HSS Hire FY14 Results April 2015
Agenda • Chris Davies, CEO: Continued delivery of profitable growth and expansion • Steve Trowbridge, CFO: Financial performance • Chris Davies, CEO: Strategic and operational overview • Q&A 1
Continued delivery of profitable growth and expansion Introduction � 25.5% revenue growth and 26.7% Adj. EBITDA 1 growth in 2014 performance Financial � Accelerated rollout of proven local branch format through Q4 - 23 branches opened in 2014 � Focus on ‘maintain’ and ‘operate’ segments delivering growth and development of key accounts operational review Strategic and � £71.9m investment in hire fleet 2 driven by customer demand, generating industry-leading ROA of 26.6% Q&A � Acquisition and integration of Apex Generators and trade and assets of MTS UK Appendix � Trading in FY15 started in line with management expectations 1 EBITDA stated before exceptional costs relating to restructuring and acquisition costs. See appendix C 2 Fixed asset additions to materials and equipment held for hire 2
Income statement Introduction � Continued expansion of local Year ended 27 December / 28 December branch network alongside performance focused fleet investment and £m 2014 2013 Growth Organic Financial (%) (%) sales initiatives Revenue 284.6 226.7 25.5% 18.7% operational review � Further economies of scale Strategic and EBITDA 67.4 52.3 28.9% 23.4% driving improvement in Adj. Exceptionals (non-finance) 3.7 3.9 EBITDA margin Adj. EBITDA 1 71.1 56.2 26.7% 21.6% Adj. EBITDA margin 25.0% 24.8% Q&A Appendix 1 Adjusted earnings stated before exceptional costs relating to restructuring and acquisition costs. See appendix C 3
Segmental analysis Introduction � Core performance driven by growth in Year ended 27 December / 28 December all geographies, investment in local performance branches and performance of OneCall £m 2014 2013 Growth Financial (%) and Training businesses Core businesses Revenue 247.4 208.0 18.9% operational review � Specialist growth through geographic Strategic and expansion and successful targeting of Adj. EBITDA 51.2 46.6 10.1% customer demand supplemented with Adj. EBITDA margin 20.7% 22.4% Apex acquisition Specialist businesses Q&A Revenue 37.1 18.6 99.1% Adj. EBITDA 19.9 9.6 107.1% Appendix Adj. EBITDA margin 53.6% 51.5% 4
Adj. EBITDA bridge Introduction 80.0 £m 71.1 performance Financial 70.0 56.2 19.9 60.0 10.3 1.8 2.9 9.6 50.0 operational review Strategic and 40.0 30.0 51.2 46.6 20.0 Q&A 10.0 0.0 Adj. EBITDA Core growth OneCall Specialist growth Adj. EBITDA (FY14) Appendix (FY13) (ex. OneCall) growth Core businesses Specialist businesses 5
Adjusted PBT, reported PBT and reported PAT Introduction � Depreciation increase reflects Year ended 27 December / 28 December acquisitions and increased hire performance fleet investment £m 2014 2013 Growth Financial (%) Adj. EBITDA 71.1 56.2 26.7% � Net finance cost impacted by Depreciation (39.9) (27.7) 44.3% operational review changes in capital structure Strategic and Amortisation (3.9) (3.3) 18.6% Adj. Operating profit 27.3 25.2 8.3% Net finance cost (pre exceptionals) 1 (24.3) (20.3) � Tax planning delivered credit in year Adj. PBT 3.0 4.9 (39.3)% Q&A Exceptionals (all) (11.5) (2.3) Reported PBT (8.5) 2.6 Appendix Tax 3.0 (2.2) Reported PAT (5.5) 0.4 1 Pre exceptional finance costs which principally relate to costs related to the restructure of the group’s debt during the year 6
Cash flow Introduction � Strong growth in Year ended 27 December / 28 December operating performance cashflow £m 2014 2013 Financial Operating cashflow (“OCF”) 1 55.6 42.1 Less: Capex 2 (60.6) (55.1) � 90% of trade operational review receivables under OCF less Capex (5.0) (13.0) Strategic and 30 days aged Less: Tax (0.2) (1.5) Net cash flow before financing (5.3) (14.5) Less: Debt issue costs (7.3) (1.7) � Significant Less: Net interest payable (10.8) (8.2) investment in hire Q&A and non hire fleet Add: Net proceeds from borrowing 26.3 29.8 and small Net increase in cash 3.0 5.4 Appendix acquisitions to support growth 1 Operating profit before depreciation and amortisation but after exceptionals and the net movement in working capital. See appendix E 2 Capex includes purchase of hire equipment, non hire property, plant and equipment and software and acquisitions of subsidiaries 7
Capital expenditure and utilisation Introduction 90 83.6 Non-hire � Well invested hire fleet: Hire fleet 80 Specialist additions of c. 2.1x hire fleet depreciation 11.7 performance Core in FY14 70 Financial Depreciation 60 30.0 50 � Growing utilisation and capex reflects 36.8 operational review 40 39.9 ability to match investment to demand Strategic and 6.0 25.6 25.4 30 27.7 4.7 5.6 25.9 25.5 41.9 20 � Small portion of FY15 capex brought 27.2 10 20.5 20.0 forward to support FY15 branch openings 0 and rapid growth in ABird Q&A FY11 FY12 FY13 FY14 Utilisation (LTM) FY13 FY14 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Appendix � 26.6% ROA with significant hire fleet Core 43% 43% 44% 45% 46% 46% 47% 47% expansion during year Specialist 51% 58% 62% 68% 69% 69% 70% 70% 1 Fixed asset additions to materials and equipment held for hire 8
Balance sheet Introduction � Growth in intangible assets principally due Year ended 27 December / 28 December to Apex acquisition (March 2014) performance £m 2014 2013 Financial Intangible assets 170.4 166.2 � Larger net liabilities position reflects Tangible assets 147.2 99.9 investment in tangible assets offset by operational review increased gearing and trade payables Deferred tax asset 2.5 - Strategic and relating to preferable capex payment terms Derivative financial instruments - 1.2 Working capital 1 3.4 21.0 � IPO post year end has subsequently de- Other net liabilities (17.9) (17.4) geared the business. Proforma net debt at Q&A Net debt 2 (317.0) (276.3) IPO of c. £155m Net liabilities (11.5) (5.5) Appendix 1 Current assets less current liabilities. Current assets / liabilities captured within net debt e.g. the current portion of finance leases are not reflected in Working capital 2 Comprises cash and all debt principal and accrued interest balances, including those which would ordinarily be shown within current assets, current liabilities or non current liabilities. See appendix D 9
FY15 guidance Introduction � Targeting Adj. EBITDA margins > 25.0% for existing Group (full year) with margin growth in both Core and Specialist businesses performance Financial � Capex investment expected to be slightly below FY14 capex operational review Strategic and � Pace of local branch openings faster in H1 FY15 than in H1 FY14 � Targeting ROA > 25% across existing portfolio Q&A � Targeting leverage of c. 2.0x Adj. EBITDA at end of FY15 Appendix � First dividend expected to be interim payment in respect of FY15 10
Our strategy Introduction � Local branch rollout to take share from the c. 48% of market held by independents performance Financial � Gaining greater share of customer wallet through our one-stop-shop solution � Further complementary and value accretive bolt-on acquisitions operational review Strategic and Achieved by: � Driving availability and utilisation through “one fleet” approach and retail-like logistics network Q&A � Being customer-driven, delivering against four foundations (safety, value, availability and support) Appendix � Targeting customer segments which provide higher asset returns 11
Financial Strategic and Introduction Q&A Appendix performance operational review 12 Local branch rollout
Local branch rollout (cont ) Introduction Opening programme built on experience Branches continue to outperform expectations + 34 more 120% Maturity 1 branches in progress performance Number of trading locations 1 Financial 300 282 100% 270 100% 13 245 23 23 250 4 90% 4 4 2 2 2 80% 11 14 16 80% operational review 200 Strategic and 70% 60% 60% 150 218 215 213 40% 100 20% 50 Q&A 10 12 11 0 0% FY13 FY14 FY15 Y1 Y2 Y3 Y4 Y5 Appendix Actual maturity 2013 branches Actual maturity 2014 branches Other (e.g. onsites) Existing portfolio Relocations - new format 2012 - new format Expected maturity curve 2013 - new format 2014 - new format 2015 - new format 1 Maturity measured against mature revenue of £450k per branch (grown at 2% p.a.) 13
Key accounts Introduction � Focused effort to increase share of wallet of large key accounts through: � Cross-selling group services performance Financial � Targeted M&A activity operational review � Growth in our Total Equipment Management offer reflecting ongoing drive to outsource Strategic and � Consolidated position in key markets including airports, facilities management, infrastructure and retail Q&A � Expanded Group onsite offer across major London build projects Appendix 14
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