TSR Decomposition Model: Analyzing Key Value Drivers PPT

This PPT slide, part of the 21-slide Value Creation Strategy Series: Phase 2 PowerPoint presentation, presents the TSR (Total Shareholder Return) Decomposition Model, which is a framework for quantifying the TSR potential of current plans by breaking it down into 3 primary drivers. The model is visually structured to highlight the contributions of each driver to the overall TSR, which is indicated as 9.6%.

The left section details the "Fundamental Value" driver, which comprises sales growth, margin change, and EBITDA growth. Sales growth is noted at 4.2%, while margin change shows a slight decrease of 0.6%, leading to an overall EBITDA growth contribution of 3.6%. This section emphasizes the importance of understanding how these elements interact to influence the company's financial performance.

The right section focuses on the "Valuation Multiple," which includes the EBITDA multiple change contributing 2.8% to the TSR. This indicates how market perceptions of the company's value can shift based on operational performance and external factors.

The slide further breaks down the "Free-Cash-Flow Yield," which is critical for assessing the sustainability of returns. It includes components like dividend yield (2.9%), share change (2.4%), and net debt change (-2.1%), culminating in a free-cash-flow yield of 3.2%.

The note at the bottom clarifies that the percentage values are illustrative and represent annual TSR. The slide concludes with a suggestion that this model can be utilized to challenge existing assumptions regarding the primary drivers of TSR, prompting a reevaluation of strategic priorities. This insight is particularly valuable for executives looking to optimize their value creation strategies.

This slide is part of the Value Creation Strategy Series: Phase 2 PowerPoint presentation.

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