Big River Industries Ltd. · ASX:BRI
Big River Industries — Investor Presentation (May 2019)
37 slides from Big River Industries's investor presentation, May 1, 2019
Slide 1: Acquisition and Capital Raise
Big River Industries Limited (ASX:BRI) Acquisition and Capital Raise 1 MAY 2019
Slide 2: Important notices
NOT FOR RELEASE OR DISTRIBUTION IN THE UNITED STATES Important notices The following notice and disclaimer applies to this investor presentation (“Presentation”) and you are therefore advised to read this carefully before reading or making any other use of this Presentation or any information contai
Slide 3: Important notices (cont'd)
NOT FOR RELEASE OR DISTRIBUTION IN THE UNITED STATES Important notices (cont’d) Future performance This Presentation contains certain ‘forward looking statements’, including but not limited to projections, guidance on future revenues, earnings, margin improvement, other potential synergies and estim
Slide 4: Who is Big River?
Who is Big River? Big River is one of Australia’s leading manufacturers and distributors of speciality timber and building products ❑ A leading manufacturer and distributor of speciality timber and building products: ̶ Leading manufacturer of plywood and formply in Australia; ̶ Leading distributor o
Slide 5: Executive summary – acquisition and capital raising
Executive summary – acquisition and capital raising ❑ Big River has entered into an agreement to acquire 100% of Plytech Pty Ltd and Decortech Pty Ltd (separately branded with common ownership; together the “NZ Acquisitions”; the “Transaction”) and is in advanced discussions with additional acquisit
Slide 6: Company background
1 – Company background 6
Slide 7: History of Big River
History of Big River Distinguished history of approximately 100 years, with the Company operating successfully across a number of market cycles Revenue (A$m) CAGR (%) (2000-19) 8.8% GFC 211 216 171 177 146 150 132 131 139 133 132 Post-GST 124 100 86 77 58 66 44 38 43 2000 2001 2002 2003 2004 2005 20
Slide 8: Our business today
Our business today Diversified by geography, industry segment and end ❑ Big River targets 3 segments: markets ‒ Formwork supplies Target segments ‒ Building products ‒ Plywood & specialty Detached Housing 4% 7% Commercial 11% 29% High Density Residential Revenue by Medium Density Residential end mar
Slide 9: Trade distribution – market position
Trade distribution – market position Big River’s vision is to be ‘Australia’s leading diversified building products distribution business to trade contractors’ Fragmented market, with ~700+ un-bannered privately owned building materials outlets Trade focus Big River Total attributable trade Bunnings
Slide 10: Strong brand with diversified and loyal customers
Strong brand with diversified and loyal customers Big River has built a large diversified customer base of over 3,000 individual customer accounts, with many of the top 20 customers having traded with the company for over 25 years Top 10 customers by revenue, 1H19 (%) Samples of customer relationshi
Slide 11: Strategic objectives
Strategic objectives Big River is pursuing a clear set of strategic shifts as part of its continued evolution From To Progress Comments ◕ • Cost reductions achieved through shift Niche (High value) manufacturing optimatisation Volume manufacturing • Ability to flex capacity (up or down) to & interna
Slide 12: History of driving growth through acquisitions
History of driving growth through acquisitions Big River has successfully completed and integrated 9 acquisitions since 2006 Big River acquisition timeline Example acquisition synergies General acquisition commentary Stacks 2006 ❑ c.6% p.a. revenue growth since acquisition ❑ Segment expansion via ac
Slide 13: Outlook
Outlook ❑ While challenging market conditions are present, the longer term growth outlook for the Company remains strong ‒ Big River has successfully managed significant construction sector downturns in the past ‒ Current tailwinds for Big River include: • Commercial - improved commercial pipeline s
Slide 14: Transaction overview
2 – Transaction overview 14
Slide 15: Transaction overview
Transaction overview ❑ Big River has entered into an agreement with a single vendor to acquire 100% of two New Zealand acquisitions, Plytech Pty Ltd and Decortech Pty Ltd (“NZ Acquisitions”). The NZ Acquisitions are New Zealand based distributors of specialist NZ Acquisition plywood based constructi
Slide 16: Transaction overview (cont'd)
Transaction overview (cont’d) ❑ Big River is increasing its financing resources via both equity and debt: ‒ $7.5 million conditional placement of 7.1 million shares at $1.05 per share (Placement) Funding ‒ Share purchase plan for existing eligible Big River shareholders at the Issue Price, capped at
Slide 17: Strategic rationale underpinning the NZ Acquisitions
Strategic rationale underpinning the NZ Acquisitions ✓ • Highly complementary acquisition, leveraging Big River’s core competency and long track record in plywood •✓ Beachhead into New Zealand market with addition of specialty manufacturing capabilities in New Zealand ✓ • Expanded branded product sa
Slide 18: NZ Acquisitions at a glance
NZ Acquisitions at a glance Highly complementary acquisition, leveraging Big River’s core competency and long track record in plywood ❑ New Zealand based distributors of specialist plywood based construction products and architectural panels supplying several sectors ❑ Long track record – Plytech fo
Slide 19: NZ Acquisitions at a glance (cont.)
NZ Acquisitions at a glance (cont.) NZ Acquisitions have experienced strong revenue growth and margins Revenue (NZ$m)(1) Normalised EBITDA (NZ$m) and margin(1) EBITDA 13.3% FY16-19 CAGR: 12.8% 16.0% 17.0% 17.5% margin: 25.6 24.6 4.3 22.4 3.8 3.4 18.1 2.9 FY16A FY17A FY18A FY19(f) FY16A FY17A FY18A F
Slide 20: NZ Acquisitions at a glance (cont.)
NZ Acquisitions at a glance (cont.) Complementary product offering and sales channel, with potential to add new segment opportunity (formwork) FY18 % revenue by product FY18 % revenue by end market FY18 % revenue by customer Manufacturing 2% 26% 6% 16% 15% 26% 50% Architectural 14% 55% 72% 84% Const
Slide 21: Improved diversification for Big River (Pro Forma basis)
Improved diversification for Big River (Pro Forma basis) Improved diversification for Big River across segment exposure, end-markets and geographies, together with an increase in (higher margin) branded product sales Revenue by segment Revenue by end market 15% 4% 6% 7% Industrial 23% Plywood & spec
Slide 22: Increased weighting towards distribution earnings
Increased weighting towards distribution earnings Consistent with Big River’s strategy, the NZ Acquisitions continue to increase Big River earnings towards product distribution Big River EBITDA Big River EBITDA contribution Manufacturing vs distribution(1) Manufacturing vs distribution(1) (A$m) (%)
Slide 23: Implementation plan and synergies
Implementation plan and synergies Targeting meaningful potential revenue synergies over the medium term, with limited integration required Implementation plan ❑ Current General Manager of Plytech to oversee both sites, creating a fourth geographic reporting region for Big River ❑ All key staff to be
Slide 24: Acquisition terms, capital raise and pro-forma balance sheet
3 – Acquisition terms, capital raise and pro-forma balance sheet 24
Slide 25: Acquisition funding and terms
Acquisition funding and terms Acquisition terms ❑ Total upfront consideration of approximately NZ$17.2 million, comprised of: ‒ NZ$15.2 million in cash plus NZ$2.0 million of Big River shares(1) ‒ Acquired on a cash free ,debt free basis, subject to working capital adjustments customary for a transa
Slide 26: Pro-forma profit and loss
Pro-forma profit and loss Combined Big River Raise New Zealand Total ($m) FY19 Guidance(1) Pro forma Pro forma(2) Pro forma Revenue 216.0 - 24.2 240.2 Normalised EBITDA 9.1 - 3.2 12.3 EBITDA margin (%) 4.2% - 13.2% 5.1% Acquisition costs -0.3 - -0.2 -0.05 EBITDA 8.8 - 3.0 11.8 Depreciation -2.2 - -0
Slide 27: Pro-forma balance sheet
Pro-forma balance sheet Adjustments ❑ Big River’s existing financier (NAB) ($m) 31-Dec-18 Pro forma has provided an increase in its Offer NZ Acquisitions facilities to support the NZ Acquisitions Receivables 28.6 - 2.4 31.0 ❑ Total available and drawn debt facilities (as at 31 December 2018 Inventor
Slide 28: Capital raising summary
4 – Capital raising summary 28
Slide 29: Details of the Offer
Details of the Offer ❑ Conditional placement to sophisticated and professional investors at $1.05 per share to raise up to $7.5 million ❑ NAOS Asset Management (19.8% shareholder) (“NAOS”) expected to apply for $6.2 million of the placement; Offer size and allotment of placement shares to NAOS will
Slide 30: Timetable
Timetable Event Date Trading halt (pre market open) and announcement of Acquisition and Placement Monday, 29 April 2019. Share Purchase Plan Record Date 7.00pm, Tuesday, 30 April 2019. Announcement of results of Placement and trading halt lifted Wednesday, 1 May 2019. Share Purchase Plan Offer Bookl
Slide 31: Key risks
5 – Key risks 31
Slide 32: Key risks
Key risks ❑ Any material weakening in the NZ economy ❑ Whilst the residential outlook for NZ is much more positive than Australia, the minimal exposure of Plytech and Decortech to this segment suggests it will have minimal impact on the business ❑ Given the segment exposure, a material fall in Comme
Slide 33: Appendix: Additional Big River information
Appendix Additional Big River information 33
Slide 34: Company overview
Company overview Key information Key shareholders Capital Structure Top Shareholders(1) Current Share Price ($) as at 26-Apr-19 1.10 Anacacia Partnership II, LP 59.8% Ordinary Shares(1) (m) 53.0 NAOS Asset Management Limited 19.8% Market Capitalisation ($m) 58.3 Top 20 Shareholders 94.6% Net Debt(2)
Slide 35: Big River Profit and Loss
Big River Profit and Loss Big River Industries 1HFY19 1HFY18 FY2018 FY2017 30 June (A$m) Total revenue 106.0 104.6 210.9 177.0 Revenue growth(1) 1.3% 21.8% 19.1% 3.2% EBITDA (before Acq. & IPO costs) 4.5 5.9 11.0 10.2 EBITDA margin 4.3% 5.6% 7.2% 5.8% Distribution EBITDA 5.5 6.5 12.0 9.7 Manufacturi
Slide 36: NZ Acquisitions Profit and loss
NZ Acquisitions Profit and loss NZ Acquisitions Normalised P&L FY19 YTD (1) FY18 FY17 FY16 31 March (NZ$m) Revenue 23.3 24.6 22.4 18.1 Revenue growth (%) 3.0% 10.2% 23.7% COGS (14.8) (15.1) (14.0) (11.3) Gross Profit 8.4 9.5 8.4 6.8 GP Margin (%) 36.3% 38.6% 37.5% 37.3% Other Income 0 0.0 0.0 0.0 Op
Slide 37: Key Risks – Additional Information
Key Risks – Additional Information 1 Risks associated with NZ Acquisitions 1.1 General conditions in the NZ economy There is a risk that any change or movement in economic or market conditions may have an effect on the profitability of, or demand for products supplied by, the New Zealand businesses.
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