Engie S.a. · EURONEXT:ENGI
Engie — Investor Day (November 2019)
85 slides from Engie's investor day presentation, Nov 14, 2019
Slide 1: Accelerating Our Client Solutions Development
ENGIE QUARTERLY INVESTOR SEMINAR LUNCHEON ACCELERATING OUR CLIENT SOLUTIONS DEVELOPMENT November 14th, 2019
Slide 2: Finance Director, Global Business Lines and Investor Relations
Finance Director, Global Business Lines and Investor Relations 2
Slide 3: Clients at the heart of energy revolution
Clients at the heart of energy revolution Integral part of our portfolio POWER GENERATION & SUPPLY CLIENT NETWORKS Climate change SOLUTIONS KEY DRIVERS Client mindset Power & gas supply Decentralized energy Small scale LNG Geothermal heating Green power offers network Engineering Biogas New DHC netw
Slide 4: Executive Vice President, Client Solutions Global Business Line
Executive Vice President in charge of the Client Solutions Global Business Line 4
Slide 5: Our Capabilities
OUR CAPABILITIES
Slide 6: Zero-Carbon Solutions Leader
ZERO-CARBON SOLUTIONS LEADER MAJOR GREEN ENERGY PROVIDER 2021 TURNING AWAY FROM COAL 2018 2015 6
Slide 7: Renewables and Client Solutions
Global CO2 emissions by sector(1) Renewables PRODUCTION CONSUMPTION 41% 59% ELECTRICITY & HEAT TRANSPORT On-site generation, PPA, etc… INDUSTRY Client Solutions OTHERS BUILDINGS Market driven by corporates, cities & communities (1) IEA, 2017 7
Slide 8: Scale Leader in services, Shift into Renewables, Strong balance sheet
Scale Leader Shift into Strong in services in Energy Renewables balance sheet 8
Slide 9: 2018 Figures: Revenue by country
2018 FIGURES Revenue by country in €bn France 9.2 €18.6bn Belgium 2.3 Total UK 2.0 Netherlands 1.1 ROCE(1) North America 1.0 ~8% Other Europe 0.7 COI(2) Germany 0.7 margin(3) ~5% Italy 0.7 Rest of the world 0.6 Switzerland 0.4 (1) Return On Capital Employed (2) Current Operating Income 9 (3) Excludi
Slide 10: 2018 Figures: Revenue and COI by client segment
2018 FIGURES Revenue by client segment(1) COI by client segment(1) 35% 33% 30% 40% ~€18.6bn ~€1bn 32% 30% Cities & Communities Industries Properties (1) Unaudited figures 10
Slide 11: 2018 Figures: Revenue and COI by business model
2018 FIGURES Revenue by business model COI by business model 15% 35% 41% ~€18.6bn 52% ~€1bn 33% 24% Projects Recurring services Asset-Based Solutions (Infra-like) 11
Slide 12: Focus, Shape, Drive, Boost
1 2 3 4 Focus Shape Drive Boost our development and our geographic footprint based rapid growth of Asset-Based operational and financial organization around three client on clear criteria Solutions performance segments 12
Slide 13: Executive Vice President, France B2B Business Unit
Executive Vice President in charge of France B2B Business Unit 13
Slide 14: Focus, Shape, Drive, Boost
1 2 3 4 Focus Shape Drive Boost our development and our geographic footprint based rapid growth of Asset-Based operational and financial organization around three client on clear criteria Solutions performance segments 14
Slide 15: 2018 Revenue by client segment
Cities & Communities Industries Properties(1) 2018 REVENUE €6bn €6bn €6.5bn (1) Including collective housing 15
Slide 16: Cities & Communities, Industries, Properties
Cities & Communities Cities Universities Hospitals Ports/Airports Industries Agro-food & Pharma & Defense Chemicals Beverage Cosmetics Properties Office & Retail & Banking, Hotel Buildings Warehouses Insurance & ICT(1) (1) Inf ormation & Communication Technologies 16
Slide 17: Better Efficiency and Greener Energy offers
Better Efficiency DHC(1) & Eco Public Public Lighting Efficient Buildings Data Centers District Transportation & CCTV (2) Greener Energy Combined Heat & On-site Power On-site Green Electric & Green Corporate Power Generation Gas(3) Generation Hydrogen Mobility PPA (1) District Heating and Cooling (2
Slide 18: Voice of Clients
VOICE OF CLIENTS
Slide 19: Cities and Communities
CITIES AND COMMUNITIES: 94 cities already committed through the C40(5) >50% of carbon emissions are produced within cities(1) 2/3 of consumption(2) 7M Annual deaths from air pollution(3) Countries committed to carbon neutrality Netherlands – 2030 Ireland – 2030 Chile – 2045 Sweden – 2045 530M EV in
Slide 20: Cities and Communities: Ottawa zoom
CITIES AND COMMUNITIES: Traffic Green energy DHC(1) & optimization Eco district Zoom on Transport infrastructure 35 years energy efficiency PPP Energy efficiency ✓ Awarded in June 2019 by the Ottawa government Connectivity & IT networks ✓ 40% reduction in CO2 emissions by 2030 Green ✓ 80 governmenta
Slide 21: Cities and Communities credentials and opportunities
(NON-EXHAUSTIVE) Several City Councils & Boroughs Geothermal project Airport Connect for districts, hospitals and a university DHC for Stadtwerke LEEDS CITY COUNCIL UNITED LINCOLNSHIRE HOSPITALS ZGIERZ SCHOOL GRONIGEN Ecodistrict development EUROPEAN COMMISSION RER A LA DÉFENSE CADCA Angers Hospital
Slide 22: Industries
INDUSTRIES: Commitment to zero-carbon 43% of emissions, including energy production(1) 2020 2025 2030 $4.5T opportunity in the next 15 years(2) 2050 2050 2025 Commitment to 100% renewable electricity US consumers that drop brands due to corporate 66% reputation(3) Commitment to green mobility 530M E
Slide 23: Food & Beverages
FOOD & BEVERAGES: Green corporate PPA Air quality Zoom on Distributed solar On-site utilities 15 years DBFOM(1) steam supply contract Process utilities ✓ Awarded in 2014 (cold, steam…) ✓ Greenhouse gas emissions reduced by 60% ✓ Competitively-priced, long-term renewable energy Green mobility Instrum
Slide 24: Industries credentials and opportunities
(NON-EXHAUSTIVE) On-site generation Automotive for several in the UK industrials in Benelux FORD MOTOR ROYAL FRISLAND CAMPINA On-site YORKSHIRE WATER ID LOGISTICS On-site generation for generation/utilities several top 1 industrials as a service for top 1 in Germany industrials in France MILCHKONTOR
Slide 25: Properties
PROPERTIES: Commitment to 100% renewable electricity 36% Buildings represent 36% of energy use (1) 2021 2022 2023 2025 2030 2030 1/3 Properties represent 1/3 of buildings CO2 emissions(2) 40% energy productivity Double its energy improvement productivity Energy efficiency investment in non-residenti
Slide 26: Office Buildings
OFFICE BUILDINGS: Green corporate PPA Distributed solar Air quality Facility Zoom on Management Energy performance 10 year DBFOM(1) energy contract Connectivity ✓ Awarded in September 2019 & IT networks Safety & access ✓ CO2 emissions est. down by 2.4k tons Digital services control annually for occu
Slide 27: Properties credentials and opportunities
(NON-EXHAUSTIVE) Banks and broadcast companies COMMERZBANK GRANT THORNTON DELHAIZE HOTEL HYATT ALLIANZ (ZIN TOWER) CONVENT DES JACOBINS UNIBAIL TOUR INCITY Energy Efficiency IT Platform Swimming pool Energy Efficiency, on-site generation Banking for FAANG, banks and retail Data centers CALIFORNIA PI
Slide 28: Cyclical and secular market dynamics
Public Electric Building Industrial Process On-site Generation DHC(1) & Eco District Public Lighting & CCTV (3) Transportation Mobility O&M(2) Operation On-site Renew able Heating Cooling Public Transport Charging Public Energy Industrial CHP CCTV Cam eras Renew able Corporate PPA Netw orks Netw ork
Slide 29: Size of ENGIE targeted markets
District Heating and Cooling networks Electric Vehicles Charging Infrastructure Public Transport Electrical and Size of ENGIE targeted markets(1) Global market size(2) Signalling Systems Global market size(3) 5.8% 40% 7% CAGR CAGR CAGR $54bn $37bn $30bn $20bn $13bn $5bn 2017 2024 2018 2024 2018 2024
Slide 30: Focus, Shape, Drive, Boost
1 2 3 4 Focus Shape Drive Boost our development and our geographic footprint based rapid growth of Asset-Based operational and financial organization around three client on clear criteria Solutions performance segments 30
Slide 31: Distribution of 2018 Revenue and priority countries
Distribution of 2018 Revenue Others OUR PRIORITY COUNTRIES CRITERIA Switzerland 8% France Italy 2% 49% 4% Germany Rank #1 or #2 4% United States 5% Zero-carbon transition appetite Netherlands €18.6bn 6% Compliant business and political United Kingdom framework 11% Belgium 11% 31
Slide 32: Carbon emissions and geographic focus
30 Urban Areas 33% 20 Countries Full scope of Client 55% Focus on dense Carbon Carbon & fast-growing metropolitan emissions Solutions emissions area, with Asset-Based focus (1) Activities related to energy access (mini-grids, rooftop solar, etc.) are not concerned by this geographical policy 32
Slide 33: Executive Vice President, North America, Latin America and UK
Executive Vice President in charge of North America, Latin America and United Kingdom Business Units 33
Slide 34: Focus, Shape, Drive, Boost
1 2 3 4 Focus Shape Drive Boost our development and our geographic footprint based rapid growth of Asset-Based operational and financial organization around three client on clear criteria Solutions performance segments 34
Slide 35: Projects, Recurring Services, Asset-Based Solutions
Recurring Asset-Based Projects Services Solutions (Infra-like) Maintain and operate Integrated offers often Design & build or revamp Provide support services with performance obligations 6 - 18 months 3 - 8 years 10 - 50 years Average contract duration Average contract duration Average contract dura
Slide 36: Projects
PROJECTS
Slide 37: Projects: delivering a one-time service
Engineering Procurement Meet unique goals Projects and objectives Delivering a one-time Construction service Installation 37
Slide 38: Projects: Key Financial Indicators
Revenue in €bn Key Financial Indicators Geographic Footprint FY 2018 2015 2018 2021 Rest of Europe 3.5 Revenue USA & Canada 7.2 9.8 CAGR 3-6% 0.7 in €bn Middle East, Asia & Africa COI margin ~5% ~3.5% 4-5% 0.3 9.8 Others 0.6 ROCE >10% >10% >10% Growth CAPEX in €bn ~1.1 0.7-1.0 France 2016-2018 and 2
Slide 39: Projects: Pricing and Cost Structure
Typology of Pricing Cost Structure Equipment Internal staff Cost + margin Move towards price based on added value (initiated) Subcontractors 39
Slide 40: Projects: Cash Flow Profile and Risks
Cash Flow Profile Risk / Opportunity Cumulative cashflow Wrong design Human Resources Severity Energy performance Co-activities commitment Frequency Key Financial Indicators ─ Revenue growth ─ WCR (Working Capital Average 6 to 18 months ─ COI/Revenue % Requirement) ─ SG&A as % of revenue ─ Backlog (
Slide 41: Montreal Public Transport
MONTREAL PUBLIC TRANSPORT Project aim Implement a new integrated transport network linking downtown Montreal, SouthShore,WestIsland,NorthShore 67 km and the airport of rail electrification Client aspirations Decrease urban congestion, GHG emissions €50M and pollution. Find local players to deliver o
Slide 42: Recurring Services
RECURRING SERVICES
Slide 43: Operation & Maintenance
Networks Energy System Data Centers Transport Infrastructure Operation & Recurring Services HVAC & Air Quality Multi-year preventive- Maintenance curative maintenance Fire equipment & operations Plumbing Relamping (Hard) Facility Management 43
Slide 44: Recurring Services: Key Financial Indicators
Revenue in €bn Key Financial Indicators Geographical Footprint FY 2018 2015 2018 2021 Rest of Europe 3.4 Revenue Latin America 6.3 6.2 CAGR 5-8% 0.07 in €bn USA & Canada 0.16 COI margin ~3% ~4% 4-5% Middle East, 6.2 Asia & Africa 0.14 ROCE >10% >10% >10% Others 0.08 Growth CAPEX in €bn ~0.8 1.2-1.5
Slide 45: Recurring Services: Pricing and Cost Structure
Typology of Pricing Cost Structure Cost + Fee Equipment Performance fees Internal staff Fixed unit price on catalogue Subcontractors Quotation on request 45
Slide 46: Recurring Services: Cash Flow Profile and Risks
Cash Flow Profile Risk / Opportunity Cumulative cashflow Contracting Human Resources Severity Wrong asset diligence Data management Energy performance commitment Frequency Key Financial Indicators ─ Revenue growth % ─ Invoicing ─ COI/Revenue % ─ Net development costs 3-8 years ─ Fixed/Additional rev
Slide 47: Buckingham Project – Data Center O&M
BUCKINGHAM PROJECT – DATA CENTER O&M Project pitch ─ Operation of a new hyperscale data center for a leading US digital company 60MW 3 years Data center load Initial contract term ENGIE value proposal +2+5+5 years extension ─ Extensive data center knowledge ─ Capability of ENGIE to propose a self-de
Slide 48: Asset-Based Solutions
ASSET-BASED SOLUTIONS INFRA-LIKE
Slide 49: Asset-Based Solutions: long-term contracts
District heating and cooling network Public ENGIE funded transportation concession/leasing Asset-Based Solutions contracts over 10–50 Long-term contracts in which years Public lighting ENGIE bears risk and management On-site generation responsibility and Off-grid energy supply …And many others 49
Slide 50: Asset-Based Solutions: Key Financial Indicators
Revenue in €bn Key Financial Indicators Geographical Footprint FY 2018 2015 2018 2021 Rest of Europe Revenue 2.4 2.7 CAGR 5-8% 0.5 in €bn Latin America 0.01 COI in €bn 0.3 0.4 France USA & Canada o/w income from main 0.1 0.1 associates COI margin(1) ~9% ~11% 10-12% 2.1 2.7 0.08 Middle East, Asia & A
Slide 51: Asset-Based: Pricing and Cost Structure
Typology of Pricing Cost Structure Charge as a service Material / Energy Subcontractors Performance fees Internal staff Indexed price Depreciation 51
Slide 52: Asset-Based: Cash Flow Profile and Risks
Cash Flow Profile Risk / Opportunity Cumulative cashflow Wrong design Energy mix of the asset performance Severity Operation Taking control Evaluation of the installation of costs Frequencies Key Financial Indicators ─ Energy margin and capital ─ Duration of contract / Average employed useful life o
Slide 53: Côte Sainte Catherine Heating Network, Bar-le-Duc
CÔTE SAINTE CATHERINE HEATING NETWORK WITH BAR-LE-DUC LOCAL AUTHORITY Project pitch 20-year concession for renovation and development of heating network and biomass boilers 7 € M 30 ENGIE Capex Local jobs created Client stake aspirations Make its local heating network greener Engie value proposal ─
Slide 54: Summary of Business Models
om SUMMARY OF BUSINESS MODELS
Slide 55: Asset-Based follows Asset-Light projects
PROJECTS On some client segments, Asset-Based Solutions will typically be a follow-up on initial Asset-Light projects On other client segments, we are able to sell CUSTOMER directly Asset-Based Solutions CLIENTS S (e.g. Universities) ASSET-BASED The two Asset-Light business models combined offer bet
Slide 56: Asset-Light and Asset-Based activities speed up development
Asset-Light and Asset-Based activities Business modelfigures of contract ~€90M/year 2018 speed up our development Projects Recurring Services Innovation and added value for the client: Asset-Based Solutions Joint project value ─ Works and commitments of the assembly lines ─ Energy savings ─ Lighting
Slide 57: 2018 figures by business model
Recurring Asset-Based Client Projects Services Solutions Solutions Revenue 2018 (in €bn) 9.8 6.2 2.7 18.6 EBITDA(2) 2018 (in €bn) ~0.4 ~0.3 ~0.7 ~1.5 COI 2018 (in €bn) ~0.3 ~0.2 ~0.4 ~1.0 COI margin(1) 2018 (in %) ~3.5% ~4% ~11% ~5% ROCE 2018 (in %) >10% >10% ~5% ~8% Revenue Growth CAGR 2018/21 3-6%
Slide 58: Exposure to downturns on margin
Asset-Based Projects Recurring Services Solutions Exposure to downturns on margin Short-term Delayed Immune Delay before impact 1-2 years ~3 years N.A. Diversified Client Base 58
Slide 59: Our advantages and competitors
Recurring Asset-Based Projects Services Solutions ─ BIM engineering ─ Hard FM expertise ─ Design, installation, investment, ─ Specialty in marine, nuclear, ─ Management of full FM build operation and maintenance Our refrigeration, mobility ─ Projects ─ Balance sheet size advantages ─ Techno agnostic
Slide 60: Executive Vice President, Client Solutions Global Business Line
Executive Vice President in charge of the Client Solutions Global Business Line 60
Slide 61: Focus, Shape, Drive, Boost
1 2 3 4 Focus Shape Drive Boost our development and our geographic footprint based rapid growth of Asset-Based operational and financial organization around three client on clear criteria Solutions performance segments 61
Slide 62: Client Solutions 2021 Guidance
Client Solutions 2018 2021 GUIDANCE Revenue 18.6 21-23 CAGR 18-21: 4-7% in €bn COI ~1 1.3-1.4 CAGR 18-21: 11-14% in €bn Growth CAPEX in €bn 1.3 ∑ 19-21: 4-5 ROCE 8 Stable in % 62
Slide 63: Performance drivers and convictions
Convictions towards acceleration to double-digit Performance drivers medium-term profit growth Organic growth Investment and scale-up in organic BD ─ Robust growth in revenues, +4% YoY and delivery capability ─ Strong backlog of ~1 year of revenues ─ Competitive intensity in selected segments Ramp-u
Slide 64: Path to €1.3-1.4bn COI by 2021
1/3(1) New M&A 1/3 (1) 1/3(1) Operational efficiency Pipeline of €6bn in M&A opportunities Organic growth Margin increase of 0.2% per year Revenue CAGR of 3-4% from organic growth(2) €1.3-1.4bn CAGR 11-14% €1.0bn 2018 2021 (1) Percentage in additional COI (2) GDP + 1-2% and new activ ities, especial
Slide 65: Increasing weight of Asset-Based activities
Organic growth Operational efficiency New M&A Priority offers Ramp up of past acquisitions 2016-18 Pricing Ongoing M&A Pipeline of opportunities powered by ENGIE Talent strategy Impact Procurement M&A Pipeline GDP growth Digital Increasing weight of Asset-Based activities Deep dive in the next slide
Slide 66: Organic growth targets and drivers
Organic growth 2018-2021 targets Key Drivers ~ 3 to 4% Revenue CAGR €0.10 - 0.15bn Market growth Development Contribution from Additional COI expected of new activities equity stakes 66
Slide 67: Q3 figures
Organic Q3 FIGURES growth Asset-Based Projects Recurring Services Solutions Revenue backlog Net commercial development(2) Installed capacity @100% €9.8bn +7%(1) In France +4%(3) 5.6GW +2%(5) DHC(4) 40% 30% 30% 1.4GW +9%(7) On-site 2019 2020 after 2020 Generation(6) (1) Y oY Growth (4) District Heati
Slide 68: Organic growth: C-level approach
Organic growth Additional C-Level Strategic Revenues Effective Approach Design for ENGIE Delivery BUs Strategic discussion Operational roadmap Alignment with ENGIE Worldwide delivery, with the top executives, to kickstart and sustain BUs for the delivery with partners if necessary to ensure speed &
Slide 69: GE Renewable project
Organic growth GE Renewable’s portfolio GE renewable energy by region sites by BU $550k 112 70 60 50 59 Industrial/Manufacturing Office/Warehouse/Other ENGIE Impact 33 28 40 30 19 8 20 15 14 16 revenues 11 10 5 8 10 9 2 0 1 0 2 0 0 # of sites by region Up to $250M The project Additional potential EN
Slide 70: ENGIE Impact
Organic growth ENGIE Impact Today First 50 targeted accounts at C-level Corporates working Corporate, city and Sites under 30 in various industries (Agro & Food, Chemicals, Automotive, Pharmaceuticals, Transportation, government clients management etc.), mainly headquartered in Europe and North Amer
Slide 71: Scale and Digital
Organic growth Our development requires different HR profiles and skills… … and new features Scale Our development brings us a lot of different opportunities, interacting with many stakeholders. Managers Developers Technicians Hiring and retaining is key in our development. Strategic sales/BD Market
Slide 72: Operational efficiency targets and drivers
Operational efficiency 2018-2021 targets Key Drivers 0.6% Margin increase over 3 years €0.10 - 0.15bn HR Pricing Processes Digital Procurement Ramp up of Additional COI expected Management start-ups Lean 72
Slide 73: Focus: Lean program
Operational efficiency Focus: Lean program +€100M DIGITAL PRICING PROCESSES PROCUREMENT COI gain ─ Operational efficiency ─ Invoice costs that were End-to-End processes: ─ Category management ─ Dedicated client tools not previously billed ─ Procure to Pay ─ Retention rate ─ Business development ─ Se
Slide 74: Commercial and operational performance tools
Operational efficiency Commercial Performance Siradel ENGIE Impact tools ─ 3,000 cities 3D-modelled ─ Profiling of customers ─ Allows simulations of offers’ ─ Comparison with peers performance and impact ─ Global tracking & monitoring ─ Guaranteed sustainability outcomes Efficiency and Operational P
Slide 75: New M&A targets and drivers
New M&A 2018-2021 Targets Key Drivers ─ Targeted EV/EBITDA multiples: ~€2.5bn 2019-2021 M&A CAPEX Additional COI contributions after 2021 x 6-10 Asset-Light activities €0.7bn x 10-15 signed so far in 2019(1) Asset-Based activities ─ Reaching critical mass €0.10-0.15bn ─ Expanding and enhancing Addit
Slide 76: New M&A criteria
New M&A Generic Criteria Specific Criteria Selective Investment Cross-selling Specific criteria for Projects Criteria synergies ─ Backlog assessment ─ Claim & Guarantees ─ Priority offers ─ Asset-Based potential, ─ Technological agnostic ─ Priority geographies even for Asset-Light ─ Expected synergi
Slide 77: Client Solutions M&A projects reviewed
New M&A Number of Client Solutions M&A projects reviewed by Group Executive Committee in 2018 and 2019 12 10 2018 7 2019 6 5 5 3 Q1 Q2 Q3 Q4 77
Slide 78: Conti Corporation, Powerlines, Otto Industries
New M&A Conti Corporation Powerlines Otto Industries ─ Long-established, broad US ─ Scale to participate in asset- ─ Excellence in German HVAC geographic and industry based public infrastructure and building automation for footprint projects industry and property ─ Particular strength in segments ─
Slide 79: Client Solutions share of Group CAPEX
~25% of Group CAPEX goes to Client Solutions Growth CAPEX mainly driven by M&A Total Group Gross CAPEX 2019-2021 2019-2021 Client Solutions Growth CAPEX net DBSO ~€2.5bn ~€1.5-2.5bn Business Model: Client Rest of group Solutions ~€21bn(1) Client Projects 75% Solutions ~25% ~€0.9bn Recurring services
Slide 80: Conclusion
CONCLUSION
Slide 81: Confirm 2019–2021 guidance
Massive shift to Zero-Carbon Confirm 2019 – 2021 guidance Organized to deliver on profitability Confirm our ambition to become the leader of the Zero-Carbon Transition Acceleration in the Asset-Based business 81
Slide 82: Appendix
APPENDIX
Slide 83: Revenue by geography 2016-2018
IN €BN 2016 2017 2018 France 8.3 8.6 9.1 Rest of Europe 6.2 6.9 7.3 Latin America 0.1 0.1 0.1 USA & Canada 0.5 0.7 1.0 Middle East, Asia & Africa 0.3 0.3 0.5 Others 0.6 0.6 0.7 Total 15.9 17.2 18.6 Pro forma figures, unaudited 83
Slide 84: Forward-Looking statements
Forward-Looking statements This communication contains forward-looking information and statements. These statements include financial projections, synergies, cost- savings and estimates, statements regarding plans, objectives, savings, expectations and benefits from the transactions and expectations
Slide 85: Investor relations contact
Ticker: ENGI +33 1 44 22 66 29 ir@engie.com http://www.engie.com/en/investors-area/ FOR MORE INFORMATION ABOUT 9M 2019 RESULTS: https://www.engie.com/en/investors/results/2019-results/ 85