Sig Plc · LSE:SHI
Sig — Sheffield Insulations Group — H1 2024 Earnings Presentation
32 slides from Sig's earnings presentation, Aug 7, 2024
Slide 1: SIG plc H1 2024 Results
SIG plc H1 2024 Results 6 August 2024
Slide 2: H1 2024 Results Agenda
H1 2024 Results Agenda 1 2 3 Overview Financial Results Business Review Gavin Slark Ian Ashton Gavin Slark CEO CFO CEO 2
Slide 3: Overview
Overview Gavin Slark, CEO
Slide 4: H1 2024 Results Overview
H1 2024 Results Overview Prolonged challenging Cost and financial Progressing actions for markets discipline operational improvement • Group reported revenue of • Operating cost reduction • Implementation of new e- £1.3bn, down 7% LFL commerce platforms • £24m cost savings vs PY in H1, • Largest mar
Slide 5: Financial Results
Financial Results Ian Ashton, CFO
Slide 6: Key Financials
Key Financials H1 H1 £'m 2024 2023 • Market headwinds continue: Revenue 1,317 1,423 LFL sales growth (7)% 0% o Subdued demand resulting in volume declines of c3% Gross profit 325 365 o Pricing also down yoy – partially due to input cost deflation Gross margin 24.7% 25.6% Underlying operating profit
Slide 7: Revenue: H1 2024 yoy change and trends
Revenue H1 2024 – yoy change Volume, price and total sales trend yoy £50m £46m 4% £10m % change 0% £1,423m £1,317m (4)% (8)% H1 LFL - LFL - Working Days/ H1 Q3 23 Q4 23 Q1 24 Q2 24 2023 Volume Deflation FX 2024 1 Daily sales LFL LFL pricing LFL volume • Ongoing market softness across most of our geo
Slide 8: Revenue
Revenue H1 2024 Operating company LFL 1 UK Interiors (14)% 1 UK Roofing (2)% • Ongoing market softness across most of our 1 (7)% geographies, particularly in UK Interiors, French UK Specialist Markets and German markets UK (9)% • Strategic branch closures impacted LFL growth France Interiors (7)% ra
Slide 9: Operating profit bridge
Operating profit bridge £13m £33m £12m £12m £13m £24m £7m H1 GP: Sales GP: Sales Gross margin % Operating cost Net operating H1 2023 volume deflation inflation cost saving 2024 • Sales volume and pricing declines drive lower GP • Reduction in GM% due to competitive pricing pressures – trade-offs bei
Slide 10: Efficiency and productivity
Efficiency and productivity • Restructuring actions to realign permanent cost base and mitigate near-term market weakness • Improving cost and cash management throughout the business Restructuring actions Cost and operating discipline £ 15m £ 24m* Annualised Net operating operating profit cost savin
Slide 11: Free cash flow
Free cash flow Working capital % of sales: H1 2022: 11.5% H1 2023: 10.6% H1 2024: 10.3% £(34)m £52m £(8)m £(8)m £(4)m £(2)m £(3)m £(19)m £(22)m Underlying Lease payments Capex Working capital Cash exceptionals Other Operating Interest and tax Free cash EBITDA cash flow flow • Working capital outflow
Slide 12: Balance sheet
Balance sheet • Continuing good liquidity • Net debt stable • Leverage increased due to lower EBITDA • Group debt facilities in place with maturity in 2026 Liquidity Net debt and leverage1 Core Group debt facilities - maturity in 2026 £222m 3.2x 3.5x 4.3x • €300m Senior Secured Notes (mature £196m £
Slide 13: Technical guidance – FY 2024
Technical guidance – FY 2024 • Inflation: o Input cost deflation stabilising o Opex inflation stabilising to norm; H2 at similar levels to H1 • Capex of £17-£20m, down from prior guidance of £20-£25m • Net interest charge of c£40m, as previously advised • Tax rate: o EU operations to continue on pre
Slide 14: Business Review
To update image Business Review Gavin Slark, CEO
Slide 15: SIG Overview: Our Pan-European operations
SIG Overview Our Pan-European operations Ireland 6% Poland 12% Operating France 40% Germany Profit1 14% by region H1 2024 UK 28% 435 7,000+ 1,100 BRANCHES COLLEAGUES DELIVERY ACROSS SIX FLEET GEOGRAPHIES Note: 1) Underlying operating profit adjusted to exclude Group overhead and Benelux loss. 15
Slide 16: LFL Revenue performance
LFL Revenue performance LFL growth1 H1 2024 Revenue (£m) UK Interiors (14)% 250 Germany (3)% 220 France Roofing (11)% 215 UK Roofing (2)% 182 UK Specialist (7)% 121 Poland 3% 119 France Interiors (7)% 105 Benelux (12)% 54 Ireland 9% 50 Note: 1) LFL revenue growth vs H1 2023, with UK operating compan
Slide 17: Operating margins & profit
Operating margins & profit H1 2024 Operating Target margin1 margin1 H1 2024 Operating profit1 (£m) France Roofing 2.3% 7% 4.9 UK Roofing 2.7% 7% 4.9 France Interiors 3.4% 7% 3.6 Germany 1.4% 6% 3.0 Poland 2.2% 5% 2.6 UK Specialist 1.9% 7% 2.3 Ireland 2.6% 6% 1.3 UK Interiors (0.5)% 3% (1.2) Benelux
Slide 18: Medium-term performance target: 5% margin
Medium-term performance target To medium-term Improving the way we operate now Improving our target margin performance 5% margin Positioning to win in long-term growth market 4 Pillar Grow Execute Modernise Specialise strategy Revenue growth ahead of Cost base improvement New omnichannel platform 60
Slide 19: Long-term growth market and opportunity
Long-term growth market and opportunity Megatrends in our end markets SIG revenue mix by end use Image Image Resi vs New vs Non-Resi RMI Housing shortage across Decarbonisation of buildings Europe and construction Ageing buildings and Building safety and infrastructure across Europe performance 19
Slide 20: Grow: Operating companies performing ahead of the market
Grow: Operating companies performing ahead of the market • Operating company LFL growth rates demonstrating continued growth ahead of market, notably: o Germany o UK Roofing • Continuing internal investment and focus on customer service enhancement, sales and marketing • Cultural shift to focus on p
Slide 21: Execute: Operational actions to improve cost base
Execute: Operational actions to improve cost base People Branch network Group Review of branch network locations • Reduced central corporate team • Opportunities for branch mergers/co-location Country • Focused on central overhead • 7 branches closed in H1 and 10 expected in total FY 2024 • Non-repl
Slide 22: Modernise: e-commerce platform investment
Modernise: e-commerce platform investment New omnichannel sales model with e-commerce platforms being rolled out in Germany and France Market Progress H1 2024 A key tool to drive margin accretive revenue growth per customer Germany • Successful pilot phase completed in H1 2024 Omnichannel targets: •
Slide 23: Specialise: H1 2024 development
Specialise: H1 2024 development Long-term opportunity SPECIALISE Progress H1 2024 Building safety and fire • Expanded fire protection range, multi-brand systems and specialist thermal insulation regulations increasing o >60 products under development, 10 products launched in H1 2024 UK Long-term dem
Slide 24: H1 2024 Results Summary & Outlook
H1 2024 Results Summary & Outlook H1 2024 Results FY 2024 Outlook Medium to longer term • Prolonged market weakness in • Full year: • Business model and leverage largest end-markets will help drive quick and o Underlying operating profit material margin rebound as guidance of £20-£30m markets recove
Slide 25: Appendix
Appendix SIG Plc H1 2024 Results
Slide 26: Our Vision and Strategic framework
Our Vision and Strategic framework OUR VISION To be the best provider of specialist construction and insulation products in Europe OUR LONG-TERM Partner of choice Growing sustainably Improving OBJECTIVES for specialist as a responsible our operating contractors business performance OUR MEDIUM-TERM S
Slide 27: Underlying financials by segment
Underlying financials by segment LFL vs Operating Change vs Operating Change vs Revenue H1 2023 profit/(loss) PY margin PY 1 UK Interiors £250m (14.4)% £(1)m £(4)m (0.5)% (1.3)% 1 UK Roofing £182m (1.9)% £5m £0m 2.7% 0.2% 1 UK Specialist Markets £121m (6.7)% £2m £(3)m 1.9% (2.5)% Total UK £553m (8.9
Slide 28: Other items
Other items PBT Cash Impact Impact H1 H1 H1 £'m 2024 2023 2024 Amortisation of acquired intangibles (1.1) (1.6) - Net restructuring costs (2.8) - (3.0) Cloud computing costs (0.4) (1.3) (0.4) Onerous contract costs - (0.2) - Other (0.3) 0.4 (0.2) Impact on operating profit (4.6) (2.7) (3.6) Non-unde
Slide 29: Cash flow and net debt
Cash flow and net debt H1 H2 H1 £'m 2024 2023 2023 Underlying operating profit 12 20 33 Add back: Depreciation & amortisation 40 40 39 Underlying EBITDA 52 60 72 • Working capital reflects normal H1 seasonality as well as Working capital movements (8) 30 (28) underlying improvements Repayment of lea
Slide 30: Net debt bridge
Net debt bridge £7m £31m £6m £52m £8m £19m £4m £8m £477m £458m FY 2023 Underlying Working Cash Capital Interest Lease additions/ Provisions/ other/ Payments related H1 2024 net debt EBITDA capital exceptionals expenditure and renewals FX to previous net debt (post-IFRS 16) tax acquisitions (post-IFR
Slide 31: Ongoing approach to capital allocation
Ongoing approach to capital allocation • Investment in new branches and capabilities, focused on high margin categories • Management of existing network and fleet to optimise efficiency, growth and Organic growth sustainability • Inventory to drive new product focus areas Criteria for acquisitions:
Slide 32: Number of trading sites
Number of trading sites 31 Dec 30 Jun Opened Merged Closed 2023 2024 UK Interiors 34 - (1) (2) 31 UK Roofing 110 - - - 110 UK Specialist Markets 30 - - (1) 29 Total UK 174 - (1) (3) 170 France Interiors 39 - - - 39 France Roofing 102 - - - 102 Total France 141 - - - 141 Germany 53 1 - (3) 51 Benelux
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