Travis Perkins plc · LSE:TPK
Travis Perkins — H1 2016 Earnings Presentation
35 slides from Travis Perkins's earnings presentation, Sep 10, 2016
Slide 1: 2016 Interim Results
INTERIM RESULTS. 2016 Interim Results. 2016 1
Slide 2: Agenda
Agenda Group highlights John Carter p3 Financial review Tony Buffin p6 Strategy Update & Outlook John Carter p19 Appendices p27 Interim Results. 2016 2
Slide 3: 2016 interim key messages
2016 interim key messages • Strong sales growth with outperformance in all key areas 1 Good first half • Plumbing & Heating market has continued to be tough performance • Performance in June was below expectations and in part due to EU referendum • Early signs from lead indicators are mixed 2 Outloo
Slide 4: Group performance highlights
Group performance highlights Revenue • Continued sales growth outperformance growth of 5.8% to £3.1bn 4.9% • Good underlying profit growth EBITA growth (ex- Property) • Investing for long-term growth Capex of £120m LAROCE • Modest decline in returns declined 20bps to 10.9% Dividend • Continued divid
Slide 5: Continued focus on delivering strategic plans
Continued focus on delivering strategic plans Significant • Strong improvements in customer propositions in all businesses 1 improvements in • Branch network expanded by 200 outlets and 200 branches reconfigured first half of plan • Growing scale advantage in sourcing and supply chain • High return
Slide 6: Financial Review. Tony Buffin
FINANCIAL REVIEW. TONY BUFFIN Interim Results. 2016 6
Slide 7: Group performance summary
Group performance summary Year-on-year Six months ended 30 June H1 2016 H1 2015 change Revenue £3,113m £2,943m 5.8% Like-for-like sales growth 3.1% 5.7% (2.6)ppt Adjusted EBITA £194m £185m 4.9% Adjusted EBITA excluding property profits £191m £182m 4.9% Adjusted profit after tax £145m £134m 8.2% Free
Slide 8: Further sales growth outperformance
Further sales growth outperformance Group revenue growth 1.9% 0.8% • Good trading through first five months 4.7% (1.6)% £3,113m £2,943m • Noticeable slow-down in June 5.8% • Deflation in all Divisions, Wickes H1 2015 Volume Price / mix Net new space Trading days H1 2016 price investment maintained L
Slide 9: Operating margin maintained
Operating margin maintained General Plumbing Contracts Consumer Group Merchanting & Heating 2015 EBITA margin 9.4% 3.1% 6.3% 5.9% 6.3% Gross margin (1.1)% (0.5)% (1.0)% (0.4)% (0.5)% Operating costs 1.4% 0.2% 0.6% 0.5% 0.5% 2016 EBITA before ∆ in property profits 9.7% 2.8% 5.9% 6.0% 6.3% Change in p
Slide 10: General Merchanting performance summary
General Merchanting performance summary Six months ended 30 June H1’16 H1’15 ∆ • Strong sales growth in first five Revenue £1,045m £979m 6.7% months Like-for-like growth 2.9% 6.7% (3.8)ppt Adjusted EBITA £104m £92m 13.0% • Good net margins despite EBITA margin 10.0% 9.4% 60bps investment and June sl
Slide 11: Plumbing & Heating performance summary
Plumbing & Heating performance summary Six months ended 30 June H1’16 H1’15 ∆ • Solid sales performance against Revenue £679m £667m 1.8% continued tough market Like-for-like growth 0.4% (2.9)% 3.3ppt Adjusted EBITA £18m £21m (14.3)% • Return to positive like-for-like EBITA margin 2.7% 3.1% (40)bps g
Slide 12: Contracts performance summary
Contracts performance summary Six months ended 30 June H1’16 H1’15 ∆ • All businesses grew in H1 Revenue £623m £605m 3.0% against strong comparator Like-for-like growth 2.7% 13.9% (11.2)ppt Adjusted EBITA £37m £38m (2.6)% • 2-year LFL of 17% EBITA margin Underlying EBITA (ex-property profit) 5.9% £3
Slide 13: Consumer performance summary
Consumer performance summary Six months ended 30 June H1’16 H1’15 ∆ • Strong sales growth from all Revenue £766m £693m 10.5% businesses Like-for-like growth 6.5% 6.5% - Adjusted EBITA £44m £41m 7.3% • Wickes store refits performing EBITA margin 5.7% 5.9% (20)bps above expectations – driving Underlyi
Slide 14: Sustainable earnings growth
Sustainable earnings growth Six months ended 30 June H1’16 H1’15 ∆ • Underlying finance cost Adjusted EBITA £194m £185m 4.9% maintained despite Net finance cost £(10)m £(18)m 44.4% increased borrowings Adjusted profit before tax £184m £167m 10.2% Adjusted tax £(39)m £(33)m (18.2)% • £2m currency mar
Slide 15: Cash flow funding investments & growing dividend
Cash flow funding investments & growing dividend £2m • Good working capital £(29)m management £57m £(20)m £194m £(12)m £(27)m • £42m exceptional tax Free cash flow Growth capex £165m £(51)m payment related to Acquisitions £(4)m Dividends Exceptional tax payment £(73)m £(42)m £165m ongoing HMRC dispu
Slide 16: Investments to drive medium-term returns
Investments to drive medium-term returns Examples Capex Extending Strong • New TP / Wickes / Toolstation / CCF £13m 1 • Benchmarx implants / showrooms / leadership returns toolhire implants Good • New formats / P&H conversions 2 Investing to grow £20m returns • Distribution centres Re-engineering &
Slide 17: Medium term ratios in line with plan
Medium term ratios in line with plan Mid-term ambition H1’16 YE’15 H1’15 YoY ∆ • Materially stronger financial position Net debt - £510m £447m £395m £115m • Net debt increased Lease debt £1,484m £1,444m £1,409m £75m due to one-off tax Lease adjusted debt - £1,994m £1,891m £1,804m £190m payment • Fin
Slide 18: 2016 outlook
2016 outlook • Trading improved through July, albeit against weaker comparatives • Too early to provide precise guidance following Brexit • Expect to continue to outperform the market • Price inflation given recent exchange rate movement in H2 2016 • Property profits of ~£20m assuming no change in c
Slide 19: Strategy Update & Outlook. John Carter
STRATEGY UPDATE & OUTLOOK. JOHN CARTER Interim Results. 2016 19
Slide 20: Lead indicators mixed, outlook less certain
Lead indicators mixed, outlook less certain Site visitors (18)pt Consumer confidence (16)pt Site reservations (10)pt Climate for purchases (13)pt Mortgage approvals (3)% Equity withdrawal +1% Housing transactions 10%* Retail Sales growth (0.5)% Housing prices +5% Architect work load (19)% Constructi
Slide 21: Market conditions difficult to read
Market conditions difficult to read 75% 15% 10 Housing transaction year-on-year growth General Merchanting quarterly 65% LFL sales growth Consumer confidence index 0 55% LTM Housing transaction GM LFL sales growth growth (lagged by 9 months) 10% 45% Housing transaction growth (10) 35% (lagged by 9 m
Slide 22: Strategic Plan positions Group to outperform
Strategic Plan positions Group to outperform • Almost £600m invested since Investment area 2014 - H1’16 capex LAROCE range Maturity profile start of the plan Extending leadership £96m 20 - 30% 3 – 5+ years • Significant investment increase Investing to grow £94m 15 - 20% 3 – 5+ years – step up in gr
Slide 23: Extended structural advantage
Extended structural advantage Customer innovation Scale advantage • Better value credentials in trade • Unique lightside & heavyside and consumer businesses distribution capability • Format improvements in Wickes, • Sourcing consolidation provides TP, Benchmarx, P&H, Keyline own-brand strength • Str
Slide 24: Focus on strategic plans with flexibility to respond
Focus on strategic plans with flexibility to respond • Continued investment in high return areas (TP, Benchmarx, Wickes, Toolstation) 1 Focused investment • IT upgrade programme to continue in high return areas • Contracts and Plumbing & Heating change programmes largely complete • Long duration and
Slide 25: A stronger position to capitalise on opportunities
A stronger position to capitalise on opportunities • Strong delivery of strategy at mid-point of the plan • Good performance in the first half of 2016 • Focus on investing in high return areas • Flexibility to take advantage of changing market conditions • Robust financial position with significant
Slide 26: Questions.
QUESTIONS. Interim Results. 2016 26
Slide 27: Appendices
APPENDICES. I. Revenue analysis II. Adjusted earnings rec. III. Branch numbers IV. Sales drivers by Division V. Like-for-like sales growth VI. Definitions Interim Results. 2016 27
Slide 28: I. Revenue analysis
I. Revenue analysis – 6 months ended 30 June 2016 Northern Midlands South West South East General Merchanting Northern Midlands South West South East Geography 21.2 21.8 23.7 33.3 Geography 33.9 15.4 21.6 29.1 Timber Forest Heavyside Lightside P&H / Other Timber Forest Heavyside Lightside P&H / Othe
Slide 29: II. Adjusted earnings reconciliation
II. Adjusted earnings reconciliation H1 2016 H1 2015 Six months ended 30 June Earnings EPS Earnings EPS Basic earnings & EPS £139m 55.7p £127m 51.3p Amortisation of intangibles £8m 3.3p £9m 3.6p Tax on amortisation £(2)m (0.6)p £(2)m (0.7)p Adjusted earnings & EPS £145m 58.4p £134m 54.2p Interim Res
Slide 30: III. Branch numbers
III. Branch numbers 31 December New 30 June Historical network growth 2015 sites Implants Closures Rebrands 2016 2009 2010 2011 2012 2013 2014 2015 H1’16 Travis Perkins 656 7 - (7) 13 669 Opening 1,262 1,303 1,813 1,868 1,896 1,939 1,975 2,028 Benchmarx 157 7 3 - - 167 New 46 519 120 48 58 101 124 4
Slide 31: IV. Sales drivers by Division
IV. Sales drivers by Division Six months ended General P&H Contracts Consumer Total 30 June Volume 3.4% 3.5% 3.5% 8.8% 4.7% Price / mix (0.5)% (3.1)% (0.8)% (2.3)% (1.6)% Like-for-like sales 2.9% 0.4% 2.7% 6.5% 3.1% Trading days 0.8% 0.8% 0.8% 0.8% 0.8% Expansion 3.0% 0.6% (0.5)% 3.2% 1.9% Total sal
Slide 32: V. Like-for-like sales growth
V. Like-for-like sales growth Like-for-like by quarter Like-for-like by half year Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 H1 H2 H1 H2 H1 H2 H1 2014 2014 2015 2015 2015 2015 2016 2016 2013 2013 2014 2014 2015 2015 2016 General 10.9% 11.6% 8.1% 5.3% 1.7% 1.0% 4.7% 1.1% General 2.8% 10.1% 14.6% 11.3% 6.7% 1.4% 2.9% P&
Slide 33: VI. Definitions
VI. Definitions Metric Definition EBITA Earnings before interest, tax and amortisation Earning per share (“EPS”) Ratio of net profit after taxation to weighted number of ordinary shares outstanding Adjusted EBITA / EBITA or EPS adjusted for exceptional items and amortisation (see Appendix III for re
Slide 34: VI. Definitions (continued)
VI. Definitions (continued) Metric Definition Site visitors House Builders Federation Survey / monthly / May 2016 / Balance score compared to a year ago Site reservations House Builders Federation Survey / monthly / May 2016 / Balance score compared to a year ago Mortgage approvals Bank of England /
Slide 35: Contact
CONTACT. Download investor.relations@travisperkins.co.uk the Travis Perkins IR Jonathan Diec | +44 7887 454 584 app for jonathan.diec@travisperkins.co.uk iPad Matt Johnson | +44 7584 491 284 vCard matt.johnson@travisperkins.co.uk Interim Results. 2016 35