Breedon Group Plc · LSE:BREE
Breedon — H1 2021 Earnings Presentation
37 slides from Breedon's earnings presentation, Jul 22, 2021
Slide 1: Breedon Group 2021 Interim Results
y BREEDON BREEDON GROUP 2021 INTERIM RESULTS 22 July 2021
Slide 2: Agenda
y -N AGENDA BREEDON GROUP HIGHLIGHTS Rob Wood, Chief Executive Officer FINANCIAL REVIEW James Brotherton, Chief Financial Officer OPERATIONAL REVIEW & OUTLOOK Rob Wood Q&A 2 2021 Interim Results + July 202
Slide 3: Group Highlights
y NX GROUP HIGHLIGHTS BREEDON Strong trading performance supported by recovery in construction activity Growing momentum in Ireland despite partial lockdown of construction sector Like-for-like revenue 17% and Underlying EBIT 9% ahead of H1 2019 Integration of CEMEX Acquisition ahead of schedule Sus
Slide 4: Financial Review
FINANCIAL REVIEW James Brotherton Chief Financial Officer
Slide 5: H1 2021 Financial Highlights
H1 2021 FINANCIAL HIGHLIGHTS Revenue £600.9m 2020: £335.3m Underlying EBIT £56.4m 2020: £(0.6)m Margin 9.4% (2020 (0.2)%). Profit before tax £46.2m 2020: £(10.1)m ys BREEDON Underlying basic EPS 1.54p 2020: (0.65)p FCF £34.3m 2020: £41.5m Net debt £291.5m 2020: £253.6m Leverage 1.2x (2020 1.7x) ROIC
Slide 6: Progression in Underlying Trading
PROGRESSION IN UNDERLYING TRADING Strong like-for-like revenue growth post COVID H12020 H22020 H12021 H1 2021 vsH12019 vsH22019 ~—- vs H1. 2020 vs H1 2019 GB -26% +9% +61% +19% Ireland -26% +11% +46% +8% Cement -20% +11% +44% +15% Group -24% +10% +54% +17% ys BREEDON
Slide 7: Revenue and EBIT Bridges
REVENUE AND EBIT BRIDGES ys BREEDON Volume driven revenue growth and margin recovery REVENUE BRIDGE £ million +£265.6m 31.9 (16.0) 600.9 2020 Great Ireland Cement Elimination 2021 Britain EBIT BRIDGE £ million +£57.0m (0.6) 2020 Great Ireland Cement Head Office 2021 Britain /Associate EBIT Margin (0
Slide 8: Divisional Performance
DIVISIONAL PERFORMANCE Strong revenue growth across all divisions GB IRELAND CEMENT BREEDON GROUP REVENUE £420.2m LFL vs 2019: +19% H121 120 209.0 H119 UNDERLYING EBIT £36.8m LFL vs 2019: +8% H121 H1 20 fl 7.3) H119 420.2 289.6 MARGIN 8.8% 30.3 36.8 REVENUE £101.1m LFL vs 2019: +8% H121 H120 H119 UN
Slide 9: Input Cost Pressures
Bo, INPUT COST PRESSURES BREEDON Given supportive market conditions, expect to recover over time UK ELECTRICITY CARBON 180 700 600 140 500 400 100 300 60 200 100 20 ) 2018 2019 2020 2021 2018 2019 2020 2021 BITUMEN 180 140 100 60 Source: Bloomberg Note: Charts based on 3 month forward electricity pr
Slide 10: H1 2021 Net Debt and Cashflow
10 H1 2021 NET DEBT AND CASHFLOW Strong trading drives further deleveraging £ million ys BREEDON (318.3) Opening statutory net debt EBITDA 95.8 Working capital (42.8) Income taxes paid (4.6) Net capital expenditure qty @ Inflow Outflow Free Cash Flow +£34.3 million Underlying Other operating Acquisi
Slide 11: Successful Refinancing
n Bo, SUCCESSFUL REFINANCING BREEDON Diversifying our sources of credit and extending our maturity profile 600 2021 Refinancing | | £350 million unsecured RCF 500 £250 million US Private Placement Available £4 million fees and expenses 400 liquidity RCF initial interest rate 2% £358m USPP average ra
Slide 12: Capital Allocation Priorities
ys CAPITAL ALLOCATION PRIORITIES BREEDON UNCHANGED Progressive dividend policy confirmed Interim dividend of 0.5p per share Final dividend not less than 1.0p » » » per share Progressive dividend policy, targeting 40% payout ratio over time Conservative Financial Management Maintain a strong balance
Slide 13: Updated 2021 Technical Guidance
Bo, UPDATED 2021 TECHNICAL GUIDANCE BREEDON Income statement Net interest expense of c.£15m, including £2m relating to IFRS 16 Effective tax rate c.18% £14m non-cash deferred tax charge in relation to UK corporation tax rate change from 19% to 25% Cashflow Working capital normalised during H1, c£40m
Slide 14: Operational Review
ys BREEDON OPERATIONAL REVIEW Rob Wood = Chief Executive Officer ,
Slide 15: UK Market Backdrop
Bo, UK MARKET BACKDROP BREEDON “V” shaped recovery driven by infrastructure and housing activity TOTAL CONSTRUCTION OUTPUT (£bn) 2021 CONSTRUCTION OUTPUT GROWTH FORECAST 15 30% 25% 12 20% 15% 9 10% : of 6 0% 2019 2020 2021 Housing Infra 1&C RMI Total Output Construction PMI averaged 54.7 QI, rising
Slide 16: ROI Market Backdrop
Bo, ROI MARKET BACKDROP BREEDON “W” shaped recovery due to further government restrictions in Q1 TOTAL CONSTRUCTION OUTPUT INDEX 2021 CONSTRUCTION OUTPUT GROWTH FORECAST 180 0% -1% 160 -2% -3% 140 -4% -5% 120 5% -6% 100 “7% -8% 80 -9% 2019 2020 2021 Resi Non-resi Infra Other Total Output Constructio
Slide 17: GB Business Review
17 GB BUSINESS REVIEW Continued recovery in demand, robust activity in residential housing and infrastructure markets Integration of CEMEX assets ahead of schedule - Legal and IT system integration complete - Operations streamlined to improve local customer focus - Asset optimisation underway Good p
Slide 18: Business Reviews: Ireland & Cement
18 BUSINESS REVIEWS IRELAND & CEMENT IRELAND Momentum building in Q2 as government restrictions lifted and tendering activity increased throughout the period Further development of aggregates business in ROI with reopening of Longford quarry Notable contracts - A6 - Dunkettle interchange - CPD Frame
Slide 19: M&A: Continuing to pursue growth opportunities
19 M&A Continuing to pursue growth opportunities Acquisition of Express Minimix - Highly complementary to our existing operations - Enhances our product and service offering for small load ready-mixed concrete - Expands our footprint across North of England and parts of Scotland — Increases our vert
Slide 20: Our Strategy in Action
OUR STRATEGY IN ACTION Good progress with our strategic initiatives in the first half @ SUSTAIN To protect our licence to operate in the long term we must conduct every area of our business as sustainably as possible, for the benefit of all our stakeholders G OPTIMISE The resources we use are scarce
Slide 21: Sustainability Strategy Development
21 Bo, SUSTAINABILITY STRATEGY DEVELOPMENT BREEDON Good progress being made Three ESG Themes Non-executive Director formally responsible for Sustainability and Head of Sustainability appointed PLANET Sustainability successfully embedded into our strategy G¥ Climate change and energy CDH Materiality
Slide 22: Developing a Roadmap and Targets
22 ys DEVELOPING A ROADMAP AND TARGETS BREEDON KPIs identified PLANET PEOPLE PLACES Making a material difference Making a material difference Making a material difference to the environment to society to the built environment C$) Carbon reduction eee Develop and empower a diverse, wm, Products and s
Slide 23: Outlook
OUTLOOK
Slide 24: Summary and Outlook
y NX SUMMARY AND OUTLOOK BREEDON Strong first half trading performance Focused on realising value from the CEMEX Acquisition Further progress with our sustainability strategy Positive outlook for our end markets, particularly infrastructure and housing Underlying EBIT for 2021 now expected to be at
Slide 25: Q&A
Slide 26: Appendix
APPENDIX
Slide 27: History
27 HISTORY 2008 20+ value accretive acquisitions & JVs since 2010 ys BREEDON
Slide 28: A Leading Construction Materials Group
28 ys A LEADING CONSTRUCTION MATERIALS BREEDON GROUP CORE OUTPUTS “20 (2 Network of 100+ 2 \ quarries AGGREGATES _ plants CEMENT across GB and Ireland ADDED-VALUE PRODUCTS AND SERVICES Substantial 200+ plants proportion of core 50+ outputs converted plants ASPHALT by Breedon into bringing margin- CO
Slide 29: Our Investment Case
OUR INVESTMENT CASE SUSTAINABLE BUSINESS Strong corporate governance, with a clear purpose and culture, focused on managing our resources sustainably and maintaining our licence to operate. SUSTAIN ASSET BACKED In excess of 1 billion tonnes of mineral reserves and resources, equivalent to over 40 ye
Slide 30: H1 2021 Product Volumes
30 H1 2021 PRODUCT VOLUMES AGGREGATES million tonnes 15.0 H1 2020 H1 2021 +88% Note: Reported percentage movements are based on non-rounded data ASPHALT million tonnes. H1 2020 H1 2021 +92% @ Great Britain @ Ireland Cement CONCRETE million rm? H1 2020 H1 2021 +75% ys BREEDON CEMENT million tonnes. 1
Slide 31: H1 2021 Income Statement
Bo, H1 2021 INCOME STATEMENT BREEDON £ million 30 June 2021 30 June 2020 Revenue 600.9 335.3 Underlying EBITDA 95.8 32.6 Depletion & depreciation (40.1) (33.1) Underlying operating profit/(loss) 55.7 (0.5) Share of associate and joint ventures 0.7 (0.1) Underlying EBIT 56.4 (0.6) Interest (7.5) (6.4
Slide 32: H1 2021 Balance Sheet
32 H1 2021 BALANCE SHEET £ million 30 June 2021 30 June 2020 Property, plant and equipment 782.1 690.3 Intangible assets 502.8 485.6 Investment in associate and joint ventures 11.4 10.3 Inventories $7.1 511 Trade and other receivables 263.4 146.2 Current tax receivable 2.4 43 Total assets (excluding
Slide 33: H1 2021 Cash Flow
33 H1 2021 CASH FLOW £ million 30 June 2021 30 June 2020 Underlying EBITDA 95.8 32.6 Working capital (42.8) 38.4 Interest paid (4.9) (4.8) Income taxes paid (4.6) (10.0) Other (1.3) (1.0) Net cash from operating activities 42.2 55.2 Acquisition of businesses (4.7) - Net capex (11.1) (15.6) Dividends
Slide 34: MPA Aggregates Volumes (Q1 2021)
Bo, MPA AGGREGATES VOLUMES (Q1 2021) BREEDON million tonnes. 170 150 130 [— (40)% 110 21% 90 ; T , , , , , T T , , , , , T , , 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 Note: Percentages show the % fall from peak to trough and the % recovery of the peak to
Slide 35: MPA Asphalt Volumes (Q1 2021)
Bo, MPA ASPHALT VOLUMES (Q1 2021) BREEDON million tonnes. 28 26 24 22 20 23% 18 16 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 Note: Percentages show the % fall from peak to trough and the % recovery of the peak to trough fall to date Source: MPA member volum
Slide 36: MPA RMX Volumes (Q1 2021)
Bo, MPA RMX VOLUMES (Q1 2021) BREEDON million cubic metres 24 22 20 18 | (40)% 16 4 + (5)% 12 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 Note: Percentages show the % fall from peak to trough and the % recovery of the peak to trough fall to date Source: MPA m
Slide 37: Disclaimer
Bo DISCLAIMER BREEDON The information contained in this presentation document (the “presentation”, which term includes any information provided verbally in connection with this presentation document) does not constitute an offer or solicitation to hold, sell or invest in any security and should not