Stelrad Group Plc · LSE:SRAD
Stelrad — FY2023 Earnings Presentation
30 slides from Stelrad's earnings presentation, Mar 8, 2024
Slide 1: Resilient performance. Strategically positioned for market improvement.
Resilient performance. Strategically positioned for market improvement. Stelrad Group plc Results for the year ended 31 December 2023
Slide 2: Agenda
RESULTS FOR THE YEAR Agenda • Overview • Financial review • Business review • Summary and outlook • Q&A Trevor Harvey Annette Borén Chief Executive Officer Chief Financial Officer Stelrad Group plc 2
Slide 3: Overview
Overview Trevor Harvey Chief Executive Officer
Slide 4: Resilient performance thanks to robust strategy, flexible business model and market leading position
2023 RESULTS SUMMARY Resilient performance thanks to robust strategy, flexible business model and market leading position • Adjusted operating profit in line with expectations despite macroeconomic headwinds • Contribution per radiator up for sixth consecutive year, driven by cost and price manageme
Slide 5: Resilient and flexible business model underpinned 2023 performance
2023 RESULTS SUMMARY Resilient and flexible business model underpinned 2023 performance • Robust financial performance in challenging conditions Revenue: £308.2m • Revenue down by 2.6% (12.9% like-for-like) (2022: £316.3m) • Contribution per radiator increased by 13.0%, helping to offset a 5.2% year
Slide 6: Financial review
Financial review Annette Borén Chief Financial Officer
Slide 7: Resilient performance during 2023 in challenging markets
FINANCIAL REVIEW HIGHLIGHTS Resilient performance during 2023 in challenging markets Revenue Adjusted operating profit Highlights • Group’s revenue was negatively impacted by a reduction in £308.2m £29.3m demand during 2023, volume reductions were partially offset by selling price increases 2023 308
Slide 8: Bridging performance
FINANCIAL REVIEW HIGHLIGHTS Bridging performance Adjusted operating profit £34.0m £1.0m £29.3m £3.5m £0.2m 2022 EBITDA Depreciation Amortisation 2023 Adjusted EPS 19.11p 3.68p 13.62p 2.34p 0.54p 2022 Adjusted Interest Taxation 2023 operating profit Stelrad Group plc 8
Slide 9: Subdued new build and renovation activity impact revenues
REVENUE Subdued new build and renovation activity impact revenues 2023 2023 2022 Movement Movement Revenue by geographical market £m % of total £m £m % UK & Ireland 139.4 45.2 140.0 (0.6) (0.5) Europe 149.1 48.4 149.7 (0.6) (0.4) Turkey & International 19.7 6.4 26.6 (6.9) (25.8) Total 308.2 100.0 31
Slide 10: Group well positioned for market recovery
FINANCIAL REVIEW HIGHLIGHTS Group well positioned for market recovery Radiator volumes sold Premium panel radiator volumes sold Contribution per radiator 5,121k units 289k units £18.09 2023 5,121 2023 289 2023 18.09 2022 5,404 2022 304 2022 16.01 2021 5,952 2021 346 2021 13.74 2020 4,969 2020 300 20
Slide 11: Fall in adjusted operating profit largely due to IAS 29 depreciation charges
ADJUSTED OPERATING PROFIT Fall in adjusted operating profit largely due to IAS 29 depreciation charges 2023 2022 Movement Movement Adjusted operating profit by geographical market £m £m £m % UK & Ireland 24.5 22.7 1.8 7.8 Europe 9.1 13.9 (4.8) (34.7) Turkey & International 1.3 2.1 (0.8) (34.4) Centr
Slide 12: Strong cash generation with free cash flow of £17.8 million
CASH FLOW Strong cash generation with free cash flow of £17.8 million 2023 2022 Movement £m £m £m EBITDA 41.2 42.2 (1.0) Exceptional items (2.5) (1.8) (0.7) Gain on disposal of property, plant and equipment — (0.2) 0.2 Share-based payments 0.5 0.3 0.2 Working capital adjustments (adjusted for foreig
Slide 13: Group leverage at a comfortable level
NET DEBT Group leverage at a comfortable level 2023 2022 £m £m Revolving credit facility - GBP 46.9 55.3 Revolving credit facility - Euro 10.4 10.6 Term loan 24.5 25.1 Cash (21.4) (22.6) Net debt before finance leases 60.4 68.4 Finance leases 9.9 10.0 Net debt 70.3 78.4 Net debt • At 31 December 202
Slide 14: Outlook and technical guidance
OUTLOOK AND TECHNICAL GUIDANCE Outlook • FY24 trading to date in line with expectations, however markets are expected to remain subdued in 2024 • Contribution per radiator in 2024 will benefit from 2023 reorganisation, tempered by continued cost pressure • Expect some benefits from lower H2 2023 ste
Slide 15: Business review
Business review Trevor Harvey Chief Executive Officer
Slide 16: Four key strategic objectives continue to drive progress
STRATEGIC OBJECTIVES Four key strategic objectives continue to drive progress Growing 1 Improving 2 Optimising 3 Positioning 4 market share product mix routes effectively to market for decarbonisation • Strive for cost leadership • Accelerate upselling to • Adapt quickly to channel • Maximise sales
Slide 17: Stelrad is the #1 player in hydronic heat emitters, with an effective multibrand strategy
GROWING MARKET SHARE 1 Stelrad is the #1 player in hydronic heat emitters, with an effective multibrand strategy Stelrad operates in ten core steel panel radiator markets: 1 6 2 • UK #1 52% share 3 7 • France #1 ↑ 31% share 5 • Belgium #1 35% share 4 • Netherlands #1 44% share 1 Head office Newcastl
Slide 18: Beyond traditional core markets, Stelrad continues to gain traction
GROWING MARKET SHARE 1 OPTIMISING ROUTES TO MARKET 3 Beyond traditional core markets, Stelrad continues to gain traction Stelrad Group steel panel radiator market share 10.1% In Germany, Stelrad moved from #5 to #3 with the acquisition of Radiators SpA Germany 6.0% #3 and 4.1 ppts gain in 2022 6.0%
Slide 19: Design radiator volume has grown by 264% since 2015
IMPROVING PRODUCT MIX OPTIMISING ROUTES TO MARKET 3 Accelerated by the Radiators SpA acquisition, design radiator volume has grown by 264% since 2015 Offering higher added value and margin than standard Total design radiators mix steel panel radiators, we define design radiators as: Volume as % of t
Slide 20: In 2023, premium steel panel radiator mix represented 5.6% of total volume
IMPROVING PRODUCT MIX OPTIMISING ROUTES TO MARKET 3 In 2023, premium steel panel radiator mix represented 5.6% of total volume • As a percentage of all steel panel Premium steel panel radiators mix radiators sold, premium steel Volume as % of steel panel & total radiators sold panel mix 2023 represe
Slide 21: Stelrad continues to expand its portfolio of higher heat output radiators
POSITIONING EFFECTIVELY FOR DECARBONISATION 4 OPTIMISING ROUTES TO MARKET 3 Stelrad continues to expand its portfolio of higher heat output radiators Working with specifiers to support the transition to low temperature heating systems, we added more high heat output products to our range • Vertical
Slide 22: Stelrad is bringing innovative and sustainable new products to market
POSITIONING EFFECTIVELY FOR DECARBONISATION 4 OPTIMISING ROUTES TO MARKET 3 Stelrad is bringing innovative and sustainable new products to market We continue to innovate, providing solutions suitable for the low and zero carbon heating systems of the future • Vento Low Temperature Radiator (“LTR”) –
Slide 23: Progress made as part of our broader ESG strategy
SUSTAINABILITY Progress made as part of our broader ESG strategy In 2023, Stelrad: • Made good progress on safety, with 7% reduction in all incidents • Reductions in lost time severity rate (“LTSR”) and lost time frequency rate (“LTFR”), ahead of targets • Increased energy use from renewable sources
Slide 24: Summary and outlook
Summary and outlook Trevor Harvey Chief Executive Officer
Slide 25: Strong 2023 performance and robust start to 2024
SUMMARY Strong 2023 performance and robust start to 2024 Resilient performance in line with expectations • Increased contribution per radiator, driven by cost and price management • Improved design radiators mix, driven by Radiators SpA acquisition • Gained market leadership in hydronic heat emitter
Slide 26: Questions
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Slide 27: Appendices
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Slide 28: In 2022, Stelrad was market leader in steel panel radiators for the first time
GROWING MARKET SHARE 1 In 2022, Stelrad was market leader in steel panel radiators for the first time • Between 2018 and 2022, European steel panel radiators Top 5 manufacturers' share evolution 2018-2022 Stelrad share increased 25% by 1.1 ppts to 18.8% • Following the Radiators SpA 19.8% acquisitio
Slide 29: Consolidated income statement summary
CONSOLIDATED INCOME STATEMENT SUMMARY 2023 2022 Movement Movement £m £m £m % Revenue 308.2 316.3 (8.1) (2.6) EBITDA 41.2 42.2 (1.0) (2.2) Adjusted operating profit* 29.3 34.0 (4.7) (13.8) • Exceptional items on Group Exceptional items (2.5) (1.8) (0.7) (36.3) restructuring Amortisation of customer r
Slide 30: Disclaimer
DISCLAIMER This presentation is not intended to, and does not constitute or form part of, any offer, invitation or the solicitation of an offer to purchase, otherwise acquire, subscribe for, sell or otherwise dispose of, any securities in Stelrad Group plc or any other invitation or inducement to en