Lords Group Trading (LSE:LORD.L) cut its full-year adjusted EBITDA guidance to approximately £16 million on Friday, down from the £17 million-£18 million range it set in July, as weak Plumbing & Heating trading persists into the winter season.
The AIM-listed distributor of building materials, plumbing, heating and DIY products also confirmed it has completed amendments to its banking facility covenants, which the Board flagged at its interim results in September, securing a revised package designed to meet the Group's requirements through to March 2029.
In a trading update covering the four months to 31 October, Digital delivered like-for-like revenue growth of 11.8% in the period and 15.3% over the ten months to the end of October, with the company citing market share gains.
Merchanting revenue also grew ahead of the comparative period, though like-for-like revenue remained 2.4% lower over the ten months to October, with competitive pressure limiting the division's ability to pass supplier price increases on to customers.
Plumbing & Heating proved the weak spot, with like-for-like revenue down 11.1% in the four-month period and 12.5% lower cumulatively to the end of October, as the division's winter heating season got off to a muted start amid continued pressure on cost of living and the wider repair, maintenance and improvement (RMI) market.
Within Plumbing & Heating, the wholesale business APP prioritised margin quality over volume, trading lower sales for improved gross margins, while its spares and trade counter businesses, DH&P and HRP, delivered combined revenue growth of 11.5% and renewables revenue more than doubled against the prior period.
Group like-for-like revenue fell 3.1% in the four months and 5.2% over the ten months to October, with reported revenue down 2.8% in the period and 0.5% lower cumulatively, after accounting for acquisitions and branch changes.
The distribution centre rationalisation in Plumbing & Heating, which reduced APP's distribution centres from seven to four during the second quarter, is expected to generate approximately £1.5 million of annualised cost savings for the division, alongside £1.6 million of annualised savings from a separate restructuring in Merchanting in August.
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"We are encouraged by the performance of Digital, improving like-for-like revenue in Merchanting, and strong performance in renewables and our spares business DH&P despite market conditions remaining challenging across all our end markets," said chief executive Shanker Patel.
The amended covenants are set around quarterly testing thresholds tied to reducing Group leverage to 3.0 times bank-calculated adjusted EBITDA by 31 March 2028 and beyond, and the company has undertaken not to pay dividends while leverage remains above 3.5 times that measure.
Citing current interest rate expectations, the Board said a recovery in demand will take longer to emerge than previously assumed, delaying the expected improvement in trading until later in the 2027 financial year.