The Board remains confident in Lords’ ability to fulfil its target to become a £500 million revenue business by 2024.

Lords, a leading distributor of building materials in the UK, has announced its annual results for the year ended 31 December 2022 (‘FY22’ or the ‘year’), which highlighted another year of positive strategic progress underpinned by strong financial performance.

Financial highlights:

  • Record performance, with Group revenues up 23.9% to £450 million (FY21: £363.3 million) and on track to reach £500 million revenue target by 2024
  • Adjusted EBITDA up 34.4% to £30 million (FY21: £22.3 million), representing a margin of 6.7% (FY21: 6.1%) and on track to reach 7.5% medium-term target
  • Adjusted basic earnings per share up 31.5% to 8.02 pence (FY21: 6.1 pence restated)
  • Cashflow generated by operations of £26.8 million (FY21: £21.1 million restated), contributing to free cashflow generation of £19.1 million (FY21: £19.9 million restated)
  • Net debt at 31 December 2022 of £19.4 million (31 December 2021: £6.5 million net cash), reflecting cash cost of acquisitions in the year and leaving headroom for value-added acquisitions
  • Total dividend for the year up 5.8% to 2.0 pence per share (FY21: 1.89 pence per share)

Operational highlights:

  • Merchanting division delivered record revenues up 69.2% to £220.8 million (FY21: £130.5 million), with strong like-for-like revenue growth of 17.4%
  • Merchanting performance reflects the Group’s ambition to be the ‘local leader’ in its markets, delivered by empowered and highly engaged management teams, alongside successful implementation of the Group’s growth strategy
  • Plumbing & Heating (‘P&H’) division revenues down 1.5% to £229.3 million (FY21: £232.8 million), 9.1% lower on a like-for-like basis
  • P&H performance was resilient given industry-wide boiler component shortages, which eased throughout H2-22, and benefitted from management actions, including higher margin energy efficient product range, which improved divisional EBITDA margins to 6.0% (FY21: 4.4%)
  • Continued to expand existing brands and grow the customer base, opening two new branches during 2022, as well as an Advance Roofing Supplies implant in the Group’s Beaconsfield branch
  • Four completed acquisitions in the year, on a blended multiple of 4.8x Adjusted EBITDA, supporting the Group’s strategy of product range and geographic expansion
  • Acquisitions are EBITDA margin and earnings accretive and all are performing in line with or ahead of expectations, following successful integration
  • ESG progress delivered in FY22 including the development of Lords’ ESG strategy, recruitment of the Group’s first ESG manager and launch of the Lords Group Foundation.

Current trading and outlook

While macroeconomic uncertainty remains, Lords believe that its end market exposure, improved product range, continuing market share gains and management actions to improve margins mean that it continues to expect a full year performance in line with market expectations.

Since the year end, the Group agreed to purchase the freehold of George Lines’ Heathrow site for £6.3 million and disposed of the non-core Lords at Home homewares subsidiary for £0.8 million.

On 31 March 2023, the Group acquired Chiltern Timber Supplies for a total consideration of up to £1.65 million on a net cash free/debt free basis. Furthermore, on 5 April 2023, the Group refinanced its existing lending facilities securing enhanced facilities provided by HSBC, NatWest and BNP Paribas on an initial three-year term.

The Board remains confident in Lords’ ability to fulfil its IPO target to become a £500 million revenue business by 2024 with an EBITDA margin of 7.5% in the medium term.

Dawn Moore, Non-Executive Director, intends to step down as a director of the Group immediately following the Company’s 2023 Annual General Meeting to focus on expanding executive responsibilities.

Shanker Patel, CEO of Lords, said: “This was an excellent year for the Group, as we continued to deliver on our IPO commitments and successfully grew the business in a tough trading environment.

“We entered 2023 in a strong financial position, which has enabled us to continue to invest in our 3Ps, as we pursue organic and acquisition-led growth opportunities. We are focused on the potential challenges to our business, notably the impact on household balance sheets from inflation, increased energy costs and interest rates.

"We are responding through our ongoing expansion into new geographical markets and product lines, and by implementing our ESG strategy, a key part of which is to enhance our energy efficiency.

“With a one per cent share of a large market and facility headroom available, we also have considerable scope to take share through further acquisitions that expand our geographical presence and product range. With around 40% of UK builders merchants still independently run, we have considerable scope for further consolidation and therefore see good opportunities to continue our track record of growth.”