Victoria Plc · LSE:VCP
Victoria — FY2022 Earnings Presentation
32 slides from Victoria's earnings presentation, Jul 19, 2022
Slide 1: Annual Results Investor Presentation
19 JULY 2022 “creating wealth for shareholders” ANNUAL RESULTS INVESTOR PRESENTATION Preliminary Results for Year Ended 2 April 2022
Slide 2: Disclaimer
Disclaimer • The information contained in this confidential document (“Presentation”) has been prepared by Victoria PLC (the “Company”). It has not been verified by the Company and is subject to material updating, revision and further amendment. This Presentation has not been approved by an authoris
Slide 3: Table of contents
Table of contents 01 Executive Summary 02 FY 2022 Financial Report – Record revenues and earnings 02 Operational Overview – Driving revenues and margins - Supply 03 Outlook - Inflation - Demand 04 Appendices 2
Slide 4: FY2022 Executive Summary
FY2022 Executive Summary ICTORIA PLC
Slide 5: FY2022 Results Highlights
FY2022 Results Highlights 9 years since the current board was appointed by shareholders REVENUE EBITDA1 EBIT1 £1,019.8m £162.8m £107.9m FY21 £622.3m FY21 £127.4m FY21 £79.8m +54% +28% +35% LEVERAGE2 CASH FLOW PER SHARE3 ADJUSTED EPS4 2.66x £0.96 £0.40 Net Debt/EBITDA FY21 3.10x FY21 £0.77 FY21 £0.29
Slide 6: Executive summary
Executive summary • A global flooring products group with a diverse range of brands and products 1 – Victoria PLC is a 126-year-old global designer, manufacturer and distributor of flooring products including ceramic tiles, carpet, underlay, luxury vinyl tile (LVT), artificial grass and flooring acc
Slide 7: FY 2022 Financial Report – record revenues and earnings
FY 2022 Financial Report – record revenues and earnings
Slide 8: Track record of robust growth
EXECUTIVE SUMMARY Track record of robust growth Revenue (£m) Underlying EBITDA (£m) 1,019.8 162 662.3 127 621.5 118 574.4 96 424.8 65 330.4 46 2017A 2018A 2019A 2020A 2021A 2022A 2017A 2018A 2019A 2020A 2021A 2022A Pre-IFRS 16 7
Slide 9: Group - underlying EBITDA margin bridge
EXECUTIVE SUMMARY Group - underlying EBITDA margin bridge Unprecedented cost inflation during the year was, to the extent not mitigated by operational measures, passed onto customers. However this was done without any additional mark-up. Hence whilst absolute profits in GBP terms were successfully p
Slide 10: Segmental performance
EXECUTIVE SUMMARY Segmental performance 2022 2021 Continuing operations UK & Europe – UK & Europe – Australia North America Central costs TOTAL UK & Europe – UK & Europe – Australia Central costs TOTAL £m soft flooring ceramic tiles soft flooring ceramic tiles Revenue 423.1 371.6 109.5 115.6 - 1,019
Slide 11: UK & Europe Soft Flooring – underlying EBITDA margin bridge
EXECUTIVE SUMMARY UK & Europe Soft Flooring – underlying EBITDA margin bridge Note 1. Calculation of cost inflation pass-through within LFL margin analysis based on average cost and price inflation, using volume growth for key product categories (as adjusted for the 53-week period in the prior year)
Slide 12: UK & Europe Ceramic Tiles – underlying EBITDA margin bridge
EXECUTIVE SUMMARY UK & Europe Ceramic Tiles – underlying EBITDA margin bridge Note 1. Calculation of cost inflation pass-through within LFL margin analysis based on average cost and price inflation, using volume growth for key product categories (as adjusted for the 53-week period in the prior year)
Slide 13: Australia – underlying EBITDA margin bridge
EXECUTIVE SUMMARY Australia – underlying EBITDA margin bridge Note 1. Calculation of cost inflation pass-through within LFL margin analysis based on average cost and price inflation, using volume growth for key product categories (as adjusted for the 53-week period in the prior year). Overall cost i
Slide 14: Non-underlying items
EXECUTIVE SUMMARY Non-underlying items 2022 2021 Refinancing Acquisition Other TOTAL TOTAL Non-underlying items, £m related related Exceptional items Acquisition and disposal related costs (10.7) (10.7) (3.0) Reorganisation costs (5.3) (5.3) (5.5) Negative goodwill arising on acquisition 6.9 6.9 6.5
Slide 15: Consistent strong operational cash generation
EXECUTIVE SUMMARY Consistent strong operational cash generation 2015-22 2015 2016 2017 2018 2019 20201 2021 2022 £m CAGR Revenue 127 255 330 425 574 622 662 1,020 % growth 77.9% 100.9% 29.5% 28.6% 35.3% 9.7% 6.6% 54.1% Underlying EBITDA 16 32 46 65 106 118 127.4 162.8 % margin 12.4% 12.7% 13.8% 15.2
Slide 16: Free cash flow re-invested
EXECUTIVE SUMMARY Free cash flow re-invested Note 1. Net debt shown before right-of-use lease liabilities, bond premia and prepaid finance costs, consistent with the measure used by our lending banks 15
Slide 17: Overview of net debt – stable leverage
EXECUTIVE SUMMARY Overview of net debt – stable leverage 2022 2021 £m Net cash and cash equivalents 258.0 344.8 Senior secured debt (at par) (631.6) (637.7) Unsecured loans (32.2) (51.7) Finance leases and hire purchase arrangements (pre-IFRS 16) (0.8) (1.1) Net debt (before obligations under right-
Slide 18: Operational Overview – driving revenues and margins
Operational Overview – driving revenues and margins
Slide 19: UK & Europe Soft Flooring – record revenues and profits
UK & Europe Soft Flooring – record revenues and profits FY22 FY21 Growth Revenue £423.1 million £280.4 million +50.9% Underlying EBITDA £70.3 million £49.0 million +43.4% Underlying EBITDA margin 16.6% 17.5% -87bps Underlying EBIT £45.4 million £28.7 million +58.5% Underlying EBIT margin 10.7% 10.2%
Slide 20: UK & Europe Ceramic Tiles – record revenues and profits
UK & Europe Ceramic Tiles – record revenues and profits FY22 FY21 Growth Revenue £371.6 million £282.4 million +31.6% Underlying EBITDA £71.4million £63.1 million +13.2% Underlying EBITDA margin 19.2% 22.3% -312bps Underlying EBIT £47.5million £40.4 million +17.5% Underlying EBIT margin 12.8% 14.3%
Slide 21: Australia – strong LFL revenue growth +11.4%
Australia – strong LFL revenue growth +11.4% FY22 FY21 Growth Revenue £109.5 million £99.6 million +10.0% Underlying EBITDA £16.4 million £16.6 million -1.4% Underlying EBITDA margin 15.0% 16.7% -174bps Underlying EBIT £11.8 million £11.9 million -0.8% Underlying EBIT margin 10.8% 12.0% -118bps • FY
Slide 22: North America – strong organic revenue growth +22%
North America – strong organic revenue growth +22%1 FY22 Revenue £115.6 million Underlying EBITDA £6.4 million Underlying EBITDA margin 5.6% Underlying EBIT £5.2 million Underlying EBIT margin 4.5% • Omni-channel flooring distributor, Cali Bamboo Holdings Inc., acquired 23 June 2021. • Based in San
Slide 23: Outlook: Inflation, Supply Chain, Demand
Outlook: - Inflation - Supply Chain - Demand
Slide 24: Inflationary Pressures Being Successfully Managed
Inflationary Pressures Being Successfully Managed • Raw Materials • Multiple Price Increases • Ceramics: raw material inflation not material • Victoria has demonstrated its ability to secure price increases over the last nine years with • Soft flooring: increased raw material prices steadily increas
Slide 25: Supply Chain Secure
Supply Chain Secure No material disruption to Victoria’s raw Active management of raw materials materials supply chain • In 2021 operational management pre-emptively • True localised supply of many raw materials invested in raw materials in anticipation of supply constraints • Highly diversified sup
Slide 26: Demand Outlook – high level view misses key VCP demand drivers
Demand Outlook – high level view misses key VCP demand drivers Victoria’s End-Customer Demographic KEY CUSTOMERS MORTGAGE-FREE HOME Resilient OWNERS • Victoria’s key market – residential renovation – EU-27 has proven to be extremely resilient over decades. Organic revenue CAGR > 3% for 25 USA years
Slide 27: Demand Outlook – high level view misses key VCP demand drivers
Demand Outlook – high level view misses key VCP demand drivers Reduced Competition Commercial Demand Returning Reduced supply from competitors • After two years of very subdued spending, the hospitality, commercial, construction, and travel • High energy costs have resulted in numerous industries ar
Slide 28: Appendices
Appendices - Koch Preferred Equity Investment - Bond issues - ESG Commitment - Shareholders
Slide 29: Koch Equity Development Investment
Koch Equity Development Investment £225 million of preferred equity to accelerate Victoria’s acquisition plans Koch Equity Development (“Koch”) becomes a major shareholder in Victoria • Koch undertook extensive due diligence on Victoria’s business, management team, and the market opportunity • Koch
Slide 30: 2021 Bond Issues
2021 Bond Issues “Liquidity and security” Two bond issues: Rationale: • €500m – August 2026, 3.625% • Covenant lite • €250m – March 2028, 3.75% • Fixed interest rate • For funding acquisitions • Low cost • Long duration
Slide 31: ESG commitment
5 ESG commitment Victoria is committed to its ESG responsibilities – full ESG report within FY2022 Annual Report to be published soon Meaningful reduction in environmental impact is consistent with optimising operating earnings • Energy efficiency and carbon emissions - Key risk priority is in the m
Slide 32: Shareholder register
Shareholder register Rank Investor Name Holding as of June 2022 % IC 1. Mr Geoff Wilding 22,438,650 19.2 2. Spruce House Investment Mgt 22,170,000 19.0 3. Vulcan Value Partners (Birmingham, AL) 14,226,409 12.2 4. KED Victoria Investments 12,500,000 10.7 5. Camelot Capital Partners 6,484,283 5.6 6. C