Supreme Plc · LSE:SUP
Supreme — FY2023 Earnings Presentation
33 slides from Supreme's earnings presentation, Jul 5, 2023
Slide 1: Results for the year ended 31 March 2023
Results for the SUPREME year ended 31 March 2023
Slide 2: Disclaimer
This presentation has been prepared by Supreme plc (“Supreme” these presentation slides to or in any such jurisdiction. Past performance is no guide to future performance. If you are or the “Company”) and the information contained herein is considering engaging in investment activity, you should see
Slide 3: Executive team
SANDY CHADHA SUZANNE SMITH ANDREW BEAUMONT DAVID NEILSON MIKE HOLLIDAY JAMES WILLIAMS • The Executive Team is supported by 4 Divisional (product) leaders • Each has deep sector and industry knowledge and experience • Wholly responsible for their own category • 100 years’ service for Supreme across t
Slide 4: Supreme company overview
• Supreme is a manufacturer, licensee, brand owner and distributor of branded, discounted staple consumer goods sold principally to UK high street discount retailers and supermarkets • Our products are high-repeat, non-discretionary purchases that are not returned and principally exist in the follow
Slide 5: Leveraging our vertically integrated platform
Leveraging our vertically integrated platform to take fast-moving consumer brands to our extensive customer network Diverse Compelling product & Proven and customer customer High quality successful offering with portfolio management M&A strategy emphasis on Strong value We own team financials brands
Slide 6: Integrated business model
NEW • Both developed in-house by PRODUCTS Supreme alongside new third-party launches • Own brand and licensed brands BRANDS • Distribution agreements Marketing R&D Bespoke PRODUCT • NPD for own brands plus private label Design packaging DEVELOPMENT brand development for customers • In house manufact
Slide 7: Financial highlights
Financial highlights ● 19% revenue growth Financial highlights ● 75% increase in Vaping revenue to £76.1m ● Reduction in Adjusted EBITDA1 driven by temporary factors ● Highly cash generative; £19.3m cash from operations ● Net debt (pre-IFRS16) neutral at year end plus £30m unutilised borrowing facil
Slide 8: Operational summary
Operational summary ● 3 acquisitions completed and integrated ● New lease for 167,000 sq ft facility to support growth ● Disposal of T Juice generated £4.0m of cash in FY23 ● Record levels of investment in M&A and capex to support future growth 8
Slide 9: Very strong start to FY24
• Very strong start to FY24 • The core business and all FY23 acquisitions are performing better than expected • The Group recently announced its status as master distributor for the UK’s leading vaping brands; Elfbar and Lost Mary into grocery retail chains • The combined impact of the accelerated t
Slide 10: Batteries
cB DURACELL Panasonic
Slide 11: Stable core product set
Stable core product set • Best year ever in Supreme’s 35-year £39.5m +13% history 11% revenues revenue gross profit margin • The bedrock of the business and the “door- opener” 25% of group revenue • Another year of solid profitable growth – £39.5m 13% growth in revenue £36.6m £36.4m £34.9m £34.4m £3
Slide 12: Lighting
oC ae ees a ‘ vi J e LIGHTING |
Slide 13: Lighting: recovery underway
Recovery underway • Revenue fell by 43% £15.4m 27% • Retailer overstocking and temporary slow- revenue gross profit margin down in consumer spending 10% • BUT all customer relationships and listings of group revenue retained • New licence agreements signed & others £27.0m £25.9m £25.6m £23.2m extend
Slide 14: Sports Nutrition & Wellness
-e BATTLE BITES HIGH PROTEIN BAR? Millions & HEALTH & WELLNESS Millions
Slide 15: Gaining market share
Gaining market share • £0 to £16m since FY19 ● 5% growth in revenue against a backdrop of unprecedented inflation (2–3x price increases) • In-house UK manufacturing category ● Launched new-look Sci-MX and transferred all manufacturing inhouse 11% of group revenue ● Buoyant private label business alo
Slide 16: Vaping
6 16
Slide 17: Vaping: outstanding performance
Outstanding performance • Record performance driven by: £76m >1.3m 75% - 3 acquisitions (manufacturing consolidated revenues regular users sales growth for all 3) of 88vape - NPD (disposables launched in FY23) 50% - prison contract (25% growth) of group revenue - general market growth £76.1m • Ongoi
Slide 18: Highly successful targeted acquisition strategy since IPO
Implemented a highly successful and 7 targeted acquisition strategy since IPO 6 5 £30m un- 4 M&A will utilised facilities 3 Additional continue to be at year end 2 All deals have earnings upside a key part of 1 Six deals been following the growth earnings- integration strategy Can execute since IPO
Slide 19: Neil O'Brien MP statement on Smoke-free 2030
Neil O’Brien MP 2023 statement on Achieving Smoke-free 2030 (April 2023) We need to exploit the huge potential of vaping to help adult smokers to quit For adults, vaping is substantially less harmful than smoking and we now have high-quality evidence from Oxford University that compared to nicotine
Slide 20: Supreme welcomes Government measures on youth vaping
Supreme welcomes all Government measures that tackle the growing challenge of youth vaping whilst simultaneously allowing for vaping to continue its good work • We do not target younger audiences; we do not market our owned brands on social media nor do we believe our flavours or packaging are direc
Slide 21: Elfbar and Lost Mary master distributor
£25-30m revenue expected in FY24 with around £2m of incremental Adjusted EBITDA1 • Master distributor for Elfbar and Lost Mary • Will supply UK’s biggest grocers and retailers • Cross-sell opportunities • Low gross margin % but very modest overheads • Working capital investment, 35% ROCE 21
Slide 22: New 167,000 sq ft Ark facility
In November 2022, Supreme signed a 15 year lease for a 167,000 sq ft facility Based in Trafford Park (Manchester), Ark will become 1 the new principal site for the Group covering manufacturing, storage and distribution The site will allow for consolidation of existing 12 operations Today Its proximi
Slide 23: Financial summary
Financial summary 23
Slide 24: Financial summary
FY23 FY22 % change ● Revenue growth of £24.8m (19%) £m £m Revenue 155.6 130.8 +19% ● £12.8m from M&A Gross profit 40.9 38.5 +6% ● £12.0 organic Gross profit margin 26% 29% -3% Admin expenses (21.5) (17.4) +23% ● Reduced GP % due to sales mix (Vaping) and Adjusted EBITDA1 19.4 21.1 -8% inflationary p
Slide 25: Divisional revenue and gross profit
FY23 FY22 % change • Lighting reduction owing to retailer over- £m £m stocking and slow down in consumer spending Revenue • Vaping growth of £32.5m (75%) Batteries 39.5 34.9 +13% Lighting 15.4 27.0 -43% • 40% arising from M&A Vaping 76.1 43.6 +75% • Remainder from new product launches Sports Nutriti
Slide 26: Revenue Bridge
Revenue Bridge (£ million) 3.9 11.6 19.5 13.0 155.6 130.8 FY 2022 Acquisitions Vaping Organic Other Lighting FY 2023 26
Slide 27: EBITDA Bridge
EBITDA Bridge (£ million) 2.1 4.9 6.5 1.0 3.5 0.5 0.4 21.1 19.4 FY 2022 Acquisitions Vaping Lighting Wellness Overheads - Overheads - Other FY 2023 - GP Organic margin Acquisitions Underlying pressure 27
Slide 28: Balance sheet
FY23 FY22 £m £m • PPE increase due to new 15 year Fixed Assets lease signed Property, Plant & Equipment 20.8 4.7 Intangibles 15.3 3.7 TOTAL 36.1 8.4 Working capital • Intangibles increase arising from Stock 25.6 25.9 acquisitions Debtors & prepayments 20.9 19.0 Creditors & accruals (26.1) (17.3) Cor
Slide 29: Cash flow
FY23 FY22 £m £m • Cash generated from operations Adjusted EBITDA 19.4 21.1 almost doubled despite less profit Movement in working cap 2.6 (4.8) reported Tax paid (1.7) (4.2) Operating cash before adjusted items 20.3 12.1 Cash impacting Adjusted items (1.0) (0.4) • Capex includes Operating cash flow
Slide 30: Outlook
• Combination of recent acquisitions and organic growth underpin strong performance from Vaping division • Alongside Vaping, Sports Nutrition & Wellness is also trading ahead of expectations • Recently announced Elfbar and Lost Mary vape distribution agreement will further drive both revenue and Adj
Slide 31: Appendices
sndices
Slide 32: Disposable pod
SUPREME Disposable pod 32
Slide 33: Supreme PLC
SUPREME PLC