Refinancing progressing well; expected to complete shortly 18
Slide 19: Steve Corcoran, Chief Executive
Steve Corcoran Chief Executive 19
Slide 20: Introduction: Focus on Cs
Introduction Focus on 3 Cs Cash Costs Customers Market outlook Future developments 20
Slide 21: Debt reduced by 74% since July 2008
Debt reduced by 74% since July 2008 (peak debt) 350 64.6 102.2 19.6 300 10.1 7.4 250 99.7 46.7 210.9 £'m 200 150 303.2 100 34.4 50 113.9 79.5 0 * - including cashflow relating to exceptional items ** - Pro-forma net proceeds from disposal of the accommodation business, including the unwind of the ne
Slide 22: Group fleet investment – managed over the cycle
Group fleet investment – managed over the cycle Hire fleet investment vs depreciation 50 160% 45 140% 40 120% 35 100% 30 £'m 25 80% 20 60% 15 40% 10 20% 5 0 0% H1 FY08 H2 FY08 H1 FY09 H2 FY09 H1 FY10 H2 FY10 H1 FY11 H2 FY11 Fleet capex (gross) (LHS) Fleet depreciation (LHS) Capex % of depreciation (
Slide 23: Improving asset utilisation
Improving asset utilisation Itemised products - physical utilisation 25% Change in physical utilisation vs Jauary 2010 20% 15% 10% 5% 0% Change in utilisation vs Jan 2010 (LHS) Utilisation rates shown for UK Asset Services 23
Slide 24: Age profile remains comfortable
Age profile remains comfortable Fleet age vs Useful Economic Life (UEL) 160.0 140.0 120.0 Age (months) 100.0 80.0 60.0 40.0 20.0 - Lower standard deviation Upper standard deviation UEL Data for end of Q3 for UK asset services 24
Slide 25: Individual assets can distort the category
Individual assets can distort the category Fleet age vs Useful Economic Life – Compressors 200.0 150.0 Age (months) 100.0 50.0 - Lower standard deviation Upper standard deviation UEL Data for end of Q3 for UK asset services 25
Slide 26: Improving margins – UK Asset Services
Improving margins – UK Asset Services £100m 29% 29% 33% Depreciation Staff costs Property Vehicle costs Operational Delivered NBV reduction Headcount Vehicle Closed 153 gearing Factors impacting on margin since reduction since numbers depots since September September reduction since March 2008; 2008
Slide 27: Operational gearing - improving KPIs
Operational gearing - improving KPIs Employee numbers Revenue per employee 5,000.0 60.00 15% Year on year change in revenue per Number of employees 10% Revenue per employee (£'000) 4,000.0 55.00 5% 3,000.0 50.00 0% employee 2,000.0 -5% 45.00 1,000.0 -10% 40.00 -15% - -20% H1 09 H2 09 H1 10 H2 10 H1
Slide 28: Operational gearing – capacity for growth
Operational gearing – capacity for growth Number of depots Average revenue per depot per week 600 24.0 22.0 -16% Average revenue per depot per week (£'000) 500 +13% 20.0 400 Average no. of depots 18.0 300 16.0 200 14.0 100 12.0 0 10.0 28
Slide 29: Structural change – supplier rationalisation
Structural change – supplier rationalisation Number of supplier accounts 4,500 4,000 3,500 Number of supplier accounts 3,000 2,500 2,000 1,500 1,000 500 0 Aug -10 Jul-06 Sep -10 Aug-06 Oct -10 Sep-06 Nov -10 Oct-06 Dec -10 Nov-06 Jan -11 Dec-06 Feb -11 Jan-07 Mar -11 Feb-07 Other Approved Preferred
Slide 30: Revenue breakdown - diversified client base
Revenue breakdown - diversified client base Activity Speedy Sales Structure Transport Repair Other 4.3% 1.4% General International Cash Account Ireland 4.8% Construction Account 2.1% (Account) 2.9% 2.9% 1.4% Engineering Managed (SES) Services 3.5% CN Top 100 5.4% Infrastructure 27.2% 3.5% Trades Sal
Slide 31: Gaining market share with those gaining share
Gaining market share with those gaining share End Markets Other Hire Miscellaneous Majors growing faster than Companies 8.7% 4.9% construction market Construction Infrastructure 47.0% and Utilities Average 3.8% increase in turnover 5.2% of companies in position 1 -80 * FM, Services, 58.5% Aver
Slide 32: Why Major Accounts?
Why Major Accounts? Market remains challenging - Majors provide debt security, work security and utilisation More secure, lower risk revenue stream efficiency Infrastructure is the strongest market and the Forward contract security domain of the Majors Major order books more transparent Greate
Slide 33: Future infrastructure developments
Future infrastructure developments 33
Slide 34: Systems development
Systems development Current Developments Future Benefits PDA roll out Fewer queries, faster payments Cash Automated asset management Increased utilisation, reduced capex Continued development of Axapta Costs Increasing efficiencies, decreasing costs Hire & ERP system Enhanced MI and cu
Slide 35: Network evolution
Network evolution Structure Activity Benefits Regional MSC / RDC • Concentration of workshop services, • 24 hour service capability power, engineering, fencing & specialist • Efficiencies from people, property and vehicles (c60,000 sq ft + 1 acre) equipment • Improved customer service • Distribution
Slide 36: Network evolution – Stoke case study
Network evolution – Stoke case study Stoke Tools (Burslem) 3 depots into 1 Stoke Commenced trading Tools Stoke Lifting 1 March 2010 (Hanley) Capex - £0.3m Stoke Property legacy cost - £0.1m Superstore Efficiencies * Headcount reduction – 4 (£85k) Vehicle reduction – 2 (£35k) On-going
Slide 37: Network evolution
Network evolution Superstores Existing Superstores Trading Superstores In Planning In planning MSC / RDC • Stoke • Nottingham Trading • Edinburgh • Glasgow • Hatton Cross • Park Royal (North- (Heathrow) West London) • Southampton • Teesside • Dartford • Manchester East • Sheffield • Manchester West
Slide 38: Managing the lease run-off
Managing the lease run-off 122 31 19 30 31 94 0 50 100 150 200 250 300 350 Number of depots > 60 months >48 months, < 60 months >36 months, <48 months >24 months, <36 months >12 months, <24 months <12 months 38
Slide 39: Market outlook
Market outlook 39
Slide 40: Construction Outlook
Construction Outlook Market will remain challenging; Construction Products Association forecast a 0.8% decline in 2011, a further 2.0% in 2012 and marginal growth in 2013 Major contractors expected to take market share Infrastructure will continue to be strongest growth area to 2016 Public sec
Slide 41: Infrastructure – growth sector, domain of majors
Infrastructure – growth sector, domain of majors Forecast to grow for the next five years Principal spending in water, waste, energy and transport Rail & energy CAGR of 3% to 2016 Highways budget £18.7bn, despite £2bn cuts Major Projects - Crossrail (£16bn) , AMP5 (water: £22bn), Heathrow
Slide 42: Key Markets
Key Markets Water Transport Major Investment in the water market to Network Rail’s £35bn spending plan for the maintain and improve the current UK five years from 2009-14, includes infrastructure £16bn Crossrail AMP5 investment programme of £22bn £0.6bn London Bridge redevelopment over 201
Slide 43: Conclusion
Conclusion 43
Slide 44: Profit outlook – upsides and downsides
Profit outlook – upsides and downsides Positives Impact Negatives Impact • Volume • Gaining share with those • Fuel • £1.0m increase vs FY11 @ £1.35 gaining share per litre (1ppl = £80k cost pa) • Balance sheet supports growth • Improving prices • 10% + yoy rate increase • April bank holidays • 1 da
Slide 45: Summary: Steady sustained recovery is underway
Summary Significantly improved trading performance during H2; margins up, profits up, return on capital up Our continuing focus on the 3 Cs has delivered £110m cost savings since June 2008 Developing a long term sustainable platform in hire and added value services – over 28% of revenues non-h
Slide 46: Appendix
Appendix 46
Slide 47: H1:H2 Summary
H1:H2 Summary FY March 2011 FY March 2010 H1 H2 Total H1 H2 Total £m £m £m £m £m £m Revenue 177.3 176.9 354.2 184.8 166.3 351.1 EBITDA* 24.9 38.5 63.4 35.1 33.1 68.2 EBIT* (4.6) 12.9 8.3 3.7 4.3 8.0 PBT* (9.9) 9.2 (0.7) (4.8) (1.4) (6.2) *pre amortisation and exceptional costs 47
Slide 48: Effective rate of tax
Effective rate of tax 2011 2010 % % Expected rate on (loss) / profit (28.0) (28.0) Disallowable expenditure / income not taxable 21.0 14.1 Deferred tax charge not recognised 3.6 1.2 Rate change on deferred tax (11.6) - Chattels exemption (7.3) (6.1) Prior year adjustments (23.5) 3.6 Losses arising i
Slide 49: Exceptional items
Exceptional items 2011 2010 £m £m Restructuring / integration costs: -Onerous lease provision and associated costs 2.6 4.6 -Redundancy 2.9 3.9 -Other - 2.6 Write down of accommodation assets 13.8 - Financial expense 1.5 - 20.8 11.1 Taxation (5.6) (2.7) 15.2 8.4 Pre tax cash cost of exceptionals is £
Slide 50: Capex
Capex Land & buildings, IT, £2.6m Fixtures & £2.0m fittings, £0.3m International hire equipment, £5.0m UK & Ireland hire equipment, Total Capex £47.9m £38.0m 50
Slide 51: Property, plant and equipment
Property, plant and equipment 2011 2010 £m £m UK hire equipment 167.6 230.9 Ireland hire equipment 4.1 6.5 International hire equipment 14.0 9.5 Land & buildings 11.4 12.1 Fixtures & Fittings 22.8 26.6 219.9 285.6 85% of our property, plant and equipment value is in hireable assets 51
Slide 52: Operational gearing – Group hire fleet re-sized
Operational gearing – Group hire fleet re-sized 700 500 450 600 400 500 350 300 Hire fleet (£'m) Revenue (£'m) 400 250 300 200 200 150 100 100 50 0 0 H1 FY07 H2 FY07 H1 FY08 H2 FY08 H1 FY09 H2 FY09 H1 FY10 H2 FY10 H1 FY11 H2 FY11 Hire fleet cost (LHS) Hire fleet NBV (LHS) Revenue (RHS) 52
Slide 53: Current covenant suite
Current covenant suite Headroom 2011 measure £m at 31 Mar 2011 Covenant test headroom Cashflow cover Cashflow 18.4 Interest cover EBITDA 15.1 Leverage EBITDA 11.0 Fixed charge cover EBITDA 15.7 Tested quarterly (trailing 12 months) Cashflow cover Cashflow before debt service to debt service Interest
Slide 54: Operating cash flow
Operating cash flow 2011 2010 £m £m Cash flow from operating activities EBIT loss (16.5) (8.6) Exceptional write down of accomodation assets 13.8 - Amortisation 5.5 5.5 Depreciation 55.1 60.2 Profit on disposal of hire equipment (5.0) (2.7) Loss on disposal of other property, plant and equipment - 0
Slide 55: Cost reduction activity
Cost reduction activity Employees Vehicles 5,500 3,100 2,900 5,000 2,700 2,500 4,500 2,300 2,100 4,000 1,900 1,700 3,500 1,500 Sep 08 Mar 09 Sep 09 Mar 10 Sep 10 Mar 11 Sep 08 Mar 09 Sep 09 Mar 10 Sep 10 Mar 11 Depots 500 450 400 350 300 250 200 Sep 08 Mar 09 Sep 09 Mar 10 Sep 10 Mar 11 55