Keller Group Plc · LSE:KLR
Keller — H1 2020 Earnings Presentation
44 slides from Keller's earnings presentation, Aug 4, 2020
Slide 1: Keller Group plc Interim Results 2020
Keller Group plc Interim Results 2020 4 August 2020 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
La Verpillière France Agenda Summary Financial results Business update Outlook and summary Questions and answers
Slide 4: Summary
Summary Underlying Underlying Underlying operating operating diluted Revenue profit margin EPS Order book Dividend 2020 interim £1,039.1m £47.9m 4.6% 39.5p c.£1bn will be -5% +25% Up from 3.5% Up 46% No change considered later (-5% CC) (+20% CC) (Up 37% CC) in the year Strong H1 despite the disrup
Slide 5: Financial results
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Slide 6: Summary income statement
Summary income statement H1 2020 H1 2019 Non- Non- £m Underlying Total Underlying Total underlying underlying Revenue 1,039.1 - 1,039.1 1091.7 - 1,091.7 Operating costs (991.4) (18.1) (1,009.5) (1,053.5) (7.4) (1,060.9) Amortisation of acquired - (2.5) (2.5) - (1.7) (1.7) intangibles Other operating
Slide 7: Summary income statement - underlying
Summary income statement - underlying Revenue £m H1 2019 1,091.7 H1 2020 H1 2019 FX +2.7 Non- Non- North America +12.3 £m Underlying Total Underlying Total underlying underlying EMEA -50.0 Revenue 1,039.1 - 1,039.1 1091.7 - 1,091.7 APAC -17.6 H1 2020 1,039.1 Operating costs (991.4) (18.1) (1,009.5)
Slide 8: Underlying operating profit bridge H1 2019 to H1 2020
Underlying operating profit bridge H1 2019 to H1 2020 £m 55.0 Central items North America EMEA APAC Up £4.8m to £38.6m Down £2.9m to £8.4m Up £6.9m to £4.6m Cost up £0.8m to £3.7m 50.0 1.0 3.6 (0.8) 47.9 45.0 5.6 (4.3) 6.2 40.0 4.1 (3.9) 1.6 (4.3) (7.5) 6.7 38.3 1.6 35.0 30.0 25.0 20.0 2019 2020 The
Slide 9: Summary income statement – non-underlying
Summary income statement – non-underlying Non-underlying operating costs £m Disposal of Brazil operations (10.0) H1 2020 North America restructuring (4.6) Non- Franki Africa restructuring (3.3) £m Underlying Total underlying APAC restructuring 0.1 Revenue 1,039.1 - 1,039.1 Other (0.3) Total (18.1) O
Slide 10: Cash flow
Cash flow £m H1 2020 H1 2019 Depreciation/Capex 2020 2019 Underlying operating profit 47.9 38.3 Net capex/Depreciation 70% 76% Depreciation and amortisation 47.0 46.6 Gross capex/Depreciation 76% 79% Underlying EBITDA 94.9 84.9 Non-cash items 0.6 0.5 Working capital £m Dividends from joint ventures
Slide 11: Balance sheet
Balance sheet Intangibles incl. goodwill £m Opening 124.7 Amortisation acquired (2.5) Amortisation other (0.2) FY 2019 FX 7.9 £m H1 2020 H1 20191 Closing 129.9 (Audited) Intangibles incl. goodwill 129.9 124.7 153.3 Tangible fixed assets £m Opening 460.6 Managed assets Capital expenditure 27.8 Right-
Slide 12: Net debt profile
Net debt profile1 (£m) 358 368 343 343 353 341 320 332 334 318 312 258 261 251 213 223 195 155 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun 2019 2020 • Net debt of £155m decreased by £179m (54%) from H1 2019 and by £58m (27%) from FY 2019 • Average month end net debt of £2
Slide 13: Financial modelling considerations
Financial modelling considerations March 2020 look ahead H1 2020 experience H2 2020 considerations Trading/profit Suncoast margin Assumed no steel tariffs No impact of new steel tariffs New steel tariff impact in H2 Large projects Cape Lambert in APAC Cape Lambert continues to 2021 Award of HS2 C1 a
Slide 14: Business update
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Slide 15: COVID-19 - VIDEO
COVID-19 - VIDEO $ KELLER
Slide 16: Response to COVID-19
Response to COVID-19 North America • Effect of COVID-19 less than initially • Measures put in place since start of pandemic expected, with varying restrictions in have strengthened our resilience and minimised different states people and financial impact. Include: • Construction considered an essent
Slide 17: Safety performance
Safety performance • New global incident management process ‒ All incidents are submitted into a new global incident management system ‒ Investigation held, Accident Frequency Rate (AFR) Per 100,000 hours commensurate with potential consequence 1.2 ‒ Root cause(s) identified and corrective actions a
Slide 18: InSite
InSite • Now fully implemented across North America as planned • Very positive response • Field crews appreciate safety features and leaner approach to reporting • During COVID-19, has enabled immediate and clear updates • Future developments • Safety Passport: crew skills and training • Implement a
Slide 19: North America Operating review
North America Operating review £m H1 2020 H1 2019 Constant £m £m currency Revenue 636.5 611.0 +2% Swimming Hall of Fame Underlying operating profit 38.6 33.1 +14% Fort Lauderdale, US Underlying operating margin 6.1% 5.4% Order book1 677.3 624.3 +9% 1Comparative order book stated at constant currency
Slide 20: North America reorganisation
North America reorganisation Easier for customers to work with us as one company in each local market offering all products and services • Reorganisation and rebranding of our foundations businesses successfully completed as planned on 1 Jan 2020 • Implementation costs have been absorbed in trading
Slide 21: EMEA Operating review
EMEA Operating review £m H1 2020 H1 2019 Constant currency Revenue 286.5 342.4 -15% Police Poland Underlying operating profit 8.4 10.6 -26% Underlying operating margin 2.9% 3.1% Order book1 335.9 263.6 +27% 1Comparative order book stated at constant currency • All markets materially impacted by COVI
Slide 22: HS2 Finished cutting showing the entry
HS2 Finished cutting showing the entry point of the two tunnels Package C1 (c.£90m over 4 years) Scope • Slope stabilisation using soil nailing • Retaining structures, using diaphragm walls, for ventilation shafts • Fissure rock grouting for 26 connecting galleries to ensure competent for tunnels to
Slide 23: Asia-Pacific Operating review
Asia-Pacific Operating review £m H1 2020 H1 2019 Constant currency Revenue 116.1 138.3 -13% IPBDT railway project Underlying operating profit 4.6 (2.5) n/a Malaysia Underlying operating margin 4.0% (1.8%) Order book1 154.7 154.0 +1% 1Comparative order book stated at constant currency • Revenue down
Slide 24: Cape Lambert, Western Australia (WA)
Cape Lambert, Western Australia (WA) Replacement of 18 dolphin Challenges structures and strengthening • Size and weight (70 tonnes) of the dolphin structures of 2.4km long approach jetty • High risk profile due to tidal range, sea swells and Started Dec 2019, due for extreme weather completion mid
Slide 25: Robust order book c£1bn, despite recent decline in order intake
Robust order book c£1bn, despite recent decline in order intake Geographic mix Order book (£m) (Full order book) 1300 1200 North America1 £677m +9% 1100 1000 EMEA large EMEA1 900 projects £336m +27% 800 ASEAN reset 700 APAC1 600 £155m +1% 500 400 2012 2013 2014 2015 2016 2017 2018 2019 2020 1Prepare
Slide 26: Outlook and summary
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Slide 27: H2 2020 outlook
H2 2020 outlook Backdrop • Strong H1 performance • Improved business performance • Continued execution of strategy • Deteriorating market conditions Drivers • Challenging global economic conditions and outlook • Current orderbook of c.£1bn largely underpins H2 • Assumes no material impact from furth
Slide 28: Summary
Summary 2020 • Strong H1 Performance • Increased profit and margin • Improved net debt, cash and leverage • Continued execution of the strategy • All despite disruptive impact of COVID-19 • Momentum into H2 • Current orderbook largely underpins H2 • Absent any material impact from further lockdowns
Slide 29: Questions and answers
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Slide 30: Keller overview
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Slide 31: Keller today
Keller today Every day millions of people around the world live, work and play on ground prepared by Keller 3 divisions Our purpose Our vision Our values 22 business units To help create To be the Integrity infrastructure leading provider that improves of specialist Collaboration 190 the world’s geo
Slide 32: Keller investment case
Keller investment case We operate in the large The specialist geotechnical and growing global contracting sub-sector has construction and higher margins and infrastructure market favourable market trends We are the number one geotechnical specialist contractor worldwide 1 given our geographic presen
Slide 33: Geotechnical market size
Geotechnical market size Global geotechnical contracting market $55bn Geotechnical contracting markets where Keller operates today $25bn Keller today $3bn Non-addressable market mainly China, Korea, Japan and Russia Sources: IHS Markit 2019, National statistics organisations. Keller accounts. Amount
Slide 34: 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 35: 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 36: 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 37: Full product range
Full product range Right combination of products leads to optimal solutions for the soil conditions and structure type 37
Slide 38: 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 39: The equipment advantage
The equipment advantage Large fleet and design and manufacture capability Keller total fleet • Total equipment fleet is 1,300 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 40: 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 41: Medium term financial targets
Medium term financial targets Revenue Profitability • Maintain diversity of geographies, • ROCE in excess of 20% sectors and products − Last five years: 13-20.5% Dividend Gearing • Maintaining progressive growth • Headline net debt between through the cycle 1.0x and 1.5x EBITDA 41
Slide 42: Financial performance since listing in 1994
Financial performance since listing in 1994 Revenue (£m) Underlying operating profit (£m) 2,800 140 2,400 120 2,000 100 1,600 CAGR = 10% 80 CAGR = 10% 1,200 60 800 40 400 20 0 0 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2019 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 20
Slide 43: Keller fact sheet
Keller fact sheet • Established 1860, now number one geotechnical • Contracts over £5m revenue make up c.2% of the specialist contractor globally number of contracts, but account for c.24% of total • Revenue by division: 61% North America, 28% EMEA, revenue 11% APAC (only <3% of business in UK) • Ty
Slide 44: Investor Relations contacts
Investor Relations contacts Caroline Crampton Victoria Huxster Co-Head of Investor Relations Co-Head of Investor Relations +44 20 7616 7575 +44 20 7616 7575 caroline.crampton@keller.com victoria.huxster@keller.com 44