Keller Group Plc · LSE:KLR
Keller — FY2021 Earnings Presentation
55 slides from Keller's earnings presentation, Mar 8, 2022
Slide 1: Preliminary Results for 2021
Keller Group plc Preliminary Results for 2021 8 March 2022 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 ESG Strategic progress Summary and Outlook Q&A
Slide 4: Summary
Summary Underlying Underlying Underlying operating operating diluted Revenue profit margin EPS Order book 2021 dividend £2,224.4m £92.8m 4.2% 88.4p £1.3bn 35.9p +8% -16% Down from 5.3% - 8% Up 30% Flat YoY (+13% CC) (-10% CC) • Revenue +13% to £2.2bn, as a result of increased trading activity, parti
Slide 5: Financial results
Financial results 9 i ia i _, ) =z Po el rom HE CG } KELLER
Slide 6: Summary income statement
Summary income statement 2021 2020 Non- Non- Underlying Total Underlying Total underlying underlying Revenue 2,224.4 - 2,224.4 2,062.5 - 2,062.5 Operating costs (2,132.0) (9.6) (2,141.6) (1,953.2) (29.6) (1,982.8) Amortisation of acquired intangibles - (2.8) (2.8) - (4.2) (4.2) Other operating incom
Slide 7: Summary income statement – underlying
Summary income statement – underlying Revenue £m FY 2020 2,062.5 2021 2020 FX (101.0) Underlying Underlying North America 176.3 Europe 27.0 Revenue 2,224.4 2,062.5 AMEA 59.6 Operating costs FY 2021 2,224.4 (2,132.0) (1,953.2) Amortisation of acquired intangibles - - Operating profit Other operating
Slide 8: Underlying operating profit bridge 2020 to 2021
Underlying operating profit bridge 2020 to 2021 £m 110.0 North America Europe AMEA Central items 110.1 Down £4.3m to £73.0m Up £6.7m to £24.3m Down £11.4m to £3.4m Cost up £0.9m to (7.4) £7.9m 105.0 1.6 (10.6) 100.0 8.4 (9.0) 2.1 (3.3) 95.0 (3.1) (0.9) 11.2 90.0 92.8 (15.3) 9.1 (6.8) 85.0 6.7 80.0 7
Slide 9: Summary income statement – non-underlying
Summary income statement – non-underlying Non-underlying operating costs £m 2021 Europe and KGS restructuring (6.0) AMEA restructuring (2.5) Non- Underlying Total North America restructuring 1.2 underlying Contingent consideration payment (1.3) Revenue 2,224.4 - 2,224.4 Disposal of operations (0.5)
Slide 10: Net debt flow
Net debt flow Depreciation/capex Net capex/dep & imp 2021 101% 2020 93% Gross capex/dep & imp 110% 100% £m 2021 2020 Underlying operating profit 92.8 110.1 Working capital £m Depreciation, amortisation and impairment 97.4 94.9 (Increase) in receivables (104.4) Underlying EBITDA 190.2 205.0 Increase
Slide 11: Balance sheet
Intangibles inc goodwill £m Opening 118.8 Balance sheet Additions Acquisition 0.4 24.9 Amortisation acquired (2.8) £m 2021 2020 Amortisation other (0.6) FX 0.8 Intangibles incl. goodwill 141.5 118.8 Closing 141.5 Tangible fixed assets £m Managed assets Opening 434.9 Tangible fixed assets 443.4 434.9
Slide 12: Net debt profile (£m) (IAS 17 covenant basis)
Net debt profile (£m) (IAS 17 covenant basis) 2020 2021 258 261 251 223 195 197 198 176 155 168 158 172 159 142 146 140 142 140 130 113 121 119 103 106 7 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec • Net debt (IAS 17 covenant basis) of £119.4m decreased by £1.5m (1%) from 2020 • Average month en
Slide 13: Financial modelling considerations
Financial modelling considerations 2021 experience 2022 considerations Trading/profit Impact of steel cost expected to gradually unwind Suncoast margin Impacted by cost of steel in 2022 (macro dependent) Large projects NA: Hampton Rd; Europe: HS2, SMS2 NA: RECON contract, Hampton Rd AMEA: Cape Lambe
Slide 14: Business performance
Business performance } KELLER
Slide 15: Order book increased to a record £1.3bn
Order book increased to a record £1.3bn Geographic mix (Full order book) North America1 Europe1 AMEA1 £787.0m +32.5% £332.7m +51.0% £177.3m -2.7% Order book (£m) 1400 1200 1000 800 Post COVID-19 600 COVID-19 recovery Europe large ASEAN 400 projects restructure 200 0 2016 2017 2018 2019 2020 2021 Ord
Slide 16: North America Operating review
North America Operating review £m 2021 2020 Constant £m £m currency Revenue 1,323.1 1,227.5 +15.4% Underlying operating profit 73.0 83.2 -5.6% Underlying operating margin 5.5% 6.8% Order book1 787.0 593.9 +32.5% 1Comparative order book stated at constant currency • Revenue +15.4% with improved marke
Slide 17: Europe Operating review
Europe Operating review £m 2021 2020 Constant currency Revenue 549.2 538.5 +5.2% Underlying operating profit 24.3 18.4 +38.2% Underlying operating margin 4.4% 3.4% Order book1 332.7 220.3 +51.0% 1Comparative order book stated at constant currency • Revenue +5.2% as markets recovered from COVID-19 sh
Slide 18: AMEA Operating review
AMEA Operating review £m 2021 2020 Constant currency Revenue 352.1 296.5 +20.4% Underlying operating profit 3.4 15.5 -77.1% Underlying operating margin 1.0% 5.2% Order book1 177.3 182.2 -2.7% 1Comparative order book stated at constant currency • Revenue +20.4% driven by Austral and India, partly off
Slide 19: ESG
ESG ro } KELLER Toit 1 CLIMATE ACTION 7 i i i i GOOD HEALTH AND WELL-BEING. 16 PEACE, JUSTICE AND STRONG INSTITUTIONS. »%
Slide 20: Safety performance
Safety performance Safety • AFR improved by 42% Accident Frequency Rate • TRIR improved by 32% • One fatality in Salzburg, Austria ‒ A long serving and valued employee ‒ While investigation determined Keller was not at fault, we have actively used the event to further advance our safety programme •
Slide 21: Ukraine conflict
Ukraine conflict No material impact, but still affected People • Two employees based in Ukraine, more than 20 Ukrainian nationals working with us in North-East Europe Business Unit and many colleagues with Ukrainian family connections • Support includes: • Offering immediate leave for employees • Ho
Slide 22: International Women's Day
International Women’s Day 8 March 2022 Our inclusion commitments • Conscious leadership • Listen • Empower • Partner • Evolve • Celebrate #breakthebias • Challenging gender bias and stereotypes, celebrating and valuing differences and making our environment at work and home a more diverse, equitable
Slide 23: Diversity, equity and inclusion: Recent progress
Diversity, equity and inclusion: The National Centre Recent progress for Diversity awarded Keller UK Senior Leadership Team of the Year Delivered an extensive Continued to DEI communications celebrate cultural based on our events through the Inclusion Established Keller Established a Race year that
Slide 24: Carbon emission targets and actions
Carbon emission targets and actions Scope 1 Scope 2 Net zero by 2040 Net zero by 2030 2021 progress Approximate size 2021 progress • Invested >£45m in plant and equipment with latest Tier 4 and Tier 5 engines of our emissions • Achieved first Scope 2 net zero office and yard • Developed and shared c
Slide 25: Strategic progress
Strategic progress } KELLER
Slide 26: Our Strategy
Purpose 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 Our local businesses will leverage the group’s scale and expertise to deliver
Slide 27: Strategic progress in 2021
Strategic progress in 2021 Restructuring • French Speaking Countries and Iberia and Latin America integrated into new South- West Europe business unit • Europe Division headquarters rightsized Market leadership • Acquisitions ‒ RECON ‒ Subterranean ‒ Nordpile ‒ Voges A more focused, higher quality b
Slide 28: Strategic priorities for 2022
Strategic priorities for 2022 Portfolio • Further incremental refinement of activities and structure • Selective bolt-on acquisitions • Integrate acquisitions and exploit revenue and cost synergies Performance • Prioritise and accelerate market share penetration in chosen local markets • Increase op
Slide 29: Summary and Outlook
Summary and Outlook 9 i ia i _, ) =z Po el rom HE CG } KELLER
Slide 30: Summary
Summary • Resilient performance operationally, financially and strategically, despite COVID-19 • 2021 performance was in line with our 2020 predictions and, despite inflationary impacts, ahead of market expectations • Executed strategy: further portfolio refinements completed and several bolt-on acq
Slide 31: Outlook
Outlook • Effects of COVID-19 remain and vary by geography creating operational challenges and market risks • Increased geopolitical and macroeconomic uncertainty and inflationary pressures • Increased macro uncertainty given the current geopolitical landscape (especially steel and fuel) However: •
Slide 32: Q&A
Q&A } KELLER
Slide 33: Keller overview
Keller overview 9 i ia i _, ) =z Po el rom HE CG } KELLER
Slide 34: 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 35: 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 36: 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 37: 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 38: 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 39: 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 40: 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 41: 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 42: 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 43: 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 44: Geotechnical market size
Geotechnical market size Market size Market share Sources: Keller accounts. IHS Global Insight, GlobalData and other local sources 44
Slide 45: 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 46: 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 47: 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 48: 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 • Noise, vibration • Loose, soft, stiff, hard, porous • Schedule • Slen
Slide 49: Full product range
Full product range Right combination of products leads to optimal solutions for the soil conditions and structure type 49
Slide 50: 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 51: 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 52: 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 53: Financial performance since listing in 1994
53 2021 2020 2020 2019 2018 2018 2017 Financial performance since listing in 1994 2016 TSR of 10.5% CAGR vs. 7.1% FTSE All Share CAGR (at 2 Mar 2022) 2016 2015 2014 2014 Underlying operating profit (£m) 2013 2012 2012 2011 2010 2010 2009 2008 2008 2007 2006 2006 2005 2004 2004 2003 2002 CAGR = 8% 20
Slide 54: 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 55: Investor Relations contact
Investor Relations contact Caroline Crampton Group Head of Investor Relations +44 20 7616 7575 [email protected] 55