Car Group Limited · ASX:CAR
Car — carsales.com — H1 FY2018 Earnings Presentation
41 slides from Car's earnings presentation, Feb 7, 2018
Slide 1: Half year results presentation
For personal use only Half year results presentation HALF YEAR ENDED 31 DECEMBER 2017
Slide 2: Disclaimer and non-IFRS information
Disclaimer and non-IFRS information For personal use only Disclaimer The material in this presentation has been prepared by carsales.com Limited (ASX: CAR) ABN 91 074 444 018 (“carsales") and is general background information about carsales’ activities current as at the date of this presentation. Th
Slide 3: Table of contents
Table of contents For personal use only Key Highlights 4–5 Reported Group Financial Performance 6 – 11 carsales Domestic 12 – 16 carsales International 17 – 21 Outlook 22 – 23 Delivering on our strategy 24 – 36 Appendix 37 – 41 3
Slide 4: Key Highlights
For personal use only Key Highlights TO 31 DECEMBER 2017 4
Slide 5: H1 FY18 highlights
H1 FY18 highlights REPORTED REVENUE REPORTED EBITDA ADJUSTED NPAT* For personal use only Up 12% to $200m Up 9% to $91m Up 11% to $61m Reported NPAT** up 27% to $60m FINANCIAL SUMMARY • Solid first half with the Group delivering pleasing growth against pcp across all three key financial metrics with
Slide 6: Reported Group Financial Performance
Reported For personal use only Group Financial Performance TO 31 DECEMBER 2017 6
Slide 7: Financial overview
Financial overview • Pleasing revenue performance for the first half of $200.1m, up by $A Millions Growth 12% on pcp. Half Year Ending 31 December 2017 H1 FY17 H1 FY18 $'s % For personal use only • Solid growth in EBITDA up 9% on pcp. Revenue Online Advertising 129.8 141.6 11.8 9% • Operating expens
Slide 8: Strong track record of financial performance
Strong track record of financial performance For personal use only Revenue EBITDA Adjusted NPAT* $m $m $m 90.6 60.9 200.1 83.2 54.9 81.5 51.6 178.6 72.9 167.3 46.7 43.9 150.9 63.5 112.3 H1 FY14 H1 FY15 H1 FY16 H1 FY17 H1 FY18 H1 FY14 H1 FY15 H1 FY16 H1 FY17 H1 FY18 H1 FY14 H1 FY15 H1 FY16 H1 FY17 H1
Slide 9: EBITDA margin performance
EBITDA margin performance Core EBITDA margin continues to expand offset by high revenue growth domestic and international investments For personal use only 1.0% (1.5%) • Reported Group margins moved from 46.6% in H1 FY17 to 45.3% in H1 FY18, with domestic core business margin increases offset primar
Slide 10: Look through revenue and EBITDA performance
Look through revenue and EBITDA performance Look Through Revenue Look Through EBITDA For personal use only $m $m 194.6 94.5 173.3 84.5 159.4 25.1 81.1 8.4 73.5 146.2 20.4 64.4 5.7 16.5 4.3 5.4 116.8 14.0 1.8 6.6 169.5 86.1 152.9 75.7 78.8 142.9 69.2 132.2 62.6 110.3 H1 FY14 H1 FY15 H1 FY16 H1 FY17 H
Slide 11: Reported debt and cash flow
Reported debt and cash flow Solid operating cash flows Improved credit metrics Reported Operating Cash flow* (column) and Reported Leverage Ratio For personal use only $m conversion from EBITDA to cash (line) (Net debt** / Annualised EBITDA***) 60.0 120% H1 FY18 0.95 51.9 48.8 50.0 46.2 100% 41.9 42
Slide 12: carsales Domestic (Australia)
carsales For personal use only Domestic (Australia) TO 31 DECEMBER 2017 12
Slide 13: Domestic revenue performance - Summary
Domestic revenue performance - Summary $A Millions Growth Half Year Ending 31 December 2017 H1 FY17 H1 FY18 $'s % For personal use only Revenue Dealer 64.6 69.0 4.4 7% Private 30.7 36.8 6.1 20% Display 34.5 35.8 1.3 4% Total Online Advertising 129.8 141.6 11.8 9% Data, Research and Services 19.2 20.
Slide 14: Domestic revenue performance by category
Domestic revenue performance by category $m Dealer For personal use only Millions $90 Dealer revenue up 7% on pcp to $69.0m $69.0 Solid growth in core dealer advertising products mainly driven by yield $64.6 improvements. Low single digit percentage lead volume growth recorded for $58.8 H1 with impr
Slide 15: Domestic revenue performance by category
Domestic revenue performance by category Display For personal use only $m Display revenue up 4% to $35.8m $40 $35.8 $34.5 $30.9 $31.6 Recorded revenue growth of 4% on pcp, which was a respectable $30.1 $30 result in a competitive market. Our insights and analytics capability as well as sponsored con
Slide 16: Domestic revenue performance by category
Domestic revenue performance by category Finance and Related Services Revenue For personal use only $A Millions Growth Half Year Ending 31 December 2017 H1 FY17 H1 FY18 $'s % up 23% to $32.1m Core Finance 19.6 23.2 3.6 19% Positive momentum from Q4 FY17 carried through into this half Other products
Slide 17: carsales International
For personal use only carsales International TO 31 DECEMBER 2017 17
Slide 18: International Portfolio
International Portfolio carsales is the clear number For personal use only one online automotive classified network operating across the Latin American region International Highlights • Acquisition of remaining 50.1% of SK Encar completed in $A Millions Growth January 2018, and investment in Soloaut
Slide 19: Asia – Underlying Results
Asia – Underlying Results SK Encar Financials (49.9% Owned - Equity Accounted by CAR) For personal use only 6 months to 6 months to PCP Pro-Forma (100%) 31 Dec 2016 31 Dec 2017 KRWb KRWb % Underlying revenue* 17.9 20.2 13% Underlying EBITDA* 8.6 9.0 6% Solid underlying revenue performance in local c
Slide 20: Latin America – Underlying Results
Latin America – Underlying Results WebMotors Financials (30% owned - Equity Accounted by CAR) 6 months to 6 months to PCP Pro-Forma (100%) 31 Dec 2016 31 Dec 2017 For personal use only BRLm BRLm % The improvements in Brazil’s economic conditions identified at the Underlying revenue* 51.8 67.5 30% en
Slide 21: Latin America – Underlying Results
Latin America – Underlying Results soloautos Financials (100% owned – Consolidated by CAR) 6 months to 6 months to For personal use only PCP Pro-Forma (100%) 31 Dec 2016 31 Dec 2017 MXPm MXPm % Given the size of the market opportunity in Mexico our strategy Reported revenue 4.3 7.4 71% is to invest
Slide 22: Outlook
For personal use only 22 Outlook
Slide 23: Performance outlook
Performance outlook carsales Domestic Outlook For personal use only H2 FY18 has commenced well with January once again proving to be an attractive month for car buyers in the domestic business. We expect our domestic adjacent businesses to continue to build scale and breadth consistent with H1 FY18
Slide 24: Delivering on our strategy
Delivering on For personal use only our strategy H1 FY18 24
Slide 25: Our domestic business strategy
Our domestic business strategy Our domestic strategy: Growing our core advertising solutions, expanding into adjacent markets and addressing future opportunities across our two key customer divisions of Commercial and Consumer. For personal use only Our Customers Our Customers Strategic Opportunitie
Slide 26: Expanding our core services – Mobile
Expanding our core services – Mobile With over two thirds of our traffic now being from mobile devices, carsales is intensely focused on delivering an optimised mobile capability for its consumer and commercial customers to enhance their experience and make communication easier. For personal use onl
Slide 27: Expanding our core services – Sponsored content
Expanding our core services – Sponsored content carsales is deepening its relationships with OEMs and evolving the display product set through new sponsored content programs. These programs leverage carsales’ significant content production expertise to deliver engaging consumer content and with tail
Slide 28: Expanding our core services - Commercial
Expanding our core services - Commercial carsales continues to enhance our suite of solutions for advertisers, with new opportunities to engage consumers across the buying cycle and using our data and analytics capabilities to better segment, target and measure campaign effectiveness. For personal u
Slide 29: Expanding our core services – Tiered pricing and premium products
Expanding our core services – Tiered pricing and premium products carsales continues to evolve the private seller value proposition. Price tiering, depth product optimisation and bundling of adjacent services have driven improved yields, with plenty of potential for further growth through continued
Slide 30: Increasing our brand's leadership position
Increasing our brand’s leadership position carsales is continuing to innovate its marketing strategy with a focus on our premium offering and personalisation. A current initiative sees For personal use only everyone who advertises a car on carsales offered a one-of-a kind car commercial. A world fir
Slide 31: Expanding our core services – Technology innovation
Expanding our core services – Technology innovation carsales is ramping up investment in ‘Cyclops’ (our artificial intelligence platform) to provide compelling, personalised and efficient experiences for our consumers and customers. For personal use only Advanced Snap ‘n’ Sell world first User simpl
Slide 32: Continuing Global Platform Development
Continuing Global Platform Development Supporting our global expansion strategy the business rolled out new ERP and CRM platform in H1 FY18 to the core carsales business. This, along with our AI and data analytics capability positions the group well to quickly scale and adapt to technology and marke
Slide 33: SK Encar – Acquisition overview
SK Encar – Acquisition overview carsales’ acquisition of the remainder of SK Encar represents a significant advancement in our international growth strategy. For personal use only • Acquisition of remaining 50.1% stake. • Purchase price KRW205bn (c.A$240m) excluding working capital. Deal Summary • A
Slide 34: SK Encar – Acquisition overview
SK Encar – Acquisition overview For personal use only 41.0 33.7 27.2 • Impressive recent financial performance. Revenue KRW (bn) • Strong growth in underlying revenue and EBITDA EBITDA Financial 21.0 in CY16 and CY17 (calendar year). 17.0 summary 14.8 • Growth in premium dealer products a key contri
Slide 35: International – investing in the Latin American region
International – investing in the Latin American region Carsales’ network of sites is the number one dedicated car classifieds network in Latin America. carsales is committed to a long term investment in this region. For personal use only I. Exposure to attractive macro environments and technological
Slide 36: International – investing in the Latin American region
International – investing in the Latin American region 30% Brazil - 168 employees* For personal use only H1 FY17 • Excellent financial performance in H1 FY18 with revenue 68 122% H1 FY18 and EBITDA growth of 30% and 122% respectively. 52 BRL (m) 24 • Strong KPI metrics, in particular an increase in
Slide 37: Appendix
For personal use only Appendix TO 31 DECEMBER 2017 37
Slide 38: Overview of carsales non-IFRS financial information
Overview of carsales non-IFRS financial information What is IFRS and non-IFRS financial information? For personal use only • IFRS financial information is financial information that is presented in accordance with all relevant accounting standards. • Non-IFRS financial information is financial infor
Slide 39: Reconciliation of Reported to Adjusted NPAT
Reconciliation of Reported to Adjusted NPAT For personal use only $A Millions Growth Half Year Ending 31 December 2017 H1 FY17 H1 FY18 $'s % Reported NPAT 47.2 60.2 13.0 27% Gain on associate dilution** (0.3) (0.9) Associate fair value revaluation loss 7.1 - SK Encar one-off tax gain (0.8) - NPAT be
Slide 40: carsales “Look Through” P&L analysis
carsales “Look Through” P&L analysis HY16 HY17 HY18 Days Look Days Look Days Look % Owned Owned Reported Underlying Through % Owned Owned Reported Underlying Through % Owned Owned Reported Underlying Through For personal use only Revenue carsales International iCar Asia 22.9%, 20.3% 183 Equity Acc't
Slide 41: For personal use only
For personal use only