Genuit Group Plc · LSE:GEN
Genuit — Investor Day (November 2022)
44 slides from Genuit's investor day presentation, Nov 23, 2022
Slide 1: Genuit Group plc Capital Markets Day
Genuit Group plc Capital Markets Day 23 November 2022
Slide 2: Agenda and presenters
Agenda and presenters 10:30 Introduction Joe Vorih Paul James Chief Executive Officer Chief Financial Officer Strategy Update - Sustainable Solutions for Growth JV Matt Pullen Matthew Webber Business Overview Chief Operating Officer Managing Director – Climate Management Solutions - Climate Manageme
Slide 3: Evolution from plastic pipes to sustainable water and climate management
The Group has evolved from its heritage in plastic pipes to become a leading player in sustainable water and climate management 1980 1990 2000 2005 2010 2015 2020 2022 Continued new product development GROUP DEVELOPMENT Diversification through Movement Founded as a Shift to refocusing on core busine
Slide 4: Genuit has built a strong reputation, excelling in key capabilities
Genuit has built a strong reputation, excelling in key capabilities National Builders’ Merchant Polypipe Civils has established a quality reputation based off its advanced knowledge of the water Deep expertise in management landscape…” core applications Educational Sector Client Adey’s customer serv
Slide 5: The next evolution of Genuit
The next evolution of Genuit OF TODAY OF THE FUTURE • Evolved significantly from legacy piping focus, • Deep expertise and brand equity in water and known for: climate solutions ‒ application expertise in pockets of Transition excellence underpinned by: • Proven leadership and partner of choice in ‒
Slide 6: Sustainable Solutions for Growth
Sustainable Solutions for Growth 1 2 3 4 5 Focus on Strengthen Simplify the Create Value Increase higher position by Business through Genuit solution growth, being lowest Business capability via sustainability carbon System growth- driven choice enabling M&A markets for our customers Invest in our p
Slide 7: 1. Focus on Higher Growth, Sustainability Driven Markets
1. Focus on Higher Growth, Sustainability Driven Markets • Due to the Group’s expansive M&A programme, Genuit now operates in more segments, with a Total Addressable Market (TAM) of £9bn • The Served Addressable Market (SAM) we can play in with our current business model and portfolio is £3bn 9 Sour
Slide 8: 1. Focus on Higher Growth, Sustainability Driven Markets
1. Focus on Higher Growth, Sustainability Driven Markets • Genuit’s SAM is predicted to grow faster than the broader UK construction market in the years ahead, with a mid term CAGR of 1.5% in contrast to broader market growth of 0.8% • Genuit has number one or two positions in its key segments, prov
Slide 9: 1. Focus on higher growth, sustainability driven markets
1. Focus on higher growth, sustainability driven markets Climate Management Segment Water Management Segment • Regulatory Tailwinds Part L, Part F, • Regulatory tailwinds around SUDs, Future Homes Standard Floods & Water Management Act (FWMA) and need to design for • Increasing need for integrating
Slide 10: 2. Strengthen position by being lowest carbon choice
2. Strengthen Genuit’s position by being lowest carbon choice for our customers 60% 45% 45% Plastics based products The potential reduction FTSE companies have have lower life cycle of the carbon impact in net zero targets, along carbon emissions than construction projects by with major developers l
Slide 11: 2. Strengthen position by being lowest carbon choice
2. Strengthen Genuit’s position by being lowest carbon choice for our customers • We have submitted our Science Based Targets (SBTs) • By 2027 we will reduce Scopes 1 & 2 emissions by a further 25% • Recognising our role in driving carbon from our supply chain, we will ensure 70% of our suppliers, c
Slide 12: 3. Simplify the business – Genuit today
3. Simplify the business – Genuit today Residential Systems Ventilation • Divisions have largely been a & Climate consolidation layer • Difficult to sell full solutions • Fragmented businesses were entrepreneurial, but carried significant extra cost • Reporting unhelpful for transparency and account
Slide 13: 3. Simplify the business – Genuit moving forward
3. Simplify the business – Genuit moving forward Climate Management Water Management Sustainable Building Solutions Solutions Solutions Addressing the drivers for low Driving climate adaptation and Providing a range of solutions to carbon heating, cooling and resilience through integrated reduce the
Slide 14: 4. Create value through the Genuit Business System
4. Create value through the Genuit Business System Companies with demonstrated lean results • Industrials: Danaher, Eaton, Honeywell • UK: Spectris, Unipart • Construction: ADS, St-Gobain Genuit – Early results of lean thinking • 20% Improvement in order level OTIF • £2m One time energy savings • £2
Slide 15: 5. Increase solutions capability via growth-enabling M&A
5. Increase solutions capability via growth-enabling M&A CASE STUDY M&A has enabled creation of leading climate management proposition, now representing over 30% of Group EBIT 1. Cross sell solutions Accelerate UK leader in ventilation Low carbon heating 2. Complete portfolio, adding Growth performa
Slide 16: Investing in our people & culture
Investing in our people & culture Talent Engagement Culture Key additions to leadership team, Investing in HRIS - Workday D&I Programme roll out including Group Talent Director Investing in Engagement Measurement Talent & Development process in platform - Peacon We believe a diverse team of talented
Slide 17: Sustainable Solutions for Growth - mid-term outcomes
Sustainable Solutions for Growth - mid-term outcomes Through cycle growth above +2-4% Focus on higher growth, 1 sustainability-driven markets UK construction Strengthen position by being 2 lowest carbon choice for our Operating margin 20%+ customers 3 Simplify the business Cash conversion >90% 4 Cre
Slide 18: Business units overview
Sustainable Solutions for Growth Business units overview 20
Slide 19: Focused, experienced Business Leadership Team
Focused, experienced Business Leadership Team MATTHEW STEVE STEVE WEBBER DURDANT-HOLLAMBY CURRIER Managing Director Managing Director Managing Director Climate Management Solutions Water Management Solutions Sustainable Building Solutions • Joined Genuit Group through the • Joined Genuit Group 4 yea
Slide 20: Climate Management Solutions
Climate Management Solutions Matthew Webber 22
Slide 21: Climate Management Solutions
Climate Management Solutions EBIT Subsectors Mid Term CAGR Revenue Margin Heating Systems 5% 2021 £153m 20.2% Ventilation and Cooling 3% Key Segments • Commercial and Residential Ventilation Genuit and • Underfloor Heating (UFH) solutions including competitors’ share of £0.9bn renewable energy sourc
Slide 22: Climate Management Solutions: organic growth above market sector
Climate Management Solutions Organic growth above market sector Blended Genuit • We are focused on low carbon and efficiency solutions, which segment CMS have stronger tailwinds than H&V average Mid term 4% 7-9% CAGR • Realisation of cross-selling synergies • Packaging of MVHR to UFH for whole house
Slide 23: Climate Management Solutions: new product development & inorganic opportunities
Climate Management Solutions New product development & inorganic opportunities Residential Multi-occupancy The opportunity landscape is broad and offers significant growth synergies • Future low carbon heating requires integrating systems/technologies to optimise performance • This provides a landsc
Slide 24: Water Management Solutions
Water Management Solutions Steve Durdant- Hollamby 26
Slide 25: Water Management Solutions
Water Management Solutions EBIT Mid term CAGR Revenue Margin Mid term Sector Growth 1% 2021 £170m 11.0% Key Segments • Sustainable Urban Drainage Genuit and competitors’ • Green urbanisation share of £0.8bn SAM (2021) Percent of billions of • High-capacity stormwater drainage GBP (MSP) *Market secto
Slide 26: Water Management Solutions: organic growth above market sector
Water Management Solutions Organic growth above market sector • Attractive Higher Growth Subsegments Market Genuit • Green urbanisation forecast to grow between 5-10% CAGR segment WMS backed by regulatory drivers such as UK Government Green Mid term 1% 3-4% Financing CAGR • Entry into installation a
Slide 27: Green Surfaces – Case Study
Green Surfaces – Case Study
Slide 28: Water Management Solutions: new product development & inorganic growth
Water Management Solutions New Product Development & Inorganic growth Our portfolio addresses interconnected aspects of water management, served by a fragmented number of players. • Our key opportunities are based around range completion and sustainability focus • We are able to leverage these addit
Slide 29: Sustainable Building Solutions
Sustainable Building Solutions Matt Pullen 31
Slide 30: Sustainable Building Solutions
Sustainable Building Solutions £1 billion market Genuit and competitors’ share of SAM (2021) EBIT Percent of billions of GBP (MSP) Revenue Margin 2021 £265m 17.6% Key Segments From • Residential & Commercial drainage and • Internal water distribution systems (H&C) To • Roofing, floor and wall ventil
Slide 31: Sustainable Building Solutions: our market and growth opportunity
Sustainable Building Solutions Our market and growth opportunity Single family Market Genuit residential home Segment SBS Mid term 1% 2-3% CAGR Strong brands and market shares - well positioned to benefit from: • Structural housing shortage • Modern methods of construction to Multi Occupancy address
Slide 32: Creating value through decarbonisation
Sustainable Building Solutions Creating Value and Growth for our customers through decarbonisation • Leveraging our expertise in material science to Genuit has sector leading credentials create sustainable choices for specifiers, developers and contractors In 2021 Genuit • Net zero commitments of th
Slide 33: Creating value through MMC
Sustainable Building Solutions Creating Value and Growth for our customers through MMC • Modern Methods of Construction will play an increasingly significant role in supporting decarbonisation whilst helping to address the growing skills shortage: • generating less material waste • more efficient tr
Slide 34: Creating value through R&D and innovation
Sustainable Building Solutions Creating Value and Growth for our customers through investing in R&D and innovation • In addition to our sustainable materials focus, we continue to invest in R&D and innovate around driving efficiency and productivity benefits for installers • Innovation of hot and co
Slide 35: Simpler and leaner organisation to unleash value creation
Simpler and leaner organisation to unleash value creation and the potential of the Genuit Group Climate Management Water Management Sustainable Building Solutions Solutions Solutions Addressing the drivers for Driving climate adaptation Providing a range of low carbon heating, cooling and resilience
Slide 36: Financial Framework and Targets
Financial Framework and Targets Paul James 38
Slide 37: Pathway to shareholder value creation
Pathway to shareholder value creation Sustainable Growth Capital Allocation Outcomes in Free Cashflow Disciplined • Investment in innovation Market outperformance investment for • Investment in efficiency gains future growth • Investment in sustainability ROCE 15%+ of 2-4% Accretive • ROIC ahead of
Slide 38: Margin expansion opportunity
Margin expansion opportunity Operating Margin Expansion (“OMX”): the strategy will deliver • Simplify Business a four-percentage point increase in operating margin through • Leveraging group wide benefits in cost savings initiatives and increasing operational leverage procurement • Fewer organisatio
Slide 39: History of strong cashflow conversion
History of strong cashflow conversion Operating cashflow conversion 120 120% 102% 98% 100 97% 93% 100% 91% 79% 80 80% 60% £m 60 60% 40 40% 20 20% 0 0% 2015 2016 2017 2018 2019 2020 2021 Operating Profit Operating Cashflow * Operating cash flows after capital expenditure as a percentage of underlying
Slide 40: Acquisition criteria
Strong M&A track record 2021 2021 2018 2015 2015 1 Strong management teams 2 Above average market growth opportunities Acquisition criteria 3 Premium products 4 Sustainability at its core 5 Strong market share 6 Product differentiation, IP and expertise
Slide 41: Investment case
Investment case 1. Market leader with balanced exposure across market segments with outperformance underpinned by climate-driven growth 2. Genuit Business System focused on growth, lean and leadership 3. Substantial levels of innovation driving profitability to levels amongst those highest in the in
Slide 42: Summary
Summary 44
Slide 43: Sustainable Solutions for Growth - mid-term outcomes
Sustainable Solutions for Growth - mid-term outcomes Through cycle growth above +2-4% Focus on higher growth, 1 sustainability-driven markets UK construction Strengthen position by being 2 lowest carbon choice for our Operating margin 20%+ customers 3 Simplify the business Cash conversion >90% 4 Cre
Slide 44: Q&A
Q&A 46