Macfarlane Group Plc · LSE:MACF
Macfarlane — H1 2024 Earnings Presentation
21 slides from Macfarlane's earnings presentation, Aug 1, 2024
Slide 1: 2024 Interim Results
aS FARLANE GROUP 2024 Interim Results f
Slide 2: Overview
Overview 2 • Executive Summary • H1 2024 Results/Cash Flow • Business Review • Packaging Distribution • Manufacturing Operations • Pension Scheme • Conclusions • Appendix- Background Information
Slide 3: Executive Summary
Executive Summary 3 H1 2024 H1 2023 £m £m £m Adjusted operating profit (AOP) * 12.5 12.8 Adjusted profit before tax (APBT) * 11.6 12.0 Profit before tax (PBT) 9.7 10.0 * Before charging amortisation (H1 2024: £2.2m; H1 2023: £2.0m) and crediting deferred contingent consideration adjustments (H1 2024
Slide 4: Resilience
Resilience 4 PBITA Focus and depth of Breadth of customers Value added expertise in protective and markets served proposition…. packagingBank debt Pre-tax ROCE Pension surplus Range of long established supplier Diluted EPS Performance Driven Dividend cover Bespoke product and Culture service range r
Slide 5: Financial Summary – H1 2024
Financial Summary – H1 2024 5 Revenue APBT* AOP* Revenue and profit 8% 3% 2% Pre-tax ROCE Bank funds Pension surplus Returns and balance sheet ▲ ▲ 17% £0.8m £10.2m Diluted EPS** Dividend cover*** Dividend per share EPS and dividend ▲ 4% 4.7x 0.96p * Before charging amortisation (H1 2024:
Slide 6: Income Statement
Income Statement 6 H1 2024 H1 2023 £m £m Revenue 129.6 141.6 Gross Profit 51.5 [39.7%] 51.3 [36.2%] Operating expenses (39.0) (38.5) Adjusted operating profit 12.5 12.8 Amortisation and deferred contingent consideration adj. (1.9) (2.0) Operating profit 10.6 10.8 Interest (0.9) (0.8) Profit before t
Slide 7: Cash Flow
Cash Flow 7 H1 2024 H1 2023 £m £m EBIT 10.6 10.8 DA 7.1 6.7 EBITDA 17.7 17.5 Working Capital 1.1 6.4 Lease Obligations (4.2) (3.5) Interest (1.1) (1.1) Tax (3.4) (2.2) Acquisitions (4.1) (11.4) Net capital expenditure (1.4) (1.3) Pension 0.2 (0.6) LTIP adj. 0.1 0.3 Purchase of own shares (0.4) - Div
Slide 8: Capital Allocation
Capital Allocation 8 Priorities Approach H1 2024 Outcomes Working capital managed against Management of working capital and Cash inflow of £0.3m benchmark number of days. Capital 1 investment in capital expenditure to expenditure prioritised (i) essential/ support organic growth Capital expenditure
Slide 9: Packaging Distribution
Packaging Distribution 9 £m H1 2024 H1 2023 • Organic revenue reduced by 13% versus Revenue 110.9 124.0 H1 2023, with subdued demand from existing customers and price deflation Gross margin 42.0 [37.9%] 42.4 [34.2%] • Good contribution from Gottlieb Operating expenses 32.7 33.0 acquired in April 202
Slide 10: Packaging Distribution
Packaging Distribution 10 Revenue Change 2024 H1 vs 2023 H1 -10.6% -4.0% Revenue reduced in 2024 H1 vs 2023 H1 -10.6% -8.6% Organic contraction - 12.6% : • Weak demand • Customer churn £124.0m +2.0% • Price deflation Acquisitions 2.0% positive contribution to revenue change: £110.9m • Gottlieb • All
Slide 11: Packaging Distribution
Packaging Distribution 11 H1 2024 H1 2023 £m % of Sales £m % of Sales Employee costs 17.7 15.9% 18.0 14.5% Transport (excluding employee costs) 3.4 3.1% 3.3 2.7% Utility costs 0.5 0.5% 0.7 0.5% IT 1.4 1.3% 1.4 1.1% Other 9.0 8.1% 9.4 7.7% Overheads (pre acquisitions) 32.0 28.9% 32.8 26.5% Acquisitio
Slide 12: Packaging Distribution – Raw Material Price Movements
Packaging Distribution – Raw Material Price Movements 12 £2,100 £850 £825 £2,000 £800 £775 £1,900 £750 £725 £1,800 £700 £675 £1,700 £650 £625 £1,600 £600 £575 £1,500 £550 £1,400 £525 £500 £1,300 £475 £450 £1,200 £425 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 2021 2021 2022 2022 2022 2022 2023 2023 2023 20
Slide 13: Packaging Distribution Acquisitions
Packaging Distribution Acquisitions 13 Acquisition Location Year Sales EBITDAx Placing price Integrated Lane Reading 2014 £3m 5-6x N/A ✓ Network Wolverhampton 2014 £9m 5-6x Sep-14 37.5p ✓ One Bingham 2015 £5m 5x N/A ✓ Colton Teesside 2016 £3m 5x N/A ✓ Edward McNeil Glasgow 2016 £3m 5x N/A ✓ Nelsons
Slide 14: Packaging Distribution Action Plan for 2024-2026
Packaging Distribution Action Plan for 2024-2026 14 Environmental New Business Growth Cost Inflation Sourcing Pricing Challenge Fully utilise benefits of Improve productivity to Strengthen partnerships Leverage skills/ Maintain close Significant Six Programme offset salary inflation in an with key s
Slide 15: Manufacturing Operations
Manufacturing Operations 15 • 6% increase in revenue due to: • solid contribution from B&D and Suttons £m H1 2024 H1 2023 acquired in 2023: offset by Revenue * 21.3 20.2 • organic reduction of 3% primarily due to price deflation Gross margin 9.4 [44.3%] 8.9 [44.2%] • Partnership with Distribution co
Slide 16: Manufacturing Operations Acquisitions
Manufacturing Operations Acquisitions 16 EBITDA Acquisition Location Year Sales Placing price Integrated x GWP Swindon/Salisbury 2021 £13.1m 5.5x N/A Ongoing Suttons Chatteris 2023 £7.4m 5x N/A Ongoing B&D Group Southampton 2023 £2.6m 5.5x N/A Ongoing Polyformes Leighton Buzzard 2024 £9.3m 5x N/A On
Slide 17: Manufacturing Operations Action Plan for 2024-2026
Manufacturing Operations Action Plan for 2024-2026 17 New Business Salary Inflation In House Supply Environmental Challenge Targeted sector growth: Improve productivity to offset Strengthen in-house supply Support our customers in • Medical salary inflation in an increasingly relationship with Distr
Slide 18: Reducing our Impact / Supporting our Customers / Our Colleagues
18 Reducing our Impact Supporting our Customers Our Colleagues & the Doing Business the Right Community Way • 9 Fully electric trucks now • Launched our World Class • Joined the UN Global • Launched our new operational in the fleet Sales Training Academy Compact for responsible Sustainability Report
Slide 19: Pension Scheme - £m Surplus
Pension Scheme - £m Surplus 19 £m H1 H1 H1 H1 2024 2023 2023 Investments (£m) 2024 2023 2023 Opening surplus 9.9 10.2 10.2 Multi-asset Diversified Fund 4.9 12.3 10.2 Securitised Credit Funds 17.4 - 13.0 Administration costs/interest income - 0.3 0.4 Multi-asset Credit Funds 10.0 1.0 9.8 Contribution
Slide 20: Conclusions
Conclusions 20 • Responding to challenging market conditions in H1 2024 through: • Improvement in new business growth • Effective management of deflation in pricing • Actions to control operating costs • Execution of one quality acquisition- Allpack Direct • Demand continues to be weak at the start
Slide 21: Macfarlane Business Case
Macfarlane Business Case Strongly focused A simple, Good market A track record operating flexible and positions with of performance companies with resilient growth and clear plans differentiated business model potential to sustain growth propositions