Travis Perkins Plc · LSE:TPK
Travis Perkins — FY2023 Earnings Presentation
29 slides from Travis Perkins's earnings presentation, March 2024
Slide 1: 2023 Full Year Results Presentation
2023 Full Year Results Presentation March 2024 Leading partner to the construction industry 1
Slide 2: Agenda
2023 Full Year Results Introduction Financial review Presentation Nick Roberts Duncan Cooper March 2024 3-4 5-15 Strategic review Questions Nick Roberts 16-23 24 Appendices Contacts 25-28 29 2
Slide 3: Introduction
2023 Full Year Results Presentation March 2024 Introduction Nick Roberts Chief Executive Officer 3
Slide 4: Introduction
Introduction A challenging year in weak Driving actions to support profit market conditions recovery and enhance cash generation Financial Review Progressive downturn in new build housing Plans to accelerate transformation of the and private domestic RMI markets leading Group’s operating model – £35
Slide 5: Financial review
2023 Full Year Results Presentation March 2024 Financial review Duncan Cooper Chief Financial Officer 5
Slide 6: Financial overview
Financial overview Introduction Year ended 31 December 2023 Financial Review 2023 2022 Change (£m unless otherwise stated) Revenue 4,862 4,995 (2.7)% Strategic Update Adjusted operating profit 180 295 (39.0)% Adjusted earnings per share (pence) 45.7p 94.6p (51.7)% Questions Net debt / adjusted EBITD
Slide 7: Revenue impacted by weak market volumes
Revenue impacted by weak market volumes Introduction Financial Review Strategic Update Questions Appendices Pricing strong in H1 but quickly eroded in H2 by commodity deflation Weak volumes in new house building and RMI markets New space growth from Toolstation Europe rollout and new Travis Perkins
Slide 8: Cost actions only partially offset gross profit decline and inflation
Cost actions only partially offset gross profit decline and inflation Introduction Financial Review Strategic Update Questions Appendices Gross profit decline driven by lower volumes and impact of commodity deflation Significant inflation across all overhead categories, particularly on people costs
Slide 9: Adjusting items
Introduction Adjusting items Financial Review Reduction primarily in central and regional £m headcount in Q4 generating £35m of annualised cost savings Strategic Update Restructuring charge 17 Closure of Toolstation Bridgwater DC and proposed Benchmarx branch closures 10 closure of Toolstation Daven
Slide 10: Challenging market conditions impacting on Merchanting
Challenging market conditions impacting on Merchanting Introduction Financial Review Sales volumes impacted by significant Strategic Update 2023 2022 Change decline in housebuilding activity and weak Revenue £4,036m £4,220m (4.4)% private RMI market Adjusted operating profit £212m £314m (32.5)% Majo
Slide 11: Investing for Toolstation growth
Investing for Toolstation growth Introduction Financial Review Good sales performance with 2023 2022 Change market share gains continuing Strategic Update Revenue £826m £775m 6.6% across UK and Europe Like-for-like growth 4.0% (3.7)% Opened new UK DC in H2; Adjusted operating profit - UK £23m £21m 9
Slide 12: Disciplined approach to future capital expenditure
Disciplined approach to future capital expenditure Introduction Financial Review Full year Capex of £109m; to be reduced £m 2023 2022 to £80m FY24 Strategic Update Strategic 51 75 Strategic Capex reduced by £(24)m due to Maintenance 52 28 lower investment in Toolstation network IT 6 7 and distributi
Slide 13: Strong liquidity with decisive action to reduce leverage
Introduction Strong liquidity with decisive action to reduce leverage Financial Review 31 Dec 31 Dec Change Covenant 2023 2022 Strategic Update Net debt £922m £819m £(103)m Net debt / adjusted EBITDA 2.6x 1.8x (0.8)x <4.0x Questions Net debt excluding leases £314m £279m £(35)m Net debt excluding lea
Slide 14: A clear framework for capital allocation
A clear framework for capital allocation Introduction Financial Review Maintain investment grade Disciplined approach to credit rating - return capex and property Strategic Update leverage below 2.0x as spend - maintain soon as possible differentiation Questions Improvement in working Appendices Att
Slide 15: Outlook and guidance
Introduction Outlook and guidance Outlook FY24 Guidance Financial Review FY24 market conditions set to remain Capital expenditure reduced to £80m challenging Expect ETR of around 29% on UK Strategic Update ● Pricing a headwind in H1 generated profits ● Volumes expected to remain weak ● Fiscal and mo
Slide 16: Strategic and operational update
2023 Full Year Results Presentation March 2024 Strategic and operational update Nick Roberts Chief Executive Officer 16
Slide 17: Near-term headwinds persist, accelerating transformation of operating model
Near-term headwinds persist, accelerating the transformation of Introduction the operating model Financial Review Macro uncertainty remains Evolving operating model Strategic Update Replace with image? Questions Uncertainty remains over timing Rebuild profitability and drive cash Appendices and pace
Slide 18: Long term drivers remain attractive
Introduction Long term drivers remain attractive Long term structural drivers Building long term competitive advantage Financial Review Strategic Update Questions UK Housing shortage exacerbated Investment in technology, network by low levels of activity and people Appendices Requirement to decarbon
Slide 19: Driving actions to support profit recovery
Introduction Driving actions to support profit recovery - £35m already delivered Financial Review Strategic Update Reduction in Optimised Consolidating Tighter Review of Questions central / Benchmarx network Toolstation UK controls on loss-making regional - focus on profitable supply chain discretio
Slide 20: Working on plan for a potential exit of Toolstation France
Introduction Working on plan for a potential exit of Toolstation France Financial Review Losses increased to £(18)m during 2023 Strategic Update Near term market conditions expected to remain challenging Longer term challenges with brand awareness and lower population density Questions Investment an
Slide 21: Strategic review of Toolstation Benelux
Introduction Strategic review of Toolstation Benelux Financial Review Strategic Update Questions Performance below expectations in 2023 with losses increasing to £(19)m Netherlands now expected to reach annual break-even in 2025 Appendices Belgium expected to reach profitability around 2028 Strategi
Slide 22: Transforming the operating model
Transforming the operating model to deliver a more efficient Introduction organisation Financial Review Strategic Update Supply chain Simplifying our consolidation structures Questions Appendices Technology Shared procurement enablement capability 2023 Full Year Results - March 2024 22
Slide 23: Well positioned for market recovery and long term differentiation
Introduction Well positioned for market recovery and long term differentiation Financial Review Strategic Update Leading Strategy Toolstation UK Toolstation Transformation Questions market execution pathway to Europe losses of operating positions and creates £1bn revenue and cash model will strong c
Slide 24: Questions
2023 Full Year Results Presentation March 2024 Questions 24
Slide 25: Appendices
2023 Full Year Results Presentation March 2024 Appendices 25
Slide 26: I - Definitions
I - Definitions Introduction Metric Definition Financial Review Operating profit Profit before tax, financing charges and income Earning per share (“EPS”) Ratio of net profit after taxation adjusted for minority interests to weighted number of ordinary shares outstanding Adjusted operating profit /
Slide 27: II - Sales drivers by reporting segment
II - Sales drivers by reporting segment Introduction Total Revenue Like-for-like revenue Financial Review 2023 2022 2023 2022 Q1 (3.2)% 17.9% (4.2)% 15.3% Q2 (5.6)% 9.2% (5.2)% 8.5% H1 (4.5)% 13.3% (4.8)% 11.7% Merchanting Toolstation Group Strategic Update Merchanting Q3 (3.4)% 11.5% (2.9)% 8.7% Q4
Slide 28: III - Branch Numbers
III - Branch Numbers Introduction 31 Dec 22 Openings Closures 31 Dec 23 Financial Review Travis Perkins General Merchant 547 6 (1) 552 Benchmarx* 72 (2) 70 Strategic Update Keyline 44 (2) 42 CCF 37 (1) 36 Questions BSS & TF Solutions 67 2 69 Merchanting 767 8 (6) 769 Appendices Toolstation UK 563 11
Slide 29: Contact
2023 Full Year Results Presentation March 2024 Contact Matt Worster | +44 (0) 7990 088 548 matt.worster@travisperkins.co.uk 29