Zotefoams Plc · LSE:ZTF
Zotefoams — H1 2019 Earnings Presentation
30 slides from Zotefoams's earnings presentation, Aug 6, 2019
Slide 1: Investing in our Future
Interim Results 6 August 2019 Investing in our Future ZOTEK® AZOTE® MuCell® David Stirling Group CEO Presenters Gary McGrath name Group CFO 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 Ultra durable, highly heat and A range of bact
Slide 5: Strategy
Strategy We believe our existing strategy “Our ambition is to continues to serve us well and be the world leader continues to enable us to grow in cellular materials strongly technology in our We intend to develop chosen markets” business through sustained high levels of organic growth and through p
Slide 6: Continued financial and strategic progress
Interim results highlights Continued financial and strategic progress Adjusted1 profit Operating profit Interim dividend Gross revenue before tax before WC and increased by up 12% up 7% to provisions 3% to to £42.3m up 11% to £5.07m £8.29m 2.03p HPP sales up 40% and now represent 30% (2018: 24%) of
Slide 7: Segment overview
Segment overview Revenue by geography (6/19 vs 6/18) Revenue by business unit (6/19 vs 6/18) June 19 £37.9m 15% 25% £0.86m June 18 £27.98m £9.04m UK 16% 20% Europe £42.3m N America June 18 June 19 vs June 18 £0.89m - UK up 4% June 19 ROW 25% - Europe up 1% £28.72m £12.69m 39% 35% - N America up 12%
Slide 8: Financial Review
Financial Review AZOTE® / ZOTEK® / T-FIT® / MuCell® 8
Slide 9: Abbreviated income statement
Abbreviated income statement % Change £million Jun-19 Jun-18 Reported Group revenue 42.30 37.89 11.6% Gross profit 15.03 12.92 16.4% • Revenue up 9% in constant Gross profit margin 35.5% 34.1% currency SGA (9.94) (7.89) 26.0% • Gross profit margin up to 35.5% Adjusted operating profit 5.23 5.17 1.0%
Slide 10: Abbreviated statement of financial position
Abbreviated statement of financial position % Change £million Jun-19 Jun-18 Reported Intangible Assets 6.50 6.58 (1%) • Net additions to tangible assets of Tangible Assets 80.16 59.06 36% £21.1m, mostly reflecting assets Inventori es 18.88 16.52 14% under construction in the UK, USA Recei va bl es 2
Slide 11: Free cash flow and net debt
Free cash flow and net debt s £million Jun-19 Jun-18 £million Jun-19 Jun-18 Profi t before ta x 4.10 3.62 Net cash used in investing Depreci a ti on 2.87 2.29 activities (10.92) (5.75) Ta x 0.83 0.98 Proceeds of s ha re i s s ue 0.00 20.08 Other 0.49 0.61 Repa yment of borrowi ngs (0.75) (43.29) Ope
Slide 12: Key performance metrics
Key performance metrics Polyolefin Foams Growth % HPP and MEL Share of Gross Revenue 36.0% 31.0% 26.0% 21.0% 16.0% 11.0% 6.0% H1/15 H1/16 H1/17 H1/18 H1/19 Group Operating Margin % Return on Capital Employed 2017 data as not disclosed at June 2018 Not updated at half year AZOTE® / ZOTEK® / T-FIT® /
Slide 13: Segment headlines
Segment headlines High-Performance MuCell Extrusion Products sales up sales up 3%, with 40%. Growth in all operations product lines and improvements of Polyolefin Foams margin 2018 beginning to sales up 3%, in enhancement benefit mixed market conditions. Margins stable AZOTE® / ZOTEK® / T-FIT® / MuC
Slide 14: HPP results
HPP results ZOTEK with the added benefits of consistent foaming ® ZOTEK® foams: retaining the attributes of high-performance polymers T-FIT® T-FIT® technical insulation Revenue HPP June 19 June 18 Change £m £m • 40% sales growth (34% constant currency) Segment revenue 12.69 9.04 40% • All product li
Slide 15: HPP: high-margin growth portfolio
HPP: high-margin growth portfolio ZOTEK® T-FIT® Investment in UK plant to deliver significant uplift on HPP capacity during 2019 Footwear • Significant strategic partnership announced December 2017 with Nike, exclusive supply HPP Sales History (12 month trailing) • Materials performance extremely we
Slide 16: Polyolefin Foams results
Polyolefin Foams results AZOTE ® Common polymers made extraordinary by Zotefoams’ unique process, creating premium, durable, consistent materials Polyolefin June 19 June 18 Change Revenue £m £m Foams • AZOTE® foams’ broad geographic and market Segment revenue 28.72 27.98 3% spread links to GDP trends
Slide 17: MuCell Extrusion results
MuCell Extrusion results Licensing of microcellular foam technology MEL June 19 June 18 Change Revenue £m £m • Revenue £0.9m (2018 £0.9m) Segment revenue 0.89 0.86 3% • Expectations of much stronger H2 due to timing Segment loss pre (1.11) (0.78) (42%) of projects and ability to deliver following am
Slide 18: Capacity expansion projects
Capacity expansion projects UK - £12m project • High-temperature low-pressure autoclaves to increase HPP expanding capacity • Building completed and autoclaves installed • Commissioning going well • Available Q3 2019 USA - $10m project • 2nd high-pressure autoclave to increase global capacity by app
Slide 19: Key message & outlook
Key message & outlook OUTLOOK KEY MESSAGES Expect to deliver further growth in 2019 and meet market expectations, Organic growth based on unique however we are mindful of a difficult technology delivers record current trading environment in revenue and profits European polyolefin foams markets and t
Slide 20: Appendices
Appendices AZOTE® / ZOTEK® / T-FIT® / MuCell® 20
Slide 21: 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 22: Revenue and profit momentum – Full year 2014 - 2018
Revenue and profit momentum – Full year 2014 - 2018 Divisional Revenue Split Group Revenue Autoclave technology Extrusion technology POLYOLEFINS HPP MEL AZOTE® / ZOTEK® / T-FIT® / MuCell® 22
Slide 23: 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 Licencing for spe
Slide 24: Group overview - locations
Group overview - locations MuCell Extrusion HQ Woburn, MA, USA Zotefoams plc Zotefoams T-FIT licenses MuCell® Croydon UK Material Technology technology to end Block foam main (Kunshan) Co. Ltd, users manufacturing site China Zotefoams Poland, T-FIT® products SP z.o.o., Brzeg manufacture Zotefoams In
Slide 25: 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 Clean room e
Slide 26: Three stage process
Three stage process AZOTE® / ZOTEK® / T-FIT® / MuCell® 26
Slide 27: MuCell process technology
MuCell® process technology MuCell® technology produces foam that performs like solid plastic. It creates microbubbles in the centre of plastic extrusions by injecting gas into the melt during manufacture. Lighter Greener Lower cost cost AZOTE® / ZOTEK® / T-FIT® / MuCell® 27
Slide 28: Sustainability
Sustainability Pure Performance Lighter from the outset Durable for a decade Our AZOTE® and ZOTEK® Our foams are typically 15-20% less A decade ago, one of the largest foams are expanded using pure dense than any competing foam for biotech plants in the world chose T-FIT® nitrogen only. The air we c
Slide 29: Polymer (LDPE) prices
Polymer (LDPE) prices AZOTE® / ZOTEK® / T-FIT® / MuCell® 29
Slide 30: Market information – at 29.7.19
Market information – at 29.7.19 Share price 594p (29/07/19) Market Main Market Shareholder Profile* Ticker ZTF.L Market cap. £286.9m Ord. shares in issue 48,301,234 750 1,600 1,400 700 1,200 650 Traded volume ('000s) 1,000 Share price (p) 600 800 600 550 Schroders 9.4% BlackRock 8.6% 400 Miton 8.5%