Sig Plc · LSE:SHI
Sig — Sheffield Insulations Group — FY2022 Earnings Presentation
36 slides from Sig's earnings presentation, Mar 8, 2023
Slide 1: SIG plc FY22 Results
SIG plc FY22 Results 8 March 2023
Slide 2: FY22 Results – Agenda
FY22 Results – Agenda Introduction 3-7 Gavin Slark Financial Results 9-18 Ian Ashton Business Review 20-24 Ian Ashton Summary 26-27 Gavin Slark 2
Slide 3: FY22 Results Highlights
FY22 Results Highlights £2,744.5m Revenue Good financial Operational performance progress momentum +17%1 • Good revenue growth • France continuing strong £80.2m performance with margin >5% • Improved profitability Operating • Germany and UK Interiors: >250bps Profit2 • Return to positive FCF yoy mar
Slide 4: Pan-European presence
Pan-European presence Geographically diversified EU 58% of Revenue UK 42% of Revenue EU 68% of Profit1 UK 32% of Profit1 Poland Poland 8% 10% Ireland 4% Ireland Benelux 6% 4% France 35% UK 42% Germany Revenue Germany Operating Profit1 17% by region 17% by region FY22 FY22 France UK 25% 32% 4 Note: 1
Slide 5: Specialist building products
Specialist building products Interiors and exteriors product categories Interiors 65% Exteriors 35% • Structural Insulation • Pitched roofing • Technical Insulation • Flat roofing • Interiors & Ceilings • Roofing accessories • Drylining • Timber FY22 • Plastering • Facades Revenue1 • Building & Cons
Slide 6: OpCo Margin Performance
OpCo Margin Performance Operating Margin Strategic Focus Med-Term Target2 20201 2021 2022 Ireland 1.0% 3.2% 5.5% • Develop mix: Grow own label, higher margin categories Opportunity in France 3.0% 4.8% 5.2% all OpCos to • Strengthen specialism, further improve technical expertise and value- margin Po
Slide 7: Initial Impressions
Initial Impressions • Significant progress in last two years • Strong positions in EU and UK in SIG performance Pan-European • Regional end-market diversification Good 2 year • Strengthened financial and operating presence progress positions • >70 year trading history in France and >60 year in UK •
Slide 8: Financial Results
Financial Results Ian Ashton
Slide 9: Key financials
Key financials H1 H2 FY FY £'m 2022 2022 2022 2021 • Strong FY revenue growth Revenue 1,359 1,386 2,745 2,291 • Robust gross margin LFL sales 21.2% 13.1% 17.0% 24.3% Gross profit 356 355 711 602 • Doubling of operating profit Gross margin 26.2% 25.6% 25.9% 26.3% Underlying operating profit 42 38 80
Slide 10: Revenue bridge by OpCo – growth across the portfolio
Revenue bridge by OpCo – growth across the portfolio £21m £13m £90m Acquisitions £24m £105m LFL growth £51m £67m £24m £62m £23m £195m £2,745m LFL vs 2021 LFL: £2,291m 17% 23% 7% 12% 15% 16% 28% 25% 24% 2021 UK UK France France Germany Poland Benelux Ireland FX 2022 Interiors Exteriors Interiors Exte
Slide 11: Operating profit bridge by OpCo
Operating profit bridge by OpCo £1.8m £1.9m £3.2m £4.6m £13.3m £6.6m £1.1m £6.3m £16.8m £80.2m £41.4m 2021 UK UK France France Germany Poland Benelux Ireland Head Office 2022 Interiors Exteriors Interiors Exteriors • UK Interiors and Germany the key year-on-year profit drivers • UK Exteriors reflect
Slide 12: Profitability progression
Profitability progression Gross margin Operating costs1 Operating margin 26.3% 24.5% 25.9% 23.0% 2.9% 1.8% 2021 2022 2021 2022 2021 2022 Operating margin (LTM rolling 2019-22) 4% • Gross margin slightly lower as expected following normalisation in UK Exteriors vs PY 2% • Continued reduction in opex
Slide 13: Free cash flow
Free cash flow Return to positive FCF after 4 years • Improved cash position supported by growth in underlying EBITDA • Modest working capital outflow despite high inflation, with some expected normalisation of inventory after 2021 £29m investment; normal seasonal impact in H1/H2 £14m • Working capi
Slide 14: Cash flow
Cash flow £'m FY 2022 FY 2021 Underlying operating profit 80 41 • Lease payments rising with growth and inflation Add back: Depreciation & Amortisation 76 72 Underlying EBITDA 157 113 • Capex primarily branch maintenance, renovation and Working capital movements (14) (85) HSE Repayment of lease liab
Slide 15: Balance sheet
Balance sheet Leverage reducing; good long-term funding Group Liquidity & Leverage Long term debt profile £330m Leverage1 Leverage1 3.3x 3.2x 2.8x Core Group debt facilities with maturity in 2026 £280m 2.8x £230m £220m 2.3x • Debt refinanced in November 2021 £195m £180m £50m £90m 1.8x • €300m Senior
Slide 16: Acquisitions
Acquisitions FY 2022 Miers Construction Products Limited • A leading UK supplier of specialist construction accessories • High margin categories, with exposure to growing infrastructure markets • Synergies with existing SIG Construction Accessories • Acquired July 2022 for £35m total potential consi
Slide 17: Capital allocation and value creation
Capital allocation and value creation • Investment in new branches and new capabilities, focused on high margin categories Organic growth • Investment in existing network and fleet to optimise efficiency, growth and sustainability • Inventory to drive new product focus areas Criteria for acquisition
Slide 18: Technical guidance FY23
Technical guidance FY23 • Inflation: • Some further input cost inflation expected in 2023, notably H1 • Year on year inflation impact expected to be materially lower than seen in 2022 • Capex expected to be up to c£20m • Net interest charge expected to be £32-34m • Tax rate: • EU operations expected
Slide 19: Business Review
Business Review Ian Ashton
Slide 20: France
France France Exteriors Revenue Operating margin £600m 4.3 % 5.1 % 6.0 % France Exteriors: 4.0 % £500m 2.5 % 2.4 % £466m • 2022 LFL Revenue up 15% (H1: 18%; H2: 11%) £406m 2.0 % £400m £342m £345m 0.0 % • Growth in ‘shop in shop’ accessories sales £300m (2.0)% (4.0)% • Own label mix increase £200m (6
Slide 21: Germany
Germany Germany • 2022 LFL Revenue up 16% (H1: 17%; H2: 15%) Revenue Operating margin • Strengthening market position, despite market £800m 3.7 % volume decline in some categories 4% £700m 1.2 % 0.9 % £600m 0.1 % 2% • Successful turnaround under Alfons Horn’s new £500m £458m 0% leadership since late
Slide 22: UK Interiors and UK Exteriors
UK UK Interiors Revenue Operating margin £1,000m 5% UK Interiors: 1.5 % 2.0 % £900m (0.5)% £800m £703m 0% • 2022 LFL Revenue up 23% (H1: 24%; H2: 22%) £700m £600m £534m (12.7)% £507m (5)% • Industry leadership regained since 2020 £500m £400m £357m (10)% • Back to profitability, on plan - more to do
Slide 23: Branch network investment
Branch network investment # Trading Sites Reversed footprint decline • 16 new branches since 20201 (5 UK, 4 Poland, 3 Benelux, 2 France, 2 Ireland) 500 • 15 branches acquired since 2020 • Several relocations to better sites Continuing branch network expansion 450 497 • Including further network expa
Slide 24: ESG
ESG 2022 Good progress against our long-term sustainability commitments Our Commitments Measure Change FY 2022 FY 2021 Net Zero Carbon by • Net zero carbon emissions (MT)1 Improved (9.6%) 43,328 47,948 2035 • Own fleet mix by fuel type Improved 24% 19% (% electric/hybrid)2 Zero SIG waste to landfill
Slide 25: Summary
‘ acces Depot 30N fEMENT 3ATOIRE. my) Summary = Gavin Slark
Slide 26: Growth drivers
Growth drivers A portfolio benefiting from industry growth trends and opportunities • 40% of global emissions from building and construction Sustainable • Europe’s leading • >70% of EU homes must be renovated for net zero goals independent supplier of c80% Sales construction • European governments’
Slide 27: Summary & Outlook
Summary & Outlook FY 2022 Results FY 2023 Outlook Longer term • Good performance and • Weaker market conditions, • Reiterate medium term target of improved operations across varying across our geographies 5% Group operating margin portfolio • Full year revenue: • Increasingly meaningful cash • Expec
Slide 28: Q&A
Q&A SIG FY22 Results
Slide 29: Appendix
Appendix SIG FY22 Results
Slide 30: Underlying financials by segment
Underlying financials by segment LFL Operating Change vs Operating Change vs Revenue vs 2021 profit/(loss) PY margin PY UK Interiors £703m 22.9% £14.3m £16.8m 2.0% 2.5% UK Exteriors £445m 6.7% £18.4m £(6.6)m 4.1% (1.8)% Total UK £1,148m 15.4% £32.7m £10.2m 2.8% 0.4% France Interiors £218m 12.4% £12.
Slide 31: Other items
Other items PBT Cash Impact Impact £'m 2022 2021 2022 Amortisation of acquired intangibles (4.7) (4.7) - Impairment charges (15.8) (10.2) - Net restructuring costs (0.4) (3.7) - Costs related to acquisitions (2.5) (1.5) (1.9) Legal and professional fees for acquisitions and related earn out recognit
Slide 32: Net debt bridge
Net debt bridge £13m £35m £101m £157m £43m £15m £15m £14m £444m £365m Opening Underlying Working Cash Capital Interest Lease additions/ Provisions/ Acquisitions Closing net debt EBITDA Capital exceptionals Expenditure and renewals FX/Other net debt (post-IFRS 16) Tax (post-IFRS 16) • Net debt benefi
Slide 33: Number of trading sites in 2022
Number of trading sites in 2022 31 Dec 31 Dec Opened Acquired 2021 2022 UK Interiors 53 - 7 60 UK Exteriors 115 1 - 116 Total UK 168 1 7 176 France Interiors 38 - - 38 France Exteriors1 98 2 - 100 Total France 136 2 - 138 Germany 51 - 1 52 Benelux 15 2 - 17 Ireland 9 2 - 11 Poland 45 2 - 47 Total Gr
Slide 34: Poland & Ireland
Poland & Ireland Poland Revenue Operating margin £300m 4.6 % Poland: 3.4 % 2.8 % 4.0 % £250m 1.3 % £231m 2.0 % • 2022 LFL Revenue up 28% (H1: 44%; H2: 16%) £200m £187m 0.0 % £156m £150m • Market-leading ‘omnichannel’ services continue £150m (2.0)% to support profit growth and productivity (4.0)% £10
Slide 35: Benelux
Benelux Benelux Revenue Operating margin Benelux: £140m 5.0 % 6.0 % • 2022 LFL Revenue up 25% (H1: 20%; H2: 31%) £120m £116m 2.7 % 4.0 % £103m £100m £92m • Revenue benefited from increased volume and £92m 2.0 % inflation £80m 0.0 % £60m • Management team appointed mid-2021 making (2.6)% (2.0)% £40m
Slide 36: Disclaimer
Disclaimer This presentation may include certain forward-looking statements, beliefs or opinions, including statements with respect to SIG plc’s business, financial condition and results of operations. These forward-looking statements can be identified by the use of forward-looking terminology, incl
Sheffield Insulations Group — FY2022 Earnings Presentation on 6ix