Ibstock Plc · LSE:IBST
Ibstock — H1 2023 Earnings Presentation
39 slides from Ibstock's earnings presentation, Aug 2, 2023
Slide 1: 2023 Half Year Results
2023 HALF YEAR RESULTS 2 AUGUST 2023 Project name: Northampton Museum and Art Gallery Product used: Generix Stone Cladding
Slide 2: Disclaimer
DISCLAIMER The information contained in this presentation has not been independently verified and this presentation contains various forward-looking statements that reflect management’s current views with respect to future events and financial and operational performance. The words “growing”, “scope
Slide 3: Agenda
AGENDA OVERVIEW Joe Hudson FINANCIAL REVIEW Chris McLeish MARKET UPDATE Joe Hudson STRATEGIC PROGRESS Joe Hudson SUMMARY & OUTLOOK Joe Hudson Q&A 3
Slide 4: Overview
Project name: 197 High Street, Kensington Product used: Otterburn Antique Waterstruck Brick OVERVIEW Resilient trading performance with H1 performance marginally ahead of Board’s expectations Disciplined approach to pricing; intense focus on cost and capacity with benefit from fixed cost absorption
Slide 5: Financial Review
FINANCIAL REVIEW Project name: 79 Fitzjohn’s Avenue, London Product used: Olde English Grey bricks
Slide 6: Financial Summary
FINANCIAL SUMMARY Resilient first half performance Group Revenue Adjusted EBITDA EBITDA Margin £223m £63m 28.2% HY 2022: £259m (-14%) HY 2022: £71m (-11%) HY 2022: 27.3% (+90bps) Return on Interim Dividend Adjusted EPS EBITDA: Net debt Capital Employed per share 9.0p 0.7x 19.6% 3.4p HY 2022: 11.3p (
Slide 7: Revenue Bridge
REVENUE BRIDGE Revenues reduced by 14% vs HY 2022 HY 2022 186 74 259 Group revenues reduced by 14% vs HY 2022 Clay (24) Clay revenues 13% lower with sales volumes in line -£37m with domestic market; includes £6m from Futures (-14%) Concrete (13) Concrete revenues down 17% reflecting a material reduc
Slide 8: Clay
Project name: Assay Studios, Birmingham Product used: Atlas Smooth Blue CLAY Robust performance underpinned by network reliability and cost management 6 months ended 30 June 2023 (£m) 2023 2022 Total Revenue 162 186 Adjusted EBITDA 57 64 Margin 35.5% 34.7% Revenue decreased by 13% year-on-year Volum
Slide 9: Concrete
Project name: Rail improvements Product used: Anderlite troughing CONCRETE Good performance reflecting broad end-market exposure 6 months ended 30th June 2023 (£m) 2023 2022 Total Revenue 61 74 Adjusted EBITDA 11 11 Margin 17.9% 15.3% Revenue decreased by £13m, down 17% on HY 2022 Volumes significan
Slide 10: Disciplined Working Capital Management
DISCIPLINED WORKING CAPITAL MANAGEMENT Strengthened inventory position; continued improvement in receivables management Trade working capital days analysis 225 30% Working capital as percentage of sales increased to 27% 27% driven by inventory levels 175 137 25% 94 Days sales outstanding (DSO) 52 da
Slide 11: Cash Flow Performance
CASH FLOW PERFORMANCE Investment in fixed assets and working capital to support long-term growth 6 months ended 30th June 2023 2023 2022 Adjusted EBITDA 63 71 Δ in net working capital (40) (10) Cash conversion reflects rebuild of inventory to long-term averages Net interest (3) (2) Tax (3) (1) Capex
Slide 12: Continued Balance Sheet Strength
CONTINUED BALANCE SHEET STRENGTH Net debt increased in the period after significant growth investments and inventory build Closing net debt increased to £89m at 30 June 2023 Strong leverage position at 0.7x, remaining at the lower end of our target range Closing net debt was slightly better than our
Slide 13: Debt Financing Locked In at Attractive Long-Term Rates
DEBT FINANCING LOCKED IN AT ATTRACTIVE LONG-TERM RATES £100m core debt provides insulation against increased interest rates £250m The Group benefits from diversified credit sources at attractive rates, with a long-term debt maturity profile £200m £100m US Private Placement – 2.19% Available average
Slide 14: Technical Guidance FY23
Employees creating wellbeing garden at local school TECHNICAL GUIDANCE FY23 Adjusted income statement Inventories expected to stabilise in H2; EBITDA margin % to moderate in both clay and concrete as cost absorption benefit not expected to recur Energy cover for H2 2023 at around 85%; around one thi
Slide 15: Market Update
MARKET UPDATE Project name: Gardenmore Green, Belfast Product used: Ivanhoe Cream and Staffordshire Blue bricks
Slide 16: Navigating the Near Term Backdrop
NAVIGATING THE NEAR TERM BACKDROP '000 Private Housing Starts '000 Private Housing Completions 4% Macroeconomic backdrop expected to weigh on near-term activity levels 200 1% 10% 200 3% 2% 10% 0% 0% 150 150 -10% -10% More cautious macroeconomic backdrop 100 -20% 100 -19% -20% -25% -30% -30% 50 50 Hi
Slide 17: Capacity and Cost Management
Employee at our Eclipse Factory based in Leicester CAPACITY AND COST MANAGEMENT Robust range of cost and capacity measures underpinned solid H1 performance Rebuild of inventories Redeployment of employees towards sustaining and maintenance activities Discretionary cost freezes Extended factory shutd
Slide 18: Medium Term Fundamentals Remain Positive
Project name: New development Product used: Stepoc Retaining Wall system MEDIUM TERM FUNDAMENTALS REMAIN POSITIVE Market recovery and structural growth opportunities underpin our confidence as we increase capacity from early 2024 Undersupply of housing in the UK – cross-party political support to bu
Slide 19: A Strong Platform for Growth
A STRONG PLATFORM FOR GROWTH MARKET LEADERSHIP ESG AT HEART OF THE BUSINESS CASH GENERATION & GROWTH OPERATIONAL STRATEGY Brand, market leadership & Sustainability integrated into our Cash generative nature of business Asset enhancement and operational customer relationships strategy, products and p
Slide 20: Strategic Progress
STRATEGIC PROGRESS Customer meeting with Design Advisor
Slide 21: Sustain, Innovate and Grow
SUSTAIN, INNOVATE AND GROW ADDRESSING MANUFACTURING IMPROVING LIVES CLIMATE CHANGE MATERIALS FOR LIFE Significant progress on health, safety and New unified ‘One Ibstock’ brand and digital tools Targeted M&A to support organic growth wellbeing Easier than ever for customers to see full offering Smal
Slide 22: Sustain, Innovate and Grow
SUSTAIN, INNOVATE AND GROW Wire-cut factory redevelopments on track for Ibstock Futures platform for growth in place Nostell slips investments on track commissioning by end 2023 (Atlas & Aldridge) Innovation hub creates a scalable platform for Initial automated brick slips cutting line (17m Atlas ‘p
Slide 23: Sustain, Innovate and Grow
SUSTAIN, INNOVATE AND GROW Continued progress towards sustainable building Completed pilot project firing bricks using Step change in our approach to culture and materials from our unrivalled clay reserves: synthetic gas from waste capability, firing up the organisation for today and Expanded clay –
Slide 24: Medium Term Targets
MEDIUM TERM TARGETS On track to deliver strong growth and returns over the period to 2026 Revenue growth target Target to grow revenues to >£600m by 2026 2022 revenue showed strong progress towards with an ambition to grow beyond this 2026 ambitions £513m >£600m Medium term profitability targets: £4
Slide 25: Balance Sheet Strength Affords Significant Strategic Optionality
Project name: Chesterfield House, London Product used: Nexus Façade System and Umbra Sawtooth Glazed Brick BALANCE SHEET STRENGTH AFFORDS SIGNIFICANT STRATEGIC OPTIONALITY As we approach latter part of current organic growth cycle, we will look to appraise further strategic growth opportunities: In
Slide 26: Summary & Outlook
Ibstock Apprentices, Make UK, Birmingham SUMMARY & OUTLOOK
Slide 27: Summary & Outlook
Employee at the Lake, Ibstock Leicester SUMMARY & OUTLOOK Resilient performance for the period with margins ahead of the prior year, despite material reduction in sales volumes Capital investment programme remains on track, and well advanced with new low-cost, efficient and sustainable capacity on l
Slide 28: Q&A
Q&A Architects discuss an Ibstock Glazed brick for their project
Slide 29: Appendices
APPENDICES Solar park, Leicester
Slide 30: Ibstock at a Glance
IBSTOCK AT A GLANCE Ibstock Plc is a leading UK manufacturer, offering a diverse range of building products and solutions Key facts Our business We offer a diverse range of building products, solutions, all backed up by expert technical and 200 Over 200 years of experience 40 Manufacturing facilitie
Slide 31: ESG Progress
*13% reduction is for Scope 1 emissions only, including Scope 2 emissions (location based) gives a 15% reduction ESG ESGPROGRESS PROGRESS 31 Committed to leading our sector in transparency & disclosure THE USE BY IBSTOCK PLC OFANY MSCI ESG RESEARCH LLC OR ITS AFFILIATES (“MSCI”) DATA, AND THE USE OF
Slide 32: Brick Market Dynamics
BRICK MARKET DYNAMICS Balancing supply and demand Brick Consumption (billions of bricks) Brick Production and Stock (billions of bricks) Domestic Despatches Imports Production Stock 2.1 2.0 2.0 1.9 1.9 1.9 0.5 1.8 1.8 0.4 0.5 0.6 0.3 1.6 1.6 0.3 0.2 1.5 0.3 1.4 1.4 0.1 0.3 1.3 0.1 0.1 0.1 0.1 0.9 2.
Slide 33: Concrete Revenue Analysis
CONCRETE REVENUE ANALYSIS Lintels 7% Walling Roofing 11% 19% Concrete delivered a solid performance in H1 2023, despite macroeconomic concerns with slowing markets and the more cautions view of industry projections Stone Concrete revenue 5% The division delivered a resilient HY-2023: £61m performanc
Slide 34: Core Residential Markets Update
CORE RESIDENTIAL MARKETS UPDATE '000 Private Housing Starts UK Inflation rate remains elevated 180 4% 10% 1% 160 0% Starts projected to decrease 25% in 2023 however 2024 shows 4% 140 growth. 120 -10% 100 -25% -20% 80 Completions projected to decrease 19% in 2023 and increase by 60 -30% 40 4% in 2024
Slide 35: Income Statement
INCOME STATEMENT 6 months ended 30th June 2023 2023 2022 Revenue £223m £259m Adjusted EBITDA £63m £71m Normal depreciation (£14m) (£13m) Adjusted profit before interest and tax £49m £57m Cash interest (£2m) (£2m) Adjusted profit before tax £46m £56m Taxation - at effective rate (£11m) (£10m) Adjuste
Slide 36: Adjusted Income Statement Reconciliation
ADJUSTED INCOME STATEMENT RECONCILIATION Depreciation and Exceptional Non-cash Deferred tax 6 months ended 30th June 2023 Adjusted Reported amortisation items interest rate change Revenue £223m - - - - £223m Costs (£160m) (£20m) (£11m) - - (£191m) EBITDA £63m (£20m) (£11m) - - £32m Normal depreciati
Slide 37: Balance Sheet
BALANCE SHEET 6 months ended 30th June 2023 2023 2022 Property, plant and equipment £424m £384m Right of Use assets £39m £26m Intangible fixed assets & Goodwill £85m £91m Non-current assets £548m £502m Inventories £112m £78m Trade and other receivables £76m £93m Assets held for sale £0m £0m Current
Slide 38: Cash Flow
CASH FLOW 6 months ended 30th June 2023 2023 2022 Cash generated from operations £22m £60m Interest paid (£2m) (£1m) Other interest paid - lease liabilities (£1m) (£0m) Tax paid (£3m) (£1m) Net cash flow from operating activities £16m £57m Cash flows from investing activities Purchase of property, p
Slide 39: Adjusted EBIT LTM and ROCE
ROCE Clay Concrete Group £91.1m +13% £12.3m +13% £92.1m +14% Adjusted EBIT LTM 2023 £91.1m 2023 £12.3m 2023 £92.1m 2022 £80.4m 2022 £10.9m 2022 £81.1m 2021 £56.1m 2021 £11.0m 2021 £59.5m 23.0% +20pts 15.2% +60pts 19.6% -20pts 2023 23.0% 2023 15.2% 2023 19.6% ROCE 2022 22.8% 2022 14.5% 2022 19.8% 202