Zotefoams Plc · LSE:ZTF
Zotefoams — FY2022 Earnings Presentation
34 slides from Zotefoams's earnings presentation, Mar 21, 2023
Slide 1: Preliminary Results 21 March 2023
1 Preliminary Results 21 March 2023 David Stirling Group CEO Gary McGrath Group CFO Presenters name AZOTE®®/ZOTEK AZOTE / ZOTEK®® /T-FIT / T-FIT®® /MuCell / 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: Strategy
Strategy We intend to develop “Our ambition is to business through be the world leader sustained high in cellular materials levels of organic technology in our growth and through chosen markets” partnerships or acquisitions We focus resources primarily on markets where We deliver we are, or have the
Slide 6: Results Summary
Results Summary Gross revenue Adjusted1 operating Adjusted1 Leverage ratio up 26% to £127.4m profit basic EPS improved to 1.2x up 70% to £14.2m up 126% to 21.04p (2021: £100.8m) (2021: 2.1x) (2021: £8.4m) (2021: 9.31p) (CC22: £119.8m) • Record Group revenue of £127.4m, with strong growth across all
Slide 7: Strategy summary
Strategy summary • Polyolefin foams • Rapid recovery in Polyolefin Foams margins through price increases demonstrates strength of the product offering • Structural growth prospects exist in this important business unit, underpinned by the megatrends of environment, regulation and demographics and fa
Slide 8: Segment overview
Segment overview Revenue by geography Revenue by business unit 2022 2021 Revenue by industry A well-balanced geographical and industry spread Growth across all markets, supported by pricing actions in Polyolefin Foams and FX supporting mainly HPP. Stable industry split. AZOTE® / ZOTEK® / T-FIT® / Mu
Slide 9: Financial review
Financial review Appendices AZOTE®® / / ZOTEK AZOTE ZOTEK®® / T-FIT® /®MuCell® ® / T-FIT / MuCell 9
Slide 10: Abbreviated income statement
Abbreviated income statement £million Dec-22 Dec-21 Change • Significant revenue growth of 26% including a favourable currency impact of Group revenue 127.4 100.8 26% £7.6m Gross profit 38.7 26.6 46% • Gross margin benefitted from: Gross profit margin 30.4% 26.4% 400bps • Price increases in AZOTE Di
Slide 11: Statement of financial position
Statement of financial position Key observations • Intangible asset growth mostly ReZorce-related £million Dec-22 Dec-21 Change • Tangible asset growth mostly currency-related Intangible assets 7.8 6.2 25% • Good working capital control Tangible assets 95.2 92.5 3% • Net deferred tax liability up du
Slide 12: Statement of cash flows
Statement of cash flows £million Dec-22 Dec-21 Profit before tax 12.2 7.0 Depreciation/Amortisation 8.2 7.6 Finance costs 1.8 1.1 Equity-settled share-based payments 0.8 0.4 Other 1.1 0.4 Operating profit before movements in W/C • Cash generated from operations very and provisions 24.1 16.5 strong,
Slide 13: Inflation and FX influencers
Inflation and FX influencers LDPE LDPE (costs) Polymer price elements • Low-density polyethylene polymer is the primary 2500 1,000 raw material for AZOTE® foams 900 2000 800 • Prices reached a peak by mid-2022 but receded EURO/TONNE (SPREAD) 700 in H2, still significantly above historic average EURO
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 AZOTE process, creating premium, durable, consistent materials Revenue – up 25% (55% of Group sales) Polyolefin Dec 22 Dec 21 Change Foams £m £m • Volumes down 1%, with 5% decline in continental Segment revenue 70.1 56
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 29% (43% of Group sales) HPP Dec 22 Dec 21 Change £m £m • Footwear sales up 25% to £42.2m and represent 33% Seg
Slide 17: MuCell Extrusion (MEL) results
MuCell Extrusion (MEL) results Growth potential significantly enhanced with MuCell® microcellular technology development of ReZorce® mono-material barrier packaging Revenue & growth MEL Dec 22 Dec 21 Change £m £m • Resources continue to be redeployed from the traditional MEL licensing model while co
Slide 18: Sustainability
Sustainability Appendices AZOTE®® / / ZOTEK AZOTE ZOTEK®® / T-FIT® /®MuCell® ® / T-FIT / MuCell 18
Slide 19: Sustainability Approach and Progress
Sustainability Approach and Progress Four aspects of our business will enable us to thrive in a lower carbon economy • Our nitrogen-based process • Efficient use of raw material • Our products’ role in avoiding emissions • New product development Focus & Progress • Sustainability embedded in decisio
Slide 20: ReZorce circular packaging
ReZorce circular packaging Positioning • The first fully recyclable beverage carton with performance to match current multi-material solutions • Five times less energy; 11 times less water; 50% lower Global Warming Potential 1 • 100% recyclable (up to 100% recycled content2) • Complies with forthcom
Slide 21: Key messages & outlook
Key messages & outlook KEY MESSAGES: 2022 OUTLOOK Record Group revenue along with much “We currently expect that, for the year as a improved gross margins led to a 74% increase whole, polyolefin foams volumes will be at a in profit before tax similar level to last year, with more challenging conditi
Slide 22: Appendices
Appendices Financial review AZOTE® / ZOTEK® / T-FIT® / MuCell® 22
Slide 23: Investment case
Investment case Sustained high levels of organic growth with margin enhancement through product mix and operational gearing ReZorce® mono- material barrier Flexible core packaging has autoclave potential for a capacity for block transformational foam production sustainability (AZOTE® & improvement i
Slide 24: Investment case
Investment case Sustained high levels of organic growth with margin enhancement through product mix and operational gearing ReZorce® mono-material Flexible core barrier packaging has autoclave potential for a capacity for block transformational foam production sustainability (AZOTE® & improvement 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 Zotefoams Denmark ApS Zotefoams plc MuCell® / ReZorce Croydon UK Development Centre MuCell Extrusion HQ main block foam Zotefoams T-FIT Woburn, MA, USA manufacturing site Material Technology licenses MuCell® technology to end-users (Kunshan) Co. Ltd, China T-FIT ® products
Slide 30: Group main sites
Group main sites Foam Production: • UK • USA • Poland Croydon, UK: largest site, AZOTE and all Brzeg, Poland: AZOTE foams HPP foams Walton, KY, USA: AZOTE foams Massachusetts USA Stilling, Denmark ReZorce: pilot line ReZorce: pre-production AZOTE® / ZOTEK® / T-FIT® / MuCell® 30
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
Market information Share price 349p (16/03/23) Shareholder Profile* Market Main Market Ticker ZTF.L Market cap. £169.4m Ord. shares in issue 48,621,234 450 500 400 450 400 350 Traded Volume (000's) 350 300 Share price (p) 300 250 250 200 200 150 150 100 Schroders 14.4% Canaccord 10.1% 100 Invesco 8.
Slide 33: Board of Directors
Board of Directors Steve Good Non-Executive Chair (Chair of the Nomination Committee and member of the Remuneration Committee) Dr Alison Fielding Non-Executive Director Appointed to the Board in October 2014 as a Non-Executive Director and (Chair of the Remuneration Committee and member of the Audit
Slide 34: Five-year trading history - KPIs
Five-year trading history - KPIs 2022 2021 2020 2019 2018 £m £m £m £m £m Group revenue 127.4 100.8 82.7 80.9 81.0 Operating profit (before exceptional item) 13.9 8.1 9.1 9.1 11.6 Profit before tax (before exceptional item) 12.2 7.0 8.3 8.8 10.8 Profit before tax 12.2 7.0 8.3 9.8 9.9 Profit after tax