Keller Group Plc · LSE:KLR
Keller — H1 2024 Earnings Presentation
45 slides from Keller's earnings presentation, Aug 6, 2024
Slide 1: Outstanding H1 performance, expectations for FY24 materially increased
Outstanding H1 performance, expectations for FY24 materially increased Keller Group plc Interim results for 2024 6 August 2024 1
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: Summary Financial results Business performance
01 Summary 02 Financial results 03 Business performance 04 Group strategy 05 Summary and outlook 06 Q&A
Slide 4: Summary - Outstanding H1
Summary - Outstanding H1 Underlying Underlying Underlying operating operating diluted Revenue profit margin EPS Order book Dividend £1,489.8m £113.2m 7.6% 103.3p £1.6bn 16.6p +2% +69% Up from 4.6% +85% (+10.4% CC1) +19% YoY (+5% CC1) (+76% CC1) Outstanding H1 performance setting new records across
Slide 5: Financial results
$ KELLER Financial results
Slide 6: Summary income statement
Summary income statement H1 2024 H1 2023 Non- Non- Underlying Total Underlying Total underlying underlying Revenue 1,489.8 - 1,489.8 1,466.3 - 1,466.3 Operating costs (1,373.3) (6.6) (1,379.9) (1,384.9) (7.0) (1,391.9) Net impairment (loss)/gain of trade receivables and contract assets (2.8) - (2.8)
Slide 7: Summary income statement - underlying
Summary income statement - underlying 1. Revenue £m CC% H1 2024 H1 2023 H1 2023 1,466.3 Underlying Underlying FX (42.4) North America 35.9 +4.2% Revenue 1,489.8 1 1,466.3 EME 23.8 +6.0% Operating costs (1,373.3) (1,384.9) APAC 6.2 +3.4% Net impairment (loss)/gain of trade receivables and H1 2024 1,4
Slide 8: Underlying operating profit bridge H1 2023 to H1 2024
Underlying operating profit bridge H1 2023 to H1 2024 North America EME APAC Central items £m Up £42.7m to £105.8m Down £8.7m to £3.0m Up £15.2m to £11.1m Cost up £0.5m to £6.7m 115.0 1.1 5.3 14.1 (0.5) 110.0 113.2 32.9 (5.2) 1.4 105.0 100.0 (14.0) 95.0 90.0 85.0 80.0 13.6 75.0 70.0 65.0 67.0 (2.5)
Slide 9: Summary income statement – non-underlying
Summary income statement – non-underlying H1 2024 Non- Underlying Total 1. Non-underlying items underlying Revenue 1,489.8 - 1,489.8 Cash items £m Operating costs (1,373.3) (6.6) (1,379.9) ERP costs (2.5) Net impairment (loss)/gain of trade receivables and Restructuring (3.3) contract assets (2.8) -
Slide 10: Net debt flow
Net debt flow £m H1 2024 H1 2023 Underlying operating profit 113.2 67.0 1. Depreciation/Capex 2024 2023 Depreciation, amortisation and impairment Net capex/depreciation 69% 100% 54.0 1 54.1 Gross capex/depreciation 96% 115% Underlying EBITDA 167.2 121.1 Non-cash items (3.3) (0.6) Increase in working
Slide 11: Balance sheet
Balance sheet 1. Intangibles incl. goodwill £m Opening 114.6 £m H1 2024 FY 2023 H1 2023 Amortisation acquired (1.6) FX 0.3 Intangibles incl. goodwill 113.3 1 114.6 128.8 Closing 113.3 Managed assets 2. Property, plant and equipment £m Property, plant and equipment 461.7 2 480.2 473.5 Opening 480.2 R
Slide 12: Net debt profile (£m)
Net debt profile (£m) 2024 2023 254 255 257 250 235 245 237 244 224 209 160 146 120 130 105 94 101 91 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec • Net debt1: £100.7m decreased by £143.9m, down 59% (H1 2023: £244.6m) • Average month-end net debt1: £112.4m, down 54% (H1 2023: £244.7m) • The Group
Slide 13: Financial modelling considerations
Financial modelling considerations H1 2024 H2 consideration Trading / profit NA foundations • Sustained operational performance • Sustained operational performance to continue • General buoyant market • Buoyant market to dissipate resulting in more • Benign weather conditions normalised margins Sunc
Slide 14: Business performance
} KELLER Business performance
Slide 15: Safety and wellbeing
Safety and wellbeing Performance • AFR remain unchanged at 0.09 (12-month Accident Frequency Rate rolling) • We have started 2024 well, with five fewer 0.61 injuries year-on-year and expect AFR to improve accordingly throughout this year 0.39 0.35 0.34 0.23 0.09 • TRIR is 0.58, a slight improvement,
Slide 16: Carbon performance
Carbon performance Scope 2 Scope 1 Scope 3 Net zero 2030 Net zero 2040 Operations net zero 2050 • On track to reduce our • Baselining the carbon • Sustainability week engaged emissions below 50% of our intensity of different solutions over 1,000 employees, with On track to reduce a further 2019 base
Slide 17: Record order book of £1.6bn – underpins H2
Record order book of £1.6bn – underpins H2 Geographic mix Order book (£m) (Full order book) 1,800 Group 1,600 £1.6bn +10% 1,400 North America 1,200 Record order £1.1bn RECON LNG, 1,000 +16% NEOM and HS2 orders book 800 EME COVID-19 Post COVID-19 600 recovery £367.3m +11% 400 200 APAC £142.5m -20% -
Slide 18: North America Operating review
Arizona USA North America Operating review £m H1 2024 H1 2023 Constant £m £m currency Revenue 883.8 875.8 +4.2% Underlying operating profit 105.8 65.4 +67.7% Underlying operating margin 12.0% 7.5% +460bps Order book 1,131.0 979.1 +15.8% • Revenue: up 4.2%, driven by Foundations and Moretrench Indust
Slide 19: Europe and Middle East Operating review
Grenoble France Europe and Middle East Operating review £m H1 2024 H1 2023 Constant £m £m currency Revenue 418.9 401.3 +6.0% Underlying operating profit 3.0 12.0 -74.4% Underlying operating margin 0.7% 3.0% -230bps Order book 367.3 332.9 10.7% • Revenue: up 6.0% to £418.9m driven by large infrastruc
Slide 20: Asia-Pacific Operating review
East Perth Australia Asia-Pacific Operating review £m H1 2024 H1 2023 Constant £m £m currency Revenue 187.1 189.2 3.4% Underlying operating profit 11.1 (4.2) n/a Underlying operating margin 5.9% (2.2)% +820bps Order book 142.5 179.2 -20.2% • Revenue: up 3.4%, driven by India, ASEAN and Austral, part
Slide 21: Group strategy
¢ KELLER Group strategy
Slide 22: 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 23: Strategic progress in 2024
Strategic progress in 2024 Portfolio • Focused on quality of existing portfolio and earnings • Disposed of business in South Africa through MBO • Maximising opportunities with clients who value engineered solutions and our delivery capability Performance • Sustained OP margin >6% • NA Foundations -
Slide 24: Strategic priorities for 2024
Strategic priorities for 2024 Portfolio • Further refinement of our organisation structure (NA, EME, APAC) • Organic market penetration in chosen local markets • Targeted acquisitions to accelerate market share development Performance • Turnaround in Europe • Maintain focus on profitability and cash
Slide 25: Summary and outlook
$ KELLER Summary and outlook
Slide 26: Summary and outlook
Summary and outlook Outstanding H1 performance • Robust revenue demonstrates the benefit of our diverse and resilient revenue streams • Strong operating profit, margin and cash conversion • H1 performance evidences the sustainability of the step-up in performance delivered in 2023 • Interim dividend
Slide 27: Q&A
Q&A
Slide 28: Keller overview
* KELLER Keller overview
Slide 29: 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 17 business units To build the To be the Integrity foundations for leading provider a sustainable of specialist Collaboration 160 future geote
Slide 30: 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 31: 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 (2023) Revenue by sector (2023) AMEA AMEA 14%
Slide 32: 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 33: 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 2% of the number of contracts, but account for 40% of total revenue Revenue by contract size (2023) Number of contracts (2023) Above £5m - 2% £1m to £5m - 8
Slide 34: Keller has a strong position in the geotechnical market with room to grow
Keller has a strong position in the geotechnical market with room to grow Market size Share of addressable market £23bn Global geotechnical contracting market £39.5bn Addressable markets £23bn Core markets where we choose to operate £18.5bn Keller £3bn Non-addressable markets mainly China, North and
Slide 35: 171,184 tonnes of CO2e (Scope 1 and 2)
Keller’s 2023 emissions 171,184 tonnes of CO2e (Scope 1 and 2) 171,184 4,764 Not tracked Not tracked Scope 1 Scope 2 Scope 3 Scope 3 Operational Materials Direct emissions Indirect emissions Transport of materials, >60% of site (eg fuel use on site) from electricity use business travel and emissions
Slide 36: 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 37: Market demand trends play to our strengths
Market demand trends play to our strengths 65m people will be added to urban population 01 Urbanisation and more large- scale development projects by every year. 67% of the world’s population will live in metropolitan regions by 2040 Increasing land shortage, 02 driving a need to use more brownfield
Slide 38: 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 39: Full product range
Full product range Right combination of products leads to optimal solutions for the soil conditions and structure type 39
Slide 40: Value engineering with an equipment advantage
Value engineering with an equipment advantage • World’s largest equipment fleet with flexibility to move between markets to match local demand • 1,600 engineers; some focused purely on design • 40% of projects are ‘design and build’ where value engineering can substantially reduce cost and save time
Slide 41: 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, 38 apprentices and 40 interns and coops • Pitcair
Slide 42: Financial performance since listing in 1994
2023 2022 2021 2023 2020 2022 2019 2021 2018 2020 2017 2019 2018 2016 2017 TSR of c.16% CAGR vs. 7.7% FTSE All Share CAGR (2023) 2015 Underlying operating profit (£m) 2016 2014 2015 2013 2014 2012 2013 2011 2012 2010 2011 2009 2010 2008 2009 2007 2008 Financial performance since listing in 1994 2006
Slide 43: Keller fact sheet
Keller fact sheet Established 1860, now world’s largest geotechnical specialist Approx. 40% of our contracts are design and build. contractor globally Contracts over £5m revenue make up around 2% of the number of Revenue by division: North America 60%; Europe 23%; AMEA 17%; contracts, but account fo
Slide 44: Reporting – new structure proforma
Reporting – new structure proforma Effective 1 January 2024 Revenue Operating profit Operating profit margin % H1 2023 H1 2023 H1 2023 £m £m % North America 875.8 North America 65.4 North America 7.5% Europe 332.2 Europe 4.1 Europe 1.2% MEA1 69.1 MEA1 7.9 MEA1 11.4% EME 401.3 EME 12.0 EME 3.0% AMEA
Slide 45: Investor Relations contact
Investor Relations contact Caroline Crampton Group Head of Investor Relations +44 20 7616 7575 [email protected] 45