Gwa Group Limited · ASX:GWA
Gwa — FY2019 Earnings Presentation
37 slides from Gwa's earnings presentation, Aug 19, 2019
Slide 1: ASX cover letter: Annual Results Presentation
19 August 2019 ASX On-Line Manager Company Announcements Australian Securities Exchange Dear Sir Annual Results Presentation for the Year Ended 30 June 2019 We enclose the following document for immediate release to the market. • Annual Results Presentation On 19 August 2019 at 10:00am, GWA will be
Slide 2: Results Presentation – Year ended 30 June 2019
Results Presentation Year ended 30 June 2019 19 August 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 Financial results 03 Summary and outlook 04 Appendix 3
Slide 5: Overview and key themes
Overview and o1 key themes 4|@&loms cuae« | dorf | METHVEN Group Limited
Slide 6: Solid FY19 result – focused and strengthened business
Overview Financial results Outlook Appendix Solid FY19 result – focused and strengthened business GWA continuing to perform ahead of the market to deliver solid financial result ‒ Continuing to gain profitable market share – 4th annual period of increased share ‒ B&K revenue steady despite 1.4% mark
Slide 7: Solid financial result
Overview Financial results Outlook Appendix Solid financial result Normalised¹ from Continuing Operations² Revenue ROFE $381.7m 6.4% n/a n/a EBITDA Operating Cashflow 2.7% 64.4% $82.3m $94.2m EBIT EPS 1.5% 3.2% $77.4m 19.6 cents NPAT FY Dividend³ 3.2% 2.8% $51.8m 18.5 cents fully-franked ¹Normalised
Slide 8: Solid financial result (excluding Methven)
Overview Financial results Outlook Appendix Solid financial result (excluding Methven) Normalised¹ from Continuing Operations (ex. Methven)² Revenue ROFE $358.7m (1.0)pp 0.0% 20.2% EBITDA Operating Cashflow 0.8% 59.0% $80.8m $91.1m EBIT EPS 0.2% 2.8% $76.4m 19.5 cents NPAT FY Dividend 2.8% 2.8% $51.
Slide 9: Increased presence in robust R&R segment
Overview Financial results Outlook Appendix Increased presence in robust R&R segment and improved geographic diversification provide resilience through the cycle R&R increases from Segment Category Taps and showers 52% to 59%¹ post Residential Valves 1% increases from 21% Methven acquisition Basins,
Slide 10: GWA growing revenue ahead of the market
Overview Financial results Outlook Appendix GWA growing revenue ahead of the market B&K revenue flat vs market down ~(1.4)%¹ Continued market share % growth in B&K² Market % of B&K Market Segment Performance Segment Sales Renovation & 52% Overall market showing decline Replacement in Residential, pa
Slide 11: Financial results
02 | Financial results 10 |G] or... “dorf | METHVEN
Slide 12: Normalised continuing operations – NPAT up 3.2%
Overview Financial results Outlook Appendix Normalised¹ from continuing operations² – NPAT up 3.2% A$m Normalised¹ FY-2018 FY-2019 % Change ‒ Result from Continuing Operations includes GWA plus Revenue 358.6 381.7 6.4% Methven contribution from 10 April 2019 (before EBITDA 80.2 82.3 2.7% significant
Slide 13: EBIT maintained in declining market
Overview Financial results Outlook Appendix EBIT maintained in declining market Normalised Continuing Operations EBIT Bridge (A$m) ‒ EBIT up 1.5% on prior period 79 0.6 (1.4) ‒ Volume/mix: in line with prior year despite declining 78 1.1 1.0 market. Improved volume and mix in sanitaryware partially
Slide 14: Bathrooms & Kitchens outperformed market
Overview Financial results Outlook Appendix Bathrooms & Kitchens (ex Methven) – continued to perform above market A$m Normalised¹ FY-2018 FY-2019 % Change ‒ Revenue stable and driving profitable market share growth Revenue 358.6 358.7 0.0% ‒ Continued growth in sanitaryware with ongoing EBITDA 91.8
Slide 15: Continued strong improvement in operating cashflow
Overview Financial results Outlook Appendix Continued strong improvement in operating cashflow Cash flow from Continuing FY-2018 FY-2019 ‒ Continued strong performance in operating cashflow Operations A$M EBITDA 80.2 82.3 ‒ Innovation & Distribution Centre at Prestons NSW driving: Net movement in Wo
Slide 16: Strong financial position maintained
Overview Financial results Outlook Appendix Strong financial position maintained Metric 30 June 30 June 30 June 30 June 30 Jun ‒ GWA remains in a strong financial position post the 2015 2016 2017 2018 2019 acquisition of Methven Net Debt 94.8 88.4 79.8 97.7 141.9 Leverage Ratio ‒ Increase in net deb
Slide 17: Summary and outlook
03 | Summary and outlook am, 16 |G ona Jo caek | dorf | METHVEN Group Limited
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: Continued progress on strategic initiatives
Overview Financial results Outlook Appendix Continued progress on strategic initiatives Corporate priority Progress made ▪ Joint business planning in B&K drives enhanced ranging / showroom presence ▪ Trade and Retail sales team targeting merchants to access core Residential R&R CUSTOMER FOCUSED oppo
Slide 20: Caroma Smart Command®
Overview Financial results Outlook Appendix Caroma Smart Command® 19
Slide 21: Caroma Smart Command® generating positive market engagement
Overview Financial results Outlook Appendix Caroma Smart Command® generating positive market engagement Key area Progress ▪ Caroma Smart Command® now installed in 18 sites across Australia / NZ – solid bank of additional projects in the pipeline Expanded footprint ▪ Strong customer engagement with l
Slide 22: Update on acquisition of Methven
Overview Financial results Outlook Appendix Update on acquisition of Methven Summary Update on activity ▪ Enhanced revenue opportunities in core markets through superior GWA customer capability ▪ Increased market share in Taps segment in Australia from ~12% to ~20% and Compelling strategic rationale
Slide 23: FY20 outlook
Overview Financial results Outlook Appendix FY20 outlook Key area FY20 commentary ▪ GWA stronger, more focused with demonstrated track record of outperforming the sector even in challenging environments, with solutions to capitalise on opportunities ▪ Weaker consumer sentiment, credit tightening and
Slide 24: Results Presentation – Full Year ended June 2019
Results Presentation Full Year ended 30 June 2019 19 August 2019
Slide 25: Appendix
AGED CARE | 145 ARCHITECTS attending an Aged Care CPD event at Caroma on Collins 04 Appendix 24
Slide 26: Key assumptions for FY20
Overview Financial results Outlook Appendix Key assumptions for FY20 ▪ FY20 depreciation and amortisation¹ expected to be ~$8 – $9 million ▪ Corporate costs of $14 - $14.5 million ▪ ~$7 million F/X oncosts expected to be offset by cost savings and price ▪ Interest costs of ~$6.5 – $7.5 million ▪ Tax
Slide 27: Reconciliation – Reported NPAT to normalised NPAT
Overview Financial results Outlook Appendix Reconciliation – Reported NPAT to normalised NPAT FY-2018 FY-2019 A$m Continuing Discont'd Group Continuing Discont'd Group Operations Operations Total Operations² Operations Total³ Normalised¹ REVENUE 358.6 93.9 452.5 381.7 0.0 381.7 EBITDA 80.2 9.3 89.5
Slide 28: Reconciliation – Reported NPAT to normalised NPAT
Overview Financial results Outlook Appendix Reconciliation – Reported NPAT to normalised NPAT FY-2018 FY-2019 A$m Continuing Discont'd Group Continuing Discont'd Group Operations Operations Total Operations² Operations Total³ REVENUE Bathroom & Kitchens 358.6 0.0 358.6 358.7 0.0 358.7 Door & Access
Slide 29: Reconciliation - Methven Proforma (12 months)
Overview Financial results Outlook Appendix Reconciliation - Methven Proforma (12 months) FY- 2019 A$m Normalised FY-2018 FY-2019 % Change (3 Mths) Revenue 94.7 95.1 0.4% 23.1 EBITDA 12.9 9.4 -27.2% 1.5 EBIT 9.8 6.6 -33.0% 1.0 EBIT Margin % 10.4% 6.9% -3.5pp 4.2% 28 1. Normalised is before Significa
Slide 30: 5 year summary
Overview Financial results Outlook Appendix 5 year summary A$m FY15¹ FY16¹ FY17 FY18² FY19² Revenue Bathrooms & Kitchens 330.0 342.0 350.4 358.6 358.7 Methven 0.0 0.0 0.0 0.0 23.1 Total Cont'd Ops 330.0 342.0 350.4 358.6 381.7 Discontinued Ops 217.8 102.5 95.9 93.9 0.0 Group Total 547.8 444.5 446.3
Slide 31: Overview of Methven
Overview Financial results Outlook Appendix Overview of Methven GWA’s 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 manufacturer of showers, taps an
Slide 32: Australian market context
Quantity Completed Annually 0 20,000 40,000 60,000 80,000 120,000 140,000 100,000 31 FY-1975 FY-1976 FY-1977 FY-1978 FY-1979 FY-1980 FY-1981 FY-1982 FY-1983 FY-1984 FY-1985 pressure FY-1986 FY-1987 FY-1988 FY-1989 FY-1990 FY-1991 FY-1992 FY-1993 FY-1994 FY-1995 Actual FY-1996 FY-1997 FY-1998 FY-1999
Slide 33: Commercial continues to be strong
Overview Financial results Outlook Appendix Australian Market Context – Commercial continues to be strong and R&R subdued (but less volatile than Residential new build) ▪ Commercial segment to remain buoyant in ▪ Reduced existing housing turnover, low wage Victoria and NSW driven by both government
Slide 34: Non residential by sector
Overview Financial 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 Other S&I 33
Slide 35: Annual net overseas migration
34 100 150 200 250 300 350 0 50 Jun-82 Jun-83 Jun-84 Source: ABS 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 Jun-07 Annual Net Overseas Migration ('000’s) Jun-0
Slide 36: Australian population growth
35 0.5 1.0 1.5 2.0 2.5 0.0 Jun-82 Jun-83 Source: ABS 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 Australian population growth (%) Jun-07 Jun-08 Overview J
Slide 37: Results Presentation – Full Year ended June 2019
Results Presentation Full Year ended 30 June 2019 19 August 2019