Ecosynthetix Inc. · TSX:ECO
Ecosynthetix — Q2 2018 Earnings Presentation
17 slides from Ecosynthetix's earnings presentation, Aug 7, 2018
Slide 1: EcoSynthetix Inc. Q2 2018 Earnings Call
EcoSynthetix Inc. Q2 2018 Earnings Call Jeff MacDonald | CEO Rob Haire | CFO August 7, 2018
Slide 2: Forward Looking Statements
FORWARD LOOKING STATEMENTS Certain statements contained in this document and any amendment or supplement hereto constitute Some of the risks that could affect the Company’s future results and could cause those results to differ materially forward-looking statements. All statements other than stateme
Slide 3: Q2 2018 Highlights
Q2 2018 HIGHLIGHTS TOPLINE GROWTH ACROSS BOTH PAPER & WOOD COMPOSITES SIGNIFICANTLY NARROWED ADJ EBITDA LOSS IMPROVING SB LATEX PRICING DYNAMICS DRIVING PAPER GROWTH FOCUSED ON OSB SEGMENT IN WOOD COMPOSITES pMDI PRICING REGRESSING BUT STILL CHALLENGING FOR MDF & PB ADOPTION MOMENTUM TOWARD PROFITAB
Slide 4: Improvement in bottom line driven by sales growth and cost structure
IMPROVEMENT IN BOTTOM LINE DRIVEN BY SALES GROWTH AND COST STRUCTURE (USD millions) Net Sales Adj EBITDA loss Cash used in operating activities $11.2 $3.6 $2.7 $8.4 $2.2 $5.8 63% $4.8 $1.3 $1.4 65% 22% $0.9 $0.5 $0.3 Q2 Q2 YTD YTD Q2 Q2 YTD YTD Q2 Q2 YTD YTD 2017 2018 2017 2018 2017 2018 2017 2018 2
Slide 5: Consistent performance improvement across eight quarters
CONSISTENT PERFORMANCE IMPROVEMENT ACROSS EIGHT QUARTERS $6.0 $5.0 $4.0 2X REVENUE $3.0 $2.0 $1.0 70 % IMPROVEMENT $0.0 IN ADJ EBITDA Q3 16 Q4 16 Q1 17 Q2 17 Q3 17 Q4 17 Q1 18 Q2 18 -$1.0 -$2.0 ON TRACK TO ACHIEVE PROFITABILITY ECOSYNTHETIX INC. 5
Slide 6: Global pMDI – Recent Softening
GLOBAL pMDI – RECENT SOFTENING $4,500 € 4,500 $2,484 $4,000 € 4,000 PMDI Bulk Price per MT – $3,500 € 3,500 North America Jun 2018 $3,000 € 3,000 $2,443 PMDI Bulk Price $2,500 € 2,500 per MT – Asia Jun 2018 $2,000 € 2,000 €2,250 $1,500 € 1,500 PMDI Bulk Price per MT – Europe $1,000 € 1,000 Jun 2018
Slide 7: Dual commercial strategy in wood composites
DUAL COMMERCIAL STRATEGY IN WOOD COMPOSITES NEAR-TERM OPPORUNITY PRIMARY TARGET OSB – lower cost binder PB & MDF – NAF solution system than pMDI alone AN NAF SOLUTION AS AN ALTERNATIVE TO FORMALDEHYDE BINDERS ECOSYNTHETIX INC. 7
Slide 8: >5 top global wood composite manufacturers in trials
>5 TOP 15 GLOBAL WOOD COMPOSITE MANUFACTURERS IN TRIALS TOP 15 GLOBAL WOOD-BASED PANEL MANUFACTURERS WOOD COMPOSITES VALUE CHAIN BASED ON PRODUCTION CAPACITY (‘000M3) 4,000 8,000 12,000 16,000 CONSUMERS Kronospan M&P Kaindl Egger Swiss Krono Group RETAILERS Arauco* Driving adoption Louisiana-Pacific
Slide 9: Inter IKEA commitment to bio-based adhesive systems
Change will only be possible if we IKEA has the intention to collaborate with others and nurture convert presently used adhesives systems from fossil entrepreneurship. We are committed to based to bio based systems taking the lead working together with everyone – from raw material suppliers all IKEA
Slide 10: SB Latex Pricing Dynamics Trending Higher
SB LATEX PRICING DYNAMICS TRENDING HIGHER $180.0 $160.0 $140.0 $120.0 $108 SB latex/100 lb $100.0 $80.0 $74 $60.0 WTI/bbl $40.0 $20.0 $- Jan-10 Jul-10 Jan-11 Jul-11 Jan-12 Jul-12 Jan-13 Jul-13 Jan-14 Jul-14 Jan-15 Jul-15 Jan-16 Jul-16 Jan-17 Jul-17 Jan-18 ECOSYNTHETIX INC. 10
Slide 11: Packaged goods leaders pursuing 100% bio-based solutions
PACKAGED GOODS LEADERS PURSUING 100% BIO-BASED SOLUTIONS ECOSYNTHETIX INC. 11
Slide 12: Financials
FINANCIALS USD millions (except gross margin) Q2 2018 Q2 2017 YTD 2018 YTD 2017 Net Sales $5.8 $4.8 $11.2 $8.4 Gross Profit $1.2 $1.0 $2.2 $1.8 Gross Margin 20.5% 21.8% 19.9% 22.0% Gross Margin adjusted for manufacturing depreciation 23.9% 25.8% 23.6% 26.6% Adjusted EBITDA (loss) $(0.5) $(1.3) ($1.4
Slide 13: Operating Cost
OPERATING COST Selling, General & Administrative Research & Development (USD, millions) (USD, millions) $3.5 $3.0 $1.4 $2.5 $1.2 $1.0 $2.0 $0.8 $1.5 $0.6 $1.0 $0.4 $0.5 $0.2 $- $- Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 14 14 14 15 15 15
Slide 14: Pattern of Reduced Adj EBITDA Loss
PATTERN OF REDUCED ADJ EBITDA LOSS Adj EBITDA loss $(4.0) $(3.5) $(3.0) $(2.5) $(2.0) $(1.5) $(1.0) $(0.5) M $(0.5) $- Q2 14 Q3 14 Q4 14 Q1 15 Q2 15 Q3 15 Q4 15 Q1 16 Q2 16 Q3 16 Q4 16 Q1 17 Q2 17 Q3 17 Q4 17 Q1 18 Q2 18 TARGETING PROFITABILITY IN NEAR TERM ECOSYNTHETIX INC. 14
Slide 15: Outlook
OUTLOOK ON TRACK FOR PROFITABILITY ENGAGED IN NEAR TERM WITH THE RIGHT ACCELERATE CONVERSION IN WOOD COMPOSITES: OSB REMAINS HIGHEST PROBABILITY IN NEAR TERM MANUFACTURERS IN STAYING IN FRONT OF PB & MDF PROSPECTS BOTH MARKETS RENEWED INTEREST IN ECOSPHERE ECOSYNTHETIX INC. 15
Slide 16: #1 Priority: Converting Existing Prospects
#1 PRIORITY CONVERTING EXISTING PROSPECTS ECOSYNTHETIX INC. 16
Slide 17: Question & Answer
EcoSynthetix Inc. Question & Answer