TIDMVCP
RNS Number : 3304D
Victoria PLC
19 October 2022
For Immediate Release 19 October 2022
Victoria PLC
('Victoria', the 'Company', or the 'Group')
Acquisition of International Wholesale Tile
Further Growth in North America
Victoria PLC (LSE: VCP) the international designers,
manufacturers and distributors of innovative flooring, is pleased
to announce further growth of its North American division with the
acquisition of ("the Acquisition") Florida-based flooring
distributor, International Wholesale Tile LLC ("IWT").
Key terms of the Acquisition
-- For the 12 months ended 31 March 2022, IWT generated
unaudited revenues of $63.2 million [1] (c. GBP55.4m 1 ) and
normalised EBITDA of approximately $7.0 million (c. GBP6.2m (1)
).
-- The total consideration paid on completion was $28.5 million (GBP24.9 m 1 ).
-- A further, capped, contingent payment is payable over the
next four years, conditional upon the business achieving certain
growth and earnings targets.
-- Post-completion leverage remains in line with the Group's stated financial policy.
The Acquisition will be immediately earnings and cash flow
accretive.
Overview of IWT
Established in 1994, IWT is a specialty distributor of ceramic
& porcelain tiles, natural stone, luxury vinyl tiles ("LVT"),
and decorative glass tiles as well as an array of tile and stone
installation systems.
Revenue has grown consistently over the last 10 years (CAGR of
11.6%). IWT's management lead a team of c.122 employees and have
committed to continue to manage the business for a minimum term of
four years.
IWT sources product from suppliers in Europe, Asia, and South
America and distributes from a company operated, 220,000 square
foot distribution facility located in Palm City (about 80 miles
north of Fort Lauderdale) to more than 1,700 dealers in Florida and
across the United States. Key markets are residential repair and
remodel, and new construction applications. Most customers have
been with IWT for more than 10 years, providing a stable base of
recurring revenue.
US Market Overview
It is important to appreciate that the United States is not a
homogenous market. Whilst the country overall is experiencing
subdued economic growth at present, some markets - including
Florida - are seeing continued strong growth due to internal
migration of high-income households (>$120,000pa salary [2] ),
and a favourable tax and business environment.
All of the 10 fastest growing counties in the U.S. in 2021-2022
are in Florida [3] and in 20 21, the real Gross Domestic Product
(GDP) of Florida increased by 6.9% [4] - growth that has continued
into 2022 .
This population and GDP growth is directly impacting flooring
demand within the state and benefitting IWT.
Strategic rationale for the Acquisition
The acquisition of IWT continues Victoria's winning strategy of
growing its business in North America via the acquisition of
successful distributors selling the same categories of product as
the Group manufactures and sells in Europe. While, as always, IWT
(and our manufacturing operations) will remain commercially
independent, there will be meaningful commercial synergies and
efficiencies for Victoria from this acquisition.
Including IWT, Victoria's North American-derived revenues will
exceed $400 million, comprising c.27% of the Group's income.
1. Distribution diversification
-- IWT further increases Victoria's ceramic tiles distribution
footprint in the very large (c.$29 billion) and resilient US
flooring market.
-- Florida, and the other geographies serviced by IWT, are
growth markets -- outpacing the US as a whole.
2. Significant commercial synergies
-- Significant demand exists for European flooring in the US and
IWT will have improved access to Victoria's production output in
Spain, Italy, and Turkey enabling it to offer a better and more
extensive range of tiles to its customers. This is expected to lead
to market share gains and superior financial performance over
time.
-- Furthermore, the additional volume will benefit the income
and earnings of the factories, who will secure the manufacturing
margin.
The Acquisition of IWT is another step in Victoria's strategy of
growing its business with earnings accretive acquisitions, and then
using available synergies to drive significant benefits to our
customers and excellent financial results for Victoria's
shareholders. The Board believes that IWT presents an excellent
strategic fit with Victoria's existing business and will have
strong long term growth prospects as part of the Group.
Philippe Hamers, Group Chief Executive, commented:
"Victoria has been profitably selling a significant amount of
product into the US$29 billion - and growing - US market for many
years. The acquisition of Cali in July 2021 has proven to be very
successful and IWT is a further step for Victoria into North
America.
We were particularly attracted by the passion of IWT's
management team and their operational philosophy, which prioritises
customer service - ensuring product is in stock and providing rapid
delivery. These are values we share at Victoria and which have
driven our market outperformance in recent years."
Geoff Wilding, Executive Chairman, said:
"Whilst the Board remains mindful of the macroeconomic headwinds
across the globe, it maintains a long-term view in its mission to
create wealth for shareholders. Consequently, when very attractive
acquisition opportunities arise, we simply focus on ensuring we are
buying high quality, resilient businesses at valuations that
provide a margin of safety for our shareholders. We believe IWT
represents such an opportunity with its steady growth over an
extended period, high quality management, and significant synergy
opportunities."
For more information contact:
Victoria PLC
Geoff Wilding, Executive Chairman
Philippe Hamers, Group Chief Executive
Brian Morgan, Chief Financial Officer +44 (0) 1562 749 610
Singer Capital Markets (Nominated Adviser
and Joint Broker)
Rick Thompson, Phil Davies, Alex Bond +44 (0) 207 496 3095
Berenberg (Joint Broker)
Ben Wright, Richard Bootle
Peel Hunt (Joint Broker)
Adrian Trimmings, Andrew Clark
+44 (0) 203 207 7800
Buchanan Communications (Financial PR) +44 (0) 207 418 8900
Charles Ryland, Chris Lane, Jack Devoy +44 (0) 20 7466 5000
About Victoria
Established in 1895 and listed since 1963
and on AIM since 2013 (VCP.L), Victoria
PLC, is an international manufacturer and
distributor of innovative flooring products.
The Group, which is headquartered in Kidderminster,
UK, designs, manufactures, and distributes
a range of carpet, flooring underlay, ceramic
tiles, LVT (luxury vinyl tile), artificial
grass and flooring accessories.
Victoria has operations in the UK, Spain,
Italy, Belgium, the Netherlands, Turkey,
the USA, and Australia and employs approximately
6,500 people across 31 sites. Victoria
is the UK's largest carpet manufacturer
and the second largest in Australia, as
well as the largest manufacturer of underlay
in both regions.
The Group's strategy is designed to create
value for its shareholders and is focused
on consistently increasing earnings and
cash flow per share via acquisitions and
sustainable organic growth. (Further information
about Victoria can be found on its website,
www.victoriaplc.com.)
[1] .GBP / USD : 1.14
[2] Florida Department of Financial Services
[3] U.S. News & World Report
[4] Statista Services
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