Introduction to Applus+ for Investors
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Introduction to Applus+ for Investors Aston Swift, IR November 2021
Transcript of Introduction to Applus+ for Investors
Introduction to Applus+ for Investors
Aston Swift, IR
November 2021
Applus+ at a glance
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A world leading Testing, Inspection & Certification company
Solutions for customers in all industries to ensure that theirassets and products meet quality, health & safety andenvironmental standards and regulations
A Leading Global Provider of Testing, Inspection and Certification Services
Investment case
Financial Performance in 2020
A “TIC” company benefiting from Quality, Safety & Environmental structural growth drivers:
Increasing regulations
Risk reduction and sustainability
Increased product variety and complexity
Ageing assets
Outsourcing of in-house testing
Environmental growth drivers include Energy Transition, Electric/Hybrid vehicles, energy efficiency and lighter materials
High ESG scoring (AA from MSCI / B from CDP)
Leading market positions in key markets
High entry barriers: accreditations, reputation, relationships, network, innovation
Strong cash flow & balance sheet; low capex
Fragmented industry / good acquisition synergies
Financial Performance in 2019
23,000+people in 2020
Revenue of €1,778 millionUp 6% on 2018
Adj. Op. Profit of €197mUp 10% from 2018
Margin 11.1%
EPS €0.76 up 12% on 2018
Net debt/EBITDA at 2.0x
Revenue of €1,558 millionDown 12% on 2019
Adj. Op. Profit of €118 millionDown 40% on 2019
Margin 7.6%
EPS €0.33 down 57% on 2019
Net debt/EBITDA at 3.0x and liquidity €546m
Financial Institutions and
other shareholders
Milestones
1996 - 2003 2004 - 2007 2008 - 2013 2014 - 2015
53%
25%
22%
70%
30% 1 0 %
Acquisition of VELOSI (est 1982)
20 more companies acquired
Acquisition of RTD (est 1937)
Acquisition of Norcontrol(est 1981)
TheIPO of
Automotive established in 1996
IDIADA contractawarded (est 1971)
Labs contractawarded (est 1907)
Free Float
Financial Institutions and
other shareholders
7 5 %
Ownership
Energy & Industrydivisionformed
Four more companies acquired
1 5 %
Period
History of the Group
2017
100% Free Float:River Mercantile 5%Southeastern 3%Norges 3%DWS 3%Harris 3%Threadneedle 3%
2016 - 2020
Acqn of Inversiones Finisterre plus 18more companies acquired for total €250m revenue
ABO of 10% at €10.55 in September 2017
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O&G Opex 25%
Statutory Vehicle Inspection 23%
Automotive OEM 13%
Power 9%
O&G Capex 7%
Construction 6%
Aerospace 2%
Others 15%
Spain 24%
Rest of Europe
25%
North America
19%
LatAm11%
Asia Pacific11%
Middle East & Africa 10%
Energy & Industry 28%
Auto 57%
Idiada 8%
Labs 7%
Energy & Industry 58%
Auto 23%
Idiada 13%
Labs 6%
FY 2020. Splits by Division, End Market and Geography
* FY 2019
Revenue by Division
Revenue By End Market
Revenue By Geography
*60%
*22%
*13%
*5%*23%
*26%*19%
*11%
*11%
*10%
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Adj. Op. Profit by Division
*40%*6%
*41%
*13%
*22%
*13%
*9%
*5%
*3%
*14%
*9%
*25%
Energy & Industry Division
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In 2020 58% Revenue and 28% of Adj Op Profit
Non-destructive testing, industrial and environmentalinspection, quality assurance/control, engineering/consultancy,vendor surveillance, technical assistance, certification and assetintegrity services
In 2015 integrated 3 separate divisions realising cost savingsand optimising growth opportunities through complementarygeographic footprint and cross selling
c.14,000 employees 58% of Revenue
28% Adj. Op. Profit
Growth Drivers and Performance
2019: Revenue up 4% and AOP up 9%. Margin 8.4%
2020: Revenue down 14% and AOP down 53%
Energy Transition: Oil & Gas to Renewables, Hydrogen, Nuclear
Capex and Opex in Construction and other infrastructure
Long term O&G Opex growth (Global leader)
Cyclical upturn in O&G Capex (Global leader)
Advance technology and exclusive proprietary solutions
Geographical Footprint
60 countries €907m€41m
Margin 4.6%
Oil & Gas Opex infrastructure (43% division revenue in 2020)
Oil & Gas Capex infrastructure (13% division revenue in 2020)
Power Generation and Distribution (includes Renewables)
Construction
Mining infrastructure
Telecom infrastructure
Aerospace
Acquisitions in last 3 years
2021: Inecosa and Adícora in Spain. Power (76 employees)
2020: SAFCO in KSA. Construction, €29 million revenue
2019: LEM in Chile. Mining infrastructure, €8m revenue
2018: TIS in UK. Nuclear, €1m revenue
2018: Talon Test in USA. Aerospace, €4m revenue
ESG Services (7% of division revenue)
Renewables (On/Offshore; Wind/Solar; Capex/Opex), EnergyEfficiency, Environmental Inspection, Waste Mngt
Automotive Division (Statutory Vehicle Inspection)
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In 2020 23% Revenue and 57% of Adj Op Profit
Statutory vehicle inspection services for Safety and/or Emissions
16 million inspections across 33 programmes in 12 countriesplus a further 10 million programme managed inspections
74% Regulated and 26% Liberalised
c.5,600 employees
12 countries
57% Adj. Op. Profit
Growth Drivers and Performance
Regulations (emissions, safety)
Increasing car inspection frequency (volume, age, compliancerates)
Emerging markets implementing legislation
Outsourcing
€82mMargin 23.2%
Spain (Catalonia, Galicia, Alicante, Basque Region, Aragon,Castilla la Mancha, Canary Islands, Madrid)
USA (Connecticut, Georgia, Illinois, Massachusetts, Texas, SaltLake City, Idaho, Utah-Weber)
Ireland
Denmark
Finland
Sweden
Andorra
Costa Rica
Uruguay
Argentina (3 contracts)
Chile (3 contracts)
Ecuador (4 contracts)
2019: Revenue up 4% and AOP up 7%. Margin 23.9%
2020: Revenue down 8% and AOP down 10%
Acquisitions in last 3 years
2020: Besikta in Sweden. Statutory vehicle inspection, €62 million revenue
2020: ITV Canarias in Spain. Statutory vehicle inspection €4m revenue
ESG Services (21% of division revenue)
Auto emissions inspection to reduce air pollution
23% of Revenue
€356m
IDIADA Division (Auto Industry OEM Testing)
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In 2020 13% Revenue and 8% of Adj Op Profit Growth Drivers and Performance
Testing, engineering, homologation and R&D services providerto the leading vehicle manufacturers (OEMs)
Specialised facilities, people and proving ground with knowledgeof global technical requirements
IDIADA A.T. (80% owned by Applus+ and 20% by theGovernment of Catalonia) has been operating under anexclusive contract since 1999. The contract to operate thebusiness and use the assets runs until September 2024 forwhich there will be a tender for a new 20 or 25 year concession.
c. 2,400 employees
22 countries
13% of Revenue
8% Adj. Op. Profit
€12mMargin 5.7%
€201m
Quality & Safety (Regulations and own brand requirements)
Increasing car models (Electric and Autonomous Vehicles)
Technology (eg Advanced Driver Assistance Systems)
Emerging Markets
Outsourcing
Passive Safety
Chassis & Power Train
Proving Ground
Homologation (Type Approval)
Spain
Germany, UK, Czechia
France, Italy, Belgium, Korea
China
USA
2019: Revenue up 12% and AOP up 8%. Margin 12.7%
2020: Revenue down 16% and AOP down 62%
Acquisitions in last 3 years
2018: Karco in USA. Crash testing, €4 million revenue
ESG Services (25% of division revenue)
Electric and Hybrid vehicles testing and homologation, Tyrelabelling, Emissions inspection (WLTP)
Laboratories Division
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In 2020 6% Revenue and 7% of Adj Op Profit Growth Drivers and Performance
Multi-technology state-of-the-art testing laboratories forproduct development serving the Aerospace, Auto,Construction, Energy, IT & Cybersecurity industries
Testing, evaluation and certification services
Main facilities in Europe, USA and China
c. 1,500 employees
12 countries
Industry (incl Aerospace, Auto)
Construction (Fire and structuralmaterials testing)
Energy
Information Technology
Metrology
System certification
Quality, Safety and Security
Regulations
Technology development and increasing product complexity
Spain
Rest of Europe
North America
China
Asia Pacific
6% of Revenue
€93m
7% Adj. Op. Profit
€10mMargin 10.5%
2019: Revenue up 21% and AOP up 32%. Margin 14.5%
2020: Revenue flat and AOP down 28%
Acquisitions in last 3 years
2021: IMA in Dresden. Materials testing, €25 million revenue
2020: QPS in Canada. Certification, €16 million revenue
2020: Reliable Analysis China/US. EV testing, €24m revenue
2020: ZYX in Spain. Metrology, €2 million revenue
2019: A2M in France. Aerospace, €3 million revenue
2019: LEM in Spain. Metrology, €3 million revenue
2018: DataPoint USA. Materials testing, €4 million revenue
2018: 3C in UK. EMC testing for vehicles, €3 million revenue
ESG Services (13% division revenue)
Electric/Hybrid vehicles electrical components testing, lightermaterials for aerospace, energy efficient building products
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At the forefront of ESG practices in the last few years
▪ ESG formally introduced practice in 2014 with the creation ofthe ESG Committee of the Board
▪ First Corporate Social Responsibility Report published 2015following the Global Reporting Initiative (GRI)
▪ UN Global Compact
▪ Signatory since 2017 and Advanced Level from 2018
▪ Follow the 10 Principles
▪ UN Sustainable Development Goals (SDG). Adopted since2017 as a framework for ESG goals
▪ Targets set for Environmental, Social and Governance metricsto be achieved by end of 2021
An ESG leader according to rating agencies
Environmental
Group wide focus on reducing impact with improvements in key
parameters in 2020 and 2019
SocialDevelopment and inclusion
programmes in place
Low voluntary turnover rate (2020: 7% and 2019: 12%)
23% decrease in accident rate
Governance
High adherence to CNMV recommendations (87%)
Strong culture of compliance Annual Corp. Governance road show by Non Executive Director
B Rating
above average (B-) and inthe “Management”category
AA Rating
Top quintile of peers
Environmental, Social and Governance
72Based on 2019 data and above average (53) and increase of 10 points from 2018
Circa €200 million revenues with a substantialsustainability contribution - directly related to protecting / reducing environmental impact, from a range of services:
▪ Renewables
▪ Automotive Emissions
▪ Environmental Surveys
▪ Energy Audits
▪ Waste Management Surveys
▪ Innovation projects for Automotive eco-engines and lightweight Aerospace materials
Green Services: Those which make a substantial contribution to one environmental objective and do not cause significant harm to the other environmental objectives.
Sustainability is an integral part of our services And a fundamental pillar of the strong macro drivers creating incremental opportunities for Applus+
The TIC industry should continue to benefit from structural growth trends: an acceleration of outsourcing, tightening regulation, as well as increasing product innovation and complexity of supply chains, all underpinned by increased focus on ESG
▪ Stricter standards (quality, performance, safety) set by governments/regulatory bodies and/or corporates are being implemented
▪ As stakeholders across industries pay closer attention to the ESG impact, they will increasingly demand third party controls and assessments. It should also improve client penetration and create cross-selling opportunities
External Green Services supported by strong macro drivers
These are services which help customers reduce their environmental impact, and have a significant positive effect
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Calendar and Contact
2021 FY Results Announcement 28 February 2022
Start of Close Period 7 February 2022
Ticker: APPS-MC
Aston Swift, Vice President Investor Relations
Barcelona +34 935 533 111
www.applus.com
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