Gwa Group Limited · ASX:GWA
Gwa — H1 FY2021 Earnings Presentation
33 slides from Gwa's earnings presentation, Feb 16, 2021
Slide 1: ASX cover letter for Half Year Results Presentation
16 February 2021 ASX On-Line Manager Company Announcements Australian Securities Exchange Dear Sir Financial Results Presentation for the Half Year Ended 31 December 2020 We enclose the following document for immediate release to the market: • Half Year Results Presentation On 16 February 2021 at 10
Slide 2: Results Presentation Half Year ended 31 December 2020
Superior Solutions for Water Results Presentation Half Year ended 31 December 2020 16 February 2021
Slide 3: Disclaimer
Disclaimer This Presentation contains projections and other prospective statements that represent GWA's assumptions and views, including expectations and projections about GWA's business, the industry in which it operates and management’s own beliefs and assumptions. Such matters require subjective
Slide 4: Overview
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Slide 5: Ongoing discipline in first half result – strong leverage to market recovery
Overview Financial results Strategic progress Outlook Appendix Ongoing discipline in first half result – strong leverage to market recovery First half result demonstrates ongoing discipline in challenging period (incl COVID-19 impact) ‒ Maintained leading market share position in Australia and grew
Slide 6: Group revenue improved in Q2 by +1.6% vs. Q1
Overview Financial results Strategic progress Outlook Appendix Group revenue improved in Q2 by +1.6% vs. Q1 Revenue vs pcp Commentary % of Group revenue Q1 Q2 1H Australia ‒ Q2 growth showing signs of recovery in builders and merchants’ sales but -2.2% impacted by slow down in project segment partic
Slide 7: Commercial / retail split impacting 1H momentum in top five customers
Commercial / retail split impacting 1H momentum in top five customers GWA sales to top 51 customers (Australia) - revenue vs pcp Customer A Customer B Customer C 1H 1H 1H 12.4% -0.6% -15.5% Customer D Customer E 1H 1H -3.0% -48.7% 6 1 Customers are shown in random order and notation A – E does not d
Slide 8: GWA maintains share in challenging market
Overview Financial results Strategic progress Outlook Appendix GWA maintains share in challenging market Market Data¹ ‒ Despite challenging market conditions GWA Australia Dec-20 MAT vs Market Segment Dec-19 MAT has held market share Residential detached housing -9% ‒ Demonstrates GWA’s commitment t
Slide 9: Financial results
02 | Financial results 3|Glar | meTHVEN | cLan« | dorf Group Limited
Slide 10: Continued operational discipline helps mitigate revenue decline
Overview Financial results Strategic progress Outlook Appendix Continued operational discipline helps mitigate revenue decline Normalised¹ EBIT Bridge (A$M) ‒ Volume/Mix: impacted by market decline, COVID-19, sales mix across geographies and customers coupled 45 with commercial segment slowdown in A
Slide 11: Normalised results
Overview Financial results Strategic progress Outlook Appendix Normalised¹ results ‒ Revenue down 4.4% primarily due to A$m Normalised¹ 1H FY20 1H FY21 % Change weaker construction conditions in Australia Revenue 206.3 197.2 -4.4% not fully offset by growth in International EBITDA 48.1 42.2 -12.2% ‒
Slide 12: Reported results
Overview Financial results Strategic progress Outlook Appendix Reported results ‒ EBIT includes $2.2m (pre tax) integration A$m Reported 1H FY20 1H FY21 % Change costs related to Methven which will yield Revenue 206.3 197.2 -4.4% savings FY22 onwards EBITDA 47.4 40.0 -15.6% ‒ NPAT change in line wit
Slide 13: Strong cash conversion maintained
Overview Financial results Strategic progress Outlook Appendix Strong cash conversion maintained ‒ Continued focus on strong cash management Cash flow from Continuing Operations A$M 1H FY20 1H FY21 ‒ Cash conversion¹ from operations very strong EBITDA 48.1 42.2 at 118% despite weaker Australian mark
Slide 14: Solid and improving financial position despite COVID-19
Overview Financial results Strategic progress Outlook Appendix Solid and improving financial position despite COVID-19 Metrics1 30 June 30 June 30 June 30 June 31 Dec ‒ GWA remains in a solid financial position to operate 2017 2018 2019 2020 2020 through the current challenging environment Net Debt
Slide 15: Strategic progress
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Slide 16: GWA evolving strategy for growth
Overview Financial results Strategic progress Outlook Appendix GWA evolving strategy for growth PURPOSE: We make life better through products, services and technologies that create superior solutions for people to enjoy and sustain water, our planet’s most precious resource. GOAL: We use our fixture
Slide 17: Continued progress on Methven integration opening up overseas growth opportunities
Overview Financial results Strategic progress Outlook Appendix Continued progress on Methven integration opening up overseas growth opportunities ‒ Integration cost synergies ahead of target with A$1.5m in 1H FY21; expect total of A$3m for full year FY21 ‒ The final stage of Methven integration incl
Slide 18: Market driven innovation and new product development
Overview Financial results Strategic progress Outlook Appendix Market driven innovation and new product development ‒ Creation of the Sydney and Auckland centres of excellence ‒ Technical, design and sourcing capability, test rigs ‒ Rolling 3-year innovation and NPD pipeline prioritised against mark
Slide 19: Strong market support for Caroma Smart Command®
Overview Financial results Strategic progress Outlook Appendix Strong market support for Caroma Smart Command® Progress ‒ Strong customer engagement in multiple commercial segments not only surrounding the system’s water saving technology but also its enhanced hygiene and touchless applications ‒ Ca
Slide 20: FY21 Outlook
04 | FY21 Outlook 0G GWA | meTHVEN | cLan« | dorf Group Limited
Slide 21: Expect some market improvement in Q4 FY21 / FY22
Overview Financial results Strategic progress Outlook Appendix Expect some market improvement in Q4 FY21 / FY22 Key area FY21 commentary1 ‒ Recent lead indicators in Australia (consumer sentiment, approvals, new housing loans, housing Market Activity – expect residential turnover) and Federal (HomeB
Slide 22: Results Presentation Half Year ended 31 December 2020
Superior Solutions for Water Results Presentation Half Year ended 31 December 2020 16 February 2021
Slide 23: Appendix
Lint 05 | Appendix - GWA - 221G
Slide 24: FY21 Key Assumptions
Overview Financial results Strategic progress Outlook Appendix FY21 Key Assumptions1 Area Assumption Australian market backdrop For 2H FY21 GWA expects its addressable market to grow between (4)% and +2% Customer stock on hand Not expecting any significant customer de/restocking in FY21 Price increa
Slide 25: Reconciliation – Reported NPAT to normalised NPAT
Overview Financial results Strategic progress Outlook Appendix Reconciliation – Reported NPAT to normalised¹ NPAT A$m 1H FY20 1H FY21 Normalised¹ Revenue 206.3 197.2 EBITDA 48.1 42.2 EBIT 38.1 32.1 NPAT 24.0 20.0 EPS 9.1c 7.6c Significant items Pre Tax (0.6) (2.2) Post Tax (0.4) (1.5) Reported Reven
Slide 26: 1H FY21 dividend increased on FY20 final
Overview Financial results Strategic progress Outlook Appendix 1H FY21 dividend increased on FY20 final 1.0 9.5 9.5 9.0 8.0 3.5 8.5 9.0 7.5 8.0 7.0 6.0 6.0 FY15 FY16 FY17 FY18 FY19 FY20 FY21 Interim ordinary Final ordinary Special 25
Slide 27: Increased presence in R&R segment and improved geographic diversification provide resilience
Overview Financial results Strategic progress Outlook Appendix Increased presence in R&R segment and improved geographic diversification provide resilience through the cycle Segment Category Basins, Sinks, Valves Resi Tubs & Baths 1% 19% 18% Multi-Resi 7% Sanitaryware 43% R&R Commercial Comm 11% 63%
Slide 28: Existing housing turnover remains volatile after decline in FY20
Overview Financial results Strategic progress Outlook Appendix Existing housing turnover remains volatile after decline in FY20 60 50 40 '000s per month 30 20 10 0 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21 Number of dwelling sales, Australia Linear (Number of d
Slide 29: Number of loans for construction and purchase of new dwellings increasing
Overview Financial results Strategic progress Outlook Appendix Number of loans for construction and purchase of new dwellings increasing Number of loans, per month 10,000 9,000 8,000 7,000 6,000 5,000 4,000 3,000 2,000 1,000 Total number of loans Construction of new dwellings Purchase of new dwellin
Slide 30: Quantity Completed Annually
Quantity Completed Annually 20,000 40,000 60,000 80,000 0 100,000 120,000 140,000 FY-1975 29 FY-1976 FY-1977 FY-1978 FY-1979 FY-1980 FY-1981 FY-1982 FY-1983 FY-1984 FY-1985 FY-1986 FY-1987 FY-1988 FY-1989 FY-1990 FY-1991 FY-1992 FY-1993 FY-1994 FY-1995 Actual FY-1996 ¹ 19% of GWA’s Australian revenu
Slide 31: Australian Market Context – Commercial work done expected to improve FY22 onwards
Overview Financial results Strategic progress Outlook Appendix Australian Market Context – Commercial work done expected to improve FY22 onwards, A&A to continue at high levels Commercial¹ Alterations & Additions² 60,000 12,000 50,000 10,000 $m Approved Annually $m Work Done 40,000 8,000 30,000 6,00
Slide 32: Residential completions expected to rise by 5,000 or 5% in FY21
Overview Financial results Strategic progress Outlook Appendix Residential completions expected to rise by 5,000 or 5% in FY21 (Completions’ lag vs. approvals ~12 months) Historical trends showing ~12 month lag when anchored on market turnaround 140,000 120,000 100,000 Quantity Completed Annually 80
Slide 33: Multi-residential completions expected to fall by 14% in FY21
Overview Financial results Strategic progress Outlook Appendix Multi-residential completions expected to fall by (12,000) or (14)% in FY21 (Completions’ lag vs. approvals ~12-24 months) Historical trends showing ~12-24 months lag when anchored on market turnaround 140,000 120,000 Quantity Completed