Forterra Plc · LSE:FORT
Forterra — FY2019 Earnings Presentation
31 slides from Forterra's earnings presentation, Mar 10, 2020
Slide 1: Forterra plc Results Presentation, Full year ended 31 December 2019
Forterra plc Results Presentation Full year ended 31 December 2019 10 March 2020 Keeping Britain Building
Slide 2: Disclaimer
DISCLAIMER This document has been prepared by Forterra plc (the “Company”) solely for use at a presentation in connection with the Company’s Results Announcement in respect of the financial period ended 31 December 2019 (the “Presentation”). For the purposes of this notice, “Presentation” shall mean
Slide 3: Agenda
AGENDA 1. Key points 2. Financial review 3. Business review 4. Outlook 5. Q&A Stephen Harrison Ben Guyatt Chief Executive Officer Chief Financial Officer 3 Keeping Britain Building
Slide 4: Key Points
KEY POINTS • Resilient performance against a challenging market backdrop • Revenue increase from Bricks and Blocks despite slightly reduced sales volumes • Strong revenue increase from Bespoke Products, albeit at lower margin • Robust balance sheet – net debt to EBITDA 0.6x (2018: 0.5x) • Constructi
Slide 5: Financial review
Financial review Keeping Britain Building
Slide 6: Key Financials
KEY FINANCIALS Before exceptional items and IFRS 16 Statutory £m FY 2019 FY 2018 FY 2019 FY 2018 Revenue 380.0 367.5 380.0 367.5 EBITDA 76.4 78.8 78.4 78.8 Profit before tax 62.5 64.8 58.2 64.8 Earnings per share (pence) 25.6 26.5 23.8 26.5 Net debt 43.2 38.8 57.3 38.8 Net debt / EBITDA (x) 0.6 0.5
Slide 7: Summary Profit & Loss
SUMMARY PROFIT & LOSS Like-for-like 2019 2019 2018 Exceptional Before IFRS 16 £m Statutory IFRS 16 impact impact and exceptional FY 2018 Revenue 380.0 - - 380.0 367.5 EBITDA - Bricks and Blocks 77.1 (5.7) 3.3 74.7 75.8 - Bespoke Products 2.0 (0.6) 0.3 1.7 3.0 - Unallocated exceptional cost (0.7) - 0
Slide 8: Group Cash Flow
GROUP CASH FLOW 90 70 (17.2) 50 (0.6) (1.1) (24.3) 76.4 £m 30 58.6 (10.8) 10 (22.0) (4.8) (4.4) -10 EBITDA Working capital Non-cash items Operating cash Exceptional Capital Tax & Interest Dividends EBT share Increase in net flow items expenditure paid movement debt -30 • Operating cash flow £58.6m (
Slide 9: Net Debt and Facilities
NET DEBT AND FACILITIES Before exceptional items and IFRS 16 Statutory £m FY 2019 FY 2018 FY 2019 FY 2018 Net debt 43.2 38.8 57.3 38.8 Net debt / EBITDA (x) 0.6 0.5 0.7 0.5 • Increase in net debt reflects spend on Desford project • Net debt to EBITDA 0.6x (2018: 0.5x) • Debt facility comprises a com
Slide 10: Capital Allocation
CAPITAL ALLOCATION Strong balance sheet enables continued investment in the business Capital allocation priorities Organic investment Dividends Acquisitions 10 Keeping Britain Building
Slide 11: Business review
Business review Keeping Britain Building
Slide 12: At a Glance
AT A GLANCE Revenue by segment (%) 27% 48% 25% Leading UK producer of Focus on bricks and blocks with manufactured masonry complementary range of bespoke clay & Bricks products concrete products Blocks Bespoke Products Revenue by end use (%) 10% 27% 63% Sole manufacturer of iconic Fletton Precast co
Slide 13: Market Drivers
MARKET DRIVERS Residential starts and completions Annual Monthly starts (2018-2019) 200,000 180,000 160,000 140,000 120,000 100,000 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 2018 starts 2019 starts Starts Completions 3 per. Mov. Avg.
Slide 14: Market Drivers
MARKET DRIVERS Residential planning applications for projects below £100k 60,000 50,000 40,000 30,000 20,000 10,000 - No. of applications 12 per. Mov. Avg. (No. of applications) Source: Barbour ABI • Planning applications for residential projects below £100k are used as a proxy for Repairs, Maintena
Slide 15: Brick Market
BRICK MARKET Brick deliveries and inventory (domestic) Brick imports 2,500 450 18.0% 400 16.0% 2,000 350 14.0% % of total market 300 12.0% Bricks (m) 1,500 250 10.0% 200 8.0% 1,000 150 6.0% 500 100 4.0% 50 2.0% 0 - 0.0% 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2012 2013 2014
Slide 16: Bricks and Blocks
BRICKS AND BLOCKS 2019 2018 Before exceptional items £m and IFRS 16 FY 2018 Change Revenue 279.1 277.5 0.6% EBITDA 74.7 75.8 (1.5)% EBITDA margin % 26.8% 27.3% • Segment impacted by weakening market in H2 2019 • Revenue remained broadly stable, with the selling price increases offsetting volume decl
Slide 17: New Desford Facility
NEW DESFORD FACILITY Investment in new £95m brick facility continues at pace • Capacity of 180m bricks per annum (25,000 new homes) adding 16% to brick production capacity Progress update • Significant transformation over the year: • demolition of a redundant area of the existing plant • substantial
Slide 18: Precast Concrete Market
PRECAST CONCRETE MARKET EBIT margin movement (%) 2017 2018 Year-on-year movement (6.9%) (29.3%) Competitors with margin growth 5 3 Competitors with margin decline 17 17 Source: Company Information, Companies House data • Financial data from UK precast concrete competitors shows margins in the sector
Slide 19: Bespoke Products
BESPOKE PRODUCTS 2019 2018 Before exceptional £m items and IFRS 16 FY 2018 Change Revenue 103.5 92.2 12.3% EBITDA 1.7 3.0 (43.3)% EBITDA margin % 1.6% 3.3% • Revenue growth from Bison Precast • Despite growth, a challenging market and weaker margins did not deliver the anticipated EBITDA • Managemen
Slide 20: Off-Site Solutions: Quickwall
OFF-SITE SOLUTIONS Quickwall system • An innovative and unique new product development • 2019 saw the supply of prefabricated, single skin brick walls to a significant flood alleviation scheme in Derby • We believe this solution focused development could be pioneering within the sector • Offsite pro
Slide 21: Off-Site Solutions: Surebrick and Precast Panels
OFF-SITE SOLUTIONS Surebrick • Our SureBrick façade system, a mechanically fixed fully non- combustible solution suited to projects both below and above 18 metres • Further developed towards market launch in 2019 • Expanding our offering in alternatives to conventional brickwork Precast panels • Pro
Slide 22: Sustainability
SUSTAINABILITY • Initial 10 year targets set in 2010 coming to an end • New stretching targets to be set in the coming year around: • People • Planet • Products 22 Keeping Britain Building
Slide 23: Outlook
Outlook Keeping Britain Building
Slide 24: Outlook
OUTLOOK • We remain optimistic that demand will recover through the year although this may take some time given an extremely wet winter • The Board continues to expect the challenging market conditions experienced in the second half of 2019 to gradually improve but anticipates that the Group’s perfo
Slide 25: Q&A
Q&A Keeping Britain Building
Slide 26: Appendices
Appendices Keeping Britain Building
Slide 27: Investment case
Investment case UK Focus Resilience Strategy Leadership Flexible production Iconic Fletton Brick Growth Efficiency capacity 1. 2. 3. 4. 5. 6. 100% in UK Sole Operational Well-equipped to An efficient Leadership manufacturer agility deliver long-term manufacturing Consolidated team competitive growth
Slide 28: Technical Guidance
TECHNICAL GUIDANCE Desford / capex cash spend guidance • We expect 2020 to be the largest year of spend within the Desford Period Spend (£m) project Already spent 12 • Total capex for 2020 expected to be around £56m 2020 42 • routine capex of £14m in addition to Desford spend of £42m 2021 35 2022 6
Slide 29: Summary Balance Sheet
SUMMARY BALANCE SHEET £m Dec 2019 Dec 2018 Intangible assets 18.2 17.3 Property, plant and equipment 182.6 170.5 Right-of-use assets 13.7 - Total non-current assets 214.5 187.8 Current assets Inventories 47.8 37.4 Trade and other receivables 40.4 37.9 Cash and cash equivalents 26.6 26.0 Total curren
Slide 30: Summary Cash Flow
SUMMARY CASH FLOW 2019 2018 Before exceptional £m items and IFRS 16 FY 2018 EBITDA 76.4 78.8 Change in working capital (17.2) 2.7 Other movements (0.6) (1.7) Operating cash flow 58.6 79.8 Exceptional items (1.1) - Tax and Interest (10.8) (14.0) Capital expenditure - maintenance (9.9) (8.5) - strateg
Slide 31: Keeping Britain Building
Forterra 5 Grange Park Court Roman Way Northampton NN4 5EA 01604 707600 Keeping Britain Building