Zotefoams Plc · LSE:ZTF
Zotefoams — FY2020 Earnings Presentation
32 slides from Zotefoams's earnings presentation, Mar 23, 2021
Slide 1: Preliminary results 23 March 2021
1 Preliminary results 23 March 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: 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 the
Slide 7: Results highlights
Results highlights Adjusted1 Adjusted1 Gross revenue up Cash generated basic EPS operating profit from operations up maintained at 2% to £82.7m maintained at 10% to £13.0m £9.4m 15.33p (2019: £80.9m) (2019: £11.8m) (2019: £9.4m) (2019: 15.38p) • Delivered year-on-year revenue growth despite COVID-19
Slide 8: Segment overview
Segment overview Revenue by geography Revenue by business unit 2020 2019 Revenue by industry A well-balanced geographical and industrial spread Significant change year-on-year with growth in Footwear, the PPE programme and COVID- related market impacts AZOTE® / ZOTEK® / T-FIT® / MuCell® 8
Slide 9: Financial review
Financial review Financial review AZOTE® / ZOTEK® / T-FIT® / MuCell® 9
Slide 10: Abbreviated income statement
Abbreviated income statement • H1 revenue £34.6m, H2 £48.3m • Manufacturing costs successfully flexed £million Dec-20 Dec-19 Change in H1 to lower activity levels and SG&A Group revenue 82.7 80.9 2% costs tightly controlled Gross profit 27.8 28.6 (3%) • New capacity and pandemic-influenced sales mix
Slide 11: Statement of cash flows
Statement of cash flows Debt and Liquidity £million Dec-20 Dec-19 Profit before tax 8.3 9.8 • Net debt under bank definitions (excluding IFRS 2 and IFRS 16 impacts) of £34.2m (2019: £30.7m) Depreciation 6.8 5.8 Other 1.0 (0.2) • Net debt to EBITDA (leverage) ratio of 2.1x against a bank covenant of
Slide 12: Business review
Business review AZOTE® / ZOTEK® / T-FIT® / MuCell® 12
Slide 13: Commercial overview
Commercial overview Markets and programmes • Q1 2020 saw a continuation of subdued demand from 2019 in general with some encouraging signs of improvement in certain segments • COVID-19 effect from late Q1 materially impacted our major volume markets including industrial protection, automotive, aviat
Slide 14: Polyolefin Foams results
Polyolefin Foams results ® Common polymers made extraordinary by Zotefoams’ unique AZOTE process, creating premium, durable, consistent materials Revenue Polyolefin Dec 20 Dec 19 Change • H1 decline of 23%, followed by 28% increase in H2 Foams £m £m (vs previous period) Segment revenue 50.9 51.4 (1%)
Slide 15: 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 HPP Dec 20 Dec 19 Change £m £m • H1 decline of 7% followed by 32% increase in H2 (vs Segment revenue 30.0 26.5 13% p
Slide 16: MuCell Extrusion results
MuCell Extrusion results MuCell® microcellular technology MEL Dec 20 Dec 19 Change Revenue & growth £m £m • Equipment sales and related licence and royalty Segment revenue 1.8 3.1 (41%) income • Licensing and royalty at similar levels to 2019, while Segment loss pre (1.2) (1.3) 7% equipment sales (t
Slide 17: Strategic progress
Strategic Photo progress AZOTE® / ZOTEK® / T-FIT® / MuCell® 17
Slide 18: 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 • Poland plant commissioned in February 2021, representing the final commitment of a multi-year capacit
Slide 19: 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 20: ReZorce Circular Packaging
ReZorce® Circular Packaging A MEL development Positioning • The first fully recyclable beverage carton • Performance and functionality matches current multi-material solutions • Five times less energy; 11 times less water; 50% lower Global Warming Potential 1 • 100% recyclable (up to 100% recycled c
Slide 21: Key messages & outlook
Key messages & outlook KEY MESSAGES: 2020 OUTLOOK Successful response to the significant Strong start to 2021 across the business challenges posed by COVID-19 as a whole, led by Footwear and Polyolefin Foams Resilience through strong cost and cash management and capture of new sales Operational envi
Slide 22: Appendices
Appendices Appendices AZOTE®® / / ZOTEK AZOTE ZOTEK®® / T-FIT® /®MuCell® ® / T-FIT / MuCell 22
Slide 23: 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 24: 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 25: Three stage process
Three stage process AZOTE® / ZOTEK® / T-FIT® / MuCell® 25
Slide 26: 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® 26
Slide 27: 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 28: 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 29: Statement of financial position and net debt
Statement of financial position and net debt Statement of financial position £million Dec-20 Dec-19 Change Intangible assets 5.9 6.6 (11%) Tangible assets 94.3 86.9 9% Net working capital 37.3 35.1 6% Net debt reconciliation Post employment benefits (8.9) (6.9) 28% Net debt (35.6) (31.9) 12% £millio
Slide 30: Polymer (LDPE) prices/kg
Polymer (LDPE) prices/kg € AZOTE® / ZOTEK® / T-FIT® / MuCell® 30
Slide 31: Market information
Market information Share price 431p (18/03/21) Shareholder Profile* Market Main Market Ticker ZTF.L Market cap. £208m Ord. shares in issue 48,621,234 550 3,000 500 2,500 450 400 2,000 Traded volume ('000s) Share price (p) 350 1,500 300 250 1,000 Schroder Investment Mgt 12.4% Invesco (OppenheimerFund
Slide 32: 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