expansion of equipment services into usa - … · expansion of equipment services into usa ... 2011...
TRANSCRIPT
Expansion of Equipment Services into USA 24 November 2010
Adrian Ringrose, Chief Executive Steven Dance, Managing Director, Equipment Services
2 The Trusted Partner
Overview
• Attractive opportunity to expand global footprint into world’s largest construction market
• Acquiring formwork and shoring assets, existing client base & established sales force, branch and distribution network
• Consideration represents significant discount to replacement cost of assets
• Marginally accretive to headline EPS in 2011
• Excellent value for shareholders
3 The Trusted Partner
Established Business
Distributor Agreement or Representative office
Equipment Services global footprint
Australia market size c. £100m,
market share c. 30%
Middle East market size c. £600m, market share c. 10%
USA market size c. £535m
Spain market size c. £290m, market
share c. 5%
UK market size c. £80m, market share c. 25%
4 The Trusted Partner4 The Trusted Partner
Equipment Services historic returns
5 The Trusted Partner5 The Trusted Partner
Equipment Services pro forma revenues by geography
Pro forma revenue 2010
93%
7%
Existing Equipment Services North America
6 The Trusted Partner6 The Trusted Partner
US business operations
• Head office in Denver, operating out of 4 distribution centres in Houston, Dallas, Denver and Los Angeles
• Previous head of CMC’s US business retained, reporting to Steven Dance, MD of Equipment Services
• Majority of CMC’s management and staff associated with this activity have been re-employed
7 The Trusted Partner7 The Trusted Partner
US construction market
In the 3 key states in which the business operates (California, Texas, Colorado) double-digit market growth is forecast in 2011 & 2012
Main markets for Equipment Services US business:
Texas California
Second largest construction market within US US$58.9billion
Largest state construction output US$67.8billion
Texas California
Second largest construction market within US US$58.9billion
Largest state construction output US$67.8billion
Colorado
Double digit market growth forecast
US construction market – growth rate forecasts (source: McGraw Hill, August 2010)
McGraw Hill Construction Data August 2010 – All US States 2011 2012 2013 Non Residential +7% +23% +25% Non Building* +7% +7% +5%
McGraw Hill Construction Data August 2010 – Texas, California & Colorado 2011 2012 2013 Non Residential +13% +22% +25% Non Building* +13% +12% +7% * Includes the infrastructure categories of Highways, Bridges, Dams, Water Treatment, Water Supply & Power Plants
8 The Trusted Partner8 The Trusted Partner
Financial implications
• Expect to grow Equipment Services US revenues faster than US market
• Gross margins of Equipment Services US expected to be consistent with rest of Equipment Services
• EBITDA on investment for Equipment Services US expected to be consistent with Equipment Services historical range of 20% - 30%
• Paid from existing cash resources (Group net debt @ 30/6/10: £53.1m)
• Marginally accretive to headline EPS in 2011
9 The Trusted Partner9 The Trusted Partner
Summary
• Attractive opportunity to expand global footprint into world’s largest construction market
• Acquiring formwork and shoring assets, existing client base & established sales force, branch and distribution network
• Consideration represents significant discount to replacement cost of assets
• Marginally accretive to headline EPS in 2011
• Excellent value for shareholders
10 The Trusted Partner
Project example –Alshor Plus shoring at the Dallas Cowboys stadium
11 The Trusted Partner
Project example - Albuquerque Waste Water Plant
