Endeavour Group Ltd · ASX:EDV
Endeavour — H1 F22 Earnings Presentation
37 slides from Endeavour's earnings presentation, Feb 21, 2022
Slide 1: H1 F22 Investor Presentation
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Slide 2: Important notice and disclaimer
This presentation is dated 21 February 2022 and unless stated otherwise is current as at that date. This presentation contains summary and general information about Endeavour Group Limited and its controlled entities (together, the Group or Endeavour Group), and Endeavour Group’s activities as at th
Slide 3: Acknowledgement of Country
Acknowledgement of Country
Slide 4: Creating a more sociable future together
Creating a more sociable future together Our Values We’re real We’re We’re inclusive responsible Our Ways We work We’re team We endeavour of Working with spirit players for better 4
Slide 5: Steve Donohue, Chief Executive Officer
Steve Donohue Chief Executive Officer
Slide 6: A focused and resilient business
A focused and resilient business Sales $6.3b -0.3% • Our first 6 months has demonstrated the structural resilience of the business and the agility and adaptability of our team EBIT $556m +3.2% • Strong overall performance as Retail provided a natural hedge to Hotels Profit after tax $311m +15.6% • I
Slide 7: Maintaining high level of sales, with strong EBIT uplift
Maintaining high level of sales, with strong EBIT uplift Retail sales remain high ● Switch from on-premise purchasing Sales $5.7b -0.6% ● Net new stores (24) and renewals (49) ● Premiumisation; and New and more personalised offerings $461m +10.0% ● EBIT Compared to H1 F21, sales declined slightly as
Slide 8: Performance impacted by COVID-19 lockdowns and restrictions
Performance impacted by COVID-19 lockdowns and restrictions Significant COVID-19 impacts again this half ● Only 30% of total trading days when all hotels were open Sales $680m +1.9% +1.9% ● Team members demonstrated resilience and agility in managing through a highly volatile period -0.8% Improvemen
Slide 9: Retail and Hotels investment in digital capability
$35m ¹ invested in endeavourX further building our digital capability and enhancing our understanding of customer preferences to deliver more personalised experiences • Personalisation capabilities scaled Retail across brands and channels driving incremental sales and profit in store Online sales $6
Slide 10: Deep customer insights driving innovative product development
Deep customer insights driving innovative product development • Unparalleled ability through customer insights to identify trends, innovate and bring products to market at speed • 36% of Pinnacle sales are new products launched in the last 3 years • New and innovative products driving category growt
Slide 11: Credential-led brands from leading wine regions
Through credential-led brands from leading wine regions, Endeavour is building an increasing presence in the premium and luxury wine segments • Our evolving Paragon Wine Estates brand portfolio has seen significant growth and continues to build credentials through acclaim and awards • We have proven
Slide 12: Committed to leaving a positive imprint
At Endeavour, we're committed to leaving a positive imprint on each other and on the communities we serve. In October, we launched our first Sustainability Strategy and have made good progress in H1 F22: Responsibility and Community People Advocating responsible choices and supporting Championing in
Slide 13: Shane Gannon, Chief Financial Officer
Shane Gannon Chief Financial Officer
Slide 14: Cash and capital foundations
Financial Cash and Investments Delivering for results capital foundations shareholders +11.3% $932m 17.4¢ 2 year1 $6.3b -0.3% Sales 1 year Operating cash inflow 11.3% Earnings per share ROFE $556m +3.2% $1b 12.5¢ EBIT Debt headroom Interim dividend $150m per share Capital expenditure $311m +15.6% $6
Slide 15: Strong growth in Group Profit after income tax
+15.6% increase Strong growth in Group Profit after year-on-year income tax underpinned by growth in Retail EBIT 42 31 Other EBIT of ($26m) (H1 F21 ($2m)) (1) (6) • Includes corporate costs of operating as (24) $311m a standalone business $269m • In line with ($55m) -($60m) full year guidance Lower
Slide 16: Retail EBIT growth from higher margin new products
+10.0% increase year-on-year EBIT to Sales %: 8.1% (+79bps) Elevated sales levels continued, 18.4% ahead of H1 F201 Strong gross margin: • Higher margin new products and $461m Pinnacle Drinks demand $419m • Premiumisation • Maintained competitive pricing, in less promotion driven market CODB rate in
Slide 17: Hotels EBIT in line despite COVID-19 trading
-0.8% Financial outcomes in line with H1 F21 decline year-on-year notwithstanding the considerable EBIT to Sales %: 17.8% (-50bps) volatility in the half • H1 F22 trading still below “normal” due to $122m $121m COVID-19 impacts which impacted both H1 F22 and H1 F21 (Sales +1.9% on H1 F21 and -26.0%
Slide 18: Retail and Hotels sales
% million +18.4% % million -26.0% Retail Sales 2-year change1 Hotel Sales 2-year change1 6000 1000 800 4000 600 400 2000 200 0 0 H1 F192 H2 F192 H1 F202 H2 F202 H1 F21 H2 F21 H1 F22 H1 F192 H2 F192 H1 F202 H2 F202 H1 F21 H2 F21 H1 F22 Retail Hotels • Retail sales grew strongly over two years with si
Slide 19: Cash generative, long term debt facilities in place
CASH GENERATIVE LONG TERM DEBT FACILITIES IN PLACE Strong cash realisation ratio of 161% in H1 F22 reflects the • Net debt $667m at end of H1 F22 seasonality of cash flow associated with Retail sales in the • Repayment of $225 million in January (post balance Christmas period date) • Committed undra
Slide 20: Disciplined capital allocation priorities
Strong free cash flow deployed in line with our disciplined capital allocation priorities Target outcomes consistent with investment 1 grade credit metrics Leverage ratio1 of 3.1x Solid shareholder dividend distributions 2 12.5c interim dividend per share at a 71.9% payout ratio Capex prioritised to
Slide 21: Focus of H1 F22 investments
Other 3% Focus of H1 F22 investments Hotels Retail Expanding and enhancing our network $150m 46% 51% ● Renewed 22 hotels and 49 retail stores ● 30 new stores and 3 hotels ● 2 hotels acquired post balance date Pinnacle Drinks Growing digital capability and engagement Sustaining 2% 17% ● Increased inv
Slide 22: Steve Donohue, Chief Executive Officer
Steve Donohue Chief Executive Officer
Slide 23: Trading through COVID-19 phases and current trading
JUL - MID OCT MID OCT - EARLY DEC MID DEC - FEB Widespread lockdown & Initial reopening in NSW & VIC Omicron - Living with COVID-19 extensive restrictions • Hotels in NSW reopened, with • Hotels trading weakened again in • The most significant Hotel closures restrictions in place, on 11 Oct and the
Slide 24: Continue to manage and respond to COVID-19 impacts
Continue to manage and respond to COVID-19 impacts Commence work on our technology transition roadmap Accelerate our digital and data led transformation Unlock further property opportunities in new sites, network renewal and redevelopments Continue to activate our Endeavour culture, purpose and sust
Slide 25: Robust H1 F22 financial results
Robust H1 F22 financial results Investing for the future Resilient business and adaptable team Expanding and renewing Retail and Hotel networks Strong margin performance in Retail Investing in endeavourX to enhance customer insights, digital capabilities and offerings Hotel performance impacted by C
Slide 26: Questions
Steve Donohue Chief Executive Officer Shane Gannon Chief Financial Officer
Slide 27: Appendix
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Slide 28: Tailwinds and Headwinds
Tailwinds Headwinds • In-home consumption continuing to support Retail sales • Cycling retail trading highs that surged from March 2020 • Digital investments driving strong growth in online retail and continued through F21 • Premiumisation, moderation and craft trends continuing • Deleverage of Reta
Slide 29: Network
16 4 Network New/ Closures/ Network 52 413 132 as at acquisitions disposals as at 27 June ‘21 2 Jan ‘22 24 144 28 Dan Murphy's 251 6 - 257 19 91 33 2 3 83 390 55 BWS 1,392 241 (6) 1,410 Retail 1,643 30 (6) 1,667 77 321 85 1 Hotels 339 3 - 342 (incl managed clubs) 1 2 35 5 Dan Murphy’s Bottling facil
Slide 30: Trade working capital
$ million H1 F22 F21 H1 F21 2 JAN 2022 27 JUN 2021 3 JAN 2021 Trade working capital 235 483 355 Lease assets 3,132 3,117 3,150 Property, plant and equipment 1,898 1,887 1,838 Trade working capital Intangible assets 3,852 3,845 3,838 Other liabilities (net) (797) (610) (725) Lower inventory levels du
Slide 31: Cash realisation ratio and cash flow
H1 F22 H1 F21 $ million CHANGE (27 WEEKS) (27 WEEKS) EBIT 556 539 17 Depreciation and amortisation expenses 267 255 12 Changes in trade working capital 248 181 67 Changes in assets and liabilities and other non-cash items 136 172 (36) Cash realisation ratio of 161% Finance costs on borrowings paid (
Slide 32: Group results H1 F22 vs H1 F21
$ million H1 F22 H1 F21 CHANGE Sales Retail 5,657 5,690 (0.6%) Hotel 680 667 1.9% Total sales 6,337 6,357 (0.3%) Profit for the half Retail EBIT 461 419 10.0% Hotel EBIT 121 122 (0.8%) Other (26) (2) n.m. Total EBIT 556 539 3.2% Finance costs (105) (136) (22.8%) Profit before income tax 451 403 11.9
Slide 33: Retail results
H1 F22 H1 F21 CHANGE Sales ($m) 5,657 5,690 (0.6%) EBITDA ($m) 604 552 9.4% Depreciation and amortisation ($m) (143) (133) 7.5% EBIT ($m) 461 419 10.0% Gross margin (%) 23.7% 22.3% +141bps Cost of doing business (%) 15.5% 14.9% +62bps EBIT to sales (%) 8.1% 7.4% +79bps Sales per square metre ($) 20,
Slide 34: Hotels results
H1 F22 H1 F21 CHANGE Sales ($m) 680 667 1.9% EBITDA ($m) 245 244 0.4% Depreciation and amortisation ($m) (124) (122) 1.6% EBIT ($m) 121 122 (0.8%) Gross margin (%) 84.4% 84.8% -36bps Cost of doing business (%) 66.6% 66.4% +17bps EBIT to sales (%) 17.8% 18.3% -50bps Funds employed ($m) 3,905 3,908 (0
Slide 35: Glossary of terms
Term Description Cash realisation ratio Operating cash flow as a percentage of Group net profit after tax before depreciation and amortisation Measure of sales which excludes stores that have been opened or closed in the last 12 months and demonstrable Comparable sales impact on existing stores from
Slide 36: Equivalent F20 and Equivalent F19 information
EQUIVALENT F20 AND EQUIVALENT F19 INFORMATION • Equivalent F20 Financial Information relates to the results of what was previously known as Woolworths’ Woolworths' Drinks and Hotels businesses were only transferred Drinks and Hotels businesses for the full 52-week to, and merged with, Endeavour Grou
Slide 37: Endeavour Group Limited
Endeavour Group Limited ACN 159 767 843 | 26 Waterloo Street, Surry Hills, NSW, 2010