Slide 1: Eurocell Plc 2019 Half Year Results
EUROCELL PLC 2019 Half Year Results
Slide 2: Agenda
AGENDA Manufacturer Business Review Mark Kelly Chief Executive Officer Financial Review Distributor Michael Scott Chief Financial Officer Summary and Outlook Mark Kelly Recycler 1
Slide 3: Overview
OVERVIEW Mark Kelly – Chief Executive Robust financial results Revenue Strong sales growth £136.3m ▲ 15% (H1 2018: £118.8m) Gross margin improvement EBITDA up EBITDA(1) Good progress with plans to improve £14.8m operating efficiency ▲ 4% (H1 2018: £14.2m) On track with investment in extrusion capaci
Slide 4: Sales Overview: Gaining Share in Subdued RMI Market
SALES OVERVIEW Eurocell Revenue Gaining Share in Subdued RMI Market by Market (%) ► Strong sales growth delivered across the whole business ► Weaker comparatives in H1 after bad weather in H1 2018 ► CPA construction output forecasts – small decline in 2019(2) Sales Growth (%) H1 H2 FY H1 RMI > 80% 2
Slide 5: Profiles – Performance in H1 2019
Profiles Division P&L DIVISIONAL REVIEW H1 H1 £m Change Profiles – Performance in H1 2019 2018 2019 3rd Party Revenue 50.5 57.6 ▲14% Organic 50.5 55.1 ▲9% ► Gaining share – 9% like-for-like growth Ecoplas (1) - 2.5 n/a - Includes benefit of selling price increases Inter-segmental 23.6 26.7 ▲13% ► Gr
Slide 6: Profiles – Capacity and Operating Efficiency
DIVISIONAL REVIEW 2017 - 2019 Extrusion Capacity Development Profiles – Capacity and Operating Efficiency Number of lines at 2019 2017 2018(1) 31 December Planned(2) Co-extrusion 12 17 22 ► Good progress with plans to expand capacity and Rigid PVC 15 12 12 improve operating efficiency Foam PVC 21 23
Slide 7: Building Plastics – Performance in H1 2019
Building Plastics Division P&L DIVISIONAL REVIEW £m H1 H1 2018 2019 Change Building Plastics – Performance in H1 2019 3rd Party Revenue 68.3 78.7 ▲15% Organic 68.3 76.6 ▲12% ► Gaining share – 12% organic growth Acquisitions (2) - 2.1 n/a - Includes benefit of selling price increases Inter-segmental
Slide 8: Building Plastics – Trial Format (Leeds)
DIVISIONAL REVIEW Building Plastics – Trial Format (Leeds) Trial Format – New Leeds Branch ► Opened in April – new 6k sq ft site, double average branch size ► Trade counter area – double average branch size ► Showroom displays – large MTOs(1) and interactive video wall to engage customers and drive
Slide 9: Financial Highlights
FINANCIAL HIGHLIGHTS Michael Scott – Chief Financial Officer Revenue Gross Margin EBITDA(1) £136.3m 51.1% £14.8m ▲15% (H1 2018: £118.8m) ▲ 1.1% (H1 2018: 50.0%) ▲ 4% (H1 2018: £14.2m) Basic EPS(1) Interim Dividend Net Debt(1) 8.8p 3.2p per share £36.7m Flat (H1 2018: 8.8p) ▲ 3% (H1 2018: 3.1p per sh
Slide 10: Group Income Statement
FINANCIAL PERFORMANCE Group Income Statement H1 2018 H1 2019 Change H1 2019 £m (pre-IFRS 16) (Reported) Revenue 118.8 136.3 ▲ 15% 136.3 Gross Profit 59.4 69.7 69.7 Gross Margin % 50.0% 51.1% 51.1% Overheads (45.2) (54.9) (49.8) EBITDA 14.2 14.8 ▲ 4% 19.9 Depreciation and Amortisation (3.4) (3.7) (8.
Slide 11: Sales Performance: Strong Sales Growth
SALES PERFORMANCE Strong Sales Growth 140 Like-for-like(1) 4.6 136.3 sales ▲10% 135 1.1 130.6 7.2 130 £m 125 4.6 120 118.8 115 110 H1 2018 Profiles LFL Building Plastics Group LFL 2018 / 2019 Acquisitions H1 2019 LFL branches ► Sales ▲ 15% (or 11% excluding acquisitions) ► Building Plastics ▲ £1.1m
Slide 12: Gross Margin: Increasing Gross Margin
GROSS MARGIN Increasing Gross Margin 50.0% -0.3% -0.1% +£2.5m / +0.7% +0.6% +0.2% 51.1% 71 2.6 69.7 69 3.3 (0.8) 0.9 67 65 4.5 (0.2) £m 63 61 59.4 59 57 55 H1 2018 Volume Mix Selling price Cost price Increased Acquistions H1 2019 increases increases recycling ► Underlying volume (-30 bps), mix (-10
Slide 13: Overheads: Investment in Business Expansion
OVERHEADS Investment in Business Expansion Like-for-like(1) 56 overheads▲14% (2) 3.0 54.9 54 0.5 52 0.5 51.4 0.5 1.6 50 3.6 £m 48 46 45.2 44 42 40 H1 2018 Volume Wage and Bad debts Other Group LFL 2018 / 2019 Acquisitions H1 2019 other branches inflation ► Like-for-like(1) cost increase ▲ 14% ► Impa
Slide 14: Capex: Investment in Manufacturing Capacity
CAPEX Investment in Manufacturing Capacity Total Capital Expenditure 10.0 8.8 ► H1 2019 capex £8.8m (H1 2018: £3.1m) 9.0 8.7 - Increase manufacturing capacity £2.5m 8.0 7.5 7.2 • Expand production capacity and improve manufacturing efficiency 7.0 6.4 - Increase recycling capacity £3.5m 6.0 • Ilkesto
Slide 15: Working Capital: Investment in Working Capital
WORKING CAPITAL Key Working Capital Metrics(1) Investment in Working Capital Stock Days Debtor Days June 2018 58 43 ► Net outflow from working capital £10.4m December 2018 55 37 - Impact of stock build and business growth June 2019 67 44 ► Stock days at 67 vs 58 at June 2018 Inventory as a % of LTM
Slide 16: Cash Flow Generation
Reconciliation of Net Debt CASH FLOW Dec Jun £m Change 2018 2019 Cash Flow Generation Cash 5.9 4.7 (1.2) Borrowing (29.4) (41.4) (12.0) 20 Net Debt (23.5) (36.7)(2) (13.2)(2) 14.8 10.4 16 Dec 2018 bank refinancing 12 ► New £60m facility (up from £45m) 8 1.1 (1) ► Margin and key terms unchanged 3.3 8
Slide 17: 2019 Financial Guidance: IFRS 16 Leases Reconciliation
2019 FINANCIAL GUIDANCE IFRS 16 Leases – Reconciliation IFRS 16 Reconciliation Other 2019 Financial Guidance £m H1 2019 H1 2019 H1 2019 2019 Pre-IFRS 16 IFRS 16 Reported Guidance Revenue 136.3 - 136.3 Income statement Gross margin 69.7 - 69.7 Depreciation and amortisation £8.0m - £8.3m (pre-IFRS 16)
Slide 18: Strategic Priorities
STRATEGIC PRIORITIES Mark Kelly – Chief Executive Clear strategy to create 2019 focus on self-help initiatives to support delivery of near-term profit targets long term value STRATEGIC PRIORITIES PROGRESS UP TO 2018 FOCUS IN 2019 INCREASE USE OF Increased use to 9.5kt via investment in Ilkeston si
Slide 19: Summary and Outlook
SUMMARY And Outlook Robust financial results Strong sales growth and gross margin improvement EBITDA up Good progress with plans to improve operating efficiency On track with investment in extrusion capacity Investment in recycling now well advanced Strengthened operational teams Outlook Full year e
Slide 20: Appendices
Appendices eurocell: All together better
Slide 21: Product Range
PRODUCT RANGE Ranges of window and door profile Skypod pitched skylights Aspect bi-folding doors Conservatories and Equinox tiled roofs Fascias, soffits and guttering Traded goods Products sold through two major trading divisions: Profiles and Building Plastics (branches) 20
Slide 22: Profiles Division
PROFILES DIVISION Use of Recycled PVC in Manufacturing ► Manufactures: - Extruded rigid and foam PVC profiles using virgin 10.0 9.5 PVC compound 8.3 8.0 - Rigid products also include recycled compound 6.4 6.0 6.0 ► Recycles: kt 4.1 4.3 - Factory offcuts (post-industrial) and old windows 4.0 (post-co
Slide 23: Building Plastics Division
BUILDING PLASTICS DIVISION Number of Branches ► Sells: 250 (1) - Range of Eurocell manufactured and branded 202 207 190 PVC foam roofline and window fitting / 200 159 maintenance products 150 128 141 - Third party manufactured ancillary products: 100 sealants, tools and rainwater products - Vista do
Slide 24: Locations
LOCATIONS Centrally located Extrusion centre Secondary Recycling Warehousing & HQ, Manufacturing, 140,000 sq ft operations (foiling) operations (Eurocell Recycle Conservatory Warehousing, 52 extruders 120,000 sq ft Injection Moulding 10 foiling machines and Ecoplas) Roofs and Recycling 280,000 sq ft
Slide 25: Route to Market
ROUTE TO MARKET Third Party Suppliers Recycling: Eurocell Recycle Third Party Suppliers 37,000 tonnes of virgin e.g. compound consumed (1), 9,500 tonnes of recycled • Rainwater products plus 8,500 tonnes of compound consumed • Sealants other raw materials (2) (17% of profile raw material • Tools con
Slide 26: Recycling at Eurocell Recycle (Ilkeston)
RECYCLING AT EUROCELL RECYCLE (ILKESTON) Post-consumer Post-industrial 16,500 tonnes 7,200 tonnes collected and collected and recycled by Eurocell recycled by Eurocell Recycle Recycle 5,600 tonnes 9,500 tonnes recycled compound Recycled recycled compound used to manufacture compound used in producti
Slide 27: Corporate and Operational History
CORPORATE AND OPERATIONAL HISTORY Branch expansion Branch expansion Eurocell Building Branch expansion reaches 100 reaches 150 Plastics launched reaches 50 Operational Branch 1st Eurocell expansion Building Plastics reaches 200 Extrusion branch business Rebranding: Primary founded, single brand extr
Slide 28: Disclaimer
DISCLAIMER This Presentation may contain forward-looking statements form of commitment on the part forward-looking statements that involve risks and uncertainties of the Company to proceed with involve substantial risks and because they relate to events and any transaction. uncertainties, and actual
Slide 29: Eurocell – All together better
eurocell ® All together better 28