Keller Group Plc · LSE:KLR
Keller — H1 2010 Earnings Presentation
38 slides from Keller's earnings presentation, June 2010
Slide 1: Keller Group plc Interim Results
Keller Group plc Interim Results Half year ended June 2010
Slide 2: Highlights
Highlights • Further geographic diversification, with 35% of revenue now from Australia and developing markets • June acquisitions of Waterway in Australia and Nilex in the US • Order book increased every month this year; now 1% ahead of this time last year • £98.1m of cash generated from operations
Slide 3: Group Income Statement
Group Income Statement Constant currency basis £m H1 2010 H1 2009 % change FY 2009 − revenue down 11% − operating profit down 71% Revenue 496.9 552.6 -10% 1,037.9 Average exchange rates EBITDA 33.4 60.1 -44% 113.2 − US$1.53 (H1 2009: $1.49) − €1.15 (H1 2009: €1.12) Operating profit 13.7 42.8 -68% 77
Slide 4: Group Income Statement (continued)
Group Income Statement (continued) Minority interests £m H1 2010 H1 2009 % change FY 2009 mainly Spain and Profit after tax 8.1 27.9 52.1 Saudi Arabia Minority interests (0.1) (1.0) (1.7) Attributable to shareholders 8.0 26.9 50.4 Interim dividend up 5% Earnings per share 12.5p 42.1p -70% 78.8p Dilu
Slide 5: Operating Profit and Margin
Operating Profit and Margin H1 2010 H1 2009 Constant currency Op Op revenue down 11% £m Revenue Profit Margin Revenue Profit Margin − UK: - 8% − US: - 24% UK 28.1 (0.1) (0.0)% 30.7 (0.4) (1.3)% − CEMEA: + 2% − Australia: + 5% US 198.0 (1.0) (0.5)% 268.0 18.6 6.9% All except Australia CEMEA 190.1 9.3
Slide 6: Group Balance Sheet
Group Balance Sheet £m June 2010 June 2009 Dec 2009 Comparisons Goodwill/intangibles 128.0 99.9 119.1 impacted by Property/plant/equipment 261.3 237.5 264.4 exchange rates 389.3 337.4 383.5 Inventories 37.8 41.8 37.4 Receivables 313.6 328.6 299.9 Continued Payables (248.5) (266.3) (252.3) focus on c
Slide 7: Group Cash Flow Statement
Group Cash Flow Statement £m H1 2010 H1 2009 FY 2009 Last 12 months’ cash Cash from operating activities 15.0 40.1 123.2 from operations 113% of EBITDA (H1 2009: Capex – net (12.4) (23.1) (35.5) 101%) Tax (7.3) (14.5) (30.0) Interest (1.0) (2.2) (4.5) Free cash flow (5.7) 0.3 53.2 Capex virtually ha
Slide 8: Group Financing Position
Group Financing Position • Over £200m of committed financing facilities, Key Financial Covenants mainly – £65m and £80m revolving credit facilities, expiring Test Status March and June 2011 respectively – US$100m private placement Net debt < 3x EBITDA 1.4x – $30m repayable in 2011, $70m in 2014 • Pl
Slide 9: Group Order Intake
Group Order Intake Last six months’ orders up £m Monthly orders (rolling 3 month average at constant currency*) 12% on H1 2009 160,000 140,000 120,000 Order book increased 100,000 every month this year 80,000 60,000 40,000 Order book 1% up on last 20,000 June at constant currency 0 *at current excha
Slide 10: 2010 Guidance
2010 Guidance • Mature markets remain very difficult • Early signs of revenue growth returning at a Group level – margin recovery will lag revenue increases – not expected until some time in 2011 • Q1 weather impact means 2010 profit more second half weighted than normal • Expected full year tax rat
Slide 11: Group Revenue by End Market
Group Revenue by End Market H1 2010 H1 2009 Keller operates across the Total revenue £497m Total revenue £553m whole construction spectrum 16% 13% Changes in absolute 13% 18% 46% 52% revenue − Infrastructure/Public 19% Buildings flat 23% − Industrial/Manufacturing down a lot, Power less so Infrastru
Slide 12: US Non-residential Construction Market
US Non-residential Construction Market $bn US Construction Put-in-Place Total US non-residential construction market down 17% 400 year to date 350 300 Infrastructure/Public Buildings 250 down 7% 200 Office/Commercial/Leisure 150 down 36% 100 - more than halved since peak 50 0 Power/Industrial/Manufa
Slide 13: US Revenue by End Market
US Revenue by End Market H1 2010 H1 2009 Infrastructure/Public Total revenue $303m Total revenue $399m Buildings by far the most important sector 15% 23% 13% 47% Residential revenue up on 48% H1 2009 10% 19% 25% Infrastructure/Public Buildings Infrastructure/Public Buildings Power/Industrial/Manufac
Slide 14: US Foundations
US Foundations • Margins remain under pressure • Bidding environment continues to be challenging – excess capacity in the market place – projects continue to be re-bid • Headcount reduction broadly in line with reduction in volume – employees down 25% from peak two years ago • New York area providin
Slide 15: US Suncoast
US Suncoast US Housing Starts (000s) Suncoast recorded an H1 loss 2500 − no sustained housing recovery − high rise market deteriorating 2000 − increases in cost of steel strand 1500 Headcount reduced by a further 20% to 1000 300 500 0 Further office closures Source: US Census Bureau, Housing Starts
Slide 16: Nilex Acquisition
Nilex Acquisition Nilex acquired in June for $7.2m − leading wick drain contractor in the US & Canada − wick drains are a ground improvement technique − gives scale to Hayward Baker’s existing wick drain division − complements other ground improvement techniques Nilex installing wick & strip drains
Slide 17: US Case Studies
US Case Studies Jet grouting for new rail tunnels Piling at oil refinery Borough of Queens, New York Whiting, Indiana 16
Slide 18: CEMEA Revenue by End Market
CEMEA¹ Revenue by End Market H1 2010 H1 2009 Infrastructure/Public Total revenue €219m Total revenue €214m Buildings markets robust − absolute revenue up 14% 13% 10% 19% 41% Residential revenue up 51% 27% due to Resource Piling acquisition 17% 22% Significant decreases in Infrastructure/Public Build
Slide 19: CEMEA Revenue by Geography
CEMEA Revenue by Geography H1 2010 H1 2009 Asia the largest contributor Total revenue €219m Total revenue €214m − acquisition of Resource Piling 4% − significant growth in other 8% 20% 12% 9% 20% businesses 9% 14% 10% 20% 11% 14% Poland two thirds of 12% 12% Eastern Europe 12% 13% Asia Eastern Europ
Slide 20: CEMEA Highlights
CEMEA Highlights Most European businesses severely impacted by adverse Q1 weather Results in Germany holding up reasonably well Further reorganisation and headcount reductions in France and Spain Busy, but competitive, market in Poland No improvement in the Middle East 5,700 Ton Load Test Marina Bay
Slide 21: CEMEA Case Studies
CEMEA Case Studies Vibro compaction and jet grouting Vibro replacement and bored piling 2014 Olympic Park, Sochi, Russia Power plant, Anpara, Northern India 20
Slide 22: Developing Markets
Developing Markets 350 Continued progress in India Revenue (£m) − extension of product range gains 300 momentum − headcount now 270 250 200 Second large ground improvement project awarded in Brazil 150 − JV company with local partner 100 First contracts in Russia 50 − 2014 Winter Olympics related 0
Slide 23: Developing Markets and Australia
Developing Markets and Australia Together with Australia these markets 350 comprised 35% of Group H1 2010 Revenue (£m) revenue 300 250 200 Absolute revenue quadrupled in five years 150 − over two thirds organic 100 50 0 Maintained above average mid cycle 2005 2006 2007 2008 2009 H1 H1 Group margins
Slide 24: Australia Highlights
Australia Highlights Market conditions remain very strong − resources, infrastructure, population growth − recent compromise on resources tax helped First half results very strong boosted by − infrastructure work at Ipswich Minefill − resources work in Western Australia Several large projects in the
Slide 25: Waterway Acquisition
Waterway Acquisition Waterway acquired in June for A$30m debt free − earn out payable based on profit to June 2013 − annualised revenue of circa A$50m − leading near shore marine contractor in NSW − good prospects to expand to Western Australia Waterway working in Sydney, NSW − strong potential syne
Slide 26: UK Highlights
UK Highlights Market remains very challenging Further redundancies made − workforce down one third since the peak Current status on Crossrail − Canary Wharf station grouting completed Vibro compaction − piling to be performed at TCR station − geotechnical and tunnelling monitoring Port extension, Fe
Slide 27: Outlook
Outlook • No change in key construction markets since May IMS – US and Western Europe remain very difficult – Australia and developing markets strong • General economic and financial sentiment more cautious recently • Full year expectations unchanged and within the current range of market expectatio
Slide 28: Appendix
Appendix KELLER
Slide 29: Introduction to Keller
Introduction to Keller • The world’s largest independent ground engineering contractor – ground engineering is a small, niche sub-sector of construction – sector growing faster than construction, reflecting: − more pressure to build on brownfield and marginal land − more ambitious development and in
Slide 30: Ground Engineering Worldwide
Ground Engineering Worldwide % of 2009 Activities revenue Regions of use Applications Piling 36% US/UK Foundation support Eastern Europe Earth retention Middle East & Asia Australia Ground improvement 21% US/UK Foundation support Continental Europe Seismic risk protection Middle East & Asia Australi
Slide 31: History of Keller
History of Keller 1958 1960’s 1974 1984 1990 1994 2001 2002 2006 2007 2008 2009 2010 NOW Acquired Phi Acquired Acquired Est. 1958 Acquired Management (UK) Resource Acquired Systems Ground test Johann Keller buyout from Piling Suncoast Geotechnique services in Germany GKN plc (Singapore) marking (US)
Slide 32: Strategy
Strategy •Our Objective – to extend our global leadership in specialist ground engineering through: – organic growth, particularly in developing markets – targeted acquisitions • Our Execution – transfer of technologies and techniques within our current geographic regions – offering design and build
Slide 33: US Geographic Coverage
US Geographic Coverage MAINE WASHINGTON NORTH VERMONT MONTANA DAKOTA NEW HAMPSHIRE MINNESOTA OREGON WISCONSIN MASSACHUSETTS IDAHO NEW YORK SOUTH RHODE ISLAND DAKOTA MICHIGAN CONNECTICUT WYOMING PENNSYLVANIA NEW JERSEY IOWA NEBRASKA OHIO WASHINGTON D.C. DELAWARE NEVADA ILLINOIS INDIANA MARYLAND WEST
Slide 34: Europe Geographic Coverage
Europe Geographic Coverage SWEDEN UK NETHERLANDS GERMANY POLAND UKRAINE CZECH REP. SLOVAKIA FRANCE SWITZERLAND AUSTRIA HUNGARY HUNGARY ROMANIA SLOVENIA CROATIA PORTUGAL SERBIA SPAIN ITALY 33
Slide 35: Ten Year Track Record: Revenue
Ten Year Track Record Revenue 2000 – 2009 (£m) (Continuing Operations) 1,196.6 137.1 1,037.9 Compound 955.1 857.7 85.2 126.9 annual growth 107.1 65.1 78.0 57.6 rate of 16% 685.2 60.7 532.1 37.1 526.2 43.4 467.0 505.4 447.5 32.4 473.2 27.9 38.6 476.9 347.5 26.1 41.9 43.3 399.9 265.3 18.3 45.9 270.4 2
Slide 36: Ten Year Track Record: Operating Profit
Ten Year Track Record Operating Profit 2000 – 2009 (£m) (Continuing Operations) 119.4 107.4 19.4 2.7 Compound 14.7 89.3 3.8 annual growth 77.3 7.0 3.4 rate of 20% 52.1 16.6 55.3 0.5 1.8 61.6 1.9 33.8 * 33.4 64.1 32.2 31.5 22.7 1.8 2.0 1.7 1.5 1.5 1.4 42.1 0.5 14.9 49.9 0.7 19.3 21.0 22.3 33.6 1.6 17
Slide 37: Financial Performance
Financial Performance Operating margin* Dividend per share (pence) 12% 22 20 Dividend 10% 18 increased every 16 year since 8% 14 flotation in 1994 12 6% 10 8 4% 6 2% 4 2 0% 0 00 01 02 03 04 05 06 07 08 09 00 01 02 03 04 05 06 07 08 09 *from continuing operations 36
Slide 38: Slide 38