Ibstock Plc · LSE:IBST
Ibstock — H1 2022 Earnings Presentation
37 slides from Ibstock's earnings presentation, Jul 27, 2022
Slide 1: 2022 Half Year Results
2022 HALF YEAR RESULTS 27 July 2022 Project name: Kidbrooke, London Product used: Ivanhoe Cream Original
Slide 2: Disclaimer
Disclaimer The information contained in this presentation has not been independently verified and this presentation contains various forward-looking statements that reflect management’s current views with respect to future events and financial and operational performance. The words “growing”, “scope
Slide 3: Agenda
Agenda Overview Joe Hudson Financial review Chris McLeish Market update Joe Hudson Strategic & operational update Joe Hudson Summary & outlook Joe Hudson Q&A 3
Slide 4: Overview
Overview Strong first half performance with profit and cash materially ahead of prior year Supply chain challenges well managed Market backdrop remains encouraging in the early weeks of H2; confident in the full year Now expect adjusted EBITDA to be modestly ahead of previous expectations Good strat
Slide 5: Financial Review
FINANCIAL REVIEW Project name: Regent Village Ebsfleet Green Product used: Leicester Autumn Multis, Multi Yellow stock
Slide 6: Financial summary
Financial summary Significant progress in all key financial metrics Group Revenue Adjusted EBITDA EBITDA Margins £259m £71m 27.3% H1 2021: £202m (+28%) H1 2021: £55m (+29%) H1 2021: 27.1% (+20bps) Adjusted EPS Net debt Interim dividend per share 11.3p £36m 3.3p H1 2021: 7.9p (+43%) Dec 2021: £39m (£
Slide 7: Revenue bridge
Revenue bridge Revenues increased by 28% vs H1 2021 +£57m (+28%) £300m £259m Strong performance with Group revenues increasing £10m 28% on H1 2021 £250m £47m £74m £202m Clay revenues up 34% with mid single-digit volume £200m and strong pricing benefit; £2 million from new Telling GRC business £64m £
Slide 8: Clay
Clay Performance was above H1 2021, and ahead of expectations set at the start of the year 6 months ended 30 June 2022 (£m) 2022 2021 Total Revenue 186 138 Adjusted EBITDA 64 47 Margin 34.7% 34.1% Revenue increased by 34% year-on-year Strong commercial performance, with volume and price contributing
Slide 9: Concrete
Concrete Strong demand backdrop; output constraints in roofing 6 months ended 30 June 2022 (£m) 2022 2021 Total Revenue 74 64 Adjusted EBITDA 11 12 Margin 15.3% 18.5% Revenue increased by £10m, up 16% on H1 2021 Volumes broadly in line with comparative period Growth in fencing, walling and rail prod
Slide 10: Excellent cash flow performance
Excellent cash flow performance Adjusted operating cash flow £16m (48%) ahead of 2021 6 months ended 30 June 2022 2022 2021 Adjusted EBITDA 71 55 Δ in net working capital (10) (10) Continued strong focus on working capital Net interest (2) (2) Tax (1) (4) Cash conversion at 69%, 8 percentage points
Slide 11: Net debt further reduced to £36m
Net debt further reduced to £36m Net debt reduced by £3m in the period after growth investments and shareholder returns Closing net debt improved to £36m at 30 June 2022 Net debt decreased by £3m after capex, payment of dividends and the first £6m of share buybacks Leverage was below the bottom end
Slide 12: Full year 2022 guidance
Full year 2022 guidance Income statement Trading in the early weeks of the second half remains encouraging, with resilient demand across end markets Backed by strong forward order visibility, we expect good year on year progress in H2, despite capacity slightly below H1 due to phasing of planned shu
Slide 13: Market Update
MARKET UPDATE Project name: Blake’s Hotel, London Product used: MechSlip and Natural Blue Linear bricks
Slide 14: Robust structural drivers provide confidence in achieving our medium-term targets
Robust structural drivers provide confidence in achieving our medium-term targets Structural undersupply of Domestic clay brick demand Unrivalled asset base, range and housing stock, with continuing expected to exceed supply on service proposition will underpin preference for clay brick short-medi
Slide 15: Core residential markets update
Core residential markets update Resilient demand in new build and RMI markets Customers’ order books and reservations remain positive relative to long-term trend '000 Private Housing Starts 200 173 Mortgage availability and affordability levels remain healthy 165 166 166 158 146 150 118 82 Elevated
Slide 16: Diversified markets update
Diversified markets update Positive mid to long term growth prospects for our diversified markets UK Mid to high rise façades market is in excess of £1.5bn This market is larger than UK traditional, low-rise residential market Pace of growth is ahead of conventional low rise market Brick and other m
Slide 17: Inventory and production
Inventory and production Industry brick inventories remain at lower levels 350 120% Domestic clay brick production for the first 5 300 100% months of 2022 of around 0.8 billion – marginally ahead of prior year 250 80% Imported brick volumes in the first 5 months of 200 2022 of c.258m (or around 24%
Slide 18: Strategic & Operational Update
STRATEGIC & OPERATIONAL UPDATE Project name: John Modern Centre Product used: Cumberland Blend
Slide 19: Building from a strengthened platform
Building from a strengthened platform Investing for growth from our strong platform to meet the challenges of tomorrow Our Business Today Strategy Pillars Investment Levers Trends Investment driven growth through Accelerating two areas of focus: Sustainability Sustain ESG GROW DIVERSIFIED CORE GROWT
Slide 20: Ambition to deliver strong growth and returns over next 5 years
Ambition to deliver strong growth and returns over next 5 years Our targets: Revenue growth target 1. Target to grow revenues to >£600m by 2026 with an ambition to grow beyond this – 50% upside from 2021 2. Medium term profitability targets: EBITDA Margins in core Clay business of >35% >£600m Overal
Slide 21: Significant cash available to support further investment and shareholder returns
Significant cash available to support further investment and shareholder returns Capital structure, dividend and capital allocation policies remain unchanged: 0.5-1.5x net debt/EBITDA through the cycle Dividend pay-out of c.50% Clear capital allocation priorities Maintain and enhance assets Sustaina
Slide 22: Sustain
Sustain Strong progress – delivering on our commitments Health and safety Further progress on accident frequency rates – on track to deliver 2023 target Increasing emphasis on mental health acting as strong cultural catalyst Operational excellence Final commissioning of three enhancement projects de
Slide 23: Innovate
Innovate Innovation at the heart of our growth plans Product innovation Focus on innovation remains central to differentiating our customer proposition and diversifying revenue base Customer experience Enhancing customer experience at every stage of our engagement: Strengthened nationwide distributi
Slide 24: Growth in the core business
Growth in the core business Investment-driven growth in core business on track 5% increase in Clay network achieved - driven by execution of enhancement projects Active pipeline of growth opportunities across Clay and Concrete Further progress on Atlas & Aldridge redevelopments: Atlas & Aldridge inv
Slide 25: Growth in Ibstock Futures
Growth in Ibstock Futures Continued momentum in building diversified growth engine Market opportunity in brick slips gathering pace Strong near-term commercial pipeline - increasing competitiveness versus other façades Continue to progress towards development of Nostell slip factory Capacity expansi
Slide 26: Summary & Outlook
SUMMARY & OUTLOOK Ibstock Apprentices, Make UK, Birmingham
Slide 27: Summary & Outlook
Summary & Outlook Strong performance in H1 driven by robust demand and solid execution driving further upgrade in 2022 performance Continue to manage inflation and supply chain challenges well (with over 90% of H2 2022 and approaching 50% of 2023 energy locked in) UK construction markets remain soli
Slide 28: Q&A
Q&A Discussing The I-Range with Architects from The Space Studio
Slide 29: Appendices
APPENDICES Project name: Station Road Cambridge Product used: Sevenoaks Yellow, Mechslip
Slide 30: Brick market dynamics
Brick market dynamics Balancing supply and demand Brick Consumption (billions of bricks) Brick Production and Stock (billions of bricks) Domestic Despatches Imports Production Stock 2.1 2.0 1.9 1.9 1.9 0.5 1.8 1.8 0.3 0.4 0.5 1.6 1.6 0.3 0.2 1.5 0.3 1.4 1.4 0.1 0.3 1.3 0.1 0.1 0.1 0.1 0.9 2.0 2.0 2.
Slide 31: Growing our core business - Atlas
Growing our core business - Atlas Strongly positive fundamentals for the UK residential markets over medium term Deficit of new homes Government policy supportive Positive trends in RMI and build to rent which will also be supportive over the medium term Intensifying customer focus on decarbonisatio
Slide 32: A leading provider of clay and concrete building products
A leading provider of clay and concrete building products RMI Factors c.30% c.20% New build Merchants and End housing Sales other market c.60% channel c.50% Infrastructure Housebuilders and other direct new build c.30% c.10% Opportunity to RMI exposure Key supplier to the Complementary Cross-selling
Slide 33: Concrete revenue analysis
Concrete revenue analysis Lintels £5m Walling £5m Roofing £16m Concrete delivered a solid performance in H1 2022, continuing to benefit from its exposure to a broad range of residential and infrastructure markets, and resilient demand for its products. Overall Concrete revenue increased by £10m, Con
Slide 34: Income statement
Income statement Strong growth in performance with EPS up by 43% 6 months ended 30 June 2022 2022 2021 Revenue £259m £202m Adjusted EBITDA £71m £55m Normal depreciation (£13m) (£14m) Adjusted profit before interest and tax £57m £41m Cash interest (£2m) (£2m) Adjusted profit before tax £56m £39m Taxa
Slide 35: Adjusted income statement reconciliation
Adjusted income statement reconciliation Depreciation and Exceptional Non-cash Deferred tax 6 months ended 30 June 2022 Adjusted Reported amortisation items interest rate change Revenue £259m - - - - £259m Costs (£189m) (£19m) £1m - - (£208m) EBITDA £71m (£19m) £1m - - £51m Depreciation and amortisa
Slide 36: Balance sheet
Balance sheet 6 months ended 30 June 2022 2022 2021 Property, plant and equipment £384m £372m Right of Use assets £26m £26m Intangible £91m £92m Non-current assets £502m £490m Inventories £78m £66m Trade and other receivables £93m £82m Assets held for sale £0m £0m Current assets £171m £148m Total as
Slide 37: Cash flow
Cash flow 6 months ended 30 Jun 2022 2021 Adjusted EBITDA £71m £55m Working capital1 (£11m) £10m Net interest (£2m) (£2m) Tax (£1m) (£4m) Post-employee benefits - (£1m) Exceptional items - (£4m) Other - (£1m) Net cash flow from operating activities £57m £33m Total capex (£19m) (£10m) Surplus asset d