Sig Plc · LSE:SHI
Sig — Investor Presentation (November 2021)
36 slides from Sig's investor presentation, November 2021
Slide 1: Company Presentation
Company Presentation November 2021 Return to Growth strategy gathering momentum 1 RESTRICTED
Slide 2: Disclaimer
Disclaimer This presentation (the “Presentation”) has been prepared by SIG plc (the “Company”, and together with its subsidiaries, the “Group”), solely for informational purposes, and has not been verified by any independent third party. By reading the Presentation, the recipients will be deemed to
Slide 3: SIG overview, Key business highlights, Historical financials, Appendix
1 SIG overview 2 Key business highlights 3 Historical financials 4 Appendix Return to Growth strategy gathers momentum 3 RESTRICTED
Slide 4: Our business segments & products
Our business segments & products We are a leading supplier of interior and exterior products in Europe ideally placed to benefit from the RMI and energy efficiency growth tailwinds Interiors Exteriors % SIG total revenue % division sales exposed to RMI % SIG total revenue % division sales exposed to
Slide 5: We have established leading positions and extensive branch networks across its core markets
We have established leading positions and extensive branch networks across its core markets Leading European Branch Network 163 trading sites 44 trading sites #2 #1 Insulation & Dry Lining c. 15% 426 European sites Insulation c. 10% >6,700 employees #1 Leading national roofing #1 > 20% Interiors spe
Slide 6: We perform an essential role in the new build & refurbishment industry supply chain
We perform an essential role in the new build & refurbishment industry supply chain We link a significant variety of suppliers to an extensive customer base, simplifying our customers’ procurement processes and enhancing suppliers’ market reach and penetration Balanced exposure with ~55% sales from
Slide 7: Key business highlights
1 SIG overview 2 Key business highlights 3 Historical financials 4 Appendix Return to Growth strategy gathers momentum 7 RESTRICTED
Slide 8: Key business highlights
Key business highlights 1 Highly diversified business profile by product, geography, end user exposures, and customer base Long standing and stable business Born Green” – Optimally placed to benefit from sustainable tailwinds in the construction backed by 2 industry in the coming years favourable in
Slide 9: Highly diversified business profile by product, geography, end user exposures, and customer base
Highly diversified business profile by product, geography, end user exposures, and 1 customer base We cover six regions in Europe – with no more than 20% exposure to any one business – and five different segments, further reducing the exposure to any idiosyncratic adverse effects. Both in terms of p
Slide 10: SIG is ideally placed to benefit from tightening energy efficiency regulation
2 SIG is ideally placed to benefit from tightening energy efficiency regulation Strong long term growth potential for SIG with already >50% of sales exposed to energy efficiency regulation and core products proposition addressing future insulation requirements across all geographies At least 54% of
Slide 11: Insulating existing housing stock is an imperative across Europe before 2050
2 Insulating existing housing stock is an imperative across Europe before 2050 Increased insulation and better roofing products are required to achieve the Europe 2050 objectives All governments have long term policies in place towards carbon neutrality with clear & urgent targets to meet over the n
Slide 12: Historic track record of strong profitability and cash generation
3 Historic track record of strong profitability and cash generation 320 Strong financial performance with resilient EBITDA margin… 270 GBPm 31% EBITDA % margin 220 191 182 177 178 182 178 178 21% 185 169 172 170 11% 120 7% 6% 7% 7% 7% 7% 7% 6% 6% 6% 1% 70 20 -9% (30) 2009A 2010A 2011A 2012A 2013A 20
Slide 13: Clear and well-executed strategy driving strong and sustainable performance
4 Clear and well-executed strategy driving strong and sustainable performance For seven decades SIG has operated a consistent and successful approach, save for the period 2014-19, and is now back on track Although there were some recent headwinds… …The business is poised for future growth 1957 - 201
Slide 14: An experienced management team with a track-record of executing growth strategies
5 An experienced management team with a track-record of executing growth strategies and optimising financial management We have strengthened our leadership team with operational experts to deliver on SIG’s “Return to Growth” strategy Senior Management team Regional Management team Steve Francis Ian
Slide 15: Experienced and diverse board providing strong oversight and input
5 Experienced and diverse board providing strong oversight and input Andrew Allner Steve Francis Ian Ashton Alan Lovell Gillian Kent Chairman CEO CFO Senior Independent NED Independent NED • Previously Chairman of • Previously CEO of • Previously CFO of Low • Previously CEO of Marshalls plc and The
Slide 16: Clayton Dubilier & Rice (CD&R) is an experienced investor who takes a partnership approach
5 Clayton Dubilier & Rice (CD&R) is an experienced investor who takes a partnership approach Investment by CD&R Complementary minority owner without excessive influence SIG entered into a relationship agreement with CD&R on 29 May 2020, which will remain SIG maintains a diversified shareholder base
Slide 17: Revenues by Country since Q1 2018
6 Revenues by Country since Q1 2018 • Turnaround in UK now visible: back to Q1 2019 levels, further to go • Strong Growth in EU countries: now well above Q1 2018 levels Monthly SPWD by Country (Quarterly Average) Indexed to March 2018 142 Previous Management New Management 125 124 110 119 104 93 105
Slide 18: Strong, steady recovery by end Q2 2021 with trend to continue in Q3
6 Strong, steady recovery by end Q2 2021 with trend to continue in Q3 “Self-harm” period Peak 130 Covid Strong revenue growth drives EBIT reversion to period previous mean 110 97.8 109.7 83.9 84.6 • EBIT mean (from Mar 2018 to Mar 2019) in 2-4% range Revenue rebound1 90 (seasonal) 70 • Self Harm in
Slide 19: “Return to growth” strategy driving margin recovery to near historical levels
6 “Return to growth” strategy driving margin recovery to near historical levels EBITDA margin evolution1 7.0% 1 7% 6% 6.0% 6% 5% 5% 5.0% 5% 4% 4.0% 4% Covid / Past 3.0% Management impact 3% 2.0% 2% 1% 1.0% 1% 2018 2019 2020 YTD Jun-21 YTD Sep-21 Targeted Back to modernised version of tried and Diver
Slide 20: Historical financials
1 SIG overview 2 Key business highlights 3 Historical financials 4 Appendix Return to Growth strategy gathers momentum 20 RESTRICTED
Slide 21: Key historical financials – revenues
Key historical financials – revenues 2019 sales: £m, Dec-YE 2018 2019 2020 LTM Jun-21 UK: YoY decline driven by previous management decisions, more Interiors 1,624 1,454 1,218 1,361 specifically by actions such as: UK 680 534 357 442 Centralisation of commercial functions with insufficient suppo
Slide 22: Key historical financials – P&L
Key historical financials – P&L Pre-IFRS16 £m, Dec-YE 2018 2019 2020 LTM Jun-21 Despite the implications on top line in 2019 and 2020, gross Underlying Revenue 2,347 2,143 1,873 2,142 profit margin remained highly resilient at ~25-26%. Dropped to 25% in 2019 due to lower rebates on much lower sale
Slide 23: Key summary cash flow
Key summary cash flow Depreciation from 2019 onward reflects depreciation of right-of-use Pre-IFRS16 assets as a result of implementing IFRS16 £m, Dec-YE 2018 2019 2020 H1 2021 Other non-cash items include impairments in 2019 and 2020. In Operating profit excluding gain on sale from Air Handling
Slide 24: H1 2021 trading update
H1 2021 trading update £m, Dec-YE H1-20 H1-21 % change 2020 LTM Jun-21 Ongoing positive impact from the “Return to Growth” strategy, supported by Interiors 559 703 26% 1,218 1,361 continuing robust demand in the RMI segments in most markets UK 155 239 54% 357 442 Strategy of re‐connecting with c
Slide 25: Recent performance
Recent performance Continued momentum into Q3 Our performance in Q3 continued to build on the positive momentum gained during the first half of this year • Based on YTD trading, our H2 profitability is currently well ahead of H1 profitability, with our Q3 results exceeding prior expectations • Under
Slide 26: Financial objectives
Financial objectives Into 2022 and beyond, we expect to take advantage of both strong near‐term demand and healthy long‐term fundamentals which, if capitalised on, are expected to result in strong top line growth across all geographies Topline growth Market share gains are expected to be primari
Slide 27: Financial policy and medium term goals
Financial policy and medium term goals • Group EBIT margin target of approximately 3%, target of approximately 5% in the longer-term Margin • Underpinned by a target EBIT margin of approximately 5% within the Group’s operating companies Leverage • Net leverage target of 2.5x (post-IFRS16), equivalen
Slide 28: Appendix
1 SIG overview 2 Key business highlights 3 Historical financials 4 Appendix Return to Growth strategy gathers momentum 28 RESTRICTED
Slide 29: UK Interiors business recovery
UK Interiors business recovery • UK Interiors daily sales have rebounded strongly • Recapture of market share well underway • Despite the significant inflationary conditions and supply dislocations, UK Interiors has rebuilt margins to historic levels in the last year • Main levers: • Improved suppli
Slide 30: UK rebuild is a key part of the near term recovery
UK rebuild is a key part of the near term recovery… Plan to enhance Operational efficiency and efficacy Rebuilt UK business in six months 1 Right-sized structure and organisation UK merger and reduction in central roles completed generating £4m of savings and reduction of 70 roles • Merged SIGD and
Slide 31: …while continuously growing our leadership positions in Continental Europe
…while continuously growing our leadership positions in Continental Europe Key measures over 2020-21: Gained market share due to proactive & well Key measures over 2020-21: managed rapid response to COVID-19 Strengthened back office New MD Louis van Wijck with wealth of Successful implementa
Slide 32: SIG’s internal ESG focus
SIG’s internal ESG focus • Responsible Actions Environmental Social Governance for our planet for our people for our stakeholders We strive to improve sustainability in… Everyone should feel… Strongly governed Our operations Safe LSE-regulated • A carbon zero target and a clear strategy for • Physic
Slide 33: Strong market for profitable growth
Strong market for profitable growth Continued strong rebound of construction industry expected post Covid-19 and medium/long term strength due to structural market shortages, government stimulus and sustainability initiatives • European and UK construction at mid-point in cycle pre- • European Green
Slide 34: All macro indicators reacting positively post COVID-19
All macro indicators reacting positively post COVID-19 The construction industry is emerging strongly from COVID-19 with elevated or accelerating lead indicators across our main markets Composite and residential construction PMI Residential renovation market (YoY real change) Most PMI improving or e
Slide 35: SIG’s core markets show strong growth potential beyond the initial COVID-19 bounce back
SIG’s core markets show strong growth potential beyond the initial COVID-19 bounce back All SIG markets are experiencing a strong post-COVID-19 recovery and retain attractive growth upside Total construction output (indexed to 2017) UK France Germany +4.2% +2.4% +0.2% 110 107 103 103 103 102 105 102
Slide 36: SIG’s significant insulation portfolio optimally positioned to embrace evolving emissions and regulatory standards
SIG’s significant insulation portfolio optimally positioned to embrace evolving emissions and regulatory standards In addition to strong post-COVID-19 RMI demand, SIG is uniquely exposed to the structural demand for insulation and roofing products Emission reduction potential Main energy renovation