Travis Perkins Plc · LSE:TPK
Travis Perkins — FY2022 Earnings Presentation
33 slides from Travis Perkins's earnings presentation, Feb 28, 2023
Slide 1: Full Year Results Presentation
Full Year Results Presentation February 2023 Leading partner to the construction industry Full Year Results February 2023 1
Slide 2: 2022 Financial review
2022 Financial review Alan Williams Full Year Results Presentation February 2023 > 5-15
Slide 3: Agenda
Agenda Half Year Results August 2022 3
Slide 4: A resilient trading performance in rapidly changing market conditions
A resilient trading performance in rapidly changing market conditions Robust revenue growth of 9% from diligent pricing management Solid performance in Merchanting with further share gains and operating profit up 3%* Good H2 growth in Toolstation after challenging H1 comparatives; investment support
Slide 5: Half Year Results August 2022
Half Year Results August 2022 5
Slide 6: Key financial highlights
Key financial highlights Year ended 31 December 2022 2022 2021 Change (£m unless otherwise stated) Revenue 4,995 4,587 8.9% Adjusted operating profit 295 353 (16.4)% Adjusted operating profit excluding property profits and restructuring charge 285 304 (6.3)% Adjusted earnings per share (pence) 94.6p
Slide 7: Robust revenue growth from diligent pricing management
Robust revenue growth from diligent pricing management Elevated levels of manufacturer inflation passed through in an orderly manner across all businesses Volumes reflect Toolstation normalisation in H1 and challenging Merchanting RMI market through H2 New space growth from Toolstation rollout, new
Slide 8: Resilient profit performance in challenging market conditions
Resilient profit performance in challenging market conditions Overhead inflation recovered through pricing pass-through Cost base flexed during H2 to reflect lower volumes Significant inflation in people costs, property, fuel and utilities Strategic investment primarily in Toolstation branch network
Slide 9: Solid performance in Merchanting with further share gains
Solid performance in Merchanting with further share gains Robust revenue growth resulting from orderly pass-through of elevated levels of materials cost inflation Continued outperformance in both General 2022 2021 Change Merchant and Specialists Revenue £4,220m £3,826m 10.3% Operating profit 3% ahea
Slide 10: Toolstation - Good H2 growth after challenging H1 comparatives
Toolstation - Good H2 growth after challenging H1 comparatives UK Revenue up 7% in H2 following challenging pandemic comparatives in H1. FY revenue 55% 2022 2021 Change ahead of 2019. Revenue £775m £761m 1.9% UK operating profit reflects pace of network Like-for-like growth 12.3% investment with aro
Slide 11: Good cashflow conversion
Good cashflow conversion 31 Dec 31 Dec Change Change £m 2022 2021 £m % Stock 728 724 4 0.6% Receivables 726 707 19 2.7% Trade payables and other (852) (905) 53 5.9% Working capital 602 526 76 Free cash flow of £95m with good operating cash flow conversion of 67% Working capital inflow of £39m in H2.
Slide 12: Continuing to invest in growth drivers
Continuing to invest in growth drivers Strategic investment focused behind Toolstation £m 2022 2021 capacity and distribution capability together with Strategic 75 66 larger, more capable Merchanting branches Maintenance 28 20 Maintenance expenditure returning to normalised level IT 7 9 with investm
Slide 13: Property portfolio management underpins strategic delivery
Property portfolio management underpins strategic delivery Network strategy enhances both earnings and balance sheet; ● Net cash inflow of c. £100m* ● Market value of properties increased by c. £600m* ● Average property profits of £23m p.a.* ● Reduced Merchant branches by c. 15%; driven Add updated
Slide 14: Robust balance sheet provides flexibility
Robust balance sheet provides flexibility 31 Dec 2022 31 Dec 2021 Change Covenant Net debt under IFRS 16 £819m £605m £(214)m IFRS 16 net debt / adjusted EBITDA 1.8x 1.2x (0.6)x Covenant metrics* Covenant net debt £279m £87m £(192)m Covenant net debt / EBITDA 0.8x 0.2x (0.6)x <3.0x Increase in net de
Slide 15: 2023 outlook
2023 outlook Planning for mid to high single digit market volume declines Product inflation expected to moderate into H2; mid to high single digit for the full year Overhead inflation of 5-7% driven by wage and property / utility costs Cost actions already taken to reflect market conditions Cautious
Slide 16: Agenda
Agenda Half Year Results August 2022 16
Slide 17: Remaining focused on clear priorities
Remaining focused on clear priorities Our priorities Maintaining operational agility and discipline in capital allocation Leading the evolution of the Merchanting model Maximising Toolstation growth potential in UK and Europe In order to operate and lead in attractive markets Full Year Results Febru
Slide 18: Operating and leading in attractive markets
Operating and leading in attractive markets Balanced exposure provides resilience Long term drivers: Group revenue: Market segment: ● Long term housing shortage ● Demand for more sustainable homes ● Drive for carbon and energy efficiency ● Ageing and underinvested stock ● Infrastructure and social h
Slide 19: Leading the evolution of the Merchanting model
Leading the evolution of the Merchanting model UK’s largest distributor of building materials Leading value added distributor Leading partner to the construction industry Operating profit +18%* Capital employed reduced by £95m* ROCE improved by 280bps* Digital FUTURE capabilities Value-added service
Slide 20: Merchanting: Delivering on our strategy
Merchanting: Delivering on our strategy Full Year Results February 2023 20
Slide 21: Maximising Toolstation growth potential
Maximising Toolstation growth potential Rapidly growing lightside distributor Investing for the future Leading lightside distributor UK total revenue +90% to £671m* UK revenue per branch Leading trade FUTURE +13% to £1.2m* proposition Upgraded distribution Europe revenue European first capability do
Slide 22: Delivering on our strategy
Delivering on our strategy Full Year Results February 2023 22
Slide 23: Maintaining operational agility and discipline in capital allocation
Maintaining operational agility and discipline in capital allocation ● Early action taken to address cost base; £25m savings Operational underpin expectations for 2023 agility ● Cost base managed tightly in line with volume environment ● Continued investment in strategic priorities Capital disciplin
Slide 24: Competitive advantage from strategic sustainability focus
Competitive advantage from strategic sustainability focus ● 34% YoY reduction in Scope 1&2 emissions ● Interim carbon targets launched for 2027; Decarbonising our industry ○ Property 40% reduction ○ Fleet 27% reduction ● Provision of embodied carbon data to customers Developing the ● Over 1,000 appr
Slide 25: Robust investment thesis
Robust investment thesis Merchanting leadership and Toolstation expansion Attractive earnings growth driving above market growth Strong cash conversion from disciplined Robust balance working capital Ordinary dividend sheet and management (30 – 40% FY adjusted earnings) focused allocation of capital
Slide 26: Well prepared for the year ahead
Summary Well prepared Attractive Positioned for the long term to year ahead fundamentals outperform Full Year Results February 2023 26
Slide 27: Half Year Results August 2022
Half Year Results August 2022 27
Slide 28: Agenda
Agenda Half Year Results August 2022 28
Slide 29: I - Technical guidance
I - Technical guidance Base capital expenditure in 2023 expected to be around £100m Property profits around £20m Effective tax rate of 25% Full Year Results February 2023 29
Slide 30: II - Definitions
II - Definitions Metric Definition Operating profit Profit before tax, financing charges and income Earning per share (“EPS”) Ratio of net profit after taxation adjusted for minority interests to weighted number of ordinary shares outstanding Adjusted operating profit / Operating profit / EPS before
Slide 31: III - Sales drivers by reporting segment
III - Sales drivers by reporting segment Total Revenue Like-for-like revenue 2022 2021 2022 2021 Q1 17.9% 5.7% 15.3% 15.7% Q2 9.2% 87.8% 8.5% 94.1% Merchanting Toolstation Group H1 13.3% 37.5% 11.7% 47.3% Merchanting Q3 11.5% 15.1% 8.7% 15.2% Volume (5.8)% (7.1)% (6.0)% Q4 4.7% 13.6% 2.3% 11.9% H2 7
Slide 32: IV - Branch Numbers
IV - Branch Numbers 31 Dec 21 Openings Closures 31 Dec 22 Travis Perkins General Merchant 557 4 (14) 547 Benchmarx* 78 (6) 72 Keyline 43 1 44 CCF 37 37 BSS & TF Solutions 66 1 67 Merchanting 781 6 (20) 767 Toolstation 530 35 (2) 563 Toolstation Europe 123 35 158 Toolstation 653 70 (2) 721 Group 1,43
Slide 33: Matt Worster
Matt Worster | +44 (0) 7990 088 548 matt.worster@travisperkins.co.uk Half Year Results August 2022 33