Keller Group Plc · LSE:KLR
Keller — FY2022 Earnings Presentation
46 slides from Keller's earnings presentation, Mar 7, 2023
Slide 1: Unaudited Preliminary Results for 2022
Keller Group plc Unaudited Preliminary Results for 2022 7 March 2023 Building the foundations for a sustainable future keller.com
Slide 2: Cautionary statements
Cautionary statements This document contains certain 'forward-looking statements' For a more detailed description of these risks, uncertainties with respect to Keller's financial condition, results of and other factors, please see the Principal risks and operations and business and certain of Keller
Slide 3: Agenda
Agenda 1 Summary 2 Financial results 3 Business performance 4 Strategic progress 5 Summary and outlook 6 Questions and answers
Slide 4: Summary
Summary Underlying Underlying Underlying operating operating diluted Revenue profit margin EPS Order book 2022 dividend £2,944.6m £108.6m 3.7% 100.7p £1.4bn 37.7p +32% +23% Down from 4.0% +20% Up 8% +5% (+24% CC) (+12% CC) • Austral fraud: No material change from position announced on 9 January 2023
Slide 5: Financial results
Financial results 3 KELLER
Slide 6: Summary income statement
Summary income statement 2022 2021 (restated)1 Non- Non- Underlying Total Underlying Total underlying underlying Revenue 2,944.6 - 2,944.6 2,222.5 - 2,222.5 Operating costs (2,837.5) (30.0) (2,867.5) (2,134.4) (9.6) (2,144.0) Amortisation of acquired intangibles - (10.3) (10.3) - (2.6) (2.6) Other o
Slide 7: Impact of Austral financial reporting fraud
Impact of Austral financial reporting fraud Underlying 2021 Austral fraud impact As Austral • Revenue for 2021 reduced by £1.9m to Restated presented impact £2,222.5m Revenue • Underlying operating profit reduced by 2,224.4 (1.9) 2,222.5 £4.3m to £88.5m Operating costs (2,132.0) (2.4) (2,134.4) • Un
Slide 8: Summary income statement – underlying
Summary income statement – underlying 2022 20211 Revenue £m Underlying Underlying FY 2021 2,222.5 FX 154.1 Revenue 2,944.6 2,222.5 North America 429.4 Operating costs Europe 105.5 (2,837.5) (2,134.4) AMEA 33.1 Amortisation of acquired intangibles - - FY 2022 2,944.6 Other operating income - - Operat
Slide 9: Underlying operating profit bridge
Underlying operating profit bridge North America Europe AMEA Central items £m Up £0.8m to £82.0m Up £4.9m to £29.1m Up £6.7m to £6.6m Cost up £1.2m to £9.1m 110.0 (1.2) 108.6 105.0 10.1 100.0 8.1 (3.2) (13.7) 95.0 8.0 8.9 (7.5) 90.0 16.3 6.1 88.5 (3.8) 85.0 (8.0) 80.0 75.0 2021 2022 Restated1 1The 3
Slide 10: Summary income statement – non-underlying
Summary income statement – non-underlying 2022 Non-cash items: £m Goodwill impairment (12.5) Non- Underlying Total Amortisation of acquired intangibles: underlying RECON (8.9) Revenue 2,944.6 - 2,944.6 Moretrench Industrial (0.7) GKM (0.3) Operating costs (2,837.5) (30.0) (2,867.5) Other (0.4) Amort
Slide 11: Net debt flow
Net debt flow £m 2022 20211 Depreciation/capex 2022 2021 Underlying operating profit 108.6 88.5 Net capex/dep and imp 103% 98% Depreciation, amortisation and impairment 97.0 97.4 Gross capex/dep and imp 111% 110% Underlying EBITDA 205.6 185.9 Non-cash items (1.1) - Working capital Actual Revenue Var
Slide 12: Balance sheet
Intangibles inc goodwill £m Balance sheet Opening Additions 139.5 0.1 Acquisition 8.4 £m 2022 20211 Impairment (12.5) Amortisation acquired (10.3) Intangibles incl. goodwill 137.2 139.5 Amortisation other (0.4) FX 12.4 Closing 137.2 Managed assets Tangible fixed assets 486.5 443.4 Tangible fixed ass
Slide 13: Net debt profile (£m)
Net debt profile (£m) 2021 2022 331 294 296 296 282 249 263 242 210 219 192 194 197 198 168 172 176 142 146 130 106 113 119 103 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec • Net debt (IAS 17 lender covenant basis) of £218.8m increased by £99.4m, up 83% (2021: £119.4m), driven predominantly by wo
Slide 14: Financial modelling considerations
Financial modelling considerations 2022 experience 2023 considerations Trading/profit Suncoast Beneficial uplift: favourable contract pricing Residential slow down; more normalised contract with unwind of steel cost pricing and steel cost Large projects NA: LNG contract; Europe: HS2; AMEA: Europe: H
Slide 15: Business performance
Business performance 9 3 KELLER
Slide 16: A robust year-end order book at £1.4bn
A robust year-end order book at £1.4bn Geographic mix (full order book) North America1 Europe1 AMEA1 £761.3m -13% £347.5m +2% £298.4m +56% Order book (£m) 1600 1400 1200 1000 800 RECON LNG project 600 and various HS2 orders 400 Europe large COVID-19 Post COVID-19 ASEAN recovery 200 projects restruct
Slide 17: North America Operating review
North America Operating review £m 2022 2021 Constant £m £m currency Revenue 1,896.1 1,323.1 +29.3% Underlying operating profit 82.0 73.0 +1.0% Underlying operating margin 4.3% 5.5% -120bps Order book1 761.3 787.0 -13.0% 1 Comparative order book stated at constant currency • Revenue: +29%2 improved t
Slide 18: Europe Operating review
Europe Operating review £m 2022 2021 Constant currency Revenue 649.3 549.2 +19.4% Underlying operating profit 29.1 24.3 +20.2% Underlying operating margin 4.5% 4.4% +10bps Order book1 347.5 332.7 +1.5% 1Comparative order book stated at constant currency • Revenue: +19%2, growth reported by all BUs d
Slide 19: AMEA Operating review
AMEA Operating review £m 2022 20212 Constant currency Revenue 399.2 350.2 +9.0% Underlying operating profit 6.6 (0.9) n/a Underlying operating margin 1.7% (0.3)% n/a Order book1 298.4 182.4 +55.8% 1Comparative order book stated at constant currency 2 2021 results has been restated in respect of the
Slide 20: NEOM, Saudi Arabia
NEOM, Saudi Arabia Module 42 • Current work is focused on THE LINE, a smart city, and there are further large elements to the project • It is rapidly gaining momentum in terms of activity and is dynamic/fluid in terms of schedule • It is developing to be a material opportunity for Keller which will
Slide 21: Safety and wellbeing
Safety and wellbeing Accident Frequency Rate Performance • Slight increase in AFR and TRIR, mainly hand injury-related • Emphasis on near miss reporting increased reports by 37% which we see as a positive thing Total Recordable Incident Rate • 4,000 leadership site visits completed • 3,000 site and
Slide 22: Carbon emissions
Carbon emissions 2022 progress 100 250,000 Scope 1 95 tCO2e / £m revenue Net zero • 15% increase in Scope 1 on 2021, due to RECON acquisition and additional projects 90 200,000 Total tCO2e 2040 • 17% decrease in Scope 1/£m revenue on baseline 85 150,000 • Developed sector-wide carbon reduction guide
Slide 23: Strategic progress
Strategic progress 3 KELLER
Slide 24: Our Strategy
Purpose Strategy Objectives Actions To be the preferred international geotechnical specialist contractor focused on sustainable markets and attractive projects, generating long Our term value for our stakeholders Strategy Our local businesses will leverage the group’s scale and expertise to deliver
Slide 25: Strategic progress in 2022
Strategic progress in 2022 Portfolio • Progressed RECON integration • Exited Denmark and Ivory Coast • Acquired GKM Consultants Inc, Canada • Acquired Nordwest Fundamentering AS, Norway Performance • Consolidated Midwest and North-East business units in North America • Started design of an enterpris
Slide 26: Strategic priorities for 2023
Strategic priorities for 2023 Portfolio • Further incremental refinement of activities and structure • Selective acquisitions • Integrate acquisitions and exploit revenue and cost synergies • Prioritise and accelerate market share penetration in chosen local markets Performance • Increase operating
Slide 27: Summary and outlook
Summary and outlook 3 KELLER
Slide 28: Summary and outlook
Summary and outlook 2022 summary • Strong revenue growth despite turbulent and challenging markets • Faced, and dealt with, a number of challenges and headwinds • A good but not a great year 2023 outlook • Robust order book £1.4bn and good trading momentum • Increased focus on operational performanc
Slide 29: Questions and answers
Questions and answers 3 KELLER
Slide 30: Keller overview
Keller overview 3 KELLER
Slide 31: Keller today
Keller today Every day millions of people around the world live, work and play on ground prepared by Keller Three divisions Our purpose Our vision Our values 19 business units To build the To be the Integrity foundations for leading provider a sustainable of specialist Collaboration 180 future geote
Slide 32: Building the foundations for a sustainable future
Building the foundations for a sustainable future • Diverse geographies Resilient • Diverse market sectors revenues • Diverse products • Diverse customers • Specialist project profile Firm Sustainable • Improved focus on quality of margin foundations margins • Strong competitive position • Proprieta
Slide 33: Well balanced in terms of geography and sector
Well balanced in terms of geography and sector • Operating globally in a number of sectors gives us the resilience to trade through national cyclicality • Good access to all markets with no overweight exposure • Geopolitically secure Revenue by geography (2022) Revenue by sector (2022) AMEA 14% Resi
Slide 34: The best solutions
The best solutions • Projects often require a variety of techniques • With access to our global knowledge base and industry leading product portfolio, our engineers can design the best solutions that reduce materials, cost and time for our clients • Our project management capabilities mean we can al
Slide 35: Diverse customer base
Diverse customer base • Our large client spread means we’re not overly reliant on certain customers • Contracts over £5m revenue make up around 1% of the number of contracts, but account for 32% of total revenue Revenue by contract size (2022) Number of contracts (2022) Above £5m - 1% £1m to £5m - 8
Slide 36: Geotechnical market size
Geotechnical market size Market size Market share 36
Slide 37: Keller's emissions
Keller’s emissions 216,779 tonnes of CO2e (Scope 1 and 2) 210,186 6,593 Not tracked Not tracked Scope 1 Scope 2 Scope 3 Scope 3 Operational Materials Direct emissions Indirect emissions Transport of materials, >60% of site (eg fuel use on site) from electricity use business travel and emissions for
Slide 38: Specialist versus generalist business model
Specialist versus generalist business model Project lifespan Keller General contractor Ground engineering General construction • Early stage • Longer, larger projects • Lower cyclicality • National focus • Specialist design capability • Higher cyclicality • A mix of contracts • Integration of multip
Slide 39: Market demand trends play to our strengths
Market demand trends play to our strengths 65m people will be added to urban population 01 Urbanisation and more large- scale development projects by every year. 67% of the world’s population will live in metropolitan regions by 2040 Increasing land shortage, 02 driving a need to use more brownfield
Slide 40: Factors to consider in geotechnical engineering
Factors to consider in geotechnical engineering Site conditions Requirements Loading Constraints conditions • Sand, silt, clay, • Performance • Neighbouring rock, organic (allowable • Spread, low buildings settlements) intensity • Noise, vibration • Loose, soft, stiff, hard, porous • Schedule • Slen
Slide 41: Full product range
Full product range Right combination of products leads to optimal solutions for the soil conditions and structure type 41
Slide 42: Value engineering with an equipment advantage
Value engineering with an equipment advantage • World’s largest equipment fleet with flexibility to move between markets to match local demand • 1,700 engineers; over 200 focused purely on design • 30% of projects are ‘design and build’ where value engineering can reduce cost by up to 40% and save t
Slide 43: The people advantage
The people advantage Enabling high performance by investing in our people and expertise Learning and development programmes • Project Manager Academy • Field Supervisor Academy • Business Development Academy Emerging talent • More than 55 graduates, 66 apprentices and 70 interns and coops • Pitcairn
Slide 44: Financial performance since listing in 1994
44 2022 2021 2022 2020 2021 2019 2020 2018 2019 Financial performance since listing in 1994 2017 2018 TSR of 10.5% CAGR vs. 7.2% FTSE All Share CAGR (at 3 Mar 2023) 2016 2017 2015 2016 Underlying operating profit (£m) 2014 2015 2013 2014 2012 2013 2011 2012 2010 2011 2009 2010 2008 2009 2007 2008 20
Slide 45: Keller fact sheet
Keller fact sheet • Established 1860, now world’s largest geotechnical specialist contractor globally • About 30% of our contracts are design and build, 50% are build only • Revenue by division: North America 64%; Europe 22%; AMEA 14%; (only <5% of business in UK) • Contracts over £5m revenue make u
Slide 46: Investor Relations contact
Investor Relations contact Caroline Crampton Group Head of Investor Relations +44 20 7616 7575 [email protected] 46