Ibstock Plc · LSE:IBST
Ibstock — H1 2018 Earnings Presentation
33 slides from Ibstock's earnings presentation, Aug 9, 2018
Slide 1: Interim Results Presentation, Six Months to 30 June 2018
INTERIM RESULTS PRESENTATION | SIX MONTHS TO 30 JUNE 2018
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: Presenting Today
PRESENTING TODAY Kevin Sims Joe Hudson CFO CEO 3
Slide 4: Agenda
AGENDA Overview Financial review Operating review Summary Q&A Joe Hudson Kevin Sims Joe Hudson Joe Hudson 4
Slide 5: Overview
OVERVIEW Financial Overview – six months ended 30 June 2018 Interim dividend of 3.0p Group revenue Adjusted Net debt to Continued strong per share up 1% to EBITDA down LTM EBITDA at underlying cash plus supplementary £230m 2% to £58m 1.1x generation dividend of 6.5p per share Operational Overview –
Slide 6: Agenda
AGENDA Highlights & Overview Financial review Operating review Summary Q&A Joe Hudson Kevin Sims Joe Hudson Joe Hudson 6
Slide 7: Financial Highlights Six Months Ended 30 June 2018
FINANCIAL HIGHLIGHTS SIX MONTHS ENDED 30 JUNE 2018 Revenue £230m 1% Adjusted EBITDA1 £58m 2% EBITDA margin % 25% 1%pt Reported EBITDA £66m 7% PAT £42m 37% ROCE2 18% ◀ Cash conversion3 42% 1%pts Net Debt to EBITDA 1.1x 0.3x Interim dividend 3.0p 15% Supplementary dividend 6.5p - Adjusted EPS 9.6p 1%
Slide 8: P&L Reconciliations Six Months Ended 30 June 2018
P&L RECONCILIATIONS SIX MONTHS ENDED 30 JUNE 2018 Adjusted EBITDA to Statutory profit (£m) Adjusted EBITDA (£m) to Adjusted EPS Adjusted EBITDA 1H 2018 58 Adjusted EBITDA 1H 2018 58 Exceptional items1 8 Depreciation (11) Interest - cash2 (2) Amortisation (3) Interest - non-cash 1 Fair value deprecia
Slide 9: Revenue & EBITDA Bridges
REVENUE & EBITDA BRIDGES Revenue bridge (in £m) Adj EBITDA bridge (in £m) +£1.6m (+1%) -£1.3m (-2%) 6.0 (0.3) (0.6) (3.5) 228.3 229.9 0.9 (1.0) 59.7 (0.3) (0.9) 58.4 1H 2017 1H 2018 FX PLC UK US 1H 2017 1H 2018 Concrete FX UK Clay US UK • Constant currency revenue growth of 2.3% • Overall EBITDA mar
Slide 10: Highly Cash Generative
HIGHLY CASH GENERATIVE • Working capital reflects higher stocks due to weather Six months ended 30 June (£m) 2018 2017 Change % change (expected to reverse) and regular sales seasonality, Adj. EBITDA 58 60 (2) (2%) Share-based payments 1 1 - • Cash tax reduction in 2018 reflects tax refunds for Cape
Slide 11: Financial Management
FINANCIAL MANAGEMENT Disposal of surplus property assets Surplus property Bristol quarry sold for Additional c£15m of sales anticipated Additional profit on disposals assets no longer in use £9.3m June 2018 generating by the end of 2019. Precise timing of c£14m expected to be or required for the pre
Slide 12: Agenda
AGENDA Highlights & Overview Financial review Operating review Summary Q&A Joe Hudson Kevin Sims Joe Hudson Joe Hudson 12
Slide 13: Market Backdrop Remains Favourable
MARKET BACKDROP REMAINS FAVOURABLE GB Brick Market Domestic Despatches Imports Production Stock Brick Consumption (billions of bricks) Brick Production and Stock (billions) 2.6 2.5 2.4 0.2 1.9 1.9 1.9 1.9 0.3 0.4 1.8 1.8 0.3 0.2 0.1 0.3 1.6 1.6 0.1 1.4 1.5 0.1 0.1 0.1 0.1 1.3 2.4 2.0 2.0 1.8 1.7 1.8
Slide 14: Ibstock Brick's Manufacturing Footprint
IBSTOCK BRICK’S MANUFACTURING FOOTPRINT Ibstock factories (19) Specialty assembly sites (6) Sales Office (5) • 19 manufacturing locations supplying the broadest range of products across GB • Manufacturing footprint underpins No. 1 position and leading margins • Balanced wirecut / soft mud production
Slide 15: Action to Sustain Manufacturing Capability
ACTION TO SUSTAIN MANUFACTURING CAPABILITY Ibstock factories (19) Specialty assembly sites (6) • Factories have been operating at high utilisation rates and a review Sales Office (5) has identified measures required to sustain quality and range of products • Short term increase in maintenance spend
Slide 16: Building on Strong Foundations
BUILDING ON STRONG FOUNDATIONS Market and Innovation Organisational capability Strategic • Commercial excellence • Organisational effectiveness • Review of US business • Supply chain efficiency and and talent • Organic investments route to market • Manufacturing performance • M&A in existing geograp
Slide 17: Agenda
AGENDA Highlights & Overview Financial review Operating review Summary Q&A Joe Hudson Kevin Sims Joe Hudson Joe Hudson 17
Slide 18: Summary
SUMMARY Long term Good UK activity Group remains strongly Continue to appraise fundamentals levels anticipated cash generative and is opportunities for supporting UK with benefits of evaluating value creating new build housing new Leicester opportunities for acquisitive remain unchanged factory in H
Slide 19: Agenda
AGENDA Highlights & Overview Financial review Operating review Summary Q&A Joe Hudson Kevin Sims Joe Hudson Joe Hudson 19
Slide 20: Appendix | Additional Financial Information
APPENDIX | ADDITIONAL FINANCIAL INFORMATION
Slide 21: Operating Segment Review - UK
OPERATING SEGMENT REVIEW - UK 1H 2018 1H 2017 % Growth Revenue £192m £186m 4% Adjusted EBITDA £58m £57m 2% Adjusted EBITDA margin 30.1% 30.6% Clay brick performance Slower RMI Overall UK New factory Mid single digit sector has margins Gas costs constrained commissioning in price increases broadly in
Slide 22: Operating Segment Review - US
OPERATING SEGMENT REVIEW - US 1H 2018 1H 2017 % Growth ($) Revenue $53m (£38m) $53m (£42m) (1%) Adjusted EBITDA $5m (£4m) $6m (£5m) (20%) Adjusted EBITDA margin 9.3% 11.5% Low single • Order book and current Inflationary Energy costs digit volume • Maintaining share order intake ahead of price incre
Slide 23: Income Statement Six Months Ended 30 June 2018
INCOME STATEMENT SIX MONTHS ENDED 30 JUNE 2018 Income statement Six months ended Six months ended 30 June 2018 30 June 2017 £m £m Revenue 230 228 Operating profit pre-exceptional 44 47 Add exceptional items1 8 2 Operating profit 52 49 Net finance costs2 (1) (10) Adjusted Profit before tax 51 39 Adju
Slide 24: Adjusted EBITDA Reconciliation
ADJUSTED EBITDA RECONCILIATION Income statement Six months ended Six months ended 30 June 2018 30 June 2017 £m £m Adjusted EBITDA 58 60 Add exceptional income1 8 2 Less depreciation & amortisation (14) (13) Operating profit per statutory FS 52 49 Less interest expense2 (1) (10) Less taxation (9) (8)
Slide 25: Balance Sheet as at 30 June 2018
BALANCE SHEET AS AT 30 JUNE 2018 Balance Sheet 30 June 2018 30 June 2017 31 Dec 2017 £m £m £m Assets PP&E 407 393 400 Intangible 113 120 116 Non-current assets 520 513 516 Inventories 101 90 91 Trade receivables 90 77 53 Other 2 4 6 Current assets 195 171 150 Total assets 713 684 666 Payables (95) (
Slide 26: Financial Management
FINANCIAL MANAGEMENT Debt £250m Revolving Comfortably RCF facility blended Significant capacity Credit Facility No fixed debt within covenants interest rate to fund organic refinanced repayments and (interest cover 4.0x investments and March 2017 125bps at <1.25x includes accordion and debt leverage
Slide 27: Introduction to the Group
IBSTOCK ii INTRODUCTION TO THE GROUP I GF i mea = [oa i 4
Slide 28: Key Investment Highlights
KEY INVESTMENT HIGHLIGHTS Market Structural Industry High barriers Strong Multiple Long-standing Outstanding leadership demand structure to entry customer growth management financial positions growth service ethic options team performance Three UK brick Vertically Strong household High quality, broa
Slide 29: A Leading Provider of Clay and Concrete Building Products
A LEADING PROVIDER OF CLAY AND CONCRETE BUILDING PRODUCTS UK US Revenue (% of Group) HY18 - £142m (62%) HY18 – £27m (12%) HY18 - £22m (10%) HY18 - £38m (17%) FY17 - £265m (58%) FY17 - £54m (12%) FY17 - £44m (10%) FY17 - £89m (20%) A leading clay UK #1 in clay bricks UK #1 in fencing Market leader in
Slide 30: A Leading Provider of Clay and Concrete Building Products
A LEADING PROVIDER OF CLAY AND CONCRETE BUILDING PRODUCTS End market Sales channel A whole house product range & more Group revenue by UK (FY 17)1 end market (FY 17) Infrastructure Others 2% New build 2% Other Merchants housing Factors new build 46% 57% 23% 15% RMI 26% Housebuilders direct 29% Key s
Slide 31: Well Positioned in Structurally Attractive Markets
WELL POSITIONED IN STRUCTURALLY ATTRACTIVE MARKETS UK Brick Market Ibstock Forterra Wienerberger Other 2.6 Imports (billions of bricks) UK brick capacity (billions) 0.4 2.1 2.0 0.1 0.9 0.8 0.9 2007 2016 2018 LTM May 2018 '98 - '07 Avg. Import volumes close Imports have higher Availability is partly
Slide 32: UK Fundamentals Remain in Place
UK FUNDAMENTALS REMAIN IN PLACE UK Housing Dynamics Strong demand for new housing 266 273 264 261 230 226 265 Continued shortage of new housing from long term 206 181 187 193 136 130 140 165 164 underbuilding 130 135 Mortgage availability remains good Government committed to increasing housing suppl
Slide 33: Capital Allocation
CAPITAL ALLOCATION Prioritisation Organic growth, Supplementary Ordinary dividends pay maintenance and Selective M&A when dividends when out ratio of 40% - 50% improvement capital opportune appropriate on a of adjusted profit 1 expenditure discretionary basis Supplementary Dividend policy Maintain a