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Victoria PLC (VCP)


Wednesday 23 June, 2021

Victoria PLC

Acquisition of Cali Bamboo Holdings Inc

RNS Number : 8175C
Victoria PLC
23 June 2021

For Immediate Release                                                                                                        23 June 2021  

The information communicated within this announcement is deemed to constitute inside information as stipulated under the Market Abuse Regulations (EU) No. 596/2014. Upon the publication of this announcement, this inside information is now considered to be in the public domain.

Victoria PLC

('Victoria' or the 'Group')

Acquisition of Cali Bamboo Holdings Inc.


North America Distribution Expansion


Victoria PLC, (LSE: VCP) the international designers, manufacturers and distributors of innovative flooring, is delighted to announce the further expansion of its existing North American distribution business with the acquisition of Cali Bamboo Holdings Inc. ("Cali").


Cali is an exceptionally high-growth US-based business that has achieved an organic CAGR of 17% for the past five years via its online B2C customer acquisition model, data-driven analytics, a high-touch consultative sales team, and direct delivery capability, alongside B2B channels.


Key terms of the Acquisition

· For the 12 months ended 30 April 2021, Cali generated unaudited total revenues of US$171.6 million (£124.3m1) (Y/E 31 December 2020: US$151.1m) and normalised EBITDA of US$13.8 million (£10.0m1) (2020: US$11.7m).

· Total consideration paid was US$76.1 million (£55.1m1) and was funded entirely from the Group's cash balances. In addition, Cali had approximately US$27.8 million (£20.1m1) of net debt, which was repaid on completion.

· Victoria's leverage remains in line with our stated financial policy.


The acquisition of Cali will be immediately earnings-accretive.


Strategic rationale for the Acquisition

The integration of Cali with Victoria's existing business will create opportunities for value-creating revenue synergies by expanding Victoria's US distribution, where the Group currently sells c. US$33 million of flooring each year.


However, very significantly, the acquisition also gives Victoria access to the intellectual property and online management experience of Cali, which the Group will leverage to partner with its key retailers to accelerate growth in its existing UK, European, and Australasian markets .


Established in 2004, Cali is a multi-channel US flooring distributor with 49.5% of revenue from direct to consumer and direct to contractor channels driven by the Cali website, 29.0% of revenue from speciality retailers (B2B), and 21.5% of revenue from consumers via national home centres. This direct customer access, combined with Cali's bespoke data analytics capabilities, enables informed decisions about new products and channel-specific marketing initiatives that allows Cali to constantly tune its channel and product mix to better address ever changing customer needs. The result has been consistent revenue and profitability growth in excess of industry averages and across economic cycles.


There are several distinct aspects to Cali's business model that gives Victoria's board confidence that a high growth rate can be maintained:

· Cali's fast growing direct to consumer/contractor business is highly profitable on a first order basis and increasingly benefits from a growing mix of repeat professional customers (today 47% of contractor/professional sales are repeat orders up from 28% in 2017). Unit economic measures like LTV / CAC (LifeTime Value / Customer Acquisition Cost) and fully costed ROAS (Return On Average Sale) are very attractive on an absolute basis and well above industry benchmarks from other D2C verticals. 

· For the past 3 year's Cali's direct to consumer/contractor channel has benefitted from consistent increases in average order value and customer lifetime value alongside declining CAC.  This highlights Cali's "headroom" to efficiently increase advertising spend to accelerate growth. Victoria plans to make use of Cali's high cash conversion and continue investing aggressively in digital marketing channels to further accelerate profitable growth and continue to build out its e-commerce capabilities.

· The Cali lifestyle brand and sustainability-themed product portfolio resonates in particular with Millennials, the largest US demographic, now entering their peak home-buying years (38% of home sales in 2019 were to Millennials). The business's brand and genuine customer care appeals to this large group of customers as evidenced by a Net Promotor Score of 81 - higher than many leading brands, including Amazon, Starbucks, Netflix, and Sony. (Source: Customer Guru)

· 51.9% of Cali's revenues are in the US's highest growth flooring product category of LVT/LVP (Luxury Vinyl Tile/Luxury Vinyl Plank), with the balance consisting of engineered hardwoods, composite decking, and other items.

· Cali has coverage across the US, which is a c. US$29 billion flooring market (Freedonia) . Online sales, which are still only 4% of the total residential market, are growing at 11% per annum ( Flooring Weekly) and we believe Cali's historical investment into performance marketing knowhow and fulfilment infrastructure makes them well positioned to capture a substantial portion of the flooring market as online penetration increases.


Like all companies acquired by Victoria, Cali will continue to operate with a high degree of autonomy under experienced and committed managers, led by CEO Renee Thomas Jacobs, whilst benefiting from access to an even wider range of products to support its rapid growth.


The Acquisition of Cali is another step in Victoria's strategy of growing its business with earnings accretive acquisitions, and then using available synergies to drive further increases in margin and revenue across the Group. The Board believes that Cali 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 successfully selling a significant amount of product into the US$29 billion - and growing - US market for many years. The acquisition of Cali represents a step-change for the Group presenting both revenue synergies alongside meaningful exposure to the fast-growing online sales channel. We will also be using the knowledge and online systems developed by Cali to partner with our existing key retailers in the UK, Europe, and Australia to accelerate our growth and earnings in these markets.


Cali has a very high-quality management team who are passionate about the business and the result is indisputable: it has been organically growing revenues at more than 17% annually for the last five years with strong operating cash conversion."


Geoff Wilding, Executive Chairman, said:

"Victoria has now invested a little over £160 million in the current financial year to add approximately £27 million of EBITDA to the Group. This is a significant acquisition for Victoria and helps towards our objective of increasing our commitment to North America where the practical support and deep sector experience of Koch Equity Development has proven invaluable.


We continue to have substantial amounts of capital to deploy and are in active discussions with additional high-quality opportunities to grow our business. Therefore, shareholders can expect further acquisitions."



1 Applying a GBP:USD exchange rate of 1.38

2 Leverage ratios calculated in-line with the Group's debt facilities


The person responsible for arranging the release of this announcement on behalf of the Company is Michael Scott, Group Finance Director.


For more information contact:

Victoria PLC

Geoff Wilding, Executive Chairman

Philippe Hamers, Group Chief Executive

Michael Scott, Group Finance Director

+44 (0) 1562 749 610


N+1 Singer (Nominated Adviser and Joint Broker)

Rick Thompson, Phil Davies, Alex Bond



+44 (0) 207 496 3095

Berenberg (Joint Broker)

Ben Wright, Mark Whitmore, Tejas Padalkar


Peel Hunt (Joint Broker)

Adrian Trimmings, Andrew Clark


Buchanan Communications (Financial PR)

Charles Ryland, Chris Lane, Vicky Hayns, Tilly Abraham

+44 (0) 203 207 7800


+44 (0) 207 418 8900


+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 and Australia and employs approximately 3,800 people across more than 25 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, .)

About Cali

Cali was founded in 2004 by two college friends who, while on a surfing trip to Hawaii and cutting bamboo as a casual job, thought that bamboo could and should be used as a building product in place of traditional trees. Not only is bamboo the fastest growing plant on earth and rapidly-renewable, it could also help reduce global warming and save animal habitat loss.

Since then, the business has developed as a US-wide online flooring product designer and distributor with an absolute commitment to customer service and environmental sustainability . (Further information about Cali can be found on its website .)







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