D&l Industries, Inc. · PSE:DNL
D&l Industries — 1H24 Earnings Presentation
28 slides from D&l Industries's earnings presentation, Aug 13, 2024
Slide 1: D&L Industries Media Presentation for 1H24
D&L’s expansion site in Batangas, Philippines FILIPINO MANUFACTURING CUSTOMIZED B2B2C SPECIALTY PRODUCTS D&L INDUSTRIES Media Presentation for 1H24 August 13, 2024
Slide 2: 1H24 Highlights
1H24 Highlights 1 1H24 earnings up 6% YoY to P1.3 bn with Batangas plant turning profitable in 2Q24 2 Momentum continues to build up, on a QoQ basis, 2Q earnings up 13%; HMSP volumes +33% YoY in 2Q24, up for the fourth consecutive quarter 3 Export sales contribution at record high, stood at 33% in 1
Slide 3: Earnings up 6% YoY as Batangas plant turned profitable in 2Q24
Earnings up 6% YoY as Batangas plant turned profitable in 2Q24 Net Income (Php mn) Net income breakdown Consumer 3,318 Products ODM, 4% Specialty 2,643 Plastics, 2,295 32% Food Ingredients, +6% 39% 1,240 1,316 Chemrez Group, 25% FY21 FY22 FY23 1H23 1H24 Start of commercial operations of Batangas pla
Slide 4: Batangas plant turned profitable in 2Q24; ahead of initial expectation
Batangas plant turned profitable in 2Q24; ahead of initial expectation Quarterly income/losses of Batangas plant 3Q22 4Q22 1Q23 2Q23 3Q23 4Q23 1Q24 2Q24 200 149 100 - -16 -100 -101 -111 -132 -132 -152 -200 -300 Pre-operating rental expenses -315 -400 Start of commercial operations, depreciation and
Slide 5: Batangas Plant – D&L’s next leg of growth
Batangas Plant – D&L’s next leg of growth 5
Slide 6: Condensed Income Statement
Condensed Income Statement *number of outstanding shares: 7,142,857,990 6
Slide 7: Sales mix
Sales mix REVENUES % share to total group revenues 33% 34% 33% 31% 41% 40% 39% 37% 37% 38% 42% 42% 43% 45% 49% 67% 66% 67% 69% 59% 60% 61% 63% 63% 62% 58% 58% 57% 55% 51% 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 1H24 High Margin Specialty Products (HMSP) Commodities* *Co
Slide 8: HMSP Volume Growth (YoY)
HMSP Volume Growth (YoY) HMSP volumes up YoY for the fourth consecutive quarter HMSP volume growth (YoY) 40% Confluence of events such as the late 36% passage of the budget, US- China 33% trade war, and spillover of negative consumer sentiment dampened overall volume in 2019 13% 14% 13% 13% 11% Aver
Slide 9: Exports sales contribution at record high
Exports sales contribution at record high Sharp recovery in exports following a soft FY2023 FY18 FY19 FY20 FY21 FY22 FY23 1H23 1H24 EXPORT/ SALES 24% 21% 29% 33% 31% 27% 24% 33% Breakdown of exports 13.6 Oleochemicals 30% 10.2 Food 9.1 55% +57% Specialty Plastics 6.3 6.3 6.2 15% 4.7 Consumer 4.0 Pro
Slide 10: Condensed Statement of Cash Flows
Condensed Statement of Cash Flows FCF remained positive In P mn 1H24 FY23 EBITDA 2,589 4,415 Interest Received 3 16 Paid taxes (314) (729) Non cash items (179) 48 Change in working 775 (1,096) capital Net Operating Cash 2,874 2,654 Flow Capex (523) (1,511) FCF remained positive as Free Cash Flow 2,3
Slide 11: Capex normalizing after the completion of Batangas plant
Capex normalizing after the completion of Batangas plant Capex (P mn)* • Capex peaked in 2022 and started to normalize in 2023 after the completion of the plant • No other major capex requirement in the near-term 3,497 3,179 2,114 1,552 1,441 625 443 456 2017 2018 2019 2020 2021 2022 2023 1H24 *accr
Slide 12: Pass-through pricing mechanism as natural hedge against volatility
Pass-through pricing mechanism as natural hedge against volatility in forex and commodity prices 20.9% 19.1% 16.8% 18.3% 16.2% GP Margin 17.3% 15.1% 15.7% 14.8% 13.4% 13.9% We expect margins to continue to 12.6% 12.4% 12.0% 10.5% 11.7% 10.8% 9.9% 10.9% 10.9% EBIT Margin improve over time as we furth
Slide 13: 1H24 Group Results
1H24 Group Results Food Ingredients Oleochemicals & Specialty Consumer D&L Industries - Other Specialty Plastics Products ODM Consolidated Chemicals % change in +27% +5% +11% -33% +17% Revenues % change in Net +27% -3% +51% -60% +6% Income* 13
Slide 14: DOE plans to increase Biodiesel blend to 3% (B3) from 2% (B2)
DOE plans to increase Biodiesel blend to 3% (B3) from 2% (B2) this year Impact of a higher biodiesel blend Biofuels industry short overview to the industry 2006 – Biofuels law was passed with the intention of a 5% biodiesel blend (B5) Volume 2007 – implementation of 1% blend (B1) Overall industry pr
Slide 15: Asset-Light Model
ASSET-LIGHT MODEL Rental expenses Management and Shared Service Fees (paid to affiliates) (MSSF) D&L provides management and shared services to its subsidiaries and affiliates, including executive management and admin support such as legal, MIS, accounting, human resource, and finance land, faciliti
Slide 16: Balance Sheet remains robust
Balance Sheet remains robust As of end As of end As of end As of end In Pmn In P mn Jun-24 Dec-23 Jun-24 Dec-23 Cash 3,825 2,844 Book Value 20,691 20,868 Current Assets 26,246 22,583 BVPS1 (in P) 2.90 2.92 Debt-to-equity Total Assets 45,897 42,625 0.79x 0.82x (Borrowings/E quity) Return on Borrowing
Slide 17: Capital Structure
Capital Structure Philratings reaffirmed its highest credit rating (PRS Aaa with a stable outlook) on D&L’s maiden bond offering Borrowings (Pmn) Equity (Pmn) Net Gearing 67% 20,868 62% 20,691 20,651 interest 5x 19,105 60% 50% cover P12.5 net 17,764 15,217 16,565 17,112 25% 15,487 17,135 16,300 Bill
Slide 18: Net debt, effective interest rate, and interest cover
Net debt, effective interest rate, and interest cover Interest rate (%) Interest cover (x) 35 7.0% 14.3 30 12.5 6.0% 12.0 12.0 11.9 11.9 11.2 25 5.0% 10.0 9.5 9.0 8.6 20 4.0% 6.6 15 3.0% 4.4 4.0 10 3.7 2.0% 2.9 3.0 2.8 2.1 2.2 2.0 2.1 1.9 1.9 1.6 1.6 5 1.2 1.2 1.4 1.4 1.4 1.0% - 4Q16 1Q17 2Q17 3Q17
Slide 19: Working Capital Cycle
Working Capital Cycle 16,000 CASH CONVERSION 12,000190 140 161 143 144 170 INVENTORY 14,000 120 10,000150 111 106 12,000 127 120 117 With the commercial operations 14,282 8,000 130 of100 the Batangas plant, the 10,000 101 13,142 110 90 91 company 80 has started ramping 11,823 8,000 6,00090 74 up inv
Slide 20: Investor Relations
INVESTOR RELATIONS Ownership as of 12-Month Daily Trading Average* June 2024 #55 Public, 27% Lao Family, 73% P42 bn* w US$217k Foreign Ownership as % Ranked 55th of Outstanding Shares among Philippines’ 14 14 14 largest companies 14 13 14 14 13 14 14 14 13 % % % 12 % % % % % % % % % by market cap %
Slide 21: Investor Relations
INVESTOR RELATIONS Return since IPO Price Change Total Return DNL PM +172% +286% PCOMP Index +14% +29% Price as of 08/09: P5.85 Market Cap as of 08/09: P42bn USD 729 mn (USD1:P57.29) Outstanding Shares: 7,142,857,990 DNL +172% DLNDY:US Unsponsored ADR (BNY Mellon & Citi) PCOMP 1ADR = 25 Ordinary +14
Slide 22: Q&A
Q&A 22
Slide 23: Foundation of future growth
Foundation of future growth High value, high margin products: Expansion in export zones & “Pack at source” initiative 23
Slide 24: FIT Expansion
FIT Expansion Natura Aeropack D&L Premium Foods Natura Aeropack 24
Slide 25: CNO & CPO 1-yr Price Chart
Last Price HE CNOIRDM1 Index (USD) 1584.75 1 KO1 Comdty (USD) 868.97 Track Annoi CNO & CPO 1-yr Price Chart tate News ©, Zoom P1400 P1200 P1000 800
Slide 26: CNO & CPO 2-yr Price Chart
CNO & CPO 2-yr Price Chart Track 4 Annotate = News ©, Zoom Last Price HE CNOIRDM1 Index (USD) 1584.75 HNKO1Comdty (USD) —868.97485 P2500 P2000 P1500 P1000 500 Mar Jun Sep Dec Mar Jun Sep Dec Mar 2024 Jun
Slide 27: Maiden Bond Offering
MAIDEN BOND OFFERING *Awarded Best New Bond (Philippines) by the Asset Magazine Offer Size Interest Rate Tenor Spread over BVAL Base offer: P3bn (Series A) 2.7885% p.a. 3 years +50 bps Oversubscription option: P2bn (Series B) 3.5962% p.a. 5 years +60 bps Bond Rating PRS Aaa with Stable Outlook Use o
Slide 28: 3yr and 5yr BVAL rates
3yr and 5yr BVAL rates D&L Bond Listing September 2021 28