Mobico Group Plc · LSE:MCG
Mobico — National Express Group — H1 2022 Earnings Presentation
44 slides from Mobico's earnings presentation, Jul 28, 2022
Slide 1: Half Year Results
Half Year Results For the period ended 30 June 2022 28th July 2022
Slide 2: Agenda
Agenda 1 Introduction and highlights 2 Financial review 3 Evolve strategic update 4 Q&A 5 Appendix 2
Slide 3: Introduction and highlights
Introduction and highlights 3
Slide 4: Introduction and highlights
Introduction and highlights Revenue growth across all divisions converting strongly to profit and cash • Group revenue increases by 34% to £1.3bn Strong revenue growth • Strong growth across all divisions, and particularly in our discretionary coach businesses • Momentum building with Q2 stronger th
Slide 5: Evolve delivering progress across all divisions
Introduction and highlights Evolve delivering progress across all divisions ALSA North America UK & Germany • Demand recovery in Long Haul • Revenue and profit in Shuttle • UK Bus patronage performing and strong Morocco performance ahead of 2019… ahead of industry average driving revenue growth • …9
Slide 6: Financial review
Financial review 6
Slide 7: 2022 interim financial review: Summary
2022 interim financial review Summary Underlying £m H1 2022 H1 2021 Change Revenue 1,324.3 992.4 33.6% EBITDA 197.8 128.2 54.3% Group Operating Profit 90.5 22.9 295.3% Group PBT 68.7 0.1 68.6m Basic EPS 6.2p (2.1p) 8.3p Statutory £m H1 2022 H1 2021 Change Group Operating Profit/(Loss) 42.3 (26.1) 68
Slide 8: Divisional summary
2022 interim financial review Divisional summary Revenue* Underlying Operating Profit/(Loss) ALSA H1 2022 H1 2021 Change £444m +59.8% ALSA £50.3m £17.1m £33.2m North America £519m +7.5% North America £57.4m £41.5m £15.9m UK UK (£12.8m) (£19.9m) £7.1m £237m +37.3% German Rail £3.0m (£7.6m) £10.6m Ger
Slide 9: Separately disclosed items
2022 interim financial review Separately disclosed items Income Statement Cash – No further Covid-related items other than £m 2022 2021 2022 re-measurements of previously recorded items Amortisation of intangibles arising upon acquisition (18.7) (19.4) - Covid-related costs (3.3) (15.4) (8.3) – Nort
Slide 10: Sequential margin improvement
2022 interim financial review Sequential margin improvement 8% – Underlying operating margin up 450 bps to 6.8% 6.8% 6% – Below 2019 levels driven by business mix and H1 UK losses 4% – Operational leverage in UK driving positive Q2 2% 2.3% and momentum into H2 0% – NA H1 margin boosted by CERTS…will
Slide 11: UK impacted by Omicron in Q1; rebounding strongly into H2
2022 interim financial review UK impacted by Omicron in Q1; rebounding strongly into H2 90% UK Coach passengers versus 2019 UK operating profit (£m) 80% 8.2 70% 60% 50% Intercity 40% Airport 30% 20% -21.0 10% 0% Feb Feb Jul Jun Jun Jan Jan Apr Apr Aug Sep May Mar May Oct Mar Nov Dec Q1 Q2 2021 2022
Slide 12: School Bus driver shortages and wage inflation
2022 interim financial review School Bus driver shortages and wage inflation • Wage inflation running at 10-12% • Average 10% price increase on contracts renewed this year; exceeding wage inflation in those locations Wage inflation covered as contracts renew • Non-expiring contracts (c.60% of total)
Slide 13: Medium term inflation protection
2022 interim financial review Medium tern inflation protection Inflation protection by business line – Other than School Bus, wage inflation running at Each segment represents % of Group revenue low to mid single digit growth and generally Contracted protection subject to multi-year agreements Germa
Slide 14: Continued strong free cash flow
2022 interim financial review Continued strong free cash flow £m H1 2022 H1 2021* FY 2021 EBITDA 197.8 128.2 300.0 Working capital (24.9) (9.0) 33.0 Net maintenance capex (88.3) (56.7) (142.1) Pension deficit (3.6) (3.6) (7.2) Operating cash flow 81.0 58.9 183.7 Tax & interest (17.2) (22.8) (60.3) F
Slide 15: Leverage returns below covenant levels
2022 interim financial review Leverage returns below covenant levels £m H1 2022 H1 2021 FY 2021 Free cash flow 63.8 36.1 123.4 Net growth capital expenditure (29.2) (74.9) (134.4) Net acquisitions and disposals (25.6) (46.9) (54.3) Separately disclosed items (23.2) (34.3) (44.4) Payment on hybrid in
Slide 16: Disciplined capital allocation
2022 interim year financial review Disciplined capital allocation Return to Maintain a prudent Invest for growth Shareholders balance sheet (targeting investments that (dividend at least (net debt to EBITDA in a deliver 15% returns) 2.0x covered) range of 1.5 to 2.0 times) Pipeline of opportunities
Slide 17: 2022 guidance reiterated
2022 interim year financial review 2022 guidance reiterated • Full year revenue in line with 2019 levels • Around 7% margin • Maintenance capex around 0.8x depreciation • Around £100m of growth capex • Gearing between 2.5x and 3.0x • Intention to reinstate dividend in respect of full year 2022 17
Slide 18: Evolve strategic update
Evolve strategic update 18
Slide 19: Evolve recap
Business and strategic update Evolve recap Our Evolve strategy is rooted in our vision – to be the world’s premier shared mobility operator We have a clear purpose: to lead the modal shift from cars to mass transit We do this through five customer propositions, underpinned by technology All of which
Slide 20: Good progress on developing our customer propositions
Business and strategic update Good progress on developing our customer propositions Reinvigorate public transport Multi-modal expansion • Successful start-up of our first urban bus • Awarded an all-electric urban bus contract contract in Portugal in Geneva • Shortlisted for large bus contract in Dub
Slide 21: Evolve - Successful mobilisation in a new market
Business and strategic update Evolve - Successful mobilisation in a new market • Successful mobilisation on time and ahead of other operators • Operating urban bus services in Lisbon o 227 buses including 23 ZEVs, 153 routes o Providing mobility for nearly 400,000 people, employing 350 people • 7-ye
Slide 22: Delivering operational transformation in German Rail
Business and strategic update Evolve – Delivering operational transformation in German Rail • Successful mobilisation of 2 emergency award contracts in German Rail: o RRX 1 and 11, 6.2 million kilometres p.a. INSERT PHOTO • 2-year contracts to Dec 2023, revenue protected o €100m revenue p.a. • Mobil
Slide 23: Digitally enabling Evolve outcomes
Business and strategic update Digitally enabling Evolve outcomes Safest Employer of Choice • Group-wide speed control technology • Driver Assistance Systems: • Training models using AI & ML for increasing automation, reducing individual driver behaviours burden on drivers • Optimisation tools for sh
Slide 24: Developing scalable digital assets with Group-wide applicability
Business and strategic update Developing scalable digital assets with Group-wide applicability Development & improvement of Channels & Customer New business models operational tools information development • Optimising Fleet Management with • Development of web, app and other • DRT: On-demand & ride
Slide 25: We continue to make progress on our Evolve outcomes
Business and strategic update We continue to make progress on our Evolve outcomes The safest The environmental leader • FWI pmm* improved by 50% • Plans approved for 1,500 ZEVs by 2024 • Morocco – 28% improvement in accidents • UK Bus 50% ZEV by 2025 at fault, driven by mobilisation in • ZEV efficie
Slide 26: Strong pipeline of £2.1bn in annualised revenue
Business and strategic update Strong pipeline of £2.1bn in annualised revenue… 18-month pipeline by division: Annual Revenue (£bn) • Urban and Regional – targeting cities and regions where current market 23% share is low 39% ALSA • Tourism and Shuttle opportunities across Spain 0.8 • Bidding and ino
Slide 27: Of which £0.8bn asset light bidding opportunities
Business and strategic update …Of which £0.8bn asset light bidding opportunities Organic pipeline £1.2bn annualised revenue • Significant pipeline of asset light bidding opportunities including: o North America transit (Las Vegas, Houston, Orlando) o Dubai urban bus o Manchester urban bus 33% o Germ
Slide 28: An attractive investment case
An attractive investment case 1 2 3 4 5 6 We benefit from We have five We are the We are uniquely We are taking We have a long-term, compelling, best-in-class diversified and environmental track record of structural growth hard-to-replicate operator balanced leadership delivering strong opportunitie
Slide 29: Summary
Summary Strong revenue growth Converting strongly to profit and cash Continued strategic progress Confident in prospects for full year 29
Slide 30: Appendix
Appendix 30
Slide 31: ALSA: Very strong recovery in Long Haul
ALSA Very strong recovery in Long Haul Summary Returns – Very strong recovery in trading, profit tripled H1 2022 H1 2021 – Long Haul revenue up 172%, passenger demand up 162%: – Occupancy up 37%; yield up over 8%; revenue per km up 19% Revenue €527.5m €331.1m – Morocco revenue up 25% – record revenu
Slide 32: North America: Significant improvement in financial returns
North America Significant improvement in financial returns Summary Returns – School Bus and Shuttle revenue strongly ahead H1 2022 H1 2021 – Transit operating at around 83% of services – Shuttle revenue up 28% yoy and profit ahead of 2019* Revenue $673.5m $627.8m – School bus operational challenges
Slide 33: UK: Strong recovery in Coach – Q2 in profit
UK Strong recovery in Coach – Q2 in profit Summary Returns – Very strong recovery in Coach revenue and passenger demand, up H1 2022 H1 2021 359% and 515% yoy – Passenger demand back to 75% pre-pandemic levels; higher Revenue £237.3m £172.8m demand on intercity (84%) versus airport routes (64%) Under
Slide 34: Germany: Strong revenue growth
Germany Strong revenue growth Summary Returns – Strong revenue growth reflecting emergency award of 2 contracts H1 2022 H1 2021 within RRX Lot 1 – Successful mobilisation at very short notice Revenue €147.3m €92.6m – 2-year contracts worth €100m revenue p.a. Underlying Op profit €3.5m €(8.8)m – Reve
Slide 35: Our long-term financial targets remain unchanged
2022 interim year financial review Our long-term financial targets remain unchanged Revenue back to 2019 levels in Free cash conversion Paying a dividend at least 2022, targeting reaching at least £1bn additional over 80% 2x covered, revenue by 2027 by 2027 targeting 2022 reinstatement Margin averag
Slide 36: Navigating our reported cash flow (1/2)
Cash flow Navigating our reported cash flow (1/2) The following is an example of the cash flow that we report in our announcements and presentations. This is on a “funds flow” basis and differs to the statutory cash flow statement. A reconciliation between the two is presented on the next page Six m
Slide 37: Navigating our reported cash flow (2/2)
Cash flow Navigating our reported cash flow (2/2) The following is a reconciliation between the “funds flow”, which is the format of cash flows that we focus on and is what we present in our announcements and presentations, and the statutory cash flow statement contained within the financial stateme
Slide 38: Fuel risk largely fixed until 2023
Risk management Fuel risk largely fixed until 2023 Fuel hedging 2021 2022 2023 2024 % hedged* 100% 100% 75% 35% Price per litre** 37.8 36.1 36.5 41.6 – Average weighted hedge price of 37.2p, similar to 2021 38
Slide 39: Significant liquidity headroom
2022 interim financial review Significant liquidity headroom Maturity profile – committed facilities Financing activity 20 16 – No material refinancing requirement before the £400m bond maturity in H2 2023 400 500 480 237 250 22 27 28 21 118 57 15 59 47 32 52 17 13 2022 2023 2024 2025 2026 2027 2028
Slide 40: Robust Balance Sheet; Investment Grade ratings reaffirmed
Covenants and ratings Robust Balance Sheet; Investment Grade ratings reaffirmed 2022 half 2021 year Covenant ratios Ratings Grade Outlook year end Moodys Baa2 Stable Gearing 3.1x 3.6x Fitch BBB Stable Interest cover 8.2x 6.3x – Gearing now back within pre-amendment limit of 3.5x. Gearing covenant te
Slide 41: Availability contracts offer the optimal cash flow solution
2022 interim financial review Availability contracts offer the optimal cash flow solution 200 Cumulative discounted cash flows* over 15 years for a double decker – EV’s operated via availability contracts provide a better cash flow bus £'000 outcome than EV’s or diesels purchased outright – Even wit
Slide 42: Significant potential for passenger growth
Modal shift potential Significant potential for passenger growth CPT*estimates 41% increase in local bus passenger Kms by 2030, and 83% by 2050 through modal shift for Great Britain and…. • …. In the West Midlands, an increase of 65% by 2030 and 120% by 2050 Modal shift is already happening TfWM sur
Slide 43: External sustainability recognition
External sustainability recognition Sustainability is integral to what we do and we are recognised for this by a number of external bodies. Sustainalytics rates National Express as ‘low risk’ for ESG overall and in every single subcategory. We are rated in the 2nd percentile of all transport compani
Slide 44: The information in this presentation is general information and background only, and is not
The information in this presentation is general information and background only, and is not intended to be relied upon as advice to investors or potential investors as it does not take into account their particular investment objectives, financial situation or needs. The contents of this presentatio
National Express Group — H1 2022 Earnings Presentation on 6ix