REG - Supreme PLC - Market and Trading Update and Share Buyback

SupremeAnnouncement

29/01/2024 14:45

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RNS Number : 2609B  Supreme PLC  29 January 2024

29 January 2024

Supreme plc

("Supreme" or the "Company" or the "Group")

 

Market and Trading Update and Share Buyback

 

-    Trading now significantly ahead of current FY 2024 market
expectations(1)

-    Supreme fully supportive of recently published Vaping Review

-    FY 2025 outlook unaffected by proposed changes

-    £1 million proposed share buyback programme underpins confidence

 

Supreme PLC (AIM: SUP), a leading manufacturer, supplier, and brand owner of
fast-moving consumer goods, is pleased to provide an update on the Groups
trading performance for the nine months ending December 31, 2023 ("Q3 2023"),
alongside its strategic outlook in response to recent regulatory developments
and announces a proposed share buyback.

 

FY 2024 Trading Update

 

Supreme has delivered an excellent trading performance across the Group during
our historically busiest quarter. It is now expected that FY 2024 will
significantly outperform market expectations(1), with revenue projected to be
at least £225 million and Adjusted EBITDA(2) anticipated to reach at least
£38 million - a doubling from FY 2023's Adjusted EBITDA(2). This success
highlights the Group's continued strategic development and record levels of
organic growth across its core business divisions, including Vaping and Sports
Nutrition & Wellness. The ElfBar distribution opportunity is now expected
to significantly exceed previously issued guidance(3) in FY 2024.

 

UK Government's Proposals to Ban Disposable Vapes

 

Supreme notes the UK Government's proposal to ban disposal vape devices as
part of a number of initiatives announced today to seek to mitigate underage
vaping. As a business, Supreme welcomes this clarity and as a responsible
business remains ahead of the curve, having already implemented a number of
proactive measures, including narrowing and re-naming of flavours and
tailoring packaging, as part of an ongoing commitment to eradicate underage
vaping and continuing to support adult smokers by providing an affordable,
sustainable, safer alternative to smoking.

 

Supreme remains confident that vaping is, and will continue to be, the most
credible and effective alternative to cigarettes. Supreme has an established
suite of fully compliant rechargeable pod systems, produces over 60 million
10ml bottles of e-liquid annually and has already become a principal supplier
to the UK Government's "Swap to Stop" scheme. None of these revenue streams
are expected to be adversely affected by the changes proposed by the
Government earlier today.

 

Proposed Share Buyback Programme

 

Building on our operational success and strategic response to regulatory
changes and the Board's ongoing confidence in the business, Supreme proposes
to launch up to £1 million share buyback programme over the next three
months. This initiative reflects the Board's confidence in the Company's
future value and our dedication to enhancing shareholder returns.

 

FY 2025 Outlook

 

The Company expects that approximately £75 million of its revenue (33%) and
£9 million of Adjusted EBITDA(2) (23%) will be derived from disposable vapes
in FY 2024.

 

Looking to FY 2025, the Board believes that the anticipated ban on disposable
vapes by the end of 2025 is expected to cause a temporary increase in revenue
as retailers roll-out replacement vaping devices such as pod-system vaping
devices ("Pods") and refillable vape kits ("10mls"). The Company expects that
more than half of disposable vape activity will permanently transition to
alternative forms of vaping such as Pods and 10mls, and Supreme will work
closely with its retail partners to manage this seamlessly. The Board will
continue to evaluate the ongoing impact of new regulations within the UK
e-cigarette market as more clarity, particularly in respect of timing, is
published.

 

Sandy Chadha, Chief Executive Officer, commented:

 

"Supreme is at the forefront of the UK vape market, consistently innovating
and expanding our reach. The UK Government's latest proposals, many of which
Supreme has already proactively embraced, support our strategic direction and
focus. As a responsible vaping supplier, we welcome changes that help prevent
underage vaping and will work with our various stakeholders to work through
the proposed legislation. Our early initiatives and strong customer
partnerships are testament to our resilience and long-term vision.

 

We remain extremely excited by the future and believe we are ideally placed to
continue to expand both our operational and financial footprint across our key
growth markets. The buyback proposed today reinforces the confidence we have
in the business across the long term."

 

(1) Company-issued guidance immediately before this announcement for the year
ending 31 March 2024 was revenue of £210-225 million and Adjusted EBITDA(2)
of £32-35 million.

(2) Adjusted EBITDA means operating profit before depreciation, amortisation
and Adjusted items.

(3) Current guidance for the ElfBar opportunity is around £60 million of
revenue and around £7 million of Adjusted EBITDA(2).

 

The information contained within this announcement is deemed to constitute
inside information as stipulated under the Market Abuse Regulation (EU) No.
596/2014 which is part of UK law by virtue of the European Union (withdrawal)
Act 2018. Upon the publication of this announcement, this inside information
is now considered to be in the public domain.

 

Enquiries:

 

 Supreme plc                                                         via Vigo Consulting

 Sandy Chadha, Chief Executive Officer

 Suzanne Smith, Chief Finance Officer

 Shore Capital (Nominated Adviser and Joint Broker)                  +44 (0)20 7408 4090

 Mark Percy / David Coaten / Rachel Goldstein - Corporate Advisory

 Ben Canning - Corporate Broking

 Zeus (Joint Broker)                                                 +44 (0)161 831 1512

 Jordan Warburton / Alex Campbell-Harris - Investment Banking

 Benjamin Robertson - Corporate Broking

 Vigo Consulting (Financial Public Relations)                        +44 (0)20 7390 0230

 Jeremy Garcia / Kendall Hill

 supreme@vigoconsulting.com

 

About Supreme

 

Supreme supplies products across five categories; Batteries, Lighting, Vaping,
Sports Nutrition and Wellness, and Branded Distribution. The Company's
capabilities span from product development and manufacturing through to its
extensive retail distribution network and direct to consumer capabilities.
This vertically integrated platform provides an excellent route to market for
well-known brands and products.

 

The Group has over 3,300 active business accounts with retail customers who
manage over 10,000 branded retail outlets. Customers include B&M, Home
Bargains, Poundland, Tesco, Sainsburys, Morrisons, Amazon, The Range,
Costcutter, Asda, Halfords, Iceland and HM Prison & Probation Service.

 

In addition to distributing globally-recognised brands such as Duracell,
Energizer and Panasonic, and supplying lighting products exclusively under the
Energizer, Eveready, Black & Decker and JCB licences across 45 countries,
Supreme has also developed brands in-house, most notably 88Vape and has a
growing footprint in Sports Nutrition and Wellness via its principal brands
Sci-MX and Battle Bites.

 

https://investors.supreme.co.uk/
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