Slide 1: FY23 Preliminary Results
FY23 Preliminary Results Halfords Group PLC 21st June 2023 1
Slide 2: Agenda
Agenda FY23 Financial Performance Jo Hartley Business & Strategic Update Graham Stapleton Q&A 2 Classification: Restricted
Slide 3: Financial Performance
FINANCIAL PERFORMANCE Jo Hartley 3 Classification: Restricted
Slide 4: Basis of financial information
Basis of financial information • Covers the 52-week period from 2 April 2022 to 31 March 2023 • All comparators are on a three-year basis unless otherwise stated (note - from FY24 we will revert to one-year comparison only) • All figures are post IFRS 16 unless otherwise stated 4 Classification: Res
Slide 5: Advantages and headwinds mitigated over £90m
Strategic transformation and agile trading helped mitigate over £90m of headwinds. Platform built to drive profit progression in FY24 and stronger growth in the mid-term. Headwinds Macro Low consumer Skilled labour Record inflation USD FX rate confidence shortages Advantages Structural Growing Conti
Slide 6: Underlying PBT outturn within guided range of £50-60m
Underlying PBT outturn within our guided range of £50-60m. Significant Group Strong LFL Gross Margin Revenue Growth Growth Impacted by Mix Group Total Revenue Group Gross Margin Group LFL Growth Yo3Y 49.3% Growth Yo3Y +39.5% +13.4% (-180bps Yo3Y) Challenging Cost Resilient Profit Strong Balance Envi
Slide 7: Profitable sales growth offset by extraordinary cost inflation
Profitable sales growth offset by extraordinary cost inflation. FY23 vs. FY22 vs. FY20 +£211.1m +£451.1m Vs FY22 – Strong revenue growth driven by Retail Motoring and Revenue £1,593.5m Autocentres. +15.3% +39.5% Vs FY22 – Retail margin down 230bps, and Autocentres down 500bps Gross margin (%) 49.3%
Slide 8: Strong revenue growth driven by service-related sales
Strong revenue growth driven by the strategically important service-related sales, now representing 48% of Group Revenue. Group Revenue Bridge Total £58m Revenue £41m Total £305m £1,594m Revenue -£65m £1,142m £113m Retail sales densities up over Product +10%, with product revenue Revenue decline of
Slide 9: Structural transformation, agile trading and cost control offset headwinds
Structural transformation, agile trading and cost control largely offset over £90m of cost and market headwinds. £91.2m of market and cost headwinds. 9
Slide 10: £51.5m PBT delivered despite over £95m headwinds
£51.5m PBT delivered despite cost and market headwinds of over £95m, with headwinds exceeding the profit made in FY22. £95.4m of market and cost headwinds. 10
Slide 11: Operating cost growth driven by acquisitions and variable costs
Operating cost growth driven by acquisitions and variable costs associated with L4L growth. Cost and efficiency savings offset operating cost inflation and investments. Group Operating Costs Bridge vs FY22 £16.9m £4.0m £14.2m £11.2m £75.1m -£16.7m -£3.6m £20.3m of cost & efficiency covered on the ne
Slide 12: Full year cost and efficiency savings of £20.3m
Full year cost and efficiency savings of £20.3m exceeded original target of £15m. Support Costs Organisation Structure Property Costs Continued Cost Culture c.£9.0m savings c.£4.6m savings c.£3.6m savings c.£3.1m savings 12 Classification: Restricted
Slide 13: Autocentres Group
AUTOCENTRES GROUP 13 Classification: Restricted
Slide 14: Underlying Autocentres businesses continued to grow
The underlying Autocentres businesses continued to grow, despite the consumer tyre market impact within National. FY23 vs. FY20 vs. FY22 Autocentres Group Gross Margin (£ / %) +220.1% Yo3Y +61.2% YoY FY23 £309m 50.4% Revenue £613.9m +31.6% 3LFL +15.4% LFL -1,510bps FY22 £211m 55.4% Gross Margin 50.4
Slide 15: Autocentres Group EBIT vs FY22
Underlying growth and acquisition synergies delivered in line with the business case were offset by significant tyre market impact and inflationary headwinds. Autocentres Group EBIT vs FY22 £5.8m -£1.3m -£0.5m £2.4m £4.1m £14.4m -£6.7m £10.4m -£7.8m * Impact of owning National Tyres full a full year
Slide 16: Retail
RETAIL 16 Classification: Restricted
Slide 17: Retail: strong trading in needs-based motoring products
In Retail, strong trading in needs-based motoring products, alongside a focus on cost and efficiency has helped partially mitigate significant COGs inflation. Gross Margin Bridge – year-on-year FY23 vs. FY20 vs. FY22 0.9% +3.1% Yo3Y -2.2% YoY Revenue £979.6m +9.9% 3LFL -1.8% LFL 0.7% 0.6% 4.1% +10.3
Slide 18: Cash & Balance Sheet
CASH & BALANCE SHEET 18 Classification: Restricted
Slide 19: Continued strong cash position
Continued strong cash position, allowing investment in the business and returns to shareholders. £154.8m 19 Classification: Restricted
Slide 20: Net debt excluding lease debt of £1.8m
Net debt excluding lease debt of £1.8m. Leverage including lease debt within guided range. Net Debt £m Net Debt : EBITDA (FY23) 344.9 348.7 1.87 391.0 346.9 0.01 1.8 (46.1) Net Debt : EBITDA Net Debt : EBITDA (pre lease debt) (post lease debt) FY23 FY22 (Cash)/Debt Lease debt • Net debt (post lease
Slide 21: Progressive dividend for FY23
Progressive dividend for FY23, following proposed 7p final dividend. Capital Allocation Priorities Maintaining a prudent Dividend per share balance sheet Investment for growth 7.00 6.00 Final Final M&A focused on Autocentres 6.18 5.00 Interim Final 3.00 Interim Interim 3.00 Dividend covered by 1.5x
Slide 22: FY23 Summary: Resilient results
FY23 Summary: Resilient results, against an exceptionally challenging backdrop. 1. £51.5m of PBT delivered, within guided range despite over £90m of year-on-year market and inflationary headwinds. 2. Significant revenue growth of +15.1% year-on-year and L4L growth at +2.4% with increased market shar
Slide 23: Business & Strategic Update
BUSINESS & STRATEGIC UPDATE Graham Stapleton 23 Classification: Restricted
Slide 24: Supporting Motoring customers through cost-of-living crisis
We have supported our Motoring customers through the cost-of-living crisis. Motoring Value Campaigns Industry Leading Market Leading Finance Offers Motoring Club 24 Classification: Restricted
Slide 25: Customers have responded to our investments
Our customers have responded to our investments to support their motoring needs. Awareness increase FY23 Tyre +4.6% Market Share +0.4ppts Consideration increase +7% FY23 Motoring Value Perception Market Share increase +2.6ppts +7.9% 25 Classification: Restricted
Slide 26: Delivering against our Capital Markets Day strategy
As we outlined at our Capital Markets Day, we are delivering against our strategy. Support our customers through Inspire our customers with a Enable a lifetime of motoring an integrated, unique and more differentiated, super-specialist offer and cycling convenient services offer To access the Halfor
Slide 27: Changing shape of our business
The changing shape of our business evidences our strategic shift into a more resilient motoring services and B2B focused business. FY19 FY23 Group Revenue £1.1bn £1.6bn 24% Revenue from Services 48% Revenue from Motoring 66% 77% 12% 24% Revenue from B2B 27
Slide 28: FY23 Strategic Progress
FY23 STRATEGIC PROGRESS 28 Classification: Restricted
Slide 29: FY23 transformation centred on strategic priorities
Our FY23 transformation has centered around 4 strategic priorities … Building a Optimising the Nationwide, Leveraging our shopping Developing our market leading unique data experience across SaaS business garage services capability a town business 29 Classification: Restricted
Slide 30: Garage services: building physical infrastructure
In FY23 we focused on building our unique physical infrastructure … Garages: 643 Vans: 748 Garage services Acquisition of National Tyres FY23 Acquisition of Lodge Tyre FY22 Acquisition of Tyres On The Drive, & Acquisition of McConechy’s Universal Tyre FY21 Halfords Mobile FY20 Expert launched FY18 G
Slide 31: Lodge Tyre acquisition: largest Commercial Tyre Service Provider
The acquisition of Lodge Tyre has made Halfords the UK’s largest Commercial Tyre Service Provider. • Lodge completes full UK coverage of commercial vehicle tyre & service market. Garage services • Already delivering business case. Additional improvements in performance at McConechy’s and Universal v
Slide 32: Delivered £6m National Tyres synergies target
We delivered our £6m National Tyres synergies target in FY23. Key successes FY23 Value area Synergy plan Progress synergy delivered Garage services Tyre & parts economies of scale £5m+ 128,000 £6m+ Grow scale Halfords to use Viking network (Purchasing) Annualised savings Wholesale tyres to negotiate
Slide 33: Building relationships with 1.7m Motoring customers
We are building valuable relationships with 1.7m Motoring customers. FY23 highlights: Club Members 1.7m Data Record NPS +4pts 33 Classification: Restricted
Slide 34: Club has delivered tangible financial benefits
The Club has already delivered tangible financial benefits to the Group … FY23 highlights: Data Higher Group cross-shop 15% Vs 4% for non- members *Excludes subscription revenues. All values exclude VAT. Customer numbers for full financial year. All other numbers from customers signing up during fir
Slide 35: Halfords in a town
Halfords in a town In FY23, we rolled out the more capital-efficient elements of our Fusion trial to 50 towns. Upgrading the retail car park Solution selling service and referral model 35 Halfords Fusion Video Link Classification: Restricted
Slide 36: SaaS signed its third major international client
signed its third major international client. - Mobivia becomes first major European client contracted. Mobivia operates 9 brands over 2,000 sites. - Successful launch of Avayler in Germany via Mobivia’s ATU brand SaaS - Extended US reach with new contract via Tire Pro, a 600- garage chain who are no
Slide 37: FY24 Year-to-Date
FY24 YEAR-TO-DATE 37 Classification: Restricted
Slide 38: Trading year-to-date has been strong
Trading year-to-date has been strong • Positive Group LFL growth year-to-date. • Overall, sales performance has been ahead of our expectations underpinned by strong market share performance across all key categories. • Highest recorded market share results ✓ Consumer Tyres ✓ Oils • Overall, markets
Slide 39: FY24 Focus
FY24 FOCUS 39 Classification: Restricted
Slide 40: Leverage omnichannel platform to improve returns
‘‘ To fully leverage our unique, digital and data-enabled omnichannel platform, driving improved financial returns. ‘‘ 40 Classification: Restricted
Slide 41: Plan to get £90-110m PBT in the mid-term
At our Capital Markets Day, we outlined a plan to get £90-110m PBT in the mid-term. Market recovery, share, cost inflation, and efficiency were the most material moving parts. Group PBT Bridge - FY23 to mid-term Group Revenue c.£1.6bn Group Revenue c.£1.9bn Operating Margin c.3-4% Operating Margin c
Slide 42: FY24 four building blocks
FY24 represents Year 1 of our CMD plan. Our expectations in this year are underpinned by the following 4 building blocks. 1 Inflation Inflation 2 Cost CostEfficiency & Efficiency 3 Market MarketRecovery Volumes 4 Market Share Market Share 42
Slide 43: Inflation: expected £46m in the mid-term
Inflation At the CMD we highlighted an expected £46m of inflation in the mid-term … 43
Slide 44: FY24 expected c.£30m of inflation
In FY24, we expect to see c.£30m of this inflation – nearly two thirds of the mid-term expectation. Inflation FX Rate Utilities Pay Freight (c.84% of FY24 requirement (c.75% of FY24 requirement (Assumes National Minimum (c.50% saving year-on-year bought at rate of $1.22) bought) Wage and general rat
Slide 45: Cost & Efficiency: expected £51m savings mid-term
Cost & Efficiency At the CMD we highlighted an expected £51m of cost savings in the mid-term … 45
Slide 46: FY24 c.£30m cost and efficiency savings
In FY24, we expect to deliver c.£30m of cost and efficiency savings – nearly 60% of our mid-term target. Cost & Efficiency Outsourcing / Property & “Good Not For Product Cost Organisational Warehousing Resale” Reduction Structure Savings Reduction Approximately 1/3 of the required cost and efficienc
Slide 47: Market Volumes: mid-term growth expectations
At the CMD we highlighted that we expected mid-term growth across Retail Motoring, Cycling, and Consumer Tyres … Retail Autocentres Market Volumes Retail Motoring Cycling Consumer Tyres Motoring Servicing Market Size c.£4bn c.£1.2bn c.£2.2bn c.£9bn FY23 Market Volumes c.-24% c.+4% Broadly flat c.-14
Slide 48: FY24 market volume expectations
In FY24, we expect to see growth across both Retail Motoring and Consumer Tyres, a resilient performance in Motoring Servicing, and a small decline in Cycling. Retail Autocentres Market Volumes Retail Motoring Cycling Consumer Tyres Motoring Servicing Market Growth Assumed over Broadly +2% c.+18% c.
Slide 49: Tyre and Motoring Products markets ahead of expectations
To date, the Tyre and Motoring Products markets are ahead of expectations. Cycling performance impacted by customer sentiment and poor weather. Retail Autocentres Market Volumes Retail Motoring Cycling Consumer Tyres Motoring Servicing Growth Assumed Year 1 Broadly FY24 vs FY23 c.+0.5% c.-1% c.+2.6%
Slide 50: Market Share: mid-term share expectations
At the CMD, we highlighted that we expected to take share across all of our major markets over the mid-term. Retail Autocentres Retail Motoring Cycling Consumer Tyres Motoring Servicing Market Share Market Size c.£4bn c.£1.2bn c.£2.2bn c.£9bn Approximate Volume Share c.41.8% c.37.0% c.9.5% c.3.5% FY
Slide 51: FY24 expected to take share in all markets
In FY24, we expect to take share in all markets. Retail Autocentres Retail Motoring Cycling Consumer Tyres Motoring Servicing Market Share Approximate Volume Share +1.2% +2.0% +1.5% +0.3% Change Mid term Share expectation year 1 c.+0.6ppts c.+0.7ppts c.+0.2ppts +0.2ppts FY24 vs FY23 YOY YOY YOY YOY
Slide 52: Year-to-date share grown across all categories
Year-to-date, we have exceeded targets and grown share across all categories. Retail Autocentres Retail Motoring Cycling Consumer Tyres Motoring Servicing Market Share Share expectation year 1 c.+0.6ppts c.+0.7ppts c.+0.2ppts +0.2ppts FY24 vs FY23 YOY YOY YOY YOY April Share Movement c.+1.5ppts c.+3
Slide 53: Share gains supported by three major initiatives
Our share gains will be supported by three major initiatives in FY24 … 1 2 3 Market Share Growing our Leveraging our Major market leading significant improvements extended financial to utilisation car parts services offer across our proposition garage business 53
Slide 54: Market Share – Car Parts
Market Share – Car Parts We will establish our unique customer offer in the £1bn specialist parts market. We will create a unique parts offer We aim to own “the 4th B” - Brakes • Market leading convenience • As a major part of creating a unique parts offer, we and expertise – “Click & aim to lead th
Slide 55: Market Share – Financial Services
Market Share – Financial Services Last week we launched an industry leading “Buy Now Pay Later” offer. • Offer expected to be particularly beneficial to tyre proposition, which is typically a high invoice value, distressed purchase. 55
Slide 56: Market Share - Utilisation
Our utilisation plan is built upon improving the “tail” of garages which are c.15% below our company average performance. Market Share - Utilisation Garage utilisation distribution: Under-utilised “tail” Average garage population Highly utilised garages Potential to improve utilisation of Potential
Slide 57: Plan to deliver FY24 profit growth
We believe our plan will deliver year-on-year profit growth in FY24 and are comfortable with current analyst consensus of £53.3m. c.£53.3m £51.5m 1 2 3 4 FY23 FY24 Inflation Cost & Efficiency Market Volumes Market Share PBT PBT Guidance See Appendix for further FY24 guidance detail 57 Classification
Slide 58: Conclusion & Summary
Conclusion & Summary 1. FY23 was another year of strategic progress, with a solid financial performance given the context and economic backdrop. 2. Year-to-date trading has been strong, with good market share and LFL growth. 3. FY24 will see us face further market and cost headwinds, but our plans t
Slide 59: Q&A
Q&A 59 Classification: Restricted
Slide 60: Contact and Newsflow
Contact and Newsflow For further information, please go to www.halfordscompany.com or contact: Andy Lynch Head of Investor Relations and Corporate Finance andrew.lynch@halfords.co.uk Next newsflow: 6 September 2023: FY24 20-week trading update 60 Classification: Restricted
Slide 61: Appendix
APPENDIX 61 Classification: Restricted
Slide 62: FY23 Group Operating Cost Breakdown
Appendix 1 - FY23 Group Operating Cost Breakdown FY23 Group Operating Cost Breakdown Other £61m Administrative Cost £147m Payroll £325m FY23 £722m Rent & Rates £131m Warehousing £57m 62
Slide 63: Further Guidance Detail
Appendix 2 – Further Guidance Detail ➢ We anticipate H1 PBT to be down YoY, and H2 to be up YoY, with the H1 variance impacted by the one-off FX credit taken in H1 FY23. ➢ We expect to invest some gross margin rate year-on-year, as we look to support customers through the cost-of-living crisis, whil