Endeavour Group Ltd · ASX:EDV
Endeavour — FY2022 Earnings Presentation
40 slides from Endeavour's earnings presentation, Aug 23, 2022
Slide 1: F22 Results
F22 *. Results August 2022 3"6 endeavour Jans QFOup
Slide 2: Important notice and disclaimer
This presentation is dated 23 August 2022 and unless stated otherwise is current as at that date. This presentation contains summary and general information about Endeavour Group Limited and its controlled entities (together, the Group or Endeavour Group), and Endeavour Group’s activities as at the
Slide 3: Acknowledgement of Country
Acknowledgement of Country Calling Country Whale Gadigal People 3
Slide 4: Creating a more sociable future together
Creating a more sociable future together Our Values We’re real We’re We’re inclusive responsible Our Ways We work We’re team We endeavour of Working with spirit players for better 4
Slide 5: Steve Donohue, Chief Executive Officer
Steve Donohue Chief Executive Officer 5
Slide 6: Strong performance despite a challenging environment
Strong performance despite a challenging Sales $11.6b Flat YoY environment • Strong F22 financial performance reflecting: EBIT $924m +2.8% ○ The resilience of our business ○ The ‘natural hedge’ between our Retail and Profit Hotels segments after tax $495m +11.2% ○ The commitment and capability of ou
Slide 7: Our first year as a listed business
Our first year as a listed business Grown customer 4.5m Active members VOC of 79 VOC of 74 VOC of 8.4 reach 15% 2pt 3pt 0.1pt My Dan’s Guarantee BWS Cooler Hotels Digitisation Broadened digital Scan rate ~70% Most successful Order and pay at table engagement year to date Trend Leadership M&A Property
Slide 8: Drivers of F22 Retail performance
Drivers of F22 COVID-19 impacts drove volatile trading patterns ● Strong F22 sales consistent with elevated F21, Retail performance ● with COVID-19 impacts in both years Robust H1 performance driven by the closure of hospitality venues, reduced promotional activity ● Sales decelerated in H2 as more
Slide 9: Drivers of F22 Hotels performance
Drivers of F22 Hotels performance Robust recovery in H2 after COVID-19 impacts in H1 ● H1 was significantly impacted by nationwide trading restrictions including lockdowns in New South Wales and Victoria COVID-19 continued to have a ● Customers returned enthusiastically as restrictions significant i
Slide 10: Building on our leading digital capability
Building on our leading digital capability Growing a profitable eCommerce business, assisted by COVID-19 tailwinds in F22 Continued investment in endeavourX to develop our digital capability F22 focus on improving the Retail $1.0b Retail online sales omnichannel customer experience through: +17.0% ●
Slide 11: Pinnacle Drinks
Pinnacle Drinks F22 Highlights Pinnacle Drinks is a customer led, branded drinks business with integrated assets and broad capabilities 479 30%+ 479 new products were New products launched launched in F22 including Sales growth in Paragon Wine Estates expanded ranges within the 7/10 portfolio premiu
Slide 12: Sustainability: our positive imprint
Sustainability: our positive imprint Responsibility and Our People Our Planet Community Advocating responsible choices and Championing individuality, human and Reducing our impact on the planet supporting positive change in our communities personal rights • Created our ‘Leading in • 76% for our Voic
Slide 13: Shane Gannon, Chief Financial Officer
Shane Gannon Chief Financial Officer 13
Slide 14: F22 Financial result highlights
F22 Financial result highlights Financial results $11.6b Sales Flat YoY +14.9% 3-year1 $924m EBIT +2.8% $495m Profit after tax +11.2% Cash and capital foundations $949m Operating cash inflow $985m Debt headroom $349m Capital expenditure 11.4% ROFE +28bps F21: $1,114m F21: $312m Delivering for shareh
Slide 15: Group profit after tax bridge and outlook
Group result underpinned by +11.2% ● Solid Retail performance to sustain profit levels increase year-on-year ● Strong recovery of Hotels ● Continuing to execute and invest in line with strategy (3) 54 (26) 42 (17) Other EBIT of ($57m) (F21: ($31m)) includes a full year of corporate costs associated
Slide 16: Retail EBIT: strong result in line with F21
Strong result, achieving EBIT in line with F21 ● Maintained elevated sales levels, 19.3% ahead of F191 -0.4% Gross profit margin expansion decline year-on-year EBIT to Sales %: 6.6% (+3bps) ● Supported by premiumisation, higher margin new products and demand for Pinnacle Drinks products ● Maintained
Slide 17: Return to more normal trading post COVID-19 disruption
Return to more normal trading post COVID-19 disruption +20.7% • F22 trading was below “normal” due to COVID-19 impacts, increase year-on-year particularly in the first four months of F22 and during the EBIT to Sales %: 20.8% (+243bps) Christmas and New Year trading period • Sales +6.6% on F21 and -7
Slide 18: Half yearly sales track
Half yearly sales track +19.3% $million $million -7.9% Retail sales 3-year change1 Hotels sales 3-year change1 800 600 400 200 0 H1 F192 H2 F192 H1 F202 H2 F202 H1 F21 H2 F21 H1 F22 2 2 3 3 2 2 3 3 H1 F19 H2 F19 H1 F20 H2 F20 H1 F21 H2 F21 H1 F22 H2 F22 H1 F19 H2 F19 H1 F20 H2 F20 H1 F21 H2 F21 H1 F
Slide 19: Cash generative with long-term debt facilities in place
CASH GENERATIVE - Cash realisation ratio of 93% LONG-TERM DEBT FACILITIES IN PLACE Strong operational performance and disciplined cost • Net debt of $1.2b was $56m lower than F21, reflecting management generated operating cash flow of $949 million a reduction of $212m in borrowings partly offset by
Slide 20: Strong returns to shareholders
Strong returns to shareholders Strong free cash flow deployed in Operating cash flow (93.0% cash realisation) line with our capital management framework Targeting investment grade credit metrics 1 Target outcomes consistent with investment grade credit metrics • Sustain the core Sustaining • Stay-in
Slide 21: Focus of F22 investments
Other 1% Focus of F22 investments Expanding and enhancing our network ● Renewed 40 hotels and 81 retail stores ● 32 net new stores and 5 hotels Hotels Retail $349m ● Acquired Josef Chromy Wines (April 2022) 40% 59% ● EGM average age now 6.8 years (down from 9.6 yrs at the beginning of F21) Growing d
Slide 22: Case study: Sunnybank
Case study: Sunnybank Hotel renewal investment profile ⁓$3.1 million investment1 in Sunnybank Hotel (relaunched on 30 July 2021) Food and Bar sales increased by >40% since the completion of the renewal ROI at year 2 above hurdle rate of >15% 1. Hotel renewal only excluding retail stores renewals ✓ U
Slide 23: F23 Priorities & Outlook
F23 Priorities & Outlook Steve Donohue Chief Executive Officer 23
Slide 24: F23 - First 7 weeks
F23 - First 7 weeks Continuing to return to normal in both Retail and Hotels First 7 weeks sales1: ● 1 year growth rates will be distorted as we cycle COVID-19 impacts in the first half vs F22 vs F202 ● Both segments up by ~13% on pre COVID-19 levels Retail -6.7% 12.7% Retail Hotels 75.2% 13.4% ● Re
Slide 25: Priorities for F23
Priorities for F23 Disciplined cost management and operational optimisation to offset inflationary pressures Unlock property opportunities in new sites, network renewal and redevelopments Accelerate improvement of customer experience with digital and data led transformation Continued investment in t
Slide 26: In summary
In summary Strong F22 financial results F23 Operating environment Resilient business supported by the ‘natural hedge’ Customers are increasingly seeking out between our Retail and Hotels segments social connection and occasions in more pre-COVID/normal ways Agile team performance Team shortages, par
Slide 27: Our purpose, vision and strategy: Delivering strong returns
Our purpose, vision and strategy: Delivering strong returns OUR STRATEGY OUR PURPOSE OUR RESULTS Creating a more sociable future together… Sustainable shareholder value creation OUR VISION Leading Efficient Partnerships that customer offer end-to-end grow our industry To be the leading business plat
Slide 28: Steve Donohue and Shane Gannon
Steve Donohue Chief Executive Officer Shane Gannon Chief Financial Officer 28
Slide 29: Appendices
$4 endeavour
Slide 30: Operational context
Operational context JUL - MID OCT MID OCT - EARLY DEC MID DEC - FEB MID FEB - JUNE Widespread lockdown & Initial reopening in NSW & VIC Emergence of Omicron Living with COVID-19 extensive restrictions • Hotels in NSW reopened, with • Hotels trading weakened • Hotels trading started to • The most sig
Slide 31: Network
Network1 258 +7 5 +1 16 4 Dan Murphy’s Stores Wineries 52 417 132 24 146 28 1,417 3 19 93 35 +25 2 3 84 389 55 BWS stores Bottling facilities 344 77 321 85 1 +5 1 Hotels (incl. 2 35 5 1 managed clubs) Dan Murphy’s BWS Hotels (incl clubs) Wineries Bottling facilities 1. As at 26 June 2022 31
Slide 32: Indicative Technology Roadmap
Indicative Technology Roadmap Including transition from Woolworths F22 // Priority Projects underway F23 // Design and scope F24 - F27 // Phased build and implement High level and preliminary roadmap Priority projects will continue. Scoping, product Transition and simplify technology landscape as a
Slide 33: Trade working capital F22
F22 F21 $ million 26 JUNE 2022 27 JUNE 2021 CHANGE Trade working capital 546 483 63 Lease assets 3,126 3,117 9 Property, plant and equipment 1,935 1,887 48 Intangible assets 3,894 3,845 49 Other liabilities (net) (677) (610) (67) Funds employed 8,824 8,722 102 Tax liabilities (net) 273 268 5 Other (
Slide 34: Cash flow F22
F22 F21 $ million (52 WEEKS) (52 WEEKS) CHANGE EBIT 924 899 25 Depreciation and amortisation expenses 525 505 20 Changes in trade working capital (63) 7 (70) Changes in assets and liabilities and other non-cash items 26 130 (104) Finance costs on borrowings paid (45) (72) 27 Payment for the interest
Slide 35: Group financial performance
$ million F22 F21 CHANGE Sales Retail 10,086 10,178 (0.9%) Group Hotels 1,511 1,417 6.6% financial performance Total sales 11,597 11,595 imm. Profit for the period Retail EBIT 666 669 (0.4%) Hotels EBIT 315 261 20.7% Other (57) (31) 83.9% Total EBIT 924 899 2.8% Finance costs (205) (247) (17.0%) Prof
Slide 36: Retail financial performance
Retail financial performance F22 F21 CHANGE Sales ($m) 10,086 10,178 (0.9%) EBITDA ($m) 944 936 0.9% Depreciation and amortisation ($m) (278) (267) 4.1% EBIT ($m) 666 669 (0.4%) Gross margin (%) 23.2% 22.4% +89bps Cost of doing business (%) 16.6% 15.8% +86bps EBIT to sales (%) 6.6% 6.6% +3bps Return
Slide 37: Hotels financial performance
Hotels financial performance F22 F21 CHANGE Sales ($m) 1,511 1,417 6.6% EBITDA ($m) 561 499 12.4% Depreciation and amortisation ($m) (246) (238) 3.4% EBIT ($m) 315 261 20.7% Gross margin (%) 85.1% 85.0% +8bps Cost of doing business (%) 64.2% 66.6% -236bps EBIT to sales (%) 20.8% 18.4% +243bps Return
Slide 38: Glossary of terms
Term Description Cash realisation ratio Operating cash flow as a percentage of Group net profit after tax before depreciation and amortisation Cost of doing business (CODB) Expenses which relate to the operation of the business eCommerce (eComm) Online channels including but not limited to store web
Slide 39: Normalised 52-week equivalent F19 Information
Normalised 52-week equivalent F19 Information Woolworths' Drinks and Hotels businesses were transferred to, and merged with, Endeavour Group Limited on 2 February 2020 (Restructure) and 4 February 2020 (Merger), respectively. Prior to this only the results of Endeavour Group Limited, previously know
Slide 40: Endeavour Group Limited
Endeavour Group Limited ACN 159 767 843 | 26 Waterloo Street, Surry Hills, NSW, 2010