Slide 1: 2023 Financial Results Review and Outlook
Marshalls plc 2023 Financial Results Review and Outlook Management actions position the Group well for when markets recover 18 March 2024
Slide 2: Agenda
Agenda ▪ First Impressions from Matt Pullen ▪ 2023 Summary and Financial Results ▪ Opportunity for Marshalls Find out more online www.marshalls.co.uk ▪ Summary and Outlook Find us on Facebook MarshallsGroup ▪ Q&A Follow us on X @MarshallsGroup Find us on LinkedIn Marshalls Find us on YouTube Marshal
Slide 3: Matt Pullen, Chief Executive
Matt Pullen, Chief Executive Weak market backdrop impacts on demand and the financial results My background ▪ Experience of leading complex businesses in construction ▪ Career foundation in blue chip FMCG in the UK and Europe – Strategic foresight – Transformation and growth – People leadership – En
Slide 4: First impressions and reflections
First impressions and reflections Presence Organisation Opportunity and brands people and to create culture value ▪ Operational leverage from ▪ Leading brands and market ▪ Talented, knowledgeable and market recovery positions experienced leaders ▪ Strengthened through ▪ People are passionate and ▪ S
Slide 5: The Group is well positioned for outperformance in the medium-term
The Group is well positioned for outperformance in the medium-term Weak market backdrop impacts on demand and the financial results ▪ Our near-term markets remain challenging ▪ Management actions taken in 2023 demonstrate a well- managed and agile business ▪ More diversified portfolio of products an
Slide 6: 2023 summary
2023 summary Marshalls
Slide 7: 2023 summary
MANAGEMENT ACTIONS POSITION THE GROUP WELL FOR WHEN MARKETS RECOVER 2023 summary Management actions position the Group well for when markets recover Weak marketresults ▪ Financial backdrop impactsimpacted in short-term on demand andmarket by weak the financial results conditions ▪ Group resilience d
Slide 8: Highlights: Financial headlines
MANAGEMENT ACTIONS POSITION THE GROUP WELL FOR WHEN MARKETS RECOVER Highlights Financial headlines Contribution of Marley contributed to record performance despite significant challenges Revenue £671.2m 7% Adjusted basic EPS 16.7p 47% Adjusted Final operating profit £70.7m 30% proposed dividend 5.7p
Slide 9: Key challenges and management response
Key challenges and management response
Slide 10: 2023 challenges
MANAGEMENT ACTIONS POSITION THE GROUP WELL FOR WHEN MARKETS RECOVER 2023 challenges Weak market backdrop impacted demand and the financial results ▪ Macro-economic environment challenging through 2023 ▪ House builders reduced activity levels with progressive slowdown as they worked through order boo
Slide 11: Management response
MANAGEMENT ACTIONS POSITION THE GROUP WELL FOR WHEN MARKETS RECOVER Management response Action taken in response to challenging market backdrop ▪ Reduction in capacity whilst maintaining ability to supply a stronger market in the medium-term – Factory closure at Carluke – Mothballing capacity in bui
Slide 12: Financial performance
eel Or aa seqnnce tere cagcent stb ene net OER EES Financial performance Marshalls
Slide 13: Group revenue
MANAGEMENT ACTIONS POSITION THE GROUP WELL FOR WHEN MARKETS RECOVER Group revenue Revenue contracted by 13 per cent on a like-for-like basis ▪ Group revenue reduction of 7 per cent including an additional 4 months of Marley; like-for-like Revenue (£'m) contraction by 13 per cent ▪ Marshalls Landscap
Slide 14: Group adjusted operating profit
MANAGEMENT ACTIONS POSITION THE GROUP WELL FOR WHEN MARKETS RECOVER Group adjusted operating profit Contraction in operating profit driven by weaker market demand and reduced manufacturing efficiency ▪ Operating profit stated after adding back adjusting items of £29.7 million, of which £18.7 million
Slide 15: Marshalls Landscape Products
MANAGEMENT ACTIONS POSITION THE GROUP WELL FOR WHEN MARKETS RECOVER Marshalls Landscape Products Lower demand from new build housing and private housing RMI impacts volumes and profitability ▪ Volumes adversely impacted by weak demand from new build housing and private housing RMI with commercial an
Slide 16: Marshalls Building Products
MANAGEMENT ACTIONS POSITION THE GROUP WELL FOR WHEN MARKETS RECOVER Marshalls Building Products Weak new build housing activity reduced volumes and profitability ▪ Challenging trading conditions driven by progressive weakness in new build housing through the year 2023 £’m Change % ▪ Revenue contract
Slide 17: Marley Roofing Products
MANAGEMENT ACTIONS POSITION THE GROUP WELL FOR WHEN MARKETS RECOVER Marley Roofing Products Resilient performance demonstrating benefits of less discretionary RMI market and integrated solar growth ▪ Challenging trading conditions in new build housing together with more resilient RMI and growth in V
Slide 18: Adjusted profit before taxation and earnings per share
MANAGEMENT ACTIONS POSITION THE GROUP WELL FOR WHEN MARKETS RECOVER Adjusted profit before taxation and earnings per share Profitability impacted by weak construction market ▪ Operating profit was £70.7 million, representing year on year contraction of 30 per cent 2023 £’m Change % ▪ Higher financin
Slide 19: Cash flow
MANAGEMENT ACTIONS POSITION THE GROUP WELL FOR WHEN MARKETS RECOVER Cash flow Strong management of cash delivers reduction in net debt ▪ Strong cash conversion with 106 per cent of EBITDA 2023 £’m Change £m flowing into operating cash flow due to strong management of working capital Operating profit
Slide 20: Funding and liquidity
MANAGEMENT ACTIONS POSITION THE GROUP WELL FOR WHEN MARKETS RECOVER Funding and liquidity Extension of medium-term funding, significant liquidity and covenant headroom ▪ Majority of syndicated bank facility extended to April 2027, further securing medium-term funding ▪ £30 million of term loan repai
Slide 21: Ongoing capital discipline
MANAGEMENT ACTIONS POSITION THE GROUP WELL FOR WHEN MARKETS RECOVER Ongoing capital discipline Good control of working capital; medium-term target to rebuild ROCE to c.15 per cent; progressive deleveraging 2023 £’m Change ▪ Continued focus on maintaining capital discipline Debtor days 49 days none t
Slide 22: Capital allocation
MANAGEMENT ACTIONS POSITION THE GROUP WELL FOR WHEN MARKETS RECOVER Capital allocation Clear and unchanged policy 1 2 3 4 5 Organic R&D and new product Ordinary Balance sheet Selective growth development dividends deleveraging acquisitions Capital investment Continued focus Maintaining dividend Targ
Slide 23: The opportunity for Marshalls
The opportunity for Marshalls 23
Slide 24: The opportunity for Marshalls
MANAGEMENT ACTIONS POSITION THE GROUP WELL FOR WHEN MARKETS RECOVER The opportunity for Marshalls ▪ Clear opportunity to evolve the business, making the most of structural drivers and market trends to drive relative outperformance in the medium-term Requires an increased focus on ▪ understanding our
Slide 25: Structural under-investment in construction expected to drive medium-term market outperformance
MANAGEMENT ACTIONS POSITION THE GROUP WELL FOR WHEN MARKETS RECOVER Structural under-investment in construction expected to drive medium-term market outperformance UK’s housing stock continues to age, underpinning RMI Material structural deficit in new build housing demand going forward House buildi
Slide 26: Climate mitigation and adaptation driving market opportunities for integrated solar
MANAGEMENT ACTIONS POSITION THE GROUP WELL FOR WHEN MARKETS RECOVER Climate mitigation and adaptation driving market opportunities for integrated solar Integrated solar growth expected to be driven by regulation changes ▪ Building regulation driving improvement in energy efficiency and market growth
Slide 27: Innovation will enhance our competitive advantage
MANAGEMENT ACTIONS POSITION THE GROUP WELL FOR WHEN MARKETS RECOVER Innovation will enhance our competitive advantage Viridian Solar innovation extends its system offer ▪ Viridian Solar has a strong track record of innovation ▪ 90 per cent of revenue from products launched in the last five years ▪ M
Slide 28: Climate mitigation and adaptation driving market opportunities: water management
MANAGEMENT ACTIONS POSITION THE GROUP WELL FOR WHEN MARKETS RECOVER Climate mitigation and adaptation driving market opportunities water management Increased demand anticipated for water management solutions ▪ Water utility companies proposed a £96 billion infrastructure investment through to 2030 ▪
Slide 29: New product development in Landscape Products enhances our competitive advantage
MANAGEMENT ACTIONS POSITION THE GROUP WELL FOR WHEN MARKETS RECOVER New product development in Landscape Products enhances our competitive advantage Dual block plant unlocks innovative lower carbon paving ranges ▪ Marshalls’ £25m investment in state-of-the-art facility is now operational ▪ Dual bloc
Slide 30: Group well positioned for when markets recover
MANAGEMENT ACTIONS POSITION THE GROUP WELL FOR WHEN MARKETS RECOVER Group well positioned for when markets recover Protecting medium-term capacity through the downturn ▪ 2023 sales volumes c.25 to 30 per cent below 2019 ▪ Network capacity reduced through mothballing and can be quickly recommissioned
Slide 31: 20 per cent recovery in sales volumes has potential to double PBT
MANAGEMENT ACTIONS POSITION THE GROUP WELL FOR WHEN MARKETS RECOVER Group well positioned for when markets recover 20 per cent recovery in sales volumes has potential to double PBT 2023 10% Growth 20% Growth ▪ Market recovery and volume growth will drive stronger Revenue £671M £738M £805M returns wi
Slide 32: Ingredients in place to drive significant shareholder returns
MANAGEMENT ACTIONS POSITION THE GROUP WELL FOR WHEN MARKETS RECOVER Ingredients in place to drive significant shareholder returns Our key strategic goals define our medium-term targets Execution of strategic goals ▪ Group growth ahead of the market as structural under-investment delivers sustainable
Slide 33: Summary and outlook
Summary and outlook 33
Slide 34: The Group is well positioned for outperformance in the medium-term
The Group is well positioned for outperformance in the medium-term Weak market backdrop impacts on demand and the financial results ▪ Our near-term markets remain challenging ▪ Management actions taken in 2023 demonstrate a well- managed and agile business ▪ More diversified portfolio of products an
Slide 35: Appendices
Appendices 35
Slide 36: Results summary
MANAGEMENT ACTIONS POSITION THE GROUP WELL FOR WHEN MARKETS RECOVER Results summary Weak construction market results in reduced demand and contraction in profitability Change 2023 2022 % Revenue £671.2m £719.4m (7%) Adjusted results EBITDA £103.6m £136.0m (24%) Operating profit £70.7m £101.1m (30%)
Slide 37: Adjusted profit before taxation and earnings per share
MANAGEMENT ACTIONS POSITION THE GROUP WELL FOR WHEN MARKETS RECOVER Adjusted profit before taxation and earnings per share Bridge of reported result to adjusted result 2023 2023 2023 2022 2022 2022 £’m Reported Adjusting Adjusted Reported Adjusting Adjusted Operating profit 41.0 29.7 70.7 47.9 53.2
Slide 38: Adjusting items charged to profit before taxation
MANAGEMENT ACTIONS POSITION THE GROUP WELL FOR WHEN MARKETS RECOVER Adjusting items charged to profit before taxation 2023 2022 £’m £’m 1. Amortisation of acquired intangible assets 10.4 7.3 2. Impairment charges, restructuring and similar costs 18.3 13.0 3. Additional contingent consideration 1.6 3
Slide 39: Disclaimer
MANAGEMENT ACTIONS POSITION THE GROUP WELL FOR WHEN MARKETS RECOVER Disclaimer ▪ For the purposes of the following disclaimer, references to this “presentation” shall be deemed to include references to the presenters’ speeches, the question and answer session and any other related verbal or written