Turners Automotive Group Ltd · NZX:TRA
Turners Automotive — Shareholder Meeting (September 2024)
58 slides from Turners Automotive's shareholder meeting presentation, Sep 18, 2024
Slide 1: 2024 Annual Meeting Presentation
2024 Annual For personal use only Meeting Presentation 18 September 2024 1 • 2024 ASM PRESENTATION TURNERS AUTO GROUP
Slide 2: Board of Directors
Board of Directors For personal use only Grant Baker Matthew Harrison Alistair Petrie Non-executive Chairman Non-executive Director Non-executive Director John Roberts Lauren Quaintance Antony Vriens Independent Director Independent Director Independent Director 2 • 2024 ASM PRESENTATION TURNERS AUT
Slide 3: Meeting Agenda
Meeting Agenda 1. Presentations For personal use only •Address from the Chair, Grant Baker •Address from the CEO, Todd Hunter •Address from Directors up for re-election 2. Shareholder Discussion 3. Resolutions are per Notice of Meeting •Auditor Appointment and Remuneration •Directors Resolution •Ant
Slide 4: Chairman's Address
For personal use only Chairman’s Address Grant Baker 4 • 2024 ASM PRESENTATION TURNERS AUTO GROUP
Slide 5: Delivering on our plan
For personal use only Delivering on our plan 5 5•• 2024 2024ASM ASMPRESENTATION PRESENTATIONTURNERS TURNERSAUTO AUTOGROUP GROUP
Slide 6: Strong and sustainable business with proven track record
Turners is a strong and sustainable business with a proven track record… Total NPBT/NPAT over 3 year period ($m) Aggregate dividends paid over 3 year period (cps) For personal use only 160 0.800 0.715 137.6 140 0.700 120 0.600 0.51 95.5 96.9 0.500 100 0.43 77.3 0.400 80 70.6 56.6 0.300 60 40 0.200 2
Slide 7: Delivering on our plan for growth
Delivering on our plan for growth … 1. Record result despite the economy under significant pressure. Turners For personal use only demonstrates resilience and ability to pivot to where the demand is strongest. • EBIT $58.6M +12% 1 2. Auto Retail division grows profits 27%, Insurance 15%, Credit 9% •
Slide 8: For personal use only
For personal use only 8 • 2024 ASM PRESENTATION TURNERS AUTO GROUP
Slide 9: FY24 Results snapshot
FY24 Results snapshot Revenue 450 For personal use only 400 350 Revenue Shareholders’ Equity 300 Millions $417.0M +7% $278M as at 31 March 24 250 2H 200 1H 150 Net Profit Before Tax Final Dividend 7.5 cps 100 50 $49.1M +8% FY Div 25.5 cps +11% 0 FY18 FY19 FY20 FY21 FY22 FY23 FY24 EBIT 1 Net profit a
Slide 10: We operate to a simple formula
For personal use only We operate to a simple formula 10 • 2024 ASM PRESENTATION TURNERS AUTO GROUP 10 • 2024 ASM PRESENTATION TURNERS AUTO GROUP
Slide 11: Quality environment, customer experiences, outcomes
For personal use only Quality Quality Quality outcomes environment + customer = for our for our people experiences shareholders 11 • 2024 ASM PRESENTATION TURNERS AUTO GROUP
Slide 12: Team ownership, awards and dividends
50% of our team ~350 Winner of Most Trusted A decade of increasing For personal use only people own shares in Used Car Dealership 5 dividends for shareholders Turners. years running (except for 2020) Quality Quality Quality outcomes environment + customer = for our for our people experiences shareho
Slide 13: Turners has a strong and sustainable yield
Turners has a strong and sustainable yield For personal use only Dividend per Share ($) 0.30 COVID impacted year 0.255 0.25 0.23 0.23 • Continued the track record of delivering strong, 0.20 0.20 sustainable and growing dividends in the business 0.17 (CAGR 11%) 0.16 0.15 0.14 0.15 0.13 • Dividend pay
Slide 14: A year of accolades
A year of accolades… For personal use only 50 Entry into NZX50 INFINZ Finalist in the Diversity NZ Marketing Award: CEO of the Year Works NZ Awards for Excellence in Long- Respectful Culture Term Marketing Strategy 14 • 2024 ASM PRESENTATION TURNERS AUTO GROUP
Slide 15: New medium-term target of $65M NPBT for FY28
New medium-term target of $65M NPBT for FY28 For personal use only Net Profit Before Tax ($M) 70 FY28 target 65 May-24 set new target of $65M NPBT by FY28 60 • We achieved our FY24 target a year ahead,and remain on track for exceeding our $50M NPBT FY25 goal. 55 • Assumes organic growth out of Auto
Slide 16: Positioning ourselves for future growth
For personal use only Positioning ourselves for future growth and extension of the Turners brand… 16 • 2024 ASM PRESENTATION TURNERS AUTO GROUP
Slide 17: Investment in My Auto Shop
For personal use only • Turners have invested $3.35M for 50% of My Auto Shop • My Auto Shop are a vehicle repair platform with 300+ MTA approved repairers plus a fleet of MyAutoShop branded mobile repair vans. Their goal is simple, they aim to make vehicle repairs easier. • Significant opportunity t
Slide 18: Strategic investment in Quashed
For personal use only • Strategic investment of $1 million in Quashed giving a 13% stake in the rapidly growing Kiwi company. • Quashed allows consumers to easily compare, shop and manage insurance policies from multiple insurers across motor, contents, home, pet, and life insurance. • The investmen
Slide 19: Key takeaways
Key takeaways… ✓ Attractive dividend yield of c.9% For personal use only ✓ Proven track record of growth, resilience and a positive outlook. ✓ Strong earnings, despite extremely challenging conditions for retailers. ✓ Auto Retail fired again during the year with +27% profit growth. But it's much mor
Slide 20: CEO's Update
For personal use only CEO’s Update Todd Hunter 20 • 2024 ASM PRESENTATION TURNERS AUTO GROUP
Slide 21: What is happening in the markets we operate in?
What is happening in the For personal use only markets we operate in? 21 • 2024 ASM PRESENTATION TURNERS AUTO GROUP
Slide 22: Regulatory changes driving drop in used car market sales
Regulatory changes driving drop in used car market sales… NZ Used Car Change of Ownerships (000s) For personal use only 1,200 45,000 • The last year saw a material impact on the used import market with unprecedented levels of change in government regulation. 40,000 1,000 35,000 NZ Used Vehicle Chan
Slide 23: Dealer numbers bouncing along the bottom
Dealer numbers bouncing along the bottom Registered Dealer Numbers NZ (source MBIE) 3,600 For personal use only 3,500 • Registered dealer numbers bottomed out in Q1 2023 but picked up off the strength of NZD v YEN 3,400 and higher numbers of used imports. 3,300 3,518 Feb-18 • Dealer numbers startin
Slide 24: Business divisions
Business divisions For personal use only 24 • 2024 ASM PRESENTATION TURNERS AUTO GROUP
Slide 25: FY24 by segment
FY24 by segment For personal use only ($M) Automotive Retail Finance Insurance Credit Revenue 298.6 +7% 62.4 +6% 46.1 +6% 9.8 +6% Segment NPBT 31.8 +27% 12.2 (18%) 14.3 +15% 3.1 +9% • 3 out of 4 segments materially ahead of FY23 • Composition of FY25 profits will look different and it is playing out
Slide 26: Auto Retail Division
For personal use only Auto Retail Division Strong brand Smarter sourcing Systems efficiency 26 • 2024 ASM PRESENTATION TURNERS AUTO GROUP
Slide 27: Our auto retail division has been a stand out performer
Our auto retail division has been a stand out performer Revenue $299M +7%, Segment Profit $32M +27% For personal use only Operating Profit Contribution Auto Retail ($M) 35.0 • Sourcing cars locally (Tina working well) 30.0 31.8 • Operational improvements meaning we turn stock faster 25.0 25.0 Operat
Slide 28: Branch expansion and owning more local cars will drive growth
Branch expansion + owning more local cars will drive growth in units sold Car units sold v Forecasted property retail m2 For personal use only Exiting inefficient Growth in retail focused and Committed plan to large branches eg. located branches + 218,000 Acquisition of have 29 branches 45,000 Penro
Slide 29: Entering a build phase for next growth push
Entering a “build” phase for next growth push Committed development pipeline For personal use only Expected additional Location Branch Size Timing profit contribution “Opportunities” pipeline Timaru (COMPLETED) Cars 4,000m2 Q4 FY24 $500k New locations Napier (COMPLETED) Cars 8,000m2 Q4 FY24 $500k •
Slide 30: Christchurch footprint to be optimised by 2026
Christchurch footprint to be optimised by 2026, with three new sites under development Wairakei Rd – April 2025 For personal use only Moorhouse – commence Sept 2024 Hornby – commence Oct 2024 30 • 2024 ASM PRESENTATION TURNERS AUTO GROUP
Slide 31: Shands Rd, Hornby, Christchurch
Shands Rd, Hornby, Christchurch (15,000m2) For personal use only 31 • 2024 ASM PRESENTATION TURNERS AUTO GROUP
Slide 32: Shands Rd, Hornby, Christchurch
Shands Rd, Hornby, Christchurch (15,000m2) For personal use only 32 • 2024 ASM PRESENTATION TURNERS AUTO GROUP
Slide 33: Other Christchurch sites – Moorhouse Ave
Other Christchurch sites – works to start September Moorhouse Ave (6500m2) For personal use only 33 • 2024 ASM PRESENTATION TURNERS AUTO GROUP
Slide 34: Other Christchurch sites – Wairakei Rd
Other Christchurch sites – works to start September Wairakei Rd (12,000m2) For personal use only 34 • 2024 ASM PRESENTATION TURNERS AUTO GROUP
Slide 35: Tauranga Trucks / DEOL new site in Tauriko
Tauranga Trucks / DEOL – new site in Tauriko due for completion Oct 2024 For personal use only 35 • 2024 ASM PRESENTATION TURNERS AUTO GROUP
Slide 36: Tauranga Trucks / DEOL new site in Tauriko
Tauranga Trucks / DEOL – new site in Tauriko due for completion Oct 2024 For personal use only 36 • 2024 ASM PRESENTATION TURNERS AUTO GROUP
Slide 37: Finance Division
For personal use only Finance Division Weathered the interest rate shock Credit scores continue to improve Back into growth mode 37 • 2024 ASM PRESENTATION TURNERS AUTO GROUP
Slide 38: Finance division
Finance division Revenue $62.4M +6%, Segment Profit $12.2M -18% For personal use only Operating Profit Contribution Finance ($M) 20.0 • Interest rate cycle has been a head wind since FY23 18.0 …but this will turn into a tail wind in time 18.0 16.0 15.8 • Growth in Turners Cars business has halo impa
Slide 39: Net interest margin starting to lift
Net interest margin starting to lift. Net Interest Margin (NIM) % after originator commission For personal use only 8% 7% 6% • NIM has stabilised and is back growing but will gather pace as a reducing OCR 5% cycle begins. 4% • Some older and low priced interest swaps running off in Q1 FY25 which wil
Slide 40: The quality of the finance book continues to improve
The quality of the finance book continues to improve. Average Credit Score For personal use only 740 720 Average Centrix 700 autoloan portfolio score 680 660 640 620 600 580 560 1H17 2H17 1H18 2H18 1H19 2H19 1H20 2H20 1H21 2H21 1H22 2H22 1H23 2H23 1H24 2H24 40 • 2024 ASM PRESENTATION TURNERS AUTO GR
Slide 41: Arrears well below industry benchmarks
Quality focus resulting in arrears at well below industry benchmarks Consumer arrears For personal use only 8.0% Centrix Auto Loan 7.0% Portfolio Jul-24 6.3% 6.0% 5.0% 4.0% 3.0% 2.0% Oxford Finance Aug-24 2.3% 1.0% Low point of 2.0% 0.0% Total consumer arrears Industry arrears (Centirx) 41 • 2024 AS
Slide 42: Insurance Division
For personal use only Insurance Division Well tuned business Distribution networks still important Building blocks for a direct to consumer offer in place 42 • 2024 ASM PRESENTATION TURNERS AUTO GROUP
Slide 43: Insurance division
Insurance division Revenue $46.1M +6%, Segment Profit $14.3M +15% For personal use only Operating Profit Contribution Insurance ($M) • Market share gains continuing to provide robust 16.0 policy sales despite challenging market conditions. 14.0 14.3 • Risk pricing continues to be refined 12.0 12.5 1
Slide 44: Claims are being well managed
Claims are being well managed For personal use only Mechanical Breakdown Insurance (MBI) Loss Ratio Performance 59.8% • Claims Costs inflation being offset by frequency 58.4% of claims reducing due to changes in consumer 58.0% 58.0% behavior (WFH and cost of living). • Risk pricing very important in
Slide 45: Credit Management Division
For personal use only Credit Management Division Business recovering Tightening economy supports growth Payment bank being rebuilt 45 • 2024 ASM PRESENTATION TURNERS AUTO GROUP
Slide 46: Credit management
Credit management Revenue $9.8M +6%, Segment Profit $3.1M +9% For personal use only Operating Profit Contribution Credit ($M) • Business recovering and building off the back of 7.0 improved marketing and a deteriorating 6.0 6.5 economy. • Debt value loaded increased by 14% ($18M) over 5.0 5.1 FY23.
Slide 47: NZ credit arrears metrics worst in years
NZ credit arrears metrics worst in 7 years Consumer Arrears Trend For personal use only Source – Centrix Credit Bureau 47 • 2024 ASM PRESENTATION TURNERS AUTO GROUP
Slide 48: Funding
Funding For personal use only 48 • 2024 ASM PRESENTATION TURNERS AUTO GROUP
Slide 49: More diversification in funding introduced
More diversification in funding introduced Borrowings Borrowings by asset class ($M) For personal use only ($M) Limit Drawn 450 Receivables – Securitisation (BNZ/ACC) 371 305 400 Receivables – Banking Syndicate (ASB/BNZ/Westpac) 50 23 350 Less Cash (10) 300 Net Receivables Funding 421 318 250 Receiv
Slide 50: MPS Update
For personal use only Adrian Orr name check! 20th Aug-24 MPS Update 50 • 2024 ASM PRESENTATION TURNERS AUTO GROUP
Slide 51: Looking forward
3. Looking forward … For personal use only 51 • 2024 ASM PRESENTATION TURNERS AUTO GROUP
Slide 52: Segment Outlook
Segment Outlook For personal use only • Automotive Retail – we are in a build phase over the next 18 months as a number of new sites are under development. We will continue to push hard for the transition of wholesale to retail and see upside coming from this strategy. Consumers demanding lower pric
Slide 53: Guidance
Guidance For personal use only • Expecting a record first half performance with HY25 ahead of HY24. • On track for exceeding the $50M NPBT goal in FY25 however there remains some obvious risks with the rate of recovery in the overall economy and consumer demand. 53 • 2024 ASM PRESENTATION TURNERS AU
Slide 54: Shareholder Discussion
Shareholder For personal use only Discussion 54 54 • 2024 • 2024 ASM ASM PRESENTATION PRESENTATION TURNERS TURNERS AUTO AUTO GROUP GROUP
Slide 55: Resolutions
3. Resolutions For personal use only 55 • 2024 ASM PRESENTATION TURNERS AUTO GROUP
Slide 56: Resolutions
Resolutions ORDINARY RESOLUTIONS: For personal use only Resolution 1 That Baker Tilly Staples Rodway be reappointed as auditor of the Company and that the Directors be authorised to fix the auditor’s remuneration. Resolution 2 That Antony Vriens, who retires by rotation and has offered himself for r
Slide 57: Voting
Voting For personal use only PROXY Resolution: Proxies FOR AGAINST DISCRETION 1. Auditor’s reappointment / remuneration 19,161,313 443,501 2,492,057 2. Re-election of Antony Vriens 19,564,185 3,737 2,525,433 3. Re-election of Alistair Petrie 18,177,952 1,391,536 2,525,433 Total proxies received in r
Slide 58: Close of meeting
Close of meeting For personal use only Todd Hunter Group CEO T: 64 21 722 818 E: todd.hunter@turners.co.nz Aaron Saunders Group CFO T: 64 27 493 8794 E: aaron.saunders@turners.co.nz 58 •• 2024 58 2024 ASM ASM PRESENTATION PRESENTATION TURNERS TURNERS AUTO AUTO GROUP GROUP
Turners Automotive Group — Shareholder Meeting (September 2024) on 6ix