Coats Group Plc · LSE:COA
Coats — FY2024 Earnings Presentation
30 slides from Coats's earnings presentation, Mar 6, 2025
Slide 1: A Platform for Growth: 2024 Full Year Results
A PLATFORM FOR GROWTH 2024 Full Year Results 6 March 2025
Slide 2: Disclaimer
DISCLAIMER Restricted distribution This presentation is not for release, publication or distribution, in whole or in part, directly or indirectly, in, into or from any jurisdiction where to do so would constitute a violation of the relevant laws or regulations of such jurisdiction (the ‘Restricted J
Slide 3: Agenda
AGENDA 01 Highlights 02 Financial Performance 03 Strategic Update 04 Summary and Outlook 05 Appendices COATS GROUP PLC | 2024 FULL YEAR RESULTS 3
Slide 4: Highlights
HIGHLIGHTS 2024 Financial Highlights (CER) 2024 Strategic Highlights Outperformance against the industry market share gains in Apparel and Footwear 100% recycled thread products revenue grew 144% to $405m Strategic projects actions now complete Group revenue up 9% $67m of savings delivered ($75m by
Slide 5: Financial Performance
FINANCIAL PERFORMANCE
Slide 6: Key Financial Highlights
KEY FINANCIAL HIGHLIGHTS 18% EBIT margins Strong free 9% CER 18% EPS – ahead of 2024 cash flow revenue growth growth target $153m Strategic Projects Acquisition largely complete- 1.5x Fully de-risked synergies $75m total leverage UK pension $22m benefits by 2025 COATS GROUP PLC | 2024 FULL YEAR RESU
Slide 7: Key Financial Metrics
KEY FINANCIAL METRICS ACCELERATED SALES AND MARGIN GROWTH FY 2024 FY 2023 Reported change FY 2023 CER1 CER1 change Revenue ($ million) Apparel 770 689 12% 678 13% Footwear 403 368 10% 368 10% Performance Materials 328 336 -3% 330 -1% Group 1,501 1,394 8% 1,377 9% Adj. EBIT ($ million) Apparel 151 12
Slide 8: Group EBIT and Margin
GROUP EBIT AND MARGIN POSITIVE VOLUMES, OFFSETTING INFLATION AND BENEFITS FROM PROJECTS AND SYNERGIES 18.0% margin 9 16.7% margin 25 10 11 -22 37 -9 -10 6 270 -16 -5 $m 233 $36m price and productivity benefits more than offsetting $21m inflation COATS GROUP PLC | 2024 FULL YEAR RESULTS 8
Slide 9: Divisional Margins
DIVISIONAL MARGINS APPAREL AND FOOTWEAR MARGINS WELL AHEAD OF 2024 GUIDANCE APPAREL (EBIT %) Apparel margins up 210bps yoy to 19.6% – 2024 target margin of 15-16% exceeded 19.6% – Volume recovery driving efficiencies 17.5% – Strategic project benefits, procurement savings, and one-off exchange gain
Slide 10: Income Statement
INCOME STATEMENT COMPOUNDING EARNINGS GROWTH - 18% EPS GROWTH Exceptional / acquisition related items $m 2024 20231 – Strategic projects - $27m - actions now largely complete Adjusted EBIT 270 233 – Toluca closure costs of $15m ($8m cash costs in 2024 / 25) Exceptional / acquisition related items (7
Slide 11: Cash Flow and Leverage
CASH FLOW AND LEVERAGE STRONG CASH GENERATION DRIVEN BY IMPROVED PROFITABILITY 2024 Cashflow ($m) $m 2024 2023 1 315 Adjusted free cash flow 153 131 (28) (32) Pensions (136) (49) (71) Exceptionals (21) (13) (18) (14) 153 Disposals and discontinued operations (1) (5) Dividends paid to equity sharehol
Slide 12: Pensions
PENSIONS FULL UK PENSION DE-RISKING ACHIEVED UK pension liability risks now 100% hedged £100m ($128m) cash funding in September – no more cash contributions required 24-36 month period of post-transaction true-ups and asset realisation Anticipated option to remove scheme from balance sheet by 2027 G
Slide 13: 2025 Modelling Guidance
2025 MODELLING GUIDANCE Area Guidance Modest levels of raw material, freight and energy inflation after some deflation in 2024. Continued levels of inflation on the remainder of our costs base e.g. labour. Inflation In line with past track record - we anticipate net inflationary pressures to be offs
Slide 14: Deliver Today, Re-imagine Tomorrow: Strategic Update
DELIVER TODAY RE-IMAGINE TOMORROW Strategic Update
Slide 15: My Observations
MY OBSERVATIONS Unparalleled Scale and customer base global footprint Financial Culture strength COATS GROUP PLC | 2024 FULL YEAR RESULTS 15
Slide 16: A Strong Platform for Growth
A STRONG PLATFORM FOR GROWTH 2014 – 2024 Revenue growth Today Over 10 year period revenue +20%1, Global market leader Divested crafts and zips in 85%+ of portfolio $1.5bn Exited c.30 non-core countries Consistently outperforming market 18% 18% EBIT growth EBIT Acquired Coats Digital, Gotex, PPE $1.2
Slide 17: Three High Quality Divisions
THREE HIGH QUALITY DIVISIONS 51%* Global market leader, substantially larger than next competitors combined Apparel c.$3bn addressable market growing at 1-2% p.a. Sustainability and supply-chain resilience driving industry consolidation 27%* Market leader in threads and structural components, becomi
Slide 18: Market Share Drivers
MARKET SHARE DRIVERS Winning with the winners Innovation Sustainability Digital EcoVerde recycled thread Clear leader in sustainability ShopCoats cloud based platform Rhenoprint structural components $405m sales from 100% recycled thread Over 80% of orders for threads Xtru composite tapes and PPE fa
Slide 19: Revenue Growth from Organic Adjacencies
REVENUE GROWTH FROM ORGANIC ADJACENCIES One-step adjacencies – Existing customers – Existing + new products Coats Digital Composite tapes for Energy PPE fabrics Large addressable markets Apparel Performance Materials Performance Materials ($1.3bn1) Combined market growth >5% CAGR 2024 Coats sales of
Slide 20: Medium-Term Financial Framework
MEDIUM-TERM FINANCIAL FRAMEWORK Revenue % (CAGR) 3-4% Apparel EBIT % >19% Revenue % (CAGR) >5% Revenue % (CAGR) 7-9% Footwear EBIT % 19-21% EBIT % 24-26% >$750m FCF1 (cumulative) over 5yrs Revenue % (CAGR) 6-8% Organic EPS3 (CAGR) HSD%4 Performance Total EPS3 (CAGR) >10%2 Materials EBIT % 13-15% 1.
Slide 21: Apparel
APPAREL 2024 Performance Medium-term targets 3-4% Revenue growth1 13% (underlying market c.1-2%) 19.6% EBIT margin >19% (Underlying c.19%) Gaining market share Strong position today Future profit growth drivers Sales growth consistently outperforming market Leaders in sustainability, a key different
Slide 22: Footwear
FOOTWEAR 2024 Performance Medium-term targets 7-9% Revenue growth1 10% (underlying market 4-5%) EBIT margin 23.5% 24-26% Gaining market share Strong position today Future profit growth drivers Consistent market outperformance Leaders in sustainability & innovation Margin target surpassed New Indones
Slide 23: Performance Materials
PERFORMANCE MATERIALS 2024 Performance Medium-term targets 6-8% Revenue growth1 (1)% (underlying market 3-4%) EBIT margin 7.4% 13-15% Facing challenges in the Americas Wider division performing well Improvement plan NA Yarns (21% of division) at negative EBIT PM margins in Asia / EMEA healthy double
Slide 24: Sustainable Growth at Premium Profitability
SUSTAINABLE GROWTH AT PREMIUM PROFITABILITY >5% revenue CAGR >2% 19-21% 3% EBIT margin 18% EBIT margin 2024 Underlying Share gains Medium-term 2024 A&F* margin PM Growth Medium-term market & organic organic progression improvement investment organic adjacencies ORGANIC EPS CAGR HSD% 24 * Apparel & F
Slide 25: M&A Framework
M&A FRAMEWORK Strategic criteria Areas of interest Financial criteria Further industry consolidation Footwear: highly differentiated components Size (Revenue) > $50m - $300m One step adjacencies: – Shared customers – Shared core technologies Performance threads and tapes 18% Consistent with Differen
Slide 26: Value Creation
VALUE CREATION Maintain current target leverage ratio of 1-2x net debt to EBITDA Cumulative FCF1 of over $750m over 5 year period Priorities Capital allocation >$750m over 5 year period 01. Reinvest in organic growth M&A or 02. Progressive dividend buybacks EPS growth >10%2 03. Disciplined M&A Divid
Slide 27: Leadership Changes
LEADERSHIP CHANGES Pasquale Abruzzese Hannah Nichols CEO Performance Materials & Group COO CFO Designate – April 2025 Blue chip background: Proven CFO in FTSE 250 Industrials: Royal Philips, Honeywell, Aptiv Hill & Smith, BT Group Plc Track record of developing world class Track record of value crea
Slide 28: Summary and Outlook
SUMMARY AND OUTLOOK Medium-term targets Delivered a strong performance in 2024 We anticipate another year of financial and strategic progress in 2025, in line with market expectations >5% revenue – Based on current market conditions and normalised customer buying CAGR behaviour – Continued organic g
Slide 29: Appendix
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Slide 30: Sustainability; a Driver of Market Share Gains
SUSTAINABILITY; A DRIVER OF MARKET SHARE GAINS % ACHIEVEMENT 2022 2026 2024 Pillar Metric TARGET ACTUAL OF 2026 TARGET Baseline 22% reduction from ENERGY Reduction in Scope 1&2 emissions 182 kTonnes1 51% reduction 232% 2022 baseline MATERIALS % non-virgin oil-based materials 25%1 60% 46% 76% Increas