Carel Industries Spa · MIL:CRL
Carel Industries Spa — H1 2018 Earnings Presentation
37 slides from Carel Industries Spa's earnings presentation, Sep 7, 2018
Slide 1: 1H Results 2018
CAREL INDUSTRIES S.p.A. 1H Results 2018 7th September 2018 This document and all of its contents are property of CAREL. All unauthorised use, reproduction or distribution of this document or the information contained in it, by anyone other than CAREL, is severely forbidden.
Slide 2: Disclaimer
Disclaimer This document has been prepared by Carel Industries S.p.A. (“Carel” or the “Company”), for information purposes only, exclusively with the aim of assisting you to understand and assess the activities of Carel. The information contained in this presentation does not purport to be comprehen
Slide 3: 1. Overview
1.Overview Highlights
Slide 4: Leading provider of advanced control solutions for HVAC/R
Leading provider of advanced control solutions for HVAC/R Key financials – 2017A • HVAC: Industrial, Residential, Growing key Commercial markets • Refrigeration: Food Retail and Revenue Adj. EBITDA EBITDA margin Net income Food Service €255m €51m 20% €31m Leadership in • Control solutions premium +1
Slide 5: We operate in attractive niches across a wide range of end-markets
We operate in attractive niches across a wide range of end-markets… HVAC Refrigeration Industrial Residential Commercial Food Retail Food Service Data Centers Residential Shopping Centers Convenience Stores Restaurant Chains Industry and Process Office Space Hypermarkets Refrigerated Merchandisers P
Slide 6: One-stop-shop portfolio of components and platforms
…through a one-stop-shop portfolio of components and platforms Programmable controls HMI and unit terminals Parametric controls Isothermal humidifiers Electronic controls easily programmable and customizable User interfaces for units and systems Entry level electronic controllers Steam production sy
Slide 7: Long track record of profitable organic growth
Long track record of profitable organic growth Revenue (€m) 255 231 203 1990s 2000A 2001A 2002A 2003A 2004A 2005A 2006A 2007A 2008A 2009A 2010A 2011A 2012A 2013A 2014A 2015A 2016A 2017A Adj. EBITDA (€m) 51 43 38 1990s 2000A 2001A 2002A 2003A 2004A 2005A 2006A 2007A 2008A 2009A 2010A 2011A 2012A 2013
Slide 8: Well-articulated strategies to continue the growth track record
Well-articulated strategies to continue the growth track record • Consolidation of HVAC market leadership • Growth in Refrigeration driven by technology leadership • Upselling and cross-selling HVAC Refrigeration • Global penetration to consolidate to represent the its market leadership engine of gr
Slide 9: 1H 2018 Results
1H 2018 Results
Slide 10: Main achievements
Main achievements May “Heez”, an innovative CAREL’s solution for refrigerated merchandisers, won, in the US, the “Top of the year product” award given by the “Environmental leader”. Jun IPO – the only IPO in the main segment of Borsa Italiana in 2018. Acquisition of a residual 51% stake in Carel Jap
Slide 11: 1H 2018 - Overview
1H 2018 - Overview The positive trend in revenue +9.1% (+12.1% net of FX impact), together with an increased adjusted profitability, already reported in the first quarter of the year, continues, consolidating the leadership of the Group in HVAC sector and strengthening its role in refrigeration mark
Slide 12: 1H 2018 - Continuous growth in performance and efficiency
1H 2018 - Continuous growth in performance and efficiency KPIs EBITDA Bridge (m€) m€ 1H 2017 1H 2018 Δ% 3.1 0.5 29.2 Revenue 127.3 138.8 9.1% 26.4 (0.8) Revenue FX Adj. (1) 127.3 142.7 12.1% 24.2 EBITDA 26.4 24.2 -8.4% (5.0) (2) EBITDA Adj. 26.4 29.2 10.6% EBITDA adj./Revenue 20.7% 21.0% Net Profit
Slide 13: 1H 2018 – Revenue breakdowns
1H 2018 – Revenue breakdowns Breakdown by region Breakdown by sector Other South APAC 3% 4% North APAC 11% Western Europe HVAC 53% 63% South America 3% 138.8 138.8 M€ North America 12% M€ Refrig. m€ m€ 34% Area 1H 2018 1H 2017 Δ% Δ% fx m€ m€ RoEMEA Western Europe 73.0 64.8 12.6% 12.9% Sector 1H 2018
Slide 14: From EBITDA to Net Profit
From EBITDA to Net Profit K€ 1H '17 1H '18 Δ% • Higher D&A mainly linked to the EBITDA 26,377 24,165 -8.4% Carel’s footprint expansion D&A -3,894 -4,080 project (Croatia, Italy, US) Impairment -9 -96 EBIT 22,475 19,990 -11.1% • Financial income affected by the Financial (charges)/income 227 66 disin
Slide 15: 1H 2018 – (NFP)/Cash Bridge
1H 2018 – (NFP)/Cash Bridge Cash Conversion +5.0m€ Rate 5.1 80.8%* 15.6 (8.5) 40.2 (7.2) 15.2 (30.0) m€ (NFP)/Cash Net Profit D&A and Provisions NWC CAPEX Dividends (NFP)/Cash FY 2017 1H 2018 • Positive FCF generation: thanks to operating results, easily covering NWC increase and a significant growt
Slide 16: Closing Remarks
Closing Remarks Higher revenues Strengthening Supportive growth Footprint Carel’s HVAC compared to the expansion presence and Refrigeration market project abroad market scenario on-track We expect the growth experienced in revenue in the first half of the year to be maintained also in the second hal
Slide 17: Annexes
Annexes
Slide 18: Shareholding structure and Corporate Governance
Shareholding structure and Corporate Governance CAREL INDUSTRIES S.p.A. The controlling Shareholders own approximately Shareholding structure 60% of Carel Share Capital (36,17% Luigi Rossi ~40% Luciani S.a.p.a and 23.58% Luigni Nalini S.a.p.a.) with a lock-up period of 180 days from the IPO. Free fl
Slide 19: Income statement and Balance Sheet
Income statement and Balance Sheet Income statement Balance sheet K€ 1H_2017 1H_2018 var % K€ FY_2017 1H_2018 var % Revenues 127,267 138,793 9.1% FIXED ASSETS 37,411 40,646 8.6% Other Revenues 637 766 20.3% WORKING CAPITAL 46,353 53,471 15.4% Opex (101,528) (115,395) 13.7% TFR (5,687) (5,610) -1.4%
Slide 20: “Performance shares” plan
“Performance shares” plan On the 7th of September the CAREL’s Shareholders meeting approved an incentive plan called “Performance shares” plan • Aligning the interest of the beneficiaries of the plan with CAREL’s interests; Objectives • Supporting and rewarding the achievement of medium/long-term ob
Slide 21: Company profile
Company profile
Slide 22: Leading provider of advanced energy efficient control solutions
Leading provider of advanced energy efficient control solutions 1 High-tech leader in attractive niches of the HVAC/R industry 2 Attractive above market growth supported by secular trends Positioning and technological innovation capability hard to 3 replicate Highly efficient global operations servi
Slide 23: High-tech leader in attractive niches of the HVAC/R industry
1 High-tech leader in attractive niches of the HVAC/R industry Focus on attractive niches… …resulting in leadership positioning …CONSOLIDATED …INNOVATION-ORIENTED High value applications IN HVAC PREMIUM NICHES IN REFRIGERATION Deep knowledge of final applications is 33%1 #1 SIGNIFICANT ROOM FOR key
Slide 24: Attractive market growth supported by secular trends
2 Attractive market growth supported by secular trends Secular trends… …supporting attractive market growth Reference HVAC Market Market value (€m)1 GROWING • Improvement in LIVING STANDARDS POPULATION increasing demand for HVAC/R • Focus on WASTE REDUCTION in CHANGE IN food sector CONSUMER • Increa
Slide 25: Growth is driven by market trends and focused strategic actions
2 Growth is driven by market trends and focused strategic actions… Growth drivers SECULAR TRENDS Market Increasing the market of the applications addressed by CAREL trends NICHES EXPANSION Secular Leverage of deep knowledge of final trends applications to expand to adjacent niches Expansion to Incre
Slide 26: Favoured by up-selling and cross-selling
2 …and favoured by up-selling and cross-selling… FROM PRODUCT PLATFORMS TO INTEGRATED ELECTRONIC SOLUTIONS… PRODUCT PLATFORMS SYSTEMS From a COMBINATION OF PRODUCTS FROM DIFFERENT PLATFORMS To an ECOSYSTEM TO QUICKLY ADOPT NEW TECHNOLOGIES …IN THE HVAC AND REFRIGERATION MARKETS HVAC Refrigeration Ex
Slide 27: With High Efficiency applications driving demand
2 …with High Efficiency applications driving demand HVAC Refrigeration CAGR 2015-17 CAGR 2015-17 36% 20% 9% 16% 1.6% 3.7% HVAC CAREL HVAC CAREL HVAC REF market2 CAREL REF CAREL REF market1 revenues HE products’ revenues HE products’ revenues revenues KIGALI AMENDMENT ENERGY COST SAVINGS “... keeping
Slide 28: Positioning and innovation capability hard to replicate
3 Positioning and innovation capability hard to replicate ~6% OF REVENUE1 13% OF TOTAL WORKFORCE Invested annually in R&D dedicated to R&D 3 R&D CENTRES PROPRIETARY SOFTWARE COMBINING 5 DOMAINS Vast library of proprietary software modules UNIQUE 01100 • Hardware & Firmware developed over the past 10
Slide 29: Leadership position in HVAC OEM premium niches
3 Leadership position in HVAC OEM premium niches… Leadership positioning in premium …with no perfect comparable niches… Chiller European Market Share1 OEM Large 33% proprietary diversified EM / Low cost 26% solutions competitors competitors 14% 8% 6% Vertical niche approach Innovation p
Slide 30: Leading in innovation in the refrigeration market
3 …and leading in innovation in the refrigeration market Leveraging on HVAC experience… …CAREL is a leader in innovation Large diversified EM / Low cost competitors competitors 2014 HEOS SISTEMA Waterloop system with DC tech for refrigeration Vertical niche approach Innovation pace & 2015
Slide 31: Highly efficient global operations serving locally
4 Highly efficient global operations serving locally… NORTH AMERICA WESTERN EUROPE NORTH APAC GLOBAL PRODUCTION FOOTPRINT 1 3 Plant Plants 110 718 Employees Employees DIRECT AND HIGHLY SKILLED SALES NETWORK 52 139 Sales force Sales force 1 64 x3 Plant Sales force 1 1 BEST POSITIONED TO CAPTURE R&D C
Slide 32: Diversified blue-chip customers
4 …diversified blue-chip customers HVAC REFRIGERATION GLOBAL BLUE-CHIP Dealers 16% >6,300 c. 5% OEMs BROAD & HIGHLY Customers from first customer1 70% Installers/ DIVERSIFIED In c. 100 c. 25% contractors / VARs / End Users countries worldwide from top-15 customers2 14% 2017A revenue LONG-TERM >80% >
Slide 33: Track record of profitable organic growth
5 Track record of profitable organic growth Organic double-digit growth Strong profitability High conversion to net income Cash generative business Revenue Adj. EBITDA Net Income Operating cash1 (€m) (€m and margin %) (€m and margin %) (€m and cash conversion2 %) 255,4 12,2% 73,8% 78,3% 19,9% 231,0
Slide 34: Organic growth with strong profitability
5 Organic growth with strong profitability Strong growth both in HVAC and Benefitting from operating leverage With further positive impact from taxes Refrigeration Revenue Operating Taxes (€m) (€m) cost base (€m and Revenue CAGR as % of 81.1% Revenue) 1 255,4 2015-17 Effective tax rate (%) by busine
Slide 35: Focus on cash generation
5 Focus on cash generation Capex (€m and as % of Revenue) Net Working Capital ("NWC") Net Liquidity (€m) €m 2015A 2016A 2017A Cash 4.8% 4.2% 3.9% dividend 5.0 20.0 15.0 Trade receivables 47.9 56.0 54.6 (€m) Inventories 28.6 31.5 37.8 Tax receivables 1.1 0.6 0.8 40,2 9,7 10,0 9,7 37,7 Other current 3
Slide 36: Global expansion, innovation and services
6 A Global expansion, innovation and services Pursuing additional Consolidation of opportunities leadership positions improving services in HVAC offer with IoT and Growth in advanced Refrigeration monitoring solutions Geographical Cross-selling and up- expansion through selling exploiting the introd
Slide 37: Pursuing external growth through disciplined bolt-on M&A
6 Pursuing external growth through disciplined bolt-on C M&A CAREL has performed detailed analyses and scouting of potential targets, thus promoting an opportunistic approach with a focus on 3 MAIN EXPANSION AREAS: A B C COMPLEMENTING GEOGRAPHICAL Potential selected CORE-BUSINESS EXPANSION acquisiti