Travis Perkins Plc · LSE:TPK
Travis Perkins — FY2020 Earnings Presentation
45 slides from Travis Perkins's earnings presentation, March 2021
Slide 1: 2020 Full Year Results
2020 Full Year Results March 2021
Slide 2: Agenda
Agenda Introduction Nick Roberts p3 Financial review Alan Williams p5 Operational review Nick Roberts p22 & strategic update Appendices p37 Full Year Results March 2021
Slide 3: Introduction
Travis Perkins © Introduction Nick Roberts a) =a > Keyline CCF Kitchens and Joinery
Slide 4: 2020 - Resilient trading amidst significant uncertainty
2020 - Resilient trading amidst significant uncertainty Full year earnings impacted by the pandemic but strong recovery in H2 Excellent progress on a number of key initiatives to strengthen the core of the businesses Opening up new channels via technology and network changes to take market share Acc
Slide 5: Financial Review
Financial Review Alan Williams
Slide 6: Key financial highlights
Key financial highlights Year ended 31 December 2020 Year-on-year (£m unless otherwise stated) FY 2020 FY 2019 change Revenue 6,158 6,956 (11.5)% Like-for-like revenue growth (7.1)% 3.8% (10.9)ppt Adjusted EBITA 227 442 (48.6)% Adjusted earnings per share (pence) 42.4p 112.7p (62.4)% Adjusting opera
Slide 7: Revenue impacted by unprecedented conditions
Revenue impacted by unprecedented conditions Volumes significantly impacted by the pandemic but good recovery in H2 Pricing remained robust despite drop in volumes Disposals of PF&P Wholesale & Tile Giant TS Europe consolidation - first full year Branch closure programme impact c. (3)% in the year 7
Slide 8: H2 Revenue recovery after spring lockdown closure
H2 Revenue recovery after spring lockdown closure Lockdown 8 Full Year Results March 2021
Slide 9: Group gross margins increased due to segment mix
Group gross margins increased due to segment mix 2020 gross margin +c. 50bps 2019 gross margin Reduced Segmental Annual volume Category / P&H business promotional rebates mix *Arrows are demonstrative and are not to scale channel mix mix activity Overall Group gross margin increased by c. 50 bps: –
Slide 10: EBITA drivers
EBITA drivers 10 Full Year Results March 2021
Slide 11: Restructuring programme driving operational efficiencies
Restructuring programme driving operational efficiencies Programme launched to close approximately 190 Merchanting and P&H branches with focus on smaller sites Headcount reduction of approximately 2,500, including branch staff and support functions across all businesses and head office Annualised gr
Slide 12: Merchanting - H2 revenue recovery driven by RMI
Merchanting - H2 revenue recovery driven by RMI Significant impact from spring lockdown Encouraging recovery in H2 led by RMI. Housebuilding and commercial slower to recover FY 2020 FY 2019 Change Total revenue £3,065m £3,703m (17.2)% Gross margins impacted by lower annual volume rebates. Expected t
Slide 13: Toolstation - another year of great progress
Toolstation - another year of great progress Another year of exceptional UK sales growth despite the disruption of Covid FY 2020 FY 2019 Change UK branch network expansion resumed at Total revenue £633m £445m 42.1% pace post initial lockdown with 54 new Like-for-like growth 22.2% 16.3% 5.9ppt branch
Slide 14: Retail - model enables further market outperformance
Retail - model enables further market outperformance Wickes LFL revenue +5.5%** led by strong performance in Core DIY +19.3%** K&B revenue down (27.4)%** impacted by showroom restrictions FY 2020 FY 2019 Change Gross margin modestly higher as K&B mix Total revenue £1,391m £1,342m 3.6% impact offset
Slide 15: Plumbing & Heating - strong H2 recovery
Plumbing & Heating - strong H2 recovery Significant impact in spring lockdown as installers unable to access customer properties Strong H2 recovery driven by domestic installer activity (RMI) with contract FY 2020 FY 2019 Change business a little slower Total revenue £1,069m £1,465m (27.0)% Restruct
Slide 16: Outstanding free cash flow generation
Outstanding free cash flow generation Excellent free cash flow generation of £304m Significant working capital inflow: Inventory reduced by £97m due to unwind of Brexit contingency and network rationalisation Strong debtor collection performance throughout the year Business growth concentrated in ca
Slide 17: Significant H2 investment to keep expansion on track
Significant H2 investment to keep expansion on track Base capex lower year on year due to rephasing of fleet replacements in light (£m) FY 2020 FY 2019 of restructuring Maintenance (42) (56) Growth capex driven by Toolstation H2 IT (15) (12) expansion, TP branch investment and Growth Capex (51) (53)
Slide 18: Property Activity underpins business growth
Property Activity underpins business growth Freehold activity 2016-2020 Merchant freehold acquisitions focused on Cumulative cash invested £239m major conurbations, with retail portfolio exit Cumulative cash from disposals £360m largely complete Net cash in £121m Recent freehold investments built ou
Slide 19: Significant reduction in net debt
Significant reduction in net debt FY 2020 FY 2019 Exceptional working capital Free cash flow (£m) 304 195 performance driving free cash flow Net freehold transactions 26 42 Receipt of £50m from PF&P wholesale Acquisitions / disposals 54 (43) disposal in January Dividends 0 (116) Cash payments on adj
Slide 20: Wickes demerger
Wickes demerger Wickes demerger process has Significant reduction in Group IFRS16 recommenced given more stable net debt post-demerger environment and strong liquidity position TP Group TP Group including excluding Prospectus and circular due to be issued Wickes Wickes Wickes late March* FY2020 FY20
Slide 21: Outlook and technical guidance
Outlook and technical guidance Outlook: Long term fundamentals remain robust with positive catalysts from Government stimulus and strong domestic RMI recovery Continuation of trends seen in Q4 2020 so far in 2021 Focus on modernising and strengthening core business to deliver outperformance and long
Slide 22: Operational Review & Strategic Update
Operational Review & Strategic Update Nick Roberts
Slide 23: Overview
Overview Strong recovery demonstrates resilience of both business models and end markets Accelerated our strategy despite the challenges of the pandemic Progress made in modernising the business for the future Group is progressively leaner, more agile and customer focused 23 Full Year Results March
Slide 24: Key priorities unchanged
Key priorities unchanged ● Customer proposition enhanced Regeneration of Travis Perkins ● Processes simplified ● Network quality improved ● Network expansion on track Accelerate Toolstation expansion ● IT Infrastructure replatformed ● Fulfilment capability enhanced Strengthen the core ● Technology p
Slide 25: Strengthening the core
- strengthening the core Significant progress on regenerating the General Merchant Pricing Range & Commercials Empowerment Network More relevant shelf- Simplified commercial Enhanced local Rationalised network edge pricing structures decision making Simplified processes Depth of range More confident
Slide 26: Progress towards a modern merchant
- progress towards a modern merchant Channels Fulfilment Integration Enhanced website Larger footprint Integration of with trade account branches for depth kitchens and management of heavyside joinery into capability General Merchant Enabled Click & Regional offer Collect management of Greater fleet
Slide 27: Winning market share in UK and Europe
Winning market share in UK and Europe Digital capability & multi-channel approach driving market share gains Rapid evolution of UK ...driving progress on …whilst gaining business model…. key metrics... momentum in Europe Network expansion Sales per branch up 25% Adapted operating model quickly conti
Slide 28: Continuing to improve the business
- continuing to improve the business Driving focus on Opening up new Rationalising cost quality of sales channels base ● Pricing / ● Online sales up ● Closing lower Commercial deal 18% to £57m performing simplification branches ● Segmented ● Increasing strength ● Disposal of low customers by of bath
Slide 29: Specialist Merchants - modernising to extend leadership
Specialist Merchants - modernising to extend leadership Heating & cooling Civils & drainage Interiors & insulation Market leaders in respective sectors Networks rationalised. Strong sales retention from branch closures BIM capability Delivery management system Expanding TF Solutions Commercial simpl
Slide 30: A thriving digitally led home improvement business
- a thriving digitally led home improvement business 2020 has demonstrated the agility and resilience of the Wickes balanced model Performance is supported by well developed digital and flexible fulfilment capability Market share gains and buoyant DIY market underpinned performance 233 stores operat
Slide 31: An organisational platform fit for the future
An organisational platform fit for the future People Process Systems Leadership Commercial deals Accelerated progress strengthened for simplified on digital capability modernisation Management More focus on data to Core system structure delayered drive decisions replacement, starting with Finance sy
Slide 32: Sustainable Business Framework
Sustainable Business Framework 6 Strong Core Focus Areas 6 Leading Commitment Focus Areas A Supply-Chain Wide Approach 32 Full Year Results March 2021
Slide 33: Good progress in 2020; defining long term targets
Good progress in 2020; defining long term targets Carbon Apprenticeships Net zero by 2035 (Scope 1 and 2) 783 apprentices 2020; 179 graduated 80% reduction and 20% offset £2.4m invested; 38 different programmes Set a Scope 3 carbon target by June 2021 Driving greater diversity with 39% female; 66% u
Slide 34: Building the future through a year of adversity
Building the future through a year of adversity A Group of market leading businesses with huge potential Creating a modern merchant Leveraging the strength of the Group Progressive digital tools and capability Collaboration between businesses Integrated with branch and fleet operations Seamless expe
Slide 35: Questions
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Slide 36: Appendices
Travis Perkins [ x a BENCHMARX Kitchens and Joinery
Slide 37: I - Sales drivers by division
I - Sales drivers by division 37 Full Year Results March 2021
Slide 38: II - Segmental revenue analysis
II - Segmental revenue analysis Northern Midlands South West South East Northern Midlands South West South East Timber Forest Heavyside Lightside P&H Timber Forest Heavyside Lightside P&H Merchanting Retail Cash Credit Cash Credit Collected Delivered Collected Delivered Northern Midlands South West
Slide 39: III - Group revenue analysis
III - Group revenue analysis Northern Midlands South West South East Timber Forest Heavyside Lightside P&H Group Cash Credit Collected Delivered *Deliv ered includes direct to site 39 Full Year Results March 2021
Slide 40: IV - Market Lead Indicators
IV - Market Lead Indicators Dec 20 Site visitors Jan 21 (34) pts Consumer confidence (28)pt Dec 20 Site reservations Jan 21 (2) pts Climate for purchases (24) pt Dec 20 Mortgage approvals Q3 20 54% Equity withdrawal (2)% Dec 20 Housing transactions Jan 21 32% Retail Sales growth 7% Jan 21 Housing pr
Slide 41: V - Branch numbers
V - Branch numbers 41 Full Year Results March 2021
Slide 42: VI - Like for Like sales growth
VI - Like for Like sales growth 42 Full Year Results March 2021
Slide 43: VII - Definitions
VII - Definitions Metric Definition Operating profit Earnings before results of associates, interest, tax and amortisation of acquisition-related intangible assets Earning per share (“EPS”) Ratio of net profit after taxation adjusted for minority interests to weighted number of ordinary shares outst
Slide 44: VIII - Definitions (continued)
VIII - Definitions (continued) Metric Definition Site visitors House Builders Federation Survey / monthly / Dec 2020 / Balance score compared to a year ago Site reservations House Builders Federation Survey / monthly / Dec 2020 / Balance score compared to a year ago Mortgage approvals Bank of Englan
Slide 45: Contact
Contact Matt Worster | +44 7990 088 548 Heinrich Richter | +44 7392 125 417 [email protected] [email protected]