PSI acquisition: Strategic expansion in US growth markets 14 - - PowerPoint PPT Presentation

www.intertek.com

André Lacroix

Chief Executive Officer

PSI acquisition:

Strategic expansion in US growth markets

14 OCTOBER 2015

Edward Leigh

Chief Financial Officer

www.intertek.com 2

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 2015

Cautionary statement regarding forward-looking statements

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PSI acquisition

 Intertek has agreed to acquire Professional Service Industries, Inc. (“PSI”) for

$330m1 on a cash and debt free basis, equivalent to a 7.6x multiple based on LTM2 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

• ffering

 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

1. Subject to customary post-closing adjustments 2. Last Twelve Months to 31-Aug-15. Adjusted for minor non-recurring items

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An Industry leader in materials testing and assurance for the commercial and civil construction markets

 Founded in 1961, 2,400 people  PSI reported 20141 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

1. Audited financials for the year ended 31-Dec-14. Adjusted for minor nonrecurring items

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US: Projected pipeline capacity additions2 US: Real GDP US: Total construction starts non- residential / non-building1

Exciting macro and sector growth

• pportunities

US economic growth US construction US pipelines

$15.5tn $16.2tn $16.8tn $17.4tn $17.9tn $18.4tn $18.8tn

$10tn $12tn $14tn $16tn $18tn $20tn 2011 2012 2013 2014 2015 2016 2017

3,306 5,290 1,734 3,885 431 1,880

2,000 4,000 6,000 8,000 10,000 12,000 Outlook in Feb 2014 Outlook in Feb 2015

Gas Pipelines Crude Pipelines Product Pipelines Miles of Pipeline 5,471 miles 11,055 miles



Construction activity continues to grow



Driven by steady population growth, stronger job market and pent-up demand for new properties



Demand for greener, better quality, more modern buildings



Growth in non-building driven by investment in transportation systems (e.g. motorways, bridges, highways, water supply)



US desire for energy self-sufficiency



Inadequate infrastructure for shale developments



Transmission pipelines expected to see strong medium term growth



US #1 economy in the world with attractive growth prospects



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

1. Industry data; Non-residential includes manufacturing plants, office buildings and hospitals. Non-building includes structures such as bridges and motorways 2. Industry publication 100 150 200 250 300 14 15E 16E 17E

Non-residential Non-building Billions of Current Dollars

12.7% 7.0%

15-17E CAGR

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By service type Construction services by end market

Geotechnical Services Materials Testing Property & Environmental Services NDT

Well balanced and diversified portfolio

Geotechnical Services Materials Testing Property & Environmental Services Non-destructive Testing (“NDT”)

CONSTRUCTION OIL & GAS

Infrastructure Public works Retail Office Industrial Manufacturing Housing Utilities Hotel Other

Revenue mix

Construction NDT

A diversified customer base with a large group of loyal customers

(e.g. bridges, motorways) (e.g. includes hospitals, government, municipal buildings)

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Service complementarity

Broad spectrum of services across construction/building project lifecycle

Geotechnical Services

 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 Services

 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

Property Transfer Facilities Management Construction Site Selection & Design Product Qualification Intertek Both PSI Service offering:

Project Lifecycle

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Building scale in growing markets

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

01

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

02

Strengthen and diversify Industry Services opex business

• Access to the attractive mid-stream pipeline market
• Doubles existing Industry Services’ US based NDT business with complementary regional footprint
• Continues opex diversification

03

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A value accretive transaction

• Price: $330m1 at completion
• LTM EBITDA2 $43m, 7.6x multiple

Attractive financial terms

• 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

Delivering value for Intertek shareholders

• Funded from existing facilities
• Intertek Net debt: EBITDA c.1.8x at 31 December 2015

Financing

• Completion expected during December 2015

Timetable

1. Subject to customary post-closing adjustments 2. Last Twelve Months to 31-Aug-15. Adjusted for minor non-recurring items

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Strategic expansion in US growth markets

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

01 02

Combine Intertek’s Building business with PSI’s construction portfolio to create an industry leading testing and assurance service offering Attractive financials and returns underpinned by significant revenue and cost synergies

03 04 05

Complementary NDT business providing scale in attractive mid-stream market, doubling Intertek NDT business in the US

www.intertek.com

André Lacroix

Chief Executive Officer

PSI acquisition:

Strategic expansion in US growth markets

14 OCTOBER 2015

Edward Leigh

Chief Financial Officer