q3 fy18 noteholder presentation - selectad3372beb-65c9-4bb2-941c...coffee and convenience food...

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


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


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 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


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


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


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


• 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


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


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


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



€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

q3 fy18 noteholder presentation - selectad3372beb-65c9-4bb2-941c...coffee and convenience food...

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