Sig Plc · LSE:SHI
Sig — Investor Presentation (October 2024)
34 slides from Sig's investor presentation, October 2024
Slide 1: SIG plc Company Presentation October 2024
SIG plc Company Presentation October 2024 INTERNAL
Slide 2: Disclaimer
Disclaimer This presentation may include certain forward-looking statements, beliefs or opinions, including statements with respect to SIG plc’s business, financial condition and results of operations. These forward-looking statements can be identified by the use of forward-looking terminology, incl
Slide 3: Agenda
1 SIG overview 2 Key investment highlights 3 Historical financials 4 Appendix INTERNAL
Slide 4: Leading and differentiated supplier of building products across key specialisms
Leading and differentiated supplier of building products across key specialisms Ideally placed to benefit from the RMI and energy transition growth tailwinds Key products Key suppliers SIG key differentiators Interiors Structural insulation Technical insulation Ceiling tiles and grids (£1,633m, 62%
Slide 5: Structural long-term trends underpin long term demand
Structural long-term trends underpin long term demand for interior, exterior and specialist products, with early signs of cyclical recovery Supportive long term structural drivers Short-term recovery from cyclical lows On-going implementation of EU regulations for energy Evolution of expected constr
Slide 6: Pan-European presence with leading market positions
Pan-European presence with leading market positions #1 Insulation Top 3 Other interiors #2 Insulation 435 European sites1 #2 Other interiors c. 7,000 employees c. 1,200 delivery fleet £97m 11 Revenue Branches £247m 50 LTM Jun-24 Revenue Branches LTM Jun-24 #1 National roofing specialist #2 Insulatio
Slide 7: Central role in industry value chain: Partner of choice for specialist contractors
Central role in industry value chain: Partner of choice for specialist contractors >75,000 Connecting suppliers… …with customers PARTNERSHIPS END MARKETS2 Highly Valued by Suppliers and Customers Developers Interiors • SIG benefits from strong supplier partnerships, We link a significant variety of
Slide 8: Our Vision and Strategic framework
Our Vision and Strategic framework To be the best provider of specialist construction and insulation products in Europe Our Vision Partner of choice for Improving our operating Growing sustainably Our Long-term specialist contractors performance as a responsible business Objectives Four pillar strat
Slide 9: Increasingly digitalised operations with a revitalised branch network
Increasingly digitalised operations with a revitalised branch network Revitalisation branches and well invested E-commerce roll-out Digitalisation of Fleet and Delivery platform Customer digital pick-up Revitalisation of UK Exteriors and France SIG sales executive ✓ 2023 investment in customer servi
Slide 10: Growing sustainably as a responsible business
Growing sustainably as a responsible business Engaged people Safety-focussed Net Zero Carbon by 2035 Our fleet is 80% of total emissions… ✓ Improving LTIFR1 and in “near-miss” hazard Employee Engagement investments, reporting training and skills programme Net Zero carbon emissions reduction ✓ Most f
Slide 11: Key investment highlights
1 SIG overview 2 Key investment highlights 3 Historical financials 4 Appendix INTERNAL
Slide 12: Key investment highlights
Key investment highlights Pan-European leader with highly defensible market position and competitive advantage 1 in specialist building materials Market-leading positions, and well- placed to benefit Strong product and geographic diversification including more resilient renovation and from both cycl
Slide 13: Pan-European leader with highly defensible market position
1 Pan-European leader with highly defensible market position and competitive advantage in specialist building materials Leading market positions across our top 3 countries Highly defensible market position thanks to competitive features FY23 revenue in £m ✓ Roofing Interiors Strong pan-European foot
Slide 14: Strong product and geographic diversification
2 Strong product and geographic diversification including more resilient renovation and commercial end-markets Diversified, blue-chip Active across nine businesses Balanced end-market exposure with significant RMI component supplier base Broad customer base LTM Jun-24 LTM Jun-24 Revenue breakdown (%
Slide 15: Regulation and pent-up demand across Europe support long term sustainable demand
3 Regulation and pent-up demand across Europe support long term sustainable demand… Drivers of structural demand within European construction 1 2 3 Energy efficiency and decarbonisation regulations Ageing buildings Housing undersupply and pent-up demand ’s product portfolio: Nearly 70% of the houses
Slide 16: Clear signs of cyclical market recovery emerging
3 ...clear signs of cyclical market recovery emerging UK Construction PMI (pts) "UK construction companies indicated a decisive improvement in output growth momentum during September, driven by faster upturns across all three major categories of activity… A combination of lower interest rates, domes
Slide 17: Output forecast beginning of recovery in Europe next year
3 Output forecast beginning of recovery in Europe next year Evolution of expected construction output in Western Europe and relevant EU countries (% change in real terms) Europe 11.7% 6.8% 5.4% 6.5% 2.8% 4.1% 1.5% (1.2%) (0.6%) 2.6% (3.1%) (3.5%) 2021A 2022A 2023A 2024E 2025E 2021A 2022A 2023A 2024E
Slide 18: Historic track record of resilient profitability
4 Historic track record of resilient profitability Strong financial performance with resilient EBITDA margin Historical EBITDA and EBITDA margin evolution Performance under traditional model Divergence from traditional model Returning to a modernised version of the and Covid downturn in 2020 traditi
Slide 19: Ongoing strategic programme to drive operating performance and margin
4 Ongoing strategic programme to drive operating performance and margin back to historical levels 7% average Improving our operating performance over 2009-18 Four pillar ‘GEMS’ strategy1 to reach medium-term 8% EBITDA margin / 5% Operating margin target ✓ Green shoots of Work in progress… industry r
Slide 20: Robust liquidity profile including large cash balance and undrawn RCF
5 Robust liquidity profile including large cash balance and undrawn RCF… Sustained and strong liquidity profile £220m £222m £196m £191m £90m Seasonally lower cash £90m as of end of June £90m compared to December £90m given cyclicality of working capital £130m £132m £106m £101m 2022A H1-23A 2023A H1-
Slide 21: Operating cash generation supported by capex-light model
5 … with ongoing operating cash generation supported by capex-light model and prudent working capital management Strict working capital management … … combined with SIG’s capex-light operating model … Working capital % of LTM revenue Capex % of revenue 1.1% 11.5% 10.6% 0.7% 0.8% 0.7% 0.8% 0.7% 10.1%
Slide 22: An experienced management team
6 An experienced management team with a track-record of executing growth strategies and optimising financial management Gavin Slark Ian Ashton Group Chief Executive Officer Group Chief Financial Officer Operating Company Managing Directors David Hope Chris Lodge UK Construction Accessories & UK Roof
Slide 23: Experienced board providing strong oversight and input
6 Experienced board providing strong oversight and input Andrew Allner Gavin Slark Ian Ashton Kath Durrant Gillian Kent Chairman CEO CFO Senior Independent Independent Director NED • Previously Chief Executive Officer • Previously Chairman of Marshalls at Grafton Group plc and at BSS • Previously CF
Slide 24: Historical financials
1 SIG overview 2 Key investment highlights 3 Historical financials 4 Appendix INTERNAL
Slide 25: Key financial highlights
Key financial highlights Revenue (£m) EBITDA (£m) and margin 5.3% 1.1% 4.9% 5.7% 4.8% 2,745 2,761 2,143 2,291 1,873 1,597 1,588 1,263 1,362 156 1,206 132 113 113 881 929 1,148 1,174 667 20 2019A 2020A 2021A 2022A 2023A 2019A 2020A 2021A 2022A 2023A UK EU % CAGR EBITDA EBITDA margin Capital expenditu
Slide 26: Key historical financials (1/2)
Key historical financials (1/2) £m, Dec-YE 2019A 2020A 2021A 2022A 2023A CAGR 19-23A Commentary UK 881 667 929 1,148 1,174 7.4% • Strong recovery following the Covid lows: UK Interiors 503 314 414 562 557 • robust revenue growth across all geographies since 2019, despite lower demand impacting volum
Slide 27: Key historical financials (2/2)
Key historical financials (2/2) £m, Dec-YE 2019A 2020A 2021A 2022A 2023A Commentary Total Revenue 2,143 1,873 2,291 2,745 2,761 • Profit margins stabilised to pre-COVID levels in last 3 years: % LFL growth (7.4%) (13.3%) 24.3% 17.0% (2.0%) • Gross margin: 25-26% • Underlying operating margin: 2-3% C
Slide 28: Key summary cash flow
Key summary cash flow £m, Dec-YE 2019A1 2020A 2021A 2022A 2023A Commentary Underlying operating profit/(loss) 43 (53) 41 80 53 Depreciation and amortisation 70 73 72 76 79 • Cash flow generation has been primarily driven by operating Underlying EBITDA 113 20 113 156 132 performance, with working cap
Slide 29: H1 trading update: robust results amid difficult market backdrop
H1 trading update: robust results amid difficult market backdrop % LfL LTM Jun- £m, Dec-YE H1-23A H1-24A % change 2023A % change Commentary change 24A UK Interiors 290 250 (14%) (14%) 557 517 • Despite a challenging operating environment and sustained market UK Exteriors 184 182 (2%) (1%) 369 367 so
Slide 30: Q3 demonstrated stabilisation with an improving outlook
Q3 demonstrated stabilisation with an improving outlook LFL revenue decline has bottomed-out, positively trending into September Q3 Trading LFL growth and volume evolution (1%) • UK Interiors affected by branch closures (4% impact) (2%) (2%) • Strong growth in UK Exteriors, well-ahead of market (3%)
Slide 31: Key investment highlights
Key investment highlights Pan-European leader with highly defensible market position and competitive advantage 1 in specialist building materials Market-leading positions, and well- placed to benefit Strong product and geographic diversification including more resilient renovation and from both cycl
Slide 32: Appendix
1 SIG overview 2 Key investment highlights 3 Historical financials 4 Appendix INTERNAL
Slide 33: Capital allocation policy and medium-term goals
Capital allocation policy and medium-term goals • Investment in new branches and capabilities, focused on high margin categories Organic growth • Investment in existing network and fleet to optimise efficiency, growth and sustainability • Inventory to drive new product focus areas Criteria for acqui
Slide 34: Pathway to 8% EBITDA margin within next 3-5 years
Pathway to 8% EBITDA margin within next 3-5 years Improving our performance Grow Execute Modernise Specialise Operational leverage Recovery in two underperforming units Productivity & gross margin improvements c.+2% c.+1% c.+1% margin margin margin Market growth • Mid-single digit market recovery (G