Luceco Plc · LSE:LUCE
Luceco — H1 2019 Earnings Presentation
20 slides from Luceco's earnings presentation, September 2019
Slide 1: 2019 Half Year Results Presentation
2019 Half Year Results Presentation September 2019
Slide 2: Agenda
Agenda Introduction and highlights John Hornby Financial overview Matt Webb Strategy, current trading & outlook John Hornby Questions Luceco plc | Half Year Results Presentation 2019 2
Slide 3: Introduction
Introduction Who we are What we do • Luceco is a manufacturer and • Luceco operates an integrated model, HY Revenue Established distributor of high quality and which includes wholly‐owned £82.7m UK and International innovative wiring accessories, LED manufacturing and product 2018: £75.1m sales netw
Slide 4: Highlights
Highlights Operational improvements deliver sustained progress • Financial highlights: • Strong revenue growth of 10.1% (8.1% like‐for‐like) • Excellent conversion of revenue growth into adjusted operating profit growth • Return to target leverage: Net debt reduced to 1.5 times LTM adjusted EBITDA •
Slide 5: Financial overview
Financial overview Luceco plc | Half Year Results Presentation 2019 5
Slide 6: Income statement
Income statement Adjusted Adjusted Adjusted • 10.1% revenue increase a product of: £m H1 2019 H1 2018 FY 2018 Revenue 82.7 75.1 163.9 • 8.1% like‐for‐like increase Growth / (Decline) % 10.1% (0.3)% (2.2)% • (1.1)% from US closure Gross profit 28.9 20.5 50.6 • 3.1% from currency movement Gross margin
Slide 7: UK macroeconomic environment
UK macroeconomic environment UK GPD Growth By Quarter (%) UK Construction Annual Growth (%) UK Business Confidence Index 7.1% 0.7% 0.7% 0.5% 0.5% 0.5% 4.1% 0.4% 0.4% 0.4% 0.3% 0.3% 11.4 0.2% 0.2% 0.3% 0.1% 7.0 6.7 0.8 (8.0) (3.4) (1.0) (0.2) (8.7) (10.2) (9.8) (0.2%) (12.3) (0.3)% (16.4) (16.6) Q1‐1
Slide 8: Revenue
Revenue Revenue bridge (£m) UK Retail Growth* % UK Professional Growth* % 33.5% 17.0% 12.3% 18.7% 9.8% 8.3% 3.1% 10.1% 0.2% 8.1% L4L (2.2)% 0.5% (1.1)% 4.9% (15.4)% (21.7)% H1‐17 H2‐17 H1‐18 H2‐18 H1‐19 H1‐17 H2‐17 H1‐18 H2‐18 H1‐19 2.7% 82.7 Europe Growth* % Rest of World Growth* % 75.0% 83.2% 67.2
Slide 9: Gross margin bridge (%)
Gross margin bridge (%) Adjusted gross margin bridge (%) • Gross margin recovery against a weak comparative • Gross margin of 35.0%: 35.0% • 7.7% better than H1 2018 1.5% • 1.1% better than H2 2018 3.8% • Important benefit from product cost savings: • Factory headcount reduced by 8.2% (average YOY)
Slide 10: Profitability rebuilt in challenging market conditions
Profitability rebuilt in challenging market conditions Adjusted gross margin 2017 to 2019 (%) • Gross margin: 35.0% • Recovery underlines strength of our market position Prior full year peak 33.9% = 30.3% 31.9% (FY2016) • On track to deliver a new full year peak 26.4% 27.3% • Margin expansion will b
Slide 11: Product cost savings
Product cost savings Example Product Cost Savings -67% -42% -25% Quarto Alfresco Deco -52% -37% -£500k pa Hellvellyn Fortis Packaging Luceco plc | Half Year Results Presentation 2019 11
Slide 12: Chinese factory efficiencies
Chinese factory efficiencies China Headcount • Chinese factory produces circa 50% of products sold – a key driver of Group profitability • Downturn in Group performance in 2018 used as the catalyst for a step change in factory efficiency: 30% improvement in 2 years • Key drivers: • Focusing on effic
Slide 13: Segmental results
Segmental results Adjusted Adjusted • Performance improvement across all segments £m H1 2019 H1 20181 Wiring Accessories • Wiring Accessories: Revenue 34.1 31.2 Growth % 9.3% • Established, high quality business generating the Operating profit 5.9 1.1 majority of the Group’s profits Operating margin
Slide 14: Balance sheet
Balance sheet H1 H1 FY Change vs • Capex spend remains modest: £m 2019 2018 2018 FY 2018 • Ample factory capacity Intangible assets 23.1 23.8 23.3 (0.2) Tangible assets 22.3 23.8 21.5 0.8 • Competitive product range Non‐current assets 45.4 47.6 44.8 0.6 • Working capital remains under tight control:
Slide 15: Cash flow
Cash flow H1 H1 • Operating cash conversion reduced by repayment of non‐ £m 2019 2018 Change recourse debt factoring – underlying cash conversion of Adjusted operating profit 7.2 ‐ 7.2 90% Adjusted depreciation and amortisation 3.4 2.4 1.0 • Net capital expenditure equal to 1.7% of revenue – below A
Slide 16: Strategy and outlook
Strategy and outlook Luceco plc | Half Year Results Presentation 2019 16
Slide 17: Strategy update
Strategy update 1. Increase sales to professional customers 2. Increase sales to international customers 3. Enter new markets that are synergistic & improve international profitability with our existing business Increased share of a challenging UK market Overseas business contributes first net profi
Slide 18: Current trading & outlook
Current trading & outlook Current trading: • Low single digit revenue growth • Further gross margin expansion • Overheads well controlled • Early Q4 order book now visible, but order conversion will be affected by Brexit Outlook: • Good H1 numbers reflect a range of operational improvements • These
Slide 19: Questions
Questions Luceco plc | Half Year Results Presentation 2019 19
Slide 20: Disclaimer
Disclaimer This presentation and information communicated verbally to you may contain certain projections and other forward‐looking statements with respect to the financial condition, results of operations, businesses and prospects of Luceco plc. These statements are based on current expectations an