Marshalls Plc · LSE:MSLH
Marshalls — FY2018 Earnings Presentation
62 slides from Marshalls's earnings presentation, 2019
Slide 1: Marshalls plc 2018 Results Review and Outlook
Marshalls plc 2018 Results Review and Outlook Delivering long-term sustainable growth
Slide 2: Agenda
Agenda Delivering long-term sustainable growth • Highlights • Financial Performance • The Market Find out more online • Delivering Sustainable Growth www.marshalls.co.uk • Public Sector and Commercial • Domestic Find us on Facebook • Emerging UK Businesses MarshallsGroup • Strategy Update Follow us
Slide 3: Highlights
Delivering long-term sustainable growth Highlights Increase 2018 2017 % Revenue £491.0m £430.2m 14 EBITDA £80.8m £67.9m 19 Operating profit £64.8m £53.4m 21 Profit before tax £62.9m £52.1m 21 Basic EPS 26.29p 21.52p 22 Total dividends – ordinary and supplementary 16.00p 14.20p 13 Final ordinary divi
Slide 4: Strong track record
Delivering long-term sustainable growth Strong track record 2018 2013 5 year CAGR % Revenue £491.0m £307.4m +10 EBITDA £80.8m £30.2m +22 Operating profit £64.8m £16.1m +32 Profit before tax £62.9m £13.0m +37 Basic EPS 26.29p 6.94p +31 Total dividends – ordinary and supplementary 16.00p 5.25p +25 ROC
Slide 5: Financial Performance
Financial Performance Full Year 2018 Results
Slide 6: Revenue growth
Delivering long-term sustainable growth Revenue growth 550 500 56.9 3.9 491.0 450 430.2 £'m 400 350 300 2017 Revenue Landscape Other 2018 Revenue Products 6 Marshalls plc 2018 Results Review and Outlook
Slide 7: Revenue analysis
Delivering long-term sustainable growth Revenue analysis Revenue analysis: end market Revenue analysis: business area ↑4% 5% ↑4% Public Sector 19% & Commercial ↑3% Landscape Products 29% UK Domestic Other International 66% 81% ↑17% ↑20% 7 Marshalls plc 2018 Results Review and Outlook
Slide 8: Margin reconciliation
Delivering long-term sustainable growth Margin reconciliation Revenue Operating profit Impact on margin £m £m % 2017 430.2 53.4 12.4 Landscape Products 56.9 8.1 0.2 Other 3.9 3.3 0.6 2018 491.0 64.8 13.2 8 Marshalls plc 2018 Results Review and Outlook
Slide 9: Return on capital employed – reported basis
Delivering long-term sustainable growth Return on capital employed – reported basis 25.0% 23.0% 20.8% 21.9% 20.0% 19.0% 15.0% 12.5% 10.0% 8.1% 5.0% 0.0% 2013 2014 2015 2016 2017 2018 ROCE : CAGR of 22% over 5 years 9 Marshalls plc 2018 Results Review and Outlook
Slide 10: Cash flow from operating activities
Delivering long-term sustainable growth Cash flow from operating activities 2018 2017 £m £m Cash inflow arising from: Operating profit 64.8 53.4 Depreciation and amortisation 16.0 14.5 EBITDA 80.8 67.9 Net financial expenses paid (1.3) (0.9) Taxation paid (9.9) (10.5) Net gain on sale of property, p
Slide 11: Cash flow
Delivering long-term sustainable growth Cash flow 2018 2017 £m £m Net cash flow from operating activities 63.3 57.3 Capital expenditure (29.2) (20.7) Net proceeds from sale of property, plant and equipment 1.6 3.9 Acquisition of subsidiary undertaking (16.4) (44.5) Dividends paid (29.2) (24.1) Share
Slide 12: Significant borrowing facilities available
Delivering long-term sustainable growth Significant borrowing facilities available Cumulative Facility Facility £m £m Expiry date Committed facilities: Q1 2024 25 25 Q3 2023 20 45 Q3 2022 20 65 Q3 2021 20 85 Q3 2020 20 105 Q3 2019 20 125 On demand facilities: Available all year 15 140 • Bank facilit
Slide 13: Capital allocation policy
Delivering long-term sustainable growth Capital allocation policy 1 2 3 4 5 R&D Organic Ordinary Selective Supplementary growth NPD dividends acquisitions dividends Capital investment Increase research Maintain dividend Target selective Supplementary in growth projects. and development cover of 2 ti
Slide 14: Bank debt capacity
Delivering long-term sustainable growth Bank debt capacity • Continued strong cash generation • Net debt of £37.4 million at 31 December 2018 (2017: £24.3 million) reflecting cash outflow relating to the Edenhall acquisition of £16.4 million, increased capital expenditure and increased dividend • Ba
Slide 15: Strong track record of capital discipline
Delivering long-term sustainable growth Strong track record of capital discipline 2018 2017 2016 2015 2014 ROCE 21.9% 20.8% 23.0% 19.0% 12.5% Debtor days 43 41 39 39 38 Creditor days 61 58 56 53 59 Inventory turn (times per annum) 3.4 3.3 3.3 3.2 3.0 Liquidity ratio 1.6 1.6 1.6 1.6 1.6 (current asse
Slide 16: Pensions
Delivering long-term sustainable growth Pensions Balance Sheet • Company contributions to Defined Benefit Scheme reduced to zero under agreed Recovery Plan • 31 December 2018 surplus of £13.5 million (2017: surplus of £4.1 million) • Following the High Court ruling in the Lloyds Banking case, Scheme
Slide 17: Dividends
Delivering long-term sustainable growth Dividends • Progressive ordinary dividend policy 18.00 • 2018 dividends 16.00 • Interim and final (1) 12.0p (+18%) 14.00 4.00 • Supplementary (1) 4.0p 12.00 4.00 • Total 16.0 (+13%) 10.00 3.00 • Supplementary dividend: discretionary and non-recurring 8.00 2.00
Slide 18: The Market
The Market Full Year 2018 Results
Slide 19: CPA construction sector forecasts
Delivering long-term sustainable growth CPA construction sector forecasts 19 19 Marshalls plc 2018 Results Review and Outlook
Slide 20: CPA construction output forecasts - Winter 2018
Delivering long-term sustainable growth CPA construction output forecasts - Winter 2018 All Work Central Forecast % Growth on Last Year 20 Marshalls plc 2018 Results Review and Outlook
Slide 21: CPA sector cumulative forecasts MAT
Delivering long-term sustainable growth CPA sector cumulative forecasts MAT Key sectors for Marshalls 21 Marshalls plc 2018 Results Review and Outlook
Slide 22: Public Sector & Commercial
Public Sector & Commercial Full Year 2018 Results
Slide 23: ABI projects awarded
Delivering long-term sustainable growth ABI projects awarded All project Values 23 Marshalls plc 2018 Results Review and Outlook
Slide 24: Housing deficit
Delivering long-term sustainable growth Housing deficit Housing Completions▲1% in 2019 to 191,000 (CPA) ▼860,000 deficit since the 2007 target was set. 2 million deficit since 1980 when the target was last surpassed. In 2017, the target was increased to 300,000 new homes per year. FT 8th January 201
Slide 25: ONS total new housing orders and output
Delivering long-term sustainable growth ONS total new housing orders and output Total Housing Orders MAT % LY Total Housing Output MAT % LY 25 Marshalls plc 2018 Results Review and Outlook
Slide 26: Cross Rail / Elizabeth line progress
Delivering long-term sustainable growth Cross Rail / Elizabeth line progress Quoted on project and delivered Quoted on project No activity as yet 26 Marshalls plc 2018 Results Review and Outlook
Slide 27: Placemaking and pedestrianisation
Delivering long-term sustainable growth Placemaking and pedestrianisation Well-planned regeneration of the public realm can boost commercial trade by up to 40%* • Stoke-on-Trent Pedestrian-friendly project led to 30% more footfall • Sheffield Improvements to Peace Gardens lead to a 35% increase in f
Slide 28: Domestic
Domestic Full Year 2018 Results
Slide 29: Domestic installer order books
Delivering long-term sustainable growth Domestic installer order books 29 Marshalls plc 2018 Results Review and Outlook
Slide 30: Consumer project funding
Delivering long-term sustainable growth Consumer project funding Over 55s Pension Withdrawals Over 55s Equity Release ▲20% to £7.8bn in 12 months to 2018 Q4 ▲16% to £1.2bn on Home Improvements 1 million individuals = £7,800 each £3.6bn released in 2018, 64% planning Home & Garden improvements ( ) 30
Slide 31: Consumer intentions
Delivering long-term sustainable growth Consumer intentions Which of the following improvements are you likely to make to your home over the next 12 months? GFK DIY Consumer Intentions - Income £50k+ 35.0% 30.0% 25.0% Garden 21.8% 20.0% 15.0% Drive 12.7% 10.0% 5.0% 0.0% 2013 Q1 2017 Q2 2012 Q1 2012
Slide 32: Marshalls Register awards 2019
Delivering long-term sustainable growth Marshalls Register awards 2019 32 Marshalls plc 2018 Results Review and Outlook
Slide 33: Emerging UK Businesses
Emerging UK Businesses Full Year 2018 Results 33
Slide 34: Marshalls Landscape Protection
Delivering long-term sustainable growth Marshalls Landscape Protection Marshalls Landscape Protection 100% 90% Share of Marshalls Landscape Protection Total Value 80% 42% 53% 49% 70% 62% 58% 66% 65% 60% 50% 40% 35% 33% 30% 35% 31% 34% 20% 28% 29% 10% 23% 18% 8% 12% 7% 6% 6% 0% 2013 2014 2015 2016 20
Slide 35: Marshalls Recon Walling
Delivering long-term sustainable growth Marshalls Recon Walling 35 Marshalls plc 2018 Results Review and Outlook
Slide 36: Marshalls Premier Mortars
Delivering long-term sustainable growth Marshalls Premier Mortars 36 Marshalls plc 2018 Results Review and Outlook
Slide 37: Marshalls Aggregates
Delivering long-term sustainable growth Marshalls Aggregates Aggregates Volume - Index 2013 = 100 180 160 140 Weight (kg) Index 2013 = 100 120 100 80 60 40 20 - 2013 2014 2015 2016 2017 2018 37 Marshalls plc 2018 Results Review and Outlook
Slide 38: Strategy Update
Strategy Update Full Year 2018 Results
Slide 39: 2020 Strategy update
Delivering long-term sustainable growth 2020 Strategy update • 2018 PBT of £62.9m + 21% • 2018 EBITDA of £80.8m +19% • Self help programme well advanced – annual savings of £5 million • New Product Development continuing strongly – 12% of 2018 sales • Digital strategy providing real benefits • CPM i
Slide 40: Marshalls Year Strategy to 2020
Delivering long-term sustainable growth Marshalls 5 Year Strategy to 2020 Our Values Our purpose is to Create Better Spaces for Everyone; Our Purpose Socially, Environmentally and Economically. Leadership Our Continuing Mission is to Deliver Sustainable Growth through a Brand that Drives Our Mission
Slide 41: Digital
Digital Full Year 2018 Results
Slide 42: Artificial intelligence
Delivering long-term sustainable growth Artificial intelligence • AI will change the world – Marshalls embracing it • Natural language processing – c50% of all searches will be voice searches by 2020 • Marshalls Voice Assistant – over 80 questions asked in over 3,000 ways • Extended to “live chat” v
Slide 43: New Product Development
New Product Development Full Year 2018 Results
Slide 44: New products in 2018: Modal
Delivering long-term sustainable growth New products in 2018 : Modal 200*100 300*100 200*200 200*300 300*300 200*400 300*400 200*600 300*600 400*400 600*600 900*600 44 Marshalls plc 2018 Results Review and Outlook
Slide 45: New products in 2018: SPT
Delivering long-term sustainable growth New products in 2018 : SPT • Surface Performance Technology is not one process • Aesthetic isn’t the only advantage • Innovative processes allow us to achieve a differentiated offer • SPT highlights the value added products & extended guarantee • SPT® products
Slide 46: Self Help Investment
Self Help Investment Full Year 2018 Results
Slide 47: Increasing self help capital investment
Delivering long-term sustainable growth Increasing self help capital investment • Important part of the 2020 Strategy • Original plan to invest additional £15m over 3 years to reduce cost base by £5m per annum • Further self help opportunities led to capital expenditure of £29.2m in 2018 (including
Slide 48: Self help investments: Mells
Delivering long-term sustainable growth Self help investments : Mells 48 Marshalls plc 2018 Results Review and Outlook
Slide 49: Acquisitions
Acquisitions Full Year 2018 Results
Slide 50: Marshalls acquisitions: CPM
Delivering long-term sustainable growth Marshalls acquisitions : CPM • M1 Junctions 23-25 • M6 Junctions 2-4 • M6 Junctions 16-19 • M20 Junctions 3-5 • M23 Junctions 8-10 50 Marshalls plc 2018 Results Review and Outlook
Slide 51: Acquisition of Edenhall
Delivering long-term sustainable growth Acquisition of Edenhall • In line with stated Group strategy of expanding into adjacent building products related to New Build Housing • Acquired in December 2018 for an initial cash consideration of £16.4 million including take on of £4.7 million of existing
Slide 52: Marshalls acquisitions: Edenhall
Delivering long-term sustainable growth Marshalls acquisitions : Edenhall 52 Marshalls plc 2018 Results Review and Outlook
Slide 53: Summary
Delivering long-term sustainable growth Summary • Revenue growth – +14% (2013-18: +60%, CAGR: 10%) • Strong PBT growth – +21% (2013-18: +384%, CAGR: 37%) • Improving operating margins – up to 13.2% (2017: 12.4%) • Continued strong ROCE – 21.9% (reported basis) (2013-18: +1,380 basis points, CAGR: 22
Slide 54: Appendices
Appendices Full Year 2018 Results
Slide 55: Profit for the financial year
Delivering long-term sustainable growth Profit for the financial year 2018 2017 Increase £m £m % EBITDA 80.8 67.9 19 Depreciation / amortisation (16.0) (14.5) Operating profit 64.8 53.4 21 Financial income and expense (net) (1.9) (1.3) Profit before tax 62.9 52.1 21 55 Marshalls plc 2018 Results Rev
Slide 56: Construction Products Association
Delivering long-term sustainable growth Construction Products Association 2016 2017 2018 2019 2020 £m / % change Actual Actual Forecast Forecast Forecast Housing 36,291 40,539 42,132 42,913 43,281 12.2% 11.7% 3.9% 1.9% 0.9% Other New Work 62,916 66,139 63,647 63,092 64,614 2.5% 5.1% -3.8% -0.9% 2.4%
Slide 57: Additional information and ratios
Delivering long-term sustainable growth Additional information and ratios 2018 2017 Interest: Charge £1.9m £1.3m Cover 34.1 times 41.1 times EPS 26.29p 21.52p Dividend: 2018 interim and final recommended 12.00p 10.20p Cover (ordinary) 2.2 times 2.1 times Supplementary dividend recommended 4.00p 4.00
Slide 58: Financial flexibility
Delivering long-term sustainable growth Financial flexibility 2018 Actual EBITA: Interest charge 60.3 times Net Debt: EBITDA 0.46 times • EBITA to interest charge must be greater than 2.5 times • Net debt to EBITDA must be less than 3.0 times • Net assets must be greater than £100 million 58 Marshal
Slide 59: Impact of IFRS - Leases
Delivering long-term sustainable growth Impact of IFRS 16 - Leases • Effective from 1 January 2019 – with almost all leases being recognised on the balance sheet • Recognition of a right-of-use asset and a lease liability on the balance sheet (included within debt) • Marshalls is applying the modifi
Slide 60: Net assets
Delivering long-term sustainable growth Net assets £m 2017 Net Assets 237.6 Impact of movements in the year: Profit for the financial year 51.9 Dividends (29.2) Actuarial movement on pensions (after tax) 8.3 Hedging reserve (0.1) Share issue 1.8 Share-based payments (after tax) (2.0) Purchase of own
Slide 61: Disclaimer
Delivering long-term sustainable growth 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 other related verbal or written communications. • This prese
Slide 62: Marshalls
Marshalls Creating QRerter Spaces Oe E Gita ® fyatiess K COMMUNITY MADE IN Fair Tax