Investor Presentation Carnegie Construction Seminar. Helsinki, August 24, 2018 Martti Ala-Härkönen, CFO

Transcription

1 Investor Presentation Carnegie Construction Seminar Helsinki, August 24, 2018 Martti Ala-Härkönen, CFO

2 Contents 1. Business and strategy 2. Q2/2018 financials 3. Appendix 2

3 Business and strategy

4 Caverion a leading European service company o o o Caverion designs, builds, operates and maintains user-friendly and energy-efficient technical solutions for buildings, industries and infrastructures in Northern, Central and Eastern Europe. Caverion s services and solutions are used in commercial, industrial, public and residential buildings and processes ensuring business continuity, safe, healthy and comfortable conditions, optimised performance and cost control. The company s head office is located in Helsinki, Finland. The Caverion share (CAV1V) is listed on Nasdaq Helsinki. EUR 2.2 billion revenue, LTM Q2/ ,000 spaces in service EUR 37.4 million adjusted EBITDA, LTM Q2/ countries 0.2x Net debt/ebitda 1 ~15,750 employees (6/2018) Caverion is a technical forerunner and its disciplines cover the entire life cycle of buildings and industries, projects, and services Heating and Sanitation Ventilation and Air Conditioning Cooling Electricity Information and Communication Services Security and Safety Automation Industrial Installations Process Piping Note: Revenue and adjusted EBITDA LTM Q2/2018 figures. IFRS 15 restated figures as applicable, unless otherwise. stated. 1) According to agreed calculation principles with the lending parties. As of Q2/

5 Caverion is a leading European service provider for buildings and industries Caverion has a strong market position: In 2017, ranked among the five largest players in all of its largest operating countries (Finland, Sweden, Norway, Denmark, Germany and Austria). Caverion is also the leading industrial solutions company in Finland. Finland Sweden Austria Norway #3 #2 #1 1. Caverion 2. Are 1. Bravida 2. Caverion 1. Ortner 2. Caverion 1. Bravida+Oras 2. GK #5 #4 3. Consti 3. Assemblin 3. Engie 3. Caverion 4. Bravida 4. Midroc Electro 4. EQOS Energie 4. Coor #5 5. Quatro Mikenti 5. Eitech 5. G. Klampfer 5. OneCo Germany 1. Apleona 2. Strabag PFS 3. Wisag 4. SPIE 5. Caverion Denmark 1. Kemp & Lauritzen 2. Bravida 3. Kirkebjerk 4. Lindpro 5. Caverion Baltics/EE 1. ISS 2. Apleona 3. City Service 4. Caverion Denmark 6% Austria 7% Industrial Solutions 11% Finland 14% Eastern Europe 3% Revenue by division (2017) Norway 16% Sweden 22% Germany 21% #2 Revenue meur mEUR More than 500mEUR 5

6 Forerunner in digital solutions for built environments Megatrends Increasing technology Energy efficiency Digitalisation Urbanisation The share of technology in built environments investment cost is increasing (40-60%) requires expertise in integration of multiple technologies Both legal and financial needs increase the demand for energy efficient solutions and renewable energy sources The growing digitalisation of built environments creates possibility to manage data and conditions across the whole life cycle Creating safe and reliable built environments for citizens and communities in a profitable manner Caverion s technical expertise New solutions Cost efficiency Energy efficiency Customer satisfaction Megatrends and Caverion s well-invested technological platform and new solutions provide cost and energy efficiency for Caverion s customers 6

7 Fit for Growth Increasing technology Energy efficiency Digitalisation Urbanisation Caverion is turning into a leading service company and a selective master of projects. We cover the whole life cycle of buildings, industries and infrastructure. We are a technology forerunner providing excellent customer experience. We will, after getting fit, grow faster than the market. MISSION VISION Smart solutions and happy customers First choice in digitalising environments MUST-WINS Excellent customer experience Best solutions Top performance at every level Winning team VALUES Step ahead Cooperation Responsibility High performance MUST-HAVES Safety Quality Sustainability 7

8 Fit for Growth Meeting the milestones for FIT GROWTH Excellent customer experience Best solutions Top performance at every level Winning team 8

9 Accelerating profitable Services growth Building on existing strengths TECHNICAL MAINTENANCE (78% of revenue in Services) Performance management People development Growth with existing customers Expand and upgrade services scope Pricing optimisation SERVICES TAILORED FOR LARGE CUSTOMERS (22% of revenue in Services) Comprehensive offering with technical and digitalised core Differentiating factor Develop partnerships High quality service delivery Growth with existing and new customers NEW DIGITAL SERVICES SERVICE CULTURE 9

10 New Digital Services add value to our customers Ready to roll-out: IoTFlex for industrial customers ServiFlex+ for buildings Customer information portal Remote center services Analytics Sensors Customer information portal Development: Caverion smart solutions Digitalised service delivery process Analytics New business models Remote center Building Automation System Field mobility 10

11 Favourable Services market demand and outlook % Facility Management Services Market Growth Outlook Europe Germany Services Underlying demand expected to remain strong IFM/bundled offerings gaining share Opportunities in outsourced operations and maintenance; currently ~half of the total market is outsourced (varies between geographies and segments) Demand for Life Cycle Solutions expected to increase Source: Lünendonk -Studie

12 Delivering our selective and disciplined strategy in Projects Select projects based on profitability, cash flow and ability to support growth in services Implement Projects Performance Management Improve project management competences and develop resource planning Manage project portfolio and business mix, climb up in the value chain 12

13 Strategy execution through must-wins continues Focus on Top performance at every level in 2018 Preparing for growth with new solutions and services Services Overall improvement in performance KPI s Good opportunities identified in pricing Specific actions carried out for lowperforming service units Utilisation improved Quick identification of performance gaps Actions to get back on track Projects Consolidation of project units, comprehensive project management trainings rolled out Improvement in performance KPI s Meeting and review practices and project management dashboards with KPIs implemented Procurement and fixed costs Procurement and fixed costs performance management programmes ongoing Supplier category management under implementation 13

14 Key investment highlights A leading European service company offering intelligent and integrated solutions Clear strategic path forward with focus on strong profitability improvement and service growth Financial targets Cash conversion* > 100% Profitability (EBITDA-%) > 6% 3. Forerunner in digital solutions for built environments Asset-light, cash generative business model with a diversified customer base Healthy order backlog with an increasing share of services and high-quality projects Market outlook remains attractive Leverage (Net debt/ebitda) < 2.5x Growth Services growth > market Services generate > 2/3 of Group revenue (longterm target beyond 2020) Group revenue growth target specified by the end of 2019 *) Operating cash flow before financial and tax items / EBITDA 14

15 Q2/2018 financials

16 Summary of Q2/2018: Operational improvement continues and Q2 revenue slightly higher than last year Risk level lower going forward Order backlog Order backlog amounted to EUR 1,596.8 (1,512.7) million at the end of June, up by 5.6 percent from the end of June in the previous year. Reporting change of long-term Services contracts in Sweden (up by EUR 62.5 million) Revenue Revenue EUR (563.3) million, up by 0.3% or by 2.1% in local currencies. Revenue up by 4.2% in Services and down by 4.0% in Projects Impacted negatively by currency fluctuations and the sale of Krantz EBITDA Adjusted EBITDA improved to EUR 12.9 (4.5) million Both business units improved their margins. EBITDA amounted to EUR (-14.1) million, affected by anti-trust fine of EUR 40.8 million. Cash flow and leverage Operating cash flow before financial and tax items was EUR (-25.9) million, impacted by seasonality. Net debt/ebitda improved to 0.2x, based on the confirmed calculation principles with lending parties. Earnings per share Earnings per share amounted to EUR (-0.14) per share. Earnings per share was impacted by the German anti-trust fine of EUR 40.8 million and other items affecting comparability. 16

17 Order backlog development Order backlog was EUR 1,596.8 (1,512.7) million at the end of June, up by 5.6 percent from the previous year. The order backlog reporting was changed during the period due to reporting harmonisation of longterm Services contracts in Sweden, which increased the order backlog by EUR 62.5 million. At comparable exchange rates the order backlog increased by 7.0 percent. Order backlog increased in Services and declined in Projects from the end of June Order backlog EUR million Q1 Q2 Q3 Q4 1,540 1,597 1, Comparative figures are carve-out figures for the periods before the effective date of the partial demerger (June 30, 2013). 17

18 Revenue development Group revenue, EUR million Q1 Q2 Q3 Q4 Q1 Q : 2,275.8 Revenue breakdown by division, EUR million Norway Denmark Sweden Germany Industrial Solutions / /2018-4% +4% -12% -1% -10% +1% +9% -9% Comparative figures are restated IFRS 15 figures for H1/2018: 1,091.6 (1,138.0) Finland Austria Eastern Europe Q2/2018: Revenue was EUR (563.3) million, up by 0.3% from the previous year (+2.1% in local currencies). +4.2% in Services (+6.4% in local currencies) and -4.0% in Projects (-2.5% in local currencies) Revenue increased from the previous year in all divisions except Sweden, Denmark and Eastern Europe. H1/2018: Revenue was EUR 1,091.6 (1,138.0) million, down by 4.1% from the previous year (-2.0% in local currencies). +1.4% in Services (+3.9% in local currencies) and -9.9% in Projects (-8.4% in local currencies) Impacted negatively by currency fluctuations and the sale of Krantz 18

19 Adjusted EBITDA improved from the previous year Adjusted EBITDA improved from the previous year to: EUR 12.9 (4.5) million for Q2/2018 EUR 23.9 (12.3) million for H1/2018 EBITDA was EUR (-14.1) million for Q2/2018 and EUR (-16.1) million for H1/2018, impacted by the German anti-trust fine of EUR 40.8 million and other items affecting comparability. EBITDA also impacted by certain project writedowns from older projects as well as one-off legal and strategy-related costs. Both business units improved their margins. By division, there was positive development in most divisions. Adjusted EBITDA, EUR million Adjusted EBITDA margin, % 2017: 25.8 (1.1%) H1/2018: 23.9 (2.2%) EBITDA, EUR million EBITDA margin, % 2017: 3.8 (0.2%) H1/2018: (-2.0%) Q1 Q2 Q3 Q4 Q1 Q Comparative figures are restated IFRS 15 figures for Q1 Q2 Q3 Q4 Q1 Q2 19

20 Estimated Projects business risks for 2018 Caverion managed to settle some of its largest old project claims during the quarter, one of them relating to a large Industrial Solutions project. The company s risk position related to old project risks was reduced. The company will separately report the impacts of the remaining two completed Large Projects in Industrial Solutions under Items affecting comparability. The Projects business is expected to materially improve its result in 2018 although there are still certain project performance risks from older projects. At present there are approximately one fifth of projects in Caverion s project order backlog that have been started in 2016 or earlier. There was good development also in old overdue trade receivables. 20

21 15,751 employees at the end of June 2018 Employees by division 6/2018 Number of employees (end of period) 17,664 16,750 Work safety Accident frequency rate in the end of June decreased by 7% from the previous year to 5.4 (5.8). Sweden 19% Norway 15% Finland 16% Germany 14% Industrial Solutions 13% Eastern Europe 10% Denmark 6% Austria 5% Group Services 1% 15,751 Q2/16 Q2/17 Q2/18 21

22 Q2 cash flow impacted by seasonality Operating cash flow before financial and tax items amounted to EUR 4.9 (-38.1) million during H1/2018. Operating cash flow improved in all divisions except Denmark due to better profitability and improved working capital management. Free cash flow improved to EUR -5.1 (-46.7) million in H1/2018. Capex was EUR 7.4m (7.9). IT investments: EUR 5.7m (5.8) Other investments: EUR 1.7m (2.1) Operating cash flow before financial and tax items, EUR million 2017: -8.7 H1/2018: 4.9 (-38.1) Free cash flow, EUR million Q1/17 Q2/17 Q3/17 Q4/17 Q1/18 Q2/18 Capex, EUR million Q1/17 Q2/17 Q3/17 Q4/17 Q1/18 Q2/18 Free cash flow = Operating cash flow before financial and tax items Taxes paid Net cash used in investing activities (net, including acquisitions and disposals) 22

23 Working capital development The Group s working capital improved to EUR (-8.6) million at the end of June. Working capital, EUR million % of sales, (LTM) Working capital was impacted by the anti-trust fine related current liability of EUR 40.8 million in Germany. The amount of POC receivables decreased to EUR (273.1) million and trade receivables to EUR (300.6) million at the end of June. There was good development also in old overdue trade receivables % % % 0.0% -0.5% -1.0% -1.5% -2.0% -2.5% Q1/17 Q2/17 Q3/17 Q4/17 Q1/18 Q2/18-3.0% Comparative figures are restated IFRS 15 figures for

24 Financial position after EUR 60 million share issue in Q2/ x Net debt (EURm) Net debt/ebitda (12m) x 2.3x x 0.7x x x x x x x 2.8x x 3.4x * The Net Debt/EBITDA for Q1-Q3/16 has been calculated excluding restructuring costs. ** The Net Debt/EBITDA for Q4/16 Q2/18 has been calculated according to confirmed calculation principles with lending parties x x x x Net debt reduced by EUR 37 million in Q2, Net debt EUR 10.2 million at the end of Q2. o o On 15 June 2018, Caverion announced a directed share issue. Proceeds raised were EUR 60.0 million. German anti-trust fine will be paid in Q3/2018. Financial covenant (Net Debt/EBITDA): Net debt/ebitda in Q2/2018: 0.2x according to the confirmed calculation principles with lending parties. In June it was agreed with the lending parties that the German anti-trust fine and there-related legal and advisory fees are excluded from the calculation of EBITDA. Gross debt to net debt (EURm) Long-term borrowings Short-term borrowings Cash and cash equivalents Net debt Liquidity reserve EUR 181 million at the end of June 2018, EUR million 119 Unused credit facilities 62 Cash and cash equivalents 24

25 Strengthened balance sheet to retain strategic flexibility Equity ratio 28.2% (Q2/2017: 25.8%) Equity ratio, % Gearing, % Gearing 3.9% (Q2/2017: 41.7%) Caverion concluded a directed share issue of EUR 60.0 million in June. The rationale was to maintain a strong balance sheet and to retain strategic flexibility after the payment of the anti-trust fine, including: Continuation of shift towards the Services business; Support strategic projects and operational development; Investments in digitalisation; A solid cash position to finance bolt-on acquisitions in selected areas in services especially in well-performing divisions. 16.9% 16.7% 25.8% 24.8% 25.8% 27.7% 28.2% 88.8% 106.4% 41.7% 59.5% 27.2% 19.4% 3.9% Comparative figures are restated IFRS 15 figures for Q4/

26 Guidance for 2018 unchanged Revenue Adjusted EBITDA Caverion estimates that the Group s revenue for 2018 will decrease compared to the previous year (2017: EUR 2,275.8 million). Caverion estimates that the Group s adjusted EBITDA will more than double in 2018 (2017: EUR 25.8 million). Dividend Dividend policy: Dividend pay-out at least 50% of the result for the year after taxes, however, taking profitability and leverage level into account. The AGM held on 26 March 2018 decided that no dividend be paid for Adjusted EBITDA = EBITDA before items affecting comparability (IAC) 26

27 Appendix

28 Summary - Caverion Equity story Key investment proposals A leading European service company offering integrated and sustainable technical solutions Among top 5 in key operating countries Intelligent and integrated solutions covering all technical disciplines throughout the life cycle of properties and plants Strong technical competence Presence in 12 countries Extensive client base Own R&D Client benefits: Optimal conditions Usability Cost-efficiency Sustainability We are a company for the future Energy efficiency incorporated in all solutions Our unified market offering helps clients to focus on their core business Provider of Life Cycle Solutions Business units: Services Projects Life Cycle Solutions for buildings and industries Business model built on market mega trends Getting fit for growth Client need for integrated solutions and outsourcing partners supporting demand Fragmented market offering growth opportunities also through M&A Well-performing Services, actions ongoing to improve profitability in Projects through Performance Management actions Operating in asset-light, cash generative business Megatrends: Increasing technology Energy efficiency Digitalisation Urbanisation Technology forerunner that will, after getting fit, grow faster than the market Financial targets: Cash conversion > 100% EBITDA margin >6% Net debt/ebitda < 2.5x Services growth > market Dividend policy: at least 50% of net profit, taking into account profitability and leverage level 28 Caverion

29 Some examples of our clients Broad and diversified client base Managed Services Technical maintenance Industrial Installations Managed Life Cycle Karolinska University Hospital Solna, Sweden Metsä Fibre, Pulp Mills Finland TOTAL Refinery Leuna, Germany "Marine Façade, passenger port of St. Petersburg Russia Outokumpu Tornio, Finland National courthouse Viborg, Denmark Managed Operations Project Execution Energy Performance contracting Design & Engineering, Project Management & Execution AstraZeneca, Sweden Valio, Vantaa, Finland Palais Quartier Frankfurt a. M., Germany DC Tower Vienna, Austria Söderhamn municipality, Sweden Knowledge Centre, St. Olav s Hospital Trondheim, Norway 29

30 New Digital Services add value to our customers Ready to roll-out: IoTFlex for industrial customers ServiFlex+ for buildings Customer information portal Remote center services Analytics Sensors Customer information portal Development: Caverion smart solutions Digitalised service delivery process Analytics New business models Remote center Building Automation System Field mobility 30

31 ServiFlex+ Smart service concept for buildings Renewed, digitalised service for preventive maintenance Experience on building technology from over 30,000 facilities in 12 European countries Applications for all kind of facilities; schools, office buildings, retails shops, malls and warehouses With ServiFlex+ customers can: Optimise and predict maintenance costs Choose single or multiple technical systems See 24/7 how their building is performing Sustainability: reduced energy consumption up to 20% Have one customer information portal for reports and real-time information 31

32 IoTFlex Smart service concept for industry Modern analytics based on sensor technology allows the detection of disturbances in critical parts of the production line at an early stage Tested and developed together with a few industrial customers Fits for various industrial segments Major cost-savings when uncontrolled interruptions of production can be eliminated 32

33 Customer information portal with 24/7 real-time data 33

34 Directly registered shareholders on July 31, 2018 Largest shareholders Shares, % of share pcs Capital Change after June 2018, pcs Change after June 2018, % 1 Herlin Antti 20,500, Structor S.A. (Ehrnrooth family) 17,565, Varma Mutual Pension Insurance Company 9,721, Ilmarinen Mutual Pension Insurance Company 5,568, , Mandatum companies 3,927, , Fondita funds 3,395, Caverion Oyj 3,264, Nordea funds 3,043, , Aktia funds 2,118, Säästöpankki funds 2,060, The State Pension Fund 1,850, Evli funds 1,231, OP funds 1,179, , Elo Pension Company 1,060, Brotherus Ilkka 1,048, Odin funds 848, Foundation of Brita Maria Renlunds minne 817, Funds held by Ari Lehtoranta* 768, Kaleva Mutual Insurance Company 483, Jenny and Antti Wihuri s Foundation 283, largest, total 80,736, All shares 138,920, Sector distribution (7/2018) 27,134 owners Nominee reg. and non- Finnish 31.1% (Jun. 30: 30.6%)* Households 16.9% (17.3%) General government 13.6% (13.7%) Financial and insurance corporations 11.6% (11.5%) Non-profit institutions 4.2% (4.2%) Non-financial corporations and housing corporations 22.5% (22.7%) *) Solero Luxco S.A.R.L (Triton) holding nominee registered since April Their latest directly registered holding as of March 31, 2017 was 9,716,223 shares (7.74%). *) incl. Voluntas Investment Oy and directly held shares. 34