Algeco Group Q3 2018 Investor Presentation FINAL · 6wudwhjlf 3ulrulwlhv 0dqdjh fdslwdo...
Transcript of Algeco Group Q3 2018 Investor Presentation FINAL · 6wudwhjlf 3ulrulwlhv 0dqdjh fdslwdo...
Third Quarter 2018Investor Conference Call
26 November 2018
2
Safe Harbor
Basis of PresentationUnless otherwise noted or unless the context otherwise requires, all references to “we,” “us,” “our,” “AS,” “Algeco,” the “Group” and the “Company” refer to Algeco Global S.à r.l., a limited liability company incorporated under the laws of Luxembourg, together with its subsidiaries. As used in this presentation, “Europe” means our operations within various countries in Europe, “Asia Pacific” or “APAC” means Australia, New Zealand, and China, and “North America” means the United States (“US”) and Canada. Unless otherwise noted or unless the context otherwise requires, all amounts are presented in Euros (“EUR€”).
Use of Non-GAAP Financial MeasuresThis presentation includes certain financial measures not calculated and presented in accordance with U.S. Generally Accepted Accounting Principles (“GAAP”), including, but not limited to, EBITDA, Adjusted EBITDA, Adjusted Gross Profit, and certain ratios and other metrics derived therefrom. These non-GAAP financial measures are not measures of financial performance in accordance with GAAP and may exclude items that are significant in understanding and assessing our financial condition and results. Therefore, these measures should not be considered in isolation or as alternatives to net income, cash flow from operations or other measures of profitability, liquidity or performance under GAAP. These measures may not be comparable to similarly-titled measures used by other companies. A reconciliation of each non-GAAP financial measure to the most comparable GAAP financial measure is included in an appendix to this presentation.
Use of Constant Currency ResultsWe believe that currency exchange rates are an important factor in understanding period-to-period comparisons of our financial results. Accordingly, we present financial results on a constant currency basis in addition to our reported actual currency results. Constant currency information compares results between periods as if exchange rates had remained constant period-over-period. Unless stated otherwise, in this presentation, we calculate constant currency results by calculating prior year results using current-year currency exchange rates. We generally refer to such amounts as excluding or adjusting for the impact of foreign currency or being on a constant currency basis. These constant currency results should be considered in addition to, as opposed to as a substitute for, our actual currency results. Constant currency results, as we present them, may not be comparable to similarly titled measures used by other companies and are not measures of performance presented in accordance with GAAP.
3
Safe Harbor
Forward-Looking StatementsThis presentation contains forward-looking statements, which reflect industry outlook, our expectations regarding our future growth, results of operations, operational and financial performance, liquidity and capital resources, capital expenditures and investments, strategic transactions, business prospects and opportunities, challenges and future events. All statements other than statements of historical fact are forward-looking statements. Words such as, but not limited to, “anticipate,” “continue,” “estimate,” “expect,” “may,” “might,” “will,” “project,” “should,” “would,” “believe,” “intend,” “continue,” “could,” “currently,” “plan,” “predict,” and negatives of these words and similar expressions are intended to identify forward-looking statements. In particular, statements about our expectations, beliefs, plans, objectives, assumptions or future events or performance contained in this presentation are forward-looking statements. Although the forward-looking statements contained in this presentation reflect management’s current beliefs based upon information currently available to management and upon assumptions which management believes to be reasonable, actual results or events may differ materially from those stated in or implied by these forward-looking statements.
A number of factors could cause actual results, performance, events or achievements to differ materially from the results expressed or implied in the forward-looking statements. Readers should not place undue reliance on the forward-looking statements. Forward-looking statements necessarily involve significant known and unknown risks, assumptions and uncertainties that may cause our actual results, performance, events and achievements in the future periods to differ materially from those expressed or implied by such forward-looking statements. There can be no assurance that the results performance, events or achievements contemplated in the forward-looking statements will be realized.
We cannot assure you that forward-looking statements will prove to be accurate, as actual actions, results and future events could differ materially from those anticipated or implied by such statements. All future written and oral forward-looking statements attributable to us or any person acting on our behalf are expressly qualified in their entirety by the cautionary statements contained or referred to in this section. These forward-looking statements are made only as of the date of this presentation and, except as required by law, we undertake no obligation, and specifically decline any obligation, to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. This presentation should be read together with our December 31, 2017 and September 30, 2018 consolidated financial statements and the notes thereto and our managements discussion and analysis of financial condition and results of operations covering our results presented in such financial statements and the risk factors described therein.
Note Regarding Parent Entity Financial Statements and Reconciliations.As permitted by the indentures governing Algeco Global Finance plc’s €600,000,000 6 1/2% Senior Secured Fixed Rate Notes due 2023, $520,000,000 8% Senior Secured Fixed Rate Notes due 2023 and €150,000,000 Senior Secured Floating Rate Notes due 2023 (the “Senior Secured Notes”) and Algeco Global Finance 2 plc’s $305,000,000 10% Senior Notes due 2023 (the “Senior Notes” and, together with the Senior Secured Notes, the “Notes”), Algeco Investments B.V. has elected to provide in this report consolidated financial information of Algeco Global S.àr.l., as a parent entity, in lieu of consolidated financial statements of Algeco Investments B.V.
4
Introduction & Recent Events
As of September 1 2018, Andrew Tyler assumed the role of Group Chief Executive Officer; Andrew is the former chief executive of Northrop Grumman’s European business and also previously served as Chief Operating Officer at the U.K. Ministry of Defense, where he was responsible for their €18 billion per annum procurement, asset management, and support business
On November 13, 2018, Algeco agreed to sell Target Lodgings, its North American Remote Accommodation business, to Platinum Eagle for $820 million (€708 million(2)) of which it is expected that $562 million (€486m(2)) will be paid in cash and the remainder stock.
The sale is in line with Algeco’s strategy to focus on its core modular solutions business
The pro-forma net leverage after the proceeds of the sale reduces from 5.6x to 4.2x
To assist with understanding the Group performance we have quoted pro-forma figures in this presentation without the results of Target Lodgings wherever relevant.
In line with the changes made in Q2 2018, the reporting currency continues to be in Euro1
(1) Following the divestiture of Williams Scotsman International Inc., the majority of our revenues are earned in euros and, subsequent to the issuance of the Notes, our funding is principally in euros. As a result, as of June 30, 2018 we are presenting the results in euros. For additional reference, we have also posted a version of the Q1 2018 Investor presentation in euros to the investor page of our website
(2) EUR:USD 0.8639
Source: Company information and third party industry reports.(1) Based on installed fleet.(2) For outsourced Remote Accommodation Solutions. Based on installed fleet.(3) Assuming 25 years useful economic life.
Enhanced IRRincl. VAPS 360°
Enhanced IRRincl. VAPS 360°
>37,000 Customers>37,000 Customers
> 25% IRR per annum(3)> 25% IRR per annum(3)
Leading Position in North America and APAC for selected
markets (2)
(Pro-forma: N. America divested)
Leading Position in North America and APAC for selected
markets (2)
(Pro-forma: N. America divested)
>4x larger than #2 player in Europe (1)
>4x larger than #2 player in Europe (1)
~241,000 Modular Units
~15,800 Rooms(Pro-forma: ~3,400 Rooms)
~241,000 Modular Units
~15,800 Rooms(Pro-forma: ~3,400 Rooms)
~€2.0bnFleet Gross Book Value
(Pro-forma: ~€1.7bn)
~€2.0bnFleet Gross Book Value
(Pro-forma: ~€1.7bn)
Leader in European modular space
business solutions (1)
Leader in European modular space
business solutions (1)
5
Algeco at a Glance
Pro-formaEnergy and
Natural Resources
16%
Public Administration
24%Industries
and Services
31%
Construction 29%
Company Snapshot
6
Well-Diversified Business
Adj EBITDA By Geography (3)
Global Presence
(1) Based on LTM Q3 2018 Leasing & Services Revenue(2) Based on LTM Q3 2018 Total Pro-forma Revenue(3) Based on LTM Q3 2018 Adj. Pro-forma EBITDA before headquarter costs and intercompany eliminations
Global presence – operations in Europe, North America & APAC
providing a compelling mix of Modular Space and Remote Accommodation
Business Solutions
(Pro-forma: The North American segment will have been fully disposed of)
Comprehensive footprint – 162 branches and 23 camps in 24 countries
(Pro-forma: 162 branches and 7 camps in 22 countries)
Diverse and recurring customer base – top 20 customers account for
~27% (1) of leasing & services revenue with an average tenure of 5 years
(Pro-forma: Top 20 customers account for ~19% of leasing & services)
Europe
Market Leader with a Diverse Revenue Base
Revenue By End-Market (2)
North America
25%
Asia Pacific 9%
Europe 66%
North America
Asia Pacific
8%
22%
36%
34%
Pro-forma
88%
12%
7
Strategic Priorities
Manage capital aggressively
Invest in markets and sectors demonstrating organic growth at good returns
In markets that have weak economies, constrain capital investment, and generate free cash flow
Revenue
Profitability
Capital Discipline
Salesforce effectiveness including bringing out of term pricing in line with market rates
Increase utilization globally, and where needed, redeploy fleet to optimize unit returns
Continue focus on managing costs and improving efficiencies
Optimize pricing globally and increase the amount and percentage of revenue contribution from value added products and services (“VAPS 360°”)
Increase Leasing & Services revenue in all markets
8
Agenda
I) Q3 2018 Financial Results
II) Closing Comments
III) Questions & Answers
9
Q3 2018 and YTD Sep18 Highlights
Q3 Adjusted EBITDA of €90.6m at Reported FX rates (Pro-forma: €66.2m)
Adj. EBITDA at Constant Currency FX up €27.5m or 43.6% from Q3 2017 (Pro-forma €17.5m or 36.0%)
Adj. EBITDA at Reported FX up €27.4m or 43.2% from Q3 2017 (Pro-forma €17.2m or 35.1%)
Q3 Adjusted EBITDA includes €2.8m of non-recurring project costs related to the Touax integration and other discrete projects that will be completed this year.
Excluding these projects, Q3 Underlying EBITDA would have been €93.4m and up €30.3m or 48.0% over Q3 2017 (at Constant Currency) (Pro-forma €69.0m and up €20.3m or 41.8%)
Q3
Hig
hlig
hts
YTD Sep Adjusted EBITDA of €217.5m at Reported FX rates (Pro-forma €157.5m)
Adj. EBITDA at Constant Currency FX up €55.2m or 34.8% from YTD Sep 2017 (Pro-forma €31.0m or 24.5%)
Adj. EBITDA at Reported FX up €52.1m or 31.5% from YTD Sep 2017 (Pro-forma €30.3m or 23.8%)
YTD Sep Adjusted EBITDA includes €12.6m of non-recurring project costs
Excluding these projects, YTD Sep Underlying EBITDA would have been €230.1m and up €67.8m or 41.8% over YTD Sep 2017 (at Constant Currency) (Pro-forma €170.1m and up €43.6m or 34.4%)
YT
D S
ep H
igh
light
s
Underlying EBITDA growth is tracking in line with the Feb-18 Offer Memorandum
Group Pro-forma1
Overall Q3 revenue up ~21% over prior year driven by increased Modular Space and Sales growth in Europe and higher Remote Accommodations in North America.
Modular Space pricing down ~2% versus prior year as increases in Asia Pacific were offset by a decrease in Europe associated with dilution from the inclusion of Touax related units; excluding Touax related units, pricing would have increased ~4%
VAPS 360° revenue grew ~18% over prior year to ~ €39m as VAPS revenue per unit decreased by ~2% primarily driven by the inclusion of Touax related units; excluding the Touax units, VAPS 360° revenue per unit would have increased ~11%
+14.6% over Q3-17
No change
No change
Utilization decreased 50bps from prior year to 81.5% as a 120bps increase in Asia Pacific was offset by an 80bps decline in Europe (mainly in Germany and the UK)
SG&A increased €9.4m versus prior year due to the non-recurring project costs, the inclusion of Touax, volume related increases in Europe and duplication of head office costs as we transitioned to London from Baltimore.
Adj. EBITDA increased €27.5m over prior year driven by higher Modular Space and Sales volume in Europe, increased N.A. Remote Accommodations volume, and higher margins in Asia Pacific; partially offset by increased SG&A
No change
+€8.0m over Q3-17
+€17.5m over Q3-17 (+36%)
10
Q3 2018 Highlights
Revenue
Profitability
(1) Pro-forma represents the Group excluding Target Lodgings
Capital discipline and cash generation
11
€’m YTDSep-17
YTDSep-18
Cashimpact
Underlying EBITDA 127 170 +43
Net Capex (98) (79) +19
EBITDA - Capex 29 91 +62
Conversion % 23% 54%
€’m YTDSep-17
YTDSep-18
Cashimpact
Underlying EBITDA 165 230 +65
Net Capex (103) (131) -28
EBITDA - Capex 62 99 +37
Conversion % 38% 43%
Strong cash conversation with a €43m increase in EBITDA delivered with €19m less capex
Europe and APAC have been less capex intensive than North America in 2018
We continue to manage capital aggressively
Q3 2018 and YTD Sep-18 net capex higher than prior year by €11m and €28m respectively with investment in North America remote accommodation projects more than offsetting lower capex in Europe and APAC
We have more than doubled cash conversion in YTD Sep-18 compared to YTD Sep-17 on a pro-forma basis
Group Pro-forma(excl. North America)
Key
12
LTM EBITDA (in € at Reported Currency)
(€ in millions)
(2)
(1) LTM Sep-18 Underlying EBITDA is defined as LTM Sep-18 Adjusted EBITDA excluding the €12.7m million of YTD 2018 non-recurring project costs in Europe (2) Run-Rate Adjusted EBITDA as calculated and presented in the final notes offering memorandum
Tracking as planned towards the LTM Sep-17 Run-Rate Adj EBITDA presented in the notes offering memorandumon both a Group and pro-forma basis
(1)
Pro-forma
Target
Group
13
Modular Space – Group Avg. Rental Rate
€ 144 € 147 € 146
€ 147 € 146
€ 148 € 149 € 147
€ 141
€ 145 € 147
€ 100
€ 110
€ 120
€ 130
€ 140
€ 150
€ 160
Q1 Q2 Q3 Q4
2016 2017 2018
Average Modular Monthly Rental Rate
€ 55
€ 61
€ 66 € 64
€ 57
€ 66 € 67
€ 60
€ 54
€ 61 € 65
€ -
€ 20
€ 40
€ 60
€ 80
Q1 Q2 Q3 Q4
2016 2017 2018
Average VAPS 360° Revenue Per Unit
All quarters presented in € at Q3 2018 Reported FX Rates
2018 decrease in Avg. Monthly Rental Rate and VAPS 360° Revenue per Unit driven by the inclusion of Touax related units in Europe. Excluding Touax ARR continues to increasePro-forma: No change (Target does not have a modular space business)
14
Modular Space – Europe Avg. Rental Rate
€ 135 € 138 € 138 € 140
€ 138 € 141 € 141
€ 138 € 139 € 143
€ 146
€ 100
€ 110
€ 120
€ 130
€ 140
€ 150
Q1 Q2 Q3 Q4
2016 2017 2018
Average Modular Monthly Rental Rate
€ 52 € 58
€ 61 € 61 € 53
€ 64 € 66 € 62 € 63
€ 71 € 74
€ 20
€ 40
€ 60
€ 80
Q1 Q2 Q3 Q4
2016 2017 2018
Average VAPS 360° Revenue Per Unit
Europe excl. Touax (1) Europe excl. Touax (1)
(1) As we are currently in the process of integrating the Touax fleet on a country by country basis, the Europe excluding Touax #’s are estimates
€ 135 € 138 € 138 € 140 € 138 € 141 € 141
€ 138 € 133
€ 137 € 137
€ 100
€ 110
€ 120
€ 130
€ 140
€ 150
Q1 Q2 Q3 Q4
2016 2017 2018
€ 52
€ 58 € 61 € 61
€ 53
€ 64 € 66
€ 59 € 53
€ 60 € 65
€ 20
€ 40
€ 60
€ 80
Q1 Q2 Q3 Q4
2016 2017 2018
Europe Europe
All quarters presented in € at Q3 2018 Reported FX Rates
15
Modular Space – Asia Pacific Avg. Rental Rate
Average Modular Monthly Rental Rate Average VAPS 360° Revenue Per Unit
€ 254 € 253
€ 242 € 236
€ 280
€ 264
€ 241 € 241 € 240
€ 246 € 256
€ 100
€ 150
€ 200
€ 250
€ 300
Q1 Q2 Q3 Q4
2016 2017 2018
€ 95
€ 105 € 108 € 107
€ 100
€ 83 € 80
€ 73
€ 66 € 69 € 71
€ 30
€ 50
€ 70
€ 90
€ 110
€ 130
Q1 Q2 Q3 Q4
2016 2017 2018
Asia Pacific Asia Pacific
All quarters presented in € at Q3 2018 Reported FX Rates
16
Modular Space – Group Utilization
75.7%
79.5%
80.3%
79.5%
78.5%
80.6%
82.0%81.5%
80.0%
81.2% 81.5%
70%
72%
74%
76%
78%
80%
82%
84%
Q1 Q2 Q3 Q4
2016 2017 2018
153.0
157.5 159.1 156.9 154.9
159.8 164.2
172.5
195.3 197.7 196.8
130
140
150
160
170
180
190
200
Q1 Q2 Q3 Q4
2016 2017 2018
Avg. Modular Fleet Utilization % Avg. Modular UoR (# of Units) (1)
(1) (Units in 000’s)
17
Modular Space – Europe Utilization
Avg. Modular Fleet Utilization % Avg. Modular UoR (# of Units)
78.1%
80.8%81.5%
80.3%79.1%
81.2%82.5% 82.0%
81.0%
82.1% 82.0%
73%
75%
77%
79%
81%
83%
Q1 Q2 Q3 Q4
2016 2017 2018
141.8
145.5 146.9 144.2
141.7
145.9 149.5 149.1
146.2 148.7 149.0
120
130
140
150
Q1 Q2 Q3 Q4
2016 2017 2018
Europe excl. Touax (1) Europe excl. Touax (1)
(1) As we are currently in the process of integrating the Touax fleet on a country by country basis, the Europe excluding Touax #’s are estimates
78.1%
80.8%81.5%
80.3%79.1%
81.2%
82.5%81.9%
80.3%
81.4% 81.8%
75%
77%
79%
81%
83%
85%
Q1 Q2 Q3 Q4
2016 2017 2018
141.8 145.5 146.9 144.2 141.7 145.9
149.5
157.7
180.5 182.5 181.5
130
140
150
160
170
180
190
200
Q1 Q2 Q3 Q4
2016 2017 2018
Europe Europe
18
Modular Space – Asia Pacific Utilization
Avg. Modular Fleet Utilization % Avg. Modular UoR (# of Units)
63.0%
66.7%68.7%
70.7%72.1%
75.2%77.1% 77.4%77.0% 78.4% 78.3%
50%
55%
60%
65%
70%
75%
80%
Q1 Q2 Q3 Q4
2016 2017 2018
11.2 11.9 12.3 12.7 13.1 13.9
14.7 14.8 14.8 15.2 15.3
-
4
8
12
16
Q1 Q2 Q3 Q4
2016 2017 2018
Asia Pacific Asia Pacific
19
Remote Accommodation
Average Daily Rate Average Rooms on Rent (1)
(1) (Rooms in 000’s)
€ 100 € 101 € 98
€ 76€ 71 € 73 € 75 € 74€ 73 € 77 € 82
€ 0
€ 20
€ 40
€ 60
€ 80
€ 100
€ 120
€ 140
Q1 Q2 Q3 Q4
2016 2017 2018
3.8 3.5 3.5 3.43.54.0
4.54.85.0
5.6
6.7
0
1
2
3
4
5
6
7
Q1 Q2 Q3 Q4
2016 2017 2018
North America North America
All quarters presented in € at Q3 2018 Reported FX Rates
1.1 1.1 1.2 1.1 1.1 1.2
1.4 1.4 1.3 1.5 1.5
0.0
0.5
1.0
1.5
2.0
Q1 Q2 Q3 Q4
2016 2017 2018
€ 60€ 67
€ 74€ 68
€ 62
€ 74€ 65 € 63€ 67
€ 81
€ 70
€ 0
€ 20
€ 40
€ 60
€ 80
€ 100
Q1 Q2 Q3 Q42016 2017 2018
Asia Pacific Asia Pacific
Pro-forma: We will only have Remote Accommodation in APAC
20
Q3 2018 Financials - Group (in € at Constant Currency)
Q3
(€ in millions) 2017 2018 Y-o-Y Y-o-Y %
- Modular Space Leasing €107.3 €127.1 €19.9 18.5%
- Modular Space Delivery & Install €43.2 €45.3 €2.1 4.9%
- Remote Accommodations €39.5 €61.7 €22.3 56.5%
Leasing & Services Revenue €189.9 €234.2 €44.3 23.3%
- New Units €59.8 €62.6 €2.8 4.7%
- Rental Units €2.9 €7.7 €4.7 160.1%
Sales Revenue €62.7 €70.3 €7.5 12.0%
Total Revenue €252.6 €304.4 €51.8 20.5%
Adjusted Gross Profit (1) €116.0 €152.9 €36.9 31.8%
Adjusted Gross Profit % (1) 45.9% 50.2% 430bps
SG&A (2) €52.9 €62.3 (€9.4) (17.8%)
Adjusted EBITDA €63.1 €90.6 €27.5 43.6%
Adjusted EBITDA % 25.0% 29.8% 480bps
Group results, i.e. including Target Logistics(1) Excludes depreciation on rental equipment(2) Excludes sponsor fees and other non-recurring items
Leasing & Services revenue was up €44.3m due to increased Modular Space in Europe and higher Remote Accommodations in N.A.
New Units & Rental Units Sales increased €2.8m and €4.7m, respectively, due to increased volume in Europe, partially offset by lower activity in Asia Pacific in line with our strategy to rebalance this business.
Adjusted Gross Profit % increased 430bps driven by profitability improvements in all three business segments
SG&A increased €9.4m due to the €2.8m non-recurring project costs in Europe, the inclusion of Touax, and volume related increases in Europe & N.A.
Adj. EBITDA increased €27.5m driven by both Modular Space and Sales growth in Europe, increased North America Remote Accommodations volume, and higher margins in Asia Pacific; partially offset by increased SG&A
21
Europe Overview (in € at Constant Currency)
Q3 2017 Q3 2018
Average Modular Units on Rent (#) 149,485 181,488
Average Modular Utilization 83% 82%
Avg. Modular Monthly Rental Rate (€) at CCQ3 2018 Excl. Touax(1) 141
137146
Avg. VAPS Revenue Per Unit (€) at CC Q3 2018 Excl. Touax(1) 66
6574
Economic conditions positive; France strong growth from infrastructure projects, Germany steady growth, ENSE growing due to Southern and Eastern Europe, and UK growing despite Brexit uncertainty
Revenue Leasing & Services revenue increased €19.4m
driven by the inclusion of Touax, and higher units on rent and VAPS 360° volume throughout most of Europe
Avg. Rental Rates were negatively impacted by the inclusion of Touax units; excluding Touaxunits, rates would have increased ~2% driven by higher rates in the majority of European countries
New Sales and Rental Sales increased €4.2m and €6.1m, respectively, driven by higher volumes in the major countries
Adjusted EBITDA Increased €13.0m driven by increased Modular
Space and Sales volumes across most of Europe; partially offset by higher SG&A associated with the inclusion of Touax, non-recurring integration and project costs, and volume-related increases
CapEx Minor increase driven by increased fleet
investments in Germany & ENSE, partially offset by a decrease in U.K. spend
34.2 35.7
€ 0
€ 25
€ 50
Q3 2017 Q3 2018
CapEx
169.0 198.8
€ 0
€ 110
€ 220
Q3 2017 Q3 2018
Revenue
50.8
63.8
€ 0
€ 35
€ 70
Q3 2017 Q3 2018
Adjusted EBITDA
(1) As we are currently in the process of integrating the Touax fleet on a country by country basis, the Europe excluding Touax #’s are estimates
22
Europe Segments (in € at Constant Currency)
(€ in millions)
(1) As of Q1 2018, we have consolidated both the U.S. and Europe corporate costs centers into a new corporate entity, and as such, we have adjusted historical Europe and Corporate figures to reflect this change(2) NRP costs are planned and expected non-recurring project costs related to the Touax integration and other discrete projects that will be completed by year end(3) Total Revenue is shown net of intercompany eliminations
RevenueAdj.
EBITDAGross CapEX Revenue
Adj. EBITDA
Gross CapEX
UK 51.4 10.5 8.8 54.2 11.0 5.8 France 54.4 17.3 15.2 66.1 25.6 14.9 Germany 34.6 12.6 6.3 37.3 14.9 8.1 Eastern Northern Southern Europe ("ENSE") 39.4 10.4 3.9 49.5 15.0 6.9
Europe - Underlying 170.4 50.8 34.2 201.6 66.6 35.7
Non-Recurring Project Costs ("NRP") (2)(2.8)
Europe - Total (3)169.0€ 50.8€ 34.2€ 198.8€ 63.8€ 35.7€
Avg UoR Avg. Util % ARR (€) Avg UoR Avg. Util % ARR (€)UK 31,639 75% 179 28,265 68% 185 France 45,111 86% 142 56,985 86% 139 Germany 31,427 84% 144 40,210 84% 137 Eastern Northern Southern Europe ("ENSE") 41,318 83% 111 56,028 85% 113
Europe - Total 149,495 83% €141 181,488 82% €137
Financial Metrics (1)
Q3 2017 Q3 2018
Fleet Statistics (1)
Q3 2017 Q3 2018
23
Europe Q3 2018 EBITDA Growth (in € at Constant Currency)
(€ in millions)
€50.8
€66.6 €63.8
€8.4
€4.7 €2.2
€0.5
€2.8
€-
€10.0
€20.0
€30.0
€40.0
€50.0
€60.0
€70.0
Q3 2017 Adj.EBITDA
France ENSE Germany UK Q3 2018Underlying
EBITDA
NRP Costs Q3 2018 Adj.EBITDA
4.4
8.8
€ 0
€ 5
€ 10
Q3 2017 Q3 2018
Adjusted EBITDA
24
Asia Pacific Overview (in € at Constant Currency)
Q3 2017 Q3 2018
Average Modular Units on Rent (#) 14,680 15,342
Average Modular Utilization 77% 78%
Avg. Modular Monthly Rental Rate (€) at CC 241 256
Avg. Remote Accom Rooms on Rent (#) 1,376 1,484
Avg. Remote Accom Utilization 48% 45%
Avg. Remote Accom Daily Rate (€) at CC 65 70
Energy and natural resources sector showing positive signs, new sales business stabilizing, China growing
Revenue Leasing & Services revenue increased €3.8m
driven by higher Modular Space leasing revenue (€1.5m) and higher delivery and installation (€1.0m) revenue associated with the unit on rent growth
Remote Accommodations Revenue also increased (€1.3m) driven by both higher volume and Avg. Daily Rates
Units on Rent are increasing in all regions (Australia, New Zealand, and China); higher rental rates driven by continued recovery in Australia
New Sales and Rental Unit Sales revenues were essentially flat
Adjusted EBITDA Increased € 4.4m driven by increased Modular
Space and Remote Accommodations volumes in Australia and higher gross profit margins across all categories; partially offset by increased SG&A
CapEx Continued moderate fleet investments. Decrease
driven by reduction in China spend.
51.1 53.4
€ 0
€ 40
€ 80
Q3 2017 Q3 2018
Revenue
3.92.2
€ 0
€ 5
€ 10
Q3 2017 Q3 2018
CapEx
25
North America Overview (in € at Constant Currency)
Q3 2017 Q3 2018
Avg. Remote Accom Rooms on Rent (#) 4,479 6,711
Avg. Remote Accom Utilization 56% 71%
Avg. Remote Accom Daily Rate (€) at CC 75 82
Improving oil and gas sector demand driving growth and increased investment
Revenue Remote Accommodations revenue increased
€21.0m driven by increases in core oil and gas related camps, camp expansions, and the inclusion of Iron Horse Ranch. Partially offset by non-recurrence of Q3 2017 €1.3m used sale
The impact of the Q4 2016 South Texas Family Residential Center contract extension are now behind us, and earnings are currently expected to remain stable
Remote Accommodations Avg. Rooms on Rent and Daily Rate increases due to higher oil and gas related demand in the U.S. Permian Basis and related camp expansions and new camp openings
Adjusted EBITDA Increased €10.0m driven by higher oil and gas
related Remote Accommodations volume; partially offset by volume related SG&A increases (€1.4m)
CapEx Increase driven by growth CapEx investment for
camp expansions in the U.S. Permian Basin (Texas)
32.5
52.2
€ 0
€ 30
€ 60
Q3 2017 Q3 2018
Revenue
14.5
24.5
€ 0
€ 15
€ 30
Q3 2017 Q3 2018
Adjusted EBITDA
2.3
17.3
€ 0
€ 15
€ 30
Q3 2017 Q3 2018
CapEx
26
Algeco YTD Sep 2018 EBITDA Growth (in € at Constant Currency)
(€ in millions)
€162.3
€229.9 €217.5
€24.2 €14.0
€13.5 €11.1
€5.1 €2.7
€3.0 €12.7
€-
€50.0
€100.0
€150.0
€200.0
€250.0
YTD Sep2017 Adj.EBITDA
NorthAmerica
France APAC ENSE Germany UK Corporate YTD Sep2018
UnderlyingEBITDA
NRPCosts
YTD Sep2018 Adj.EBITDA
Pro-forma: YTD Underlying EBITDA increased by €43.7m (34.5%) from €126.5m in YTD Sep-17 to €170.2m in YTD Sep-18
YTD Underlying EBITDA increased by €67.6m (41.7%) from €162.3m in YTD Sep-17 to €229.9m in YTD Sep-18
27
Disciplined Capital Management
Q3 Capital Expenditure by Region
Group Pro-forma
(1.6)(7.7)
34.2 35.7
2.3
17.3
3.9
2.2
0.3
1.0
Corporate
Asia Pacific
North America
Europe
€39.1m Net CapEx €48.5m€40.7m Gross CapEx €56.2m
Group
Q3 2018 Gross CapEx was up ~€15.5m or ~38% and Net CapEx was up ~€9.4m or ~24% driven by:
Increased remote accommodation investments in N.A. for new camps and camp expansions driven by oil & gas sector demand
Europe and APAC gross capex broadly flat
Capital investments are supported by long term customer contracts
YTD 2018 net capex was up €27.9m (27%) due to N.A. remote accommodation investment
Pro-forma
Q3 2018 Gross CapEx was up ~€0.5m or ~13% driven by increased investment in Germany & ENSE, offset by a reduction in both the U.K. and Asia Pacific
Q3 2018 Net CapEx was down ~(€5.7m) or ~(15%) driven by the higher rental unit sales in Europe.
YTD 2018 net capex was €19.2m down (19.6%) due to optimization of spend in Europe following the Touax acquisition.
Gross CapEx:
Net
Net
Q3 2017 Q3 2018
(€ in millions at Constant Currency)
(1.1) (7.3)
34.2 35.7
3.9 2.2
0.3 1.0Net
Net
Q3 2017 Q3 2018
€37.3m Net CapEx €31.6m€38.4m Gross CapEx €38.9m
9m YTD€102.9m Net CapEx €130.8m€111.7m Gross CapEx €142.8m
€98.2m Net CapEx €79.1m€105.6m Gross CapEx €91.0m
Group Pro-forma
28
YTD Sep 2018 Growth vs. Maintenance Capital Expenditures
(€ in millions at Reported FX Rates)
YTD Sep-18 maintenance capex includes investment to upgrade Touax units in order to deliver higher future rental rates with better returns than purchasing new units
Maintenance CapEx
North America includes €48.8m of growth capex for demand-driven Target Lodging camp
expansions in the U.S. Permian Basin
30 Sep-18Actual
Target disposal
proceeds
Disposed TL balances
Use of proceeds
Pro-forma for Target
Disposal
Asset Based Loan Revolver (L+275) 152 - - (80) 72
8.0% $ Senior Secured FXN 437 - - - 437
E + 6.25% € Senior Secured FRN 146 - - - 146
6.5% € Senior Secured FXN 582 - - - 582
Other senior secured debt 111 - (5) - 105
Total Senior Secured Debt 1,427 - (5) (80) 1,342
10.0% $ Senior Unsecured FXN 255 - - - 255
Other debt 31 - - (31) 0
Gross total debt 1,713 - (5) (111) 1,597
Cash and Cash Equivalents (43) (486) 2 119 (407)
Equity in Platinum Eagle - (223) - - (223)
Total Net Debt 1,671 (708) (3) 8 967
LTM Sep-17 PF Run Rate EBITDA 298 (70) - - 228
Net leverage 5.6x 4.2x
29
Algeco – Net Debt Structure after Target Disposal
As of 30 September 2018 (€ in millions at Reported FX Rates)
ABL availability as of 30 September 2018 was approximately €117m
9m 30 September 2018 actual cash interest expense was approximately €102m
Algeco will de-lever from 5.6x net leverage to 4.2x net leverage
(1) EUR:USD 0.8639(2) The balance sheet of Target Lodgings at 30 September 2018 included €5m of debt and €2m of cash(3) Payment of €80m of ABL facility, €31m factoring facility and €8m assumed deal fees
(2)(1)
(3)
30
Key Credit Highlights
Global Presence with Significant Scale Advantages1
Attractive Returns on Long-Lived Assets4
Hard-to-Replicate Network Footprint2
Growing High-Margin Service Offering5
Favourable Growth Trajectory in Europe7
Resilient Cash Generation with Flexible Capex6
Recurring and Diverse Revenue and Profit Streams3
31
Questions & Answers
32
Appendix
33
Q3 2018 Financials – Pro-forma (in € at Constant Currency)
Q3
(€ in millions) 2017 2018 Y-o-Y Y-o-Y %
- Modular Space Leasing €107.3 €127.1 €19.9 18.5%
- Modular Space Delivery & Install €43.2 €45.3 €2.1 4.9%
- Remote Accommodations €8.2 €9.5 €1.3 15.7%
Leasing & Services Revenue €158.7 €182.0 €23.3 14.7%
- New Units €59.8 €62.6 €2.8 4.7%
- Rental Units €1.6 €7.7 €6.0 368.1%
Sales Revenue €61.4 €70.3 €8.9 14.4%
Total Revenue €220.1 €252.2 €32.1 14.6%
Adjusted Gross Profit (1) €98.7 €124.2 €25.5 25.9%
Adjusted Gross Profit % (1) 44.8% 49.2% 440bps
SG&A (2) €50.0 €58.0 (€8.0) (15.9%)
Adjusted EBITDA €48.7 €66.2 €17.5 36.0%
Adjusted EBITDA % 22.1% 26.2% 410bps
(1) Excludes depreciation on rental equipment(2) Excludes sponsor fees and other non-recurring items
Leasing & Services revenue was up €23.3m due to increased Modular Space in Europe and Asia Pacific, and higher remote accommodations in Asia Pacific driven by an increase in rooms on rent
New Units & Rental Units Sales increased €2.8m and €6.0m, respectively, due to increased volume in Europe, partially offset by lower activity in Asia Pacific in line with our strategy to rebalance this business.
Adjusted Gross Profit % increased 440bps driven by profitability improvements in all both Europe and Asia Pacific
SG&A increased €8.0m due to the €2.8m non-recurring project costs in Europe, the inclusion of Touax, and volume related increases in Europe.
Adj. EBITDA increased €17.5m driven by both Modular Space and Sales growth in Europe and higher margins in Asia Pacific; partially offset by increased SG&A
34
YTD 2018 Financials – Pro-forma (in € at Constant Currency)
YTD Sept 2018
(€ in millions) 2017 2018 Y-o-Y Y-o-Y %
- Modular Space Leasing €308.9 €370.6 €61.7 20.0%
- Modular Space Delivery & Install €116.9 €122.3 €5.4 4.6%
- Remote Accommodations €23.2 €28.4 €5.3 22.9%
Leasing & Services Revenue €449.0 €521.4 €72.4 16.1%
- New Units €148.5 €170.9 €22.3 15.1%
- Rental Units €7.2 €12.0 €4.8 66.1%
Sales Revenue €155.7 €182.8 €27.1 17.4%
Total Revenue €604.7 €704.2 €99.5 16.5%
Adjusted Gross Profit (1) €284.8 €340.8 €56.0 19.6%
Adjusted Gross Profit % (1) 47.1% 48.4% 130bps
SG&A (2) €148.2 €183.3 (€35.1) (23.7%)
Adjusted EBITDA €126.5 €157.5 €31.0 24.5%
Adjusted EBITDA % 20.9% 22.4% 1.4%
(1) Excludes depreciation on rental equipment(2) Excludes sponsor fees and other non-recurring items
Leasing & Services revenue was up €72.4m due to increased Modular Space activity in Europe and Asia Pacific, and higher remote accommodations in Asia Pacific driven by an increase in rooms on rent
New Units & Rental Units sales increased €22.3m and €4.8m, respectively, due to increased volume in Europe, partially offset by planned lower activity in Asia Pacific
Adjusted Gross Profit % increased 130bps driven by profitability improvements in both Europe and Asia Pacific
SG&A increased €35.1m due to the €12.7m non-recurring project costs in Europe, the inclusion of Touax, higher Corporate costs, and volume related increases in Asia Pacific
Adj. EBITDA increased €31.0m driven by both Modular Space and New Sales growth in Europe, and higher margins in Asia Pacific; partially offset by increased SG&A
35
Algeco YTD Sep 2018 EBITDA Growth – Pro-forma(in € at Constant Currency)
(€ in millions)
€126.5
€169.9
€157.5
€14.0
€13.5
€11.1 €5.1 €2.7 €3.0
€12.7
€-
€20.0
€40.0
€60.0
€80.0
€100.0
€120.0
€140.0
€160.0
€180.0
€200.0
YTD Sep2017 Adj.EBITDA
France APAC ENSE Germany UK Corporate YTD Sep2018
UnderlyingEBITDA
NRP Costs YTD Sep2018 Adj.EBITDA
36
Foreign Exchange Exposure
Local to EUR€ Q3 2017 Q 2018 % ChgUSD 0.852 0.860 1%AUD 0.672 0.629 (6%)GBP 1.115 1.121 1%
€ millions EBITDAGross Capex Net
USD 0.2 (0.0) 0.1 AUD (0.3) 0.2 (0.1) GBP 0.0 (0.0) 0.0
Other (0.1) 0.0 (0.0)
Total (0.2) 0.2 0.0
Avg. Reported FX Rates
Q3 FX impact by currency
37
Quarterly Financial Highlights (in € at Actual Currency FX)
(€ in millions)
* As of Q1 2018, we have consolidated both the U.S. and Europe corporate costs centers and we have adjusted historical figures to reflect this change; by YE 2018, all corporate costs will reside in Europe
Revenue 1Q17 2Q17 3Q17 4Q17 FY 2017 1Q18 2Q18 3Q18
Europe 130.8 148.6 168.8 169.8 618.0 162.3 183.0 198.8
North America 25.0 28.3 32.2 32.7 118.2 31.4 38.0 52.2
Asia Pacific 60.0 57.9 54.6 58.5 230.9 50.9 55.8 53.4
Algeco Global 215.6€ 234.7€ 255.4€ 261.5€ 967.1€ 244.7€ 276.7€ 304.4€
Adj. EBITDA 1Q17 2Q17 3Q17 4Q17 FY 2017 1Q18 2Q18 3Q18
Europe 38.0 45.2 50.8 48.8 182.8 40.6 49.5 63.8
North America 11.2 12.7 14.3 16.6 54.8 15.3 20.2 24.5
Asia Pacific 1.5 4.7 4.7 5.1 16.0 7.1 7.7 8.8
Corporate* (5.6) (5.6) (6.5) (6.0) (23.9) (6.2) (7.5) (6.4)
Algeco Global 45.2€ 57.0€ 63.3€ 64.5€ 229.9€ 56.9€ 70.0€ 90.6€
CAPEX 1Q17 2Q17 3Q17 4Q17 FY 2017 1Q18 2Q18 3Q18
Europe 23.8 34.3 34.2 21.0 113.3 17.2 25.2 35.7
North America 2.1 1.8 2.2 9.2 15.3 19.4 15.0 17.3
Asia Pacific 3.0 4.0 4.1 4.5 15.6 5.1 3.9 2.2
Corporate* 0.6 1.2 0.3 0.6 2.8 0.5 0.3 0.6
Algeco Global 29.6€ 41.3€ 40.9€ 35.3€ 147.0€ 42.2€ 44.3€ 55.8€
38
Quarterly Modular Fleet Statistics (in € at Reported Currency FX)
1Q 2017 2Q 2017 3Q 2017 4Q 2017 FY 2017 1Q 2018 2Q 2018 3Q 2018
EuropeAvg. Units on Rent 141,742 145,859 149,485 157,709 148,905 180,548 182,508 181,488 Avg. Total Fleet 179,183 179,605 181,086 192,575 183,739 224,888 224,186 221,946 Avg. Utilization % 79.1% 81.2% 82.5% 81.9% 81.0% 80.3% 81.4% 81.8%ARR (€) 139 142 141 138 140 134 138 137 VAPS ARR (€) 56 64 65 61 60 53 60 65
Asia-PacificAvg. Units on Rent 13,148 13,946 14,680 14,807 14,116 14,777 15,194 15,342 Avg. Total Fleet 18,243 18,555 19,032 19,120 18,727 19,189 19,372 19,581 Avg. Utilization % 72.1% 75.2% 77.1% 77.4% 75.4% 77.0% 78.4% 78.3%ARR (€) 257 249 243 244 248 244 250 256 VAPS ARR (€) 113 91 85 76 91 67 69 71
Algeco GroupAvg. Units on Rent 154,890 159,805 164,165 172,516 163,021 195,325 197,701 196,829 Avg. Total Fleet 197,426 198,160 200,118 211,694 202,466 244,077 243,557 241,527 Avg. Utilization % 78.5% 80.6% 82.0% 81.5% 80.5% 80.0% 81.2% 81.5%ARR (€) 149 151 150 149 150 142 146 147 VAPS ARR (€) 61 66 67 61 64 54 61 65
39
Quarterly R.A. Fleet Statistics (in € at Reported Currency FX)
1Q 2017 2Q 2017 3Q 2017 4Q 2017 FY 2017 1Q 2018 2Q 2018 3Q 2018
Asia-PacificAvg RoR 1,132 1,248 1,376 1,379 1,273 1,331 1,450 1,484 Avg Available Rooms 2,909 2,884 2,879 2,881 2,890 2,884 2,982 3,308 Avg. Occupancy % 39% 43% 48% 48% 44% 46% 49% 45%Avg. Total Rooms 2,958 2,933 2,931 2,933 2,940 2,933 3,042 3,369 Avg. Daily Rate (€) 70 80 69 65 72 68 82 70
Target LogisticsAvg RoR 3,517 3,980 4,479 4,841 4,197 4,967 5,553 6,711 Avg Available Rooms 7,376 7,709 7,921 8,348 7,844 8,378 8,448 9,504 Avg. Occupancy % 48% 52% 57% 58% 54% 59% 66% 71%Avg. Total Rooms 7,556 7,899 8,118 8,557 8,038 8,614 8,745 9,750 Avg. Daily Rate (€) 78 77 74 73 75 69 75 83
Algeco GroupAvg RoR 4,649 5,228 5,855 6,220 5,470 6,298 7,003 8,195 Avg Available Rooms 10,285 10,593 10,800 11,229 10,734 11,262 11,429 12,812 Avg. Occupancy % 45% 49% 54% 55% 51% 56% 61% 64%Avg. Total Rooms 10,514 10,832 11,049 11,490 10,978 11,547 11,787 13,119 Avg. Daily Rate (€) 76 78 73 71 75 69 77 82
DRAFT 5
Algeco 2nd Floor, 12 Berkeley Street, London, W1J 8DT
www.algeco.com