Alumasc Group Plc · LSE:ALU
Alumasc — The Alumasc Group — Investor Presentation (October 2024)
63 slides from Alumasc's investor presentation, Oct 10, 2024
Slide 1: Capital Markets Event
Capital Markets Event 10th October 2024 SUSTAINABILITY DRIVING FURTHER GROWTH Alumasc Roofing – Hydrotech-Buchanan Wharf, Building 5
Slide 2: Welcome
1 Welcome Vijay Thakrar Chair Alumasc Water Management – Skyline and Rainwater – Weston-Super-Mare General Hospital The Alumasc Group plc 2
Slide 3: Agenda
1 Welcome.........................................................Vijay Thakrar 2 Our Investment Proposition........................Paul Hooper Agenda 3 Our Ambitions...............................................Simon Dray 4 Housebuilding Products.............................Michael Leaf 5 Building
Slide 4: Our Investment Proposition
2 Our Investment Proposition Paul Hooper Chief Executive Alumasc Roofing – Hydrotech and Derbigum – Pall Mall, Liverpool The Alumasc Group plc 4
Slide 5: Three divisions, diverse range of products & markets
Three divisions, diverse range of products & markets Building Products for a Sustainable Future Water Building Housebuilding Management Envelope Products Climate change resilience through Building decarbonisation/greening/ Building decarbonisation through urban water and stormwater climate resilienc
Slide 6: Sustainability driving future growth
Sustainability driving future growth • Market leadership: sustainable solutions to the global built environment • Driving shareholder value through clear strategic growth objectives • Significant long term growth drivers drive revenue generation: – Housing undersupply / ageing building stock – Build
Slide 7: Strong track record, good momentum
Strong track record, good momentum Portfolio refocus completed in 2022 Revenue (£m) Operating margin (%) • Focus on sustainable building products Continuing operations Continuing operations, underlying • Supply only 100.7 • Strong brands and long-term demand drivers 89.4 89.1 13.5% 13.6% 77.8 71.3 1
Slide 8: Clear & Well-Established Growth Strategy
Clear & Well-Established Growth Strategy Championing Accelerating Organic Driving Margin Value-Accretive Sustainable Building Sales Growth Improvement Investment Products • Outperform general UK • Operating margin • Investment supported • Align portfolio with construction sector target 15-20% by cas
Slide 9: Potential for significant demand growth
Potential for significant demand growth Exposure to higher-growth, sustainability-driven markets driving continued outperformance Key market volumes remain significantly below pre-pandemic levels 2024 volumes vs 2019 Significant structural volume increases potential • Key market volumes 15-20% below
Slide 10: Our Ambitions
3 Our Ambitions Simon Dray Group Finance Director ARP – Bespoke Legacy-style cast aluminium guttering system – Oaklands, Yorkshire The Alumasc Group plc 10
Slide 11: Our key financial performance indicators
Our key financial performance indicators Revenue Underlying operating Cash Carbon growth margin conversion2 reduction3 >UK construction Further 42% Targets growth 15-20% >100% reduction by 2030 Scope 3 targets in place by end 2025 +7.1% CAGR1 +435 bps 93% average 70% reduction Results FY19-24 FY19-2
Slide 12: Margin improvement FY19-24
Margin improvement FY19-24 435bps improvement 20 Footprint Operational Operational rationalisation efficiencies leverage in operating margin 18 Footprint 16 rationalisation 14 1.6% • Site consolidation 12 1.4% facilitated by Wade 10 1.3% acquisition 8 Operational efficiencies 14.1% 6 • Continuous ef
Slide 13: Medium term margin growth opportunities
Medium term margin growth opportunities Dover site closure ARP synergies Operational leverage Medium term ambition Dover site closure 20 • Planned for 18 Target range December 2024, 15-20% annualised cost 16 14 reduction £0.8m pa 12 ARP synergies • Procurement 10 and operational 8 efficiencies; init
Slide 14: Strong cash generation & robust balance sheet
Strong cash generation & robust balance sheet Cash generation FY19-FY24 Free cash flow Operating cash flow Operating cash flow +36% CAGR £17.1m Conversion ratio average 93% £12.7m £10.1m Average annual capital expenditure £2.5m £6.1m £8.6m £6.3m £7.3m £8.3m £3.7m £2.4m Cumulative free cash flow £26.
Slide 15: Capital allocation priorities
Capital allocation priorities Maintain debt at Strong cash generation supports growth and shareholder returns prudent level Debt leverage maintained below 1.5x EBITDA Organic growth investment • Revenue: Invest in organic – Technical sales/customer support growth – New product development – Overseas
Slide 16: M&A criteria
M&A criteria M&A target characteristics Key areas of focus Bolt-on (to c.£20m EV) Water Building Housebuilding Operating in Alumasc markets / Management Envelope Products close adjacents Consistent with Group margin and Consolidation/scale cash generation targets Technology Immediately earnings accr
Slide 17: M&A case studies
M&A case studies Typical PBT multiples up to 7x • Timloc (Sep 2004) £3.4m cost (8% ROI on historic PBT) • Rainclear (Dec 2012) £0.7m cost (26%) • Wade (Jan 2018) £8.0m cost (18%) • ARP (Dec 2023) £8.5m initial cost (13%) Investment in growth potential and synergies drive ROI improvement • Timloc 35%
Slide 18: Housebuilding Products
4 Housebuilding Products Michael Leaf Executive Director & Housebuilding Products Divisional Managing Director Timloc Factory The Alumasc Group plc 18
Slide 19: The Timloc House | Basket of Products
The Timloc House | Basket of Products • From ground level right up to the roof ridge • Distribute to roofing merchants, builders merchants, plumbing merchants, specialist distributors • Used by ground workers, brickwork contractors, plumbing contractors, dry lining insulation contractors, roofing co
Slide 20: What Sets Timloc Apart?
What Sets Timloc Apart? • Industry leading, next working day delivery on all orders of standard stock items placed before 12pm • Industry leading low carriage-paid order values of £100 to branch and £150 direct to site • Broad range of products – “one stop shop” • Unique service propositions – singl
Slide 21: Roadmap for Future Growth
Roadmap for Future Growth Margin Market New Product Building Enhancement Growth Development Regulations • Further automation – • Underlying demand • Drive to net zero housing • Future Homes increased throughput for new houses Standard 2025 • Adjacent channels • Larger tools – • Government target • B
Slide 22: Sustainability | Underpins Everything We Do
Sustainability | Underpins Everything We Do • Over 75% of polymers we purchase are from recycled materials • First building products manufacturer to become a CO2 neutral manufacturer • First building products manufacturer to use 100% renewable energy • All packaging is fully recyclable and 70% comes
Slide 23: Sustainability | Net Zero Housing
Sustainability | Net Zero Housing • In 2022, emissions from residential buildings accounted for between 20 to 30% of greenhouse gas emissions in the UK • The 2025 Future Homes Standard requires every new home in England to produce 75% to 80% less carbon emissions • The new Vistry Innovation Centre s
Slide 24: Margin Enhancement | NPD, Building Regs, Sustainability
Margin Enhancement | NPD, Building Regs, Sustainability • Patented product design • Future Home Standard – Air source heat Pumps 15 mm pipe • Twin shot technology – outsourced • Brought in house – investment in automation • Changed to recycled materials – plastic and TPE • Significant margin enhance
Slide 25: Adjacent Channels | Roofing Merchants
Adjacent Channels | Roofing Merchants • Significant investment in Roof Tile Vent Tools • Targeted roofing merchants • Roofline by Timloc • Inventive Tile Vents • Further investment in roofline products • Investment in automation, driers • Patented products • Third party tested The Alumasc Group plc
Slide 26: Building Regulations | Approved Document Part B: Fire Safety
Building Regulations | Approved Document Part B: Fire Safety • Significant changes in Building Regulations since Grenfell • Non-combustible products in cavities above 11 metres (residential) • Fire rated loft access doors – 2.5 storeys and above • Fire rated cavity barriers – commercial residential
Slide 27: The Market | Private Housing Starts & Completions
The Market | Private Housing Starts & Completions • Underlying demand for housing 2022 2023 2024 2025 2026 • Government target to build 1.5 Actual Actual Projection Projection Projection million houses over next 5 years Starts 202,428 171,265 152,051 170,699 180,201 % Growth -1% -15% -11% 12% 6% • 2
Slide 28: Timloc Building Products | Key Take Aways
Timloc Building Products | Key Take Aways • Modern, automated, well-invested factory • Significant capacity for growth • Agile, quick to respond to a changing environment • Unique service proposition • New Product Introduction key to growth • Changing Building Regulations present opportunities • Sus
Slide 29: Building Envelope
5 Building Envelope Gilbert Jackson Executive Director & Building Envelope Divisional Managing Director Alumasc Roofing – Hydrotech Hot Melt and Derbigum Bituminous Membrane – Oldham Road, Manchester The Alumasc Group plc 29
Slide 30: What We Do
What We Do • Advisers and specifiers to provide high-end Flat Roofing Systems and Solutions to the construction market • Early design stage involvement • Client base include:- – Architects – Building Surveyors – Local Authorities – Education Trusts – Health Boards – Blue Chip Clients • Some of the h
Slide 31: Products and Ranges
Products and Ranges Bituminous Membranes Bituminous Membranes Hot melt membranes Liquid Roofing Solutions Single Ply Membrane Metal Sheeting Ancillary Roof Support Metal Pitched Roofing The Alumasc Group plc 31
Slide 32: Opportunity and Drivers
Opportunity and Drivers • Opportunity to continue market • Legislative drivers :- share growth – Construction 21 system compliance • Anticipated increase in funding within – National Model Design Code education and health properties. (Guidance 24) • New funding streams available for solar – Construc
Slide 33: Evolving Client Demands
Evolving Client Demands Environmental Social Governance • Reduction in embodied • Local Apprenticeship uptake • Compliance with current carbon of the materials and upcoming guidance/ • Benefits to local legislation • Increased recycled content. communities – education, IT We have the highest gifting
Slide 34: Taking Market Share
Taking Market Share c.13% share of a growing UK market Competitor G Competitor F • Market share 6% – 13% Competitor E 2% 4% in last 5 years 5% Competitor D • Adjacent markets 7% 33% Competitor A • Export into Ireland Others 12% • Additional funding streams available • Legislation 12% • Ageing health
Slide 35: Evolution of Membranes
Evolution of Membranes Depolluting roof Clean the air with a CO2 neutralising membrane • Features a natural olivine granule • The membrane contains 1.4 kg/m² of olivine, so it has the capacity to neutralise 1.75 kg/m² CO2/m e.g. an area of 1000m = 50.33 kg CO2 /yr & 1750 kg CO2 /30 yrs • The olivine
Slide 36: Adjacent Market – System Focus
Adjacent Market – System Focus • No penetration of the roofing system, reducing risk • Thermal performance of the building is enhanced • Financial stability and guaranteed energy production • Carbon reduction of the building is dramatically enhanced contributing to carbon reduction targets and NET Z
Slide 37: Water Management
6 Water Management Paul Hooper Chief Executive & Water Manage- ment Divisional Managing Director Alumasc Water Management – Heritage Cast Aluminium Rainwater Systems – Hertfordshire The Alumasc Group plc 37
Slide 38: Market Position
Market Position Our integrated Water management solutions brands are typically positioned in the top two positions of their market. The Alumasc Group plc 38
Slide 39: Key Products
Key Products A wide range of premium products providing proven Rain-to-Drain solutions. Fascia & Soffit Coping Window Surrounds Roof Outlets Shower Drains SML Cast Iron Access Covers Slotdrain Kerbdrain Door Canopies Column Casings Planters Aluminium Cast Iron Steel Linear Drainage Floor Gullies Rod
Slide 40: Growth Opportunities
Growth Opportunities Alumasc Water Management Growth Opportunities Construction Industry Forecasts 2024-2026 • Market conditions forecast to improve from 2025 Key Points • Specification/New Product Development focus to drive market share • Construction output to fall by 2.9% in 2024 and rises by 2.0
Slide 41: Growth Strategy
Growth Strategy Investment & Sustainability Sales Growth Margin Growth Efficiency Providing water management Targeting a larger addressable Capitalising on supply chain Manufacturing centres of solutions for a sustainable market by providing solutions synergies and manufacturing excellence. future.
Slide 42: Spotlight on: Rainwater Goods
Spotlight on: Rainwater Goods Market leader in Metal Rainwater goods Rainwater goods market by value By material, estimated Addressable market currently dominated by plastic Architectural aluminium Alumasc distinction: • Highly specified Metal Plastic rainwater rainwater • Recognised brand, synonymo
Slide 43: Spotlight on: Exports
Spotlight on: Exports Main • Gatic engineered Total Group • Y/E ‘23 : c £5m exportable access covers exports • Y/E ‘24 : c £10m products • Gatic Slotdrain Main • Airports Current areas • UK areas of • Seaports of strength • Hong Kong application • Military facilities • Singapore • Prisons • Middle E
Slide 44: Gatic/Wade Exports
DRAINAGE & ACCESS COVERS Gatic/Wade Exports WADE BUILDING DRAINAGE Worldwide Distributors European Distributors Australia Macau Panama Thailand Austria Eire Italy Sweden Bahrain Malaysia Peru UAE Belgium France Netherlands Serbia Canada Mexico Philippines USA Cyprus Germany Poland Slovakia India New
Slide 45: Export opportunity
Export opportunity Slotdrain: Pago Pago International Airport, F900 Recessed Cover array: Chek Lap Kok Airport, American Samoa Hong Kong The Alumasc Group plc 45
Slide 46: Export Case Study – Hong Kong Airport
Export Case Study – Hong Kong Airport The Alumasc Group plc 46
Slide 47: Water Management Profit Growth Drivers Summary
Water Management Profit Growth Drivers Summary Relocation of Access Cover New Export ARP manufacturing Further Products growth synergies to Halstead / acquisitions closure of Dover site The Alumasc Group plc 47
Slide 48: Spotlight on: ARP acquisition
Spotlight on: ARP acquisition M&A target characteristics ARP Bolt-on (to c.£20m EV) Maximum £10m EV Operating in Alumasc markets/close adjacents Rainwater management & architectural aluminium Consistent with Group margin and cash Cash generative; pre-synergy returns in line with generation targets A
Slide 49: Introduction to ARP
7 Introduction to: Steve Dann Managing Director, ARP Group ARP – Mustang® 125mm Seamless Guttering & Colonnade Swaged Aluminium Rainwater Pipes – Langton House, Leicestershire The Alumasc Group plc 49
Slide 50: ARP Group Structure
ARP Group Structure Aluminium Roofline Products Ltd www.arp-ltd.com Envelope Solutions Ltd trading as www.guttersonline.co.uk Cast Iron Superstore Ltd trading as www.castironsuperstore.co.uk www.aluminiumsuperstore.co.uk www.steelsuperstore.co.uk The Alumasc Group plc 50
Slide 51: History
History 1983 1990s 2000s 2010s 2020s Trading as Alstock Commenced • Entry into Fascia, • Entry into Cast Iron • Acquisition of Cast Ltd supplying supply of Soffit, Coping Rainwater market Iron Superstore Ltd seamless gutters downpipes to market • Launch of • Commence complement • Introduced in Gutte
Slide 52: Facilities Overview
Facilities Overview The Alumasc Group plc 52
Slide 53: Complementary Routes to Market & Specification
Complementary Routes to Market & Specification Routes to Market Specification ARP ARP Consumer Other spec Online Brand spec National Contractors Merchants Open Spec Independent Merchants Alumasc Water Management Alumasc Water Management Consumer Contractors Online Other spec Open Spec Independent Me
Slide 54: Key Product Lines
Key Product Lines The Alumasc Group plc 54
Slide 55: Sales Performance
Sales Performance Key Sales Growth Activities 2024-25 • Standardise & Launch Canopy ARP Ltd Sales Progression & Window Surrounds offering £14m (GBP £m) • Increase sales of Seamless Gutters £12m through focused campaigns £10m • Introduction of Harmer Outlets £8m to ARP offering £6m • Improved Project
Slide 56: Key Projects
Key Projects Online Interface to Shopfloor Barcode Product Development Good to Great (G2G) ERP System Scanning • Active new product • Transforming ARP from • Rapid Sales Order • Live tracking of development a “Good” company into Processing orders through the programme to deliver an enduring “Great”
Slide 57: Acquisition Benefits
Acquisition Benefits Acceleration Access to of New Product Ability to share greater Technical, Development resources as Marketing & through access to required i.e. Specification wider technical manufacturing expertise resource Greater Enhanced Access to opportunities visibility & Capital for for emp
Slide 58: Synergies
Synergies Procurement Manufacturing Cross Selling Opportunities • Access to a wider supply chain Exchange of best practices such as: Access to a wider product range • Active programme to reduce • Quicker drying paint for Cast Iron • Comprehensive & more costs in areas such as: • Welding processes co
Slide 59: Introduction to Seamless Gutters
Introduction to Seamless Gutters The Alumasc Group plc 59
Slide 60: Client Endorsement
8 Client Endorsement James Broady Managing Director, Central Group Alumasc Water Management Solutions – Soffit, Fascia, Sloping Coping, Rainwater Goods including GX Joggle Box Gutters and flush joint pipe, Bespoke Box Ends and Bespoke Dormer Window Surrounds – Dukeries Homes, Lake View, Mansfield Th
Slide 61: Closing Remarks
9 Closing Remarks Vijay Thakrar Chair Alumasc Roofing – Hydrotech and Derbigum – Pall Mall, Liverpool The Alumasc Group plc 61
Slide 62: Our investment proposition
Our investment proposition • Track record of sustainable profit & dividend growth • Well-established growth strategy • Long-term structural growth drivers from our sustainability-linked products • Premium products and brands with strong market positions in the UK, with strong export potential • Robu
Slide 63: Presenters
Presenters Vijay Thakrar Chair (appointed 2022). Non-executive of Alpha FX Group plc, RSM Group and Chair of Treatt plc. Previously served as Non-Executive Director on various Boards, including The Quoted Companies Alliance, Sanderson Design Group plc and Quorn Foods, ex-partner at Deloitte and E&Y.
The Alumasc Group — Investor Presentation (October 2024) on 6ix