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

A trading update for the year ended 31 December 2022 has revealed a year of positive strategic progress underpinned by strong financial performance for Lords, a leading distributor of building materials in the UK.

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 EBITDA and Adjusted Profit Before Tax 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).

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 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 debt 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

While 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, said: “I am proud of the progress Lords has made during 2022, continuing to deliver against our strategic plan while 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 three 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.”