Slide 1: 2023 Results Presentation, 26 March 2024
26 MARCH 2024
Slide 2: Important notice
This document has been prepared by Forterra plc (the “Company”) solely for use at a Statements in the Presentation, including those regarding the future financial condition, results presentation on 26 March 2024 in connection with the Company’s Results Announcement in of operations, business or othe
Slide 3: Agenda
01 ⎯ Headlines 02 ⎯ Financial Review 03 ⎯ Our Markets 04 ⎯ Strategic Update 05 ⎯ Sustainability 06 ⎯ Outlook Chief Executive Officer Chief Financial Officer 2023 Results Presentation 3
Slide 4: Headlines
⎯ Resilient EBITDA result of £58.1m delivered against extremely challenging backdrop ⎯ Industry brick despatches fell c.30% year on year back to levels last seen in the GFC in 2009 ⎯ Strong management actions during the year will deliver annualised fixed costs savings in excess of £20m ⎯ Part of our
Slide 5: Financial Review
A FINANCIAL REVIEW 2023 Results Presentation
Slide 6: Group results summary
Year ended 31 December * £m 2023 2022 Change Revenue 346.4 455.5 (24.0)% EBITDA 58.1 89.2 (34.9)% EBITDA margin 16.8% 19.6% (280) bps Operating profit / EBIT 38.1 72.7 (47.6)% Profit before tax 31.1 70.6 (55.9)% Earnings per share (pence) 11.4 26.4 (56.8)% Cash flow (used in)/ generated from operati
Slide 7: Income statement
Year ended 31 December* £m 2023 2022 Change Revenue 346.4 455.5 (24.0)% EBITDA - Bricks and Blocks 52.1 85.6 (39.1)% - Bespoke Products 6.0 3.6 66.7% Total 58.1 89.2 (34.9)% EBITDA margin 16.8% 19.6% (280) bps Depreciation and Amortisation (20.0) (16.5) 21.2% Operating profit / EBIT 38.1 72.7 (47.6)
Slide 8: Production and cost management actions
• Production decisions made with reference to market demand expectations, product range, inventory levels and Desford commissioning • Assuming demand in 2024 remains consistent with 2023, our management actions will ensure output is broadly matched with sales, limiting future inventory build • Produ
Slide 9: Bricks and Blocks
• Revenues of £277.4m, 26.2% decrease vs. 2022 (£376.1m) Year ended 31 December * • Decline in sales volumes partially offset by pricing benefit, primarily driven by the significant mid- year price increases implemented in 2022 £m 2023 2022** Change Revenue 277.4 376.1 (26.2)% • Pricing remained res
Slide 10: Bespoke Products
277.4 376.1 2023 2022 • Revenue in the year was £72.7m (2022: restated Year ended 31 December* £84.2m) £m 2023 2022 Change • Floor beam sales volumes decreased in line with Revenue 72.7 84.2 (13.7)% the rest of our product range although hollowcore sales were more resilient, actually increasing EBIT
Slide 11: Operating cash flow
Increase Decrease • Decline in operating cashflow due predominantly to a £31.1m decline in adjusted EBITDA and a significant working capital outflow driven by an increase in inventory • Included within the above is a second half adjusted operating cash inflow of c.£11m 2023 Results Presentation 11
Slide 12: Working capital
• Inventories increased by a total of £52.8m primarily as a result of increases in the quantities of inventory on hand • The movements in receivables and payables are primarily a function of a reduction in activity with lower sales and purchases reduced accordingly 2023 Results Presentation 12
Slide 13: Capital expenditure and cash flow
Year ended 31 December • Decline in operating cashflow due predominantly £m to a £31.1m decline in adjusted EBITDA and a 2023 2022 significant working capital outflow driven by an Adjusted operating cash flow (5.3) 89.0 increase in inventory Payments made in respect of adjusting items (5.9) — • Cape
Slide 14: Capex expectations
Capex expectation Spend to date £m 2023 (2019 - 2023) 2024 2025 Desford 5.2 91.3 3.0 - Wilnecote redevelopment 10.9 17.9 10.0 2.0 Accrington brick slip facility 3.2 3.2 8.0 - Maintenance 14.8 - 6.0 8.0 Total capex 34.1 112.4 27.0 10.0 • 2024 capex expected to be H1 weighted (£16m) • Maintenance cape
Slide 15: Net debt and facilities
• At 31 December 2023 net debt (before leases) At 31 December was £93.2m (2022: £5.9m) • £110m drawn against revolving credit facility £m 2023 2022 Change (RCF) of £170m leaving headroom of £50.4m after deducting letters of credit Cash and cash equivalents 16.0 34.3 (18.3) Loans and borrowings 109.2
Slide 16: Our Markets
2023 Results Presentation 16
Slide 17: Housing starts vs government target
Housing starts vs. government target 300,000 250,000 200,000 Starts 150,000 100,000 50,000 • TBC • TBC 0 2001 2002 2003 [WIP] 2004 2005 2006 2007 2008 2009 2010 Starts 2011 2012 2013 2014 2015 2016 Government target (less conversions) 2017 2018 2019 2020 2021 2022 2023 2024F 2025F • Average number o
Slide 18: Brick market: housing, imports and inventory
600 570 24% 600 25% 22% 500 23% 500 23% 20% 22% 400 400 329 15% 21% ‘000 homes 12% Bricks (m) Bricks (m) 300 300 166 163 561 20% 10% 200 19% 200 19% 134 304 129 125 5% 100 100 120 18% 0 17% 0 0% 2022 2023 2024 Dec 2022 Dec 2023 2022 2023 Starts Completions Imports % of market Inventory % of market S
Slide 19: UK brick industry capacity
Evolving domestic brick industry capacity Forterra capacity Increase Forterra Decrease Others Demand (normalised) Source: Forterra estimates Industry capacity was rationalised during the global financial crisis with Forterra playing the leading role in this. Despite current and announced capacity in
Slide 20: Strategic Update
2023 Results Presentation 20
Slide 21: Our strategy
Our strategy supports the delivery of our purpose, recognising the key role our products play in shaping the built environment. Make our current business even better than Provide the products and solutions for the Create an engaged, healthy and safe Leave the lightest touch on the world we it is tod
Slide 22: Strategy: commercial and manufacturing excellence, brick slips
▪ Commercial Excellence: optimising our performance through new ▪ Ambitious targets to develop a leadership position in brick slips, and product development, digital and service innovation and optimisation associated façade systems by capitalising on organic and potential of our route-to-market mode
Slide 23: Sustainability
2023 Results Presentation 23
Slide 24: Carbon emissions performance
• Remain committed to net zero and our interim targets that support achieving this • 13% reduction in absolute emissions in 2023 (20% vs. 2019) driven by reduced output • Carbon emissions intensity increased in both clay (+2%) and concrete (+23%), driven by inefficiencies in reduced production, prod
Slide 25: Sustainable innovation and renewable energy
• Our development work across 2023 to • Creating ‘as much from less’ is the target of • Sector-leading commitment in prove the viability of calcined clay from our innovation team, who continue to renewable energy generation through waste bricks as an alternative investigate how we can produce the li
Slide 26: Outlook
2023 Results Presentation 26
Slide 27: Outlook
• The outlook for our industry remains subject to considerable uncertainty and, with a general election expected in 2024, demand is anticipated to remain subdued in the near term • Trading conditions at the beginning of 2024 continued to be challenging with Department for Business and Trade figures
Slide 28: Appendix
2023 Results Presentation 28
Slide 29: Appendix
2023 Results Presentation 29
Slide 30: Summary balance sheet
Period ended 31 December £m 2023 2022 Change Intangible assets 19.2 23.6 (4.4) Property, plant and equipment 249.7 233.7 16.0 Right-of-use assets 24.1 18.1 6.0 Derivvative asset 5.0 — 5.0 Total non-current assets 298.0 275.4 22.6 Current assets Inventories 95.8 43.0 52.8 Trade and other receivables
Slide 31: Forterra plc contact details
Forterra plc 5 Grange Park Court, Roman Way, Northampton NN4 5EA Tel: 01604 707600