Keller Group Plc · LSE:KLR
Keller — H1 2023 Earnings Presentation
45 slides from Keller's earnings presentation, Aug 1, 2023
Slide 1: Keller Group plc Interim Results for 2023
Keller Group plc Interim Results for 2023 1 August 2023 Building the foundations for a sustainable future 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
Agenda Summary Financial results Business performance Group Strategy Summary and outlook Questions and answers
Slide 4: Summary - Record H1, positive H2 outlook, increased dividend
Summary - Record H1, positive H2 outlook, increased dividend Underlying Underlying Underlying operating operating diluted Revenue profit margin EPS Order book Dividend £1,466.3m £67.0m 4.6% 56.0p £1.5bn 13.9p +10% +58% Up from 3.2% +48% (-2% CC) +5% YoY (+6% CC) (+50% CC) Record H1 performance in
Slide 5: Financial results
Financial results 3 KELLER
Slide 6: Summary income statement
Summary income statement 1 H1 2023 H1 2022 (restated) Non- Non- Underlying Total Underlying Total underlying underlying Revenue 1,466.3 - 1,466.3 1,333.4 - 1,333.4 Operating costs (1,399.5) (7.2) (1,406.7) (1,292.0) (6.1) (1,298.1) Amortisation of acquired intangibles - (3.8) (3.8) - (5.8) (5.8) Oth
Slide 7: Summary income statement - underlying
Summary income statement - underlying 1. Revenue £m CC% 1 H1 2022 1,333.4 H1 2023 H1 2022 FX 52.7 Underlying Underlying North America (35.9) -3.9% Revenue Europe 25.7 +8.4% 1,466.3 1 1,333.4 AMEA 90.4 +53.8% Operating costs (1,399.5) (1,292.0) H1 2023 1,466.3 +5.8% Amortisation of acquired intangibl
Slide 8: Underlying operating profit bridge H1 2022 to H1 2023
Underlying operating profit bridge H1 2022 to H1 2023 North America Europe AMEA Central items Up £33.6m to £65.4m Down £10.3m Up £0.3m to £3.7m Cost up £m £1.3m to £6.2m to £4.1m 85.0 80.0 4.0 10.4 (2.1) 7.2 75.0 (11.0) (14.3) 6.7 70.0 (2.6) 18.5 65.0 (1.3) 67.0 60.0 55.0 50.0 6.8 45.0 2.4 40.0 42.3
Slide 9: Summary income statement – non-underlying
Summary income statement – non-underlying H1 2023 1. Non-underlying items Non- Underlying Total underlying Cash items £m ERP costs (4.0) Revenue 1,466.3 - 1,466.3 Restructuring (3.2) Operating costs (1,399.5) (7.2) (1,406.7) Total cash items (7.2) Amortisation of acquired intangibles - (3.8) (3.8) 1
Slide 10: Net debt flow
Net debt flow £m H1 2023 H1 20221 1. Depreciation/Capex 2023 2022 Underlying operating profit 67.0 42.3 Net capex/depreciation 100% 74% Depreciation, amortisation and impairment 1 Gross capex/depreciation 115% 80% 54.1 48.5 Underlying EBITDA 121.1 90.8 Non-cash items (0.6) (1.1) Increase in working
Slide 11: Balance sheet
Balance sheet 1. Intangibles incl. goodwill Opening £m 137.9 Amortisation acquired (4.0) FY 2022 Amortisation other (0.1) £m H1 2023 H1 20221 (audited) FX (5.0) Closing 128.8 Intangibles incl. goodwill 128.8 1 137.9 149.1 Managed assets 2. Tangible fixed assets £m Tangible fixed assets 473.5 2 486.5
Slide 12: Net debt profile (£m)
Net debt profile (£m) 2023 2022 331 294 296 296 282 263 257 254 249 255 242 250 245 235 210 219 192 194 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec • Net debt1: £244.6m increased by £25.8m, up 26% (H1 2022: £194.0m) • Average month-end net debt1 :£244.7m, up 12% (H1 2022: £217.8m) • The Group op
Slide 13: Financial modelling considerations
Financial modelling considerations H1 2023 experience H2 consideration Trading / profit NA – Suncoast Temporary higher margins as lower steel Expect normalised margins strand price took effect Europe Pricing compression caused by market Anticipate improved profitability due to phasing of conditions
Slide 14: Business performance
Business performance 9 3 KELLER
Slide 15: Safety and wellbeing
Safety and wellbeing Performance • AFR is 0.09, a slight improvement on our Accident Frequency Rate 12-month rolling average • TRIR is 0.64, an improvement of 18 fewer recordable injuries year-on-year • Continued improvement in near miss reporting - believe increased awareness is resulting in more i
Slide 16: Action on reducing carbon emissions
Action on reducing carbon emissions Scope 2 Scope 1 Scope 3 Net zero by 2030 Net zero by 2040 Operations net zero by 2050 Emissions reduction timeline • On track to reduce by a further • Biofuel trials in two business • 900 engineers trained on 10% from 2022 units, with two more planned sector carbo
Slide 17: Scope 1 reduction - The new KB0-E
Scope 1 reduction - The new KB0-E Leading the way with our proprietary jet grouting rig Compared to an equivalent diesel rig, the KB0-E: 1800tCO e approx. carbon saving across lifetime* 2 100% reduction in site particulate emissions 10db approx. reduction in noise levels 40% increase in engine effic
Slide 18: Strong order book of £1.5bn underpins H2
Strong order book of £1.5bn – underpins H2 Geographic mix Order book (£m) (Full order book) 1600 Group1 1400 £1.5bn -2% 1200 NA and AMEA large projects North America1 1000 £979.1m +8% 800 Post COVID-19 recovery Europe large projects COVID-19 600 ASEAN Europe1 restructure £306.0m -21% 400 200 AMEA1 £
Slide 19: North America Operating review
North America Operating review Bushy Creek Texas £m H1 2023 H1 2022 Constant £m £m currency Revenue 875.8 865.7 -3.9% Underlying operating profit 65.4 30.1 +105.4% Underlying operating margin 7.5% 3.5% +400bps Order book1 979.1 902.9 +8.4% 1Comparative order book stated at constant currency • Revenu
Slide 20: Europe Operating review
Europe Operating review Armentières France £m H1 2023 H1 2022 Constant currency Peterborough Revenue 332.2 297.6 8.4% UK Underlying operating profit 4.1 13.9 -71.4% Underlying operating margin 1.2% 4.7% -350bps Order book1 306.0 389.4 -21.4% 1Comparative order book stated at constant currency • Reve
Slide 21: AMEA Operating review
AMEA Operating review Zuhar Island Dubai £m H1 2023 H1 20222 Constant currency Revenue 258.3 170.1 53.8% Underlying operating profit 3.7 3.2 10.5% Underlying operating margin 1.4% 1.9% -50bps Order book1 206.2 229.8 -10.3% 1Comparative order book stated at constant currency 2 2022 results have been
Slide 22: Group Strategy
Group Strategy 3 KELLER
Slide 23: Our Strategy
To be the preferred international geotechnical specialist contractor focused on sustainable markets and attractive projects, generating long Our term value for our stakeholders Strategy Our local businesses will leverage the group’s scale and expertise to deliver engineered solutions and operational
Slide 24: Our strategy – progressive implementation
Our strategy – progressive implementation 1 To be the preferred international Portfolio management geotechnical specialist contractor focused on sustainable markets and attractive projects, generating long term value for our stakeholders 2 Operational execution Our local businesses will leverage the
Slide 25: Our strategy – progressive implementation
Our strategy – progressive implementation 1 • Exited non-core markets including: Latin America, Sub Saharan Africa, Denmark Portfolio management • Exited non-core products including: Wannenwetsch, Concrete Eurodrill, Cyntech • Operational excellence: NA Foundations 2 improvement, Project Performance
Slide 26: Summary and outlook
Summary and outlook 3 KELLER
Slide 27: Summary and outlook
Summary and outlook Record H1 performance • Record H1 performance in revenue and underlying profit • Performance demonstrates the benefit of our diverse and resilient revenue streams • Strong recovery in FCF benefitting from growth in profit and improved working capital performance Positive H2 outlo
Slide 28: Questions and answers
Questions and answers 3 KELLER
Slide 29: Keller overview
Keller overview 3 KELLER
Slide 30: Keller today
Keller today Every day millions of people around the world live, work and play on ground prepared by Keller Three divisions Our purpose Our vision Our values 19 business units To build the To be the Integrity foundations for leading provider a sustainable of specialist Collaboration 180 future geote
Slide 31: Building the foundations for a sustainable future
Building the foundations for a sustainable future • Diverse geographies Resilient • Diverse market sectors revenues • Diverse products • Diverse customers • Specialist project profile Firm Sustainable • Improved focus on quality of margin foundations margins • Strong competitive position • Proprieta
Slide 32: Well balanced in terms of geography and sector
Well balanced in terms of geography and sector • Operating globally in a number of sectors gives us the resilience to trade through national cyclicality • Good access to all markets with no overweight exposure • Geopolitically secure Revenue by geography (2022) Revenue by sector (2022) AMEA 14% Resi
Slide 33: The best solutions
The best solutions • Projects often require a variety of techniques • With access to our global knowledge base and industry leading product portfolio, our engineers can design the best solutions that reduce materials, cost and time for our clients • Our project management capabilities mean we can al
Slide 34: Diverse customer base
Diverse customer base • Our large client spread means we’re not overly reliant on certain customers • Contracts over £5m revenue make up around 1% of the number of contracts, but account for 32% of total revenue Revenue by contract size (2022) Number of contracts (2022) Above £5m - 1% £1m to £5m - 8
Slide 35: Geotechnical market size
Geotechnical market size Market size Market share 35
Slide 36: Keller’s emissions
Keller’s emissions 216,779 tonnes of CO2e (Scope 1 and 2) 210,186 6,593 Not tracked Not tracked Scope 1 Scope 2 Scope 3 Scope 3 Operational Materials Direct emissions Indirect emissions Transport of materials, >60% of site (eg fuel use on site) from electricity use business travel and emissions for
Slide 37: 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 38: Market demand trends play to our strengths
Market demand trends play to our strengths 65m people will be added to urban population 01 Urbanisation and more large- scale development projects by every year. 67% of the world’s population will live in metropolitan regions by 2040 Increasing land shortage, 02 driving a need to use more brownfield
Slide 39: Factors to consider in geotechnical engineering
Factors to consider in geotechnical engineering Site conditions Requirements Loading Constraints conditions • Sand, silt, clay, • Performance • Neighbouring rock, organic (allowable • Spread, low buildings settlements) intensity • Noise, vibration • Loose, soft, stiff, hard, porous • Schedule • Slen
Slide 40: Full product range
Full product range Right combination of products leads to optimal solutions for the soil conditions and structure type 40
Slide 41: Value engineering with an equipment advantage
Value engineering with an equipment advantage • World’s largest equipment fleet with flexibility to move between markets to match local demand • 1,700 engineers; over 200 focused purely on design • 30% of projects are ‘design and build’ where value engineering can reduce cost by up to 40% and save t
Slide 42: The people advantage
The people advantage Enabling high performance by investing in our people and expertise Learning and development programmes • Project Manager Academy • Field Supervisor Academy • Business Development Academy Emerging talent • More than 55 graduates, 66 apprentices and 70 interns and coops • Pitcairn
Slide 43: Financial performance since listing in 1994
43 2022 2021 2022 2020 2021 2019 2020 2018 2019 Financial performance since listing in 1994 2017 2018 TSR of 10.5% CAGR vs. 7.2% FTSE All Share CAGR (at 3 Mar 2023) 2016 2017 2015 2016 Underlying operating profit (£m) 2014 2015 2013 2014 2012 2013 2011 2012 2010 2011 2009 2010 2008 2009 2007 2008 20
Slide 44: Keller fact sheet
Keller fact sheet • Established 1860, now world’s largest geotechnical specialist contractor globally • About 30% of our contracts are design and build, 50% are build only • Revenue by division: North America 64%; Europe 22%; AMEA 14%; (only <5% of business in UK) • Contracts over £5m revenue make u
Slide 45: Investor Relations contact
Investor Relations contact Caroline Crampton Group Head of Investor Relations +44 20 7616 7575 caroline.crampton@keller.com 45