Keller Group Plc · LSE:KLR
Keller — FY2013 Earnings Presentation
42 slides from Keller's earnings presentation, March 2014
Slide 1: Keller Group plc Full Year Results 2013
Keller Group plc Full Year Results 2013 March 2014
Slide 2: Cautionary Statements
Cautionary Statements This document contains certain 'forward looking statements' with respect to Keller’s financial condition, results of operations and business and certain of Keller’s plans and objectives with respect to these items. Forward looking statements are sometimes, but not always, ident
Slide 3: Highlights
Highlights • Strong results reflect: – continuing business improvements – excellent performance on several major projects – improving conditions in certain markets, notably in the US • Strong cash generation resulting from: – improved profitability – relentless focus on maximising cash generation •
Slide 4: Financial Highlights
Financial Highlights* • Record revenue of £1,438.2m (2012: £1,317.5m), up 9% • Operating margin raised to 5.4% (2012: 3.7%) – increases in all four divisions • Earnings per share of 73.0p (2012: 45.9p) • Strong cash generation – cash from operations represents 106% of EBITDA (2012: 118%) • Year-end
Slide 5: Group Income Statement
Group Income Statement* £m 2013 2012 % change Revenue up 8% on a constant currency basis Revenue 1,438.2 1,317.5 +9% - up 2% excluding acquisitions EBITDA 124.2 91.9 +35% Excellent performance on Operating profit 77.8 48.3 +61% major projects Net finance costs (3.7) (4.8) Average exchange rates: - U
Slide 6: Group Income Statement (continued)
Group Income Statement (continued) Exceptional items all non- £m 2013 2012 % change trading and relating to acquisitions: Profit after tax* 50.3 30.0 +68% - £6.7m amortisation of acquired intangible assets Exceptional items (22.1) - - £5.9m acquisition costs - £6.0m contingent consideration Tax on e
Slide 7: Dividend History
Dividend History Dividend per share (pence) Dividend increased or 30 maintained 25 every year since 1994 20 flotation 15 Dividend policy of sustainable 10 growth 5 0 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 6
Slide 8: Operating Profit & Margin
Operating Profit & Margin* 2013 2012 Constant currency Op Op revenues up 8% £m Revenue Profit Margin Revenue Profit Margin − N America +19% − EMEA +7% N America 699.4 51.6 7.4% 581.9 32.0 5.5% − Asia -20% − Australia +0% EMEA 399.2 6.8 1.7% 358.6 2.2 0.6% Asia 96.2 9.0 9.4% 118.6 9.5 8.0% All divisi
Slide 9: Operating Margin Trend
Operating Margin Trend Operating margin* Operating margin 12% recovering from 10% Through-the-cycle historic low margin target 8% Peak and 6% trough margins unlikely to 4% repeat 2% 0% 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 * from continui
Slide 10: Group Balance Sheet
Group Balance Sheet £m 2013 2012 Comparisons Goodwill/intangibles 187.9 97.2 impacted by Property, plant & equipment 281.9 248.5 acquisitions and year- Other non-current assets 14.9 14.9 end exchange rates: 484.7 360.6 − US$1.65 (2012: US$1.62) − C$1.76 (2012: C$1.60) Inventories 62.0 41.3 − €1.20 (
Slide 11: Group Cash Flow Statement
Group Cash Flow Statement £m 2013 2012 Cash from operations Cash generated from operations 132.0 108.4 106% of EBITDA (2012: 118%) Capex – net (42.6) (32.7) Interest (5.0) (4.1) Acquisitions: - Keller Canada (£151.2m) Tax (21.5) (10.7) - Franki Africa (£31.3m) Free cash flow 62.9 60.9 - Geo-Foundati
Slide 12: Cash Flow History
Cash Flow History £m 160 10-year cash conversion rate of 98% 140 120 10-year aggregate 100 EBITDA of £970.5m 80 60 10-year aggregate cash 40 from operations of £949.7m 20 0 EBITDA Cash from operations 11
Slide 13: Group Contract Awards
Group Contract Awards Monthly orders Order intake at a healthy £m (rolling 3 month average at constant currency*) level 160.0 140.0 Wheatstone; Vale; Gdansk Order book for next 12 120.0 months 6% ahead of 2013 100.0 80.0 Moscow February 2014: US$41m 60.0 award for Elliott Bay sea Crossrail; Victoria
Slide 14: 2014 Guidance
2014 Guidance • Contributions from 2013 acquisitions forecast to be in line with expectations • Profits from major projects will not repeat at the same level in 2014 • Adverse £7m impact from foreign exchange, assuming current rates • Usual seasonal H2 bias • Expected effective tax rate of 32% • Cap
Slide 15: Strategy
Strategy •Our Objective – to extend our global leadership in specialist ground engineering through: – organic growth, particularly in developing markets – targeted acquisitions • Our Execution – expansion into new higher growth geographic regions – development of new technologies and techniques – tr
Slide 16: Continuous Business Improvement
Continuous Business Improvement • Business improvement initiatives now embedded • Record revenue and profit from large projects (>£5m) • Enhanced focus on risk management – further margin improvement • More examples of technology transfer – wick drains and controlled stiffness columns to Australia –
Slide 17: US Non-residential Construction Market
US Non-residential Construction Market $bn US Construction Put-in-Place Total US non-residential market 400 down 1% in 2013 (up 6% in 350 2012) - private flat, public down 3% 300 250 Infrastructure/Public Buildings 200 remains flat 150 Office/Commercial up 14% 100 - privately funded segment up 21% 5
Slide 18: North America Revenue by End Market
North America Revenue by End Market 2013 Revenue by End Market 2012 Revenue by End Market Infrastructure/Public Total revenue $1,091m Total revenue $919m Buildings less dominant - down from 50% in 2010 26% 24% Power/Industrial robust 34% - Power represents more 41% than half - increase due to Keller
Slide 19: North America - Foundations
North America - Foundations Revenue up 19% - like-for-like up 6% Margin improved to 7.9% (2012: 5.9%) - business improvements - impact of Keller Canada - improved market conditions All four US businesses ahead of 2012 Important contribution from transmission- line projects - will not repeat to the s
Slide 20: North America - Keller Canada
North America - Keller Canada Leading foundations contractor in western Canada, acquired in July for £151.2m - complements Jan 2013 Geo-Foundations acquisition Provides strategic opportunity to - increase exposure to NA energy/resources segment (including Alberta oil sands) - develop broader custome
Slide 21: North America Case Study
North America Case Study Hudson Yards, New York - set to become Manhattan’s largest commercial development Case/Hayward Baker installed piled foundations for Tower C - first building to be constructed Contract value £5.7m On site November 2012 to July 2013 Challenges: Piling, commercial/residential
Slide 22: North America - Suncoast
North America - Suncoast US Housing Starts (000s) US housing starts 000s continue to improve 2500 − up 17% in the year − still well below long-term 2000 norm 1500 1000 500 0 Source: US Census Bureau Housing Starts 21
Slide 23: North America - Suncoast
North America - Suncoast 000s $m 3000 300 Suncoast continuing to improve 2500 250 - revenue up 19% - operating margin 5.0% (2012: 3.6%) 2000 200 1500 150 Strengthening high-rise market 1000 100 500 50 Miami high-rise fabrication facility re- 0 0 started in H2 Housing Starts (000's) Suncoast revenue
Slide 24: EMEA Regional Split
EMEA Regional Split * 2013 Revenue by Region 2012 Revenue by Region Half of revenue from UK, Total revenue €471m Total revenue €441m Germany and Poland 18% 19% 19% Southern European 24% markets remain depressed 4% - France/Spain now around 2% 6% 18% one third of peak 17% 8% 8% Middle East showing si
Slide 25: EMEA Highlights
EMEA Highlights Operating profit improving, but markets remain challenging Cost reductions and business improvements Good contributions from Germany and UK Good progress on major infrastructure projects - Gdansk Tunnel - Victoria Station - Crossrail Competition remains intense in Middle East Piling,
Slide 26: EMEA - Franki Africa
EMEA - Franki Africa Largest ground engineering business in South Africa, acquired in November for £31.3m Provides design and build services to the mining, civil engineering and construction industries Around 50% of revenue in recent years from other Sub-Saharan African countries - access to markets
Slide 27: EMEA Case Study
EMEA Case Study Emergency repair works: A23 Vienna bypass – Austria's busiest road Contract value: €1.6m Retaining walls up to 40 years old - unsuitable for today‘s high traffic volume Our work - to secure the retaining walls by anchoring Challenging logistics with works executed 10pm to 5am to main
Slide 28: Asia Regional Split
Asia Regional Split 2013 Revenue by Country 2012 Revenue by Country Malaysia share down to Total revenue S$188m Total revenue S$235m 22% (2012: 27%) due to completion of major 5% contract for Vale 12% 12%1% - market remains buoyant 22% 27% 61% 60% Increase in Other reflects projects in Hong Kong and
Slide 29: Asia Highlights
Asia Highlights Strong performance on several contracts helped to raise margin on reduced revenue Another good result from Malaysia - piling now well established Singapore recorded a strong year Largest ground improvement contract to date in Indonesia, largely complete at 31/12 Trading conditions in
Slide 30: Australia Highlights
Australia Highlights Significant increase in operating profit on flat A$ revenue - continued strengthening of risk management - better contract selection - very strong performance on major projects APLNG MOF project underpinned H1 result Good contributions in H2 from several large, ongoing contracts
Slide 31: Australia - Wheatstone
Australia - Wheatstone On-shore piling supply and installation - now increased to A$220m Repetitive piling process, but with challenging logistics - major steel tube supply from Korea - remote site with difficult climatic conditions 40% complete at year end, with key project targets achieved - safet
Slide 32: Outlook
Outlook • Global markets remain mixed – North America: continued gradual improvement – Europe: recovery patchy and fragile – continued uncertainty in Australia – good opportunities in Africa and Asia • Contract awards remain at a healthy level – like-for-like order book, for work to be executed in t
Slide 33: Highlights
Highlights • Strong results reflect: – continuing business improvements – excellent performance on several major projects – improving conditions in certain markets, notably in the US • Strong cash generation resulting from: – improved profitability – relentless focus on maximising cash generation •
Slide 34: Appendix
Appendix
Slide 35: Introduction to Keller
Introduction to Keller • The world’s largest independent ground engineering contractor – ground engineering is a small, niche sub-sector of construction – growing faster than construction, reflecting: − more pressure to build on brownfield and marginal land − more ambitious development and infrastru
Slide 36: Ground Engineering Worldwide
Ground Engineering Worldwide Activities Piling Ground Specialty Anchors, Post-tension improvement grouting nails, concrete minipiles % of 2014 XX% XX% XX% XX% XX% revenue Applications Foundation Foundation Control of Excavation Slab-on-grade support support building support foundations Earth retenti
Slide 37: Group Revenue by End Market
Group Revenue by End Market 2013 Revenue by End Market 2012 Revenue by End Market Keller operates across all Total revenue £1,438m Total revenue £1,318m sectors of the construction industry 19% 17% 34% Infrastructure/Public 40% 14% Buildings remains the 15% largest sector - further decrease due to g
Slide 38: Ten Year Track Record - Revenue
Ten Year Track Record £m Revenue 2004 – 2013 1600 (Continuing Operations) 1,438.2 1400 1,317.5 1,196.6 1,154.3 1200 1,068.9 1,037.9 1000 955.1 857.7 800 685.2 600 526.2 400 200 0 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 North America EMEA Asia Australia 37
Slide 39: Ten Year Track Record - Operating Profit
Ten Year Track Record £m Operating Profit 2004 – 2013* 140 119.4 120 107.4 100 89.3 77.3 77.8 80 55.3 60 48.3 43.3 40 33.4 28.9 20 0 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 -20 Head Office Costs North America EMEA Asia Australia * * from continuing operations and before exceptional items 3
Slide 40: Group Financing Position
Group Financing Position • £344m of committed facilities, mainly: Key Financial Covenants – £170m bank facility expiring April 2015 Test Status* – US$150m bank facility expiring July 2017 – US$70m private placement, payable October 2014 Net debt < 3x EBITDA 1.3x – US$40m private placement, payable A
Slide 41: History of Keller
History of Keller 1958 1960’s 1974 1984 1990 1994 2001 2002 2006 2007 2009 2010 2013 NOW Acquired Acquired Est. 1958 Acquired Management Acquired Geo-Foundations Resource Ground test Johann Keller buyout from Suncoast (Canada) Piling services in Germany GKN plc (US) (Singapore) marking Acquired inte
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