Strix Group: An exceptional business with really significant opportunities (LON:KETL)

Strix Group plc (LON:KETL) Chief Executive Officer Mark Bartlett caught up with DirectorsTalk for an exclusive interview to discuss financial highlights, Strategic Business Objectives, how the Billi acquisition is operating, main points from the Capital Markets Day and what we can expect from the group over the next year.

Q1: Strix Group has released its interim results as well as hosting a Capital Markets Day in the city. First off Mark, could you just talk us through the financial highlights please?

A1: During the first half year, we’ve seen an increase in revenues of around 28.6%, that really is primarily as a result of the inclusion of our most recent acquisition which was Billi. This has fully offset the softness within our organic growth sales elsewhere in the business, and yet we have had some quite challenging times.

EBITDA saw a decrease of about 1.9% and the Profit after Tax saw a reduction of around 50% on the prior year, driven mainly by interest and finance costs which were related to that acquisition, along with a weakness in the kettle market particularly during Q1.

Net debt for us increased to £93 million, representing a net debt EBITDA of 2.66 times, well below our covenant, and we expect to drive this down to 2.1 times by the year end.

As a Board, we continue to take precautions to balance that capital allocation priority and have declared an interim dividend this morning of 0.9 pence.

Q2: You mentioned in the announced that the company has group Strategic Business Objectives to be delivered by the end of FY26, could you talk us through what these are and what they mean for the group?

A2: A lot has changed since we last set our strategic objectives back in 2020 which was our last Capital Markets Day. Over that time, we’ve built very strong foundations for growth with the recent acquisitions and therefore, we’ve decided to set out our commitments to grow revenue from £107 million tin 2022 to £206 million by 2026 for the gross profit of £80 million.

Within the Strategic Business Objectives (SBO), we’ve set very clear commitments for the various divisions within the business, these include very clear financial targets for kettles, for the recent acquisition of Billi and our consumer goods division. We’ve also set out our strategy for technology geographical expansion, and particularly for our people, all of which are very key drivers to the success of the business.

Q3: Now, you mentioned the acquisition of Billi, that it continues to be successfully integrated. Can you tell us more about that side of the business and how it’s operating?

A3: Billi really is a transformational acquisition for this business. It’s a highly profitable business with margins above 45%, it’s cash generative and has a history of double digit growth.

Since the acquisition was made, we really have made some very significant progress thanks to the dedication and the passion of the team in Billi. We’ve exited all of the TSA’s that we set up, we’ve set up a new Head Officer in the UK, opened a new showroom in London and even put in a brand new ERP system in just four months. So, great progress has been made.

The acquisition really does offer very significant growth opportunities with new product launches last month, and that will really allow us now to move further into the residential market segment.

Along with the group’s infrastructure, we can now also look to expand beyond their current core markets which were UK, Australia, and New Zealand, providing further opportunities for the medium term.

Q4: Just turning to the Capital Markets Day, could you talk us through the main points and the highlights from the event?

A4: As I said, a lot has changed since we last did the Capital Markets Day back in 2020, and we have built some very very strong foundations for growth within the business.

We’ve now split the business into two divisions, ensuring we really do have the right resources, processes, and particularly focus on the various categories within our business with very clear targets set for all of those.

The key elements of the Capital Markets Day really focus on innovation, sustainability, geographical expansion, all to secure that increase in revenue from £107 million in 2022 to the £206 million in 2026. The focus can really be split into three key areas:

You have the kettles, a continued focus on innovation to really set a new benchmark in technology and secure growth to £88 million worth of revenues and allow us to move into adjacent markets with some of that new technology.

Secondly, you have Billi, and really that’s a story about investing in growth, what is a transformational acquisition, and getting that to deliver £58 million of revenue with a margin in excess of 45% by 2026.

Finally, you have the consumer goods which is really to build on the success we’ve had so far and to grow that business to £60 million worth of revenues with a gross profit of 30% by 2026.

Q5: Just looking forward, what can we expect from Strix Group over the next year?

A5: The business has been through some challenging times over the past three years with the various headwinds and the macroeconomics, however, I think we’ve built some very good and strong foundations over the period and we are really clearly focussed to deliver on our revised commitments.

Over the next year, you will see a focus on our key strengths; innovation, technology, safety, sustainability and of course our people, to ensure we can deliver on those growth commitment.

For me, this is an exceptional business with some really significant opportunities and we are really committed to realise that full potential of the group.

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