Forterra Plc · LSE:FORT
Forterra — H1 2017 Earnings Presentation
35 slides from Forterra's earnings presentation, June 2017
Slide 1: Forterra plc Results Presentation Half year ended 30th June 2017
plc Forterra plc Results Presentation Half year ended 30th June 2017
Slide 2: Disclaimer
Disclaimer This document has been prepared by Forterra plc (the “Company”) solely for use at a presentation in connection with the Company’s Results Announcement in respect of the year ended 30 June 2017. For the purposes of this notice, the presentation (the “Presentation”) shall mean and include t
Slide 3: Forterra at a glance
Forterra at a glance Revenue by segment - H1 2017 (%) Leading UK producer of Focus on bricks and blocks Clay Bricks 49% manufactured masonry products with complementary range of Concrete Blocks 27% bespoke clay & concrete products Bespoke Products 24% Revenue by end use - H1 2017 (%) Sole manufactur
Slide 4: Highlights
Highlights • Double digit increase in brick and block revenue reflecting good demand from the new build residential market • EBITDA ahead of prior year comparative due to higher volumes and increased prices which mitigated higher input costs, partially offset by sales mix • Result included budgeted
Slide 5: Financial highlights
Financial highlights £m (pro-forma basis) 2017 H1 2016 H1 Change 2016 FY Revenue 162.7 146.0 11.4% 294.5 EBITDA before exceptionals 38.7 38.3 1.0% 69.4 EBITDA margin % 23.8% 26.2% (240bps) 23.6% PBT before exceptionals 31.4 30.4 3.3% 53.1 EPS before exceptionals (pence) 12.6 12.0 5.0% 21.0 Operating
Slide 6: Pro-forma adjustments
Pro-forma adjustments £m 2017 H1 2016 H1 2016 FY EBITDA before exceptionals 38.7 39.5 70.6 Additional PLC costs in 2017 - (1.2) (1.2) EBITDA before exceptionals (pro-forma basis) 38.7 38.3 69.4 Depreciation & amortisation (5.1) (4.9) (10.4) Operating profit before exceptionals (pro-forma basis) 33.6
Slide 7: EBITDA bridge
EBITDA bridge 45 4.0 (1.4) 39.5 (1.2) (0.5) 40 38.7 (1.7) 36.6 35 £m 30 25 20 2016 H1 Plc costs Stand-alone Rebased Volume/mix/ Distribution Inflation 2017 H1 EBITDA costs 2016 price (net of costs & other EBITDA (published) H1 EBITDA higher changes input costs) • Investment made in specific overhead
Slide 8: Cash flow
Cash flow (8.0) 40 1.2 (3.0) (2.0) 30 (3.7) (0.3) £m 31.9 20 38.7 10 22.9 0 EBITDA Working Non-cash Operating Capital Interest Tax Other Reduction before capital items cash flow Expenditure Paid Paid items in net debt exceptional before items exceptional items • Strong operating cash flow generation
Slide 9: Balance Sheet and Net Debt
Balance Sheet and Net Debt £m 30-Jun-17 31-Dec-16 Intangible assets 13.9 13.7 Property, plant and equipment 144.5 147.2 • Further reduction in net debt from Deferred tax asset 0.1 0.4 £92.3m at year end 2016 to £69.4m Total non-current assets 158.5 161.3 due to strong cash generation Current assets
Slide 10: New debt facility
New debt facility New IPO facility New facility agreed in July Term Loan - £140m 2017 with a group of 5 RCF £150m £30m international banks (HSBC, Santander, RBS Natwest, Total Committed £150m £170m Lloyds and Bank of Ireland) Accordion £50m - Term July 2022 April 2021 Margin range 125 - 225 bps 150
Slide 11: Total working capital (£m)
Trade working capital 140 Total Trade working capital breakdown 120 working capital Inventory 100 £21m £16m Trade & other receivables Total working capital (£m) 80 Accruals & other payables 60 37 39 Trade payables 40 20 46 32 June 2017 Dec 2016 0 Inventory days* 78 83 (29) Debtor days* 35 39 (20) (3
Slide 12: Financial summary
Financial summary • Good progress in the period, supported by continued strength of new build market • Strong cash generation, with operating cash conversion of 86% and double digit free cashflow yield • Robust balance sheet, with reduction in Net debt:EBITDA to 1.0 times • New RCF facility will pro
Slide 13: Business review
Business review Business review 13
Slide 14: Bricks and Blocks review
Bricks and Blocks review £m 2017 H1 2016 H1 % Change 2016 FY Revenue 123.7 108.7 13.8% 221.3 EBITDA before exceptionals (pro-forma) 35.7 34.8 2.6% 62.7 EBITDA margin % (pro-forma) 28.9% 32.0% (310bps) 28.3% • Strong revenue growth reflecting good demand from new build market and relatively weaker co
Slide 15: Bricks and Blocks – Claughton Dryer project
Bricks and Blocks – Claughton Dryer project • Claughton dryer upgrade commenced April 2017. • Project completed on schedule with total cost expected at £3.3m, £0.2m lower than the initial estimate • Claughton kiln was re-lit in last few weeks and production will resume in H2 • Production efficiency
Slide 16: London Brick Anniversary video
London Brick 140 Anniversary video 16
Slide 17: Bricks and Blocks – London Brick 140th anniversary year campaign
Bricks and Blocks – London Brick 140th anniversary year campaign 420844 LONDON BRICK DUAL PROMO POSTERS STAGE 11 PR.pdf 1 18/05/2017 13:11 An awareness campaign of the most iconic brick • Multi Layered campaign THERE’S ONLY brand in the UK has targeting merchants, builders injected real impetus and
Slide 18: Bespoke Products review
Bespoke Products review £m 2017 H1 2016 H1 % Change 2016 FY Revenue 40.0 38.1 5.0% 74.8 EBITDA before exceptionals (pro-forma) 3.0 3.5 (14.3%) 6.7 EBITDA margin % (pro-forma) 7.5% 9.2% (170bps) 9.0% • Underlying revenue grew by 5.0% due to continued positive performance in precast flooring, supporte
Slide 19: Acquisition of Bison - Business overview
Acquisition of Bison - Business Financials* Business Brand Products overview Revenue: £22.8 m • Bison is the UK market leading manufacturer EBITDA: £(1.1)m of hollowcore precast concrete flooring with Gross assets: £10.0 m a highly automated manufacturing facility located *All quoted figures are tho
Slide 20: Acquisition of Bison – Transaction Overview
Acquisition of Bison – Transaction Overview Consideration: £20 million Structure: Agreement signed to acquire the trade and assets of Bison Manufacturing Ltd from Laing O’Rourke plc Assets: The primary asset is the state of the art highly automated Swadlincote manufacturing facility in Derbyshire, o
Slide 21: Acquisition of Bison – Strategic rationale
Acquisition of Bison – Strategic rationale Strategic rationale • This Acquisition provides a unique and immediate opportunity for Forterra to take a leadership position in the UK precast concrete market whilst also expanding its currently capacity-constrained business • Enables Forterra to take adva
Slide 22: Acquisition of Bison – Future benefits
Kirton Somercotes Acquisition of Bison – Future benefits Measham Hoveringham Wilnecote Desford Hams Whittlesey Cradley Hall Kings Dyke Northampton Coleford (headquarters) Future benefits Milton Newbury • Bison facility currently operating at c50% capacity utilisation - allows Forterra to expand its
Slide 23: Forterra: delivery against our priorities
Forterra: delivery against our priorities Priorities Actions Embed > Implement facility optimisation programmes manufacturing > Invest in modern process technology excellence > Continual focus on Health and Safety and Sustainability Align capacity > Respond to market conditions and utilisation > Fle
Slide 24: Outlook
Outlook • Pleased with first half performance: - increased sales through strong brick and aggregate block volumes, underpinned by robust activity levels in the new build residential market, albeit against a relatively weaker volume comparator due to supply chain destocking which unwound during 2016
Slide 25: Q&A
Q&A Q&A 25
Slide 26: Appendices
Appendices @ FORTERRA;.
Slide 27: Investment case
Investment case Pure UK focus Growth Resilience Efficiency Room for volume Further growth from Substantial exposure Efficient core brick High return / Iconic Fletton brick to a more stable growth in core bricks cross-selling manufacturing low risk capex RM&I market 1 2 3 4 5 6 7 100% in UK Clear run
Slide 28: We offer a complementary range of manufactured masonry and bespoke building products
We offer We offer a a complementary complementary range range of of manufactured manufactured masonry masonry We offer a complementary range of manufactured masonry and bespoke building products We andoffer and a complementary bespoke bespoke range of manufactured masonry building products building
Slide 29: We serve the UK building construction markets across all distribution channels
We serve the UK building construction markets across all We serve the UK building construction markets across all distribution channels distribution channels End-market exposure Key Channels / Residential Strong and long-standing Products customers Residential RMI Newbuild Commercial customer relati
Slide 30: Efficient manufacturing base, driving cost leadership and competitiveness
Efficient manufacturing base, driving cost leadership and Efficient manufacturing base, driving cost leadership and competitiveness competitiveness Network of scale manufacturing facilities across strategic locations 9 brick facilities Focus on Measham 1.4x larger Forterra’s • State-of-the-art large
Slide 31: Incremental brick capacity from de-bottlenecking projects
Incremental brick capacity from de-bottlenecking Incremental brick capacity from de-bottlenecking projects projects Status ✔ Completed ✔ Commenced ✔ Completed Potential Measham Desford Claughton Accrington expansion gas supply upgrade dryer replacement kiln buffer extension Selected examples • Compl
Slide 32: P&L pre-exceptionals
P&L pre-exceptionals £m 2017 H1 2016 H1 2016 FY Revenue 162.7 146.0 294.5 Cost of Sales (94.4) (83.3) (175.2) Gross Profit 68.3 62.7 119.3 Distribution Costs (24.4) (21.2) (43.7) Administrative expenses (10.4) (7.3) (16.2) Other operating income 0.1 0.4 0.8 Operating Profit 33.6 34.6 60.2 Add back:
Slide 33: D&A and exceptional items
D&A and exceptional items £m 2017 H1 2016 H1 2016 FY EBITDA before exceptionals 38.7 39.5 70.6 Depreciation (5.0) (4.7) (10.1) Amortisation (0.1) (0.2) (0.3) Exceptional items - (10.3) (8.9) Operating profit 33.6 24.3 51.3 Net finance expenses (2.2) (11.3) (14.2) Income tax expenses (6.3) (4.2) (9.6
Slide 34: Summary cash flow statement
Summary cash flow statement £m 2017 H1 2016 H1 2016 FY EBITDA before exceptionals 38.7 39.5 70.6 Working capital (8.0) (14.8) (1.0) Non-cash movements 1.2 0.2 0.2 Operating cash flow before exceptionals 31.9 24.9 69.8 Cashflows relating to exceptionals (0.1) (11.0) (13.6) Cash generated from operati
Slide 35: General enquiries, Investor enquiries, Media enquiries
General enquiries Investor enquiries Media enquiries Forterra plc Investor contact: FTI Consulting 5 Grange Park Court Shatish Dasani Tel: 020 3727 1340 Roman Way Chief Financial Officer fti_forterra@fticonsulting.com Northampton Tel: 01604 707600 NN4 5EA investors@forterra.co.uk Tel: 01604 707600 e