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12 MARCH 2025
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Full Year Results Presentation 2024 2 Statements in the Presentation, including those regarding the future financial condition, results of operations, business or other performance of the Company, the industry in which it operates, or other trend projections, constitute forward-looking statements. These forward-looking statements may be identified by the use of forward-looking terminology, including the terms “believes”, “estimates”, “plans”, “projects”, “anticipates”, “expects”, “intends”, “may”, “will” or “should” or, in each case, their negative or other variations or comparable terminology, or by discussions of strategy, plans, objectives, goals, future events or intentions. By their nature, forward-looking statements involve known and unknown risks, uncertainties and other factors because they relate to events and depend on circumstances or assumptions that may or may not occur in the future and which may cause actual results, performance or developments to differ materially from those expressed or implied by such forward-looking statements. Accordingly, no assurance is given by or on behalf of the Company or any of its associates, directors, officers, employees or otherwise that any such forward-looking statement will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements and therefore no reliance should be placed on such forward-looking statements. No representation or warranty, express or implied, is given (by the Company, any of its associates, directors, officers, employees, advisers or otherwise) in relation to the accuracy, completeness or reliability of the information contained in the Presentation, including as to the accuracy, completeness or reliability of any forward-looking statements or the basis on which they were prepared. Except as required by applicable law or regulation, the Company does not undertake any obligation to update or revise any information in the Presentation, whether as a result of new information, future events or otherwise. This document has been prepared by Forterra plc (the “Company”) solely for use at a presentation on 12 March 2025 in connection with the Company’s Results Announcement in respect of the financial period ended 31 December 2024 (the “Presentation”). For the purposes of this notice, “Presentation” shall mean and include this document, the oral presentation of this document (and of any related document) by the Company, the question-and-answer session that follows that oral presentation, and any materials distributed at, or in connection with, that presentation (including any hard copies of this document). The Presentation is being made only to, and is only directed at, investment professionals, representatives of institutional investors and other persons to whom this type of presentation may lawfully be communicated in this form (“relevant persons”). Any person who is not a relevant person should not act or rely on the Presentation or any of its contents. Information contained in the Presentation relating to the Company or its share price or the yield on its shares are not guarantees of and should not be relied upon as an indicator of, future performance. Nothing in the Presentation should be construed as a profit forecast or profit estimate. The Presentation is being provided for information purposes only. The information contained in the Presentation does not constitute or form part of, and should not be construed as, an offer to sell or issue, or the solicitation of an offer to buy or subscribe for, securities or other financial instruments of the Company or any of its subsidiaries in any jurisdiction or an inducement to enter into investment activity. No part of the Presentation, nor the fact of its distribution, should form the basis of, or the be relied on in connection with, any contract or commitment or investment decision whatsoever. The release, publication, or distribution of any part of the Presentation in certain jurisdictions may be restricted by law, and therefore persons in such jurisdictions into which the Presentation (or any part thereof) is released, published or distributed should inform themselves about, and observe, such restrictions.
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01 ⎯ Headlines 02 ⎯ Financial Review 03 ⎯ Our Markets 04 ⎯ Strategic Update 05 ⎯ Sustainability 06 ⎯ Outlook 3 Full Year Results Presentation 2024 Chief Executive Officer Chief Financial Officer
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4Full Year Results Presentation 2024 - Adjusted EBITDA of £52.0m, slightly ahead of our revised expectations of around £50m - Return to strong cash generation, adjusted operating cash flow of £60.1m - Net debt before leases of £84.9m, closing leverage of c.1.9 times - Key milestones reached in scaling up Desford production and efficiency - Revenue flat year-on-year, double digit increase in H2 vs both the prior year and H1 24 - 2024 UK brick industry despatches up 2% compared with 2023, with Q4 20% ahead of the corresponding period - Strong commercial discipline maintained with selling prices remaining relatively stable - Continued progress with strategic investments at Wilnecote and Accrington
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5 Full Year Results Presentation 2024
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6 *Adjusted results Full Year Results Presentation 2024 Year ended 31 December * £m 2024 2023 Change Revenue 344.3 346.4 (0.6)% EBITDA 52.0 58.1 (10.5)% EBITDA margin 15.1% 16.8% (170) bps Operating profit / EBIT 31.2 38.1 (18.1)% Profit before tax (PBT) 22.1 31.1 (28.9)% Earnings per share (pence) 7.6 11.4 (33.3)% Operating cash flow 60.1 (5.3) Net debt before leases (84.9) (93.2) (8.9)% Dividend – total (pence) 3.0 4.4 (31.8)% Statutory results Profit before tax 24.8 17.1 45.0% Earnings per share (pence) 8.3 6.2 33.9%
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7 *Adjusted results Full Year Results Presentation 2024 Year ended 31 December* £m 2024 2023 Change Revenue 344.3 346.4 (0.6)% EBITDA - Bricks and Blocks 49.0 52.1 (6.0)% - Bespoke Products 3.0 6.0 (50.0)% Total 52.0 58.1 (10.5)% EBITDA margin 15.1% 16.8% (170) bps Depreciation and Amortisation (20.8) (20.0) 4.0% Operating profit / EBIT 31.2 38.1 (18.1)% Finance expense (9.1) (7.0) 30.0% Profit before tax (PBT) 22.1 31.1 (28.9)% Effective tax rate 27.1% 24.5% 260 bps Earnings per share (pence) 7.6 11.4 (33.3)%
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2022 Results Presentation 8 • Adjusted results are provided to fairly show our underlying trading performance on a like-for-like basis • Adjustments relate to: • Removal of fair value benefit for energy contracts which did not qualify for the own use exemption following reduction in demand • Losses on sale of surplus energy not used in the business • Costs in respect of an aborted corporate transaction • Restructuring costs associated with management actions to right-size the business 277.4 376.12023 2022 Full Year Results Presentation 2024 Year ended 31 December £m 2024 2023 EBITDA 54.7 44.1 Adjusted items Fair value movement on energy derivatives 7.1 0.8 Realised loss on the sale of surplus energy (1.5) (0.8) Aborted corporate transaction (2.7) – Restructuring costs (0.2) (9.0) Impairment of plant and machinery – (5.0) Total adjusted items 2.7 (14.0) Adjusted EBITDA 52.0 58.1 Depreciation and amortisation (20.8) (20.0) Finance expense (9.1) (7.0) Adjusted PBT 22.1 31.1
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9 • Revenue of £276.7m, in line with prior year • Brick volumes flat year-on-year with stronger growth in blocks with Aircrete volumes increasing c.20% vs prior year • Strong commercial discipline maintained with brick pricing relatively stable • EBITDA margin of 17.7%, only slightly down on 2023 (18.8%) • Operating at around 60% of capacity resulted in reduced efficiency • The first step of “Project Rebound” underway, increasing Aircrete production • Market demand remains c.30% below 2022, providing significant recovery upside • 2025 pricing discussions underway to recover cost inflation Full Year Results Presentation 2024 *Adjusted results Year ended 31 December * £m 2024 2023 Change Revenue 276.7 277.4 (0.3)% EBITDA before overhead allocation 66.2 70.0 (5.4)% EBITDA margin before overhead allocation 23.9% 25.2% (130) bps Overhead allocation (17.2) (17.9) (3.9)% EBITDA 49.0 52.1 (6.0)% EBITDA margin 17.7% 18.8% (110) bps
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2022 Results Presentation 10 • Revenue broadly flat year-on-year at £71.5m • As a reminder, this segment delivered an extremely strong result in 2023 ahead of 2022 performance • Floor beam despatches increased by c.10% with a significant improvement in H2 • Hollowcore more challenging despite strong order books with slippage of customer timetables • Challenging market conditions resulted in pricing pressure, leaving us unable to offset volatility in insulation costs 277.4 376.12023 2022 Full Year Results Presentation 2024 *Adjusted results Year ended 31 December* £m 2024 2023 Change Revenue 71.5 72.7 (1.7)% EBITDA before overhead allocation 7.3 10.5 (30.5)% EBITDA margin before overhead allocation 10.2% 14.4% (420) bps Overhead allocation (4.3) (4.5) (4.4)% EBITDA 3.0 6.0 (50.0)% EBITDA margin 4.2% 8.3% (410) bps
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11 - Strong recovery in cash generation driven by aligning production to demand - Inventories reduced in 2024 following significant inventory build seen in 2023 - Anticipate continuation of strong cash generation in 2025 Full Year Results Presentation 2024
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12 - Inventory reduction of £13.8m driven primarily by Aircrete, with brick inventories broadly stable - Increase in trade receivables reflects increasing activity in Q4 with industry brick despatches around 20% ahead of the 2023 comparative - Expectation for brick inventories to remain broadly static in 2025 with production increasing with Wilnecote recommissioning and increasing Desford output offsetting improving market demand Full Year Results Presentation 2024 £54m£63m
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- £135.5m of strategic capital expenditure since 2019 - Strategic capital expenditure in 2024 has been focused upon the projects at Wilnecote (£10.7m) and Accrington (£8.0m) - Reduction in maintenance capital spend reflects balance sheet management as well as temporary reduction in output Full Year Results Presentation 2024 13 Capital expenditure* £m 2019 2020 2021 2022 2023 2024 2025** Strategic 12.6 19.5 28.9 33.6 19.3 21.6 8.0 Maintenance 9.9 5.4 5.7 10.5 14.8 4.0 7.2 Total capex 22.5 24.9 34.6 44.1 34.1 25.6 15.2 Note*: Excluding capitalised borrowing costs Note**: Management forecast - Capital spend in 2025 is expected to reduce to around £15m, with approximately £8m of this related to the completion of our strategic projects - Looking ahead, we still expect long-term average maintenance capex of £12-14m although this will be lower in the short-term whilst output remains significantly below capacity
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Full Year Results Presentation 2024 14 • Decline in operating cashflow due predominantly to a £31.1m decline in adjusted EBITDA and a significant working capital outflow driven by an increase in inventory • Capex in the year totalled £34.1m • Strong adjusted operating cash flow, demonstrating the success of management actions • Adjusted operating cash flow recovered to £60.1m (2023: outflow of £5.3m), a year-on-year improvement of £65.4m • Tax received benefits from a £2.2m refund in respect of FY 2023 • Strong cash generation drives an £8.3m reduction in net debt before leases to £84.9m (2023: £93.2m) whilst still spending a total of £25.6m on capital expenditure 14 Year ended 31 December £m 2024 2023 Adjusted operating cash flow 60.1 (5.3) Cash flows relating to adjusting operating items (8.3) (5.9) Operating cash flow after adjusting items 51.8 (11.2) Interest paid (10.0) (6.1) Tax received / (paid) 0.4 (2.7) Capital expenditure – maintenance (4.0) (14.8) Capital expenditure – strategic (21.6) (19.3) Dividends paid (6.3) (25.7) Net payments to Employee Benefit Trust 5.1 (1.0) Other movements (1.2) (0.6) Repayment of lease liabilities (5.9) (5.9) Decrease / (increase) in net debt before leases 8.3 (87.3)
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15 • Net debt (before leases) of £84.9m equating to leverage of c.1.9 times • £8.3m reduction on 2023 (£93.2m) not withstanding total capital spend of over £25m • Committed revolving credit facility (RCF) of £170m extending to January 2027 with an option for an extension to June 2028 subject to lender consent • At the year-end a total of £100m was drawn on the facility leaving headroom of £70m • Normal seasonal trends expected to apply with net debt expected to be slightly higher at half year 2025 before reducing in H2 • The Board reiterates its leverage target of 1.5 times or below, which it expects to reach by the end of 2025 Full Year Results Presentation 2025Full Year Results Presentation 2024 At 31 December £m 2024 2023 Change Cash and cash equivalents 15.2 16.0 (0.8) Loans and borrowings 100.1 109.2 (9.1) Net debt before leases (84.9) (93.2) (8.3) Lease liabilities (20.9) (24.2) 3.3 Net debt (105.8) (117.4) (11.6)
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Full Year Results Presentation 2024 16 Continued strong free cash flow will be allocated in line with our capital allocation priorities: - Strategic organic capital investment to deliver compelling returns - Attractive mid-term dividend policy with a pay- out ratio of 55% of earnings - Bolt-ons as suitable opportunities arise in adjacent or complementary markets - Supplementary shareholder returns as appropriate
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Full Year Results Presentation 2024 17
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Full Year Results Presentation 2024 Average number of completions over last 20 years of 172,000 homes, well short of the Government target Government focus on planning reform to ‘unlock’ supply side and drive UK housebuilding. Skills and labour shortages will need addressing to achieve this 18 Affordability remains a constraint however interest rates in the UK have seen reductions in 2024 with further falls forecast Whilst unlocking the supply side is crucial, demand side support would be advantageous Our customers are more positive in the short to medium- term Source: CPA Forecast Summer 2024 Note*: Current target, annual average based on 1.5m net additional homes 2024-2029 - 50,000 100,000 150,000 200,000 250,000 300,000 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024F 2025F 2026F Starts Starts Government target* Source: CPA Forecast Winter 2024 / 2025 Note*: Government target, annual average based on 1.5m net additional homes 2024-2029 allowing for conversions
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Full Year Results Presentation 2024 19 0% 5% 10% 15% 20% 25% 0 100 200 300 400 500 600 Dec 2022 Dec 2023 Dec 2024 Brick imports Imports (m) % of market - 50,000 100,000 150,000 200,000 250,000 2022 2023 2024F 2025F 2026F Starts and completions Starts Completions 0% 10% 20% 30% 40% 50% 0 100 200 300 400 500 600 Dec 2022 Dec 2023 Dec 2024 Brick inventory Inventory (m) % of market - Industry brick consumption of c.1.7bn, slightly ahead of prior year - Starts and completions forecast to rise in 2025 and 2026, though remaining below 2022 levels - Industry inventory levels reduced in 2024 - Imports have continued to reduce both at an absolute level and as a percentage of the market Source: CPA Forecast Winter 2024 / 2025 Source: Department for Business & Trade Source: Department for Business & Trade, HMRC
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2.60 (0.30) (0.30) 2.00 (0.05) 0.15 0.10 2.20 Bricks (bn) 1.5 1.7 1.9 2.1 2.3 2.5 2.7 2.9 3.1 3.3 3.5 20 - At 2022 levels of demand, UK domestic brick market remains capacity constrained - Forterra well placed to benefit with 15% more capacity than the previous turn of cycle 20 Full Year Results Presentation 2024 Evolving domestic brick industry capacity Source: Forterra management Demand (2022)Forterra Others Demand (estimate at 300,000 homes Government target) Forterra capacity Source: Forterra management 100% 22% -47% -9% 66% 33% 7% 9% 115% 0% 20% 40% 60% 80% 100% 120% 140% Increase Decrease Total
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Full Year Results Presentation 2024 21
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- Our strategy supports the delivery of our purpose, recognising the key role our products play in shaping the built environment - Strategic imperatives provide a clear roadmap for the organisation, guiding our efforts across functions to drive growth, efficiency, and innovation Strengthen the core Make our current business even better than it is today Beyond the core Provide the products and solutions for the buildings of tomorrow 22 Full Year Results Presentation 2024 Safety and engagement Create an engaged, healthy and safe workforce Sustainability Leave the lightest touch on the world we live in
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23 - Further progress on the reinstatement of our Wilnecote factory despite supply chain challenges, which will ultimately deliver: - Increased capacity and broader range - Diversification through the attractive commercial and specification market - A range that includes non-standard brick dimensions & colours which are currently reliant on imports from Europe - £30m redevelopment is on course for completion in Q2 2025 with the kiln expected to be lit shortly Full Year Results Presentation 2024
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24 - Investing in new capacity to deliver growth in sales volumes along with enhanced efficiency - New brick slip manufacturing line at Accrington; a cost-effective entry into this attractive market, with commissioning ongoing - The first UK manufactured extruded slip solution offers improved cost and sustainability credentials vs. current ‘cut’ slips - By investing in brick slips we aim to secure a leading position in lightweight façades Full Year Results Presentation 2024
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25 Full Year Results Presentation 2024
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26 Full Year Results Presentation 2024 2025 & BEYOND 2022-23 ACHIEVEMENTS 30% more efficient Desford brick factory open Forterra Solar Farm generating c.80% of our electricity demand now open 2024 PROGRESS Calcined clay utilising as cement substitute – initially within our own products Plastic packaging Ongoing work to meet our short- term plastic reduction targets 2030 TARGETS Alternative fuels Working to better understand the use of hydrogen, synthetic gas and biomass within our production processes Carbon capture We continue to engage with suppliers of carbon capture use and storage technologies (CGUS) monitoring systems in this rapidly developing area
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27 - Calcined clay is produced by heating clay to high temperatures, resulting in a product that has only 42% of the embodied carbon of traditional cement - Using waste bricks eliminates an energy intensive element of this process and delivers an even lower embodied carbon – 11% of regular cement - In 2024, we began incorporating calcined clay as a substitute for cement in our some of our own concrete products - Industrialisation of process in 2025 Full Year Results Presentation 2024
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28 Full Year Results Presentation 2024
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29 - We continue to take encouragement from the Government’s ambition to materially increase housebuilding but remain wary of the challenges in delivering this - We anticipate a steady recovery in our markets during 2025, whilst remaining mindful of wider macroeconomic conditions - The Group remains well placed to capitalise as its key markets recover Full Year Results Presentation 2024 - Trading in the first two months of 2025 continued the positive trends seen in the final quarter of 2024, with our brick despatches 17% ahead of the weather impacted prior year - Entering 2025 we are facing more normal levels of cost inflation, but with the added challenge of increasing Employers' National Insurance contributions from April - We are currently concluding our customer pricing discussions and expect to deliver necessary price increases to offset cost inflation
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The Group is well positioned to capitalise on the recovery of our key markets ▪ Strategic capital investments will leverage the return to a normalised market ▪ Growth illustration assumes: ▪ Return to 2022 levels of profitability (208k completed new homes vs.169k in 2024) ▪ Incremental benefits from projects (assuming normalised market): ▪ £25m from Desford ▪ £7m incremental at Wilnecote ▪ Proforma Group adjusted EBITDA of c.£120m ▪ Further potential upside from brick slips and excellence projects - Brick slips - Commercial excellence - Manufacturing excellence 30Full Year Results Presentation 2024
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31 Full Year Results Presentation 2024
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32 Full Year Results Presentation 2024 Year ended 31 December £m 2024 2023 Change Intangible assets 11.6 19.2 (7.6) Property, plant and equipment 263.8 249.7 14.1 Right-of-use assets 20.5 24.1 (3.6) Derivative asset 2.8 5.0 (2.2) Total non-current assets 298.7 298.0 0.7 Inventories 82.0 95.8 (13.8) Trade and other receivables 39.0 31.0 8.0 Cash and cash equivalents 15.2 16.0 (0.8) Derivative asset 5.1 1.6 3.5 Other assets 2.4 2.3 0.1 Total current assets 143.7 146.7 (3.0) Total assets 442.4 444.7 (2.3) Trade and other payables (68.7) (66.3) (2.4) Loans and borrowings (100.1) (109.2) 9.1 Lease liabilities (20.9) (24.2) 3.3 Other liabilities (27.8) (37.2) 9.4 Net assets 224.9 207.8 17.1
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Forterra plc 5 Grange Park Court, Roman Way, Northampton NN4 5EA Tel: 01604 707600