Lords Group describes 'record-breaking' full-year performance

Building materials distributor Lords Group reported a record-breaking performance in its final results on Wednesday, with group revenues up 23.9% year-on-year at £450m.

The AIM-traded company said it was on track to achieve its goal of £500m in revenue by 2024.

Its adjusted EBITDA rose 34.4% in 2022 to £30m, representing a margin of 6.7%, compared to 6.1% in 2021.

Adjusted basic earnings per share increased 31.5% to 8.02p, up from a restated 6.1p in the prior year.

The firm generated cash flow of £26.8m from operations, contributing to free cash flow generation of £19.1m.

Lords said its net debt at year-end on 31 December totalled £19.4m, reflecting the cash cost of acquisitions in the year and leaving headroom for further value-added acquisitions.

The board hiked the total dividend for the year by 5.8%, to 2p per share.

Lords said its end-market exposure, improved product range, market share gains, and management actions to improve margins contributed to its full-year performance expectations, which were in line with market expectations.

Its directors said that although macroeconomic uncertainty was persisting, the board remained confident in Lords’ ability to achieve its initial public offering target of becoming a £500m revenue business by 2024, with an EBITDA margin of 7.5% in the medium term.

Additionally, Lords noted its recent purchase of the freehold of George Lines' Heathrow site for £6.3m, while it disposed of the non-core Lords at Home homewares subsidiary for £0.8m.

On 31 March, the group acquired Chiltern Timber Supplies for a total consideration of up to £1.65m on a net cash-free, debt-free basis.

Finally, on 5 April, the group refinanced its existing lending facilities, securing enhanced facilities provided by HSBC, NatWest, and BNP Paribas on an initial three-year term.

“This was an excellent year for the group, as we continued to deliver on our initial public offering commitments and successfully grew the business in a tough trading environment,” said chief executive officer Shanker Patel.

“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 focussed on the potential challenges to our business, notably the impact on household balance sheets from inflation, increased energy costs and interest rates.”

Patel said Lords was responding through its ongoing expansion into new geographical markets and product lines, and by implementing its environmental, social and governance (ESG) strategy, a “key part” of which was to enhance its energy efficiency.

“With a 1% 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.”

At 1028 BST, shares in Lords Group Trading were up 6.91% at 73.5p.

Reporting by Josh White for Sharecast.com.