Keller Group Plc · LSE:KLR
Keller — H1 2013 Earnings Presentation
36 slides from Keller's earnings presentation, July 2013
Slide 1: Keller Group plc Interim Results
Keller Group plc Interim Results Half year ended June 2013
Slide 2: Highlights
Highlights • Revenue up 5% and operating profit* more than doubled • Strong margin improvement reflects: – successful completion of major projects – cost reduction measures – business improvement initiatives • Cash generated from operations of £30.2m (2012: £9.0m) • Completion of North American Pili
Slide 3: Group Income Statement
Group Income Statement* £m H1 2013 H1 2012 % change FY2012 Revenue up 3% on a constant currency basis Revenue 644.6 613.8 +5% 1,317.5 EBITDA 51.4 35.0 +47% 91.9 Average exchange rates: Operating profit 28.6 13.3 +115% 48.3 - US$1.54 (H1 2012: $1.58) - S$1.92 (H1 2012: S$1.99) Net finance costs (1.8)
Slide 4: Group Income Statement
Group Income Statement Exceptional items £m H1 2013 H1 2012 % change FY 2012 comprise: - £4.9m acquisition costs Profit after tax* 18.5 7.9 +134% 30.0 - £4.5m Waterway earnout Exceptional items (9.4) - - Minority interests (0.3) 0.1 (0.5) Interim dividend up 5% Attributable to to 8.0p per share shar
Slide 5: Operating Profit and Margin
Operating Profit and Margin* H1 2013 H1 2012 Constant currency Op Op revenue up 3% £m Revenue Profit Margin Revenue Profit Margin - N America: +11% - EMEA: +13% North America 308.0 16.5 5.4% 270.1 7.6 2.8% - Asia: -27% - Australia: -15% EMEA¹ 185.5 1.8 1.0% 160.6 (2.8) (1.7%) Asia 44.4 4.8 10.8% 59.
Slide 6: Group Balance Sheet
Group Balance Sheet £m June 2013 June 2012 Dec 2012 Comparisons Goodwill/intangibles 100.2 99.3 97.2 impacted by exchange rates Property/plant/equipment 251.9 253.0 248.5 352.1 352.3 345.7 Continued focus Inventories 65.6 40.3 41.3 on cash Receivables 390.0 375.7 347.1 collection Payables (327.3) (2
Slide 7: Group Cash Flow Statement
Group Cash Flow Statement £m H1 2013 H1 2012 FY 2012 Cash from operations Cash generated from operations 30.2 9.0 108.4 includes usual seasonal working capital outflows Capex – net (19.0) (12.5) (32.7) Tax (14.7) (2.4) (10.7) Last 12 months’ cash Interest (1.9) (2.4) (4.1) from operations represents
Slide 8: Group Contract Awards
Group Contract Awards Monthly contract awards Order intake generally £m (rolling 3 month average at constant currency*) steady 160 – slower in last two Crossrail; Victoria Wheatstone; 140 Station; LNG MOF Vale; Gdansk months 120 100 One major contract 80 Moscow awarded in Russia (£35m) 60 40 Work in
Slide 9: 2013 Guidance
2013 Guidance • H2 revenue flat vs H2 2012 (ex acquisitions) • Business improvement initiatives will continue to deliver margin benefit • £5m Waterway deferred consideration payable in H2 • Capex to be around £40m • Impact in H2 from acquisition of North American Piling (“NAP”) – completed 12 July 2
Slide 10: Group Revenue by End Market
Group Revenue by End Market H1 2013 H1 2012 Keller operates across all Total revenue £645m Total revenue £614m sectors of the construction market 20% 17% 38% Infrastructure/Public 15% 44% 13% Buildings consistently the largest sector 24% - reflects construction 29% spending generally Infrastructure/
Slide 11: US Non-residential Construction Market
US Non-residential Construction Market $bn US Construction Put-in-Place Total US non-residential market 400 down 2% YTD (11% up in H1 350 2012) - private up 1%, public down 5% 300 250 Infrastructure/Public Buildings 200 down 4% YTD 150 Office/Commercial/Leisure up 1% 100 YTD 50 - privately funded se
Slide 12: North America Revenue by End Market
North America Revenue by End Market H1 2013 H1 2012 Infrastructure/Public Total revenue $474m Total revenue $427m Buildings less dominant - down from 50% in 2010 23% 29% 39% 41% Power/Industrial still robust 11% 9% 23% 25% Increase in Residential due to strong Suncoast Infrastructure/Public Building
Slide 13: North America Foundations
North America Foundations Margin increase despite markets remaining competitive Strong performance by Case, McKinney and HJ Several large projects reached/nearing completion - PSE&G and NSTAR transmission lines - University of Chicago Research Institute - Thornton Quarry Piling, residential tower Ol
Slide 14: North American Piling Acquisition
North American Piling Acquisition Market-leading foundations business in Canada - positioned in growth markets offering attractive margins - builds on Keller’s existing presence in Canada Expands Keller’s presence in the relatively underdeveloped Canadian geotechnical market Piling, marina refurbish
Slide 15: North America Case Studies
North America Case Studies Piling, bridge over river Earth retention, road toll lanes Reno, US Dallas, US 14
Slide 16: North America Suncoast
North America Suncoast US Housing Starts (000s) Housing starts continue to improve but 1200 still not at pre-2008 levels 1000 Houston high-rise market buoyant 800 Suncoast revenue up 24% YTD 600 Continued margin improvement after return to profit in 2012 400 Plans to re-start fabrication in Miami in
Slide 17: EMEA Revenue by End Market
EMEA¹ Revenue by End Market H1 2013 H1 2012 Infrastructure/Public Total revenue €219m Total revenue €196m Buildings remains strong due to large projects 14% - Gdansk Tunnel 14% - Victoria Station - Crossrail 17% 44% 42% 23% Revenues still significantly 25% below 2008 levels 21% Infrastructure/Public
Slide 18: EMEA Regional Split
EMEA¹ Regional Split H1 2013 Revenue by Region H1 2012 Revenue by Region UK continues to be Total revenue €219m Total revenue €196m underpinned by large infrastructure projects 19% 19% 16% 20% 5% 4% Strong performance in 6% 7% 17% Germany despite difficult 20% trading conditions 11% 10% 11% 12% 10%
Slide 19: EMEA Highlights
EMEA Highlights Markets remain difficult, particularly in Southern Europe Cost reductions and efficiency improvement measures - H1 2013 profit after H1 loss in 2012 Large infrastructure projects continue to progress well Mobilising on £35m contract in Moscow Good contract selection following establi
Slide 20: EMEA Case Studies
EMEA Case Studies Piling, access shafts for sewage system Ground improvement, rail maintenance workshop Muharraq, Bahrain Tangiers, Morocco 19
Slide 21: Asia Regional Split
Asia Regional Split H1 2013 Revenue by Country H1 2012 Revenue by Country Mixed market conditions Total revenue S$85m Total revenue S$117m - Singapore quiet 4% 1% - Malaysia remains buoyant 13% 17% - India challenging 16% 54% 25% 70% Projects in Hong Kong and Indonesia increasing regional presence S
Slide 22: Asia Highlights
Asia Highlights Singapore volumes down but with reasonable margins - better H2 expected Strong contribution from Malaysia - successful completion of Vale contract - now established as a piling contractor - several MRT projects Trading environment in India very challenging but risks well managed - wi
Slide 23: Australia Revenue by End Market
Australia Revenue by End Market H1 2013 H1 2012 Australian revenue by Total revenue A$162m Total revenue A$190m segment significantly impacted by major 9% projects 6% 10% 7% 32% 52% 31% 53% Office/Commercial and Residential segments remain very quiet Infrastructure/Public Buildings Infrastructure/Pu
Slide 24: Australia Highlights
Australia Highlights Very strong performance from Waterway - exceptional finish on A$159m (£105m) AP LNG MOF joint venture Other parts of the business subdued in H1 - expected to improve during H2 Recent award of a large ground improvement contract for a stadium in Perth A$180m Wheatstone project un
Slide 25: Business Improvement
Business Improvement • Increase revenue and profit from large contracts – more significant portion of revenue coming from large projects – major project won this year in Russia • Accelerate technology transfer – piling transfer to Malaysia and Brazil – wick drains transfer to Australia • Reinforce r
Slide 26: Outlook
Outlook • Conditions in our global construction markets remain mixed – US market improving slowly – Europe and Australia remain challenging – Asian markets mixed • Like-for-like revenue in H2 broadly flat • Improved margin expected, taking us closer to 6% target – careful contract selection – furthe
Slide 27: Appendix
Appendix
Slide 28: Introduction to Keller
Introduction to Keller • The world’s largest independent ground engineering contractor – ground engineering is a small, niche sub-sector of construction – sector growing faster than construction, reflecting: − more pressure to build on brownfield and marginal land − more ambitious development and in
Slide 29: Ground Engineering Worldwide
Ground Engineering Worldwide % of 2012 Activities revenue Regions of use Applications Piling 44% North America/UK Foundation support Eastern Europe Earth retention Middle East Asia & Australia Ground improvement 22% North America Foundation support EMEA Seismic risk protection Asia Australia Special
Slide 30: History of Keller
History of Keller 1958 1960’s 1974 1984 1990 1994 2001 2002 2006 2007 2008 2009 2010 2013 NOW Acquired Phi Acquired Est. 1958 Acquired Management Acquired (UK) Resource Acquired Johann Keller Acquired Geo-Foundations Ground test buyout from Suncoast Piling in Germany Systems Contractors Inc services
Slide 31: Strategy
Strategy • Our Objective – to extend our global leadership in specialist ground engineering through: – organic growth, particularly in developing markets – targeted acquisitions • Our Execution – transfer of technologies and techniques within our current geographic regions – offering design and buil
Slide 32: Ten Year Track Record
Ten Year Track Record £m Revenue 2003 – 2012 1400 (Continuing Operations) 1,317.5 1,196.6 1200 1,154.3 1,068.9 1,037.9 1000 955.1 857.7 800 685.2 600 526.2 505.4 400 200 0 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 North America EMEA Asia Australia 31
Slide 33: Ten Year Track Record
Ten Year Track Record £m Operating Profit 2003 – 2012 (Continuing Operations) 140 119.4 120 107.4 100 89.3 77.3 80 55.3 60 48.3 43.3 40 33.8 * 33.4 28.9 20 0 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 -20 Head Office Costs North America EMEA Asia Australia *pre-exceptionals 32
Slide 34: Operating Margin Trend
Operating Margin Trend Operating margin* Operating margin 12% recovering from 10% historic low Through the cycle margin 8% 6% 4% 2% 0% 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 *pre-exceptionals and from continuing operations 33
Slide 35: Dividend
Dividend Dividend per share (pence) Dividend increased every 25 year since 1994 flotation until 20 2011 15 10 5 0 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 34
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