Belysse Group Nv · EURONEXT:BELYS
Belysse Group Nv — Balta Group — Investor Presentation (May 2019)
35 slides from Belysse Group Nv's investor presentation, May 2019
Slide 1: Company presentation
Company presentation May 2019 Confidential
Slide 2: Disclaimer
Disclaimer In considering any performance information contained herein, you should bear in mind that past or projected performance is not necessarily indicative of future results, and there can be no assurance that any entity referenced herein will achieve comparable results or that illustrative ret
Slide 3: Experienced management team recently bolstered by leadership of Cyrille Ragoucy
Experienced management team recently bolstered by leadership of Cyrille Ragoucy Cyrille Ragoucy CEO, Chairman of the Board • Appointed interim CEO of Balta Group in 2018 and permanent CEO since April 2019 • Chairman since 2017 Tom Gysens Marc Dessein Lieven Jim Harley CFO Managing Vandendries- Presi
Slide 4: Our diversified operating segments
Our diversified operating segments Rugs Commercial Residential Brands End market • Home decoration, impulse buy with no need • Installed flooring driven by renovation, new • Installed flooring, driven by renovation & for installation – more resilient build and change of tenants new build Market posi
Slide 5: Our end-markets benefit from favourable trends
Our end-markets benefit from favourable trends Rugs Commercial Residential Key markets • USA • USA • UK • France • Europe • Germany • Germany • France • Rest of World Key drivers • Household home furniture spending • Commercial construction and RMI spend • Residential RMI spend • Consumer confidence
Slide 6: Evolution of our business to global and more diversified
Evolution of our business to global and more diversified 2014 Today Key achievements Row Row Revenue, FY 2018 Geography North 9% 7% America 9% North From European America company to global 31% Europe 62% business Europe 82% Business mix Non-Woven Non-Woven Revenue, FY 2018 6% 4% Rugs Business mix Ru
Slide 7: Key highlights
Key highlights 1 Global leader in decorative rugs with a leading position in European carpets and a fast growing US commercial segment 2 Attractive consumer and carpet market dynamics driving long-term demand with high focus on stable renovation market 3 Excellence in design, product development and
Slide 8: Where are we today?
Where are we today? • Challenging macro environment has affected the entire sector o Margin pressure from GBP depreciation since Brexit Referendum and marked raw material inflation continuing since H2 2017 o Price increases implemented in 2018 partially offsetting inflation. Another wave of price in
Slide 9: After a challenging start into 2018, our top-line is back on track
After a challenging start into 2018, our top-line is back on track LTM revenue, €m Key drivers (1) Six key initiatives implemented in 2018, encompassing profitable Organic growth of 1.7% y-o-y in Q4 revenue growth and delivering an increased level of cost savings 688.4 688.4 689.0 2018 and 11.5% y
Slide 10: NEXT: Three Year Earnings Enhancement program
NEXT: Three Year Earnings Enhancement program Key initiatives 1 • Channel: e-commerce opportunity in the US & Europe Rugs • Product offering: continued optimization Delivering • US: focus on market share in office segment, increased efforts in adjacent segments Sustainable Commercial • Europe: oppor
Slide 11: 1. Delivering sustainable growth
1. Delivering sustainable growth 11
Slide 12: Rugs segment
€[ ]m Rugs, 38%(1) Rugs segment Rugs LTM revenue, €m Our strengths High-quality and design 231 229 228 224 218 218 215 213 211 207 204 203 Unique product – e.g. reversible, fully washable rugs 198 195 194 193 185 182 Exposure to the faster growing synthetic rugs segment Innovation track reco
Slide 13: Rugs segment (cont'd)
Rugs segment (cont’d) Market Observations Channel Balta focus Market direction Key observations Balta actions in Furniture e-commerce retailers Stable outlook • High focus in the long-term o Started indirectly with “brick and click” DIY retailers customers in the past Growing channel on the low-en
Slide 14: Commercial segment
Commercial, 42%(1) Commercial segment Commercial LTM revenue(2), €m Our strengths Successful US commercial carpets business (20%+ growth) 222 215 209 201 199 199 198 197 196 191 190 186 184 180 Well positioned on quality and price in Europe 173 163 152 144 Differentiation through design and cu
Slide 15: Commercial segment (cont'd): Commercial US
Commercial segment (cont’d) Market Observations Segment Balta focus Balta actions - Market US Key observations direction Our core market that • Further increase in sales US - offices continues to grow. force to sustain high Largest segment – growth rates (1) 50%+ of total US commercial segment •
Slide 16: Residential segment
Residential, 16%(1) Residential segment Residential LTM revenue, €m Our strengths Leading market shares 249 249 247 247 244 243 240 239 237 235 234 234 234 225 219 211 Design leadership with track record of product innovation 208 206 High product quality and consistency Current themes and init
Slide 17: Residential segment (cont'd)
Residential segment (cont’d) Market position • Represents approximately half of our Residential • Represents approximately half of our Residential revenues revenues • Higher margin value-add products • Lower margins compared to Continental Europe Client • Polyamide (PA) carpets which are softer (e.g
Slide 18: 2. Improving commercial excellence
2. Improving commercial excellence 18
Slide 19: NEXT: Commercial Excellence
NEXT: Commercial Excellence Key initiatives Current status • Successfully implemented price increases showing first benefits in Q1 • Launched “Commercial Action Room” to bring cadence to sales organization New pricing strategy • Better price monitoring - intensified interaction with salesforce • Dif
Slide 20: Increasing sales force effectiveness through capability building and incentives
Increasing sales force effectiveness through capability building and incentives Context Topics • Refine our market and customer insights Capability • Program designed to bring best practices to our sales • Revisit segmentation based on sales and service needs Building organization through a mix of f
Slide 21: 3. Increasing cost competitiveness
3. Increasing cost competitiveness 21
Slide 22: NEXT: Increasing cost competitiveness
NEXT: Increasing cost competitiveness Key initiatives Current status • Implementation began at our Tielt plant, targeting run-rate cost savings of c.€4m Lean projects across our plants • Improving processes, systems & tools to increase capacity and reduce costs • Similar Lean projects are being star
Slide 23: Lean – Tielt case study
Lean – Tielt case study Case study – lean implementation at the Tielt plant, targeting run-rate cost savings of c.€4m with limited upfront investment • Implementation has started at the Tielt plant, to be followed by several other plants in the coming weeks • Improving processes, systems & tools to
Slide 24: S&OP improvements and complexity reduction
S&OP improvements and complexity reduction Context Actions Progress • Planning processes and granularity Significant improvements in forecast accuracy • Development and implementation of more are already noticeable S&OP is a key lever in integrated, fit-for-purpose planning tools managing inventor
Slide 25: 4. Q1 2019 results overview
4. Q1 2019 results overview 25
Slide 26: Q1 2019 Financial Summary
Q1 2019 Financial Summary +11.5% organic • Q1 2019 Consolidated Revenue of €183.5m +13.1% yoy sales growth • Growth in all divisions, with strong performance in Rugs (+23.1%) & (consolidated) Commercial (+15.4%) +1.6% FX impact • Q1 2019 Consolidated Adjusted EBITDA of €17.5m +1.4% organic +3.5% • Y
Slide 27: Group Q1 2019 Revenue Performance
Group Q1 2019 Revenue Performance €m 7.4 1.2 0.3 183.5 12.3 Q1 Growth Q1 Growth 162.3 (€m) (%) +23.1% +15.4% +2.3% +4.1% Organic +€18.6m +11.5% FX +€2.7m +1.6% Impact Reported +€21.3m +13.1% Reported Revenue Rugs Commercial Residential Non- Reported Revenue Q1 2018 Woven Q1 2019 UK/Europe overall re
Slide 28: Group Q1 2019 Adjusted EBITDA and Margins
Group Q1 2019 Adjusted EBITDA and Margins Adj. EBITDA margin (%) Reported Q1 €m Lfl(1) Q1 2018 % Change Lfl(1) 9.5% 10.4% 9.5% 2019 €m 0.4 17.5 1.5 16.9 0.2 Rugs 6.1 6.2 +1.5% 15.3 +1.4% +2.1% Commercial 7.2 7.7 +8.1% Lfl(1) +3.5% Residential 2.9 3.3 +14.5% Non-Woven 0.8 0.3 (66.2%) Consolidated Adj
Slide 29: Leverage overview - Q1 2019 (before IFRS16 impact)
Leverage overview - Q1 2019 (before IFRS16 impact) Capitalisation (€m) Amount xRef. EBITDA Maturity Coupon / Margin LTM Mar-19 adj. EBITDA(1) 72.7 Cash and Cash equivalents (20.8) (0.3x) Revolving Credit Facility – – Senior Secured Notes(2) 235.7 3.2x Sep-22 7.75% Senior Term Loan(2) 35.0 0.5x Sep-2
Slide 30: Outlook reaffirmed
Outlook reaffirmed Excluding the impact of IFRS16 • Expect Adjusted EBITDA broadly flat versus the prior year • Capex around €40m • Interest expenses flat versus the prior year • Effective Tax Rate between 25 – 27% 30
Slide 31: Appendix
Yabalta Appendix
Slide 32: Raw materials exposure
Raw materials exposure Balta’s raw materials exposure (FY18 raw materials expense split) €307m (47% of sales) ~30% ~30% ~10% ~30% granulates yarn latex other • Substantial increase in PP and PA • 35% of yarn used for Balta products • Large number of diverse and non- purchase prices since 2016: is so
Slide 33: UK remains an important market for us with multiple growth drivers
UK remains an important market for us with multiple growth drivers Brexit uncertainty led to a difficult ... however, those impacts are temporary and we expect market backdrop in 2018… market improvement in the short/medium term Consumer confidence was on the decline… UK Residential market has struc
Slide 34: Impact of IFRS16
Impact of IFRS16 • IFRS16 applicable since 1 January 2019 • Leases are recognized as asset financed by a financial liability • At our full year 2018 results we provided a preliminary estimated impact of IFRS on FY2019 • Net debt +€45m • Adjusted EBITDA + €6m to €8m • Net Debt to Adjusted EBITDA + 0.
Slide 35: Historical financial summary
Historical financial summary Pre IFRS16 Pre IFRS16 Lfl IFRS16 FY FY FY Q1 IFRS16 Lfl Q1 Q1 % change o/w organic o/w (€ million, unless otherwise stated) 2016 2017 2018 2018 Impact 2018 2019 Lfl growth FX Rugs 214.5 228.3 198.3 53.2 - 53.2 65.5 23.1% Commercial 80.1 171.7 214.8 48.3 - 48.3 55.7 15.4%