Keller Group Plc · LSE:KLR
Keller — H1 2021 Earnings Presentation
57 slides from Keller's earnings presentation, Aug 3, 2021
Slide 1: Keller Group plc Interim Results 2021
3 August 2021 Keller Group plc Interim Results 2021 Building the foundations for a sustainable future keller.com
Slide 2: Cautionary statements
Cautionary statements This document contains certain ‘forward looking statements’ with For a more detailed description of these risks, uncertainties and respect to Keller’s financial condition, results of operations and other factors, please see the Risk Management approach and business and certain
Slide 3: Agenda
Agenda Summary Financial results Business update, ESG and strategy Summary and outlook Questions and answers
Slide 4: Summary
Summary Underlying Underlying Underlying operating operating diluted Revenue profit margin EPS Order book Dividend £984.1m £39.5m 4.0% 35.6p £1.2bn 12.6p -5% -18% Down from 4.6% -10% (+11% CC) Flat YoY (flat CC) (-9% CC) (+1% CC) A better than expected H1 despite FX headwinds and anticipated COVID
Slide 5: Financial results
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Slide 6: Summary income statement
Summary income statement H1 2021 H1 2020 Non- Non- £m Underlying Total Underlying Total underlying underlying Revenue 984.1 - 984.1 1,039.1 - 1,039.1 Operating costs (944.9) (6.3) (951.2) (991.4) (18.1) (1,009.5) Amortisation of acquired - (0.4) (0.4) - (2.5) (2.5) intangibles Other operating income
Slide 7: Summary income statement - underlying
Summary income statement - underlying Revenue £m H1 2020 1,039.1 FX (57.3) H1 2021 H1 2020 North America (0.3) Non- Non- Europe (9.0) £m Underlying Total Underlying Total underlying underlying AMEA 11.6 Revenue 984.1 - 984.1 1,039.1 - 1,039.1 H1 2021 984.1 Operating costs (944.9) (6.3) (951.2) (991.
Slide 8: Underlying operating profit bridge H1 2020 to H1 2021
Underlying operating profit bridge H1 2020 to H1 2021 £m 55.0 North America Europe AMEA Central items Up £3.7m to £38.4m Down £0.9m to £5.7m Down £5.6m to £0.1m Cost up £1.0m 50.0 to £4.7m 47.9 (4.7) 3.6 (4.1) 45.0 3.9 (3.1) (4.2) 3.7 (0.7) (4.6) 40.0 (1.0) 2.1 6.7 39.5 (6.1) 35.0 30.0 25.0 20.0 202
Slide 9: Summary income statement – non-underlying
Summary income statement – non-underlying H1 2021 Non-underlying operating costs £m Europe and KGS restructuring (3.5) Non- £m Underlying Total North America restructuring 0.4 underlying Disposal of operations (1.9) Revenue 984.1 - 984.1 Contingent consideration payment (1.3) Operating costs (944.9)
Slide 10: Cash flow
Cash flow £m H1 2021 H1 2020 Depreciation/Capex 2021 2020 Underlying operating profit 39.5 47.9 Net capex/Depreciation 83% 70% Depreciation and amortisation 44.5 47.0 Gross capex/Depreciation 95% 76% Underlying EBITDA 84.0 94.9 Non-cash items (0.7) 0.6 Dividends from joint ventures - 0.5 Working cap
Slide 11: Balance sheet
Balance sheet Intangibles inc goodwill £m Opening 118.8 Acquisition 0.2 Amortisation acquired (0.4) Amortisation other (0.3) FY 2020 £m H1 2021 H1 2020 FX (1.4) (Audited) Closing 116.9 Intangibles incl. goodwill 116.9 118.8 129.9 Tangible fixed assets £m Opening 434.9 Managed assets Capital expendit
Slide 12: Net debt profile (£m)
Net debt profile (£m) 2020 2021 258 261 251 223 195 155 158 159 142 146 140 142 140 130 113 121 103 106 7 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec • Net debt1 of £113.4m decreased by £41.7m, down 27% from H1 2020 • Average month end net debt of £123.4m, down 45% (2020 H1: £223.9m) • Minimum h
Slide 13: Financial modelling considerations
Financial modelling considerations H1 2021 experience H2 2021 consideration Trading/profit NA Suncoast margin Impacted by steel tariff Impacted by steel tariff Large projects Europe reduction (Mexico) Europe: Ramp-up HS2 and SMS2 AMEA: Cape Lambert AMEA: Cape Lambert Portfolio action Europe BU merge
Slide 14: Business update
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Slide 15: North America Operating review
North America Operating review £m H1 2021 H1 2020 Constant Transit City £m £m currency Canada Revenue 581.7 636.5 0% Underlying operating profit 38.4 38.6 +11% Underlying operating margin 6.6% 6.1% Order book1 653.8 605.2 +8% 1Comparative order book stated at constant currency • Revenue flat; Q1 imp
Slide 16: Europe Operating review
Europe Operating review £m H1 2021 H1 2020 Constant currency Vallandry Gondola Lift France Revenue 242.0 254.7 -4% Underlying operating profit 5.7 7.1 -14% Underlying operating margin 2.4% 2.8% Order book1 375.5 285.3 32% 1Comparative order book stated at constant currency • Revenue decreased due to
Slide 17: AMEA Operating review
AMEA Operating review £m H1 2021 H1 2020 Constant currency Deception Bay Interchange Australia Revenue 160.4 147.9 +8% Underlying operating profit 0.1 5.9 -98% Underlying operating margin 0.1% 4.0% Order book1 162.8 187.2 -13% 1Comparative order book stated at constant currency • Revenue growth driv
Slide 18: Order book increased to a record £1.2bn
Order book increased to a record £1.2bn Geographic mix Order book (£m) (Full order book) 1,200 Group1 1,100 £1.2bn +11% 1,000 900 North America1 COVID-19 800 £654m +8% EMEA large 700 projects ASEAN reset 600 Europe1 500 £376m +32% 400 2016 2017 2018 2019 2020 2021 AMEA1 £163m -13% 1Prepared on a con
Slide 19: We have passed the anticipated COVID-19 pandemic inflection point
We have passed the anticipated COVID-19 pandemic inflection point Impact of lockdowns on site access Impact of decreased client investment Last 12 months orders/revenue COVID confidence 49.0 strikes 47.0 per week (£m) 45.0 43.0 41.0 39.0 37.0 35.0 Jan-19 Jul-19 Jan-20 Jul-20 Jan-21 Orders Revenue In
Slide 20: ESG
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Slide 21: Our Purpose
Our Building the foundations for a sustainable future Purpose 21
Slide 22: Environmental, social and governance (ESG)
Environmental, social and governance (ESG) Sustainability Improvement imperative Environment Social Governance Profitable projects Driver Planet People Principles Gender DEI Good Global initiatives Carbon reduction governance Safety Resilient cities Race DEI Local initiatives Resource use Health and
Slide 23: Safety: Operational performance
Safety: Operational performance Accident frequency rate • One fatality in Salzburg, Austria ‒ A long serving and valued employee 1.4 1.2 ‒ The investigation is now complete 1.2 and, while it has been determined 1 Keller was not at fault, we have 0.8 0.61 0.6 actively used the event to advance 0.39 0
Slide 24: Safety: Managing COVID-19
Safety: Managing COVID-19 • We continue to prioritise the safety of our people and the protection of our business against COVID-19: ‒ Maintained our company-wide protocols, supplemented locally to ensure project delivery ‒ Continue to monitor and report on infections across Keller daily ‒ Held emplo
Slide 25: Carbon reduction: Timeline
Carbon reduction: Timeline Have to be Emissions compared to baseline Stretch target net zero Acceleration Offsetting can from rig engine Scope 1 control net manufacturers emissions Net zero by 2040 Scope 2 Net zero by 2030 Final 10% of all countries emissions slower to decarbonise Dependent on suppl
Slide 26: Strategy
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Slide 27: Our Strategy
Vision Strategy Objectives Actions To be the preferred international geotechnical specialist contractor focused on sustainable markets and attractive projects, generating long Our term value for our stakeholders Strategy Local businesses will leverage the group’s scale and expertise to deliver engin
Slide 28: Implementing the strategy – Portfolio actions
Implementing the strategy – Portfolio actions Geographic rationalisation • Brazil • Latin America • Sub-Saharan Africa Product rationalisation • Heavy Foundations in ASEAN • Waterway • Wannenwetsch • Colcrete Eurodrill • Cyntech Anchors Restructuring • ASEAN • APAC and Europe HQs A more focused, hig
Slide 29: Implementing the strategy – The next phase
Implementing the strategy – The next phase Operational performance • Global product teams • Operational innovation and improvement (Lean, KDAQ,+) • Continuous improvement of project management processes Market leadership • Reorganisation of NA Division • Acquisition – RECON • Further ‘bolt-on’ acqui
Slide 30: Global leverage
Global leverage Our global product teams are adding value by: Building active community to share knowledge Supporting Continuing sustainability and professional innovation within education the product line Sustainable Reviewing and Reviewing bid/proposal/risk strategic financial health of reviews pr
Slide 31: RECON acquisition
RECON acquisition • A geotechnical and industrial services company with a focus on environmental remediation • Headquartered in Houston, Texas • Client base includes heavy industrial, commercial, and government entities with projects located throughout North America • Provides opportunity to increas
Slide 32: Summary and outlook
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Slide 33: Summary and outlook
Summary and outlook H1 2021 Summary • Strong performance in H1 ‒ Better than expected performance despite FX The long term fundamentals ‒ Margin impact of COVID was as anticipated continue to be strong; we ‒ Passed volume inflection point of pandemic impact remain optimistic about our ‒ Order book a
Slide 34: Questions and answers
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Slide 35: Keller overview
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Slide 36: Keller today
Keller today Every day millions of people around the world live, work and play on ground prepared by Keller Three divisions Our purpose Our vision Our values 21 business units To build the To be the Integrity foundations for leading provider a sustainable of specialist Collaboration 180 future geote
Slide 37: Building the foundations for a sustainable future
Building the foundations for a sustainable future • Diverse geographies Resilient • Diverse market sectors revenues • Diverse products • Diverse customers • Specialist project profile Firm Sustainable • Improved focus on quality of margin foundations margins • Strong competitive position • Proprieta
Slide 38: Well balanced in terms of geography and sector
Well balanced in terms of geography and sector • Operating globally in a number of sectors gives us the resilience to trade through national cyclicality • Good access to all markets with no overweight exposure • Geopolitically secure Revenue by geography (2020) Revenue by geography (2020) Revenue by
Slide 39: The best solutions
The best solutions • Projects often require a variety of techniques • With access to our global knowledge base and industry leading product portfolio, our engineers can design the best solutions that reduce materials, cost and time for our clients • Our project management capabilities mean we can al
Slide 40: Diverse customer base
Diverse customer base • Our large client spread means we’re not overly reliant on certain customers • Contracts over £5m revenue make up around 3% of the number of contracts, but account for 24% of total revenue Revenue by contract size (2020) Number of contracts (2020) Above £5m - 3% £1m to £5m - 5
Slide 41: Geotechnical market size
Geotechnical market size Market size Market share Sources: IHS Markit 2019, National statistics organisations. Keller accounts. Amounts are stated in US dollars. 41
Slide 42: Carbon scopes
Carbon scopes 176,000 tonnes CO2e last year (Scope 1 and 2) 169,000 7,000 Not tracked Scope 1 Scope 2 Scope 3 Scope 3 Direct emissions Indirect electricity Materials Excluding materials (eg fuel use emissions (Client) (Keller) on site) > 80% of site Transport of materials, emissions for cement- busi
Slide 43: Carbon reduction: Targets
Carbon reduction: Targets Scope Lagging Leading targets target 1 Net zero by By 2023: Create a decarbonisation strategy for fleet and machinery 2040 By 2024: Set an interim 2030 carbon reduction target By 2023: Complete site trials on carbon saving opportunities 2 Net zero by By 2023: Energy efficie
Slide 44: Florida, North America
Building the foundations for a sustainable future Florida, North America Multi million dollar power plant modernisation Challenges • Environmentally sensitive; bordered on three sides by Tampa Bay waterways • Schedule; worked 24hr per day to recover time lost from permitting process Solution include
Slide 45: Mulhouse, France
Building the foundations for a sustainable future Mulhouse, France €5.5 million project to turn disused space into attractive, canal-side park • Keller awarded contract to reinforce wall that separates canal from the train station • First collaboration of French and Spanish colleagues following inte
Slide 46: Cape Town, South Africa
Building the foundations for a sustainable future Cape Town, South Africa Harbour Arch; the largest mixed- use precinct in Cape Town CBD Challenges • COVID-19 halted operations for three months • Concrete obstructions, old foundation footings and services that required relocation • Substantial groun
Slide 47: Specialist versus generalist business model
Specialist versus generalist business model Project lifespan Keller General contractor Ground engineering General construction • Early stage • Longer, larger projects • Lower cyclicality • National focus • Specialist design capability • Higher cyclicality • A mix of contracts • Integration of multip
Slide 48: Market demand trends play to our strengths
Market demand trends play to our strengths More than half the world’s population lives 01 Urbanisation and more large- scale development projects in cities, and 65m people will be added to the urban population every year Increasing land shortage, 02 driving a need to use more brownfield and marginal
Slide 49: Factors to consider in geotechnical engineering
Factors to consider in geotechnical engineering Site conditions Requirements Loading Constraints • Performance conditions • Neighbouring • Sand, silt, clay, rock, organic (allowable • Spread, low buildings settlements) intensity • Loose, soft, stiff, • Noise, vibration hard, porous • Schedule • Slen
Slide 50: Full product range
Full product range Right combination of products leads to optimal solutions for the soil conditions and structure type 50
Slide 51: Value engineering
Value engineering Employ around 50% of our projects are 1,500 geotechnical ‘design and build’ where engineers worldwide; value engineering can over 200 focused purely reduce cost by up to on design 40% and save time Maiden Lane, New York 57-storey tower, lower Manhattan Drilled shafts Congested site
Slide 52: The equipment advantage
The equipment advantage Large fleet and design and manufacture capability Keller total fleet • Total equipment fleet is 1,200 rigs − The largest equipment fleet in the world Keller manufactured fleet • We manufacture specialist equipment in Germany • Available only to Keller • 20% of our projects ar
Slide 53: The people advantage
The people advantage Enabling high performance by investing in our people Project Manager Academy • 150 project managers trained globally − Significant improvement in gross margin already being evidenced Field Supervisor Academy • 120 supervisors have attended − Improving both performance and retent
Slide 54: Financial performance since listing in 1994
Financial performance since listing in 1994 Revenue (£m) Underlying operating profit (£m) 2,800 140 2,400 120 2,000 CAGR = 9% 100 CAGR = 10% 1,600 80 1,200 60 800 40 400 20 0 0 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 201
Slide 55: Quality lender base and strong liquidity
Quality lender base and strong liquidity • £375m RCF facility – Broad and supportive syndicate of eight banks – Expires November 2025 – £200m accordion option – Two acquisition spikes Banking • $125m US Private Placement syndicate – Matures Oct 2021($50m) & Dec 2024 ($75m) – Strong USPP investor app
Slide 56: Keller fact sheet
Keller fact sheet • Established 1860, now world’s largest geotechnical specialist • About 50% of our contracts are design and build, 50% are build contractor globally only • Revenue by division: 60% North America, 26% Europe, 14% • Contracts over £5m revenue make up around 3% of the number AMEA (onl
Slide 57: Investor Relations contact
Investor Relations contact Caroline Crampton Group Head of Investor Relations +44 20 7616 7575 caroline.crampton@keller.com 57