D&l Industries, Inc. · PSE:DNL
D&l Industries — Q3 2024 Earnings Presentation
49 slides from D&l Industries's earnings presentation, Nov 6, 2024
Slide 1: D&L Industries Investor Presentation November 2024
D&LÕs expansion site in Batangas, Philippines FILIPINO MANUFACTURING CUSTOMIZED B2B2C SPECIALTY PRODUCTS D&L INDUSTRIES Investor Presentation November 2024
Slide 2: D&L Industries makes customized specialty ingredients for food and chemicals
D&L INDUSTRIES is a Filipino company that makes customized, specialty ingredients for food and chemicals 64% Revenue 24% Revenue FOOD INGREDIENTS OLEOCHEMICALS & OTHER 9M24 Fats, oils and other specialty SPECIALTY CHEMICALS food ingredients 33% Coco-biodiesel, oleochemicals, resins and powder coatin
Slide 3: Key Business Strategies
KEY BUSINESS STRATEGIES Maintain Market Innovate Leadership Continuously Capitalize on Growing Enhance Production and Expand Domestic Consumer Market Business Processes Globally 3
Slide 4: Our history of serving customers spans 60 years
Our history of serving customers spans across 60 years POLYMER & COLOURS, INC. Colorants Specialty Engineered Polymers Commercial operations of For Plastics Aerosols Oleochemicals Fats IPO D&LÕs FIT Batangas plant 1963 1976 1984 1987 2000 2006 2012 2023 Corro-coat, Corro-Coat Inc. 1971 early 1985 19
Slide 5: Leading B2B2C company with longstanding customer relationships
As the leading B2B2C company in the Philippines, we have longstanding customer relationships with mostly consumer companies Shortening Flavored Toppings Length of Customer Relationships Flavored Glazes Icings (in Years) 38 Frying Oils Gravy Mixes 31 Breading >70% Dipping Sauces of sales are to consu
Slide 6: Majority of the Board are independent directors
Majority of the Board are independent directors while 3 out of 7 board members are female Ð highlights the importance we place on good corporate governance and gender diversity. BOARD OF DIRECTORS* Alvin D. Lao, Yin Yong L. Lao, John L. Lao, 53 years old 70 years old 68 years old CEO & President Cha
Slide 7: Second generation family members compose Senior Management
Second generation family members with more than 20 years of experience in sales, marketing & business development compose our Senior Management team. SENIOR MANAGEMENT Dean A. Lao, Jr. Franco Diego Lao, 44 years old 55 years old Chief Financial Officer, Treasurer, & Chief President & CEO of Chemrez
Slide 8: D&L Ownership Structure
D&L Ownership Structure FOOD INGREDIENTS Lao Family 62.3% Jadel Holdings Co., Inc. (Lao Family holding company) 100% 10.4% Individual Family Members Foreign Ownership as % 72.6% OLEOCHEMICALS, RESINS, of Outstanding Shares & SPECIALTY CHEMICALS 100% 14 14 14 14 14 14 14 14 13 13 % % % 14 12 12 % % %
Slide 9: Shaped and driven by R&D and disciplined innovation
We are shaped and driven by R&D and disciplined innovation OUR MISSION " We are dedicated to growth. We are not complacent, timid, or satisfied with status quo " We are committed to increase productivity and profitability, but not at the expense of ethics " We will continuously enhance our reputatio
Slide 10: Integrated supply chain maximizes efficiency of working capital management
We have an integrated supply chain that maximizes efficiency of working capital management > > INTERCONNECTED FLEET OF BARGES STORAGE CAPABILITY GROUND TRANSPORT Direct access to fleet of 6 Ability to store 33,000 metric SYSTEM barges with an aggregate tons of oil; refining facility of Superior grou
Slide 11: 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 12: Dividend policy increased from 25% to 50% payout ratio
Our dividend policy increased from a 25% to 50% payout ratio* (effective 2016) Cash Dividends (Pmn) Payout Ratio* Dividend Per 2019 2020 2021 2022 2023 2024 65% Share 64% 2,143 Total P0.286 P0.183 P0.191 P0.24 P0.30 P0.209 2,044 65% 1,714 65% Regular P0.223 P0.183 P0.141 P0.185 P0.24 P0.161 50% 68%
Slide 13: Investor Relations
INVESTOR RELATIONS Ownership as of 12-Month Daily Trading Average* September 2024 #55 Public, 27% Lao Family, 73% P43 bn* w US$207k Foreign Ownership as % Ranked 55th of Outstanding Shares among Philippines9 14 14 14 14 14 14 largest companies 14 14 13 13 % % % 14 12 12 % % % % % % % % % % by market
Slide 14: Investor Relations: Return since IPO
INVESTOR RELATIONS Return since IPO Price Change Total Return DNL PM +191% +305% PCOMP Index +23% +38% Price as of 10/31: P6.25 Market Cap as of 10/31: P45bn USD 765 mn (USD1:P58.15) Outstanding Shares: 7,142,857,990 DNL +191% DLNDY:US Unsponsored ADR (BNY Mellon & Citi) PCOMP 1ADR = 25 Ordinary +23
Slide 15: Awarded and recognized locally and internationally
We have been awarded and recognized both locally and internationally Finance Asia 2019 3 Best Mid-Cap Company, 7th Best Investor Relations 2024 3 ASEAN Honored Company; Crissa Bondad as 3rd Best Investor 2018 3 2nd Best Mid-Cap Company 2017 3 Top 50 Global Relations Professional in Asia ex- 2015 & 2
Slide 16: Corporate Social Responsibility
CORPORATE SOCIAL RESPONSIBILITY of D&L9s annual net 1% income is committed to corporate social responsibility programs through the foundation 2023 AREAS OF FOCUS P31.2M 103 Committed amount Direct scholars in from D&L 5 communities Education 388 16,872 Educational Assistance Total beneficiaries scho
Slide 17: CSR projects focus on education and values formation
Our CSR projects focus on education and values formation PROGRAM BENEFICIARIES Partner Based Educational Program College, TechVoc, High School, Elementary and Hearing Impaired students nationwide Community Based Educational Program Various communities and elementary schools where D&L plants are loca
Slide 18: 9M24 Results
9M24 Results 18
Slide 19: 9M24 Highlights
9M24 Highlights 1 9M24 earnings up 1% YoY to P1.8bn; Incremental expenses from newly commissioned lines weighed on 3Q24 earnings which were down 11% YoY to P493mn 2 Export outpaces domestic performance - sales +38% YoY, gross profits + 24% YoY, GPM higher by 1.4 ppts vs domestic sales 3 Underlying b
Slide 20: 9M24 earnings up 1% YoY
9M24 earnings up 1% YoY Net Income (Php mn) Net income breakdown Consumer 3,318 Products ODM, 5% 2,643 Food 2,295 Specialty Ingredients, +1% 33% Plastics, 1,792 1,810 35% Chemrez Group, 27% FY21 FY22 FY23 9M23 9M24 Start of commercial operations of Batangas plant. Incremental expenses weighed on ear
Slide 21: Batangas plant remains almost at breakeven
Batangas plant remains almost at breakeven despite incremental expenses from newly commissioned lines in 3Q24 Quarterly & YTD income/losses of Batangas plant 3Q22 4Q22 1Q23 2Q23 3Q23 4Q23 1Q24 2Q24 3Q24 9M24 200 149 100 - -3 -16 -100 -101 -111 -132 -132 -137 -152 -200 Pre-operating rental expenses -
Slide 22: Batangas Plant - D&L's next leg of growth
Batangas Plant Ð D&LÕs next leg of growth 22
Slide 23: Condensed Income Statement
Condensed Income Statement *number of outstanding shares: 7,142,857,990 23
Slide 24: Sales mix
Sales mix REVENUES % share to total group revenues 33% 34% 33% 31% 41% 40% 39% 37% 37% 38% 42% 42% 43% 46% 49% 67% 66% 67% 69% 59% 60% 61% 63% 63% 62% 58% 58% 57% 54% 51% 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 9M24 High Margin Specialty Products (HMSP) Commodities* *Co
Slide 25: HMSP Volume Growth (YoY)
HMSP Volume Growth (YoY) HMSP volumes up YoY for the fifth 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% 10% A
Slide 26: Exports sales
Exports sales Sharp recovery in exports following a soft FY2023 FY18 FY19 FY20 FY21 FY22 FY23 9M23 9M24 EXPORT/ SALES 24% 21% 29% 33% 31% 27% 27% 31% Breakdown of exports Oleochemicals 13.6 28% 10.2 +38% 9.2 Food 9.1 56% Specialty Plastics 15% 6.3 6.3 6.6 4.7 Consumer Products ODM 1% In P bn FY18 FY
Slide 27: Export vs Domestic Market
Export vs Domestic Market Export is a bright spot, outpacing the performance of the domestic market Sales (P bn) Gross Profits (P bn) +12% 20.3 18.1 +5% 3.0 3.2 +38% 9.2 +24% 6.6 1.6 1.3 9M23 9M24 9M23 9M24 9M23 9M24 9M23 9M24 Exports Domestic Exports Domestic Blended Gross Profit Margins 17.1% 15.7
Slide 28: Condensed Statement of Cash Flows
Condensed Statement of Cash Flows In P mn 9M24 FY23 EBITDA 3,837 4,415 Interest Received (2) 16 Paid taxes (452) (729) Non cash items (109) 48 Change in working (398) (1,096) capital Net Operating Cash 2,877 2,654 Flow Capex (706) (1,511) FCF remained positive as Free Cash Flow 2,171 1,143 CAPEX nor
Slide 29: Capex normalizing after 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 1,441 797 443 456 2017 2018 2019 2020 2021 2022 2023 9M24 *accr
Slide 30: Pass-through pricing mechanism as natural hedge
Pass-through pricing mechanism as natural hedge against volatility in forex and commodity prices 20.9% 19.1% 16.8% 18.3% 16.1% 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% 10.9% 10.2% improve over time as we further 8.9% 9.9% EBIT
Slide 31: 9M24 Group Results
9M24 Group Results Food Ingredients Oleochemicals & Specialty Consumer D&L Industries - Other Specialty Plastics Products ODM Consolidated Chemicals % change in +28% +11% +10% -20% +20% Revenues % change in Net +4% +11% +32% -53% +1% Income* 31
Slide 32: DOE increased Biodiesel blend to 3% (B3)
DOE finally increased Biodiesel blend to 3% (B3) from 2% (B2) last October 1, 2024; targets B4 by October 2025 and B5 by October 2026 Impact of a higher biodiesel blend Biofuels industry short overview to the industry 2006 3 Biofuels law was passed with the intention of a 5% biodiesel blend (B5) Vol
Slide 33: 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 34: 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 Sept-24 Dec-23 Sept-24 Dec-23 Cash 2,519 2,844 Book Value 21,184 20,868 Current Assets 25,340 22,583 BVPS1 (in P) 2.97 2.92 Debt-to-equity Total Assets 45,873 42,625 0.80x 0.82x (Borrowings/E quity) Return on Borrowi
Slide 35: 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 14.5 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
Slide 36: Working Capital Cycle
Working Capital Cycle 18,000 CASH CONVERSION 14,000190 140 161 143 170 INVENTORY 16,000 143 12,000 120 14,000 127 150 117 111 With the commercial operations 120 109 10,000130 of100 the Batangas plant, the 12,000 101 15,696 10,000 8,000110 90 91 company 80 has started ramping 13,142 90 74 up investin
Slide 37: Foundation of future growth
Foundation of future growth High value, high margin products: Expansion in export zones & ÒPack at sourceÓ initiative 37
Slide 38: FIT Expansion
FIT Expansion Natura Aeropack D&L Premium Foods Natura Aeropack 38
Slide 39: CNO & CPO 1-yr Price Chart
CNO & CPO 1-yr Price Chart Last Price WE CNOLRDMA Index (Us HEKOL Comdty (USD) Track ISD) 1612.25 353.90 Annotate News Zoom >1400 1200 1000 P00 Jan Feb Mar Por Nay Jun MW Aug Sep Oct Nov Jan Feb Mar for 2024 Nay In il ‘ug
Slide 40: CNO & CPO 2-yr Price Chart
CNO & CPO 2-yr Price Chart Last Price WECNOIRDMI Index (USD) 1612.25 WEKOL Comdty (USD), 859,90118 Track Annotate News Zoom 2500 +2000 F500 F100 $500 Jan" Feb "Mar Apr Hay an Apr May 513/23} Jun 2003 Jul
Slide 41: 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 42: 3yr and 5yr BVAL rates
3yr and 5yr BVAL rates D&L Bond Listing September 2021 42
Slide 43: News and Developments: 2017
NEWS AND DEVELOPMENTS 2017 APPOINTMENT OF NEW INDEPENDENT DIRECTORS Corazon S. Dela Paz-Bernardo, 76 years old CPA Former President & CEO of Social Security System Former Senior Partner and Chair at Joaquin Cunanan & Co (PricewaterhouseCoopers Philippines) First non-European President of the Interna
Slide 44: News and Developments: 2016
NEWS AND DEVELOPMENTS 2016 OLEO-FATS premium soft oils, Distribution agreement with including coconut " Exports within Asia Pacific (FOOD Bunge Limited oil (under Bunge9s " Food service and retail INGREDIENTS) (NYSE:BG) Farm Origin brand) " Dean L. Lao, one of D&L9s founders, stepped down as Directo
Slide 45: Bunge Soft Oil Products
BUNGE SOFT OIL PRODUCTS 45
Slide 46: News and Developments: 2015
NEWS AND DEVELOPMENTS 2015 INCREASE IN CAPITAL STOCK Dividends taken from retained earnings as of March 31, 2015 No changes in equity Capital Stock Pre - Inc in ACS Post - Inc in ACS Authorized ±4,000,000,000 ±18,000,000,000 Issued and Outstanding Subscribed ±3,571,428,995 ±7,142,857,990 shares doub
Slide 47: News and Developments: 2014
NEWS AND DEVELOPMENTS 2014 " buying 65.3% of Chemrez for " Taking Chemrez private for P6/share competitive reasons Transaction " Chemrez now wholly-owned Strategic " New product innovations Details subsidiary Rationale with large potential for " funded with 2/3s short-term margin improvement debt, 1
Slide 48: D&L receives Gawad Yamang Isip Award for Invention
D&L receives Gawad Yamang Isip Award for Invention from the Intellectual Property Office of the Philippines (IPOPHL) Gawad Yamang Isip (GYI) is the premiere national award for intellectual property (IP) creators and owners whose works helped improve Filipinos9 lives using the IP system. This year9s
Slide 49: Investor Relations Contact
Investor Relations Contact Crissa Bondad Investor Relations Manager 3 D&L Industries, Inc. crissabondad@dnl.com.ph | ir@dnl.com.ph https://dnl.com.ph/investors/ 49