Coventry Group Limited · ASX:CYG
Coventry — H1 FY2009 Earnings Presentation
22 slides from Coventry's earnings presentation, Feb 20, 2009
Slide 1: Results for Half Year Ended 31 December 2008
For personal use only COVENTRY GROUP LTD ABN 37 008 670 102 Results for Half Year Ended 31 December 2008 Roger Flynn Tony Hockley Executive Chairman Chief Financial Officer 20 FEBRUARY 2009
Slide 2: Synopsis
For personal use only SYNOPSIS BUSINESS PROFILE: Industrial Distribution PAST PRESENT FUTURE • Tough ’07 & ’08 • Continuing debt reduction • Aim to grow the • Actions taken key • Continuing operational business & to survival improvements shareholder • Becoming more outward returns looking • Trading
Slide 3: Business Profile
BUSINESS PROFILE For personal use only LEADING DISTRIBUTOR OF: • Fasteners • Automotive aftermarket parts (including manufactured gaskets) • Fluid system products • Cabinet & furniture hardware CHARACTERISED BY: • Large range (>100,000 SKU’s) • Large number of world leading suppliers • Large number
Slide 4: Fasteners and fluid systems brands
.4\) Coventry Fasteners Hylton Parker Fasteners ‘Australia’s Fastener Specialists New Zealand's Fastener Specialists AMIEcH ZINfIx «Konmecr FASTENINGS & COMPONENTS \ g: © COOPER FLUID SYSTEMS
Slide 5: Automotive, mining and industrial supplies brands
Coventrys Automotive, Mining and Industrial Supplies CORE fire se MotorTraders pe maseal ality automotive gaskets Automotive Parts, Tools ar and Equi pment ‘e) nz gaskets aa gaskets © Drivetrain Truck ai nd Trailer Part 5 Specialists FOr perso
Slide 6: Past '07 & '08 Survival Actions: Net Debt Reduction
PAST ’07 & ’08 Survival Actions For personal use only 1. Net debt reduced from peak of $83m to $37m by: Net Debt Reduction • Halting dividends 100.0 • Minimizing CAPEX • Sale of businesses 80.0 without potential 60.0 $M • Sale of freehold properties / 40.0 motor vehicle fleet 20.0 • Plus profit & wo
Slide 7: Past '07 & '08 Survival Actions: Fresh leadership
PAST ’07 & ’08 Survival Actions For personal use only 2. Fresh leadership matched to tasks WA New to Company CFO Manager Promoted from within SA GGM Manager Auto GM Commercial Artia CEO Manager GM Co Product Fasteners Sec Manager GM HR Fluids CIO Manager Commercial Manager Logistics Managers GGM Log
Slide 8: Past '07 & '08 Survival Actions: Transitions
PAST ’07 & ’08 Survival Actions For personal use only • Correct & complete transitions – Systems transitions – Relocations – Managing the Balance Sheet – Selling surplus/under-performing assets – Taking the “hits” – impairment, IT write-off’s, provisions – Critical review of under-performing busines
Slide 9: Present - Continuing Debt Reduction
PRESENT - Continuing Debt Reduction For personal use only • Net Debt 31.12.08 = $37m • Real Estate Owned 31.12.08 = $15m at Book = $36m at March‘08 appraisal – Willing buyers but unwilling property lenders slowing sales – Rental yield expectations yet to moderate relative to interest rates • Net Deb
Slide 10: Present - Continuing Operational Improvements
- Continuing Operational PRESENT Improvements For personal use only • Service Levels → Market Share • Better Sourcing – COGS our dominant cost (60% of Sales $) • Rationalise Costs - People (55% of expenses) (Our No. 2 Cost) - Sites (6% of expenses) • Optimise Pricing Structure ANNUAL EBIT SENSITIVIT
Slide 11: Present - Becoming More Outward Looking
- Becoming More Outward PRESENT Looking For personal use only • Facing our customers & suppliers for mutual benefit • Improving after being too internalised • Reviewing each of our 116 locations to align network to real customer needs
Slide 12: Present - Being Countered by Economic Crash
PRESENT - Being Countered by Economic Crash For personal use only • Sales are customer “need” driven AND • hesitancy by all particularly felt from November ’08 • Actual & potential deferment of infrastructure projects (particularly WA/Qld resource base) BUT • New car “bubble” from 3-4 years ago brin
Slide 13: Present - Inherent Value Unrecognised
PRESENT - Inherent Value Unrecognised For personal use only Coventry Similar Coys Feb ’09 Market E.V. : NTA 0.5 1.5 Market CAP : NTA 0.3 1.2 Market E.V. : Revenue 0.2 0.4 Market E.V. : EBITDA 5.1 4.4 Sequitur of the Disconnect: CYG is way undervalued when it returns to even modest EBIT : Sales
Slide 14: Present - $'s for the Period
PRESENT - $’s for the Period use only P&L Cashflow (Continuing Operations) 250.0 12.0 For personal 225.0 10.0 200.0 8.0 175.0 6.0 150.0 $M 4.0 $M 125.0 100.0 2.0 75.0 0.0 50.0 -2.0 25.0 0.0 -4.0 From Ops Tax Interest (net) Property Sales Capital Net Cash Flow Revenue COGS Employee Other NRI (net) In
Slide 15: Present - $'s for the Period: Segment Analysis
PRESENT -$’s for the Period Segment Analysis For personal use only $M Industrial Auto Gaskets Revenue 138.4 82.5 5.9 EBIT – normalised 9.9 (3.3) 0.9 EBIT/Revenue % 7.2% - 15.7% Capital Employed 111.7 - 55.3 9.5 - ROCE % 15.8% - 19% • Impact of GFC • Still below HY08 • NZ business felt Nov/Dec becaus
Slide 16: Future - Growth Path
FUTURE For personal use only - Growth Path • Organic - Customers - Products - Locations • Complimentary acquisitions matched to our: - Knowledge/skills - Capacity to fund • Active capital management • Current Bank facilities next due for renewal January 2010. (They were renewed during H1)
Slide 17: Future - Trading Outlook: Auto & Gaskets
FUTURE For personal use only - Trading Outlook Auto & Gaskets SNAKES & LADDERS External Internal External Internal •Dealer viability •Debtor exposure •New car bubble •Lower cost (Finance) •Slower than of early 2000’s base •Financial woes desired inventory requiring service •Recovering of car makers
Slide 18: Future - Trading Outlook: Fasteners
FUTURE For personal use only - Trading Outlook Fasteners SNAKES & LADDERS External Internal External Internal •GFC impacting •Debtor exposure •Government •Lower cost resource related •Slower than announced base infrastructure / desired inventory support for •Project manufacturers reduction infrastru
Slide 19: Future - Trading Outlook: Fluids
FUTURE For personal use only - Trading Outlook Fluids SNAKES & LADDERS External Internal External Internal •GFC impacting •Lower sales •Certain market •Oracle system key markets, drives need to sectors still will give control especially restructure buoyant benefits longer Kalgoorlie & •Introduction
Slide 20: Future - Trading Outlook: Cabinet & Furniture Hardware
FUTURE For personal use only - Trading Outlook Cabinet & Furniture Hardware (Artia) SNAKES & LADDERS External Internal External Internal •GFC adversely •Debtor exposure •New housing •New General impacting •Slower than boost Manager brings discretionary desired inventory •Great market greater spend r
Slide 21: Future - Trading Outlook: New Zealand
FUTURE For personal use only - Trading Outlook New Zealand SNAKES & LADDERS External Internal External Internal •Economy in •Introduction of •New •Standardised recession Oracle disruption Government systems with •Declining •Debtor exposure brings consumer Australia manufacturing confidence •Oracle w
Slide 22: Disclaimer
Disclaimer For personal use only Statements contained in this presentation, particularly those regarding possible or assumed future performance, estimated company earnings, potential growth of the company, industry growth or other trend projections are or may be forward looking statements. Such stat