Slide 1: Bringing Power to Life: 2022 Full Year Results
BRINGING POWER TO LIFE 2022 FULL YEAR RESULTS MARCH 2023 www.lucecoplc.com
Slide 2: Agenda
Agenda Highlights Financial Review Business Review Outlook Q&A John Hornby Matt Webb CEO CFO Luceco plc 2022 Final Results Presentation 2
Slide 3: Highlights
Highlights • 2022 results in line with January Trading Update: – Revenue: £206.3m – Adjusted Operating Profit: £22.0m – Adjusted EPS: 11.1p • Results reflect normalisation after a record 2021 performance: – Slowdown in Residential RMI demand post-lockdown – Significant but temporary headwind from di
Slide 4: Highlights (continued)
Highlights (continued) • Improving momentum in the second half: – Strong Non-Residential demand – Resilient Professional Residential RMI demand – Customer destocking nearing completion – Gross margin improving and input costs reducing – Strong cash generation – Healthy balance sheet • Outlook: – 202
Slide 5: Financial Review
FINANCIAL REVIEW MATT WEBB CFO
Slide 6: Financial highlights
Financial highlights Adjusted Revenue Operating Profit Operating Profit £206.3m £20.0m £22.0m -10% +20% -43% -1% -44% +22% vs 2021 vs 2019 vs 2021 vs 2019 vs 2021 vs 2019 (pre-COVID) (pre-COVID) (pre-COVID) Adjusted Adjusted EPS Dividend Operating Margin 10.7% 11.1p 4.6p -6.4ppts +0.2ppts -45% +44%
Slide 7: Income statement
Income statement Adjusted £m 2022 2021 2019 • Revenue of £206.3m: Revenue 206.3 228.2 172.1 – 9.6% lower than 2021 due to destocking Gross profit 74.3 84.7 62.3 – 19.9% higher than 2019 Gross margin % 36.0% 37.1% 36.2% – Gained market share during the pandemic Overhead costs (52.3) (45.7) (44.3) • G
Slide 8: Revenue bridge
Revenue bridge vs 2021 (£m) 7.6% (20.4%) • Revenue significantly impacted by 17.3 customer stock movements: 3.2% 7.4 Acquisitions/ (46.6) – Stocked up in 2021 Currency closures – Stocked down in 2022 movements (9.6%) LFL – Responsible for the like-for-like (‘LFL’) decline 228.2 206.3 – Destocking ne
Slide 9: Adjusted Operating Profit bridge
Adjusted Operating Profit bridge vs 2021 (£m) (1.1) 1.2 • Customer stock movements Currency responsible for LFL profit decline Acquisitions/ movements closures versus 2021 (17.1) (2.8%) 3.1% (43.6%) • Profit would have grown vs 2021 without customer destocking due to: 39.0 LFL (43.8%) – Inflation re
Slide 10: Improving underlying momentum in H2
Improving underlying momentum in H2 2022 2021 • Modest decline in Adjusted Adjusted £m H1 H2 FY H1 H2 FY Operating Profit from H1 to H2 Revenue 106.4 99.9 206.3 108.2 120.0 228.2 • Entirely driven by accelerated Gross profit 36.2 38.1 74.3 41.7 43.0 84.7 customer destocking (H1: c.£7m; Gross margin
Slide 11: Input cost inflation reducing
Input cost inflation reducing Total annualised impact vs 2019 (£m) - By cost type £21.5m • Estimate of annualised inflation impact 3.2 reduced from £21.5m to £14.0m: – Freight costs back to historic norms 7.6 £14.0m – Sterling stronger 3.2 Overheads – Copper likely to remain structurally 1.8 4.4 FX
Slide 12: Strong cash flow and deleveraging in H2
Strong cash flow and deleveraging in H2 Working capital management during pandemic Covenant Net Debt / (Cash) (£m) 155 Excluding acquisitions 56.6 135 55.7 Sync EV purchase 1.4x 109 DW Windsor purchase 53.9 97 47.5 H2 2022 Covenant 92 87 81 81 79 76 10.3 leverage H1 2022 0.7x 37.2 0.8x FY 2021 30.6
Slide 13: Business Review
BUSINESS REVIEW JOHN HORNBY CEO
Slide 14: Business Review
Business Review Luceco plc 2022 Final Results Presentation 14
Slide 15: Long-term market growth drivers remain
Long-term market growth drivers remain 1. Regulatory change 2. New technology Driver Impact Driver • Consumers demand more technology and increased functionality • New UK Wiring +110% • Installers demand technologies that Regulations every increase in sales price of simplify installation c. 2 years
Slide 16: Impact of recent growth
Impact of recent growth Growth delivered: 2019 to 2022 Customer diversification 44.2% % Group revenue 2022 2019 Change Retail 26% 35% (9ppts) Hybrid 19% 20% (1ppts) 19.9% Professional Wholesale 27% 27% - Professional Projects 28% 18% 10ppts 10.9% 100% 100% - UK GDP Luceco Luceco revenue earnings Pro
Slide 17: Kingfisher Lighting – EBITDA more than doubled in 5 years
Case study Kingfisher Lighting – EBITDA more than doubled in 5 years At acquisition • Kingfisher Lighting acquired in Adjusted £m 2022 (2017) Change September 2017 Revenue 17.7 12.1 5.6 • Bought for £9.8m or 7.5x EBITDA Gross profit 8.4 5.0 3.4 • EBITDA more than doubled in Gross margin % 47.5% 41.3
Slide 18: Attractive growth prospects in EV charger market
Case study Attractive growth prospects in EV charger market UK EV home charger market size • Lower power (Mode 2) chargers sold since 2019 £294m • Sync EV acquisition in March 2022 £243m provided entry into higher power, Smart (Mode 3) charger market £147m £195m 4% • Current 4% share of market forec
Slide 19: Strong pipeline of low risk, high impact innovation projects
Strong pipeline of low risk, high impact innovation projects Product development Recent focus areas Kingfisher BG Smart! Lighting 27 Engineers 9 month Residential in UK development EV 67 process Engineers Packaging Office in China reduction Power Activity Future focus areas 650 projects DW Commercia
Slide 20: BG Evolve
Case study BG Evolve • Contemporary design: slimline vibrant palette, colour matching service • High-quality, clip-on faceplate in polycarbonate • Backplate common with existing BG range • USB/WiFi functionality added £100k £3m Development Expected cost annual sales Luceco plc 2022 Final Results Pre
Slide 21: Sustaining long-term progress: Customers, Climate and People
Sustaining our long-term progress by focusing on Customers, Climate and People Customers Climate • Renewed investment in • Now operationally carbon neutral contractor training: • Lowest carbon intensity in our sector1: – Recognition of the next generation via Top 30 20212 operational emissions 89 pe
Slide 22: Outlook
LUCECO OUTLOOK JOHN HORNBY CEO
Slide 23: Recent market trends
Recent market trends Residential – DIY (c.30% of Group) Residential – Pro (c.30% of Group) vs 2019 vs 6 months vs 2019 vs 6 months Indicator (pre-COVID) ago Indicator (pre-COVID) ago Barclaycard Consumer ONS Construction Output Spend Report +19.5% -2.6ppts +13.7% -0.8ppts – Residential RMI Growth –
Slide 24: Outlook
Outlook • Trading in 2023 in line with expectations • Seeing expected tailwinds from improving trends in: – customer destocking – gross margin – input costs • Slower Residential RMI market, as expected • Comparatives get easier as the year progresses Well positioned to progress as market conditions
Slide 25: Q&A
Q&A JOHN HORNBY CEO MATT WEBB CFO
Slide 26: Appendix
APPENDIX
Slide 27: Company overview
Company overview Our purpose 3 reasons to invest in us Our strategy Our culture To help people harness power sustainably in everyday life 01 We operate in Grow Customer-driven attractive markets Innovate Team-focused 02 We have an advantaged What we sell business model Sustain Bold and innovative •
Slide 28: Wiring accessories – British General
What we sell Wiring accessories – British General UK market size c.£500 m Established 1941 UK market position / approx market share #2 / 15% Revenue as % of Group total 1 36% Revenue 3-year CAGR %2 2% Operating margin1 19% Product categories Switches and sockets, Circuit protection, Weatherproof, Ju
Slide 29: Commercial power - Nexus
What we sell Commercial power - Nexus UK market size c.£200 m Established 2021 UK market position / approx market share Recently established Product categories Decorative power & data modules, Cable management, Cables and connectors, Power distribution, Energy & user data management, Ergonomic acces
Slide 30: LED lighting - Luceco
What we sell LED lighting - Luceco UK market size c £700 m Established 2013 UK market position / approx market share Top 10 / 4% Revenue as % of Group total 1,3 39% Revenue 3-year CAGR %2,3 14% (4% organic) Operating margin1,3 4% Product categories Residential interior, Residential exterior, Commerc
Slide 31: LED lighting - Kingfisher
What we sell LED lighting - Kingfisher UK market size c £100m Established 1988 UK market position / approx market share UK #4 / 15% Revenue as % of Group total 1,3 39% Revenue 3-year CAGR %2,3 14% (4% organic) Operating margin1,3 4% Product categories Private realm exterior lighting 1. 2022 2. 2019
Slide 32: LED lighting – DW Windsor
What we sell LED lighting – DW Windsor UK market size c £300m Established 1975 UK market position / approx market share UK #4 / 13% Revenue as % of Group total 1,3 39% Revenue 3-year CAGR %2,3 14% (4% organic) Operating margin1,3 4% Product categories Public realm exterior lighting 1. 2022 2. 2019 t
Slide 33: Portable Power – Masterplug and BG Sync EV
What we sell Portable Power – Masterplug and BG Sync EV UK market size c £250m Established 3 1988 UK market position / approx market share 3 UK #1 / 40% Revenue as % of Group total 1 25% Revenue 3-year CAGR %2 2% (-1% organic) Operating margin1 9% Product categories Extension leads, Cable reels, Ada
Slide 34: Who we sell to
Who we sell to Sales channel Description Example customers Retail DIY chains Pure play online Retail grocers Hybrid Chains selling to both professionals and consumers Professional Wholesale Chains selling to professionals only Professional Projects Sale agreed Electrical and general contractors Ligh
Slide 35: Performance by segment
Performance by segment Strong growth in each segment Wiring Accessories LED Lighting Portable Power vs vs vs vs vs vs 2021 2019 2021 2019 2021 2019 Revenue growth -29% +5% Revenue growth +29% +50% Revenue growth -15% +7% Profit growth -52% +9% Profit growth 0% +183% Profit growth -27% +15% 36% 39% 2
Slide 36: Who we sell to
Who we sell to Product segmental sales by sales channel (as % of total) – 2022 4% 1% 19% 28% 47% 19% Professional Products 67% Professional Wholesale 27% Hybrid Retail 30% 19% 61% 14% 7% 26% 19% 12% Wiring LED Portable Total Accessories Lighting Power Luceco plc 2022 Final Results Presentation 36
Slide 37: Where we operate
Where we operate Distribution Selling Sourcing to market markets 1% 4% 5% 2% 4% 10% 45% Europe 68% Sold in end market Americas UK Collected in China Asia Pacific China – OEM Middle East and Africa China 80% Europe - manufactured UK 49% 32% Group revenue Column1 Group revenue Column2 Group revenue by
Slide 38: We operate in attractive markets
Three reasons to invest 01 We operate in attractive markets Strong positions . . . . . . with significant growth potential Segment UK market position >£3.5bn Wiring Accessories #2 LED Lighting Top 10 £3.5bn Luceco revenue Currently addressable market – UK Portable Power #1 £2.1bn Electrical wholesal
Slide 39: We have an advantaged business model
Three reasons to invest 02 We have an advantaged business model • All products designed in-house • c. 100 R&D engineers • 50% of revenue from products designed within last three years • Strategic focus: DESIGN – New products to upsell existing categories – New products to extend existing brands 1 –
Slide 40: We deliver consistent and compelling financial outcomes
Three reasons to invest 03 We deliver consistent and compelling financial outcomes 2020 2021 2022 Component Metric Target 1 Results Results Results Revenue Total revenue growth >5% 2.4% 29.5% (9.6)% Profit Adjusted Operating Margin % >15% 17.0% 17.1% 10.7% Cash Adjusted Operating Cash Conversion % >
Slide 41: Group history
Group history The group has developed through business combinations and organic expansion into new products and territories Management Luceco LED Jiaxing expanded British General buyout of Management Jiaxing projects to 52,500m2 wiring BG and buyout backed facility sales team Acquisition accessories
Slide 42: Capital allocation policy
Capital allocation policy 01 Dividends 02 Capex 40-60% payout 3-4% of annual revenue Progressive Product development Manufacturing capacity <3 year payback Conservative leverage 1.0x – 2.0x Adjusted EBITDA Averaging 1.5x 03 M&A 04 Buybacks / Product adjacency Special Dividends Customer acquisition C
Slide 43: 2013 to 2022 financials
2013 to 2022 financials Adjusted metrics Income Statement £m 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 Revenue 65.6 82.3 103.1 133.7 167.6 163.9 172.1 176.2 228.2 206.3 Growth % 25.5% 25.3% 29.7% 25.4% (2.2%) 5.0% 2.4% 29.5% (9.6)% Gross Profit 18.3 25.1 33.8 40.5 48.4 50.6 62.3 70.2 84.7 74
Slide 44: 2013 to 2022 financials continued
2013 to 2022 financials continued Adjusted metrics Balance Sheet £m 2013 2014 2015 2016 2017 2018 2019 2020 20211 2022 Fixed assets 22.4 24.6 27.5 33.5 47.2 44.8 42.6 43.9 69.4 70.5 Inventory 14.0 23.8 26.2 35.4 44.2 32.8 32.2 37.2 56.6 47.5 Trade receivables 10.5 17.1 20.4 26.5 33.4 39.5 42.8 70.1
Slide 45: 2013 to 2022 financials continued
2013 to 2022 financials continued Adjusted metrics Cash flow statement £m 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 Operating Profit 5.9 8.4 11.5 14.5 14.7 8.5 18.0 30.0 39.0 22.0 Depreciation & amortisation 1.4 1.9 2.6 3.2 4.4 6.5 7.9 6.1 6.7 7.1 EBITDA 7.31 0.3 14.1 17.7 19.1 15.0 25.9 36.
Slide 46: Disclaimer
Disclaimer This presentation and information communicated verbally to you may contain certain projections and other forward-looking statements with respect to the financial condition, results of operations, businesses and prospects of Luceco plc. These statements are based on current expectations an