Keller Group Plc · LSE:KLR
Keller — H1 2022 Earnings Presentation
49 slides from Keller's earnings presentation, Aug 2, 2022
Slide 1: Interim Results for 2022
Keller Group plc Interim Results for 2022 2 August 2022 Building the foundations for a sustainable future keller.com
Slide 2: Cautionary statements
Cautionary statements This document contains certain ‘forward looking statements’ with For a more detailed description of these risks, uncertainties and respect to Keller’s financial condition, results of operations and other factors, please see the Risk Management approach and business and certain
Slide 3: Agenda
Agenda Summary Financial results Business update Summary and outlook Questions and answers
Slide 4: Summary
Summary Underlying Underlying Underlying operating operating diluted Revenue profit margin EPS Order book Dividend £1,337.4m £49.6m 3.7% 46.5p £1.6bn 13.2p +36% +26% Down from 4.0% +31% (+22% CC) +5% YoY (+31% CC) (+19% CC) Record H1 performance, despite the current macroeconomic challenges Reve
Slide 5: Financial results
Financial results at LET = ETE _ a a - “= > KELLER
Slide 6: Summary income statement
Summary income statement H1 2022 H1 2021 Non- Non- Underlying Total Underlying Total underlying underlying Revenue 1,337.4 - 1,337.4 984.1 - 984.1 Operating costs (1,288.7) (6.1) (1,294.8) (944.9) (6.3) (951.2) Amortisation of acquired intangibles - (5.8) (5.8) - (0.4) (0.4) Other operating income -
Slide 7: Summary income statement - underlying
Summary income statement - underlying Revenue £m H1 2021 984.1 H1 2022 H1 2021 FX 34.3 Underlying Underlying North America 245.1 Europe 62.2 Revenue 1,337.4 984.1 AMEA 11.7 Operating costs H1 2022 1,337.4 (1,288.7) (944.9) Share of post-tax profits from JVs 0.9 0.3 Operating profit Operating profit
Slide 8: Underlying operating profit bridge H1 2021 to H1 2022
Underlying operating profit bridge H1 2021 to H1 2022 £m 55.0 North America Europe AMEA Central items Down £11.1m to £30.1m Up £8.2m to £13.9m Up £11.1m to £10.5m Cost up £0.2m to £4.9m 50.0 1.6 (0.2) 49.6 45.0 4.7 2.1 4.8 40.0 39.5 (7.2) 0.8 35.0 7.4 30.0 (11.5) 7.6 25.0 20.0 2021 2022 8
Slide 9: Summary income statement – non-underlying
Summary income statement – non-underlying Non-underlying operating costs £m H1 2022 Exceptional contract dispute (3.5) Non- ERP costs (1.2) Underlying Total underlying Restructuring (1.2) Other (0.2) Revenue 1,337.4 - 1,337.4 Total (6.1) Operating costs (1,288.7) (6.1) (1,294.8) Amortisation of acqu
Slide 10: Cash flow
Cash flow £m H1 2022 H1 2021 Depreciation/Capex 2022 2021 Underlying operating profit 49.6 39.5 Net capex/Depreciation 74% 83% Depreciation, amortisation and impairment 48.5 44.5 Gross capex/Depreciation 80% 95% Underlying EBITDA 98.1 84.0 Non-cash items (1.1) (0.7) (Increase)/decrease in working ca
Slide 11: Balance sheet
Intangibles incl. goodwill £m Balance sheet Opening Acquisition 141.4 2.7 Amortisation acquired (5.8) Amortisation other (0.3) FY 2021 FX 11.1 £m H1 2022 H1 2021 (Audited) Closing 149.1 Intangibles incl. goodwill 149.1 141.4 116.9 Tangible fixed assets £m Opening 443.4 Managed assets Capital expendi
Slide 12: Net debt profile (£m)
Net debt profile (£m) 2020 2021 2022 249 263 242 197 198 210 194 176 192 168 158 172 159 146 140 142 140 142 130 121 119 106 113 103 Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun • Net debt (IAS17 lender covenant) of £194.0m increased by £80.6m, up 71% (H1 2021: £113.4m), driven by working capital
Slide 13: Financial modelling considerations
Financial modelling considerations H1 2022 experience H2 2022 consideration Trading/profit Strong residential volume offset by Expected macro driven reduction in resi NA Suncoast profit volume; no further impact from steel price steel price increase for high rise increases Large projects NA: RECON,
Slide 14: Business update
Business update } KELLER
Slide 15: Safety performance
Safety performance Accident Frequency Rate Performance • AFR increased to 0.09 per 100,000 hours 1.2 • TRIR increased to 0.83 per 100,000 hours 0.61 • Demonstrates we cannot be complacent 0.39 0.35 0.34 0.23 0.19 0.15 0.12 0.08 0.09 Actions 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 YTD
Slide 16: Journey to net zero
Journey to net zero Scope 1 Fuel Scope 2 Electricity Scope 3 Operational Net zero by 2040 Net zero by 2030 Net zero by 2050 • Developing fleet decarbonisation • Completed energy efficiency • More than 550 engineers strategy, analysing existing fleet audits in Europe, with North trained on use of car
Slide 17: Order book increased to a record £1.6bn
Order book increased to a record £1.6bn Geographic mix Order book (£m) (Full order book) 1600 Group1 £1.6bn +22% 1400 1200 North America1 1000 £927.2m +26% 800 COVID-19 Post COVID-19 recovery Europe large ASEAN Europe1 600 projects restructure £390.5m +5% 400 AMEA1 200 £247.4m +44% 0 2016 2017 2018
Slide 18: North America Operating review
North America Operating review £m H1 2022 H1 2021 Constant Aria Reserve £m £m currency Miami, USA Revenue 865.7 581.7 +39% Underlying operating profit 30.1 38.4 -27% Underlying operating margin 3.5% 6.6% -310bps Order book1 927.2 735.7 +26% 1Comparative order book stated at constant currency • Reven
Slide 19: Europe Operating review
Europe Operating review £m H1 2022 H1 2021 Constant currency Peterborough Revenue 297.6 242.0 +26% UK Underlying operating profit 13.9 5.7 +144% Underlying operating margin 4.7% 2.4% +230bps Order book1 390.5 373.2 +5% 1Comparative order book stated at constant currency • Revenue +26% and underlying
Slide 20: AMEA Operating review
AMEA Operating review £m H1 2022 H1 2021 Constant currency Revenue 174.1 160.4 +7% Underlying operating profit 10.5 0.1 n/a King William St Adelaide, Australia Underlying operating margin 6.0% 0.1% +590bps Order book1 247.4 171.6 +44% 1Comparative order book stated at constant currency • Revenues +7
Slide 21: Our Strategy
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 engineered solutions and operational
Slide 22: NEOM, Saudi Arabia
NEOM, Saudi Arabia • Keller is one of a small number of geotechnical contractors to have been selected to work on the prestigious NEOM project • The first element is ‘The Line’, a 170- kilometre-long mega-city • Keller has signed an umbrella Framework Agreement and is mobilising for the first works
Slide 23: Keller pedigree and performance in a recession
Keller pedigree and performance in a recession Resilience through historical recessions and the pandemic is evidenced by continuous and growing dividends for 28 years • Diverse revenues by geography Dividend per share (p) and sector 40 • Sustainable margins, passing on 35 inflationary pressures CAGR
Slide 24: Summary and outlook
Summary and outlook } KELLER
Slide 25: Summary and outlook
Summary and outlook Summary • Record H1 performance • Strong growth despite the current macroeconomic and The long term fundamentals operational challenges continue to be strong; we • Continued execution of strategy through bolt-ons and remain optimistic about our restructuring future trading prospe
Slide 26: Questions and answers
Questions and answers } KELLER
Slide 27: Keller overview
Keller overview at LET = ETE _ a a - “= > KELLER
Slide 28: 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 29: 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 30: Case study: ASEAN infrastructure projects in 2021
Case study: ASEAN infrastructure projects in 2021 Keller is helping construct major infrastructure projects that drive economies and improve millions of lives Indonesia • Foundations for a major high-speed railway • Secured significant contract for a power plant in Java • Foundations for a liquid na
Slide 31: Case study: Keller brings RemediaClay® to Europe
Case study: Keller brings RemediaClay® to Europe Keller has completed the trial of its newly patented RemediaClay® technology on two 100m stretches of a small road in France • Clay soils that swell and shrink due to moisture cause structural foundation damage and often need underpinning • RemediaCla
Slide 32: Case study: Keller Canada: A clear plan for the future
Case study: Keller Canada: A clear plan for the future Business has seen remarkable turnaround over the last 18 months and is now a profitable, focused company Acquired in 2013 during oil boom; oil price, contracts and revenue fell a few years later Actions taken • Restructured the business • Appoin
Slide 33: Case study: High Speed 2 (HS2) carbon reduction
Case study: High Speed 2 (HS2) carbon reduction Keller is testing carbon-cutting measures on HS2 Initiatives include: • Running static plant with electricity rather than diesel • Replacing diesel with hydrotreated vegetable oil (HVO) in drilling rigs reducing CO2 by 90 percent • Optimised design of
Slide 34: Case study: Lean improvements mean significant savings
Case study: Lean improvements mean significant savings Keller’s Lean team has been helping business units make small changes with a big impact Spain: Improving site documentation has saved six hours per project or 20 days a year Norway: Simplifying the registration process for sending people to site
Slide 35: 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 (2021) Revenue by sector (2021) Marine 2% AME
Slide 36: 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 37: 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 28% of total revenue Revenue by contract size (2021) Number of contracts (2021) Above £5m - 1% £1m to £5m - 5
Slide 38: Geotechnical market size
Geotechnical market size Market size Market share Sources: Keller accounts. IHS Global Insight, GlobalData and other local sources 38
Slide 39: Carbon scopes
Carbon scopes 189,686 tonnes CO2e last year (Scope 1 and 2) 183,112 6,574 Not tracked Scope 1 Scope 2 Scope 3 Scope 3 Direct emissions Indirect electricity Operational Operational (Keller) (eg fuel use emissions (Client) Transport of materials, on site) > 80% of site business travel and emissions fo
Slide 40: 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 41: Market demand trends play to our strengths
Market demand trends play to our strengths More than half the world’s population lives 01 Urbanisation and more large- 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 42: 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 43: Full product range
Full product range Right combination of products leads to optimal solutions for the soil conditions and structure type 43
Slide 44: 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 Carolina Panthers Practice Facility • 700,000ft2 facility for professional football
Slide 45: The equipment advantage
The equipment advantage Large fleet and design and manufacture capability Keller total fleet • Total equipment fleet is 1,250 rigs − The largest foundation equipment fleet in the world Keller manufactured fleet • We manufacture specialist equipment in Germany • Available only to Keller • 20% of our
Slide 46: 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 100 graduates, 50 apprentices and 80 interns • Pitcairn Engineer
Slide 47: Financial performance since listing in 1994
47 2021 2020 TSR of 10.4% CAGR vs. 7.0% FTSE All Share CAGR (source: Datastream, 26 July 2022) 2020 2019 2018 2018 2017 2016 Financial performance since listing in 1994 2016 2015 2014 2014 Underlying operating profit (£m) 2013 2012 2012 2011 2010 2010 2009 2008 2008 2007 2006 2006 2005 2004 2004 200
Slide 48: Keller fact sheet
Keller fact sheet • Established 1860, now world’s largest geotechnical specialist contractor globally • About 50% of our contracts are design and build, 50% are build only • Revenue by division: North America 59%; Europe 25%; AMEA 16%; (only <5% of business in UK) • Contracts over £5m revenue make u
Slide 49: Investor Relations contact
Investor Relations contact Caroline Crampton Group Head of Investor Relations +44 20 7616 7575 [email protected] 49