q3 fy18 noteholder presentation - selectad3372beb-65c9-4bb2-941c...coffee and convenience food...
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Q3 FY18 Noteholder Presentation29TH AUGUST 2018
David Flochel
CEO
Gabriel Pirona
CFO
The Presenting Team
Agenda
01 – SELECTA TODAY
02 – TRADING UPDATE
03 – FINANCIAL RESULTS
04 – APPENDIX
01 Selecta Today
Selecta Today: the Leading Unattended Self-ServiceCoffee and Convenience Food Provider in Europe
Q3 FY18 NOTEHOLDE R PRESENTAT I O N
01
Increased density and scale of the business, with significant synergy savings
Proven route-based business with unique logistics infrastructure and high density on the last mile
1 FY17 Selecta Net Revenue. Excludes disposed entities: East, Baltics and Selecta Finland2 Pro-forma combined Group Net Revenue FY173 OC&C Report, management estimates
Revenue grew by >2x, from €612 million1 to €1.4 billion² in past 12 months
10 million consumers served daily
5
Total Machine
Numbers:
ca. 455k
76%
4%
20%
Q3 Gross
Revenue:
€380m
Workplace ServicesOn-the-Go
Trading
Q3FY18 Selecta Business Model: Breakdown by
ChannelsSELECTA: a Rapid Consolidation
Key Global
Partnerships
Premium Coffee
and Other 55%
HOT DRINKS
30%
COLD DRINKS and SNACKS (IMPULSE) TRADING
15%
No. 1 or 2 Position in European Market 3
No. 3 or 5 Position in European Market 3
6
Leading Market Positions and Scale Drive Superior Returns
Strategic Partnership to Enhance Brand Recognition
Ability to Invest in Best-in-Class Customer Experience
Scale to Drive Operation Efficiency,
Margin Expansion, and Superior Returns
• Leading European footprint
positions us as “Partner of
Choice” with global coffee
players
• Natural partner for leading
facility management &
catering customers as well as
large corporates
• Negotiate best procurement arrangements
• Highest density yields superior efficiency and savings
• Largest machine buyer in Europe, resulting in more efficient
capex spend and being the partner of choice for machine
manufacturers
• Ability to invest in latest technologies
• Unique modern tech development (e.g.
touchscreen user interface)
• Detailed database and insights into
consumption preferences and trends
~4 500 Route Merchandisers
~1 500Route Technicians
> 5 000Vehicles
Centralized planning
and tech support
~150 Planners
SELECTA MANAGE M EN T PRESENTAT I O N – SEPTEMBE R 2018
01
Successfully Strengthened #1 Market Leader Position in Europe01
Ambition
Vision: Selecta is the European leader in unattended self-serve coffee and convenience food, at the workplace and on-the-go
Mission: Selecta is dedicated to providing great quality coffee brands, convenience food & beverages concepts
Q3 FY18 NOTEHOLDE R PRESENTAT I O N
7
Values
Customer
Focus
Teamwork
& winning
attitude
Integrity
Excellence
In
Execution
Strategies
Deliver best solutions to consumers by offering flexible payments,
loyalty programs & leveraging data to improve offering
Self-Service Retail Experience
01
02
Drive customer acquisition by selling unique concepts, opening new
routes and standardizing sales processes, and maximize customer
base value through high retention, profitability and satisfaction
Route to Market Excellence
Attract talent and retain capable organization, in line with core
values, for the growth and transformation of the company
Powered by Great People
03
Deliver high quality service at highest efficiency through continuous
improvement, standardization and technology in order to maximize
customer satisfaction, retention and profitability
Operational Excellence
04
Set industry standard for innovation, leveraging the latest
technologies to enhance our offering in Self-Service Retail and beyond
Innovation Leadership
05
Accelerate our market
leadership in Europe with
our customers and
consumers in mind
Guided by our
Vision & MissionGuided by our
Vision & Mission
Being number 1 or 2
in top markets in which
we operate
Growth Pillars
Growing
Sales /
Machine /
Day
Innovation
Pipeline
Bolt-On
M&A
Opportunities
Driven by
Strong
Management
Teams
Improved
Retention
Rates
New Client
Wins+
02 Trading Update
9
Update at the End of Q3
Q3 FY18 NOTEHOLDE R PRESENTAT I O N
02
9
1 Constant foreign currency rates applied: CHF/EUR 1.15; SEK/EUR 9.65; GBP/EUR 0.88
Reconfirmation of FY18 Outlook
TREND UNDERPINNED BY IMPROVING LEADING
INDICATORS FOR ORGANIC GROWTH …
• Strong pipeline of commitments
• Strong uplift in proposals submitted
• Enhanced density; stronger lever across countries and borders
• Increase in retention rate
• Improvement in average sales per machine¹
…AND A CONSISTENT, SUCCESSFUL AND ACCRETIVE
STRATEGY OF BOLT-ON M&A
4 Cash capex to be €100-110m(at constant FX rate1)
1Gross sales to increase by +2.0%
(at constant scope and FX rate1)
• Business is growing as planned in spite of the ongoing
major business transformation and the impact of the SNCF
strikes in France
✓
2Adjusted EBITDA for the full year to increase to €245-255m(at constant scope and FX rate1, consistent with prior guidance)
• Pro-forma EBITDA (including pro-forma unrealised
synergies) in excess of €300m
✓
3Synergy program to be cash positive (at constant scope and FX rate1, consistent with prior guidance)
• Total 2018/2020 synergy program of €75m ✓
✓
• Successful implementation of on-going M&A activity: goal to
deliver 3-5% sales per annum as well as delivering immediate
cost synergies
• Scale continues to make Selecta the consolidator of choice
- Completion of acquisition of Stop & Go S.r.l. in Italy
- recent acquisition (Q4, August 2018) of Express Vending in
the UK
ON TRACK TO DELIVERY FULL-YEAR 2018 GUIDANCE
Financial Overview: Q3 FY18
10
1 Constant foreign currency rates applied: CHF/EUR 1.15; SEK/EUR 9.65; GBP/EUR 0.88. Selecta /PR/Argenta adjusted for subsidiary disposed (Selecta Finland)2 Revenue gross of vending fees3 Net capital expenditures is defined as capital expenditures less net book value of disposals of vending equipment
Q3 FY18 revenue in line with expectations
Q3 FY18 reported growth +2.1%, despite impact of French
railway strikes (€2m less of sales): LfL growth 2.5%
Q3 FY18 adjusted EBITDA at €59.4 or 15.6% margin to gross
revenue
Underlying Adjusted EBITDA expansion of +2% despite further
costs from former PR businesses (as expected) and the
impact from loss of earnings due to French rail strikes, as
well as deferred extra income (to Q4)
Capex efficiencies contributing to the 10.4% increase in EBITDA
less net capex ratio
Selecta (€m)
+2.1%372.2 380.0
Gross revenue ¹ ²
+2.0%58.2 59.4
15.6% Margin
Adjusted EBITDA¹
+10.4%23.7 26.1
Adjusted EBITDA less net capex¹ ³
10
Q3 FY18 NOTEHOLDE R PRESENTAT I O N
Q3 FY17 Q3 FY18
02
11
3 Focused Drivers of Organic Growth02
Best-in-Class Retention Growing Sales / Machine / Day (in €) New Business Pipeline Acceleration (€m)
(% retention rate)
92.5%94.5%
96%
Q4’17 Q3’18 Near term
target
Dedicated task force in FR/UK
Standardised reporting tracking progress
Proposal sent
Negotiation
Agreed
Contract signed
CRM in all markets driving discipline
11
Publifon®
Q3 FY18 closed very positively – notable winsPrivate
Uplifting c.2,500 underperforming
machines YTD
Public
Pricing, assortment & availability
optimisation with telemetry data
Cashless
Q3’18Q1’17 Q1’18 Q2’17 Q2’18
10.5 11.0 10.8 11.1
+4.9% +3.2%
Q3’17
11.1 11.3
+1.3%
Recent renewal successes
Q1’18 Q2’18 Q3’18 Q4’18
29
61
14
21
32
55
16
25
47
80
23
28
47
85
24
26
AWARDED OUTSTANDING SUPPLIER OF THE
YEAR BY SHELL FOR FRESH FOOD AND DRINK
Other Customer/Partner
Development Highlights
CONTRACT RENEWED FOR 3 YEARS
Q3 FY18 NOTEHOLDE R PRESENTAT I O N
03 Financial Results
13
• Growth YoY at CC of 0.8%, +1.0% LfL with increases in
vending fees in the Public channel in the Central
markets and UK (higher petrol station vending fees)
Pro Forma P&L Summary at Actual Rates¹
• In spite of difficult trading conditions, +2.1% at
constant scope² and currency³ (-€6.4m FX impact),
+2.5% LfL. The best performance came from the Public
and Trading channels.
Gross revenue
Net revenue
Adjusted EBITDA• Flat YoY at actual rates, +2.0% at CC
• Negative impact of the rail strikes (SNCF) in France (~€1.2 m)
EBITDA Adjustments• €12.7m in Q3 FY18, flat on Q2
• Synergy costs (€10.0m synergy project costs) in the
quarter driven by acceleration of initiatives
resulting from program upgrade (Group
procurement, French integration) and ongoing
integration actions (UK and other entities)
• Reported EBITDA -€4.1m in Q3FY18 vs Q3FY17
€m Q3
FY17
Q3
FY18
Variance Variance
%
Gross Revenue 375.6 377.0 1.4 0.4%
Vending fees (30.2) (35.0) (4.8) 15.8%
Net Revenue 345.4 342.0 (3.3) -1.0%
Materials and consumables used (132.0) (128.7) 3.3 -2.5%
Gross Profit 213.4 213.3 (0.1) 0.0%
% margin on net revenue 61.8% 62.4% 0.6 pts
Adjusted employee benefits expense (111.3) (105.3) 6.0 -5.4%
Adjusted other operating expenses/income (43.2) (49.3) (6.1) 14.1%
Adjusted EBITDA 59.0 58.8 (0.2) -0.3%
% margin on gross revenue 15.7% 15.6% -0.1 pts
Restructuring / Redundancy costs (1.7) (1.8) (0.2)
Other synergy project costs - (10.0) (10.0)
Pelican Rouge acquisition costs (at SEL and
PR)(5.0) - 5.0
Other adjustments (2.1) (0.8) 1.3
Reported EBITDA 50.2 46.1 (4.1) -8.2%
% margin on gross revenue 13.4% 12.2% -1.1 pts
03
13
3 Months ended 30th June 2018
Q3 FY18 NOTEHOLDE R PRESENTAT I O N
1At actual FX rates 2Selecta constant scope adjusted for subsidiary disposed (Selecta Finland). FY17 numbers are a pro forma amalgamation of Selecta, Pelican Rouge and Argenta results 3 Constant foreign currency rates applied: CHF/EUR 1.15; SEK/EUR 9.65; GBP/EUR 0.88
14
Result by Segment at Constant Rates¹
• +€2.9m YoY at constant currency and constant scope basis²
Net Revenue by Segment
• Slight growth in Switzerland, Benelux, Italy, Spain and Sweden
offset by decrease in turnaround markets like France and UK
• South, UK & Ireland:
• Central:
• North:
Adjusted EBITDA by Segment
• +€1.2m vs LY at CC – sharp acceleration of profit generation
expected in Q4
• South, UK & Ireland: +€2.5m driven by synergies in UK and Spain
• Central: -€2.1m
• North: Flat due to lower margins in Trading channel
Q3 FY17
Constant
Scope
South,
UK &
Ireland
Central North Q3 FY18
Constant
Scope
342.11.5 (2.5)
3.9 345.0
Q3 FY17
Constant
Scope
South,
UK &
Ireland
Central North HQ Q3 FY18
Constant
Scope
58.2
2.3 (2.1)0.1
0.8 59.4
(€ m) Net Revenue by region3
(€ m) Adjusted EBITDA by region
Q3 FY18 NOTEHOLDE R PRESENTAT I O N
03
14
1 Constant foreign currency rates applied: CHF/EUR 1.15; SEK/EUR 9.65; GBP/EUR 0.882 Selecta constant scope adjusted for subsidiary disposed (Selecta Finland). FY17 numbers are a pro forma amalgamation of Selecta, Pelican Rouge and Argenta results3 Revenue net of vending fees
3 Months ended 30th June 2018
• Approx 36% of total revenue; uplift due to better
than expected performance in Spain and Italy
• Approx 37% of total revenue; down by €2.5m largely
due to impact of French railway strikes
• Approx 27% of total revenue; up by €3.9m with rapid
growth in Denmark, Norway on the back of new wins
rollout, and trading activity in Sweden and Belgium
• HQ: +€0.8m due to synergies savings and cost management
15
• €765m senior secured 5.875% 2024
• €325m senior secured floating notes 2024
• CHF250m senior secured 5.875% 2024
• Total accrued interest at June €42.8m
Liquidity at 30 June 2018
Cash at bank up from €85.9m to €101.6m end June
Senior notes of €1,306.1m
Revolving credit facility: €15m drawn in June
€m Dec 17 Jun 18
Cash at bank 85.9 101.6
Factoring facilities 5.0 7.2
Reverse factoring facilities 7.6 4.3
Revolving credit facility 30.0 15.2
Senior notes 934.2 1,306.1
Accrued interest 7.1 42.8
Finance leases 41.5 43.2
Total senior debt 1,025.3 1,418.7
Net senior debt 939.4 1,317.1
Adjusted EBITDA last twelve months ¹ ² 197.1 235.2
Leverage ratio 4.8x 5.6x
Available liquidity ³ 155.9 236.5
03
Pro-forma leverage ratio (post synergies) of 4.5x
€m Jun 18
Adjusted EBITDA last twelve months² 235.2
Leverage ratio excluding synergies 5.6x
Pro-forma leverage ratio (post synergies) 4.5x
Liquidity Summary
Leverage Ratio
Q3 FY18 NOTEHOLDE R PRESENTAT I O N
15
1 Dec 17 adjusted EBITDA last twelve months based on Selecta and Pelican Rouge only2 June 2018 adjusted EBITDA last twelve months based on pro forma results of Selecta, Pelican Rouge and Argenta.3 Includes cash at bank and unused revolving credit facility
Group available liquidity €236.6m
16
Cash Flow Statement at Actual Rates
€m Q3 FY18 YTD
FY18²
EBITDA 46.1 129.2
(Profit) / loss on disposals -1.6 -6.0
Cash changes from other operating activities -1.9 -2.8
Change in working capital and provisions -8.8 -89.9
Net cash from operating activities 33.8 30.6
Capex -27.5 -71.0
Finance lease payments -5.3 -14.0
Interest received 0.0 0.1
Proceeds from sale of subsidiaries & other proceeds 0.9 13.6
Net cash used in investing activities excluding
M&A-31.9 -71.4
Free cash flow 1.8 -40.9
Acquisition of subsidiary net of cash acquired -9.8 -231.7
Free cash flow including acquisition -8.0 -272.6
Proceeds from capital increase - -
Proceeds/ repayment of loans and borrowings 16.1 343.1
Interest paid and other financing costs -5.5 -43.4
Financing related financing costs paid -19.4 -51.6
Other 6.8
Net cash used in financing activities -8.7 254.9
Total net cash flow -16.7 -17.7
03
3 Months ended 30th June
Q3 FY18 NOTEHOLDE R PRESENTAT I O N
16
¹ At comparable scope, i.e. combining Selecta, Pelican Rouge and Argenta for both Q3 FY18 and Q3 FY17, and at constant foreign currency rates: CHF/EUR 1.15; SEK/EUR 9.65; GBP/EUR 0.88
² No pro forma Q3 FY17 numbers available. YTD FY18: excludes Argenta cash flow for first 4 months, as acquisition happened in month 5 (Feb 2018)3 Net capital expenditures is defined as capital expenditures less net book value of disposals of vending equipment
€m Q3 FY17 Q3 FY18 Variance
%
Adjusted EBITDA 59.0 58.8 -0.2
Reported EBITDA 50.2 46.1 -4.1
Net capexª 32.1 29.3 -2.8
Adjusted EBITDA less net capex³ 26.9 29.5 2.6
On a pro forma basis, adjusted EBITDA less net Capex increases by
9.7% at actual rates and 10.4% at constant rates
This improvement is underpinned by capital intensity efficiencies,
through the optimisation of investment in new machines and the
expansion of external lease / funding schemes
YTD Free Cash Flow impacted by adverse working capital changes, due
to Pelican Rouge acquisition and pre-integration costs cashed out in H1
FY18, and adverse movements in Q2 and Q3 expected to be reversed in
Q4
Q3 negative financing cash outflow driven by Refinancing transactions
costs payout, whereas €15m was drawn on the Revolving Credit
Facility (RCF)
EBITDA less net capex (comparable scope and constant rates)¹ ³
Cash Flow Statement at Actual Rates
17
Outlook for 2018 Full Year
ON TRACK TO DELIVER AS PROMISED
Q3 FY18 NOTEHOLDE R PRESENTAT I O N
03
17
1 Constant foreign currency rates applied: CHF/EUR 1.15; SEK/EUR 9.65; GBP/EUR 0.88
4 Cash capex to be €100-110m(at constant FX rate1)
1Gross sales to increase by +2.0%
(at constant scope and FX rate1)
• Business is growing as planned✓
2Adjusted EBITDA for the full year to increase to €245-255m(at constant scope and FX rate1, consistent with prior guidance)
• Pro-forma EBITDA (including pro-forma unrealised
synergies) in excess of €300m
✓
3Synergy program to be cash positive (at constant scope and FX rate1, consistent with prior guidance)
• Total 2018/2020 synergy program of €75m ✓
✓
5Free Cash Flow generation that covers our fixed cash
charges in FY18
04 Appendix
19
Pro Forma P&L Multiple Rate View04
19
3 Months ended 30th June 2018
Q3 FY18 NOTEHOLDE R PRESENTAT I O N
€m Q3 FY17 @ CC
rates1,2Q3 FY18 @ CC
rates1,2 VarianceVariance
%
Q3 FY17 @ ACT FY18
rates2Q3 FY18 @ ACT
FY18 rates2 VarianceVariance
%
Gross Revenue 372.2 380.0 7.8 2.1% 369.3 377.0 7.7 2.1%
Vending fees (30.1) (35.0) (4.9) 16.4% (30.1) (35.0) (4.9) 16.4%
Net Revenue 342.1 345.0 2.9 0.8% 339.2 342.0 2.8 0.8%
Materials and consumables used (130.9) (129.7) 1.1 -0.9% (129.9) (128.7) 1.2 -0.9%
Gross Profit 211.2 215.2 4.0 1.9% 209.3 213.3 4.0 1.9%
% margin on net revenue 61.7% 62.4% 0.6 pts 61.7% 62.4% 0.7 pts
Adjusted employee benefits expense (110.2) (106.2) 4.1 -3.7% (109.3) (105.3) 4.1 -3.7%
Adjusted other operating expenses/income (42.8) (49.6) (6.9) 16.1% (42.4) (49.3) (6.8) 16.1%
Adjusted EBITDA 58.2 59.4 1.2 2.0% 57.6 58.8 1.2 2.1%
% margin on gross revenue 15.6% 15.6% -0.8% 15.6% 15.6% 0.9%
Restructuring / Redundancy costs (1.7) (1.9) (0.2) (1.6) (1.8) (0.2)
Other synergy project costs - (8.8) (8.8) - (8.7) (8.7)
Pelican Rouge acquisition costs (at SEL and
PR)(4.8) - 4.8 (4.8) - 4.8
Other adjustments (2.1) (2.0) 0.1 (2.1) (2.2) (0.1)
Reported EBITDA 49.6 46.8 (2.8) -5.7% 49.1 46.1 (3.0) -6.1%
% margin on gross revenue 13.3% 12.3% -1.0 pts 13.3% 12.2% -1.1 pts
1 Selecta constant scope adjusted for subsidiary disposed (Selecta Finland). FY17 numbers are a pro forma amalgamation of Selecta, Pelican Rouge and Argenta results 2 Constant foreign currency rates applied: CHF/EUR 1.15; SEK/EUR 9.65; GBP/EUR 0.88