REG - Lords Group Trading - FY24 Trading Update

Lords TradingAnnouncement

28/01/2025 07:00

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RNS Number : 8637U  Lords Group Trading PLC  28 January 2025

The information contained within this announcement is deemed by the Company to
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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
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considered to be in the public domain.

 

28 January 2025

 

Lords Group Trading plc

('Lords', the 'Company' and together with its subsidiaries the 'Group')

 

FY24 Trading Update

 

Strong Q4 performance from Merchanting

Lords remains well positioned for medium term growth

 

Lords (LORD.L), a leading distributor of building materials in the UK, today
issues a trading update for the year ended 31 December 2024 ('FY24' or the
'period').

 

Highlights

 

 ·         FY24 Group revenue is expected to be £436 million (FY23: £463 million)

 ·         Merchanting enters the new financial year with positive momentum, having
           delivered a strong final quarter with Q4 FY24 revenue 11% higher than Q4 FY23.
            Second half LFL revenue was 2.3% up on H2 2023

 ·         Plumbing and Heating experienced weaker market conditions in Q4 FY24 with
           revenue 17% below Q4 FY23, a comparative period which benefited from increased
           volumes ahead of the introduction of the Clean Heat Market Mechanism ('CHMM')
           on 1 January 2024.  Second half LFL revenue was 16.6% down on H2 2023

 ·         As a result, Adjusted EBITDA(1) is expected to be slightly below current
           market consensus(2)

 ·         Net debt(3) reduced by 11% since 30 June 2024 to £32.3 million.

Merchanting

 

The Merchanting division performed ahead of expectations, particularly in the
final quarter of FY24 with LFL revenue 11% ahead of Q4 FY23.  In particular,
AW Lumb performed strongly in the second half and delivered a 5% full year
increase in revenue on FY23 and our specialist roofing business, Advanced
Roofing was 10% ahead.  Revenue for the division for the year, subject to
audit, is expected to be in line with last year at £214 million.

 

In January 2025, a fifth George Lines branch was opened at Aylesford Business
Park near Maidstone, Kent.  George Lines provides a comprehensive range of
high-quality civil engineering, infrastructure, and construction products to
local contractors, developers, builders for major groundwork, landscaping and
engineering projects.

 

As part of management's focus on cash generation, in October 2024, the Group
received c.£4 million of cash from the sale and leaseback of a George Lines
branch near Heathrow, providing security of tenure at a key site the business
has operated from for more than 40 years.

 

Plumbing and Heating

 

The Plumbing and Heating division, which is typically seasonally strong in the
winter months, experienced a challenging final quarter of the year, in
contrast to FY23 which saw accelerated activity ahead of the introduction of
the CHMM on 1 January 2024.  FY24 revenue for the division, subject to audit,
is expected to be £222 million, 10% lower than FY23.

 

The Group's commitment to the energy transition was further demonstrated in
October 2024 by the strategic acquisition of Ultimate Renewables for £0.6
million.  This business provides a full design and commissioning service to
installers and independent merchants of heat pumps and renewable energy
products.  Its services include training, system design, supply of heat pump
and renewables solutions and MCS ('Microgeneration Certification Scheme')
accredited commissioning to facilitate customer Boiler Upgrade Scheme ('BUS')
grant applications. Renewables revenue in the division grew by 170% to over
£5.0 million for FY24 and the market is expected to continue its growth
trajectory in 2025.

 

Segmental Trading

 

The table below shows like-for-like and total revenue change comparing FY24 to
FY23:

 

                         FY24 revenue (unaudited)  LFL                        Group
                         H1 2024                           H2 2024  FY24     H1 2024  H2 2024  FY24
 Merchanting             £214m                     (9.3)%  2.3%     (3.6)%   (4.4)%   4.0%     (0.3)%
 Plumbing & Heating      £222m                     (3.2)%  (16.6)%  (10.4)%  (3.2)%   (16.1)%  (10.2)%
 Total                   £436m                     (6.1)%  (8.3)%   (7.0)%   (3.8)%   (7.3)%   (5.6)%

 

Outlook

 

Lords continues to demonstrate its resilience and has held its market position
in challenging market conditions, which have persisted across the sector since
FY22.  The Board continues to focus on what is within its control, managing
costs, driving efficiencies, reducing debt and pragmatically supporting
strategic initiatives to drive organic and acquisitive growth.  The Board
believes this has positioned Lords strongly for the anticipated recovery in
the construction market.

 

Like all UK businesses, the Group faces increased costs in 2025 in relation to
Employer's National Insurance, business rates and minimum wage increases,
which for Lords amount to c. £1 million. There are signs of an improving
construction market which should support an improvement in the Repair,
Maintenance and Improvement ('RMI') sector, but this is not generally expected
before the second half of 2025.

 

In addition to its organic growth levers, the Group's M&A strategy is
focused on specialist, independent businesses that can broaden the Group's
product range and/or geographic reach in highly fragmented markets. There
remains significant opportunity for consolidation given Lords' reputation as
being an acquirer of choice in the market.

 

Shanker Patel, Chief Executive Officer of Lords, said:

 

"In a challenging year across our end markets, the fundamentals of our
business in customer service excellence, highly engaged colleagues and
specialist brands have underpinned a resilient performance in 2024. We are
particularly pleased to see Merchanting's strong relative performance in the
final quarter.

 

"We continue to tightly control costs and to optimise working capital.  Net
debt was reduced by £4.1 million in the second half.  As market conditions
begin to improve, we are confident that the Group is exceptionally well
positioned for operational leverage to improve profitability, with ongoing
organic and acquisitive growth."

 

(1) Adjusted EBITDA is EBITDA, inclusive of property gains and losses,
(defined as earnings before interest, tax, depreciation, amortisation and
impairment) excluding exceptional items and share-based payments.

(2) Current consensus analyst forecasts are for FY24 revenues of between £447
million and £451 million and Adjusted EBITDA of between £23.0 million to
£23.8 million.

(3) Net debt is defined as borrowings less cash and cash equivalents, before
lease liabilities.

 

 

FOR FURTHER ENQUIRIES:

 Lords Group Trading plc                                 Via Burson Buchanan
 Shanker Patel, Chief Executive Officer                  Tel: +44 (0) 20 7466 5000
 Stuart Kilpatrick, Chief Financial Officer

 Cavendish Capital Markets Limited                       Tel: +44 (0)20 7220 0500

 (Nominated Adviser and Joint Broker)
 Ben Jeynes / Dan Hodkinson (Corporate Finance)
 Julian Morse / Henry Nicol / Charlie Combe (Sales/ECM)

 Berenberg (Joint Broker)                                                              Tel: +44 (0)20 3207 7800

 Matthew Armitt / Harry Nicholas / Detlir Elezi

 Burson Buchanan                                                                       Tel: +44 (0) 20 7466 5000
 Henry Harrison-Topham / Steph Whitmore / Abby Gilchrist                               LGT@buchanan.uk.com (mailto: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 32 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.

 

For additional information please visit www.lordsgrouptradingplc.co.uk
(http://www.lordsgrouptradingplc.co.uk/)

 

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