Mobico Group Plc · LSE:MCG
Mobico — National Express Group — FY2019 Earnings Presentation
53 slides from Mobico's earnings presentation, Feb 27, 2020
Slide 1: Full Year Results
Full Year Results For the year ended 31 December 2019 27 February 2020
Slide 2: Cautionary statement
Cautionary statement This Review is intended to focus on matters which are relevant to the interests of shareholders in the Company. The purpose of the Review is to assist shareholders in assessing the strategies adopted and performance delivered by the Company and the potential for those strategies
Slide 3: Financial highlights
Financial highlights
Slide 4: 2019 at a glance
2019 at a glance Financial highlights Strong revenue Record profits Converted to cash Reinvested growth and returned – Revenue up 10.2% at – Normalised operating profit – Generated £179m of free – Invested £166m in 9 constant FX up 13.1% at constant FX cash flow acquisitions – Robust organic growth
Slide 5: IFRS 16 impact
Underlying performance IFRS 16 impact £m Reported IFRS impact Old GAAP 2018 EBITDA 510.1 54.7 455.4 402.1 Operating profit 295.3 7.6 287.7 257.7 Interest (55.7) (7.6) (48.1) (38.6) PBT 240.0 0.0 240.0 220.0 Operating margin % 10.8% +30bps 10.5% 10.5% ROCE % 12.4% (0.8%) 13.2% 12.4% Net debt (1,241.5
Slide 6: Strong performance for the year
2019 Financial highlights Strong performance for the year Continuing operations £m 2019 2018 Change Change in Constant FX Revenue 2,744.4 2,450.7 +12.0% +10.2% Group normalised operating profit 295.3 257.7 +14.6% +13.1% Group normalised PBT 240.0 220.0 +9.1% +7.8% Normalised EPS 34.5p 32.9p +4.9% St
Slide 7: Revenue: balanced organic & inorganic growth
Revenue Balanced organic & inorganic growth (£m) 145 39 109 2,744 2,451 2,490 2018 Revenue FX Underlying Growth in continuing 2019 Acquisitions 2019 Revenue business – Strong revenue increase, up 10.2% in constant currency – Strong organic growth of 4.4% boosted by acquisitions in North America, Spa
Slide 8: Profit before tax: strong growth in continuing business
Profit before tax Strong growth in continuing business (£m) 19 (28) (6) (6) 0 (8) 46 3 240 240 220 223 Growth in 2018 PBT FX Underlying continuing 2019 Driver wages Fuel Weather IFRS 16 Interest 2019 PBT business acquisitions – Normalised profit before tax up 7.8% on a constant currency basis, and u
Slide 9: Divisional summary
Divisional summary Strong growth and double-digit margin in each division Revenue (YOY change*) Operating profit ALSA +33.8%* FY 2019 Change Margin £825m ALSA €124.9m €5.8m 13.3% +3.9%* +11.7%* North America £1,230m North America $157.0m $27.7m 10.0% +11.1%* UK UK £85.0m £5.1m 14.2% £600m Other £(22
Slide 10: Income statement
Income statement One year impact of minority interests on EPS £m FY 2019 FY 2018 Change Operating profit 295.3 257.7 +14.6% Share of results of associates & JVs 0.4 0.9 Net finance costs (55.7) (38.6) £17.1m Profit before tax 240.0 220.0 +9.1% Tax (55.2) (49.0) Profit after tax 184.8 171.0 +8.1% EPS
Slide 11: Strong free cash flow of £179m
Superior cash and returns Strong free cash flow of £179m £m FY 2019 FY 2018 EBITDA 510.1 402.1 Working capital (42.0) (17.5) Net maintenance capex (211.4) (123.9) Pension deficit (7.6) (7.4) Operating cash flow 249.1 253.3 Tax & interest (70.4) (54.7) Free cash flow 178.7 198.6 – EBITDA includes £54
Slide 12: Investing for future growth & increasing returns to shareholders
Superior cash and returns Investing for future growth & increasing returns to shareholders £m FY 2019 FY 2018 Cash flow available for growth & dividends 178.7 198.6 Net growth capital expenditure (42.2) (5.8) Net inflow from discontinued operations (1.2) 0.4 Acquisitions (166.4) (154.5) Disposals 21
Slide 13: Net debt
Net debt Increase driven by IFRS 16 £m 214 (10) 145 1,242 (179) 42 78 952 883 Net debt 31 Dec Free Cash Flow Growth Capex Dividends Other, incl FX Organic Organic net net debt debt 30 Acquisitions & IFRS 16* Net debt 31 Dec 2018 31Jun Dec2019 2019 disposals 2019 *On transition to IFRS 16 – IFRS 16 a
Slide 14: Very successful 2020 refinancing
Financial strength Very successful 2020 refinancing $500m US Private Placement £250m Sterling Bond – 7-month delay draw to lock in rates and minimise carry cost – Order book 7x over-subscribed – Sterling, Euro and Dollar – Matures 2028 – Matures 2027 to 2032, blended tenor c.9 years – Coupon below 2
Slide 15: 2020 prospects strong
Guidance 2020 prospects strong 2020 Impact of FX – Strong revenue growth from robust organics & selective acquisitions Effect of a 1% change in £ USD EUR – Margin progression in each business line…but mix impact offsets at Group level Operating profit (£m) +/- 1.2 +/- 1.2 EBITDA (£m) +/- 2.3 +/- 1.8
Slide 16: Strategic review
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Slide 17: A decade of progress
Consistent strong delivery A decade of progress Significant improvement in safety performance TSR over 10 years 800 0.06 *FWI/MM has 300% 700 0.05 improved by 600 250% 500 0.04 88% since 2011 400 0.03 200% 300 0.02 150% 200 100 0.01 244% 100% 209% 0 0 2011 2012 2013 2014 2015 2016 2017 2018 2019 50%
Slide 18: North America: transforming the business for sustainable growth
North America Transforming the business for sustainable growth NA revenue in 2010 NA revenue in 2019 Key highlights in 2019: School bus – Significant acquisition of WeDriveU: meeting its Transit $472m ambitious targets, with nearly 40% growth $712m • Growth in every market & expansion into universit
Slide 19: ALSA: transforming the business for sustainable growth
ALSA Transforming the business for sustainable growth €m Reducing dependence on long haul revenue 1000 900 CAGR = 12.0% 800 Key highlights in 2019: 700 600 – Record revenue & passenger journeys 500 400 – Very strong & broad based organic growth 300 200 CAGR = 3.4% – Successful mobilisation of 2 larg
Slide 20: UK: transforming the business for sustainable growth
UK Transforming the business for sustainable growth % of digital journeys in Bus % of digital revenues in Coach 75% 70% Key highlights in 2019: 70% 60% – Largest operator in fastest growing city region 65% 50% 60% • Nearly 1m more West Midlands commercial bus 40% passengers 55% 30% 50% – UK bus: hig
Slide 21: Strong platform; raised ambitions
Stepping into the new era Strong platform; raised ambitions Strong platform built over last 10 years; constant focus on operational excellence driving progress e.g.: Cities around the world committing to changes with local & central government support: – 2019 - first year of zero responsible fatalit
Slide 22: Renewed Vision & Purpose
Stepping into the new era Renewed Vision & Purpose Vision The world’s premier mass transit operator: leading safety, reliability & environmental standards that customers trust and value Belief Driving modal shift from cars to quality mass transit is fundamental to a clean, green & prosperous future
Slide 23: Committing to a cleaner, greener future as a trusted partner
Leading in the new era: the environment Committing to a cleaner, greener future as a trusted partner – Good progress in last decade, but a determination to do more – Signed up to the UN Sectoral Decarbonisation Approach Lead the industry in a clean & green switch, committing to: – Never buy another
Slide 24: Future prospects: growth in every division
Future prospects Growth in every division North America – Continuing strong growth in Transit & Corporate Shuttle • Full year benefit of Boston & Chicago; & WeDriveU – Master Schedule & driver training: helping drive margin improvement – Strong pipeline: ambition to grow to €1bn revenue Transit & Sh
Slide 25: A trusted partner: our vision in action
A trusted partner: our vision in action A Moroccan case study
Slide 26: ALSA: our history in Morocco
ALSA: our history in Morocco MARRAKECH AGADIR TANGIER KHOURIBGA CitySightSeeing CitySightSeeing RABAT CASABLANCA MARRAKECH TANGIER 1999 - 2021 2010 - 2025 2014 - 2024 2015 - 2020 2019 - 2034 2019 - 2034 2016 - 2022 2019 - 2024 Urban & Tourist transport EV in Marrakech Urban transport commuter transp
Slide 27: Morocco in 2020
Morocco in 2020 Impact of new contracts 1,729 buses 356m1 passengers Increase in volume in 243 58 Morocco by +50% due to 90 the new contracts in Rabat 700 201 & Casablanca 54 The new contracts have a 195 significant impact in terms 40 98 51 Casablanca 350 5 of volume on the Moroccan Rabat figure
Slide 28: Trusted partner: what we deliver to cities
Trusted partner: what we deliver to cities Integrated safety system in all contracts Network restructuring adapted to local needs Pricing policies adapted to the local demographics Flexibility to adapt the contract to the city’s needs Guaranteed stable social/labour conditions on transition Win-win
Slide 29: What we do when a new contract starts
What we do when a new contract starts TRANSFORMING THE RABAT CONTRACT IMPROVING SERVICES PREVIOUS STATUS BEST PRACTICES Poor quality buses The ALSA technical teams work together with the suppliers during the bus manufacturing processes High level of failures The maintenance causing poor levels of pr
Slide 30: How we elevate to our standards
How we elevate to our standards TRANSFORMATION OF THE RABAT CONTRACT SAFETY - THE ALSA STANDARD PREVIOUS STATUS BEST PRACTICES High number of accidents Safety is ALSA’s main priority – DOH programme implemented, in line with Group global standards Inefficient network with Network design balancing re
Slide 31: Significant improvements in safety
Significant improvements in safety Significant improvement in accident rates (per 1,000 Km) 14.00 12.00 10.00 8.00 6.00 4.00 2.00 0.00 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 AGADIR TANGIER MARRAKECH KHOURIBGA 31
Slide 32: …And opportunities in intercity
A model that works: authorities want a trusted partner TANGIER TETOUAN Actual ALSA market KENITRA OUJDA Upcoming contract RABAT renewals CASABLANCA FES ALSA provides transport to End of Contract cities with more than 12.5m combined population KHOURIBGA AGADIR BENGUERIR 2020 Represent 36% of the
Slide 33: Summary: A trusted partner in Morocco
Summary: A trusted partner in Morocco Good country to invest in, stable currency & fast growing cities We look for long-term relationships with both the authorities & passengers ALSA Morocco – we adhere to the same National Express Group global standards: quality of service, safety, fleet, com
Slide 34: Case study: WeDriveU
national express WeDriveU
Slide 35: WeDriveU 2019 results
2019 results Grew faster than expected $m WeDriveU revenue growth 250 – Revenue up 38% from $140m to $193m 193 – Growth in every location 200 – 84% satisfaction on customer survey 150 140 – Renewed Facebook, largest contract 100 91 56 50 Entered 2 new markets 0 – Expanded into University & Hospital
Slide 36: In good shape to go after the opportunities
In good shape to go after the opportunities Synergies make us leaner – Back office (legal, recruiting & IT) – Broader corporate relationships (insurance, banking) – Fleet & maintenance support – Existing National Express locations as base for new work (hub strategy) Standards make us stronger – Best
Slide 37: Appendix
national express
Slide 38: Strong environmental credentials
Strong environmental credentials Taking cars off the road, easing congestion, reducing – Our West Midlands bus fleet is the largest certified low-carbon fleet emissions outside London – Public transport key to tackling climate change & provision of clean – Early adopter of the UN’s Sectoral Decarbon
Slide 39: Summary divisional figures
Full year Summary divisional figures 2019 (£m) ALSA N America UK German Rail Revenue 824.7 1,230.1 599.7 89.9 Depreciation 62 101 37 2 Capex 82 129 24 15 Vehicle age (years) 7.2 8.4 8.8* n/a Normalised op. profit 109.5 123.0 85.0 5.0 Driver wages(1) 28% 51% 24% 6% Fuel(1) 12% 4% 6%† 6% 1As a percent
Slide 40: Capital allocation: sustainable compounding growth
Capital allocation Sustainable compounding growth £510m EBITDA Less £211m CAPEX Less £120m tax, interest & working cap £179m FCF Invest in the business Manage gearing Return to shareholders at 15% ROIC (2.5x → 2.0x) at 2.0x cover 40
Slide 41: Robust financial strategy
Financial strength Robust financial strategy Extended debt maturity profile1,3 Prudent balance sheet management – Strong commitment to investment grade rating • Fitch rating upgraded to BBB/Stable in 2019 400 495 – Gearing & interest cover well within covenants • Net debt/EBITDA <3.5x (frozen GAAP)
Slide 42: Gearing at 2.4x post IFRS 16 impact
Balance sheet Gearing at 2.4x post IFRS 16 impact Gearing Ratios 2019 2018 Covenant Ratings Grade Outlook Net debt/EBITDA 2.4x 2.3x <3.5x Moodys Baa2 Stable Interest cover 9.6x 10.5x >3.5x Fitch BBB Stable – Gearing increased to 2.4x after absorbing impact of IFRS 16 & M&A • IFRS 16 added 0.2x • Und
Slide 43: North America: record year with further diversification
North America Record year with further diversification into fast growing markets Delivering operational excellence Generating superior cash & returns – Disciplined bid season for 2019/20 2019 2018 • Average price increase of 3.9% across portfolio, up 5.9% on our contracts up for bid & renewal Revenu
Slide 44: North America: drivers of revenue and profit
North America Drivers of revenue and profit Drivers of operating profit Revenue 2019 North America ($20m) $25m 7% 1% ($7m) $5m $25m $157m $129m 92% Contract 2018 Growth in 2019 Driver wages Weather IFRS 16 2019 continuing acquisitions Private hire business Other 44
Slide 45: ALSA: record revenue, profit & passengers
ALSA Record revenue, profit & passengers Delivering operational excellence Generating superior cash & returns – Increasingly sophisticated RMS driving revenue, volume & yield 2019 2018 • Record passengers in both Spain & Morocco, up 12.8% to 368m • Growth across each segment & ancillary revenues up
Slide 46: ALSA – operating profit bridge
ALSA – operating profit bridge Drivers of operating profit Revenue 2019 €2m 25% 6% 7% 2% (€11m) €1m €19m (€5m) 25% 60% €125m €119m Passenger 2018 Growth in 2019 Driver wages Fuel IFRS 16 2019 continuing acquisitions Contract business Grants/subsidies Private hire Other 46
Slide 47: UK: record passengers in core coach driving strong growth
UK Record passengers in core coach driving strong growth Delivering operational excellence Generating superior cash & returns – Record performance in core coach for revenue & passengers – 2019 2018 core revenue up 3.6% & passengers up 4.0% – RMS & targeted marketing campaigns driving occupancy, up 2
Slide 48: UK – operating profit bridge
UK – operating profit bridge Drivers of operating profit Revenue 9% 2019 4% 2% 7% (£3m) £2m 9% £6m 78% £85m £80m 77% Contract 2018 Growth in Driver wages IFRS16 2019 continuing Passenger business Concession Private hire Other 48
Slide 49: German Rail: strong growth with start up of new services
German Rail Strong growth with the start up of new services Delivering operational excellence Generating superior cash & returns – Strong revenue growth reflecting mobilisation & start-up of 2 new 2019 2018 services in the RRX contract – Element of catch up revenue & profit through improved Revenue
Slide 50: More detail on acquisitions in 2019
More detail on acquisitions in 2019 9 acquisitions in the year – Combined total net consideration of £162m of which £11m is deferred consideration; options to purchase the remaining 40% of WeDriveU valued at £97m – 5 in North America: • 60% stake in WeDriveU – providing access to the fast-growing co
Slide 51: Fuel risk largely fixed until 2020
Risk management Fuel risk largely fixed until 2020 Fuel hedging 2019 2020 2021 2022 % hedged* 100% 100% 73% 13% Price per litre 37.3p 37.2p 36.5p 33.9p – 2020 fuel costs flat year-on-year on a like-for-like basis * Of addressable volume (c.255 million litres) 51
Slide 52: Pension deficit reducing
Risk management Pension deficit reducing Pensions £m (IAS19) 754 718 679 671 660 623 554 570 Assets Liabilities Asset Ceiling Surplus/Deficit (13) (88) (95) (117) (90) 2016 2017 2018 2019 Surplus /(Deficit) Surplus /(Deficit) Charge Charge £m 31 Dec 2019 31 Dec 2018 2019 2018 UK Bus (99.1) (127.3) (
Slide 53: National Express Group PLC
National Express Group PLC
National Express Group — FY2019 Earnings Presentation on 6ix