Ama Group Limited · ASX:AMA
Ama — Investor Day (May 2022)
87 slides from Ama's investor day presentation, May 31, 2022
Slide 1: Investor Day 2022
Investor Day 2022 31 May 2022
Slide 2: Aspiring to be
Aspiring to be Industry benchmark for safety Preferred employer within the industry Training “more than our share” 250+ sites $1.5b+ revenue 12%+ post AASB-16 margins Supporting environmental sustainability through collision repair and parts sourcing 2
Slide 3: Introduction to AMA Group
Introduction to AMA Group
Slide 4: Executive Team
Executive Team Carl Bizon CEO & Executive Director Alexandra Holston Mathew Cooper Geoff Trumbull Andrew Mair Janelle Leonard Scott Lancaster Director Investor Group Chief Group Chief Group Chief Group Chief Group Chief Relations Operating Officer Financial Officer Commercial Officer People Officer
Slide 5: The leader in the Australian and New Zealand collision repair industry
SUPPLY HE AV Y MOTOR The leader in the 3,500+ 220k+ Team members Recycled & new Australian and $920m parts supplied per year New Zealandcollision 12 months to repair industry June 2021 300k+ 8.5k+ Vehicles Vehicles repaired reclaimed We have the biggest collision repair network per year per year acr
Slide 6: Our Vision
Our Vision ENDURING MOBILITY Sustainability Innovation Community The longer vehicles remain on the road, AMA Group partners with industry, AMA Group helps communities to be the less likely they will government and academic institutions more mobile, more resilient, end up as landfill to raise the sta
Slide 7: Our Mission
Our Mission AMA Group extends the life of vehicles through an integrated network of repairers, dismantlers, and distributors so our customers can keep moving. 7
Slide 8: Our Values
Our Values Together we do it right Care One Team Ownership Resilience Performance We treat everyone We are One AMA, We own our We embrace We deliver value with empathy and working together decisions and change and adapt through respect to a common goal actions as needed performance, innovation and q
Slide 9: AMA Group Collision Repair Industry Participation
AMA Group Collision Repair Industry Participation AMA Group participation Collision AMA Group partial participation Vehicle Assessment Assessed Assessed Total Loss Repairable Dismantle Repair Parts Labour Supplies Reclaimed OEM Paint Reconditioned Parallel OEM Consumables Recycle Aftermarket Note: O
Slide 10: Collision Repair Marketplace
Collision Repair Marketplace AMA Group is the only national network of any scale in Australia, operating in a highly fragmented marketplace Number of Collision Repair Sites by Operator (Australia and New Zealand) 158 ~13% ~3000 Market Share1 Independent Repairers 29 26 19 13 Long tail 11 11 10 8 6 S
Slide 11: AMA Group Benefits of Scale
AMA Group Benefits of Scale ~$55m+ $300k+ 2.0x leverage annual benefit annual benefit vs financial costs per site of scale Benefits of Scale Paint Supply Long term supply agreement with cash market incentive and substantial market discount Part Supply Procurement benefits from National Dealer Tender
Slide 12: Five Year Strategic Targets
Five Year Strategic Targets Australia & New Zealand Vehicle 200+ $1.0b Collision Locations Revenue 149 currently FY21 $801m 16+ $100m Heavy Locations Revenue 9 currently FY21 $54m 70,000 m2 $150m Supply Capacity Revenue ~40,000 m2 currently FY21 $64m 3.0x Group Group Cost Leverage 2.0x currently 12
Slide 13: Five Year Strategy Overview
Five Year Strategy Overview Strategic Objectives Great Place to Organic Acquisition Cash Flow Margin Work Growth Growth Generation Expansion Strategic Pillars – The Three Ps Partnerships Production Procurement Focus Areas Reset the Base Business Grow Minimise Disruption 1 2 3 13
Slide 14: Short to Medium Term Focus Areas
Short to Medium Term Focus Areas 1 2 3 Reset the Base Business Grow Minimise Disruption Reset operations, pricing and Expand network, maximise customer approach to entrench Minimise disruption caused by existing operations and grow leadership position in collision situational challenges adjacent bus
Slide 15: People – AMA Group: A Great Place to Work
People – AMA Group: A Great Place to Work
Slide 16: Top People Priorities
Top People Priorities Health and safety Retention and A great place to work Engagement Employee share plan Apprenticeships Workforce of Skilled migration the Future Training and development Environment ESG Social Governance 16
Slide 17: A Great Place to Work
A Great Place to Work We asked our Team “What would make AMA Group a great place to work”? Better workplaces Better benefits Employee Value Proposition has been about building a better AMA Group Facilities and equipment Reward excellence Culture focused on One AMA — Take care of each other
Slide 18: Retention Initiatives
Retention Initiatives To improve retention, the Group is building a better place to work Major initiatives to-date: Communication through workplace updates, monthly business updates and a quarterly magazine Incentivising loyalty through service awards Recognition of work throughout COVID-19
Slide 19: Employee Share Plan
Employee Share Plan A major One AMA Building Better initiative was the introduction of the general employee share place Gifted share ownership can help to reward, recognise and retain Team members Unique employee value for proposition AMA Group - It is a benefit that can only be offered as a lis
Slide 20: Safety – Take the LEAD
Safety – Take the LEAD We value the health, safety and wellbeing of our Team above all else Significant reduction in LTIFR Take the LEAD is a cultural safety program designed to shift behaviour that moves beyond compliance This is a comprehensive safety program rolling out across all AMA Gro
Slide 21: Apprenticeships
Apprenticeships 335 150+ Current Planned Apprentices Annual Intake Building the Workforce of the Future through Apprenticeships Apprentices are the next generation of leaders and skilled tradespeople AMA Group is committed to bringing in the best people and ensuring the best start to their caree
Slide 22: Skilled Migration
Skilled Migration 20+ 230 Visa Applications Visa Holders Processing Building the Workforce of the Future through Skilled Migration While AMA Group builds the workforce of the future, it is critical that the immediate needs of the business are met COVID-19 and border closures until February 2022
Slide 23: Training and Development
Training and Development Building the Workforce of the Future through Training and Development Continued training of our Team is key to the Group’s long-term success – training doesn’t end after an apprenticeship Changing technology and governance requirements demand ongoing, up-to-date training
Slide 24: ESG Priorities
ESG Priorities AMA Group is at the beginning of its ESG journey and will be working toward an ESG strategy, with a number of key areas identified to date Environment Social Governance Extending the life of vehicles Grass roots community Embed our vision and values involvement Reclaiming and
Slide 25: Business Drivers
Business Dri AMA GROUP
Slide 26: Underlying Drivers of Revenue
Underlying Drivers of Revenue Component Driver Notes # of Vehicles Km Driven Key revenue drivers are increasing - with the Volume exception of claim Claim Customer frequency Frequency & Cost Allocations x Insurer Pricing Initiatives in place Price to address historic pricing models Mix of Accidents
Slide 27: Number of Vehicles
Number of Vehicles Increasing vehicles on the roads drives the number of repairs Historical and Forecast Number of Vehicle Registrations1 Notes 25 ~1 in 10 cars 20 are damaged through collisions annually Registrations (m) 15 ~75% of collisions result in 10 repairable damage 5 Change is slow to impac
Slide 28: Kilometres Travelled
Kilometres Travelled Increasing kilometres travelled reflects greater time on the road Kilometres Travelled (Passenger Vehicles) in Australia Notes 185 Outside COVID-19, total 180 kilometres driven have been increasing over time Total kms travelled (m) 175 170 COVID-19 165 impacted Greater kilometre
Slide 29: Claim Frequency & Claim Size
Claim Frequency & Claim Size Claim frequency has been relatively stable outside COVID-19, however claim size is increasing Claim Frequency Average Claim Size Notes 170 170 Average Claim Size (indexed to 100) 160 160 Higher penetration of Claim Frequency (indexed to 100) 150 150 ADAS in new cars 140
Slide 30: Procurement
Procuremen AMA GROUP
Slide 31: Procurement Structure
Procurement Structure Groupwide ACM Supplied OEM Dealer Agreements Reclaimed Parts OEM Partnerships Parallel Imports Groupwide Paint Partnership Aftermarket Parts Groupwide Negotiations for Indirect & Supplemental Costs Consumables 31
Slide 32: Key Collision Repair Procured Inputs
Key Collision Repair Procured Inputs Parts Indicative AMA Group Key Collision Repair Inputs1 ‐ Items installed on the car such as panels, lamps, steering and suspension Consumables, components $20m Paint ‐ Colour matched to the existing vehicle and Indirect Paint, painted onto existing or new extern
Slide 33: Groupwide Procurement Strategy
Groupwide Procurement Strategy Area Action Result Parts National Dealer Tender (completed) and OEM direct negotiations Annual spend (ongoing) ~$350m groupwide1 National Dealer Tender will be completed annually AMA Group cost advantage through Consumables Enhance procurement benefits through su
Slide 34: ACM Parts – AMA Group’s Internal Sourcing Opportunity
ACM Parts – AMA Group’s Internal Sourcing Opportunity Acquired with Capital S.M.A.R.T Observations Historically loss making of ~$2m per annum post-AASB-16 Turned around to ~$5m profit post-AASB-16 in FY21 Transformative year in FY22 as the business optimises operations for growth and loss of wreck a
Slide 35: Disintermediation Opportunity
Disintermediation Opportunity Opportunity exists to disintermediate parallel, aftermarket and reclaimed parts in AMA Group’s most in- demand parts, and to leverage the benefits of scale through supply chain optimisation Indicative Disintermediation Opportunity - AMA Group Parts (Total Parts Spend ~$
Slide 36: ACM Parts Overview
ACM Parts Overview ACM Parts’ Distribution Operations ACM Parts’ Dismantling Operations # No. of sites # No. of sites 1 1 1 1 1 1 2 1 70,000 m2 4 4 Modernise facilities Capacity Locations Locations and operations ~40,000 m2 Currently 5 Currently 4 Currently processes 36
Slide 37: ACM Parts Rebrand and Repositioning
ACM Parts Rebrand and Repositioning Rebranding and repositioning the ACM Parts’ Brand was completed in early 2022, to enhance market presence and position for the offering and service expansion to AMA Group and external customers Redefining repair by building a purpose-led brand Refocusing on ow
Slide 38: ACM Parts’ New Somerton (Vic) Warehouse
ACM Parts’ New Somerton (Vic) Warehouse Over 19,500 m2 of undercover warehouse capacity Fully equipped with over 5,000 m2 of hardstand and fit-for-purpose access Strategically positioned for access to key transport infrastructure Fully operational as of May 2022 Complementary delivery vehi
Slide 39: ACM Parts Priorities and Opportunities
ACM Parts Priorities and Opportunities Third-party sales with the largest customer in the industry as the foundation customer Priorities: Increase parts range and Priorities: Study overseas operations, modernise facilities distribution capability and approach best practice Opportunities: Leverage ba
Slide 40: Production
Production AMA GROUP
Slide 41: Production Brands
Production Brands Rapid repairs on cars that are still drivable Higher severity, more complex repairs of Includes Capital S.M.A.R.T and other AMA cars with more significant damage; Specialist truck and bus repairs Group rapid repair businesses Prestige repairs Prestige Single site brands (various) 4
Slide 42: Site Profitability Analysis (Excluding Capital S.M.A.R.T)
Site Profitability Analysis (Excluding Capital S.M.A.R.T) +10% EBITDA 5-10% EBITDA 0-5% EBITDA Unprofitable Focus on the profitability of each site individually As volumes have returned the profitability position of a significant number of sites has improved rapidly 21 Network actions in FY22
Slide 43: Evolution of Repair Volume Capacity
Evolution of Repair Volume Capacity Practical capacity of ~354k repairs, absent staff shortages and site hibernations following network optimisation 419 392 398 Capital S.M.A.R.T (21) New / Acquisitions 29 354 Exits (44) Hibernations 192 200 FY19 Exits / Growth FY20 Exits / Growth FY21 Exits / Growt
Slide 44: Capacity Utilisation Improving
Capacity Utilisation Improving Utilisation of right sized capacity is improving as volumes return, but still not to pre-Covid levels. Commercial evaluation of hibernated sites continues. Utilisation Annualised Capacity 450 100 % ‘000 vehicles 419 392 398 90 400 384 354 80 350 70 300 60 250 50 200 40
Slide 45: COVID-19 Disruption / Absenteeism
COVID-19 Disruption / Absenteeism Unplanned absenteeism for direct roles in AMA Group collision sites is 58% higher than the pre-COVID run rate Average Sick / Personal Leave Hours 13 12 11 10 Absenteeism / Headcount 9 8 7 6 Pre-COVID run rate 5 4 3 2 1 0 Jul-19 Sep-19 Nov-19 Jan-20 Mar-20 May-20 Jul
Slide 46: Capital S.M.A.R.T Improvement Plan
Capital S.M.A.R.T Improvement Plan Approximately breakeven with current pricing and volumes Pricing reset 30 June 2023 ‐ Open dialogue with insurance partner ‐ No surprises approach given significance of reprice impact Private work opportunity ‐ Historically not available in this network ‐ Ini
Slide 47: Vehicle Collision Opportunity
Vehicle Collision Opportunity There are many target sites available for purchase by AMA Group, and a number already within the network which will benefit from organic opportunities Organic Acquisition Refurbishment Network plan delivered and will continue to evolve Relocation Addresses where
Slide 48: Network Capacity Investment
Network Capacity Investment Continued investment in greenfield and improved capacity where strong returns are available Current approved investments include: ‐ Rockhampton – Greenfield (complete) ‐ Upgrade to existing capacity in township ‐ Replaced older facility which is in process of make goo
Slide 49: Prestige Opportunity
Prestige Opportunity Benefits of Prestige Repairs Higher investment returns Greater complexity of repairs resulting in higher technician skill base Higher cost of operations (technology and equipment) reflected in pricing available Greater training commitments for staff Scarcity of capability Key Op
Slide 50: Heavy Motor Opportunity
Heavy Motor Opportunity Organic Growth Expanded footprint – Victorian expansion case under study Refurbishment allowing greater site throughput Customer growth Acquisition Growth Specialised sites 3 – 5x EBITDA for single site operations 50
Slide 51: ADAS Opportunity
ADAS Opportunity In CY21, less than 20% of repairable vehicles in the USA had at least one ADAS technology that may Observations have engaged during the incident1 Expected that ADAS may prevent some accidents, especially low-speed accidents and reduce severity, however the presence of ADAS substanti
Slide 52: Operational Improvement Focus
Operational Improvement Focus Cost Control Leadership Best Practice Deferral where possible Development Sharing internal / Frontline leaders external learnings Elimination of waste training program with Operational decision Efficiency of process People focus making Site Improvement Internal Effectiv
Slide 53: Partnerships
Partnerships AMA GROUP
Slide 54: Customers in Collision Repair
Customers in Collision Repair The bulk of AMA Group’s work is from insurers, with opportunities to expand Wholesale Insurer Customers Insurers Brokers Opportunity Fleets / Government Retail Private 54
Slide 55: AMA Group Value Proposition
AMA Group Value Proposition Consistently Excellent High Customer Quality Experience Compelling Technical Capacity Capability National Breadth of Network Repair Offering Reduced Compliance Administrative and Burden Governance 55
Slide 56: Insurance Repair Pricing Models
Insurance Repair Pricing Models AMA Group Contract Profile by Revenue Average Price Model Fixed price paid for all repairs for work up to a specific value (the “cap”) and other agreed criteria with work pre-authorised under that amount Line by Line 33% Line by Line Each job is quoted on site, specif
Slide 57: Pricing Challenges
Pricing Challenges All insurers have been approached and are in active discussion regarding repricing contracts Wages Parts Pricing 120 25% % Change from Jun-19 (Rabased to 100) 115 20% Hourly Rate 110 15% 105 10% 100 Average Rate Panel Beater 95 Average Rate Spray Painter 5% 90 0% Sep-20 Sep-21 May
Slide 58: Pricing Approach
Pricing Approach Pricing must keep pace with market changes to ensure a fair return on work completed Historical Targeted Site Customers Single / Exclusive Sites Multi-Customer Sites Limited Price Review Regular Price Review Price Review (12+ Months) (3-6 months) Limited Review Regular Review Labour
Slide 59: Repair Revenue Diversification Opportunities
Repair Revenue Diversification Opportunities Direct Business Services Business Access non-insurer-based revenue from: Horizontal expansion of services offered to drive Opportunities Car Rental Companies retention of existing income and acquisition of additional income e.g. claims management Fleet Ma
Slide 60: Focus Areas
Focus Areas AMA GROUP
Slide 61: Focus Areas
Focus Areas 1 2 3 Reset the Base Business Grow Minimise Disruption Reset operations, pricing and Expand network, maximise customer approach to entrench Minimise disruption caused by existing operations and grow leadership position in collision situational challenges adjacent businesses repair indust
Slide 62: Reset the Base Business
1 Reset the Base Business Reset operations, pricing and customer approach to entrench leadership position in collision repair industry Safety Retention and engagement A great place to work Employee share plan National dealer tender and OEM direct negotiations for parts supply Groupwide procu
Slide 63: Grow
2 Grow Expand network, maximise existing operations and grow adjacent businesses Accelerate third-party parts and ACM Parts warehouse capacity expansion consumables business ACM Parts rebrand and repositioning Organic growth and investment where there is demand Network plan delivered and num
Slide 64: Minimise Disruption
3 Minimise Disruption Minimise disruption caused by situational challenges Apprenticeships program – “more than our share” Workforce of the future Skilled migration Training and development Opportunities to disintermediate parallel, aftermarket and reclaimed parts and leverage the benefits o
Slide 65: Financing
Financing AMA GROUP
Slide 66: AMA Group Financing Summary
AMA Group Financing Summary Sufficient liquidity to manage through recovery Projected available cash Prudent capital structure Debt funding in place of approximately $50m based on FY24 EBITDA until October 2024 at 30 June 2022 outlook Ongoing bank support on Capacity to fund 4Q22 covenant test coven
Slide 67: Funding and Liquidity
Funding and Liquidity 31 March 2022 $m Over $170m of debt reduction since 2020 ‐ Nov 2020: ACAD sale $70m + 30m working capital facility Facility B – Term Loan 147.5 ‐ Sep 2021: Capital raising $72.5m Facility D – Working Capital Facility 17.5 Debt facilities mature in October 2024 ‐ Banking gro
Slide 68: Capital Structure
Capital Structure Medium term guidance remains unchanged - FY24 projected as the first “clean” year ‐ Revenue $1b+ ‐ EBITDA (post-AASB 16)1 $120-140m ‐ EBITDA (pre-AASB 16)1 $70-90m Prudent capital structure based on underlying EBITDA profile ‐ Net Senior Leverage = <1.5x2 ‐ Net Total Leverage =
Slide 69: Capital Allocation
Capital Allocation Sources Uses Approach Stay-in-business capex to ensure safe and reliable operations Available cash Stay-in-business capex Targeted investment to improve site functionality and implement Projected available cash other operational initiatives of approximately $50m at 30 June 202
Slide 70: Summary and Outlook
Summary and Outlook
Slide 71: Achieving AMA Group’s Five Year Strategic Goals
Achieving AMA Group’s Five Year Strategic Goals Strategic Objectives Great Place to Organic Acquisition Cash Flow Margin Work Growth Growth Generation Expansion Strategic Pillars – The Three Ps Partnerships Production Procurement Focus Areas Reset the Base Business Grow Minimise Disruption 1 2 3 71
Slide 72: Earnings Outlook
Earnings Outlook FY22 – EBITDA1 ~$12–17m FY23 – EBITDA1 ~$70-90m FY24 – EBITDA1 $120–140m+ Demand Demand Demand ‐ COVID-19 volume impacted ‐ Continued demand growth ‐ Demand for panel repairs normalised to ‐ Mix shift to higher cost repairs ‐ Expected pause in competitor roll-outs pre-COVID le
Slide 73: AMA Group 2027
AMA Group 2027 Australia & New Zealand Vehicle 200+ $1.0b Collision Locations Revenue 149 currently FY21 $801m 16+ $100m Heavy Locations Revenue 9 currently FY21 $54m 70,000 m2 $150m Supply Capacity Revenue ~40,000 m2 currently FY21 $64m 3.0x Group Group Cost Leverage 2.0x currently 73
Slide 74: The AMA Group Road Trip
The AMA Group Road Trip Revenue diversification ADAS opportunities Network expansion Organic & Commence acquisition Introduce groupwide growth Industry benchmark for safety One AMA, procurement Preferred employer within the Commence Building Better initiatives industry contract price & Take the LEAD
Slide 75: AMA Group
AMA GROUP ~ Ws
Slide 76: Additional Information
Additional Information
Slide 77: The Road So Far…
2013 The Road So Far… Acquired commercial vehicle alloy bull-bar specialist Custom Alloy 2007 Acquired auto parts distributor Alanco Australia ‘13 2005 and our first collision repair Allomak Ltd business Mr Gloss established to acquire automotive aftercare 2014 businesses ‘07 ‘14 Acquired Repair Man
Slide 78: …The Road So Far
2020 …The Road So Far Acquired Fully Equipped Group (NZ), Western Trucks (Vic) and 9 other repair sites; Disposed ACAD & Fully Equipped to GUD Holdings 2018 ‘20 Acquired auto aftermarket group 2015 Automotive Solutions Acquired Woods Auto Group Group (incl. 14 GoRapid 2021 ‘21 repair sites, Vic) and
Slide 79: AMA Group Structure
AMA Group Structure Partnerships Production Procurement Build commercial relationships for the long- Leverage the technical skills and industry expertise in the business Secure the quality term, based on trust and products needed to delivering industry execute operations on leading value to all Oper
Slide 80: AMA Group Board
AMA Group Board Anthony Day Simon Moore Nicole Cook Chair Non-Executive Director Non-Executive Director Carl Bizon Paul Ruiz Kyle Loades Caroline Waldron CEO and Executive Director Non-Executive Director Non-Executive Director Non-Executive Director 80
Slide 81: Average Cost Model
Average Cost Model Theoretical Average Price Model Contracted ARC based on anticipated Repairs (#) repair volumes and mix (balance of repair severity) Cap prevents extreme loss making repairs being priced at the contracted ARC Cap Profitable Unprofitable Fair compensation received for work wor
Slide 82: Average Price Model
Average Price Model Fixed price paid for all repairs for work up to a specific Benefits of Average Price Model value (the “cap”) and other agreed criteria with work Reduced assessment and approval burden for insurer pre-authorised under that amount Reduced quoting for repairer Jobs are indiv
Slide 83: Line by Line Pricing
Line by Line Pricing Each job is quoted on site, specific to the vehicle, with Benefits of Line by Line estimates provided for all items of work required – task, labour required, parts, paint, and consumables Each job is assessed and paid for on the basis of the actual work required By being a
Slide 84: Parts Channels
Parts Channels Channel Description National Dealer Parts made by the original manufacturer then imported and OEM supplied by a dealer distributor in Australia OEM parts imported from an international market and supplied by a third-party Parallel distributor such as ACM Parts Parts made by a third-pa
Slide 85: Pace of Industry Change is slow
Pace of Industry Change is slow Example – Electric Vehicles as % of Car Parc For electric vehicles (EVs) to account for 50% of the Australian car parc by 2050, 70% of new cars sold would 30 60% need to be EVs from 2027 onwards ‐ Due to the size of the car parc and useful life of vehicles, EVs are
Slide 86: Electric Vehicles
Electric Vehicles Special repair requirement for EVs: The repair process is different as steel has ‘memory', aluminium does not Repairing aluminium requires a different skill set While different spray booths are not required, there are temperature restrictions to not affect the batteries Safet
Slide 87: amagroupltd.com
AMA Group Limited ABN 50 113 883 560 Level 13 484 St Kilda Road Melbourne VIC 3004 amagroupltd.com