Turners Automotive Group Ltd · NZX:TRA
Turners Automotive — FY2021 Earnings Presentation
38 slides from Turners Automotive's earnings presentation, May 2021
Slide 1: FY21 Results Presentation
FY21 Results Presentation For the twelve months ending 31 March 2021 1 ••FY21 RESULTS PRESENTATION – TURNERS AUTO GROUP
Slide 2: Disclaimer
Disclaimer Turners Automotive Group the (company) is solely responsible for the content of this document. This document is not an investment statement or prospectus and does not constitute an offer of securities. This document or any other written or oral statements made by, or on behalf of, the com
Slide 3: Agenda
Agenda 1. FY21 Results 2. Segment results 3. Looking forward … 3 • FY21 RESULTS PRESENTATION – TURNERS AUTO GROUP
Slide 4: Delivering on our plan for growth
Delivering on our plan for growth … 1. We achieved 19% growth in normalised PBT in FY21…a step change in the business performance 2. Full year dividend at 20.0cps versus guidance of 18.0cps. Based on a share price of $3.75 this is a gross yield of 7.4% pa. 3. Our plan for growth* has been proven up
Slide 5: FY21 Results overview
FY21 Results overview Financials Key Drivers for FY21 FY22 Update • NPBT $37.4m +29% • Effectively a 10-month trading period • April-21 result strong…positive due to lockdown momentum continues • NPAT $26.9m +28% • Used vehicle supply constrained due • Auto retail: supply constrained market • Underl
Slide 6: 1. FY21 Results
1. FY21 Results 6 • FY21 RESULTS PRESENTATION – TURNERS AUTO GROUP
Slide 7: FY21 Results snapshot
FY21 Results snapshot Revenue 400 Revenue Shareholders’ Equity 300 2H Millions $296.5m -11% $234m as at 31 March 21 200 1H 100 Underlying Net Profit Before Tax Final Dividend 6.0 cps 0 $34.3m +19% FY Div 20.0cps FY16 FY17 FY18 FY19 FY20 FY21 Net profit after tax Net Profit Before Tax 30.0 $37.4m +29
Slide 8: FY20 to FY21 Revenue bridge
FY20 to FY21 Revenue bridge Revenue decreased from $332m to $297m Revenue Bridge FY20 to FY21 ($Millions) • Revenue reflects material impact of L4 /L3 lockdown in April & May impacting Auto Retail, Finance and Insurance sales • NZ used car market has recovered since lockdown • Post lockdown there ar
Slide 9: FY20 to FY21 Net profit before tax (NPBT) bridge
FY20 to FY21 Net profit before tax (NPBT) bridge NPBT increased from $29.0m to $37.4m NPBT Bridge FY20 to FY21 ($Millions) • Cost reduction plans implemented as a priority in Covid response plan • Auto Retail result underpinned by stronger commercial business and improved margins on owned inventory
Slide 10: Reconciliation: NPBT to underlying NPBT
Reconciliation: NPBT to underlying NPBT $Millions Period FY21 FY20 Var Profit before tax actual 37.4 29.1 29% • Property adjustment includes IFRS 16 adjustment Oxford strategic review costs - 0.2 of $1.9m benefit offset by property exit costs of $1.3m, and rent relief of $700k Property exit and leas
Slide 11: Turners has a strong and sustainable yield
Turners has a strong and sustainable yield Dividend per Share ($) 0.25 0.20 0.20 • Business demonstrated strong momentum in 0.17 H2 FY21 0.155 0.145 0.14 0.15 0.13 • Directors declared a final dividend of 6.0 cents 0.10 per share (fully imputed) taking YTD dividends 0.10 to 20.0 cents per share. 0.0
Slide 12: Balance sheet has capacity to support growth
Balance sheet has capacity to support growth $Millions FY21 FY20 Cash and cash equivalents 12 33 Financial assets at fair value 70 65 • Reduction in cash balances from precautionary Inventory 30 44 levels held at March-20. Finance receivables 330 293 Property, plant and equipment 60 53 • Inventory r
Slide 13: Funding mix optimised to support growth
Funding mix optimised to support growth Borrowings Borrowings by Utilisation ($Millions) As at 30 March 2021 $Millions Limit Drawn Undrawn Receivables – Securitisation (BNZ) 276 239 37 Corporate & Receivables – Banking Syndicate (ASB/BNZ) Property 50 20 30 $69m (20%) Receivables – MTF 3 3 - Inventor
Slide 14: Environmental Social Governance
Environmental Social Governance • The focus through FY21 has been on delivering on the Peakon Employee Engagement Scores “social” pillar of our ESG strategy. • Health and safety of customers and staff during Covid-19 8.3 • Implementing and employee engagement measure 8.2 (Peakon) • Dealing with 1,70
Slide 15: 2. Segment Results
2. Segment Results 15 • FY21 RESULTS PRESENTATION – TURNERS AUTO GROUP
Slide 16: FY21 by segment
FY21 by segment $ Millions Automotive Retail Finance Insurance Credit Revenue 201.0 (11%) 47.9 5% 41.9 (5%) 12.8 (29%) Segment Profit 15.4 11% 15.8 30% 9.4 50% 5.1 (22%) 16 • FY21 RESULTS PRESENTATION – TURNERS AUTO GROUP
Slide 17: FY21 by segment
FY21 by segment Auto retail • Covid recovery and cost management • Margin improvement through supply initiatives and supply constraints • Continued optimisation for retail eg. new sites in Dunedin, Westgate, Otahuhu and exit of Penrose Finance • Continued focus on targeting high quality borrowers, •
Slide 18: Automotive retail
Automotive retail Revenue 201m -11%, Segment Profit $15.4m +11% • Margin on retail channel sales substantially higher than % of Total Sales by Sales Channel an auction channel sale. Target for BuyNow Retail Channel 70% • Margins on “owned” fleet have improved due to a number 65% of buying improvemen
Slide 19: Growth Focus – Auto growth priorities
Growth Focus – Auto growth priorities Buy more local car inventory & Profit / vehicle 1. Sourcing maintain margin. $1,500 Regional Branch 2. Retail Optimization 1-2 additional retail locations pa. Operating Profit of Investment in staff. $500k pa Maximise F&I as a sales enabler & Finance attach 3. F
Slide 20: Expansion - new sites confirmed - Rotorua
Expansion - new sites confirmed for the next 12 months - Rotorua 20 • FY21 RESULTS PRESENTATION – TURNERS AUTO GROUP
Slide 21: Rotorua – high profile next to Countdown
Rotorua – high profile next to Countdown 21 • FY21 RESULTS PRESENTATION – TURNERS AUTO GROUP
Slide 22: Expansion - new sites confirmed - Nelson
Expansion - new sites confirmed for the next 12 months - Nelson 22 • FY21 RESULTS PRESENTATION – TURNERS AUTO GROUP
Slide 23: Nelson - corner site, next to Harvey Norman
Nelson - corner site, next to Harvey Norman 23 • FY21 RESULTS PRESENTATION – TURNERS AUTO GROUP
Slide 24: Finance
Finance Revenue $47.9m +5%, Segment Profit $15.8m +30% Total Receivables (ex impairments) 330 • Premium Tier business growing strongly. For H2 has 320 averaged 45% of our new business per month 310 300 $ Millions 290 280 • Expanded the Risk Based Pricing Model in Dec-20 creating 270 further growth i
Slide 25: Quality transformation in finance loan book progressing well
Quality transformation in finance loan book progressing well… Online document signing Introduced Premium Tier Introduced Minimum credit scores increased FY20 Avg 04-19 05-19 06-19 07-19 08-19 09-19 10-19 11-19 12-19 01-20 02-20 03-20 04-20 05-20 06-20 07-20 08-20 09-20 10-20 11-20 12-20 01-21 02-21
Slide 26: Quality lending strategy resulting in arrears at record lows
Quality lending strategy resulting in arrears at record lows Consumer Customer Arrears (Loan Balance) • The loans we have written since Aug-19 are tracking at 1.7% arrears • Our premium strategy means the % of premium 4.2% lending will structurally increase over time. 1.7% • Runout of legacy low qua
Slide 27: Insurance
Insurance Revenue $41.9m -5%, Segment Profit $9.4m +50% Gross Written Premium FY21 v FY20 ($000s) 4.0 • Gross Written Premium up 2% on FY20 despite impact of lockdown periods on FY21 sales. 3.0 2.0 • Claims loss ratios continue to improve due to better underwriting, procurement and less vehicle 1.0
Slide 28: Credit management
Credit management Revenue $12.8m -29%, Segment Profit $5.1m -22% • Total debt load down 47% to $119m, mainly due to large NZ corporate customers pulling back on collections actions during Covid-19 to manage reputational risk. Debt Collected HY20 to HY21 ($000s) • Debt load from major banks and gover
Slide 29: 3. Looking forward …
3. Looking forward … 29 • FY21 RESULTS PRESENTATION – TURNERS AUTO GROUP
Slide 30: Growth model: FY22 – FY24
Growth model: FY22 – FY24 The model gives us confidence in higher earnings growth through the cycle. We have found the right formula, and will optimise further … Four key areas underpin our earnings growth. These are a combination of both physical and digital: 1. Retail optimisation 2. Vehicle purch
Slide 31: Growth model: FY22
Growth model: FY22 Auto Retail • Stock acquisition – secure the right cars at the right price • Continue to invest in promoting the Turners brand - build market share • Retail optimisation – developing and launching Rotorua and Nelson Finance • Expand distribution • Keep improving credit quality thr
Slide 32: Capital Allocation: high level thinking
Capital Allocation: high level thinking • Clear message from market that shareholders want yield + growth supported from existing capital base • Organic growth to be funded via retained earnings and improving capital efficiency • Maintain dividend policy of 60% to 70% NPAT • Capital allocation broad
Slide 33: Roadmap to $5/share
Roadmap to $5/share … Over three years we target 31% growth in Underlying NPBT Underlying Net Profit Before Tax ($M) 1 Dividends Paid (cps) 50 26.0 7.7% 24.0 CAGR 45 9.5% CAGR 22.0 40 20.0 35 18.0 16.0 30 14.0 25 12.0 20 10.0 FY18 FY19 FY20 FY21 FY24 FY18 FY19 FY20 FY21 FY24 1 Underlying NPBT is a n
Slide 34: Roadmap to $5/share
Roadmap to $5/share … Net Profit Before Tax Bridge ($M) • Business is highly cash generative, leading to growth + yield for shareholders • Profit growth largely driven out of Auto Retail and Finance • Retail optimisation in Auto Retail – growth driven by combination of new sites and growth in existi
Slide 35: Outlook + guidance
Outlook + guidance • April-21 result strong…positive momentum continues • Auto retail: supply constrained market expected to continue for 12-18 months • Finance: new lending strong and arrears at all-time historic lows • Insurance: new policy sales strong, claims ratios improving • Credit: debt load
Slide 36: For details on our Growth model, please refer to our recent Investor Presentation
For details on our Growth model, please refer to our recent Investor Presentation (14/4/2021) click here
Slide 37: Questions
Questions 37 • FY21 RESULTS PRESENTATION – TURNERS AUTO GROUP
Slide 38: Contact
Contact Todd Hunter Group CEO T: 64 21 722 818 E: todd.hunter@turners.co.nz Aaron Saunders Group CFO T: 64 27 493 8794 E: aaron.saunders@turners.co.nz 38 • FY21 RESULTS PRESENTATION – TURNERS AUTO GROUP
Turners Automotive Group — FY2021 Earnings Presentation on 6ix