Lords Group Trading (LORD) H1 2024 earnings summary

Executive summary

• Revenue for H1 2024 declined 3.8% to £214.2m, with like-for-like revenue down 6.1% amid challenging market conditions and CHMM disruption in Plumbing and Heating.

• Gross margin held steady at 20.2% (vs. 20.4% last year), reflecting strong customer service and margin discipline.

• Adjusted EBITDA was £12.6m, down 16.6% year-over-year, and adjusted operating profit dropped 30.7% to £7.1m.

• Air source heat pump sales surged 492% year-over-year, highlighting growth in renewables.

• 2023 acquisitions (Alloway Timber, Chiltern Timber) fully rebranded and integrated; Alloway turnaround on track for profitability in 2025.

Financial highlights

• Adjusted diluted EPS was 1.57p (down 52.4% YoY); interim dividend reduced to 0.32p per share.

• Net debt at £36.3m, 4.5% lower year-over-year, with substantial facility headroom and cash at period end.

• Working capital outflow improved to £6.7m (vs. £15.6m prior year); free cash flow conversion in 2023 was 59%.

• Statutory operating profit was £4.5m (down 44.4% YoY); adjusted profit before tax was £3.7m (down from £7.7m).

• Cash generated by operations was £5.4m, reversing a prior year outflow.

Outlook and guidance

• H2 trading conditions expected to remain unchanged; adjusted EBITDA anticipated to be in line with management expectations for the full year.

• Interest rate reductions and new government sentiment expected to support sector recovery in the medium term.

• Medium-term growth expected through organic expansion and selective acquisitions as market recovers.

• Renewables, especially air source heat pumps, seen as a near-term growth lever.