Last checked at 23 Nov 2018 07:00
Ibstock Plc
Disposal of US Brick Manufacturing Business and Trading Update
Disposal of Glen-Gery
Ibstock plc (the "Group" or "Ibstock") today announces the sale of the entire issued share capital of Glen-Gery, its US brick manufacturing business, to Brickworks Limited for an enterprise value of US$110 million on a debt free cash free basis. The value equates to over 8 times Glen-Gery's last twelve months EBITDA to June 2018, as reported.
As part of the transaction Brickworks Limited will assume certain liabilities, including an associated pension liability, and the net cash inflow for the Group is expected to be approximately US$95 million, subject to any closing account adjustments. We expect the transaction to close in the coming days.
The proceeds received by the Group will be used to repay debt. As a result of the disposal, and in combination with our strong underlying cash generation, we expect our net debt to be around £50 million by the end of 2018. This disposal further strengthens the Group's balance sheet and leaves us well positioned to invest to deliver long term growth as we focus on our core markets in the UK.
Ibstock Chief Executive Officer, Joe Hudson, commented:
"At the interim results in August we announced that we were undertaking a strategic review of certain aspects of our business, including our US operations, with a further update to be given at the full year results in March 2019.
"We have concluded that opportunities to grow the US business are not in line with our overall strategic objectives, and the decision was taken to dispose of these assets and refocus the Group on its core markets here in the UK. Following a competitive process, we believe that this is the best outcome for both Glen-Gery and Ibstock plc.
"I would like to thank our colleagues at Glen-Gery for their hard work and professionalism and we wish them the very best for the future.
"This divestment augments our strong underlying cashflow generation, leaving us with a strong balance sheet. Our capital allocation and shareholder return priorities remain unchanged, and we continue to assess both organic and inorganic investment options in the UK as we look to deliver long term growth."
Trading Update
Ibstock is pleased to confirm that the previously announced enhanced maintenance program in its UK brick business is progressing well and the Group remains on course to deliver adjusted EBITDA of £121m to £125m for the year ended 31 December 2018 (which assumed a full year 2018 contribution from Glen-Gery of £11 million). In addition, the Group announces it has generated proceeds of £3.7m from a further sale of surplus land which, when combined with our previously announced property sale, results in a total EBITDA impact of £9.5 million for the year. This amount is excluded from our adjusted EBITDA guidance above.
Whilst the uncertainty around the ongoing negotiations for the UK's withdrawal from the EU persists, the market backdrop in the new build housing sector remains positive. We will provide a further trading update for the year ended 31 December 2018 on 17 January 2019 as planned.
Enquires to;
Ibstock plc via Citigate Dewe Rogerson
Joe Hudson
Kevin Sims
Citigate Dewe Rogerson 0207 638 9571
Kevin Smith
Nick Hayns
This announcement contains inside information. The person responsible for arranging the release of this announcement on behalf of Ibstock plc is Robert Douglas, Group Company Secretary.
About Glen-Gery
A leading manufacturer of bricks by volume of despatches in the Northeast and Midwest regions of the United States, with a network of ten manufacturing plants, ten distribution centres and 29 active quarries, covered by 20 active quarry permits.
In 2017, Glen-Gery generated earnings before interest, tax, depreciation and amortisation of £11.7 million and had gross assets of approximately £106 million as at 31 December 2017.
About Ibstock Plc
Ibstock plc is a leading manufacturer of clay bricks and a diversified range of clay and concrete products, from its operations in the United Kingdom. Its principal products are clay bricks, brick components, concrete roof tiles, concrete substitutes for stone masonry, concrete fencing and pre-stressed concrete products.
The Group's primary UK businesses are:
‐ Ibstock Brick: The leading manufacturer by volume of clay bricks sold in the United Kingdom. With 21 manufacturing plants Ibstock Brick has the largest brick production capacity in the United Kingdom. It operates a network of 23 active quarries which are generally located close to its manufacturing plants. Ibstock Brick is currently commissioning a new soft mud brick manufacturing plant in Leicestershire that has been designed to add approximately 100 million bricks (c13%) to its brick production capacity per annum. The new plant is expected to be fully commissioned towards the end of 2018.
‐ Supreme: A leading manufacturer of concrete fencing products, concrete lintels and general concrete building products, with seven manufacturing plants in the United Kingdom.
‐ Forticrete: A leading manufacturer of concrete substitutes for natural stone walling, dressings and concrete roof tiles, with seven manufacturing plants in the United Kingdom.
Forward-looking statements
This announcement contains "forward-looking statements". These forward-looking statements include all matters that are not historical facts and include statements regarding the intentions, beliefs or current expectations of the directors. By their nature, forward-looking statements involve risk and uncertainty because they relate to future events and circumstances that are difficult to predict and outside of the Group's ability to control. Forward-looking statements are not guarantees of future performance and the actual results of the Group's operations. Forward-looking statements speak only as of the date of such statements and, except as required by applicable law, the Group undertakes no obligation to update or revise publicly any forward-looking statements.