Keller Group Plc · LSE:KLR
Keller — FY2020 Earnings Presentation
52 slides from Keller's earnings presentation, Mar 9, 2021
Slide 1: Full year results 2020: Building the foundations for a sustainable future
Keller Group plc Full year results 2020 9 March 2021 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 Summary Financial results Business performance Strategic progress Outlook and Summary Q&A
Slide 4: Summary
Summary Underlying Underlying Underlying operating operating diluted Revenue profit margin EPS Order book Dividend £2,062.5m £110.1m 5.3% 96.3p c£1bn 35.9p -10% +6% Up from 4.5% Up 18% No change Flat yoy (-10% CC) (+5% CC) (Up 18% CC) • Strong performance in 2020 operationally, financially and strat
Slide 5: Financial results
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Slide 6: Summary income statement
Summary income statement 2020 2019 Non- Non- Underlying Total Underlying Total underlying underlying £m Revenue 2,062.5 - 2,062.5 2,300.5 - 2,300.5 Operating costs (1,953.2) (29.6) (1,982.8) (2,197.4) (28.7) (2,226.1) Amortisation of acquired intangibles - (4.2) (4.2) - (4.3) (4.3) Other operating i
Slide 7: Summary income statement - underlying
Summary income statement - underlying Revenue £m FY 2019 2,300.5 2020 FX (15.5) Non- North America (105.3) Underlying Total underlying EMEA (63.8) £m APAC (53.4) Revenue 2,062.5 - 2,062.5 FY 2020 2,062.5 Operating costs (1,953.2) (29.6) (1,982.8) Operating profit growth Amortisation of acquired inta
Slide 8: Underlying operating profit bridge 2019 to 2020
Underlying operating profit bridge 2019 to 2020 North America EMEA Central items APAC Cost up Up £4.6m to £83.2m Down £m Up £9.9m to £13.0m £0.5m to £7.0m £8.3m to £20.9m 110.0 (0.5) 8.0 6.9 110.1 (4.1) 105.0 3.9 0.6 (6.7) 100.0 2.5 5.2 103.8 (7.9) 7.0 95.0 (25.8) 5.9 90.0 11.3 85.0 80.0 75.0 2019 2
Slide 9: Summary income statement – non-underlying
Summary income statement – non-underlying Non-underlying operating costs £m Disposal of operations (11.6) 2020 North America restructuring (5.5) Non- EMEA restructuring (11.0) Underlying Total APAC restructuring (0.1) £m underlying Impairment of goodwill (0.3) Revenue 2,062.5 - 2,062.5 Other (1.1) O
Slide 10: Cash flow
Cash flow Depreciation/capex Net capex/depreciation 2020 93% 2019 79% £m 2020 2019 Gross capex/depreciation 100% 90% Underlying operating profit 110.1 103.8 Depreciation and amortisation 94.9 94.6 Working capital £m Underlying EBITDA 205.0 198.4 Reduction in receivables 111.1 Non-cash items 1.9 13.4
Slide 11: Balance sheet
Intangibles incl goodwill £m Balance sheet Opening Additions 124.7 0.5 Goodwill impairment (0.3) Amortisation (4.8) £m 2020 2019 Disposal of subsidiaries (0.2) FX (1.1) Intangibles inc goodwill 118.8 124.7 118.8 Tangible fixed assets £m Managed assets Opening 460.6 Capital expenditure 72.5 Tangible
Slide 12: Net debt profile (£m)
Net debt profile (£m) 2019 2020 358 368 353 332 343 343 334 341 320 312 318 258 261 251 223 213 195 155 158 159 140 142 140 121 7 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec • Net debt1 of £120.9m decreased by £92.2m (43%) from 2019 • Average month end net debt of £183.5m down 44% (2019: £327.9m
Slide 13: Financial modelling considerations
Financial modelling considerations 2020 experience 2021 considerations Trading/profit Suncoast margin Impacted by new steel tariffs Similar challenges to 2020 Large projects APAC: Cape Lambert; EMEA: SMS2, HS2, AMEA: Cape Lambert; LNG Mozambique Europe: Oil refinery Mexico, LNG Mozambique SMS2, HS2
Slide 14: Business performance
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Slide 15: Safety performance
Safety performance Critical Injuries 2020 EOY 2019 EOY Change Group 11 17 -6 Highlights North America 3 10 -7 • Critical injuries reduced by 35% Asia-Pacific 3 1 +2 EMEA 5 6 -1 • AFR improved by 20% • TRIR improved by 9.5% Accident Frequency Rate Progress • Formation of Safety Leadership Committee •
Slide 16: COVID-19 safety performance
COVID-19 safety performance When COVID-19 hit, our focus was to ensure the safety of our people and the safety of our business Our people went • Dedicated global crisis team above and beyond to • Company protocols in line with WHO guidelines, keep us delivering for supplemented locally our customers
Slide 17: Order book remains c£1bn
Order book remains c£1bn Geographic mix (Full order book) North America1 EMEA1 APAC1 £585m +1.8% £267m -7.2% £149m -12.3% Order book (£m) 1200 1000 800 EMEA large COVID-19 600 ASEAN reset projects 400 200 0 2016 2017 2018 2019 2020 Order book being drawn upon more slowly 1Prepared on a constant curr
Slide 18: North America Operating review
North America Operating review £m 2020 2019 Constant £m £m currency Revenue 1,227.5 1,333.9 -7.9% Wolf Point United States Underlying operating profit 83.2 78.6 +5.8% Underlying operating margin 6.8% 5.9% Order book1 585.1 574.5 +1.8% 1Comparative order book stated at constant currency • AFR2 of 0.0
Slide 19: Successful North America reorganisation
Successful North America reorganisation Keller North America integrated • All foundations’ offices now offer all products and rebranded its foundation • Progressive harmonised processes is making businesses on 1 January 2020, business more efficient and easier to manage and is now reaping the benefi
Slide 20: EMEA Operating review
EMEA Operating review £m 2020 2019 Constant currency Revenue 607.6 679.6 -9.5% Underlying operating profit 20.9 28.4 -28.4% Underlying operating margin 3.4% 4.2% Order book1 266.6 287.3 -7.2% 1Comparative order book stated at constant currency • AFR2 of 0.21 (2019: 0.30), 30% improvement. Tragic fat
Slide 21: Innovating for growth – Neutrogel
Innovating for growth – Neutrogel® We are constantly innovating • After successful trials, used new greener grout on a to find new and more bottom seal project in Germany for first time sustainable products and technologies • Neutrogel® produces less waste, has a lower carbon footprint and costs les
Slide 22: Asia-Pacific Operating review
Asia-Pacific Operating review £m 2020 2019 Constant currency Revenue 227.4 287.0 -19% Underlying operating profit 13.0 3.3 +320.3% Underlying operating margin 5.7% 1.1% Order book1 148.5 169.3 -12.3% 1Comparative order book stated at constant currency • AFR2 of 0.06 (2019: 0.03), represents 4 lost t
Slide 23: Keller cuts project carbon emissions by more than 90%
Keller cuts project carbon emissions by more than 90% As the world’s largest Chemical and Refining Integrated Singapore geotechnical company, we Project (CRISP), Singapore want to lead the sector in • ExxonMobil’s new refinery that will increase offering solutions that production of cleaner fuels co
Slide 24: Environmental, social and governance
Environmental, social and governance We use the UN Sustainable Development Goals (SDGs) as a framework to guide our activities Environment Social • CDP rating of C is better than • We enhanced our diversity, equity and construction sector average (2019 score B on previous scoring regime) • All rigs
Slide 25: Strategic progress
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Slide 26: Our Strategy
Vision 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 Local businesses will leverage the group’s scale and expertise to deliver engin
Slide 27: Strategic progress in 2020
Strategic progress in 2020 Mainly portfolio actions • Reorganised North America Foundations business • Exited Brazil, Chile, Peru • Rationalised Franki Africa and integrated into Middle East BU • Disposed of Wannenwetsch and Colcrete Eurodrill • Transferred Middle East Africa BU to Asia-Pacific • Ri
Slide 28: Geographic rationalisation
Geographic rationalisation 2019 • North America and Europe divisions comprise of larger, more functionally self-sufficient business units that benefit from established market positions in sustainable markets • Asia-Pacific, Middle East and Africa (AMEA) division brings North Attractive Non-addressab
Slide 29: Strategic focus in 2021
Strategic focus in 2021 Mainly business performance and market penetration • Increase emphasis on performance management, particularly projects and business units • Progressively implement the longer-term simplification, standardisation and digitisation of our business operating model • Focused mark
Slide 30: Outlook and Summary
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Slide 31: Outlook for 2021
Outlook for 2021 Backdrop • Order intake and revenue slowed in H2 2020 • Soft start to 2021, especially compared to strong prior year Drivers – COVID-19 • Uncertain macroeconomic outlook • Late cycle impact of customer demand • Operational logistics and site access Leads to unchanged expectations fo
Slide 32: Summary
Summary • Strong performance operationally, financially • Well placed to benefit from long term and strategically in 2020 despite COVID-19 structural growth drivers for global infrastructure and urbanisation • Significant strategic progress, completing all portfolio actions set out a year ago • Conf
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Slide 34: Keller overview
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Slide 35: 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 21 business units To build the To be the Integrity foundations for leading provider a sustainable of specialist Collaboration 180 future geote
Slide 36: 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 37: 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 (2020) Revenue by geography (2020) Revenue by
Slide 38: 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 39: 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 3% of the number of contracts, but account for 24% of total revenue Revenue by contract size (2020) Number of contracts (2020) Above £5m - 3% £1m to £5m - 5
Slide 40: Geotechnical market size
Geotechnical market size Market size Market share Sources: IHS Markit 2019, National statistics organisations. Keller accounts. Amounts are stated in US dollars. 40
Slide 41: 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 42: Market demand trends play to our strengths
Market demand trends play to our strengths More than half the world’s population lives Urbanisation and more large- 01 scale development projects in cities, and 65m people will be added to the urban population every year Increasing land shortage, 02 driving a need to use more brownfield and marginal
Slide 43: Factors to consider in geotechnical engineering
Factors to consider in geotechnical engineering Site conditions Requirements Loading Constraints • Performance conditions • Neighbouring • Sand, silt, clay, rock, organic (allowable • Spread, low buildings settlements) intensity • Loose, soft, stiff, • Noise, vibration hard, porous • Schedule • Slen
Slide 44: Full product range
Full product range Right combination of products leads to optimal solutions for the soil conditions and structure type 44
Slide 45: Value engineering
Value engineering Employ around 50% of our projects are 1,500 geotechnical ‘design and build’ where engineers worldwide; value engineering can over 200 focused purely reduce cost by up to on design 40% and save time Maiden Lane, New York 57-storey tower, lower Manhattan Drilled shafts Congested site
Slide 46: The equipment advantage
The equipment advantage Large fleet and design and manufacture capability Keller total fleet • Total equipment fleet is 1,200 rigs − The largest equipment fleet in the world Keller manufactured fleet • We manufacture specialist equipment in Germany • Available only to Keller • 20% of our projects ar
Slide 47: The people advantage
The people advantage Enabling high performance by investing in our people Project Manager Academy • 150 project managers trained globally − Significant improvement in gross margin already being evidenced Field Supervisor Academy • 120 supervisors have attended − Improving both performance and retent
Slide 48: Financial performance since listing in 1994
Financial performance since listing in 1994 Revenue (£m) Underlying operating profit (£m) 2,800 140 2,400 120 2,000 CAGR = 9% 100 CAGR = 10% 1,600 80 1,200 60 800 40 400 20 0 0 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 201
Slide 49: Quality lender base and strong liquidity
Quality lender base and strong liquidity £375m RCF facility • Broad and supportive syndicate of eight banks • Expires November 2025 • £200m accordion option • Two acquisition spikes Banking $125m US Private Placement syndicate • Matures 2021($50m) & 2024($75m) • Strong USPP investor appetite £364m u
Slide 50: Keller fact sheet
Keller fact sheet • Established 1860, now world’s largest geotechnical specialist • Contracts over £5m revenue make up around 3% of the contractor globally number of contracts, but account for 24% of total revenue • Revenue by division: 60% North America, 29% EMEA, 11% APAC (only <3% of business in
Slide 51: Reporting – new structure proforma
Reporting – new structure proforma effective 1 January 2021 £m 2019 2020 £m 2019 2020 Revenue Underlying operating profit North America 1,333.9 1,227.5 North America 78.6 83.2 EMEA 679.6 607.6 EMEA 28.4 20.9 MEA (90.5) (69.1) MEA (0.0) (2.6) Europe 589.1 538.5 Europe 28.4 18.3 APAC 287.0 227.4 APAC
Slide 52: Investor Relations contact
Investor Relations contact Caroline Crampton Group Head of Investor Relations +44 20 7616 7575 [email protected] 52