BAPCOR LIMITED — AGM Information 2020

Oct 19, 2020

2020 AGM - CEO’s Presentation 20 October 2020

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Solid result in an unpredictable year impacted by drought, bushfires and COVID-19

• Revenue up 12.8%

• EBITDA pre AASB16 down 4.1% to $157.8M

• NPAT down 5.5% to $89.1M (2[nd] highest ever)

• Record revenue and EBIT in Burson Trade, Wholesale and Retail businesses with strong same store sales growth

• Burson same store sales up 6% in FY20

• Autobarn same store sales up 9.5% in FY20

• SWG revenue up 26% in FY20

• NZ impacted by COVID-19 with same store sales down 9%

• Improved cash conversion of 125% pre AASB16

• Successful equity raising ($236M) with leverage at 0.7x EBITDA pre AASB16

$M	FY20 Reported	FY20 Pre AASB16	FY19 Reported	Pre AASB16 YoY %
Revenue	1,462.7	1,462.7	1,296.6	12.8%
EBITDA proforma	217.1	157.8	164.6	(4.1%)
EBIT proforma	144.5	138.7	147.5	(6.0%)
NPAT proforma	88.7	89.1	94.3	(5.5%)
NPAT	79.2	79.2	97.0	(18.4%)
Cash conversion	119%	125%	79%	57.4%
Leverage (ND/EBITDA)	0.5X	0.7X	2.0X	(66.0%)
EPS (basic) proforma	30cps	30 cps	33cps	(9.2%)
DPS – Final	9.5 cps	9.5 cps	9.5 cps	-
DPS – Full year	17.5 cps	17.5 cps	17.0 cps	2.9%

• Final dividend 9.5cps fully franked – same as FY19

• Full year dividend 17.5 cps – up 2.9% on FY19

• Share price at 30 June 2020 – up 6% on 30 June 2019

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Effectively managed external environment impacts and made solid progress delivering on strategy

• Added Truckline – Heavy Commercial Trucks (Dec 19)

• Contributed revenue of $57M and EBITDA of $2.8M (well ahead of expectations)

• Investments in retail point of sale system, warehouse management system and IT infrastructure

• Solid progress on the new Victorian Distribution Centre at Tullamarine

• Added 45 new branches / store locations

• Proactively handled COVID-19

• Primary concern safety of team members, customers and suppliers

• Reduced discretionary expenditure and investment = cash conservation

• COVID-19 significantly impacted March, April and early May results

• Retail improvements bearing fruit – management, marketing, store format and standards, inventory injection and online sales

• “Thank you” incentive to all permanent staff – $300 full time; $150 part time

• Reduced WC / sales % from 21.0% to 17.4%

• Prudent increase in provisions including debtors and inventory, reflecting economic uncertainty

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Record result for revenue while profitability down given external environment

Proforma excluding AASB 16 Leases

Revenue EBITDA NPAT[1] EPS Up 12.8% to Down 4.1% to Down 5.5% to Down 9.2% to $1,462.7M $157.8M $89.1M 30.36 cps

Proforma including AASB 16 Leases

Revenue EBITDA NPAT[1] EPS Up 12.8% to Up 31.9% to Down 5.9% to Down 9.6% to $1,462.7M $217.1M $88.7M 30.23 cps

Notes:

1. NPAT as attributable to members of Bapcor Limited.

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Revenue
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NPAT
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EPS (cps)
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Dividends per share
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Notes:
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• Based on proforma results excluding AASB 16. The impact of AASB 16 on NPAT was ($0.4M).

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AUD $M proforma exc. AASB 16	Revenue	EBITDA1 FY20 FY19 % Change 81.1 78.2 3.7% 19.6 22.9 (14.0%) 50.3 46.3 8.7% 30.5 27.1 12.8% (23.7) (9.9) NM 157.8 164.6 (4.1%)	EBITDA % Revenue
	FY20 FY19 % Change		FY20 FY19 Change
Trade	561.7 524.5 7.1%		14.4% 14.9% (0.5 pp)
Bapcor NZ	156.3 165.0 (5.2%)		12.6% 13.9% (1.3 pp)
Specialist Wholesale	520.4 413.1 26.0%		9.7% 11.2% (1.5 pp)
Retail	292.7 255.3 14.7%		10.4% 10.6% (0.3 pp)
Group / Elims	(68.4) (61.3) NM
Total	1,462.7 1,296.6 12.8%		10.8% 12.7% (1.9 pp)

		Revenue
AUD $’M proforma	FY20	FY19	% Change
Revenue from Intercompany sales	72.4	62.1	16.6%

Notes:

1. Proforma results excluding AASB 16. Refer to appendix for reconciliations.

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Total Revenue

Total EBITDA

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FY20 FY19
30%
34%
47%
51%
19%
19%
Trade focused 81%
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FY20 FY19
28% 27%
55% 57%
16%
17%
Trade focused 83%
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Notes:

1. Trade includes Trade and Bapcor NZ segments

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Trade
Specialist Wholesale THAILAND
Retail & Service NT 6
17 6
3 1 [13]
QLD
242
WA VIC 47 43 152
100 227
10 23 67 55 30 142
SA
ACT
105
6
13 11 81 3 1 2
NEW ZEALAND
NSW
212
TAS 20852 34 122 75 11 136
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6 1 14
"Underlying growth in every region”
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No change to targets despite COVID-19 impacts / delays

Already the largest in Asia Pacific – and a lot of growth to come!

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Consistent delivery of specific and measurable targets with significant growth still to come

1• Grow sales

• Organic (circa 2% pa)

• Footprint expansion

• Burson 10 – 12 stores p.a.

No change to targets despite COVID-19 impacts / delays

• Retail up to 10 stores p.a.

• NZ 5 stores p.a.

• Light Com 5 locations p.a.

• Heavy Com 10 locations p.a.

• Electrical 5 locations p.a.

2• Margin

• Procurement / buying initiatives

• Pricing management

• Increase “own brand” sales

• Optimise intercompany sourcing of product

3• Operating efficiencies

• Network Plan / DC evolution

• 4• Consolidate and optimise

5• Strategic acquisitions / expansion

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• Warehouse Management System – Tier 1 System Manhattan – implemented Nunawading DC Jan 20 and operating well with improved efficiencies

• Warehouse Evolution Program – Consolidated DC Melbourne (Tullamarine) using latest technology – target Q3/Q4 FY21

• Retail Point of Sale System – state of the art retail POS – implementation in Autobarn delayed due to COVID-19 and required enhancements – complete December 2020

• Technology Infrastructure – investing in all aspects of IT – upgrade complete

• Commenced implementation of new safety data system

• Category Leadership & Brand Management – first categories underway – aircon, tools, electrical accessories and 4x4

• New ecommerce platform underway – target Q3 FY21

• Future Acquisitions – Bapcor is always on the lookout for businesses that fit with our core strategy and are fairly priced; well placed financially to move on appropriate opportunities

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Consolidated Warehousing

• The most efficient distribution

• Strong investment in ‘state of the art’

• ‘Step change’ with new Melbourne Tullamarine DC

• 50,000m[2] warehouse

• Goods to Person technology

• Immediate picking growth

• Substantial capacity

• Manhattan WMS

• Plans for future investments in Australia and connecting to the global supply chain

Transition costs charged to P&L

$M	FY20	FY21	FY22	FY23	Total		Financials	$M
Total provisions and transition costs	5.6	6.4	1.5	-	13.5		Capital	34
							Transition Costs	23
Accelerated depreciation							Incentive	(14)
Property plant and equipment	1.0	1.3	-	-	2.3		Inventory Reduction	(8)
Right-of-use-assets (AASB 16)	5.1	5.2	0.2	(3.4)	7.1		Net Investment	35
Total accelerated depreciation	6.1	6.5	0.2	(3.4)	9.4
							Benefits (est p.a.)	10
Total	11.7	12.9	1.7	(3.4)	22.9		Simple ROI %	27%

	Financials	$M
	Capital	34
	Transition Costs	23
	Incentive	(14)
	Inventory Reduction	(8)
	Net Investment	35
	Benefits (est p.a.)	10
	Simple ROI %	27%

Note: Any difference in totals is due to rounding

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• Excellent start to FY21

• Likely driven by increased consumer cash availability – low restaurant, travel, entertainment spend combined with government stimulus / super withdrawals

• 1[st] Quarter FY21 has been very strong, despite lockdowns in Victoria and Auckland

  • Burson Trade – *Revenue up 10%

  • New Zealand – *Revenue 6%

  • Same store sales up 7.7% ( up 17% excluding Victoria) Same store sales up 4%

• Retail - *Revenue up 47% Autobarn SSS up 36% - coy stores up 50%

• • Specialists - *Revenue up 45% Excluding acquisitions revenue up 18%

• Group Total - *Revenue up 27% * unaudited

• Addition of Truckline and ongoing improvements in other businesses, including retail, will positively contribute

• Investing in IT, marketing, systems and technology result in increased cost base. Also depreciation increase of $5m in FY21 due to strategic projects, especially technology.

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• Any government restrictions likely to have a negative impact on trading conditions and earnings

• COVID-19 is also likely to result in changes with a significant net positive for the automotive aftermarket:

• More vehicle use / kms driven – domestic travel and lower public transport use

• More vehicles per household – refer used car sales

• More repair and less replacement

• Older average age of vehicles

• More DIY activity

• There is a lack of clarity and uncertainty around underlying economic conditions

• However, historically Bapcor’s businesses have been resilient to economic downturns

• Anticipate a strong first half – however 2[nd] half is unclear.

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• Australian Owned and Operated

• Asia Pacific’s leading provider of vehicle parts, accessories, workshop equipment, service and solutions

• Investing in the future - with a lot more to come

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The material in this presentation has been prepared by Bapcor Limited (“Bapcor”) ABN 80 153 199 912 and is general background information about Bapcor’s activities current at the date of this presentation. The information is given in summary form and does not purport to be complete. Information in this presentation, including forecast financial information should not be considered as advice or a recommendation to investors or potential investors and does not take into account investment objectives, financial situation or needs of any particular investor. These should be considered, with or without professional advice when deciding if an investment is appropriate.

Persons needing advice should consult their stockbroker, solicitor, accountant or other independent financial advisor.

The release, publication or distribution of this presentation in certain jurisdictions may be restricted by law and therefore persons in such jurisdictions into which this presentation is released, published or distributed should inform themselves about and observe such restrictions.

This presentation does not constitute, or form part of, an offer to sell or the solicitation of an offer to subscribe for or buy any securities, nor the solicitation of any vote or approval in any jurisdiction, nor shall there be any sale, issue or transfer of the securities referred to in this presentation in any jurisdiction in contravention of applicable law.

Certain statements made in this presentation are forward-looking statements. These forward-looking statements are not historical facts but rather are based on Bapcor’s current expectations, estimates and projections about the industry in which Bapcor operates, and beliefs and assumptions. Words such as "anticipates”, "expects”, "intends,", "plans”, "believes”, "seeks”, "estimates”, and similar expressions are intended to identify forward-looking statements. These statements are not guarantees of future performance and are subject to known and unknown risks, uncertainties and other factors, some of which are beyond the control of Bapcor, are difficult to predict and could cause actual results to differ materially from those expressed or forecasted in the forward- looking statements. Bapcor cautions investors and potential investors not to place undue reliance on these forward-looking statements, which reflect the view of Bapcor only as of the date of this presentation. The forward-looking statements made in this presentation relate only to events as of the date on which the statements are made. Bapcor will not undertake any obligation to release publicly any revisions or updates to these forward-looking statements to reflect events, circumstances or unanticipated events occurring after the date of this presentation except as required by law or by any appropriate regulatory authority.

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