PSI acquisition: Strategic expansion in US growth markets

Transcription

1 PSI acquisition: Strategic expansion in US growth markets 14 OCTOBER 2015 André Lacroix Chief Executive Officer Edward Leigh Chief Financial Officer

2 Cautionary statement regarding forward-looking statements This presentation contains certain forward-looking statements with respect to the financial condition, results, operations and business of Intertek Group plc. These statements and forecasts involve risk and uncertainty because they relate to events and depend upon circumstances that will occur in the future. There are a number of factors that could cause actual results or developments to differ materially from those expressed or implied by these forward-looking statements and forecasts. Nothing in this presentation should be construed as a profit forecast. 14 OCTOBER

3 PSI acquisition Intertek has agreed to acquire Professional Service Industries, Inc. ( PSI ) for $330m 1 on a cash and debt free basis, equivalent to a 7.6x multiple based on LTM 2 EBITDA of $43m PSI is a US industry leader in materials testing and assurance for the commercial and civil construction markets The combination of Intertek s Building business with PSI s construction portfolio will create an industry leading testing and assurance one-stop-shop service offering Strong short and long-term growth drivers Significant revenue and cost synergies Financially attractive: EPS enhancing in year 1 Strategic expansion in adjacent US growth markets 3 1. Subject to customary post-closing adjustments 2. Last Twelve Months to 31-Aug-15. Adjusted for minor non-recurring items

4 An Industry leader in materials testing and assurance for the commercial and civil construction markets Founded in 1961, 2,400 people PSI reported revenue of $254m, EBITDA of $40m, and operating profit of $29m An industry leader in testing and assurance for the US commercial and civil construction markets: 77% of revenue, 78% of profit Non-destructive pipeline infrastructure testing focused on attractive mid-stream market: 23% of revenue, 22% of profit Broad-based geographic coverage: - 87 locations across 32 states, with the ability to service all 50 states - Local delivery model Strong management with proven track record High-quality operator with strong capabilities, including award winning technology 4 1. Audited financials for the year ended 31-Dec-14. Adjusted for minor nonrecurring items

5 Exciting macro and sector growth opportunities US economic growth US construction US pipelines US: Real GDP $20tn $18tn $16tn $14tn $12tn $10tn $18.8tn $18.4tn $17.9tn $17.4tn $16.8tn $16.2tn $15.5tn US #1 economy in the world with attractive growth prospects 2017 USD 1.4 trillion expected to be added to US GDP in real terms by 2017 Strong population growth Recovery led by consumer spending and residential and non-residential construction US: Total construction starts nonresidential / non-building 1 Billions of Current Dollars Non-residential 15E 16E Non-building Construction activity continues to grow 15-17E CAGR 17E Driven by steady population growth, stronger job market and pent-up demand for new properties Demand for greener, better quality, more modern buildings 12.7% 7.0% Growth in non-building driven by investment in transportation systems (e.g. motorways, bridges, highways, water supply) US: Projected pipeline capacity additions 2 Miles of Pipeline 12,000 10,000 8,000 6,000 4,000 2, ,471 miles 431 1,734 3,306 11,055 miles 1,880 3,885 5,290 Outlook in Feb 2014 Outlook in Feb 2015 Gas Pipelines Crude Pipelines Product Pipelines US desire for energy self-sufficiency Inadequate infrastructure for shale developments Transmission pipelines expected to see strong medium term growth 5 1. Industry data; Non-residential includes manufacturing plants, office buildings and hospitals. Non-building includes structures such as bridges and motorways 2. Industry publication

6 Well balanced and diversified portfolio Revenue mix Geotechnical By service type NDT Geotechnical CONSTRUCTION Materials Testing Property & Environmental Property & Environmental Construction services by end market Hotel Other Utilities Housing Materials Testing Infrastructure (e.g. bridges, motorways) Construction NDT Manufacturing OIL & GAS Non-destructive Testing ( NDT ) Industrial Office Retail Public works (e.g. includes hospitals, government, municipal buildings) A diversified customer base with a large group of loyal customers 6

7 Service complementarity Broad spectrum of services across construction/building project lifecycle Project Lifecycle Site Selection & Design Product Qualification Construction Facilities Management Property Transfer Geotechnical Soil mechanics Foundation design Pavement design Earthwork structures Materials Testing Product/code review Product requirements Product/system testing Compliance submittals Product certification Soil Concrete Asphalt Masonry Steel Property & Environmental Envelope consulting Fire consulting Acoustical consulting Roof consulting Environmental site assessment Property condition Assessments Air leakage testing Environmental exposure Field roofing and window Onsite mock-up Roofing Building envelope Indoor air quality Asbestos surveys Environmental site assessment Property condition assessments Storm water plans Service offering: Intertek Both PSI 7

8 Building scale in growing markets 01 Build scale and leadership position in adjacent US growth markets Strengthen Intertek s US business in growth sectors of the economy Expands geographic presence through PSI s US-wide branch network Significant revenue and cost synergies Strong PSI management with proven track record Combine Intertek s Building business with PSI s construction portfolio to create an industry leading testing and assurance service offering Leverages successful ATI acquisition Scale up in growing US construction testing and assurance markets and gain access to commercial and civil construction sectors New customer portfolio, including construction companies, engineering firms and Government Unique breadth and depth of industry leading service offering Cross sell Intertek Building Sciences services to PSI s customers; and PSI s Materials Testing services to Intertek s customers Strengthen and diversify Industry opex business Access to the attractive mid-stream pipeline market Doubles existing Industry US based NDT business with complementary regional footprint Continues opex diversification 8

9 A value accretive transaction Attractive financial terms Price: $330m 1 at completion LTM EBITDA 2 $43m, 7.6x multiple Delivering value for Intertek shareholders Attractive revenue growth prospects for PSI Expect PSI margin to improve by +300bps over three years Impact on Intertek EPS: 2016 accretive; good long term accretion Strong cash generation and attractive returns Financing Funded from existing facilities Intertek Net debt: EBITDA c.1.8x at 31 December 2015 Timetable Completion expected during December Subject to customary post-closing adjustments 2. Last Twelve Months to 31-Aug-15. Adjusted for minor non-recurring items

10 Strategic expansion in US growth markets 01 Acquisition of a US industry leader in materials testing and assurance for the commercial and civil construction markets Build scale in US construction market with significant growth potential Combine Intertek s Building business with PSI s construction portfolio to create an industry leading testing and assurance service offering Complementary NDT business providing scale in attractive mid-stream market, doubling Intertek NDT business in the US 05 Attractive financials and returns underpinned by significant revenue and cost synergies 10

11 PSI acquisition: Strategic expansion in US growth markets 14 OCTOBER 2015 André Lacroix Chief Executive Officer Edward Leigh Chief Financial Officer