Gwa Group Limited · ASX:GWA
Gwa — Investor Presentation (April 2016)
79 slides from Gwa's investor presentation, Apr 21, 2016
Slide 1: ASX cover letter: Investor Market Briefing Strategy Presentation
GWA Group Limited GS ABN 15 055 964 260 t 61 73109 6000 f 61 7 3852 2201 www. gwagroup.com.au Level 2, HO (South Tower) 520 Wickham Street Fortitude Valley , QLD 4006 21 April 2016 GPO Box 1411 Brisbane QLD 4001 ASX On-Line Manager Company Announcements Australian Securities Exchange Dear Sir Invest
Slide 2: Investor Market Briefing Strategy Presentation
Investor Market Briefing Strategy Presentation 21 April 2016 gwagroup.com.au
Slide 3: Disclaimer
Disclaimer This presentation contains non-IFRS financial measures to assist users to assess the underlying financial performance of the Group. The non-IFRS financial measures in this presentation were not the subject of a review or audit by KPMG. gwagroup.com.au 2
Slide 4: Agenda
Agenda Strategic Overview Tim Salt Bathrooms & Kitchens Tim Salt Door & Access Systems Sean Ralphsmith Break/Product Displays Sean Mitchell Supply Chain Financial Summary Patrick Gibson Summary Tim Salt gwagroup.com.au 3
Slide 5: Agenda
Agenda Strategic Overview Tim Salt Bathrooms & Kitchens Tim Salt Door & Access Systems Sean Ralphsmith Supply Chain Sean Mitchell Financial Summary Patrick Gibson Summary Tim Salt gwagroup.com.au 4
Slide 6: Key themes for today
Key themes for today #1 Significantly re-positioned over the last two years – effectively a new business Divestments provide clear focus on core divisions with strong ability to compete Market leading brands, new management team in place, strong supply chain partnerships Balance sheet in solid posit
Slide 7: Strongly re-positioned for growth
Strongly re-positioned for growth From GWA today Diverse Building Products business spread across Clear focus on two segments with strong market numerous segments positions and market leading brands (Dux, Brivis, Gliderol exited) Rationalised portfolio focused on market leading Diverse brand portfol
Slide 8: GWA today – focused business positioned for growth
GWA today – focused business positioned for growth Key Facts Investment Highlights A leading designer and supplier of branded Owner and distributor of market leading brands building fixtures to household and commercial in core categories in over $2 billion addressable premises market - positioned we
Slide 9: Simplified group structure focused on core business
Simplified group structure focused on core business Go to Market Bathrooms & Kitchens Door & Access Systems Finance & IT functions Group Supply Chain, Procurement, Safety People, Culture & Communications gwagroup.com.au 8
Slide 10: New appointments strengthen management team
New appointments strengthen management team Key executives Experience Extensive global experience in managing market leading Tim Salt branded portfolios - strong focus on product and brand CEO innovation in b2b and b2c environments Patrick Gibson International experience managing finance functions o
Slide 11: Our brands are market leaders in their segments
Our brands are market leaders in their segments Bathrooms & Kitchens Door & Access Systems A leading designer and supplier of domestic Leading Australian designer, manufacturer, and commercial bathroom and kitchen importer and distributor of a comprehensive products including sanitaryware, taps, bat
Slide 12: Our operating model meets local needs with global scale
Our operating model meets local needs with global scale Value Creating Operating Model Consumer Product Manu- Solution Customer Distribution insights Design facturing Expertise Service Research drives Local design Collaborative Extensive Ability to add Market-leading consumer and team deliver relati
Slide 13: We have an enviable reputation among our customers
We have an enviable reputation among our customers Net Promoter Score* Customer feedback “As a building company it is the one brand 50% of product that we can order and install with no problems what so ever” 45% 43% “Caroma has been the most trusted brand in 40% Australia for over 60 years. It has t
Slide 14: Our businesses are strong and growing
Our businesses are strong and growing FY15 Revenue by Division (A$m) FY15 EBIT by Division (A$m)* 7.2 96 330 83.3 Bathrooms & Kitchens Door & Access Bathrooms & Kitchens Door & Access Group Revenue (A$m) Group EBIT (A$m) 450 90 418 426 77.9 72.8 399 75 400 377 64.5 376 57.7 60 55.0 350 45 300 30 250
Slide 15: We have opportunity to grow in a A$2 billion market
We have opportunity to grow in a A$2 billion market A$2 billion addressable market Bathrooms & Kitchens Door & Access Systems (A$1,300m) (A$725m) Residential Commercial Services Residential $190m $150m $181m Multi- Residential $102m Commercial $127m Multi- Renovation & Residential / Replacement Comm
Slide 16: Strong presence in R&R segment – manage through cycle
Strong presence in R&R segment – manage through cycle B&K revenue by end market (%) D&A revenue by end market (%) Commercial Residential 23% 23% Multi-Res 3% Multi- Residential 10% Renovation & Replacement Detached Renovation & Housing Commercial 52% Replacement 53% 15% 21% Source: GWA estimates gwa
Slide 17: Continued demand into FY17 as completions lag approvals
Continued demand into FY17 as completions lag approvals Australian housing statistics (#) 240,000 Pipeline of work 220,000 remains as completions catch up to approvals – current gap is ~40,000 dwellings Moving Annual Numbers 200,000 180,000 160,000 140,000 120,000 Approvals Commencements Completions
Slide 18: Corporate Priorities
How we will respond to these trends - strategic summary Our Mission: To build GWA as the most trusted and respected company in the building sector Our Purpose: MAKING LIFE BETTER ……. with simple, superior water solutions with a superior range of access and security systems Bathrooms & Kitchens Door
Slide 19: Agenda
Agenda Strategic Overview Tim Salt Bathrooms & Kitchens Tim Salt Door & Access Systems Sean Ralphsmith Supply Chain Sean Mitchell Financial Summary Patrick Gibson Summary Tim Salt gwagroup.com.au 18
Slide 20: We have opportunity to grow in a A$1.3 billion market
We have opportunity to grow in a A$1.3 billion market A$2 billion addressable market Bathrooms & Kitchens Door & Access Systems (A$1,300m) (A$725m) Residential Commercial Services Residential $190m $150m $181m Multi- Residential $102m Commercial $127m Multi- Renovation & Residential / Replacement Co
Slide 21: R&R segment remains stable
R&R segment remains stable Renovation Activity (A$bn) 2.5 2.5 2.0 2.0 $bn per quarter, real $bn per quarter, real 1.5 1.5 1.0 1.0 0.5 0.5 0.0 0.0 80 82 84 86 88 90 92 94 96 98 00 02 04 06 08 10 12 14 16 Alterations & additions work done, real Approvals for alts and adds Sources: ABS, ANZ Research gw
Slide 22: Housing sales expected to remain stable as turnover is below peak
…and expected to remain stable as turnover is below peak Housing sales (‘000s) 60 50 40 ‘000s 30 20 10 0 Number of house sales, Australia Sources: ABS, ANZ Research gwagroup.com.au 21
Slide 23: But multi-res is growing as a proportion
But multi-res is growing as a proportion Dwelling completions by type (‘000s) 140,000 120,000 100,000 80,000 60,000 40,000 20,000 0 Detached dwellings Other dwellings Detached long term trend Other long term trend Source: ABS gwagroup.com.au 22
Slide 24: Bathroom market stable since peak in 2011
As a result bathroom market stable since peak in 2011 Addressable toilet market (#) 4,500,000 4,000,000 3,500,000 Toilet # 3,000,000 2,500,000 2,000,000 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 R&R Residential Resi Multi-Residential Multi-Res Commercial Source: GWA estimates. Incl
Slide 25: R&R is largest segment – opportunity for GWA growth
R&R is largest segment – opportunity for GWA growth Addressable market by segment (NSV – A$m) $190m $102m $127m $854m ZĞƐƚͲŽĨͲŵĂƌŬĞƚ Ψϲϳŵ ΨϮϵŵ Ψϰϰŵ 't ;ϯϱйƐĞŐŵĞŶƚƐŚĂƌĞͿ ;ϯϰй ;Ϯϴй ƐĞŐŵĞŶƚƐŚĂƌĞͿ Ψϭϰϴŵ ƐĞŐŵĞŶƚƐŚĂƌĞͿ ;ϭϳйƐĞŐŵĞŶƚƐŚĂƌĞͿ ZĞƐŝĚĞŶƚŝĂů DƵůƚŝͲƌĞƐŝĚĞŶƚŝĂů ŽŵŵĞƌĐŝĂů ZĞŶŽǀĂƚŝŽŶΘZĞƉůĂĐĞŵĞŶƚ Source
Slide 26: Segment Priorities
How we will target this opportunity – strategic summary Our Purpose Making life better with simple, superior water solutions Our Mission To build GWA as the most trusted and respected company in the building sector Our Operational Measures Market share, NSV, EBIT, ROFE, NPS, Safety, Engagement Compe
Slide 27: How we add value to customers
How we add value to customers Market insight Strategic implication Key initiatives Recruit key sales people with strategic account expertise Merchant customers’ overriding Build superior understanding of Shopper understanding to shape range goal is to drive their sales and our customers’ business to
Slide 28: Adding value to customers – Caroma Plumbers' App
Adding value to customers Caroma Plumbers’ App The Caroma App is designed to make plumbers more efficient and reduce time on site Over Provide plumbers with access to 48,000 valuable information on the go/on downloads site such as set out requirements Be a selling tool that they can use with their c
Slide 29: Digital value add – specify caroma.com.au
Digital value add – specify caroma.com.au Specify caroma.com.au Fast access to valuable information required by project professionals in one convenient location. Designed to make specifying B&K products easy Multi-branded site featuring all B&K brands Focus on Business Information Modeling and more
Slide 30: Digital value add – Caroma Revit add in
Digital value add – Caroma revit add in Caroma revit add in The Caroma Revit Add In was launched in May 2015. The Add In allows for seamless integration of B&K information within the architect’s environment for ease of product specification Allows architects & designers to directly download B&K file
Slide 31: Powerful insights drive our NPD program
Powerful insights drive our NPD program Strategic Market insight Key initiatives implication 65+ age group is the Partnering with tertiary academic fastest population growth institution on research to better segment and will triple in Ageing population understand needs of ageing size to 10m+ over ne
Slide 32: Powerful NPD insights – aged care research
Powerful NPD insights – aged care research UNSW Liveable Bathroom Project Partnership between GWA and UNSW 4,500 surveys returned completed by elderly Australians Largest of its kind in Australian history Database of seniors Analysis is identifying areas for potential innovative products and systems
Slide 33: Powerful NPD insights – new tap launch
Powerful NPD insights – new tap launch Dorf Industrie Dorf Epic Splice Dorf Inca gwagroup.com.au 32
Slide 34: Powerful NPD insights – Caroma Cleanflush launch
Powerful NPD insights – Caroma Cleanflush launch Caroma Flow Balancer (Pat. Pend) Innovative Caroma Flush channel & superior Controls and directs flush Flow Splitter washdown performance gwagroup.com.au 33
Slide 35: Caroma Cleanflush
Caroma Cleanflush gwagroup.com.au 34
Slide 36: Strong focus brands
Strong focus brands Market insight Strategic implication Key initiatives NPD driven off market insights Consumers value brands that offer Continue to build our brand Enhance visibility of brands in key quality, reliability and style experience at every touchpoint partner showrooms Quality designed i
Slide 37: Refocusing on brand visibility in store
Refocusing on brand visibility in store Major showroom upgrades completed Tap displays installed nationally gwagroup.com.au 36
Slide 38: Social media engagement with consumers
Social media engagement with consumers Social Media - Consumer Social media channels launched to support Caroma consumer website in April 2014. The channels allow consumers to directly interact with our brand in real time. Caroma Cleanflush launch reached over 400,000 people, with over 221,000 click
Slide 39: Upgrade product selection with Builders' App
Upgrade product selection with Builders’ App Builder Application System The platform is a pre-selection tool developed by GWA Bathrooms and Kitchens to assist the Builders in the selection process with clients Provides a platform for builders to create their own portal and database of products on of
Slide 40: Segment Priorities
How we will target this opportunity – strategic summary Our Purpose Making life better with simple, superior water solutions Our Mission To build GWA as the most trusted and respected company in the building sector Our Operational Measures Market share, NSV, EBIT, ROFE, NPS, Safety, Engagement Compe
Slide 41: Agenda
Agenda Strategic Overview Tim Salt Bathrooms & Kitchens Tim Salt Door & Access Systems Sean Ralphsmith Supply Chain Sean Mitchell Financial Summary Patrick Gibson Summary Tim Salt gwagroup.com.au 40
Slide 42: Door & Access Systems
Door & Access Systems Leading Australian designer, manufacturer and distributor of a comprehensive range of residential and commercial door hardware National supplier of security and access control systems and locksmithing services to major commercial enterprises gwagroup.com.au 41
Slide 43: Door & Access Systems ~$725 million addressable market
Door & Access Systems ~$725 million addressable market Addressable market by segment (NSV – A$m) $181m $394m $150m Rest-of-market GWA $70m (39% segment share) $23m $3m (15% segment share) (1% segment share) Residential Multi-residential and commercial Commercial Locksmithing services Source: GWA est
Slide 44: Door & Access Systems strategy on a page
Door & Access Systems strategy on a page Our Purpose Making life better with a superior range of access and security systems Our Mission To build GWA as the most trusted and respected company in the building sector Our Operational Measures Market share, NSV, EBIT, ROFE, NPS, Safety, Engagement Conti
Slide 45: Strong proposition for residential builders & merchants
Strong proposition for residential builders & merchants Market insight Strategic implication Key initiatives Ensure ‘front-door’ Differentiated front door offer New home builders have proposition remains through Gainsborough Trilock, two primary needs: differentiated from series combined with builde
Slide 46: Gainsborough Trilock and builder keying system front-door offer
Gainsborough Trilock and builder keying system combination – a powerful, truly differentiated front-door offer for builders Traditional Contemporary Eclipse G+ Australia’s market leading residential entrance Builder Keying system is available with all door lock – 1.1 million units sold Gainsborough
Slide 47: Strength in residential builder market
Strength in residential builder market “I would like to highlight the high level of customer service BGC Builders Supplies receives from GWA Door and Access Systems. I have personally always found the staff not only to be extremely knowledgeable but also have a high focus towards customer service. C
Slide 48: Driving consumer demand – styles, brands & digital marketing
Driving consumer demand – styles, brands & digital marketing Market insight Strategic implication Key initiatives Design and branding is a key Restructured processes to speed up driver of premium positioning NPD to market Launched ‘Matte Black’ range Premium end builders want to add value to their S
Slide 49: Driving consumer demand – styles, brands & digital marketing
Driving consumer demand – styles, brands & digital marketing Recent digital campaign “door hardware as the finishing touch that makes your home complete” Matt Black range gwagroup.com.au 48
Slide 50: Growth through innovation – 'smart' access
Growth through innovation – ‘smart’ access Market insight Strategic implication Key initiatives Leverage current offer and Continued enhancements to G+, build future capability to current ‘connected access’ solution extend into digital solutions for builders The market for electronic access is proje
Slide 51: G+ Access System – smart, affordable way to access your home
G+ Access System – smart, affordable way to access your home gwagroup.com.au 50
Slide 52: Market entry into multi-residential & commercial
Market entry into multi-residential & commercial Market insight Strategic implication Key initiatives A greater share of the commercial and multi- The commercial and multi-res Developing ‘market entry’ strategy residential sectors sectors have decoupled from into commercial and multi-res represents
Slide 53: New door selector website for architects
New door selector website for architects Designed to make commercial door hardware selection easy for architects Guide through your project and select your door With options to upload plans and request the preparation of a complete door hardware schedule and/or quotation The digital tool is focused
Slide 54: Focus on high-potential sectors in commercial locksmithing
Focus on high-potential sectors in commercial locksmithing Market insight Strategic implication Key initiatives Initial installation of Opportunity to embed API commercial access systems is Engaging developers, facility systems in buildings which decoupled from ongoing managers and owners / occupier
Slide 55: Education sector – Case Study – Yarra Valley Grammar
Education sector – Case Study – Yarra Valley Grammar Schools realise the importance of prevention over response API supplied and installed the wireless system and provides ongoing backup support Cost effective solution as eliminates perpetual cost of re-keying Real-time communication whether doors a
Slide 56: Door & Access Systems strategy on a page
Door & Access Systems strategy on a page Our Purpose Making life better with a superior range of access and security systems Our Mission To build GWA as the most trusted and respected company in the building sector Our Operational Measures Market share, NSV, EBIT, ROFE, NPS, Safety, Engagement Conti
Slide 57: Break/Product Displays
Break/Product Displays gwagroup.com.au 56
Slide 58: Agenda
Agenda Strategic Overview Tim Salt Bathrooms & Kitchens Tim Salt Door & Access Systems Sean Ralphsmith Supply Chain Sean Mitchell Financial Summary Patrick Gibson Summary Tim Salt gwagroup.com.au 57
Slide 59: GWA strategic summary
GWA strategic summary Our Mission: To build GWA as the most trusted and respected company in the building sector Our Purpose: MAKING LIFE BETTER ……. with simple, superior water solutions with a superior range of access and security systems Bathrooms & Kitchens Door & Access Systems GWA Operational M
Slide 60: Our operating model meets local needs with global scale
Our operating model meets local needs with global scale Value Creating Operating Model Consumer Product Manu- Solution Customer Distribution insights Design facturing Expertise Service Research drives Local design Collaborative Extensive Ability to add Market-leading consumer and team deliver relati
Slide 61: Driving exclusive relationships with leading supply partners
Driving exclusive relationships with leading supply partners Supply partners in Asian and European exclusive • Switzerland partners (90:10) • Germany • Italy Key strategic drivers shape partner selection: Quality Service Cost Innovation/NPD Protect and leverage GWA IP (patents) Supply partners in •
Slide 62: Leverage global expertise for local conditions
Leverage global expertise for local conditions Market insight Strategic implication Key initiatives Develop exclusive partnerships with vendors that have scale and capability suited to GWA Differentiate from direct Increasingly demanding distributors through the Invest in R&D, process and consumers
Slide 63: Differentiated service offer for customers
Differentiated service offer for customers Strategic Market insight Key initiatives implication Implement Integrated Customers Require deep Business Planning (IBP) increasingly understanding of operating model – major demanding in terms of demand and ability to cultural change new innovation - proac
Slide 64: Targeting further cost efficiencies
Targeting further cost efficiencies Strategic Market insight Key initiatives implication Reduce operating costs in Australia by smaller, more agile domestic footprint Constant need to Competitive Consolidation in source innovate the landscape demands country of product and operating model to increas
Slide 65: Leverage partnerships for best in class product innovation
Leverage partnerships for best in class product innovation Strategic Market insight Key initiatives implication Research global trends and applicability to local consumers Understanding of Maintain market international Patent locally leading position trends and developed market- through new developi
Slide 66: Our design minds
Our design minds gwagroup.com.au 65
Slide 67: GWA strategic summary
GWA strategic summary Our Mission: To build GWA as the most trusted and respected company in the building sector Our Purpose: MAKING LIFE BETTER ……. with simple, superior water solutions with a superior range of access and security systems Bathrooms & Kitchens Door & Access Systems GWA Operational M
Slide 68: Agenda
Agenda Strategic Overview Tim Salt Bathrooms & Kitchens Tim Salt Door & Access Systems Sean Ralphsmith Supply Chain Sean Mitchell Financial Summary Patrick Gibson Summary Tim Salt gwagroup.com.au 67
Slide 69: GWA strategic summary
GWA strategic summary Our Mission: To build GWA as the most trusted and respected company in the building sector Our Purpose: MAKING LIFE BETTER ……. with simple, superior water solutions with a superior range of access and security systems Bathrooms & Kitchens Door & Access Systems GWA Operational M
Slide 70: Shareholder value creation
Shareholder value creation Market share initiatives in core categories – taps, sanitaryware to leverage strong brand portfolio Superior customer insights and best in class product Revenue Growth innovation Re-invest cost savings in organic growth opportunities Drive operational efficiency through Pr
Slide 71: Continuing Operations building momentum
Continuing Operations building momentum Revenue growth (A$m) Earnings Growth (A$m) 450 90 426 418 77.9 399 72.8 400 75 377 376 64.5 60 57.7 55.0 350 45 300 30 250 15 200 0 FY11 FY12 FY13 FY14 FY15 FY11 FY12 FY13 FY14 FY15 Source: GWA. Continuing Operations excluding Brivis Climate Systems, Dux Hot W
Slide 72: Operational and supply chain efficiency
Operational and supply chain efficiency Cost savings target Focus area FY16-FY19 Cost savings of $15m identified through SG&A and supply chain improvements Operational efficiency $5m Project One – realigns cost base through back office and execution efficiency Supply chain efficiencies $8-10m Supply
Slide 73: Margin resilience through the cycle
Margin resilience through the cycle EBIT (A$m) and margin (%) 90 20% GWA focused on maintaining margin resilience ϭϴ͘ϳй through the cycle: 80 ϭϳ͘ϭй 18% ϭϲ͘ϭй ϳϳ͘ϵ ϭϱ͘ϯй ~50% exposure to Renovations and Replacement 16% 70 ϭϰ͘ϲй ϳϮ͘ϴ market - less cyclical than new build market 14% 60 ϲϰ͘ϱ Market shar
Slide 74: Strong financial position to fund growth initiatives
Strong financial position to fund growth initiatives Continued low debt (A$m) Strong credit metrics 190 16x 30 June 31 Dec 30 June 31 Dec Metric 2014 2014 2015 2015 176 14x Net Debt 149.4 103.5 94.8 90.8 170 165 Leverage Ratio 12x 150 Net Debt / EBITDA 1.7 1.2 1.1 1.2 149 10x Interest Cover 130 EBIT
Slide 75: Strong focus on capital management
Strong focus on capital management Disciplined capital expenditure Strong credit metrics 16 • Resumption of ordinary dividends with 14.1 FY16 interim dividend 14 13.2 12.3 12 • Board expects to pay ordinary dividends in 12.3 range of 65-85% of NPAT, subject to 10 9.0 prevailing trading and market co
Slide 76: Agenda
Agenda Strategic Overview Tim Salt Bathrooms & Kitchens Tim Salt Door & Access Systems Sean Ralphsmith Supply Chain Sean Mitchell Financial Summary Patrick Gibson Summary Tim Salt gwagroup.com.au 75
Slide 77: GWA strategic summary
GWA strategic summary Our Mission: To build GWA as the most trusted and respected company in the building sector Our Purpose: MAKING LIFE BETTER ……. with simple, superior water solutions with a superior range of access and security systems Bathrooms & Kitchens Door & Access Systems GWA Operational M
Slide 78: Key themes for today
Key themes for today #1 Significantly re-positioned over the last two years – effectively a new business #2 Strong ability to manage through the cycle #3 Significant opportunities for organic growth #4 Focus on maximising value for shareholders gwagroup.com.au 77
Slide 79: Investor Market Briefing Strategy Presentation
Investor Market Briefing Strategy Presentation 21 April 2016 gwagroup.com.au