Eurocell PLC · LSE:ECEL
Eurocell — FY2020 Earnings Presentation
34 slides from Eurocell's earnings presentation, 2021
Slide 1: Eurocell Plc 2020 Full Year Results
EUROCELL PLC 2020 Full Year Results
Slide 2: Agenda and Presenters
Agenda Presenters Business Review Mark Kelly Chief Executive Officer Financial Review Michael Scott Strategy and Outlook Chief Financial Officer 1
Slide 3: Overview
Overview Mark Kelly – Chief Executive Officer Revenue Major impact of COVID on H1 – decisive action in response £257.9m Health & safety, operational and financial measures to safeguard the business ▼ 8% (2019: £279.1m) Strong second half performance Better RMI market than anticipated Adjusted Profit
Slide 4: 2020 in Review
2020 in Review Well positioned for 2021 Q1 Q2 Q3 Q4 Controlled closure Securing the future Managed return Strong recovery • Closed late March, • £17m share placing • Phased re-opening from mid-May, • All sites open by July in line with • Deferral of non-essential and following new Government guidanc
Slide 5: Divisional Review: Profiles 2020 Performance
Divisional Review Profiles – 2020 Performance Profiles Division P&L £m 2019 2020 Change ► Full year sales down 14% – impact of first COVID lockdown 3rd Party Revenue 115.7 99.7 ▼ 14% - Equivalent to flat on a like-for-like(4) basis Inter-segmental Revenue (1) ▼ 5% 59.5 56.4 ► Good H2, with like-for-
Slide 6: Profiles: Opportunities to Grow Market Share
Divisional Review Profiles – Opportunities to Grow Market Share Strategic objective to target 20% share and consolidate position as largest supplier of rigid PVC profile to UK market ► Opportunities to grow market share - Tight specifications secured through technical sales force - Competitive advan
Slide 7: Divisional Review: Building Plastics 2020 Performance
Divisional Review Building Plastics Division P&L Building Plastics – 2020 Performance £m 2019 2020 Change 3rd Party Revenue 163.4 158.2 ▼ 3% ► Full year sales down 3% – impact of first COVID lockdown Organic 162.9 157.5 ▼ 3% - Equivalent to +14% on a like-for-like(4) basis Acquisitions (1) 0.5 0.7 ▲
Slide 8: Building Plastics: Opportunities to Grow Market Share
Divisional Review Building Plastics – Opportunities to Grow Market Share Strategic objective to target world class operations from 270-300 sites ► Market very fragmented, with c.80% served by small independents ► Opportunities to grow market share - Competitor branch footprint reduction - Simplified
Slide 9: Financial Highlights
Financial Highlights Michael Scott – Chief Financial Officer Revenue Gross Margin Adjusted Profit Before Tax(2) £257.9m 49.4% £8.5m ▼ 8% (2019: £279.1m) ▼ 1.8% (2019: 51.2%) (2019: £22.7m) Adjusted Earnings Per Share(2) Non-underlying Charges Net Debt (pre-IFRS 16) 6.5p £10.0m £9.9m (2019: 19.3p) (2
Slide 10: Financial Performance
Financial Performance Group Income Statement £m 2019(1) 2020(1) Change Revenue 279.1 257.9 ▼ 8% Gross Profit 142.9 127.4 Gross Margin % 51.2% 49.4% Overheads (100.5) (97.6) ▼ 3% Adjusted EBITDA 42.4 29.8 ▼ 30% Depreciation and Amortisation (17.8) (19.5) Finance Costs (1.9) (1.8) Adjusted Profit Befo
Slide 11: Sales Performance
Sales Performance A Year of Two Halves 350 Like-for-like(1) sales ▲ 6% 17.9 296.9 (41.1) 300 279.1 (0.1) 2.0 0.1 257.9 £m 250 200 150 100 2019 Profiles LFL Building Plastics Group LFL Trading day 19/20 Branches Acquisitions 2020 LFL impact ► Full year like-for-like(1) sales ▲6% on trading day basis
Slide 12: Gross Margin
Gross Margin Improving as Volumes Increase 51.2% -1.3% +0.2% -1.1% +0.6% -0.1% -0.1% 49.4% 142.9 (15.2) 140 0.4 (2.8) 0.8 127.4 1.5 (0.2) £m 120 100 2019 Volume Mix Increase in stock Material costs Recycling 2019 / 2020 2020 provision Branches ► Volume impact (-130bps) driven by effect of first lock
Slide 13: Overheads
Overheads OVERHEADS Impact of Government Support and IFRS 9 Impairments 110 Overheads 2.7 (6.5) ▼ 3% 100.5 100 (1.1) 2.2 97.6 (1.8) 0.8 95.4 0.8 90 £m 80 70 60 50 2019 Volume Job Retention Furlough cost Building 2019 / 2020 Warranties 2020 IFRS 9 2020 Scheme saving Plastics Branches (pre-IFRS 9) imp
Slide 14: Non-underlying Charges
Non-underlying Charges OVERHEADS Impact of COVID and Warehouse Dual Running Costs ERN(1) goodwill impairment Non-underlying charges in 2020 £m ► Lower projected cash flows, reflecting impact of COVID on: Impairment • ERN(1) goodwill 5.8 - Customer demand and production volumes in the short-term char
Slide 15: Capex
Capex Continued Investment in Operating Capacity Total Capital Expenditure (£m) 16.0 15.2 13.7 14.0 ► 2020 capex £13.7m (2019: £15.2m) 12.0 - New warehouse £8.0m • Racking c.£4m, mobile plant c.£2m, systems / offices / project management c.£2m 10.0 8.7 7.2 7.5 • Cost to complete c.£1m 8.0 - Recyclin
Slide 16: Working Capital
Working Capital Key Working Capital Metrics(1)(2) Cash Flow Management Stock Days Debtor Days ► Net inflow from working capital £4.7m December 2019 76 37 December 2020 (1)(2) 83 32 ► Stock days at 83 vs 76 at December 2019 - Stocks ▲ £0.8m since December 2019 Inventory as a % of LTM Cost of Sales(1)
Slide 17: Cash Flow
Net Debt Reconciliation £m Dec 2019 Dec 2020 Change Cash Flow Cash & Overdraft 4.9 2.6 (2.3) Significant Headroom and Good Liquidity Borrowings (39.5) (12.5) 27.0 Net debt (pre-IFRS 16) (34.6) (9.9) 24.7 IFRS 16 leases (34.1) (48.4) (14.3) Net Debt (68.7) (58.3) 10.4 40 18.7 (26.3) 36 4.7 (1.6) (1)
Slide 18: Financial Summary Including Guidance for 2021
Financial Summary Including Guidance for 2021 2020 2021 Guidance Stated Post-IFRS 16 ► Major impact of COVID on H1 financial performance Reported Guidance - Recorded a loss for the period Underlying Income Statement Depreciation and Amortisation £19.5m c.£22m ► Decisive actions taken to secure finan
Slide 19: Strategy and Outlook
Strategy and Outlook Mark Kelly – Chief Executive Officer Strategic framework: Overall objective to deliver sustainable growth in shareholder value Develop Eurocell brand Leverage vertical integration Drive sustainability ► 5 strategic priorities established in 2016 to support overall objective - Go
Slide 20: Operational Excellence
Operational Excellence Delivering Returns on Investment in Capacity ► Manufacturing and warehousing constraints now resolved New warehouse through major investments in capacity • 260k square feet, state-of-the-art facility ► Expect operational excellence to result in the benefit of sales • Modernise
Slide 21: Sustainability
Sustainability Developing Our Approach ► Now defining long-term sustainability objectives and KPIs ► Leading UK-based recycler of PVC windows - Link to relevant UN Sustainable Development Goals and the Ellen - Total output from recycling operation 21.1kt (2019: 24.9kt) MacArthur Foundation’s New Pla
Slide 22: Market Dynamics
2021 CPA Construction Industry Forecasts (2020-2022) Market Dynamics Private RMI (c.85% Eurocell revenue) New build (c.10% Eurocell revenue) Commercial (c.5% Eurocell revenue) Market drivers: Market drivers: Market drivers: 2021 ▼ 2% vs 2019 Renovation activity driven by: Budget 2021 – COVID stamp S
Slide 23: Summary Including Outlook
Summary Including Outlook Investment case ✓ Clear strategy and priorities ✓ Proven ability to deliver revenue growth ✓ Uniquely differentiated on sustainability through recycling operation ✓ Operational capacity constraints resolved through major investments ✓ Leading market positions and good poten
Slide 24: Appendices
Appendices eurocell. All together better
Slide 25: Product Range
Product Range Ranges of window profile and doors Skypod pitched skylights Syncro patio and Aspect bi-fold doors Fascias, soffits and guttering Conservatories and Equinox tiled roofs Traded goods 24
Slide 26: Existing Warehouse
Existing Warehouse 25
Slide 27: New Warehouse
New Warehouse 26
Slide 28: Profiles Division
Profiles Division Use of Recycled PVC in Manufacturing ► Manufactures: 16.0 - Extruded rigid and foam PVC profiles using virgin PVC 14.0 13.4 12.4 compound 12.0 - Rigid products also include recycled compound 9.5 10.0 8.3 Kt 8.0 ► Recycles: 6.0 6.0 - Factory offcuts (post-industrial) and old windows
Slide 29: Building Plastics Division
Building Plastics Division Number of Branches ► Sells: 250 - Range of Eurocell manufactured and branded PVC foam roofline and 202 206 208 window fitting / maintenance products 200 190 159 - Third party manufactured ancillary products: sealants, tools and 141 150 rainwater products - Vista doors 100
Slide 30: Route to Market
Route to Market Third Party Suppliers Recycling: Eurocell Recycle Third Party Suppliers 31,000 tonnes of virgin e.g. compound consumed (1), 12,400 tonnes of recycled • Rainwater products plus 5,600 tonnes of compound consumed • Sealants other raw materials (2) (25% of profile raw material • Tools co
Slide 31: Recycling – Inputs, Outputs and Usage
Recycling – Inputs, Outputs and Usage K tonnes 2019 2020 Change Change % Inputs – Waste Recycled Post-consumer 31.4 27.0 Post-industrial 9.9 6.7 Total 41.3 33.7 (7.6) (18%) Outputs – Recycled Material Produced Total 24.9 21.1 (3.8) (15%) Usage Primary Extrusion 13.4 12.4 (1.0) (7%) Products Made Fro
Slide 32: Group History
Group History Branch expansion Branch expansion Eurocell Building Branch expansion reaches 100 reaches 150 Plastics launched reaches 50 Operational Branch expansion 1st Eurocell Building Plastics reaches 200 Extrusion branch business Rebranding: Primary founded, single brand extruders: Primary Prima
Slide 33: Disclaimer
DISCLAIMER This Presentation may contain forward-looking uncertainties because they relate to events and In no circumstances will the Company be statements that involve substantial risks and depend on circumstances that may or may not responsible for any costs, losses or expenses uncertainties, and
Slide 34: Eurocell
eurocell All together better