Ibstock Plc · LSE:IBST
Ibstock — H1 2021 Earnings Presentation
34 slides from Ibstock's earnings presentation, Aug 4, 2021
Slide 1: 2021 Interim Results Presentation
2021 INTERIM RESULTS PRESENTATION 4 August 2021
Slide 2: Overview
Overview Financial review Operational review Strategy and growth Summary and outlook Q&A Joe Hudson Chris McLeish Joe Hudson Joe Hudson Joe Hudson Joe Hudson Chris McLeish WAN XA \X\\V\)
Slide 3: Strong operating performance with Group sales approaching 2019 levels
Strong operating performance with Group sales approaching 2019 levels and LfL divisional margins back to 2019 levels Underlying market fundamentals remained robust in all key markets Industry supply chains became tighter as H1 progressed - input cost and availability challenges well managed Strong c
Slide 4: Financial Review
Slide 5: Financial Summary
Financial Summary Ibstock Profitability nearing 2019 levels; strong cash flow performance delivered further material reduction in net debt Plc Revenue ted EBITDA Divisional EBITDA Margins Concrete 34.1% 18.5% (H1 2019: £203m) B (H1 2019: 33.9%) (H1 2019: 20.0%) Adjusted EPS Interim ord. dividend per
Slide 6: Revenue bridge
Revenue bridge Ibstock Pl Group revenues recovered to within £1m of 2019 levels . +£71.0m (+54%) — -£1.3m (1%) © Strong operating performance with } £203.3m organic sales approaching 2019 levels £200.0m © Clay division revenues of £138m representing 92% of 2019, with sales £131.0m volumes ahead of e
Slide 7: Clay network capacity bridge
Clay network capacity bridge Restructuring actions have created an efficient, well maintained asset base 105% Work completed To be online from Majority of £20m fixed cost savings H1 2021 middle 2022 100% 95% cS% 90% 85% 80% 2019 network Permanently Atlas mothballed Idled / reduced Bring back idled C
Slide 8: Actions enabled removal of c.£20m of fixed cost
Actions enabled the Group to remove annualised c.£20m of fixed cost - £10m saving delivered in H1 2021 Clay © Cost saving underpinned delivery of a 34.1% EBITDA margin QO After adding back proportion of cost savings to support growth, residual savings expected to support margin accretion above 2019
Slide 9: Strong cash flow performance
Strong cash flow performance Cash conversion materially ahead of both 2019 and 2020 Six months ended 30 June (£m) Adjusted EBITDA Ain net working capital Net interest Tax Post-employment benefits. Other (includes leases) Adjusted operating cash flow Cash conversion Capex Adjusted free cash flow 2% (
Slide 10: Net debt improvement of £16m in H1
Net debt improvement of £16m in H1 Ibstock Significant balance sheet capacity to support capital allocation strategy Ple © H1 net debt reduced by £16m reflecting strong trading performance Net debt reduced by £16m from year-end position of £69m © Continued management of fixed costs and working capit
Slide 11: H2 2021 EBITDA
H2 2021 EBITDA © Demand outlook for H2 at similar levels to H1 © Potential for short-term supply chain disruption ; © Carrying good momentum into H2 Board now expects adjusted EBITDA for the 2021 year to be modestly ahead of previous expectations! Other guidance © FY Adjusted interest: c.£6m Adjuste
Slide 12: Operational Review
OPERATIONAL REVIEW
Slide 13: Residential markets update
Residential markets update Robust demand in new build and RMI markets 180 160 140 120 100 Housing starts 2022 forecast to be 7% ahead of 2019 levels H2-21 down 10% vs H2-19 —s 79 D @ 74 67 a 47 2018 2019 2020 2021 2022 wH1 mH2 Source: CPA Robust market for new build housing in H1 2021 underpinned by
Slide 14: Inventory and production
Inventory and production Brick industry outputs matched to recovery in customer demand; inventories stable over the course Ple of H1 2021 eee wy PHS: Domestic production as % of 2019 Source: ONS Domestic clay brick production in the first 5 months of 2021 of around 0.8 billion - around 90 % of 2019
Slide 15: Clay division results
Pi Six months ended 30 June (£m) 2021 2020 2019 Total Revenue 138 87 151 Adjusted EBITDA 47 8 51 Margin (pre-central costs) 34.1% 87% 33.9% Energy efficient dryers at Ellistown project Revenue was £52m higher than 2020, recovering to 92% of 2019 levels QO Sales volumes in the first half were ahead o
Slide 16: Concrete division results
Concrete is Robust performangé@nveMby. more resilient RMI tremds 2020 Six months ended 30 June (£m) Total Revenue 64 45 52 Adjusted EBITDA 12 6 11 Margin (pre-central costs) 18.5% 12.5% 20.0% Revenues 122% of 2019 or 100% on a LfL basis © The division benefitted from its significant exposure to a br
Slide 17: Concrete revenue by product
Longley Flooring Other Rail / infrastructure Fencing and Building Stone Roofing
Slide 18: Strategy & Growth
STRATEGY & GROWTH
Slide 19: Three key strategic pillars
3 strategic pillars We operate our business focused on three key strategic SUESGN) Se ap © Health and safety in all that we do © Focus on Operational excellence to drive continuous improvement in underlying performance O Sustainability and social impact © Invest for growth in 2 ways: © Optimise our
Slide 20: We are focused on three priorities
We are focused on three priorities: Health and safety ©. Further significant progress towards LTIFR reduction © Implementation of new health and safety management system over the next 12 months Operational excellence © Optimisation project delivering enhancements in management of our clay quarries C
Slide 21: Innovation is at the heart of our growth plans
Innovation is at the heart of our growth plans to strengthen our market-leading positions Our initiatives are centred on three specific areas: Product innovation © Launch of three new brick types from our Leicester site targeting the specification market and high-end housing developments: Albus, Niv
Slide 22: Growing our core business - Atlas
Growing our core business - Atlas OQ. Strongly positive fundamentals for the UK residential markets over medium term © Deficit of new homes © Government policy supportive © Positive trends in RM&I and build to rent which will also be supportive over the medium term OQ _Intensifying customer focus on
Slide 23: Investments to drive growth in existing business
Investments to drive growth in existing business: © Continual investment in our Clay manufacturing assets in order to modernise our production capability, expand capacity and improve its environmental performance, in line with our strong commitment to sustainability te SYSTEMISATION Investments to d
Slide 24: Summary & Outlook
Slide 25: Sustain, Innovate, Grow strategy delivering results
Sustain, Innovate, Grow strategy delivering results ESG updated targets in H2 Strong H1 performance, with sales and divisional margins back to 2019 levels Expected EBITDA 2021 FY modestly ahead of previous market consensus expectations although supply chain challenges more evident at start of H2 Str
Slide 26: Q&A
Aarne ae
Slide 27: Appendices
APPENDICES
Slide 28: Brick market dynamics
Brick market dynamics Brick Consumption (billions of bricks) mDomestic Despatches = Imports 03 04 05 03 02 ; 03 agi 0 0 0 0 20, 20% 20) 18] 18 -— © fo of Ce ty 1.6 2009 2010-2011 2012-2013 2014 +2015 2016-2017 2018 +2019 -—-2020 Imports fell to 0.34 billion (0.46 billion in 2019) bricks, representin
Slide 29: Leading manufacturers of building products
Leading manufacturers of... 29 Ibstock At the heart of building Ibstock Concrete Longley Our Concrete divisionis aleading manufacturer of prestressedand aesthetic building products, primarily for residential construction, Andertor Ibstock Clay & Ibstock Our market-leading Clay division offers a rang
Slide 30: Key investment highlights
Key investment highlights 30 Market leadership #1 in UKbricks positions Structural Strong household formations with demand - supportive UK growth * governmentpolicy itd Three UK brick ry manufacturers c90 % structure of capacity Vertically integrated High barriers business model with to entry planni
Slide 31: Capital allocation
Capital allocation Significant balance sheet capacity to support capital allocation strategy 175 15x 150 15x 125 Balance sheet capacity assuming leverage at 1.5x 100 oe © Significant headroom within | £05 & a OCT) SUPA genet ignificant headroom within leverage range of 0.5x to 1.5x through the cycle
Slide 32: Statutory and Adjusted EPS
Statutory and Adjusted EPS nderlying tax rate benefit and £5m exceptional credits in H1 2021 2021 2020 Six months ended 30 June Adjusted Statutory Variance Adjusted Statutory Variance Adjusted EBITDA £55m £55m £0m £10m £10m £0m Depreciation & amortisation (£14m) (£19m) (£5m) (£13m) (£18m) (£5m) Exce
Slide 33: Balance sheet
Balance sheet Financials as at 30 June 2021 2020 2019 PP&E £372m £375m £378m Right of Use assets £26m £28m £37m Intangible £92m £99m £96m Non-current assets £490m £502m £511m Inventories £66m £70m £67m Trade and other receivables £82m £51m £64m Current assets £148m £121m £131m Total assets £638m £62
Slide 34: Cash flow
Cash flow Six months ended 30 June 2021 2020 og) Adjusted EBITDA £55m £10m £59m Working capital (£10m) (E1m) (£20m} Net interest (£2m) (£1m) (£m Tax (£4m) (£3m) (£7m; Post-employee benefits (£1m) (£1m) (£m Exceptional items (£4m) £0m £0m Other (£1m) £0m £0m. Net cash flow from operating activities £