Breedon Group Plc · LSE:BREE
Breedon — H1 2024 Earnings Presentation
35 slides from Breedon's earnings presentation, Jul 24, 2024
Slide 1: Breedon Group plc Interim Results 2024
Breedon Group plc Interim Results 2024 24 July 2024
Slide 2: Forward looking statement
Forward looking statement The information contained in this presentation document (the “presentation”, which term includes any information provided verbally in connection with this presentation document) does not constitute an offer or solicitation to hold, sell or invest in any security and should
Slide 3: Agenda
Agenda Group Financial Operational Q&A highlights review review & outlook Rob Wood, James Brotherton, Rob Wood, Chief Executive Officer Chief Financial Officer Chief Executive Officer 3 Breedon Interim Results 2024 • July 2024
Slide 4: Strategic progress delivers resilient performance
Strategic progress delivers resilient performance Transformative acquisition; Breedon enters the US market Resilient performance Adverse weather effects and challenging GB market conditions; offset by strong performance in Ireland Highlights Third platform launched Transformative acquisition of BMC;
Slide 5: Executing our strategy
Executing our strategy Managing factors in our control; accelerating self-help Expand Established our third platform, completed two bolt-on transactions in GB and extended our mineral reserves and resources Highlights Sustain Reinforced health, safety and wellbeing commitment, reduced carbon footpri
Slide 6: Financial review
Financial review James Brotherton, Chief Financial Officer 6 Breedon Interim Results 2024 • July 2024
Slide 7: 2024 interim financial highlights
2024 interim financial highlights Strategic progress delivers a resilient financial performance Revenue Underlying EBIT ROIC £764.6m +3% £71.6m 9.4% 8.8% 22.4% Revenue Margin Effective HY 23: £742.7m growth HY 23: £70.5m HY 23: 9.5% HY 23: 10.0% Tax Rate HY 23: 20.3% Free Cash Flow Net Debt Interim
Slide 8: H1 2024 Revenue and EBIT bridges
H1 2024 Revenue and EBIT bridges Third platform and pricing offset volume headwinds REVENUE BRIDGE EBIT BRIDGE £ million £ million +3% +2% 66.4 764.6 742.7 15.5 15.5 70.5 (7.4) 7.6 71.6 (60.0) (14.6) 155.0 HY 23 Sales Volume M&A HY 24 HY 23 Sales Costs Volume M&A HY 24 Price & Mix price & Mix EBIT M
Slide 9: H1 2024 divisional contributions
H1 2024 divisional contributions Ireland strongest performance since acquisition Great Britain Ireland United States Cement Group £492.4m £111.2m £53.0m £156.9m £764.6m Revenue HY 24 492.4 HY 24 111.2 HY 24 53.0 HY 24 156.9 HY 24 764.6 HY 23 519.6 HY 23 109.1 HY 23 HY 23 176.8 HY 23 742.7 HY 22 473.
Slide 10: H1 2024 Net Debt and cash flow
H1 2024 Net Debt and cash flow Debt increased to finance BMC acquisition Free Cash Flow (£9.6) million Outflow Inflow £ million Usual seasonal working capital expansion £0 118.1 (63.7) (8.5) (15.2) 0.6 (169.9) (40.9) 49.8 (248.7) (422.5) (32.6) (11.5) (472.3) Opening Underlying Working Interest Tax
Slide 11: Refinancing of Revolving Credit Facility
Refinancing of Revolving Credit Facility RCF upsized to £400m and maturity extended to at least June 2028 Debt finance positioned to support Long term debt funding with low cost future growth USPPs at c. 2% interest providing benefits over several years £m £m Committed liquidity Facilities Summary 7
Slide 12: 2024 technical guidance
2024 technical guidance Management expectations unchanged for the full year Income statement Cashflow • Net interest expense c.£22m • Cash interest c.£25m • Effective tax rate c.22% (cash tax payments • Working capital outflow c.£30m materially in line with that of effective rate) • Capital expendit
Slide 13: Balanced financial framework continues to deliver
Balanced financial framework continues to deliver Benefitting from strategic execution and operational focus Significant Balance Sheet Proactive Meeting strategic Returns & debt flexibility investment objectives capacity Replenished reserves and ORGANIC Third platform 2024 resources launch interim d
Slide 14: Operational review
Operational review Rob Wood, Chief Executive Officer 14 Breedon Interim Results 2024 • July 2024
Slide 15: UK market; economy stabilising
UK market; economy stabilising Construction market recovery forecast for 2025 UK GDP; returning to growth UK construction forecast Residential Infrastructure Industrial • UK GDP growth 0.7% in the twelve months to May 2024 Commercial All work 150 Construction output; weather related volatility • May
Slide 16: RoI market; constructive operating environment
RoI market; constructive operating environment Confidence recovering RoI construction forecast Residential building Civil engineering RoI Modified Domestic Demand growing steadily Non-residential building All work • Broad measure of domestic activity increased 1.7% in the year to March 2024 200 Cons
Slide 17: United States; steady growth
United States; steady growth Strong stimulus tailwind US GDP moderating; steady growth rate maintained US Construction Put-in-Place forecast Residential Non-residential building • Growth moderated to 1.4% annually in Q1 Non-building All work • Missouri GDP growth rate 1.6% annually 170 • Constructio
Slide 18: Great Britain
Great Britain Resilient performance Near-term caution across end-markets • Headwinds due to poor weather conditions, political and monetary uncertainty Aggregates Asphalt Concrete • Underlying EBIT declined due to operating leverage Million tonnes Million tonnes Million m³ 13.2 1.5 1.5 (1)% Discipli
Slide 19: Ireland
Ireland Strong performance Positive demand momentum • Strong tendering season • Resumption of governing Assembly at Stormont driving a Aggregates Asphalt Concrete pick-up in activity levels Million tonnes Million tonnes Million m³ • Steady growth in RoI, underpinned by structural shortage of housing
Slide 20: United States
United States Promising maiden contribution Strong entry to the US • Patient search for third platform has been rewarded • Volumes growing; weather headwind offset by robust activity Aggregates Concrete and healthy backlogs Million tonnes Million m³ • BMC performing ahead of prior year and plan; con
Slide 21: Cement
Cement Challenging first half Construction activity disrupted • Fall in GB housebuilding activity exacerbated by poor weather conditions Cement • Volume decline; exposure to GB ready-mixed concrete Million tonnes partially offset by resilient market in Ireland Strong margin performance 1.2 1.2 (12)%
Slide 22: Outlook and summary
Outlook and summary Rob Wood, Chief Executive Officer 22 Breedon Interim Results 2024 • July 2024
Slide 23: Summary: Economic and political landscape stabilising
Economic and political landscape stabilising Growth expected in all markets from 2025 Macro forecasts revised Healthy balance sheet Construction output forecasts revised Highly cash generative model enables down for 2024, up for 2025 rapid debt reduction Outlook and Summary Increasing political clar
Slide 24: Q&A
Q&A Breedon Interim Results 2024
Slide 25: Appendix
Appendix Breedon Interim Results 2024 25 Breedon Interim Results 2024 • July 2024
Slide 26: BMC at a glance
BMC at a glance The beachhead for our US platform Ready-mixed concrete 2023 m3: c.740k Number of Plants: 44 St Louis Aggregates 2023 tonnes: c.2.8m Number of Locations: 12 c.400m tonnes reserves and resources 50% Residential 76% Ready-mixed concrete Building products Sales mix Markets 25% Non-reside
Slide 27: Disciplined cost management
Disciplined cost management Flexible cost base supported by forward hedging programme 34% - materials & other direct costs 21% - Other • Includes imported cement, bitumen, • Depreciation subcontractor and direct mineral costs • Repairs & maintenance • Cost inflation moderated and successfully passed
Slide 28: MPA volumes
MPA volumes MPA Aggregates volumes (million tonnes) (40)% 170 150 130 110 10% 90 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 MPA Asphalt volumes (million tonnes) 31 (36)% 26 21 10% 16 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Slide 29: Aggregates pricing outpaces inflation
Aggregates pricing outpaces inflation Asset base and local model provide a natural inflation hedge Breedon reserves Aggregates markets by source of supply in Great Britain, 1955-2023 and resources million tonnes Crushed rock c.1.4bn tonnes 1.5 300 Sand and gravel 200 Recycled and secondary 100 1.0 0
Slide 30: Track record of sustainable growth
Track record of sustainable growth Six bolt-on CEMEX Six bolt-on Breedon transactions Hope Lagan UK assets transactions BMC 20111 20121 20131 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 UK 87% Rol 13% £169m Revenue CAGR2 20% £1,488m £6m Underlying EBIT3 CAGR 31% £156m Covenant Leverage 5.
Slide 31: H1 2024 Income Statement
H1 2024 Income Statement £ million HY 24 HY 23 Revenue 764.6 742.7 Underlying EBITDA 118.1 112.3 Depletion & depreciation (48.0) (43.4) Share of associate and joint ventures 1.5 1.6 Underlying EBIT 71.6 70.5 Net interest (10.4) (5.6) Non-underlying items (14.7) (8.4) Profit before tax 46.5 56.5 Tax
Slide 32: H1 2024 Balance Sheet
H1 2024 Balance Sheet £ million HY 24 HY 23 Property, plant and equipment 896.8 790.5 Right-of-use assets 47.2 47.3 Intangible assets 681.9 519.4 Investment in associate and joint ventures 15.6 15.3 Inventories 126.7 87.1 Trade and other receivables 345.6 324.4 Total assets (excluding cash) 2,113.8
Slide 33: H1 2024 Free Cash Flow
H1 2024 Free Cash Flow £ million HY 24 HY 23 Underlying EBITDA 118.1 112.3 Working capital and provisions (63.7) (40.9) Net interest paid (8.5) (3.5) Income taxes paid (15.2) (15.9) Net capex (40.9) (31.9) Other 0.6 0.7 Free cash flow (9.6) 20.8 Acquisition of businesses (248.7) (11.1) Dividends pai
Slide 34: Market consensus
Market consensus Company compiled as at July 2024 2024 2025 Average Range Average Range Revenue £1,641m £1,603m - £1,674m £1,737m £1,711m - £1,771m Underlying EBIT £174m £167m - £182m £190m £185m - £200m £ Underlying basic 33.1p 31.3p – 35.4p 36.9p 35.5p – 39.5p earnings per share Net debt £406m £37
Slide 35: We are making a material difference
We are making a material difference Our Purpose Our Vision To make a material difference to the lives of To be a leading vertically-integrated our colleagues customers and communities international construction materials group Our Values To adopt clear authentic behaviours to ensure long-term succes