Regulatory News
FY22 Trading Update
25 January 2023
A year of positive
strategic progress underpinned by strong financial
performance
Lords, a leading distributor of building materials in the UK, is pleased to
provide a trading update for the year ended 31 December 2022 ('FY22' or the
'period') ahead of publication of its FY22 Final Results in April 2022.
Highlights
- Trading ahead of current market expectations for FY22, a record
performance, demonstrating continued delivery of the Group's growth
strategy set out at the time of the Company's IPO in 2021
- FY22 revenues of £450 million resulting in 23.9% total growth for the
full year (FY21: £363 million)
- Merchanting revenue growth of 69.2% in FY22 reflecting increased market
share and value added acquisitions during the period and the continued
and substantial market share opportunity available to the
Group
- Exceptional trading performance delivers 26.9% Adjusted EBITDA growth to
not less than £28.3 million for FY22 (FY21: £22.3 million)
- The Board remains confident in Lords' ability to fulfil its objective to be a £500 million revenue business by 2024 and to achieve a 7.5% Adjusted EBITDA margin over the medium term
FY22 Guidance
The Group has delivered a strong performance in 2022 and now expects to
report record revenues, Adjusted EBITDA1 and Adjusted Profit
Before Tax2 for FY22 of not less than £450 million, £28.3 million
and £16.0 million respectively; all ahead of current market
expectations(*).
(*) Current consensus analyst forecasts are for FY22 revenues of £436.7
million (with a range of £435.4 million to £438.0 million), FY22
Adjusted EBITDA of £26.5 million (with a range of £25.7 million to £27.2
million) and Adjusted Profit Before Tax of £15.7 million (with a range
of £15.5 million to £15.9 million).
Segmental Trading
The table below shows total revenue growth and like-for-like for H1-22 and FY22:
Unaudited FY22 Revenue |
Like-for-Like Revenue Growth | Change in Total Revenue | |||
Division | H1-22 vs. H1-21 | FY22 vs. FY21 | H1-22 vs. H1-21 | FY22 vs. FY21 | |
Merchanting | £221m | 14.5% | 17.4% | 73.4% | 69.2% |
Plumbing & Heating | £229m | (12.5)% | (9.1)% | (8.2)% | (1.6)% |
Group | £450m | (3.3)% | 0.2% | 19.7% | 23.9% |
Merchanting
The Group's regional brands continue to take market share by offering
customers an expanding product range and entry into new markets. The
strategy execution translated into Merchanting revenue growth of 69.2% and
like-for-like revenue growth of 17.4%.
The Merchanting acquisitions completed by the Group during FY22, being
Advance Roofing (January 2022), AW Lumb (March 2022) and Buildbase Sudbury
(April 2022) have been successfully integrated and are performing ahead of
management expectations. Together these acquisitions delivered the
Merchanting division earnings accretion, product range extension or entry
into new geographies.
P&H
Plumbing and Heating division ('P&H') has demonstrated resilient
performance during FY22, with total P&H revenue growth of (1.6)%,
(growth of (9.1)% on a like-for-like basis), despite the industry wide
boiler component shortages first reported by the Company in H1-22 and which
has continued to ease throughout H2-22. P&H product range
extension during FY22 has seen new ranges added to support the
decarbonisation of the UK housing stock which have supported continued
improvements in P&H EBITDA margin throughout FY22.
The combined acquisition of HRP Trade and Direct Heating (April 2022) was
earnings accretive and has been successfully integrated and is trading in
line with management expectations. The enlarged P&H business is
realising customer and product range synergies across all P&H brands as
a result of the acquisition.
The Group's new store roll out strategy for Mr Central Heating, the Group's
brand which supplies installers and homeowners through online and instore
channels and thus providing an attractive EBITDA margin profile, continues
with a tenth store opened in West Bromwich in H2-22. The West Bromwich
store opening is the first of an intended 40 new Mr Central Heating store
openings over the next five years.
Balance sheet and liquidity
As at 31 December 2022, the Group had net debt3 on a pre-IFRS
basis of £23.5 million (30 June 2022: £21.1 million) which reflects an
increase and normalisation of P&H inventory following boiler supply
recovery, which has been largely offset by continued management of the
Group's wider working capital base. The Group retains a strong balance
sheet supported by a flexible capital structure and maintains good headroom
against bank facilities, which will support its investment priorities going
forward.
Current Trading and Outlook
Whilst mindful of the uncertain macro-economic environment and its impact on
the sector in the short term, the continued delivery of the Lords organic
and acquisitive led growth strategy gives the Board confidence in Lords'
ability to fulfil its IPO objective to be a £500 million revenue business by
2024 and an EBITDA margin of 7.5% in the medium term.
Shanker Patel, Chief Executive Officer of Lords, commented:
“I am proud of the progress Lords has made during 2022, continuing to
deliver against our strategic plan whilst delivering record financial
performance during the period. Our teams did a magnificent job
serving customers and the quality of our people remains integral to the
success of our customer focused proposition.
“We enter 2023 in a strong financial position that will enable us to continue to invest in our 3 P's (People, Plant, Premises) to pursue organic and acquisitive led growth opportunities. While market conditions in 2023 may become more challenging in the short term, the Group has substantial organic growth levers through new geographies and product range extension that provide our Group with the opportunity to continue its track record of growth.”
1 Adjusted EBITDA is EBITDA (defined as earnings before interest, tax, depreciation and amortisation and, in accordance with IFRS) but also excluding exceptional items and share-based payments.
2 Adjusted Profit before tax (basic) is defined as profits before tax before exceptional items, share based payments and amortisation of intangible assets.
3 Net debt is defined as borrowings less cash and cash equivalents.
FOR FURTHER ENQUIRIES:
Lords Group Trading plc | Via Buchanan |
---|---|
Shanker Patel, Chief Executive Officer | Tel: +44 (0) 20 7466 5000 |
Chris Day, Chief Financial Officer | |
Cenkos Securities plc (Nominated Adviser and Joint Broker) | Tel: +44 (0)20 7397 8900 |
Ben Jeynes / Max Gould / Dan Hodkinson (Corporate Finance) | |
Alex Pollen (Sales) | |
Berenberg (Joint Broker) Matthew Armitt / Richard Bootle / Ciaran Walsh |
Tel: +44 (0)20 3207 7800 |
Buchanan Communications | Tel: +44 (0) 20 7466 5000 |
Henry Harrison-Topham / Jamie Hooper / Abby Gilchrist | LGT@buchanan.uk.com |
Notes to editors:
Lords is a specialist distributor of building, plumbing, heating and DIY
goods. The Group principally sells to local tradesmen, small to medium
sized plumbing and heating merchants, construction companies and retails
directly to the general public.
The Group operates through the following two divisions:
- Merchanting: supplies building materials and DIY goods through its network of merchant businesses and online platform capabilities. It operates both in the 'light side' (building materials and timber) and 'heavy side' (civils and landscaping), through 30 locations in the UK
- Plumbing and Heating: a specialist distributor in the UK of plumbing and heating products to a UK network of independent merchants, installers and the general public. The division offers its customers an attractive proposition through a multi-channel offering. The division operates over 16 locations enabling nationwide next day delivery service.
Lords was established over 35 years ago as a family business with its first retail unit in Gerrards Cross, Buckinghamshire. Since then, the Group has grown to a business operating from 46 sites. Lords aims to become a £500 million turnover building materials distributor group by 2024 as it grows its national presence.
Lords was admitted to trading on AIM in July 2021 with the ticker LORD.L. For additional information please visit www.lordsgrouptradingplc.co.uk.
The information contained within this announcement is deemed by the Company to constitute inside information pursuant to Article 7 of EU Regulation 596/2014 as it forms part of UK domestic law by virtue of the European Union (Withdrawal) Act 2018 as amended. Upon the publication of this announcement via a Regulatory Information Service, this inside information is now considered to be in the public domain.