Rs Group Plc · LSE:RS1
Rs — FY2022/23 Earnings Presentation
34 slides from Rs's earnings presentation, May 23, 2023
Slide 1: Full Year Results 2022/23
FULL YEAR RESULTS 2022/23 23 May 2023
Slide 2: Disclaimer
Disclaimer This presentation contains certain statements, There are a number of factors, which may be statistics and projections that are or may be beyond the control of RS Group plc, which could forward looking. The accuracy and completeness cause actual results and developments to differ of all su
Slide 3: Introduction
01. Introduction Simon Pryce Chief Executive Officer 2022/23 Full Year Results 3
Slide 4: Another strong performance… …despite increased headwinds in H2
Another strong performance… Good Strong profit Increased Improved Significant 2022/23 growth and cash generation dividend return on capital balance sheet capacity growth 17% Revenue Our performance1 versus global industrial production (IP) growth 10% LFL 30% 25% Adj. operating +1.0 pts 20% profit ma
Slide 5: Good operational and strategic progress
Good operational and strategic progress…. • Rebranded B2B business • Major operational and strategic investments: – Enhanced product and content management – Ongoing upgrade of data, technology and digital platforms – Freight and distribution optimisation – Customer experience improvements – Innovat
Slide 6: Financial review
02. Financial review Jane Titchener Interim Chief Financial Officer 2022/23 Full Year Results 6
Slide 7: Strong growth and returns
Strong growth and returns Revenue Web Service solutions RS PRO Adjusted operating (£m) revenue (£m) revenue (£m) revenue (£m) profit (£m) 2,982 1,319 734 382 26% 402 10% LFL 12% LFL 21% LFL 19% LFL 320 588 2,554 1,145 319 21/22 22/23 21/22 22/23 21/22 22/23 21/22 22/23 21/22 22/23 Adjusted operating
Slide 8: Strong profit performance
Strong profit performance Income statement Like-for-like £m 2022/23 2021/22 Change change Revenue 2,982 2,554 17% 10% Gross margin 45.3% 44.2% 1.1 pts 1.8 pts Operating profit 383 309 24% 17% Adjusted operating profit 402 320 26% 18% Adjusted operating profit margin 13.5% 12.5% 1.0 pts 0.9 pts Adjus
Slide 9: Revenue bridge (£m)
Revenue bridge (£m) Like-for-like revenue growth 16% 3,000 2,982 10% 4% H1 H2 FY23 Like-for-like revenue growth (excl. OKdo) 19% 2,554 12% 6% 2,500 H1 H2 22/23 FY23 like-for-like revenue growth split by product 16% 1% Industrial Electronics (52%) SBC (OKdo) 2,000 2021/22 Volume Price Acquisitions FX
Slide 10: Adjusted operating profit margin bridge (%)
Adjusted operating profit margin bridge (%) 18% 16% 14% 15.7% 13.5% 12.5% 12% 10% 2021/22 Revenue Gross Acquisitions Inflation Strategic People & FX and 2022/23 growth margin investment incentives other 2022/23 Full Year Results 10
Slide 11: EMEA: delivering profitable growth
59% 60% Industrial EMEA: delivering Electronics of Group of Group adj. operating SBC (OKdo) revenue profit excluding central costs profitable growth 2022/23 trading performance reflects: • Ongoing investment in growth accelerators: product, solutions, digital 29% 74% 19% • Focus on larger, industria
Slide 12: Americas: improved returns
32% 32% Industrial Americas: improved Electronics of Group of Group adj. operating SBC (OKdo) revenue profit excluding central costs returns 2022/23 trading performance driven by: 18% 43% 1% • Investments in capacity and inventory • Customer stocking up to avoid production disruptions and increased
Slide 13: Asia Pacific: greater focus on profitable revenue
9% 8% Industrial Asia Pacific: greater focus Electronics of Group of Group adj. operating SBC (OKdo) revenue profit excluding central costs on profitable revenue Like-for-like revenue performance affected by: 18% 60% 14% • Significant decline in OKdo revenue • Weaker electronics sector against tough
Slide 14: Strong cash flow and balance sheet
Strong cash flow and Adjusted free Working capital / Net debt / adjusted balance sheet cash flow (£m) revenue (%) EBITDA (x) 0.2 21.8 263.6 • £264 million adjusted free cash flow due to 21.1 strong EBITDA and tight credit policies 0.1 162.9 • 92% adjusted operating cash flow conversion • Capital exp
Slide 15: Acquisitions accelerate our organic growth ambitions
Acquisitions accelerate our organic growth ambitions Integration on track: Our M&A track record: domnick hunter Distributor and service provider of major air compression, purification and filtration products in Thailand. Risoul Distributor of industrial and automation product and service solutions i
Slide 16: Current trading: first seven weeks of 2023/24
Current trading: first seven weeks of 2023/24 • We continue to outperform the industrial market, especially in EMEA, illustrating the strength of our more developed proposition • Trading over first seven weeks reflects – Slowing industrial growth – Continued weakness and aggressive competition in el
Slide 17: Progress and exciting potential
03. Progress and exciting potential Simon Pryce Chief Executive Officer 17
Slide 18: Encouraged by what I've found
Encouraged by what I've found…. Solid Well Investing business positioned A clear ESG Breadth of for the model, in growth strategy is core opportunity future great people markets …and the significant value creation potential 2022/23 Full Year Results 18
Slide 19: Solid business model … and great people
Solid business model … Focus on Purpose led, Customer and Differentiated Proven omni-channel, digitally supplier product and track high-service enabled and orientated value-added record product and data rich service offering service solutions for industrials … and great people 2022/23 Full Year Resu
Slide 20: Well positioned in growth markets
Well positioned in growth markets… Broad industries/ product Category market share Country market share categories RS share of revenue for that market` Global industrial and MRO market 4% share in all markets equates • 2.4% CAGR over 2023-28 to c. £15 billion opportunity 2022/23 Full Year Results …
Slide 21: A clear strategy… driving value creation
A clear strategy… …driving value creation 2022/23 Full Year Results 21
Slide 22: ESG is core in how we operate
ESG is core in how we operate… “ We at Siemens like RS’s ESG approach, it´s pretty straightforward. .” We like that you’re moving along this journey together with your suppliers and helping them to reach higher levels of sustainability. -Siemens, RS Group supplier 78 employee engagement score Better
Slide 23: Breadth and scale of opportunity
Breadth and scale of opportunity … Key areas to develop Delivery through Focus Growth accelerators Growth accelerators Alignment Operating Improve leverage Operating leverage Prioritisation Operating Execution effectiveness Operating effectiveness 2022/23 Full Year Results …to accelerate realisation
Slide 24: Investing for the future… clear allocation approach
Investing for the future… Organically 0.9x proforma net debt / Progressive dividend policy adjusted EBITDA post Distrelec Inorganically … clear allocation approach 2022/23 Full Year Results 24
Slide 25: We are making progress… a clear and exciting future
We are making progress… • Solid business and great people Long-term targets: • Well positioned in growth markets Revenue growth >2x market • A clear strategy, ESG is core • Significant opportunity 30% adj operating profit conversion • Investment capacity Mid-teen adj operating profit • Set up for 2
Slide 26: Questions?
04. QUESTIONS? 26
Slide 27: Appendix
APPENDIX 27
Slide 28: Cash generation strong despite additional inventory investment
Cash generation strong despite additional inventory investment Cash flow £m 2022/23 2021/22 EBITDA 447.6 372.5 Add back impairments and loss on disposal of non-current assets 11.5 2.4 Movement in working capital (48.9) (94.8) Defined benefit retirement contributions in excess of charge (10.6) (21.4)
Slide 29: Net debt has risen to £113m
Net debt has risen to £113m • We have maintained a strong financial position Net debt • Lease liabilities of £48.9 million £m 2022/23 2021/22 (2021/22: £48.7million) Net cash / (debt) at 1 April (42.1) (122.0) • Net debt to adjust EBITDA of 0.2x (0.9x Adjusted free cash flow 263.6 162.9 proforma pos
Slide 30: Financial key performance indicators
Financial key performance indicators Like-for-like 2022/23 2021/22 Change change Like-for-like revenue growth 10% 26% Adjusted operating profit conversion 29.7% 28.4% 1.3 pts 0.9 pts Adjusted operating profit margin 13.5% 12.5% 1.0 pts 0.9 pts Adjusted earnings per share 63.6p 51.3p 24% 16% Return o
Slide 31: Non-financial key performance indicators
Non-financial key performance indicators Environment 1.7 5,000 1.63 76% Carbon intensity Carbon emissions Packaging intensity Waste (tonnes of CO2e due to (tonnes of CO2e due to (tonnes / £m revenue) (% of waste recycled) Scope 1 and 2 emissions / Scope 1 and 2 emissions) £m revenue) Customer People
Slide 32: Our ESG approach… recognised by leading ESG ratings
Our ESG approach… For a Better World is our 2030 action plan to support a more Our ratings: sustainable and inclusive world. It has four global goals by 2030: • EcoVadis rating 2022: Platinum medal • Sustainalytics rating: Global top 50 ESG companies • MSCI ESG rating: AA • CDP climate change leader
Slide 33: Guidance points
Guidance points ⚫ Fewer trading days in 2023/24 are expected to reduce revenue Trading days by around £24 million ⚫ Net capital expenditure forecast to be c. £50 - 60 million in Other guidance 2023/24 points ⚫ We expect the effective tax rate to rise in 2023/24 to c. 26% due to UK corporate income t
Slide 34: Basis of preparation
Basis of preparation Unless otherwise stated • Figures have been prepared using UK-adopted international accounting standards • Adjusted excludes amortisation and impairment of intangible assets arising on acquisition of businesses, acquisition-related items, substantial reorganisation costs, substa