Zotefoams Plc · LSE:ZTF
Zotefoams — H1 2022 Earnings Presentation
33 slides from Zotefoams's earnings presentation, Aug 9, 2022
Slide 1: Interim Results 9 August 2022
1 Interim Results 9 August 2022 David Stirling Group CEO Gary McGrath Group CFO Presenters name AZOTE®® / ZOTEK® ®/ T-FIT® /®MuCell® T-FIT® AZOTE / ZOTEK / T-FIT / MuCell®
Slide 2: Important notice
Important notice By attending the meeting where this presentation is made, or by reading the presentation slides, you agree to be bound by the following limitations: This presentation is being made only in the United Kingdom and this document is being distributed only to and is directed only at pers
Slide 3: Introduction
Introduction AZOTE®® / / ZOTEK AZOTE ZOTEK®® / T-FIT® /®MuCell® ® / T-FIT / MuCell 3
Slide 4: Business overview
Business overview EXTRUSION AUTOCLAVE TECHNOLOGY TECHNOLOGY POLYOLEFINS HPP MEL AZOTE® ZOTEK® T-FIT® MuCell® Premium durable foams Lightweight technical foams Technical insulation for industry Innovative and accessible Uniformly dense foam sheets with a Foams which offer superior A range of insulati
Slide 5: Purpose & Strategy
Purpose & Strategy “Our ambition is to be the world leader in cellular materials technology in our We intend to develop chosen markets” business through sustained high levels of organic growth and through partnerships or acquisitions Our purpose is to We focus resources primarily provide “Optimal on
Slide 6: Results Summary
Results Summary Group revenue Adjusted1 Adjusted1 Leverage ratio up 23% to £59.0m operating profit up basic EPS up 43% down slightly at (HY 2021: £48.2m) 40% to £6.7m to 9.61p 2.0x (CC: £57.9m (HY 2021: £4.8m) (HY 2021: 6.71p) (Dec 21: 2.1x) • Group revenue of £59.0m, 23% above the prior year compar
Slide 7: Strategy summary
Strategy summary • We believe that plastics, used appropriately, remain the optimal solution both functionally and environmentally for our customers’ needs. • Strategy is built around a focus on sustainable organic growth and mix enrichment • Strong performance and current order book in most polyole
Slide 8: Segment overview
Segment overview Revenue by geography Revenue by business unit June 2022 June 2021 £’ thousands Revenue by industry A well-balanced geographical and industry spread Not updated at the half year Strong performance in all geographical and industrial markets with the exception of automotive AZOTE® / ZO
Slide 9: Financial review
Financial review Financial review AZOTE® / ZOTEK® / T-FIT® / MuCell® 9
Slide 10: Abbreviated income statement
Abbreviated income statement • Sales up due to multiple price rises, 4% £million HY22 HY21 Change higher volumes and currency • Sales less input cost margin has risen six Group revenue 59.0 48.2 23% percentage points in the period Gross profit 17.1 13.9 23% • Polymer pricing has stabilised, energy c
Slide 11: Statement of financial position
Statement of financial position Key observations £million Jun-22 Jun-21 Change Dec-21 • £3.9m increase in tangible fixed assets related Intangible assets 7.2 5.6 28% 6.2 to foreign exchange translation Tangible assets 95.6 92.9 3% 92.5 • £0.9m of ReZorce capital expenditure takes Other assets 0.7 1.
Slide 12: Statement of cash flows
Statement of cash flows £million Jun-22 Jun-21 Profit before tax 5.7 4.0 Depreciation 3.9 3.8 Other 1.8 1.2 O.P. before movements in W/C & Provisions 11.4 9.0 • Good profit performance Pension contributions (0.3) (0.4) • High receivable movement as per comment on Movement in receivables (9.6) (4.1)
Slide 13: Main cost headwinds: LDPE & Energy
Main cost headwinds LDPE & Energy LDPE • Low-density polyethylene polymer is the primary raw material for AZOTE® foams • H1 22 prices 25% higher than H1 21 with peak in May which will flow into H2 22 (FIFO accounting) • High prices now related more to ethylene with producer costs (spread) trending d
Slide 14: Business review
Business review AZOTE® / ZOTEK® / T-FIT® / MuCell® 14
Slide 15: Polyolefin Foams results
Polyolefin Foams results ® Common polymers made extraordinary by Zotefoams’ unique process, AZOTE creating premium, durable, consistent materials Polyolefin H1 22 H1 21 Change H2 21 Revenue – up 26% (58% of Group sales) Foams • Several rounds of price increases to recover, with a lag, Segment revenue
Slide 16: HPP results
HPP results ® ZOTEK® foams: retaining the attributes of high-performance polymers ZOTEK with the added benefits of consistent foaming T-FIT® T-FIT® high-performance insulation Revenue – up 21% (40% of Group sales) HPP H1 22 H1 21 Change • Footwear sales up 18% to £19.5m and represent 33% Segment rev
Slide 17: MuCell Extrusion (MEL) results
MuCell Extrusion (MEL) results MuCell® microcellular technology Revenue & growth MEL June 22 June 21 Change • Resources continue to be redeployed from the traditional MEL licensing model while continuing to Segment revenue (£m) 1.1 1.3 (22%) support existing and in-progress licensing clients Segment
Slide 18: Sustainability
Sustainability Appendices AZOTE®® / / ZOTEK AZOTE ZOTEK®® / T-FIT® /®MuCell® ® / T-FIT / MuCell 18
Slide 19: ReZorce circular packaging
ReZorce circular packaging A MuCell Extrusion LLC development Positioning • The first fully recyclable beverage carton with performance to match current multi-material solutions • 53% less energy; 51% less water; 55% lower Global Warming Potential 1 • 100% recyclable (up to 100% recycled content2) •
Slide 20: Sustainability
Sustainability Optimal material solutions for the benefit of society • Appropriate use of plastics meets functional and environmental needs: o Long-term use o Saves weight and fuel by making cars and planes lighter o Saves energy by insulating o Solves recycling challenges • Committed to reducing th
Slide 21: Our place in a lower-carbon economy
Our place in a lower-carbon economy Four aspects of our business will enable us to thrive in a lower carbon economy • Our nitrogen-based process o Our core high-pressure autoclave foaming process uses nitrogen borrowed from the atmosphere o Energy and raw material become the only environmental impac
Slide 22: Key messages & outlook
Key messages & outlook KEY MESSAGES OUTLOOK Sales up 23% to £59.0m, with £1.1m currency In H2 expect Y-on-Y growth in sales as a tailwind consequence of better pricing (including - Effective pricing has supported gross margins, some FX) and improved product mix despite cost inflation - Strong tradin
Slide 23: Appendices
Appendices Appendices AZOTE®® / / ZOTEK AZOTE ZOTEK®® / T-FIT® /®MuCell® ® / T-FIT / MuCell 23
Slide 24: Investment case
Investment case Sustained high levels of organic growth with margin enhancement through product mix and operational gearing Flexible core autoclave MuCell optionality: capacity for block investment in foam production customer base (AZOTE® & with long value tail ZOTEK®) Downstream HPP growth rates in
Slide 25: Overview
Overview Organisation Products Founded on innovation Polyolefin stretching back Foams to 1921 Environmentally friendly High- Nitrogen/CO2 A world leader Performance gas foaming in cellular Products processes Barriers materials to entry: technology IP, capital, Technology application licensing for sp
Slide 26: How our business works
How our business works Leveraging our unique technology with an innovation-led portfolio of advanced products • Starting with a core process o Proprietary three-stage process o Meaningful and sustainable competitive advantage • Making the best use of our assets o Running full and mix-enriching o AZO
Slide 27: Three stage process
Three stage process AZOTE® / ZOTEK® / T-FIT® / MuCell® 27
Slide 28: MuCell process technology
MuCell® process technology MuCell® technology produces foam that performs like solid plastic. It creates micro-bubbles in the centre of plastic extrusions by injecting gas into the melt during manufacture. Lighter Greener Lower cost cost AZOTE® / ZOTEK® / T-FIT® / MuCell® 28
Slide 29: Group overview - locations
Group overview - locations MuCell Extrusion HQ Zotefoams plc Zotefoams T-FIT Woburn, MA, USA Croydon UK Material Technology licenses MuCell® block foam main (Kunshan) Co. Ltd, technology to end-users manufacturing site China Zotefoams Poland, T-FIT ® products SP z.o.o., Brzeg manufacture foam manufa
Slide 30: Multi-year capacity enhancement now complete
Multi-year capacity enhancement now complete +60% Group capacity versus end 2017: well invested to support growth Brzeg Site: • Commissioned 2021 • Ideal logistics location • Flexible capacity, linked to UK site, to meet European customer needs Croydon, UK: largest site, AZOTE and all Brzeg, Poland:
Slide 31: Main markets & typical applications
Main markets & typical applications Product Transport Industrial Protection AZOTE® ZOTEK® MuCell® AZOTE® ZOTEK® T-FIT® AZOTE® ZOTEK® MuCell® Aircraft seats, seals Seals and gaskets Automotive seals, gaskets Marine hoses and fenders Luxury, fine art and museum Galley areas / window seals Cleanroom en
Slide 32: Market information and shareholder profile
Market information Share price 249p (04/08/22) Shareholder Profile* Market Main Market Ticker ZTF.L Market cap. £120.6m Ord. shares in issue 48,621,234 500 500 450 400 Traded volume ('000s) Share price (p) 400 300 350 200 Schroder 12.4% Canaccord 9.7% Invesco 8.4% Premier Miton 5.4% Highclere 5.1% M
Slide 33: Board of Directors
Board of Directors Steve Good Non-Executive Chair Dr Alison Fielding Non-Executive Director (Chair of the Nomination Committee and member of the Remuneration (Chair of the Remuneration Committee and member of the Audit and Committee) Nomination Committees) Appointed to the Board in October 2014 as a