Ibstock Plc · LSE:IBST
Ibstock — FY2019 Earnings Presentation
38 slides from Ibstock's earnings presentation, Mar 3, 2020
Slide 1: 2019 Preliminary Results
2019 Preliminary Results 3 March 2020 1
Slide 2: Disclaimer
Disclaimer The information contained in this presentation has not been independently verified and this presentation contains various forward-looking statements that reflect management’s current views with respect to future events and financial and operational performance. The words “growing”, “scope
Slide 3: Agenda
Agenda 1. OVERVIEW Joe Hudson 2. FINANCIAL REVIEW CEO 3. OPERATIONAL REVIEW 4. STRATEGIC UPDATE Chris McLeish 5. Q&A CFO 33
Slide 4: Overview
Overview FINANCIAL OVERVIEW Total ordinary dividend of 9.7p Revenues Adjusted EBITDA Net debt to EBITDA at 0.7x +5% to +9% to £409m £122m per share in addition to supplementary (excluding IFRS16) dividend of 5.0p per share OPERATIONAL OVERVIEW Clay production volumes New build housing Making good pr
Slide 5: Financial review
(3 wry S Awa Tana ial rev iInanc E
Slide 6: Financial highlights
Financial highlights Year ended 31 December (£m) 2019 2018 Movement Resilient trading performance Continuing operations Revenue 409.3 391.4 +5% Solid revenue growth across both divisions Adjusted EBITDA(1) 122.3 112.4 +9% Adjusted EBITDA up 2%, excluding impact of IFRS16 Adjusted PBT 84.8 84.5
Slide 7: Solid revenue growth across both divisions
Solid revenue growth across both divisions +17.9m (+5%) Group revenue up 5% to £409m Clay division growth reflects positive pricing benefits with volumes slightly lower due to 10.8 409.3 market conditions in H2 7.1 391.4 Concrete revenue growth primarily reflects solid growth in roofing and co
Slide 8: Adjusted EBITDA bridge
Adjusted EBITDA bridge +£9.9m (+9%) Adjusted EBITDA +9% to £122m, reflecting; Revenue growth in Clay division, partly offset by higher energy and maintenance costs 7.1 122.3 4.8 (0.5) (1.5) Concrete profitability reflects softer RMI and infrastructure 112.4 markets, partly offset by £0.7m bene
Slide 9: Strong cash flow supporting growth and returns
Strong cash flow supporting growth and returns Working capital outflow primarily reflects inventory build Year ended 31 December (£m) 2019 2018 Change % Change in Clay division, from historically low levels at start of year Adjusted EBITDA(2) 122 112 +10 +9% Capex reflects higher maintenance spe
Slide 10: Operational review
Operational review 10
Slide 11: Recent market dynamics
Recent market dynamics ‘000 Housing Completions m Brick Market Dynamics m 200 2,600 700 650 146 147 2,400 150 600 2,200 100 550 2,000 50 500 Stock 1,800 450 0 2018 2019 400 1,600 ‘000 Housing Starts 350 200 -8% 1,400 151 300 150 139 1,200 75 250 100 68 -9% 1,000 200 50 0 2018 2019 Domestic Despatche
Slide 12: Market fundamentals remain supportive
Market fundamentals remain supportive • Substantial housing deficit ‘000 215 195 • Government commitment to new house building 175 • Help-to-buy scheme extended to 2023 155 135 • High employment levels, low interest rates and 115 good mortgage availability 95 • First time buyer mortgage approvals at
Slide 13: Strategic progress in Clay
Strategic progress in Clay Year ended 31 December (£m) 2019 2018 Change % Change Revenue 300.5 293.4 +7.1 +2% Adjusted EBITDA 106.7 96.7 +10.0 +10% Margin 36% 33% Good progress with strategic initiatives; Improving our commercial capabilities Maintenance culture Manufacturing output and reli
Slide 14: Concrete update
Concrete update Year ended 31 December (£m) 2019 2018 Change % Change Revenue 108.8 98.0 +10.8 +11% Adjusted EBITDA 21.9 20.6 +1.3 +6% Margin 20% 21% Divisional re-organisation complete Solid trading results despite tougher market conditions Strong growth and market share gain in roofing Int
Slide 15: Concrete division overview
Concrete division overview HOUSE BUILDING INFRASTRUCTURE Revenue: Revenue: Revenue: AESTHETIC PRODUCTS c.£50m STRUCTURAL AND c.£50m RAIL AND CIVILS £10m • Roof tiles LANDSCAPING • Rail • Flooring • Retaining walls and • Walling and cast stone • Lintels civil products • Fencing 15 15
Slide 16: Outlook
Outlook • Market fundamentals remain robust • Political uncertainty resulted in subdued market conditions in the second half of 2019 and a slower start to 2020 • Activity levels anticipated to improve as the year progresses, and as a result, we expect to deliver a stable outcome for the year 16 16
Slide 17: Strategic update
Strategic 17 update
Slide 18: Our strategy to create long term value
Our strategy to create long term value Purpose: To build a better world, by being at the heart of building Vision: Enabling the construction of homes that inspire people to work and live better A purpose-led company 18
Slide 19: Sustainable Performance
Sustainable Performance Developing our leadership position with commitment to ongoing investment and optimisation, to drive world class sustainable performance across our operations. • Sustainability embedded into all aspects of our business with the launch of our 2025 roadmap • Health and Safety ro
Slide 20: Sustainability Roadmap
Sustainability Roadmap Recent Progress Carbon reduction Solar Farm Investment Automated LED lighting Plastics reduction 20
Slide 21: Innovation
Innovation The construction industry continues to evolve, as our customers look to control construction costs and drive efficiency in the build process. We are committed to being at the forefront of innovation as the market evolves, with a clear focus on strengthening our commercial functions, deliv
Slide 22: Over £200m of capital available to deliver growth and shareholder returns
Over £200m of capital available to deliver growth and shareholder returns over the next 5 years Normalised FCF generation Balance Sheet headroom Surplus property disposals £140m EBITDA £122m £150m over £180m 1.5x net debt to EBITDA 5 years £120m £160m c.£30m pa £100m Surplus FCF £140m Further £10m -
Slide 23: Disciplined capital allocation
Disciplined capital allocation Deliver major Return surplus Maintain and Sustainable and organic growth capital to enhance our progressive projects and invest shareholders when existing assets ordinary dividend selectively in appropriate inorganic growth STRONG BALANCE SHEET Net debt to EBITDA ratio
Slide 24: Selective growth
Selective growth Our core business provides a solid platform for future growth, with strong brands, customer relationships and established routes to market. With a strong balance sheet, we have the capacity to invest in both organic growth projects and M&A. ORGANIC PROJECTS ARE SCREENED FOR THE FOLL
Slide 25: Strong pipeline of organic growth projects
Strong pipeline of organic Concrete sites growth projects Clay sites Long history of New wire cut clay brick capacity expansion and manufacturing facility development projects Redevelopment of existing manufacturing Leighton Buzzard 2005 facility at our Atlas site in the Midlands to Throckley 2006 c
Slide 26: Summary
Summary GROW • Organic growth projects • M&A optionality INNOVATE • Commercial excellence • Product innovation SUSTAIN • Sustainability roadmap • Operational excellence UK focused business with strong market positions • Ibstock Clay Opportunities to strengthen our business and drive growth over the
Slide 27: Q&A
Q&A 27
Slide 28: Appendix
Appendix 28
Slide 29: Key investment highlights
Key investment highlights Experienced Market Strong Strong Structural Industry High barriers Multiple growth senior leadership customer financial demand growth structure to entry options management positions service ethic performance team Strong household Vertically integrated High quality, broad Ad
Slide 30: Leading manufacturers of….
Leading manufacturers of…. 30 30
Slide 31: A leading provider of clay and concrete building products
A leading provider of clay and concrete building products End market Sales channel Others Infrastructure 5% Other 1% new build Factors 7% 22% Merchants 46% RMI New build 32% housing 60% Housebuilders direct 27% RMI exposure Key supplier to the Complementary Cross-selling Innovative Opportunity to ad
Slide 32: Brick market dynamics
Brick market dynamics Brick Consumption (billions of bricks) Brick Production and Stock (billions) Domestic Despatches Imports Production Stock 2.5 2.1 2.0 1.9 1.9 1.8 1.8 0.4 0.5 0.3 0.3 1.6 1.6 0.2 1.5 1.6 0.3 1.4 0.1 0.1 0.1 1.3 0.1 0.1 2.0 2.1 2.0 1.7 1.8 1.8 1.6 1.7 1.6 1.6 1.5 0.9 0.7 0.6 0.6
Slide 33: Concrete division key products
Concrete division key products 33
Slide 34: Concrete division revenue analysis
Concrete division revenue analysis END MARKET SALES CHANNEL Infrastructure Others 5% 10% Other new build 10% Housebuilders direct 30% New build housing RMI 56% 29% Merchants 60% Note: (1) Based on FY18 Group revenues | (2) The sales channel reflected in the pie chart does not always reflect the indi
Slide 35: Summary balance sheet
Summary balance sheet 31 December (£m) 2019 2018 Assets PP&E 386 365 Right of Use assets 30 - Intangible 103 101 Non-current assets 519 466 Inventories 84 68 Trade receivables 58 56 Assets held for sale 1 - Current assets 143 124 Total assets 662 590 Payables (88) (92) Lease liabilities (30) - Other
Slide 36: Summary cash flow
Summary cash flow 12December 31 months to 31 December (£m) 2019 2018 Adjusted EBITDA(1) 122 112 Working capital (24) (7) Net interest (3) (4) Tax (13) (10) Post-employee benefits (2) (1) (4) Other (5) (5) Net cash flow from operations 76 82 Total capex (39) (31) Surplus asset disposals 3 16 Acquisit
Slide 37: Adjusted P&L reconciliation 2019
Adjusted P&L reconciliation 2019 Fair Value (£m) Adjusted Adjustments Property Exceptionals Other Reported Revenue 409 - - - - 409 Costs (287) - - (3) - (290) Other - - - - - - EBITDA 122 - - (3) - 119 D&A (26) (9) - - - (35) EBIT 96 (9) - (3) - 84 Finance (3) - - - 1 (2) Tax (18) 2 - 1 (1) (16) PAT
Slide 38: Adjusted P&L reconciliation 2018
Adjusted P&L reconciliation 2018 Fair Value (£m) Adjusted Adjustments Property Exceptionals Other Reported Revenue 391 - - - - 391 Costs (279) - - (3) - (282) Other - - 9 2 - 11 EBITDA 112 - 9 (1) - 120 D&A (16) (8) - - - (24) EBIT 96 (8) 9 (1) - 96 Finance (4) - - - 1 (3) Tax (15) 1 (1) - (2) (17)