Keller Group Plc · LSE:KLR
Keller — FY2006 Earnings Presentation
35 slides from Keller's earnings presentation, March 2007
Slide 1: Keller Group plc Preliminary Results 2006
Keller Group plc Preliminary Results 2006 March 2007
Slide 2: Highlights
Highlights • Revenue of £920.2m up 26%, mainly reflecting 20% like-for-like organic growth • Operating margin increased to 9.7%, with significant improvements across the Group • Profit before tax up 72% to £83.7m – another record year • Earnings per share* up 89% to 79.0p • Cash generated from opera
Slide 3: Group Income Statement
Group Income Statement £m 2006 2005 % change 20% like for like Revenue 920.2 731.0 +26% organic growth Operating profit 89.1 53.1 +68% Good Interest (5.4) (4.3) contributions from Profit before tax 83.7 48.8 +72% acquisitions Tax-recurring (30.7) (19.8) Minimal one off credit 3.8 - exchange rate Pro
Slide 4: Operating Profit & Margin
Operating Profit & Margin 2006 2005 Another record operating margin Op Op £m Revenue Profit Margin Revenue Profit Margin Significant profit UK 123.2 3.2 2.6% 89.2 (0.3) (0.4)% and margin improvement in USA 476.9 64.1 13.4% 399.9 42.1 10.5% all geographies Europe/Overseas 255.0 17.9 7.0% 204.8 12.7 6
Slide 5: Group Balance Sheet
Group Balance Sheet £m 2006 2005 Year end $ Goodwill / intangibles 57.5 55.7 exchange rate Property, plant & equipment 114.6 90.4 £1 = $1.96 Other non-current assets 8.8 - (2005: $1.72) 180.9 146.1 Inventories 25.5 24.4 Working capital Debtors 221.7 194.6 ratios improved Creditors (192.4) (168.5) ag
Slide 6: Group Cash Flow Statement
Group Cash Flow Statement £m 2006 2005 Cash from Cash from operating activities 98.3 73.5 operations 94% of EBITDA Capex – net (27.4) (13.8) (2005: 113%) Tax (30.7) (18.8) Interest (5.1) (3.9) Targeted additional capex Free cash flow 35.1 37.0 Dividends (9.0) (8.2) Three acquisitions in Acquisitions
Slide 7: Cash Flow History
Cash Flow History £m 120 EBITDA 100 W orking capital 80 Other 60 40 Group operating cash flow 20 0 -20 97 98 99 00 01 02 03 04 05 06 6
Slide 8: 2007 Guidance
2007 Guidance • Solid start to H1 2007 – £5m of H1 2006 one-off US claims income will not repeat – Suncoast 2007 budgeted profit $14m down on 2006 actual – US foundations order book down around 10% from peak (excluding Anderson) • US$ translation impact: 10 cents change in average rate = circa £3.0m
Slide 9: North America Construction Growth
North America Construction Growth $bn $bn 400 1300 1200 350 Total US Private Non Residential 1100 Construction (LHS) 2006/2005 growth + 16% 300 1000 900 250 Total US Public Construction (LHS) 800 2006/2005 growth + 10% 200 700 600 150 Total US Construction (RHS) 500 2006/2005 growth + 5% 100 400 199
Slide 10: North America Analysis of Revenue
North America Analysis of Revenue 2006 Revenue by End User 2005 Revenue by End User Private new build work Total revenue £476.9m Total revenue £399.9m up circa 40% - All five businesses contributed 10% 11% 17% Residential revenues 19% 42% 50% down marginally - Affects only Suncoast 23% 28% Public ne
Slide 11: North America Highlights
North America Highlights 2006 Revenue by Company Excellent results from all businesses Total revenue £476.9m Good first full annual contribution from 2% Donaldson (part of Hayward Baker) 11% Better contract performance Broadening of product range 15% 40% Very strong geographic reach Several large, c
Slide 12: North America Anderson Acquisition
North America Anderson Acquisition US West Coast heavy foundation business Purchased for $22m, including assumption of debt Excellent geographic fit Good first time contribution Good progress with integration 11
Slide 13: North America Suncoast Regional Analysis
North America Suncoast Regional Analysis $m 000 $m 000 $m 80 400 200 250 60 70 West Central East 50 60 300 150 50 150 40 40 200 100 30 30 50 20 20 100 50 10 10 0 0 0 -50 0 '02 '03 '04 '05 '06 H2 H2 '02 '03 '04 '05 '06 H2 H2 '02 '03 '04 '05 '06 H2 H2 '05 '06 '05 '06 '05 '06 Revenue (LHS) Revenue (LHS
Slide 14: North America Case Studies
North America Case Studies Hayward Baker Case/McKinney Joint Venture Baltimore Convention Center 42 storey Condominium Tower, Philadelphia Design build contract 8 feet diameter caissons Vibro piers 20 feet deep rock sockets 13
Slide 15: Continental Europe & Overseas Revenue
Continental Europe & Overseas Revenue 2006 Revenue by Country 2006 Revenue by End User Very balanced split of Total revenue £255.0m Total revenue £255.0m revenue between geographic areas 14% 10% As with the US, private 19% 10% new build is the largest 15% 45% market 18% More public new build 17% 35%
Slide 16: Continental Europe & Overseas Highlights
Continental Europe & Overseas Highlights • Excellent overall results with profits up over 40% • Revenue in Germany up 10% as the construction market shows signs of an upturn • Margins in Spain weakened but measures have been taken to strengthen the business • France had an excellent year, increasing
Slide 17: Continental Europe Sales Growth
Continental Europe Sales Growth €m Eastern Europe revenue now 80% of 80 Germany’s (1997: 8%) 70 Continued strong 60 growth expected from 50 Eastern Europe 40 German construction market remains one of 30 the largest in Europe 20 Germany 10 Eastern Europe 0 1997 1998 1999 2000 2001 2002 2003 2004 2005
Slide 18: Continental Europe & Overseas Case Studies
Continental Europe & Overseas Case Studies New railway tunnel in Leipzig Royal Castle, Warsaw Connecting North & South stations Deep basement excavation Compensation and cement grouting Jet grouting, anchors and soil mixing 17
Slide 19: UK Highlights
UK Highlights • KGE doubled profits on revenue 40% ahead of last year – Foundation support division had an excellent year – Geotechnical division had an on-budget year – Enlarged Phi business now fully integrated into KGE • Makers volumes recovered in 2006 with a break even result – Variety of inter
Slide 20: Australia Highlights
Australia Highlights Record result from Australia with profits up nearly four-fold • Record result from Australia with Five months’ contribution from Piling profits up nearly fourfold Contractors • Five months contribution from Piling Acquisition well timed to take advantage Contractors of growing i
Slide 21: Capital Expenditure
Capital Expenditure New version of Keller’s vibrocat (LHS) – Single purpose rig for vibro replacement – Quick mobilisation – High productivity New Keller minicat (RHS) – Smaller and lighter than the vibrocat – Designed for a new market segment Both machines give a competitive advantage 20
Slide 22: Strategy
Strategy • Our Objective – The further consolidation of our global leadership in specialist ground engineering services through: – Organic growth • Particularly in growing markets – Targeted acquisitions • Both in the US and Europe • Our Execution – Transfer of technologies within our current geogra
Slide 23: Strategy
Strategy 2006 US Revenue 2006 Europe & Overseas Piling is always the largest by Product (excluding Suncoast) Revenue by Product part of any foundation Total revenue £324.7m Total revenue £255.0m market There is scope to increase 21% 23% piling activity in Europe & Overseas 52% – organically 15% 64%
Slide 24: Outlook
Outlook • US residential market continues to decline – recent drop in housing permits extended to Texas • US non-residential markets remain strong, although: – hot spot markets cooling – order book down from its peak, but remains at an historically high level • Elsewhere, plenty of opportunities wit
Slide 25: Appendix
Appendix KELLER
Slide 26: Keller's History
Keller’s History 1958 1960’s 1974 1984 1990 1994 1996 2001 2002 2005 2006 NOW Est. 1958 Acquired Management Acquired Acquired Ground test Johann Keller buyout from Makers (UK) Donaldson (US) services in Germany, GKN plc marking Acquired Acquired Phi international Acquired Suncoast (US) (UK) expansio
Slide 27: Ground engineering worldwide
Ground engineering worldwide % of 2006 Activities revenue Regions of use Applications Piling & earth retention 35 % Mainly: Foundation support US Walls and excavation support Australia Ground improvement 26 % US Foundation support UK Seismic risk protection Continental Europe & Overseas Australia Sp
Slide 28: Our Business Model
Our Business Model • Specialist with a tight focus • Experienced people with deep industry knowledge • Global business, but with strong local knowledge • Well balanced with broad markets and customer base • Broad range of industry-leading technologies and processes • Good long-term growth record and
Slide 29: US Geographic Coverage
US Geographic Coverage MAINE WASHINGTON NORTH VERMONT MONTANA DAKOTA NEW HAMPSHIRE MINNESOTA OREGON WISCONSIN MASSACHUSETTS IDAHO NEW YORK SOUTH RHODE ISLAND DAKOTA MICHIGAN CONNECTICUT WYOMING PENNSYLVANIA NEW JERSEY IOWA NEBRASKA OHIO WASHINGTON D.C. DELAWARE NEVADA ILLINOIS INDIANA MARYLAND WEST
Slide 30: Europe Geographic Coverage
Europe Geographic Coverage SWEDEN UK NETHERLANDS GERMANY POLAND CZECH REP. SLOVAKIA FRANCE SWITZERLAND AUSTRIA HUNGARY SLOVENIA CROATIA PORTUGAL SPAIN ITALY 29
Slide 31: Ten Year Track Record
Ten Year Track Record Revenue 1997 – 2006 (£m) Compound 920.2 annual growth 65.1 rate of 15% 123.2 731.0 37.1 89.2 595.9 567.5 32.4 511.0 27.9 26.1 108.3 476.9 104.0 422.2 106.7 18.3 399.9 314.9 313.0 100.1 266.9 20.8 14.2 270.4 280.2 244.6 12.3 82.3 91.0 242.6 65.1 67.7 188.8 98.5 107.4 110.1 85.1
Slide 32: Ten Year Track Record
Ten Year Track Record Operating Profit 1997 – 2006 (£m) Compound 89.1 annual growth 7.0 3.2 rate of 22% 53.1 1.8 -0.3 64.1 34.3 32.8* 33.9 1.8 2.0 1.9 25.4 4.3 0.5 1.7 42.1 19.4 0.5 17.0 3.4 0.7 17.7* 19.3 21.0 14.3 0.9 3.0 22.3 3.4 4.3 4.3 17.4 12.0 9.9 7.7 9.7 13.8 17.9 11.9 12.7 4.1 5.5 5.1 5.9 8
Slide 33: Financial Performance
Financial Performance Operating margin Dividend per share Industry-leading 10% 16 margins 9% 14 Uninterrupted 8% dividend growth 12 7% New dividend 10 6% policy 5% 8 – 15% growth 4% 6 subject to 3% 3x cover 4 2% 1% 2 0% 0 97 98 99 00 01 02 03 04 05 06 97 98 99 00 01 02 03 04 05 06 32
Slide 34: Recent Acquisitions > £5m
Recent Acquisitions > £5m Revenue in Excellent Date Total year of Revenue in organic Company acquired investment acquisiton 2006 CAGR growth Suncoast Oct 2001 $90m $134m $280m 16% achieved Keller-Terra* Dec 2002 €14m €22m €72m 34% post acquisition McKinney Dec 2002 $30m $60m $102m 14% Donaldson Sep
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