Zotefoams Plc · LSE:ZTF
Zotefoams — H1 2021 Earnings Presentation
35 slides from Zotefoams's earnings presentation, Aug 10, 2021
Slide 1: Interim Results
1 Interim Results 10 August 2021 David Stirling Group CEO Gary McGrath Group CFO Presenters name AZOTE®® / ZOTEK® ®/ T-FIT® /®MuCell® 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 Foams which offer superior A range of insulati
Slide 5: Strategy
Strategy “Our ambition is to be the world leader in cellular materials technology in our We intend to develop chosen markets” business through Overall, we believe our strategy is sustained high levels of organic sound and the ability to realign our growth and through business, to adapt to a rapidly
Slide 6: Results highlights
Results highlights Adjusted1 Adjusted1 Leverage ratio Gross revenue up operating profit up basic EPS up to down to 39% to £48.2m 1.86x 47% to £4.8m 6.71p (HY20: £34.6m) (YE20: 2.12x) (HY20: £3.2m) (HY20: 4.73p) (CC21: £50.7m) (HY20 2.61x) • Group revenue of £48.2m, 39% above the same period last yea
Slide 7: Segment overview
Segment overview Revenue by geography Revenue by business unit H1 2021 H1 2020 Revenue by industry A well-balanced geographical and industrial spread Not updated at half-year Significant revenue by industry change year-on-year, with shorter- term COVID-related market impacts and PPE programme 2020,
Slide 8: Financial review
Financial review Financial review AZOTE® / ZOTEK® / T-FIT® / MuCell® 8
Slide 9: Abbreviated income statement
Abbreviated income statement • H1 revenue 14% above 2019 (£42.3m) £million HY21 HY20 Change • Gross margin impacted by: Group revenue 48.2 34.6 39% • Significant cost inflation in polyolefin foams raw materials Gross profit 13.9 12.0 16% • Freight cost inflation and freight costs Gross profit margin
Slide 10: Statement of financial position and net debt
Statement of financial position and net debt Statement of financial position Net debt reconciliation £million Jun-21 Jun-20 Change Dec-20 £million Jun-21 Jun-20 Dec-20 Cash & cash equivalents 6.7 12.2 8.5 Intangible assets 5.6 6.8 (18%) 5.9 Loans (short term) (26.7) (27.9) (23.4) Tangible assets 92.
Slide 11: Statement of cash flows
Statement of cash flows £million Jun-21 Jun-20 Profit before tax 4.0 2.7 Depreciation 3.8 3.2 Other 1.2 3.2 • Cash generated from operations remains O.P. before movements in W/C & Provisions 9.0 9.0 strong at £5.6m Pension contributions (0.4) (0.4) • Working capital increase reflects Movement in rec
Slide 12: Main headwinds
Main headwinds • Low-density polyethylene polymer is the primary raw material for AZOTE® foams • Prices paid have almost doubled in the six months to the end of June and are approx. 60% above the average price of the past 5 years • Expect prices to remain at these levels for the remainder of the yea
Slide 13: Business review
Business review AZOTE® / ZOTEK® / T-FIT® / MuCell® 13
Slide 14: Commercial overview
Commercial overview Markets and programmes • Demand has returned strongly to a number of markets and we have been able to pivot to much higher levels of supply last seen in H1 2019 • Footwear has performed extremely well and accounted for 34% of Revenue (HY 2020: 19%) • Aviation the main outlier, do
Slide 15: Polyolefin Foams results
Polyolefin Foams results ® Common polymers made extraordinary by Zotefoams’ unique AZOTE process, creating premium, durable, consistent materials Revenue – up 24% Polyolefin HY 21 HY 20 Change • Product mix, particularly lower aviation sales, negatively £m £m impacted the average selling price Foams
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 66% HPP HY 21 HY 20 Change £m £m • Footwear sales continued the momentum of H2 2020, Segment revenue 19.6 11.8
Slide 17: MuCell Extrusion (MEL) results
MuCell Extrusion (MEL) results MuCell® microcellular technology MEL HY 21 HY 20 Change Revenue & growth £m £m • Resources redeployed from the traditional MEL Segment revenue 1.3 0.9 56% licensing model while continuing to support existing and in-progress licensing clients Segment loss pre (0.0) (0.6
Slide 18: Strategic progress
Strategic Photo progress AZOTE® / ZOTEK® / T-FIT® / MuCell® 18
Slide 19: Strategic progress highlights
Strategic progress highlights We believe that plastics, used appropriately, remain the optimal solution both functionally and environmentally for our customers’ needs. Strategic progress and focus • Broad based recovery in most polyolefin foam markets and territories provides good momentum leading i
Slide 20: Multi-year capacity enhancement now complete
Multi-year capacity enhancement now complete +60% Group capacity versus end 2017: well invested to support growth Brzeg Site: • Commissioned 2021 • Ideal logistics location • Flexible capacity, linked to UK site, to meet European customer needs • Currently 1 shift, moving to 2 shifts later this year
Slide 21: ReZorce circular packaging
ReZorce circular packaging A MuCell Extrusion LLC development 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
Slide 22: Sustainability Appendices
Sustainability Appendices AZOTE®® / / ZOTEK AZOTE ZOTEK®® / T-FIT® /®MuCell® ® / T-FIT / MuCell 22
Slide 23: Sustainability
Sustainability Optimal material solutions for the benefit of society • Appropriate use of plastics meets functional and environmental needs: o Long-term use o Saves weight and fuel by making cars and planes lighter o Saves energy by insulating o Solves recycling challenges • Committed to reducing th
Slide 24: Our place in a lower-carbon economy
Our place in a lower-carbon economy Four aspects of our business will enable us to thrive in a lower carbon economy • Our nitrogen-based process o Our core high-pressure autoclave foaming process uses nitrogen borrowed from the atmosphere o Energy and raw material become the only environmental impac
Slide 25: Key messages & outlook
Key messages & outlook KEY MESSAGES: HY 2021 Strong trading performance in a difficult environment, with continued momentum OUTLOOK in Footwear from H2 2020 and broad- based recovery in most polyolefin foam Further positive sales momentum markets and territories expected and improved product mix Sal
Slide 26: Appendices
Appendices Appendices AZOTE®® / / ZOTEK AZOTE ZOTEK®® / T-FIT® /®MuCell® ® / T-FIT / MuCell 26
Slide 27: 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 28: 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 29: 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 30: Three stage process
Three stage process AZOTE® / ZOTEK® / T-FIT® / MuCell® 30
Slide 31: 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® 31
Slide 32: Group overview - locations
Group overview - locations MuCell Extrusion HQ Zotefoams plc Zotefoams T-FIT Woburn, MA, USA Croydon UK Material Technology licenses MuCell® block foam main (Kunshan) Co. Ltd, technology to end-users manufacturing site China Zotefoams Poland, T-FIT ® products SP z.o.o., Brzeg manufacture foam manufa
Slide 33: 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 34: Market information
Market information Share price 445p (06/08/21) Shareholder Profile* Market Main Market Ticker ZTF.L Market cap. £216m Ord. shares in issue 48,621,234 510 2,500 490 2,000 470 Traded volume ('000s) 450 Share price (p) 1,500 430 1,000 410 Schroders 12.4% Canaccord 8.6% Invesco 8.4% Premier Miton 5.4% 3
Slide 35: Board of Directors
Board of Directors Steve Good Non-Executive Chair Dr Alison Fielding Non-Executive Director (Chair of the Nomination Committee and a member of the Remuneration (Chair of the Remuneration Committee and member of the Audit and Committee) Nomination Committees) Appointed to the Board in October 2014 as