Franchise Brands plc · LSE:FRAN
Franchise Brands — Investor Day (February 2024)
95 slides from Franchise Brands's investor day presentation, Feb 20, 2024
Slide 1: Capital Markets Day: Unlocking the Group's potential
B FRANCHISE BRANDS Franchise Brands me Capital Markets Day Unlocking the Group's potential 20 February 2024
Slide 2: Disclaimer
Disclaimer The information contained in this document (“Presentation”) and the presentation made to you verbally has been prepared by Franchise Brands plc (the “Company). Franchise Brands plc is a UK company quoted on AIM, a market operated by London Stock Exchange plc. This Presentation has not bee
Slide 3: Executive Chairman, Chief Financial Officer
Executive Chairman Chief Financial Officer
Slide 4: CEOs of Pirtek, Water & Waste Services, Filta International
CEO, Pirtek CEO, Water & Waste Services CEO, Filta International
Slide 5: Presenters: B2C, CIO, Marketing, Corporate Development
Managing Director, B2C Division Chief Information Officer Group Marketing Director Corporate Development Director
Slide 6: Agenda: Pirtek, Water & Waste, Filta, B2C, Growth Summit
Pirtek Water & Waste Services Filta International B2C Division The Growth Summit
Slide 7: The journey so far, and medium-term growth potential
The journey so far, and medium-term growth potential Stephen Hemsley Executive Chairman Franchise Brands plc FRANCHISE BRANDS
Slide 8: Overview of Franchise Brands
Overview of Franchise Brands i Multi-brand franchisor, focused on B2B van- i based service with a presence in 10 countries f across UK, North America and Europe. : Focused on building market-leading businesses primarily via a franchise model. Pirtek, Metro Rod and Metro Plumb provide essential servi
Slide 9: At a glance: our increased international footprint
At a glance: our increased international footprint Continental Europe filta METRO METRO PLUMB WILLQWPUMPS filta oénclean Azura System sales Franchisees System sales Franchisees System sales Franchisees £90m 127 £189mM 455 £70m 65 Note: 2023 system sales are from the Company and are unaudited
Slide 10: A strong track record of delivery
A strong track record of delivery System sales’ (£m) CAGR £350.0m 47% £186.4m £75.2m £75.8m £93.6m 2019 2020 2021 2022 2023E Adjusted earnings per share? (p) CAGR 8.38p 8.64p 9 19% 5.55p 4.34p 4.35p UJ 2019 2020 2021 2022 2023E Notes: 1 2023E system sales is Company estimate, unaudited, Adjusted EBI
Slide 11: Key milestones on the journey
Key milestones on the journey Founding of business with the Acquisition IPO & Acquisition Acquisition of Acquisition of Acquisition of Acquisition of acquisition of | and Reverse Takeover of METRO witéwrumes = AXzura fi Ita Consideration Consideration Consideration Consideration Consideration Consid
Slide 12: Acquisition Track Record
Acquisition Track Record Current (Implied) Multiple eal Date Acquired Metro Rod* April 2017 11.4x 3.7x We have a strong trackirecordiof Willow Pumps* Oct 2019 3.9x 3.6x successfully unlocking and then growing acquired Filta March 2022 15.3x 6.9x businesses, which provides long-term [Fie April 2023 1
Slide 13: Introducing the Maximum Potential Model
Introducing the Maximum Potential Model ‘B Methodology The Maximum Potential Model in action Originally introduced by Bain Capital at Domino’s Pizza. Map potential by franchise Methodology based on “best of the best” metrics being achieved by the territory. franchisees currently in each territory: a
Slide 14: The Maximum Potential Model for the Group
The Maximum Potential Model for the Group Metro Rod* Filta International? Pirtek? Total Max model system sales Metro Rod! £293m Filta International? £752m Pirtek? £746m Total4 £1.8bn Capital Markets Day 2024 a £1.8bn Maximum potential system sales
Slide 15: Medium term target
Medium term target Adjusted EBITDA, 2021-2023E Adjusted EBITDA, 2023E-2027E Overall Organic’ Overall CAGR: CAGR: CAGR: fe) 9 fe) 88% 27% 19% £60.0m £38.0m __---~ £29.8m__---~ £15.3m £8.5m 2021 2022 2023E 2024E 2025E 2026E 2027E BITDA of based on the adjusted EBITDA in th ions of the Group and are an
Slide 16: Enhanced corporate governance
Enhanced corporate governance In line with the expansion of the Group and our ambition for the future, in 2023 we developed our corporate governance structure by reorganising the board and introducing a two-tier organisation. More streamlined board lee) On 2 Executive Directors: + Executive Chairman
Slide 17: Summary
nis Recent acquisitions have transformed the Group to a sizeable international business with 7 franchise brands across 10 countries. Next 3 years: focus on integration, organic growth and deleveraging. Maximum potential model shows significant opportunities for growth with small shares of large and
Slide 18: Pirtek Europe
Pirtek Europe Chris Stuckey CEO Pirtek Europe B FRANCHISE BRANDS
Slide 19: CEO, Pirtek
Presenter le Chris Stuckey CEO, Pirtek Chris is CEO of Pirtek’s business in 8 countries across the UK and Europe. He joined Pirtek in 2017 as Managing Director for Pirtek UK and Ireland and the business experienced strong growth under his leadership. In 2023 he was promoted to CEO of the Pirtek busi
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Slide 21: MOST DELAYED
MOST DELAYED ENGLAND: 2132017
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Slide 23: Range of services
Range of services eS Pfizer MATERIAL HANDLING THALES) 222 == Together * Safer * Everywhere Evy Uitte bolps amazon Rolls-Royce Rolls-Royce Power Systems AG
Slide 24: Why do customers buy?
Why do customers buy? @) Invented for life Speed of Nationwide Quality of Hutt response service repair UEBHERR G@antinental’$ Health and Customer First time Reduce safety service fix downtime WORKING FOR THE FUTURE
Slide 25: Pirtek at a glance
Pirtek at a glance UK& Germany Belgium & Ireland & Austria Netherlands France Sweden TOTAL £80m £67m £23m £8m £3m £181m 40 22 "1 - - 73 86 98 24 8 1 217 333 350 108 42 25 858 Business split Rental Construction Rental Construction Rental Construction (top 3 sectors) 14% 36% 26% 46% 24% 22% Waste Indu
Slide 26: Maximum Potential Model: identifying opportunities
Maximum Potential Model — identifying opportunities Pirtek Modifications Customers are mobile and their location moves with them, a customer can work across a number of franchise areas. NY QO 9 Population is a reasonable corollary for activity. Pirtek uses population density as an adjustment factor
Slide 27: The Maximum Potential Model
The Maximum Potential Model UK & Ireland Germany & Austria Maximum potential model UK & Ireland £415m Germany & Austria £240m Benelux £91m Total £746m CapitatMarkets Day 2024 26 ervice £746m potential system sales
Slide 28: Growth tools
Growth tools O1 Benchmarking of franchisee performance. O22 Identification of "Hot Spots" and "Not Spots" for penetration. O3 Contact strategy for non- trading businesses through CRM, contact calls, targeted marketing campaigns. O04 Industry sector expansion based on margin expectations. O5 Expand r
Slide 29: Case study: European Metal Recycling
Case study: European Metal Recycling Recycling and waste management business with operations in the UK, Germany and the Netherlands. sites docks shredders shears Expanding customer relationship —> EMR are a long time Pirtek ) Customer quote customer with a UK national SySSEMElIsS AeA “luse Pirtek ex
Slide 30: Essential, mission-critical service for customers
Essential, mission-critical service for customers, targeting 1-hour ETA. Existing customer relationships offer opportunity to expand service offering and increase share of wallet. European footprint with strong management teams in place to manage growth. Maximum Potential Model identifying significa
Slide 31: Water & Waste Service Division
Water & Waste Service Division Peter Molloy CEO Water & Waste Services Division . B FRANCHISE BRANDS
Slide 32: CEO, Water & Waste Services
Presenter Peter Molloy CEO, Water & Waste Services Peter is CEO of the Water & Waste Services Division which includes Metro Rod, Metro Plumb, Willow Pumps and Filta UK. He joined Metro Rod in 2003 and was Commercial Director between 2005 and 2017. In 2017, following the Franchise Brands acquisition,
Slide 33: Water & Waste services range
Drain Clearance Emergency Plumbing Pump Station Supply & Install FOG Management, including installations, Servicing & Repair Drain Repair Gas Boiler Services Pump Rehabilitation, Repair & Emergency Services Fry Management & Oil Recovery Tanker Services Commercial Plumbing Above Ground Pump Capabilit
Slide 34: The Water & Waste Services division at a glance
The Water & Waste Services division at a glance Corporate Franchises £3m (+23%) a (+10%) W&WS system WILLQW sales split 2023 MERA et7m £106m seam een) (+18%) (19%) sales METRQ PLUMB (+29%) Note: Company estimate, unaudited, 2023 Percentage changes reflect YoY increases. >307,000 jobs completed +8% £
Slide 35: Market sectors served
W &W Ss General al imercompany Sales — re 4% (-%) M ar ket Utilities 9 % (-%) Sectors Construction Oth RS 9% (-1%) % services (-%) O a, © (-%) delivered by franchisees / 5 % Public Services Q% (+1%) W&WS system sales split 2023 £106m (+18%) sales Hospitality 15% (3%) Housing (inc Social) Q% (-%) Ind
Slide 36: Why do customers buy?
Why do customers buy? Expertise Value for money © Coverage © Real time updates B a a] ee Scope of services Reduced supply chain amey WHITBREAD ASTER Travelodge vinci ss NHS} Property Services Sanctuary
Slide 37: excluding Kemac specialist services and corporate franchises.
excluding Kemac specialist services and corporate franchises.
Slide 38: Sales per head of Support Centre staff
Sales per head of Support Centre staff has more than doubled since 2017 Sales Per Indirect Head* (£) Acquisition of £50,000 fi Ita £47,455 £45,000 4 aA £42,008 Acquisition of GIES £40,000 £34,965 £35,000 WILLgW £30,000 £28,396 £32,757 £25,000 £22,562 £20,000 £15,000 £10,000 £5,000 £0 2017 2018 2019
Slide 39: The Maximum Potential Model
The Maximum Potential Model Highest franchisee market penetration Highest yield per property Total potential UK commercial properties Current Metro Rod system sales ite, unaudited Methodology Y, Commercial drainage only (3) Excludes: B2B2C customers such as insurance, social housing where we are wor
Slide 40: Multiple levers for growth
Multiple levers for growth O1 Cross selling Over 90% of customers buy from a single business. O2 Franchise delivery Reduce the dependency on direct labour. Focused franchisees. Expand technical capability to penetrate new markets. 03 Technology investment Use technology to ensure that income grows f
Slide 41: Case study: meeting Amey's needs by cross-selling
Case study: meeting Amey’s needs by cross-selling and upselling a range of services Amey Sales Progression (£m) . | | £1.3m £1.0m £0.8m _ oe - £0.3m Since 2019, 4! increase in sales from £37k to £1.6m. Multipt Ani £0.0m ultiple services driving opportur 2019 2020 2021 2022 2023E Drai pumps, plumbing
Slide 42: Summary
Summary Resilient growth business. Significant opportunities for growth. Small share of large and fragmented markets. Breadth of services. Multiple cross selling opportunities. vn Ee 5 Franchisee engagement and investment. Effective delivery of strategy via a strong dedicated team of managers, emplo
Slide 43: Filta International
Filta International - ” Jason Sayers CEO, Filta International Tom Dunn, CEO, The Filta Group Inc. John Michals, COO, The Filta Group Ing, B FRANCHISE BRANDS
Slide 44: Presenters
Presenters N Jason Sayers CEO, Filta International Jason Sayers founded Filta in 1996 and took the business to the US in 2003. Prior to the merger with Franchise Brands, he was Group CEO. He is now Chief Executive Officer of Filta International with responsibility for growing the Filta businesses in
Slide 45: A strong track record of growth
A strong track record of growth mmm System sales $120m 145 —e—#Franchisees $100m “we Q4 2023 run rate $80m 135 $115m $60m CAGR System 130 Sales 2018 $40m to 2023 21% $20m me 120 2018 2019 2020 2021 2022 2023 Note: 2023 system figures are unaudited Company estimates. 2023 franchisee as at 31 December
Slide 46: Filta North America's range of services
Filta North America’s range of services filta filta filta filtaclea Oil removed from fryer into mobile Provided as part of FiltaFry Launched in 2023 Launched 2023 ilvaite wnt illiatiem eereitse 67 franchisees in total sell fresh oil Steam based, eco friendly & Oil micro filtered to remove Oil remove
Slide 47: Case study: Prudential Centre Stadium, New Jersey
Case study: Prudential Centre Stadium, New Jersey Prudential Center Stadium Levy Restaurants (Compass) Newark, NJ Home of NJ Devils (NHL) fryers of oil concession & kitchen stands
Slide 48: Case study: how we add value for customers
Before Filta + 130 boxes of oil required to change all fryers each time (estimated 13,520 boxes used annually = 2 changes per week). + Primarily staffed by lower skilled, higher wage employees which caused hiring, training, and liability concerns around the fryers. + No ability to accurately measure
Slide 49: Filta's Environmental Impact Reports
Capital Markets Da Filta’s Environmental Impact Reports ° ~ Filta Customer ~ = ° ° Increasing importance Environmental Impact Reports, quantify the of ESG to Filta’s environmental savings of: corporate customers. Reusing (rather than discarding) the cooking oil The additional savings of replacing di
Slide 50: System sales, gross profit and volume
$50m $45m $40m $35m $30m $25m $20m $15m $0.20 $0.22 $0.22 $10m $6.3m $5m $4.6m a $4.7m o» [| 2018 2019 2020 mam System Sales ($m) Gross Profit ($m) Note: 2023 figures are unaudited Company estimates 2021 Volume (Lbs) $0.58 $0.46 2022 2023 —Avg Price achieved $ per lb $0.70 $0.60 $0.50 $0.40 $0.30 $0
Slide 51: The Maximum Potential Model
The Maximum Potential Model Filta North America customer base Total potential sites % of market System sales* *Company estimate, unaudit Max model Existing franchisees with more than 50 customers Highest average revenue per site $21,973 Highest market penetration 3.9% Addressable market in territori
Slide 52: FiltaMax: the journey to $500m in system sales
FiltaMax: the journey to $500m in sy Growth levers O1 Sealing of 55 Metro Markets across the US - opportunities to build businesses of scale. O02 Upgrade franchisees and replicate success of largest franchisees. Encourage buy outs and attract new ambitious franchisees. O3 Expand range of services. F
Slide 53: $115m system sales run rate
$115m system sales run rate with strong operational gearing. A small share of a large market. Significant growth potential: almost $1bn maximum potential market. A business of scale with a number of key strengths and opportunities Focusing on delivering the key levers of growth in FiltaMax growth st
Slide 54: B2C Division
B2C Division Tim Harris Managing Director, B2C Division B FRANCHISE BRANDS
Slide 55: Managing Director, B2C
Presenter Tim Harris Managing Director, B2C Tim is a seasoned franchise professional with over 25 years’ experience of successfully developing automotive, commercial and domestic franchise businesses in both international and UK markets. Tim joined the Group in 2008 and is the Managing Director of t
Slide 56: B2C Division: three market-leading consumer brands
B2C Division — Three market-leading consumer brands chil ChipsAway + UK’s longest established “SMART” repairer. + Cost-effective and convenient repairs for consumers. + Car Care Centre for larger repairs. + With c60-65k repairs per year, ChipsAway is a top 10 repairer by volume in the UK. % of B2C D
Slide 57: Revenue and Adjusted EBITDA
Revenue and Adjusted EBITDA Revenue breakdown by type (£m) Adjusted EBITDA breakdown by brand (£m) £2.6m £2.5m £2.6m £5.8m mincome from mw Other recruitment m Other @ Barking Mad Income m Ovenclean mlncome from @ ChipsAway MSF 2019 2020 2021 2022 2023E 2019 2020 2021 2022 2023E Note: 2023 Revenue is
Slide 58: B2C Division: high cash conversion
B2C Division — high cash conversion Adjusted EBITDA and Cash Conversion* % 5-year average cash conversion 91% mmm Adjusted EBITDA — Cash Conversion Notes: £3.0m £2.5m Ee @ £2.0m <z a Ee 1.5m UD o B >, £1.0m 5} < £0.5m 2019 2020 2021 2022 2023E * Cash flow available for debt service (CFADS) / adjuste
Slide 59: A highly efficient platform of central services
A highly efficient platform of central services Marketing — Consumer & Recruitment Training & Support Customer enquiries by brand Recruitment enquiries by brand Each brand has a dedicated training & (‘000) (‘000) support program to help franchisees build 450 6 their business. This includes: ~ Initia
Slide 60: Franchise recruitment and retention
Franchise recruitment and retention continues to be challenging. The B2C Division is highly cash generative. However, periods of increasing unemployment and redundancy have been good for recruitment and retention. © Expect to maintain track record of consistent profits and cash generation.
Slide 61: The Growth Summit
The Growth Summit Julia Choudhury Corporate Development Director Franchise Brands plc B FRANCHISE BRANDS
Slide 62: Corporate Development Director
Corporate Development Director
Slide 63: A few key takeaways
A few key tak + We’ve got a fantastic team! + We generated a huge range of growth ideas to support the maximum potential model opportunities. + Enabled everyone to connect with our guiding principles and see them in action. + Ideas for how we use technology effectively and organisational efficiencie
Slide 64: Follow up
Follow up + “Just One” recommendation trails underway for customers and engineers. + Group technology initiatives being prioritised. + Franchisee Growth Summits already being rolled out. + “Growth Summit” corner at Management Board meetings. + 2024 Growth Summit in Amsterdam in November.
Slide 65: The digital transformation of the business
The digital transformation of the business Colin Rees Chief Information Officer Franchise Brands plc FRANCHISE BRANDS
Slide 66: Chief Information Officer
Presenter Colin Rees Chief Information Officer Colin joined Franchise Brands in April 2017 as Chief Information Officer to accelerate the digital transformation of the business following the acquisition of Metro Rod. Colin was previously Director of IT at Domino’s Pizza where he was responsible for
Slide 67: Technology objectives
Increase sales and improve retention of existing business. Drive efficiency and productivity of our customers, the Support Centre and our franchisees. Assist engineers in satisfying ever more demanding customer requirements. Help make people’s jobs more rewarding.
Slide 68: Our methodology
Z Le a Capital Markets Day 2024 67 Our methodology Develop/build, operate and automate systems and platforms. Ensure systems and platforms are reliable, scalable & secure. lterate and improve to upgrade core systems and platforms with greater functionality. Analyse data and deliver insights and pote
Slide 69: Group Technology Snapshot
Group Technology Snapshot Financials Team and activity Total group technology planned spend in 2024 F3m 17 people in 10 Cloud based Migration from local u EWrore us countries processing of IT to centralised £5.1m £2.6m £300k (increasing to 27). over 1.2m jobs. service. IT income received from franch
Slide 70: Our technology journey so far
Our technology journey so far Reviewed market to replace unsuitable legacy Metro Rod Works Management System (WMS). No suitable off the shelf systems. Identified Azura core WMS. Started to develop & customise. Continued Vision development & customisation. Partnering with Azura development team Syste
Slide 71: Case study: how we are benefiting all our stakeholders
Case study: how we are benefiting all our stakeholders Self Serve Automation Scheduling Ata glance 9 9 jobs processed in of all National d reporting 2023. Account jobs (at peak). per engineer per day saving. 2pt improvement in SLA. of other Improve customer bs Additional revenue: 1 billable relation
Slide 72: Maintain, Develop, Innovate
Copital Markets Day 202371 Maintain Develop Innovate
Slide 73: Maintain
Maintain Why? + We are a bigger target for cyber criminals. + Opportunities to leverage scale and IT buying power. + Opportunities to share expensive IT resources (people, servers, systems). + Ability to deliver technology to developing parts of the group. Capital Markets Day 2024 72 Key projects Cy
Slide 74: Develop
Develop Why? Key projects + Leverage the investment we have already made. Rollout of Vision across the group. + Enable shared resources Single global finance across the group. system. + Drive operational gearing. Real time customer . updates. + Better understanding of our customers (cross sell, upse
Slide 75: Innovate
Innovate Why? + The world is moving fast and creating new technologies and opportunities. + Potential is for everything (except doing the job) to be automated. + Extends competitive advantage. Day 202474 Key projects Trials of Copilot. Al Further help desk automation. Al Engineer typing assistant. R
Slide 76: Platform established and working well
Platform established and working well. Acquisitions bring opportunities to leverage existing platforms across the group. Opportunities for Azura to sell its specialist services to other non-competing franchise businesses. aeh Centralisation will reduce costs as a percentage of system sales. Scale wi
Slide 77: How marketing supports the Maximum Potential Model
How marketing supports the Maximum Potential Model Robin Auld #sB Group Marketing Director ’ Franchise Brands plc B FRANCHISE BRANDS
Slide 78: Group Marketing Director
Presenter "a Robin Auld Group Marketing Director Robin Auld is Group Marketing Director. He joined Franchise Brands shortly after the business was founded to lead the team responsible for all our consumer, trade and franchise recruitment marketing activity. Robin has a successful track record of mar
Slide 79: Franchise Brands' marketing approach
Franchise Brands’ marketing approach Focus Our approach One KPI: Marketing i o slence Driving new not an art customer enquiries Marketing strategy (DART) as cost effectively Deploy ae as possible. Test Repeat 9 brands (7 franchised). 1 approach. Working in partnership with franchisees to deliver exc
Slide 80: Marketing Department Snapshot
Marketing Department Snapshot Financials Total Group investment in marketing in 2023 £3.8mM (100% increase over 2022) Europe us uK £2.5m £m £300k National Advertising Fee (NAF) income received from franchisees £2.8m Cost to the business Fim Production 2023 y & Over 250 email campaigns (sorry!) 009 t
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Slide 82: Marketing initiatives 2023
Capital Markets Day 2024 81 q f Launch of a Al chatbot / multilingual Dynamic Search video creator tracking app FB Marketing Advertising for system for Pirtek UK Metro Rod in Benelux in Germany 9) 0 2 A Seep plans Ww Over 300 — 4 new email - campaigns! ” New video content & imagery in all 10 countri
Slide 83: 2024 focus
2024 focus ) The FB marketing family: the whole is more than Focus on content creation and digital Rapid adoption of new technologies and new Marketing is a science not an art, rapid experimentation without fear of failure. Investing franchisee monies as efficiently and effectively as possible, to d
Slide 84: Strategic targets and de-gearing
Strategic targets | and de-gearing Mark Fryer CFO Franchise Brands plc FRANCHISE
Slide 85: Chief Financial Officer
Presenter tan Mark Fryer Chief Financial Officer Mark joined the Company in August 2023 and is an experienced CFO with 25 years of public company and private equity experience as CFO in global manufacturing and business service companies. He has been CFO of FTSE Small Cap and FTSE 250 companies, as
Slide 86: Strong track record of delivery
Strong track record of delivery System sales! Adjusted EBITDA? Adjusted earnings Dividend (£m) per share? (p) per share? (p) 2021 | £93.6m 2021 i cesm 2021 iz 5.55p 2021 I +50, 2020 | £75.8m 2020 Bh cs.em 2020 | ce 2020 [1-10 2019 Bh ers.2m 2019 [ cs.2m 2019 | | 4.34p 2019 || 0.95p Notes: 1 2023E sy
Slide 87: Strategic model assumptions, 2025-2027
rategic model assumptions, 2025-2027 Financial modelling assumptions in the strategic model from 2025 to 2027 include: System sales growth of at least 1% pa. Overheads as % system sales reduce by 40bps pa as result of operational gearing. Gross margin reduces by 10bps pa as franchise channels grow f
Slide 88: Medium term targets
Medium term targets System Sales (£m) CAGR (21-23E): 93% CAGR (23E-27E): 14% £93.6m 2021 2022 2023E 2024E 2025E Adjusted Profit Before Tax‘ (£m) CAGR (21-23E): 76% CAGR (23E-27E): 29% 7 £26.5m ““£20.1m £12.8m £6.5m 2021 2022 2023E 2024E 2025E 2026E 2027E 2026E 2027E Adjusted EBITDA (£m) CAGR (21-23)
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Slide 90: Medium term targets
Slide 91: Path to 10%+ Adjusted EBITDA margin
Slide 92: Net Debt Profile
Slide 93: Capital allocation
Slide 94: Summary and investment case
Slide 95: The investment case