Gwa Group Limited · ASX:GWA
Gwa — H1 FY2019 Earnings Presentation
35 slides from Gwa's earnings presentation, Feb 18, 2019
Slide 1: ASX cover letter: Financial Results Presentation
Group t ABN 15.055 964 386 t 61 38 6000 ft 61 7 3852 2201 Wwwvw.gwagroup.com.au 7 Eagleview Piace Eagle Farm OLD 4009 GPO Box 1411 18 February 2019 Brisbane QLD 4001 ASX On-Line Manager Company Announcements Australian Securities Exchange Dear Sir Financial Results Presentation for the Half Year End
Slide 2: Results Presentation – Half Year ended 31 December 2018
Superior solutions for water Results Presentation Half Year ended 31 December 2018 18 February 2019
Slide 3: Disclaimer
Disclaimer This presentation contains non-IFRS financial measures to assist users to assess the underlying financial performance of the Group. The non-IFRS financial measures in this presentation were not the subject of a review or audit by KPMG. 2
Slide 4: Agenda
Agenda 01 Overview and key themes 02 Group financial results 03 Bathrooms & Kitchens’ result 04 Summary and outlook 3
Slide 5: Overview and key themes
Overview and key themes GWA Group Limited lG
Slide 6: Strong result with continued momentum in superior water solutions strategy
Overview Group results Segment results Outlook Appendix Strong result with continued momentum in superior water solutions strategy Continuing to deliver strong financial results - growing ahead of market with margins maintained ‒ 5th annual period of improved market share from customer and consumer
Slide 7: Strong financial result across metrics
Overview Group results Segment results Outlook Appendix Strong financial result across metrics Normalised¹ from Continuing Operations ROFE Revenue 20.6% $182.6m 2.6% (1.1)pp Reflects increased inventory build 2H FY182 EBITDA Operating Cashflow 4.2% 31.6% $41.0m $48.6m EBIT EPS 3.0% 7.3% $38.7m 10.1
Slide 8: Robust R&R market provides resilience through the cycle
Overview Group results Segment results Outlook Appendix Robust R&R market provides resilience through the cycle B&K sales by segment % B&K sales by geography % Commercial NZ 15% 7% WA 10% NSW Multi- 35% residential 12% Renovation & Replacement 52% VIC 24% Residential 21% QLD SA 7% 17% 7 Source: GWA
Slide 9: GWA growing revenue well ahead of the market
Overview Group results Segment results Outlook Appendix GWA growing revenue well ahead of the market B&K revenue up 2.6% vs market of ~0%¹ Continued market share % growth in B&K² Renovation & Overall market showing growth in both Replacement Residential & Commercial R&R Increased ~1% (MAT) 20.8 20.7
Slide 10: Group financial results
Group financial results GWA Group Limited 1G
Slide 11: Strong increase in net profit – up 7.3% on prior year
Overview Group results Segment results Outlook Appendix Strong increase in net profit – up 7.3% on prior year A$m Normalised¹ H1FY18 H1FY19 % Change ‒ Net profit up 7.3% on prior year partly due to Revenue 178.1 182.6 2.6% lower interest costs EBITDA 39.3 41.0 4.2% EBIT 37.6 38.7 3.0% ‒ EBIT up 3.0%
Slide 12: EBIT growth from profitable share gains
Overview Group results Segment results Outlook Appendix EBIT growth from profitable share gains Normalised Group EBIT Bridge (A$m) 42 ‒ Group EBIT up 3.0% on prior period ‒ Volume/mix: Continued focus in B&K core segments (R&R, 40 0.5 (0.2) Commercial) driving growth in sanitaryware (transition to 0
Slide 13: Strong turnaround in operating cashflow
Overview Group results Segment results Outlook Appendix Strong turnaround in operating cashflow Cash flow from Continuing H1FY18 H1FY19 ‒ Working capital improved from transition to Innovation & Operations A$M Distribution Centre at Prestons NSW and improved EBITDA 39.3 41.0 debtors’ days Net moveme
Slide 14: Strong financial position maintained through the cycle
Overview Group results Segment results Outlook Appendix Strong financial position maintained through the cycle Metric 30 June 30 June 30 June 31 Dec 30 June 31 Dec ‒ GWA remains in a strong financial position 2015 2016 2017 2017 2018 2018 Net Debt 94.8 88.4 79.8 81.2 97.7 (7.1) ‒ Proceeds from Door
Slide 15: Segment results
Segment results 14| G los Group Limited
Slide 16: Bathrooms & Kitchens – continued above market growth with stable margins
Overview Group results Segment results Outlook Appendix Bathrooms & Kitchens – continued above market growth with stable margins A$m Normalised¹ H1FY18 H1FY19 % Change ‒ Revenue up 2.6%; ahead of flat market Revenue 178.1 182.6 2.6% ‒ Continued share growth – net sales in sanitaryware; EBITDA 45.4 4
Slide 17: Summary and outlook
Summary and outlook GWA Group Limited 16/6 Cy Pr “ 9 @ 6 G « Pee & om “ &, © “ 9 . ” « wo Ce = & oie © é ‘ © 9G “Ss 6 oé& > © =~ ee * by a < Ss © : “ g 6 » eo” e e
Slide 18: GWA strategy for growth
Overview Group results Segment results Outlook Appendix GWA strategy for growth We make life better with superior solutions for water Build GWA as the most trusted and respected water solutions company Maximise shareholder value creation – NPAT growth, ROFE, TSR CUSTOMER FOCUSED CONSUMER DRIVEN Add
Slide 19: Momentum in superior water solutions strategy
Overview Group results Segment results Outlook Appendix Momentum in superior water solutions strategy Corporate priority Progress made Customer initiatives driving enhanced ranging/showroom presence CUSTOMER FOCUSED Conversion to Cleanflush drives increased sales Add value to customers through s
Slide 20: FY19 outlook
Overview Group results Segment results Outlook Appendix FY19 outlook Key area FY19 commentary Expect overall 2H19 market conditions similar to 1H19 Residential R&R segment expected to remain steady Slowing new build construction, especially multi-residential, however Market Activity significan
Slide 21: Overview of Methven
Overview Group results Segment results Outlook Appendix Overview of Methven GWA’s proposed acquisition of Methven represents a highly strategic deployment of capital into a business with strong IP and growth potential Overview Alignment with strategic objectives Methven is a designer and manufacture
Slide 22: Update on proposed acquisition of Methven
Overview Group results Segment results Outlook Appendix Update on proposed acquisition of Methven Transaction summary Transaction detail On 14 December 2018, GWA advised it had entered Scheme of Arrangement to acquire leading NZ-based designer of taps, showers, valves; Methven Proposed acquisition
Slide 23: Results Presentation
Superior solutions for water Results Presentation Half Year ended 31 December 2018 18 February 2019
Slide 24: Appendix
Appendix GWA Group Limited 23|6
Slide 25: Reconciliation – Reported NPAT to normalised NPAT
Overview Group results Segment results Outlook Appendix Reconciliation – Reported NPAT to normalised NPAT H1FY18 H1FY19 A$m Continuing Discont'd Group Continuing Discont'd Group Operations Operations Total Operations² Operations Total³ Normalised¹ REVENUE 178.1 48.2 226.3 182.6 0.0 182.6 EBITDA 39.3
Slide 26: Proforma 5 year summary
Overview Group results Segment results Outlook Appendix Proforma 5 year summary Half Year Half Year A$m FY14 FY15¹ FY16¹ FY17 FY18² Dec 17² Dec 18 Revenue Bathrooms & Kitc hens 306.6 330.0 342.0 350.4 358.6 178.1 182.6 Total Cont'd Ops 306.6 330.0 342.0 350.4 358.6 178.1 182.6 Disc ontinued Ops 271.
Slide 27: Residential R&R segment stability provides resilience through the cycle
Overview Group results Segment results Outlook Appendix Residential R&R segment stability provides resilience through the cycle Alterations and Additions – Completions ($m) 9,000 8,000 7,000 $m Approved Annually 6,000 5,000 4,000 3,000 2,000 1,000 0 Actual Forecast 26 Source: BIS Oxford Economics: M
Slide 28: Residential R&R segment is large and remains stable
Overview Group results Segment results Outlook Appendix Residential R&R segment is large and remains stable Renovation Activity (A$bn) Housing sales (‘000s) 2.5 70 60 2.0 $bn per quarter, real 000s per month 50 1.5 40 30 1.0 20 0.5 10 0.0 0 80 82 84 86 88 90 92 94 96 98 00 02 04 06 08 10 12 14 16 18
Slide 29: Annual net overseas migration
28 Source: ABS 0 50 100 150 200 250 300 350 Jun‐82 Jun‐83 Jun‐84 Jun‐85 Jun‐86 Jun‐87 Jun‐88 Jun‐89 Jun‐90 Jun‐91 Jun‐92 Jun‐93 Jun‐94 Jun‐95 Jun‐96 Annual net overseas migration Jun‐97 Jun‐98 Jun‐99 Jun‐00 Jun‐01 Jun‐02 Jun‐03 Jun‐04 Jun‐05 Jun‐06 Overview Jun‐07 Annual Net Overseas Migration ('000
Slide 30: Australian population growth
29 Source: ABS 0.0 0.5 1.0 1.5 2.0 2.5 Jun‐82 Jun‐83 Jun‐84 Jun‐85 Jun‐86 Jun‐87 Jun‐88 Jun‐89 Jun‐90 Jun‐91 Jun‐92 Jun‐93 Jun‐94 Jun‐95 Australian population growth Jun‐96 Jun‐97 Jun‐98 Jun‐99 Jun‐00 Jun‐01 Jun‐02 Jun‐03 Jun‐04 Jun‐05 Jun‐06 Overview Australian population growth (%) Jun‐07 Jun‐08 J
Slide 31: Commercial new build sustaining long term growth trajectory
Overview Group results Segment results Outlook Appendix Commercial new build sustaining long term growth trajectory Non Residential – Value of Work Done (A$m) 60,000 50,000 40,000 $m Work Done 30,000 20,000 10,000 0 Actual Forecast 30 Source: BIS Oxford Economics: MAT, Actuals to March 2018, Forecas
Slide 32: Non Residential by sector
Overview Group results Segment results Outlook Appendix Non Residential by sector Non Residential – Value of Work Done $m 14,000 Forecast 12,000 10,000 8,000 6,000 4,000 2,000 0 Retail Offices Accommodation Transport Factory Warehouses Other C&I Education Aged Care Health Entertainment & Recreation
Slide 33: Detached residential new build remains resilient
32 Quantity Completed Annually 20,000 40,000 60,000 80,000 0 100,000 120,000 140,000 FY-1975 FY-1976 FY-1977 FY-1978 FY-1979 FY-1980 FY-1981 FY-1982 FY-1983 FY-1984 FY-1985 FY-1986 FY-1987 FY-1988 FY-1989 FY-1990 Source: BIS Oxford Economics: MAT, Actuals to June 2018, Forecast September 2018 – June
Slide 34: Multi-residential declining from peak but presents opportunities for selective growth
33 Quantity Completed Annually 20,000 40,000 60,000 80,000 0 100,000 120,000 FY-1975 FY-1976 FY-1977 FY-1978 FY-1979 FY-1980 FY-1981 FY-1982 FY-1983 FY-1984 FY-1985 FY-1986 FY-1987 FY-1988 FY-1989 FY-1990 Source: BIS Oxford Economics: MAT, Actuals to June 2018, Forecast September 2018 – June 2023 FY
Slide 35: Results Presentation
Superior solutions for water Results Presentation Half Year ended 31 December 2018 18 February 2019