Slide 1: 2022 Financial Results Review and Outlook
Marshalls plc 2022 Financial Results Review and Outlook Transformational acquisition, record adjusted results and well positioned for when markets improve 15 March 2023 1
Slide 2: Agenda
Agenda Highlights Financial performance Construction market outlook Key strategic initiatives Find out more online www.marshalls.co.uk ESG leadership Find us on Facebook Summary and outlook MarshallsGroup Questions and answers Follow us on Twitter @MarshallsGroup Find us on LinkedIn Ma
Slide 3: Highlights
TRANSFORMATIONAL ACQUISITION, RECORD ADJUSTED RESULTS AND WELL POSITIONED FOR WHEN MARKETS IMPROVE Highlights Highlights Contribution Record of Marley adjusted contributed performance to record following performance Marley acquisition despite significant challenges Revenue Adjusted operating profit
Slide 4: 2022 highlights
TRANSFORMATIONAL ACQUISITION, RECORD ADJUSTED RESULTS AND WELL POSITIONED FOR WHEN MARKETS IMPROVE 2022 highlights Record adjusted financial performance and year of strategic execution Acquisition of Marley – market leading pitched roofing manufacturer Record revenues and profit for former CPM a
Slide 5: 2022 challenges
TRANSFORMATIONAL ACQUISITION, RECORD ADJUSTED RESULTS AND WELL POSITIONED FOR WHEN MARKETS IMPROVE 2022 challenges Significant challenges were navigated during the year Double digit consumer price inflation Energy prices rising fed into continuous raw material price inflation Labour shortages
Slide 6: Acquisition of Marley
TRANSFORMATIONAL ACQUISITION, RECORD ADJUSTED RESULTS AND WELL POSITIONED FOR WHEN MARKETS IMPROVE Acquisition of Marley Traded robustly during the post-acquisition period; Group is stronger because of Marley Transformational acquisition – accelerating Group strategy of becoming UK’s leading manuf
Slide 7: Financial performance
Financial performance “2 Marshalls
Slide 8: Group revenue
TRANSFORMATIONAL ACQUISITION, RECORD ADJUSTED RESULTS AND WELL POSITIONED FOR WHEN MARKETS IMPROVE Group revenue Record revenues 22 per cent higher than 2021 benefitting from eight months’ contribution from Marley Group revenue 22 per cent higher than 2021 including the benefit of Marley’s revenue
Slide 9: Group adjusted operating profit
TRANSFORMATIONAL ACQUISITION, RECORD ADJUSTED RESULTS AND WELL POSITIONED FOR WHEN MARKETS IMPROVE Group adjusted operating profit Growth of 31 per cent driven by Marley contribution and Building Products Growth in adjusted operating profit of £23.7 million driven by the acquisition of Marley and
Slide 10: Marshalls Landscape Products
TRANSFORMATIONAL ACQUISITION, RECORD ADJUSTED RESULTS AND WELL POSITIONED FOR WHEN MARKETS IMPROVE Marshalls Landscape Products Weak private housing RMI market and price inflation suppress demand 2022 £’m 2021 £’m Change % Challenging market backdrop with a weak private housing RMI market and pric
Slide 11: Marshalls Building Products
TRANSFORMATIONAL ACQUISITION, RECORD ADJUSTED RESULTS AND WELL POSITIONED FOR WHEN MARKETS IMPROVE Marshalls Building Products Strong revenue and profitability growth 2022 £’m 2021 £’m Change % Revenue 193.1 164.5 +17% Positive market conditions in 2022 due to focus on new build housing and commer
Slide 12: Marley Roofing Products
TRANSFORMATIONAL ACQUISITION, RECORD ADJUSTED RESULTS AND WELL POSITIONED FOR WHEN MARKETS IMPROVE Marley Roofing Products Strong contribution – revenue and profitability growth in post-acquisition period 2022 £’m 2021 £’m Change % Revenue 132.2 ― ― Group results include eight-month contribution f
Slide 13: Adjusted profit before taxation and earnings per share
TRANSFORMATIONAL ACQUISITION, RECORD ADJUSTED RESULTS AND WELL POSITIONED FOR WHEN MARKETS IMPROVE Adjusted profit before taxation and earnings per share Continued growth in profit – profit before tax up 23 per cent and earnings per share up 7 per cent Adjusted operating profit was £101.1 million,
Slide 14: Cash flow
TRANSFORMATIONAL ACQUISITION, RECORD ADJUSTED RESULTS AND WELL POSITIONED FOR WHEN MARKETS IMPROVE Cash flow Strong working capital management in second half of 2022 2022 £’m 2021 £’m Strong cash conversion with 91 per cent of adjusted EBITDA flowing into adjusted operating cash flow Adjusted oper
Slide 15: Funding and liquidity
TRANSFORMATIONAL ACQUISITION, RECORD ADJUSTED RESULTS AND WELL POSITIONED FOR WHEN MARKETS IMPROVE Funding and liquidity Long-term funding, significant liquidity and covenant headroom Conservative capital structure to fund the Marley acquisition with over 60 per cent of consideration funded by equ
Slide 16: Ongoing capital discipline
TRANSFORMATIONAL ACQUISITION, RECORD ADJUSTED RESULTS AND WELL POSITIONED FOR WHEN MARKETS IMPROVE Ongoing capital discipline Good control of working capital; medium-term target to rebuild ROCE to 15 per cent; progressive deleveraging Continued focus on maintaining capital discipline through 2022
Slide 17: Capital allocation policy
TRANSFORMATIONAL ACQUISITION, RECORD ADJUSTED RESULTS AND WELL POSITIONED FOR WHEN MARKETS IMPROVE Capital allocation policy Amended to prioritise deleveraging the balance sheet 1 2 3 4 5 Organic growth R&D new product Ordinary dividends Balance sheet Selective acquisitions development deleveraging
Slide 18: Construction market outlook
Construction market outlook
Slide 19: UK construction output
TRANSFORMATIONAL ACQUISITION, RECORD ADJUSTED RESULTS AND WELL POSITIONED FOR WHEN MARKETS IMPROVE UK construction output 2023 is forecast to be a challenging year with a recovery starting in 2024 CPA 2023 Winter forecast – total construction output Marshalls plc 2022 Financial Results Review and Ou
Slide 20: New housebuilding
TRANSFORMATIONAL ACQUISITION, RECORD ADJUSTED RESULTS AND WELL POSITIONED FOR WHEN MARKETS IMPROVE New housebuilding Uncertainty about extent of volume decline in 2023, but significant structural deficit remains CPA 2023 Winter forecast – new house building forecast House building volumes compared t
Slide 21: Commercial and infrastructure
TRANSFORMATIONAL ACQUISITION, RECORD ADJUSTED RESULTS AND WELL POSITIONED FOR WHEN MARKETS IMPROVE Commercial and infrastructure Mixed picture forecast for 2023. Longer term need to invest in infrastructure expected to support demand CPA 2023 Winter forecast – commercial & infrastructure ABI contrac
Slide 22: Private housing RMI
TRANSFORMATIONAL ACQUISITION, RECORD ADJUSTED RESULTS AND WELL POSITIONED FOR WHEN MARKETS IMPROVE Private housing RMI CPA forecast contraction in 2023. Ageing housing stock underpins longer-term demand for Group's products Marshalls’ registered installer order books Age profile of UK housing stock
Slide 23: Key strategic initiatives
Key strategic initiatives Marshalls
Slide 24: Group strategy
TRANSFORMATIONAL ACQUISITION, RECORD ADJUSTED RESULTS AND WELL POSITIONED FOR WHEN MARKETS IMPROVE Group strategy To become the UK's leading manufacturer of products for the built environment Invest in the Group's brands Focus on specification selling Be easy to deal with – enhance customer se
Slide 25: Marshalls Landscape Products
TRANSFORMATIONAL ACQUISITION, RECORD ADJUSTED RESULTS AND WELL POSITIONED FOR WHEN MARKETS IMPROVE Marshalls Landscape Products Foundations in place to deliver 15 per cent operating margin when volumes recover Fully commission the dual block plant in H1 – key building block for NPD and transition
Slide 26: Marshalls Landscape Products: Dual block plant
TRANSFORMATIONAL ACQUISITION, RECORD ADJUSTED RESULTS AND WELL POSITIONED FOR WHEN MARKETS IMPROVE Marshalls Landscape Products Dual block plant Marshalls plc 2022 Financial Results Review and Outlook 26
Slide 27: Marshalls Building Products
TRANSFORMATIONAL ACQUISITION, RECORD ADJUSTED RESULTS AND WELL POSITIONED FOR WHEN MARKETS IMPROVE Marshalls Building Products Growth opportunities despite likely reduction in new housebuilding volumes Leverage the low carbon benefits of concrete facing bricks and build market share – concrete bri
Slide 28: Marley Roofing Products
TRANSFORMATIONAL ACQUISITION, RECORD ADJUSTED RESULTS AND WELL POSITIONED FOR WHEN MARKETS IMPROVE Marley Roofing Products Focus on system sales, growth in integrated solar and improve production Continued focus on demand generation for full roof system with emphasis on project specifications De
Slide 29: ESG leadership
ESG leadership Marshalls
Slide 30: Our journey so far
TRANSFORMATIONAL ACQUISITION, RECORD ADJUSTED RESULTS AND WELL POSITIONED FOR WHEN MARKETS IMPROVE Our journey so far 2021 Marshalls plc 2022 Financial Results Review and Outlook 30
Slide 31: ESG is part of Marshalls' DNA
TRANSFORMATIONAL ACQUISITION, RECORD ADJUSTED RESULTS AND WELL POSITIONED FOR WHEN MARKETS IMPROVE ESG is part of Marshalls' DNA Committed to UNGC engagement Doing the right thing Providing We’re industry thought Our product Net Positive and commitment to is part of high-quality data and leaders and
Slide 32: 2022 - another year of continued progress
TRANSFORMATIONAL ACQUISITION, RECORD ADJUSTED RESULTS AND WELL POSITIONED FOR WHEN MARKETS IMPROVE 2022 - another year of continued progress We continue to Marshalls’ The health, safety We remain Our human rights and We are deliver in line with carbon journey is and wellbeing of committed to environ
Slide 33: Environmental Product Declarations
TRANSFORMATIONAL ACQUISITION, RECORD ADJUSTED RESULTS AND WELL POSITIONED FOR WHEN MARKETS IMPROVE Environmental Product Declarations We are well placed to prepare verified EPDs that compare well versus our competitors Keyblok versus only published competitor 40% lower Marshalls plc 2022 Financial R
Slide 34: Summary and outlook
Summary and outlook
Slide 35: Summary and outlook
TRANSFORMATIONAL ACQUISITION, RECORD ADJUSTED RESULTS AND WELL POSITIONED FOR WHEN MARKETS IMPROVE Summary and outlook Transformational acquisition, record adjusted profitability and well positioned for when markets improve The Group is more resilient through diversification after transformational
Slide 36: Appendices
Appendices 36
Slide 37: Construction Products Association Forecasts
TRANSFORMATIONAL ACQUISITION, RECORD ADJUSTED RESULTS AND WELL POSITIONED FOR WHEN MARKETS IMPROVE Construction Products Association Forecasts 2020 2021 2022 2023 2022 Actual Actual Estimate Forecast Projection Housing (£’m) 36,621 42,376 43,395 38,671 38,240 (20.8)% 15.7% 2.4% (10.9)% (1.1)% Other
Slide 38: Results summary
TRANSFORMATIONAL ACQUISITION, RECORD ADJUSTED RESULTS AND WELL POSITIONED FOR WHEN MARKETS IMPROVE Results summary Record adjusted results with benefits of Marley acquisition Change 2022 2021 % Revenue £719.4m £589.3m 22% Adjusted results Adjusted EBITDA £136.0m £107.1m 27% Adjusted operating profit
Slide 39: Adjusted operating profit and margins
TRANSFORMATIONAL ACQUISITION, RECORD ADJUSTED RESULTS AND WELL POSITIONED FOR WHEN MARKETS IMPROVE Adjusted operating profit and margins Adjusted Revenue operating profit Margin impact £’m £’m % 2021 589.3 77.4 13.1% Landscape Products (30.7) (17.1) (2.3)% Building Products 28.6 7.2 0.7% Roofing Pro
Slide 40: Adjusted profit before taxation and earnings per share
TRANSFORMATIONAL ACQUISITION, RECORD ADJUSTED RESULTS AND WELL POSITIONED FOR WHEN MARKETS IMPROVE Adjusted profit before taxation and earnings per share Bridge of reported result to adjusted result 2022 2022 2022 2021 2021 2021 £’m Reported Adjusting Adjusted Reported Adjusting Adjusted Operating p
Slide 41: Adjusting items charged to operating profit
TRANSFORMATIONAL ACQUISITION, RECORD ADJUSTED RESULTS AND WELL POSITIONED FOR WHEN MARKETS IMPROVE Adjusting items charged to operating profit 2022 2021 £’m £’m 1. Transaction costs relating to the acquisition of Marley 14.9 ― 2. Amortisation of acquired intangible assets 7.3 1.2 3. Unwind of invent
Slide 42: Disclaimer
TRANSFORMATIONAL ACQUISITION, RECORD ADJUSTED RESULTS AND WELL POSITIONED FOR WHEN MARKETS IMPROVE 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 o