Eagers Automotive Limited · ASX:APE
Eagers Automotive — H1 2019 Earnings Presentation
27 slides from Eagers Automotive's earnings presentation, Aug 29, 2019
Slide 1: H1 2019 Results
AP Eagers H1 2019 Results 29 August 2019 Martin Ward, Chief Executive Officer Sophie Moore, Chief Financial Officer
Slide 2: Financial highlights
Financial highlights Resilient performance despite challenging market conditions Underlying Operating Profit Statutory Profit before tax Strong performance before tax1 $58.7m from Trucks, and Cars in $56.8m QLD & TAS -12.5% on 1H18 Statutory profit after tax NSW / VIC / SA faced +1.8% on 1H18 $42.4m
Slide 3: Strategic highlights
Strategic highlights Significant strategic progress – advancing NEXT100 strategy • Resilient half year operating performance in spite of challenging market conditions Strategic progress • Offer for AHG declared unconditional following ACCC merger authorisation • Parts and service businesses continue
Slide 4: National new vehicle market
National new vehicle market National new vehicle sales market decline of 8.4% Total Australian Market - Share by State • New vehicle market down 8.4% (VFACTS) NSW • TAS up 2% 32% NT TAS 1% 2% • NSW & ACT down 10%; VIC down 9%; QLD down ACT 8%; WA down 7%; NT down 15% 2% SA 6% • New vehicle market do
Slide 5: AP Eagers first half vehicle sales
AP Eagers first half vehicle sales New vehicle sales down 7.3%, APE outperforming national market (-8.4%) APE New Vehicle Sales – by State APE Used Retail Vehicle Sales – by State QLD QLD 43% 39% National - Trucks 2% National - Trucks NT 4% 3% NT VIC 4% 5% TAS 5% NSW TAS VIC 22% 10% SA 6% 29% SA NSW
Slide 6: Segment results
Segment results Disciplined approach and portfolio management enabled APE to outperform automotive retail sector Car retailing QLD and TAS performed well. Challenging market 80 conditions impacted NSW, VIC and SA results. Parts 70 and service businesses continue to excel 67.0 60 58.7 Truck retailing
Slide 7: H1 2019 Financial Review
P33. EAGERS H1 2019 Financial Review
Slide 8: Financial summary
Financial summary Strong underlying operational result achieved despite lower revenues 1H18 $ Million 1H19 Change Restated Revenue 2,059.0 2,097.5 Down -1.8% EBITDA 103.7 109.6 Down -5.4% EBIT 81.0 87.1 Down -7.1% PBT 58.7 67.0 Down -12.5% PAT 42.4 51.1 Down -17.1% Underlying operating PBT(1) 56.8 5
Slide 9: Balance sheet
Balance sheet Strong balance sheet provides flexibility to pursue growth • New vehicle inventory funded by bailment 1H19 debt. Parts and most used vehicle inventory is ($M) balance sheet funded CA – CL (excludes assets held for sale & current 17.8 lease liabilities) • Birrell Motors Group contingent
Slide 10: Earnings per share
Earnings per share Positive operating contribution despite challenging market conditions 27.7 (1.3) 26.4 0.3 26.2 (1.6) 25.4 (1.6) (1.7) 21.9 (0.6) 0.8 (0.2) 0.1 1H16 1H17 1H18 AASB 16 1H18 Restated Operational AHG Div & Profit on Sale - Bus Acq Costs Closure & Tax Dilution AASB 16 1H19 Reported (1H
Slide 11: Operating margin
Operating margin Operating margin(1) growth, through relentless focus on business optimisation & cost reduction 5.0% 4.89% 4.75% 4.71% 4.62% 4.53% 4.45% 4.5% 4.28% 4.33% 4.08% 4.09% 4.20% 4.16% 4.0% 4.12% 4.10% 4.07% 4.01% 4.03% 3.85% 3.75% 3.67% 3.5% 3.0% 2.5% 2010 2011 2012 2013 2014 2015 2016 201
Slide 12: New lease standard impact
New lease standard impact No impact on underlying shareholder value, cash flows or Group’s covenants • AP Eagers adopted the full retrospective method 1 Jan 2019 Prior year financial information restated Lease liability $270.4m • • Operating leases recognised on balance sheet as lease liabilities wi
Slide 13: Dividend
Dividend Record fully franked interim dividend maintained 36.5 36.0 35.0 32.0 27.0 22.5 22.5 23.0 22.0 20.0 20.0 18.0 16.0 15.0 12.8 13.0 10.4 8.2 13.5 14.0 14.0 13.0 12.0 9.0 8.0 7.0 5.6 4.6 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 Final Dividend Interim Dividend 13
Slide 14: Transaction Update
P33. EAGERS Transaction Update
Slide 15: Merger update
Merger update All-scrip offer to acquire all shares in AHG now unconditional • AHG shareholders to receive 1 AP Eagers share for every 3.6 AHG shares owned • Unanimously recommended by AHG Board of Directors (in the absence of a Transaction superior offer) Overview • ACCC merger authorisation grante
Slide 16: Merger benefits
Merger benefits Merger to create long term shareholder value portfolio brands synergies 229 new car dealership locations in Australia and New Zealand. Exposure to motor vehicle retailing in 68 new truck and bus dealership Pre-tax synergies of $13.5m2 as all Australian States and Territories location
Slide 17: Scale and Synergies
Scale and Synergies National footprint, leading market position with significant room to grow Merged AP Eagers-AHG market presence Market Opportunity • Strong market positions across national footprint with significant growth potential in largest markets • Small but strategic presence in New Zealand
Slide 18: Strategy and Outlook
Ps: EAGERS Strategy and Outlook
Slide 19: Next100 strategy
Next100 strategy providing integrated mobility solutions for the next 100 years OPTIMISE DEVELOP GROW Engage our customers, Deliver optimised Redefine our workforce Support innovation Reinvest with discipline everywhere vehicle finance solutions Online. At the airport. In Our workforce: re-defined a
Slide 20: Engage our customers, everywhere
Engage our customers, everywhere Leveraging our large and flexible portfolio of owned and leased properties Newstead property portfolio sale delivered substantial returns • 4 properties sold as part of Auto Mall strategy • To deliver $50.1m net deferred gains, recognised over 7-year term of the leas
Slide 21: Redefine our workforce
Redefine our workforce A superior customer experience on a lower cost base Company-wide transformation program Business Transformation Group (BTG) well advanced • Creating better customer and employee outcomes, driving key income objectives on a lower cost base • Re-design of traditional structure,
Slide 22: Deliver the best deals in vehicle finance
Deliver the best deals in vehicle finance Ultra-competitive, tailored finance deals from funding relationships New financing model producing good outcomes and Penetration F&I Penetration Target F&I Revenue expected to incrementally lift penetration rates toward long 80% Project 80 objective 170% ter
Slide 23: Support innovation
Support innovation An autonomous, connected and electric vehicle future Carzoos used car model trading on a solid basis, in line with expectations • Transitioning more traditional AP Eagers used car operations into the model • Third store to open in in south-east Queensland in 2020 • Effective incub
Slide 24: Reinvest with discipline
Reinvest with discipline Capitalising on rationalisation and consolidation opportunities Executed acquisition of Adelaide BMW MINI • Sole BMW, MINI and Alpina dealer in South Australia • Acquired at an attractive price reflecting current industry environment $122 million of executed assets sales dur
Slide 25: Outlook
Outlook Emerging stronger from the current market conditions • AP Eagers has a HIGH QUALITY ASSET BASE that ensures the company is well positioned to withstand the current trading conditions • With the BUSINESS TRANSFORMATION AND ONGOING IMPROVEMENT INITIATIVES WELL ADVANCED, we are confident of eme
Slide 26: tae . EAGERS
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Slide 27: Disclaimer
Disclaimer The information in this document (information) does not contain all information necessary for investment decisions, is not intended to be an offer, invitation or recommendation with respect to shares, is not financial product advice, and is intended to be general background information on