Bremworth Limited · NZX:BRW
Bremworth — Cavalier — HY18 Earnings Presentation
22 slides from Bremworth's earnings presentation, Feb 23, 2018
Slide 1: Investor Presentation
Investor Presentation 23 February 2018
Slide 2: Agenda and Speakers
AGENDA Our Company Resetting Our Business Half Year Results Our Future SPEAKERS Paul Alston, CEO Alan Clarke, Deputy Chair Cavalier Corporation Investor Presentation 2
Slide 3: Our Company
OUR COMPANY Cavalier Corporation is a vertically Cavalier Corporation integrated group of companies which operate across the entire spectrum of Carpets the soft flooring market. We buy and scour wool, produce yarn, Wool and design and make broadloom Procurement carpet. Felted Yarns Wool Scouring (27
Slide 4: Our Operations
OUR OPERATIONS Operations are based in New Zealand and Australia with exports around the world Auckland • Head office • Tufting factory • Sales office Brisbane • Sales office Cambridge • Wool store Sydney • AU head office Taumaruni/Raetihi/Taihape • Administration Napier • Wool stores • Sales office
Slide 5: Our Strengths
OUR STRENGTHS • Cavalier Bremworth is the most recognised and trusted carpet brand in the New Zealand market (winner of the Reader’s Digest most trusted brand award four years running - since its inauguration) • Very highly regarded brand in the Australian market, particularly with the retail trade
Slide 6: Refreshed Board and Experienced Leadership
REFRESHED BOARD AND EXPERIENCED LEADERSHIP From 1 April 2018 ALAN CLARKE SARAH HAYDON INDEPENDENT CHAIR INDEPENDENT DIRECTOR LEADERSHIP TEAM CEO: Paul Alston CFO: Victor Tan GM Australia: Michael Richardson GRANT BEIL National Sales Manager NZ: Dean DIANNE MCATEER JOHN RAE NON-INDEPENDENT Chandler I
Slide 7: Resetting Our Business
RESETTING OUR BUSINESS Cavalier Corporation Investor Presentation 7
Slide 8: Changing Market
CHANGING MARKET Wool Price c/kg 700 • Wool price increase from 2011 (circa $5m - $8m impact) 600 Cents per Kilogram 500 • Strengthening NZD against AUD from 2012 – 80c to mid 400 300 90c’s (circa $5m - $8m impact) 200 100 • Significant move from wool to synthetics. Cavalier’s 0 infrastructure geared
Slide 9: Resetting Our Business
RESETTING OUR BUSINESS • Restructuring in response to market challenges and changes within the industry: • Reduction in warehousing and distribution centres in NZ from two to one • Consolidating carpet tufting operations from two to one • Consolidating carpet yarn spinning operations from four to tw
Slide 10: HY18 Interim Results
HY18 INTERIM RESULTS For the six months ended 31 December 2017 Cavalier Corporation Investor Presentation 10
Slide 11: Half Year Result Snapshot
HALF YEAR RESULT SNAPSHOT HY18 HY17 YOY % Change REVENUE $75.3m $84.3m -11% Decrease due to reduced wool price impacting wool sales, supply issues and a softer market for carpet EBITD $4.4m -$2.0m +320% Improved operating profit reflecting better margins and reduced costs. 2017 includes large restru
Slide 12: Key Metrics
KEY METRICS Improvement on most key ratios HY17: HY18. Further improvements expected for 2H18 HY18 HY17 Return on equity 1.7% -2.7% Basic earnings/share 1.7c -2.7c Market Cap as at 31 Dec $28.2m $53.6m Debt/Equity 33:67 38:62 Tangible assets/share $0.97 $0.98 Cavalier Corporation Investor Presentati
Slide 13: Capital Management
CAPITAL MANAGEMENT Debt position improving following year of investment Net Debt $000 • Debt progressively dropped up until 2016, 70,000 following an aggressive debt reduction 60,000 programme 50,000 • This enabled the business to invest in the future 40,000 by reinvigorating the Cavalier Bremworth
Slide 14: Looking to Our Future
LOOKING TO OUR FUTURE Cavalier Corporation Investor Presentation 14
Slide 15: Current Market Trends
CURRENT MARKET TRENDS Movement away from soft flooring • Soft Flooring (carpets) has ESTIMATED FLOORING % ESTIMATED FLOORING % declined at the expense of 10 YEARS AGO NOW hard flooring and tiles Hard • Opportunities for Flooring diversification 15% Hard Flooring, Tiles 30% 10% Soft Flooring, 45% Sof
Slide 16: Opportunity in the Wool Market
OPPORTUNITY IN THE WOOL MARKET Wool rich % of Estimated total carpet wool • Wool products are our heritage market market size blm (000) • Market share leader in New Zealand New Zealand 12% - 15% 400 • Opportunities for growth in wool Australia 13% - 16% 2,500 products where we do not have a USA 1% -
Slide 17: Opportunity in the Global Market
OPPORTUNITY IN THE GLOBAL MARKET Percentage of sales • Majority of current sales into Australia and New Zealand 2% 0.5% • Growth opportunities in 0.5% other world markets – particularly North America, Europe and Asia. 42% • Currently have insignificant sales in these locations 55% Cavalier Corporati
Slide 18: Outlook for 2H18 and Beyond
OUTLOOK FOR 2H18 AND BEYOND Profitability expected to improve in the short term due to: • Wool price more favourable with increased margins as a result. Full benefit will be realised in 2019 year • NZD/AUD more favourable. Coming off high 90’s (every 1c movement results in $500k - $600k impact) • De
Slide 19: The Future
THE FUTURE • Increased focus on high-end, higher margin products • Growth opportunities in woollen products outside of New Zealand • Increased R&D and marketing spend - Innovation is key • Opportunities for growth in Australia (we are a small player) with various initiatives. • Growth in rest of wor
Slide 20: Contact
CONTACT: Paul Alston Chief Executive Officer Tel: 09 277 1135 Email: palston@cavbrem.co.nz Cavalier Corporation Investor Presentation 20
Slide 21: Corporate Information
CORPORATE INFORMATION CAVALIER CORPORATION LIMITED NZX: CAV Number of shares on issue 68,679,098 New Zealand holdings 67,418,358 Offshore holdings 1,260,740 Market Cap as at 22 February 2018 $34,339,549 T op Sh a r eh ol der s (ov er 500,000 sh a r es) Ra n k Na m e Un it s % of 1. MA RA MA T RA DIN
Slide 22: Disclaimer
DISCLAIMER This presentation has been prepared by Cavalier Corporation Limited (“CAV”). The information in this presentation is of a general nature only. It is not a complete description of CAV. This presentation is not a recommendation or offer of financial products for subscription, purchase or sa