Slide 1: Eurocell Plc 2018 Full Year Results
EUROCELL PLC 2018 Full Year Results
Slide 2: Agenda
AGENDA Manufacturer Business Review Mark Kelly Chief Executive Officer Financial Review Distributor Michael Scott Chief Financial Officer Summary and Outlook Mark Kelly Recycler 1
Slide 3: Overview
OVERVIEW Mark Kelly – Chief Executive Good progress with strategic priorities Revenue Continuing to gain market share £253.7m ▲ 13% (2017: £224.9m) Expanding branch network – now 202 sites Increasing use of recycled material Adjusted EBITDA Financial and operational highlights £30.3m ▼ 4% (2017: £31
Slide 4: Sales Overview: Gaining Share in Flat RMI Market
SALES OVERVIEW Eurocell Revenue Gaining Share in Flat RMI Market by Market (%) ► CPA construction output forecasts – flat RMI market(2) ► Strong sales growth delivered across the whole business ► Improving trends vs 2017 Sales Growth (%) FY H1 H2 FY RMI > 80% 2017 2018 2018 2018 New Build > 10% Grou
Slide 5: Profiles – Performance in 2018
Profiles Division P&L DIVISIONAL REVIEW £m 2017 2018 Change Profiles – Performance in 2018 3rd Party Revenue 94.2 107.7 ▲14% Organic 94.2 105.5 ▲12% Ecoplas (1) - 2.2 n/a ► Gaining share – 12% like-for-like growth - Now largest supplier of rigid PVC profile to UK market Inter-segmental 45.4 51.8 ▲14
Slide 6: Profiles – Manufacturing Capacity
DIVISIONAL REVIEW 2018 (Actual) and 2019 (Plan) Capacity Utilisation Levels Profiles – Manufacturing Capacity 120% 100% ► Strong growth and significant mix changes 80% - Shortage of co-extrusion capacity - Shortage of skilled labour in foiling plant 60% - Depletion of safety stocks 40% - High backlo
Slide 7: Building Plastics – Performance in 2018
DIVISIONAL REVIEW Building Plastics Division P&L Building Plastics – Performance in 2018 £m 2017 2018 Change 3rd Party Revenue 130.7 146.0 ▲12% ► Gaining share – 11% organic growth Organic 128.2 142.6 ▲11% Acquisitions (2) 2.5 3.4 ▲32% ► Like-for-like(1) sales up 5% - Maturing of branches opened pre
Slide 8: Building Plastics – Continued Investment
DIVISIONAL REVIEW Indicative Branch Economics (Rounded) Building Plastics – Continued Investment Branch Open <2 2-4 >4 years years years ► Strategic objective – world-class operations from up to 350 sites No. of Branches (1) 39 33 126 - Two key pillars to strategy Average Sales per 300 450 850 Branc
Slide 9: Financial Highlights
FINANCIAL HIGHLIGHTS Michael Scott – Chief Financial Officer Revenue Gross Margin Adjusted(2) EBITDA £253.7m 49.5% £30.3m ▲13% (2017: £224.9m) ▼ 1.5% (2017: 51.0%) ▼ 4% (2017: £31.7m) Adjusted(2) Basic EPS Total Dividends Net Debt 19.1p 9.3p per share £23.5m ▼ 6% (2017: 20.4p) ▲ 3% (2017: 9.0p per s
Slide 10: Group Income Statement
FINANCIAL PERFORMANCE Group Income Statement £m 2017 2018 Change Revenue 224.9 253.7 ▲ 13% Gross Profit 114.6 125.6 Gross Margin % 51.0% 49.5% Overheads (82.9) (95.3) Adjusted EBITDA(1) 31.7 30.3 ▼ 4% Depreciation and Amortisation (6.7) (7.1) Finance Costs (0.6) (0.7) Adjusted Profit Before Tax(2) 2
Slide 11: Strong Sales Growth
SALES PERFORMANCE Strong Sales Growth Like-for-like(1) sales ▲8% 260 253.7 3.1 255 8.8 250 241.8 245 5.6 £m 240 11.3 235 224.9 230 225 220 215 210 2017 Profiles LFL Building Plastics Group LFL 2017 / 2018 Acquisitions 2018 LFL branches ► Sales ▲ 13% (or 12% excluding acquisitions) ► Building Plastic
Slide 12: Gross Margin: Increased Manufacturing Costs
GROSS MARGIN Increased Manufacturing Costs 51.0% -1.0% -£0.8m / -0.6% +0.3% -0.2% 49.5% 130 (3.6) 0.8 125.6 10.3 2.8 0.7 120 114.6 £m 110 100 90 2017 Underlying Input costs Selling price Increased Other 2018 volume increases recycling ► Underlying volume (-100 bps) ► Raw material cost inflation and
Slide 13: Overheads: Investment in Business Expansion
OVERHEADS Investment in Business Expansion 96 2.1 95.3 Like-for-like(1) 94 overheads▲8% 3.3 92 1.5 89.9 90 3.6 88 £m 86 1.9 84 82.9 82 80 78 76 2017 Wage Other Backlog Group LFL 2017 / 2018 Acquisitions 2018 inflation issues branches ► Like-for-like(1) cost increase ▲ 8% ► Impact of 39 new branches
Slide 14: Capex: Investment in Manufacturing Capacity
CAPEX Investment in Manufacturing Capacity Total Capital Expenditure 10 ► 2018 capex £8.7m (2017: £7.5m) 8 8.7 - Increase manufacturing capacity £2.6m 7.2 7.5 • Expand production capacity and improve manufacturing efficiency 6 6.4 £m • Includes 4 new co-extrusion lines 4 - Increase recycling capacit
Slide 15: Working Capital: Investment in Working Capital
WORKING CAPITAL Investment in Working Capital Key Working Capital Metrics(1) Stock Days Debtor Days ► Net outflow from working capital £8.3m - Includes Ecoplas supply chain support c.£1m December 2018 62 38 - 2017 outflow £2.3m December 2017 55 37 ► Stock days at 62 vs 55 at December 2017 - Stocks ▲
Slide 16: Cash Flow Generation
Reconciliation of Net Debt CASH FLOW Dec Dec £m Change 2017 2018 Cash Flow Generation Cash 11.4 5.9 (5.5) Borrowing (25.9) (29.4) (3.5) 36 8.3 Net Debt (14.5) (23.5) (9.0) 30.3 32 28 Dec 2018 bank refinancing 4.3 ► New £60m facility (up from £45m) 24 (1) 20 17.7 8.7 ► Margin and key terms unchanged
Slide 17: 2019 Financial Guidance: Including IFRS 16 – Leases
2019 FINANCIAL GUIDANCE Estimated Impact of IFRS 16 Including IFRS 16 – Leases £m 2019 IFRS 16 Adjustment Income statement Reduction in overheads £9m ► IFRS 16 applied from January 2019 Increase in depreciation (£9m) - Requires operating leases to be capitalised on balance sheet - Asset and liabilit
Slide 18: Strategic Priorities
STRATEGIC PRIORITIES Mark Kelly – Chief Executive Clear strategy to create 2019 focus on self-help initiatives to support delivery of near-term profit targets long term value STRATEGIC PRIORITIES PROGRESS IN 2018 FOCUS IN 2019 INCREASE USE OF Increased use to 9.5kt (2017: 8.3kt) via investment in
Slide 19: Strategic Priorities: Investing in Sustainability
STRATEGIC PRIORITIES Investing in Sustainability ► Strategy to increase use of recycled material Acquisition – Ecoplas - Widening gap in price of recycled vs virgin compound Timing Business and Transaction Summary - Enhances product and business sustainability ► Investment in Ilkeston site 2016-18 o
Slide 20: Summary and Outlook
SUMMARY And Outlook Good progress with strategic priorities Continuing to gain market share Expanding branch network – now 202 sites Increasing use of recycled material Financial and operational highlights Strong sales growth and significant mix changes EBITDA down as anticipated – impact of product
Slide 21: Appendices
Appendices eurocell: All together better
Slide 22: Product Range
PRODUCT RANGE Ranges of window and door profile Skypod pitched skylights Aspect bi-folding doors Conservatories and Equinox tiled roofs Fascias, soffits and guttering Traded goods Products sold through two major trading divisions: Profiles and Building Plastics (branches) 21
Slide 23: Profiles Division
PROFILES DIVISION ► Manufactures: Use of Recycled PVC in Manufacturing (%) - Extruded rigid and foam PVC profiles using virgin 10.0 9.5 PVC compound 8.3 8.0 - Rigid products also include recycled compound 6.0 - Full manufacturing margin recorded in Profiles – 6.0 kt benefits from branch expansion 4.
Slide 24: Building Plastics Division
BUILDING PLASTICS DIVISION Typical Branch Format ► Sells: - Range of Eurocell manufactured and branded PVC foam roofline and window fitting / maintenance products - Third party manufactured ancillary products: sealants, tools and rainwater products - Vista doors - Windows fabricated by third parties
Slide 25: Locations
LOCATIONS Centrally located Extrusion centre Secondary Recycling Warehousing & HQ, Manufacturing, 140,000 sq ft operations (foiling) operations (Eurocell Recycle Conservatory Warehousing, 52 extruders 120,000 sq ft Injection Moulding 10 foiling machines and Ecoplas) Roofs and Recycling 280,000 sq ft
Slide 26: Route to Market
ROUTE TO MARKET Third Party Suppliers Recycling: Eurocell Recycle Third Party Suppliers 37,000 tonnes of virgin e.g. compound consumed (1), 9,500 tonnes of recycled • Rainwater products plus 8,500 tonnes of compound consumed • Sealants other raw materials (2) (17% of profile raw material • Tools con
Slide 27: Recycling at Eurocell Recycle (Ilkeston)
RECYCLING AT EUROCELL RECYCLE (ILKESTON) Post-consumer Post-industrial 16,500 tonnes 7,200 tonnes collected and collected and recycled by Eurocell recycled by Eurocell Recycle Recycle 5,600 tonnes 9,500 tonnes recycled compound Recycled recycled compound used to manufacture compound used in producti
Slide 28: Corporate and Operational History
CORPORATE AND OPERATIONAL HISTORY Eurocell Building Branch expansion Branch expansion Branch expansion reaches 100 Plastics launched reaches 150 reaches 50 Operational Branch 1st Eurocell expansion Building Plastics reaches 200 Extrusion branch business Rebranding: Primary founded, Primary Primary s
Slide 29: Market Backdrop – Mixed Indicators
MARKET BACKDROP – MIXED INDICATORS Driver Description Private Housing RMI Spend (£bn) 23 Real UK GDP is forecast to grow by 1.6% in 2019 (2018 21.5 GDP 21.5 22.0 estimate: 1.3%) 21.5 19.6 20 Consumer Dropped recently due to increasing uncertainty over 18.6 confidence Brexit 17 UK interest rates incr
Slide 30: IFRS16 – Leases (Applicable from January 2019)
IFRS16 – LEASES (APPLICABLE FROM JANUARY 2019) ► No economic impact on the Group Estimated Impact of IFRS 16 - No effect on cash flows £m 2019 IFRS 16 Adjustment ► Impact on presentation of assets, liabilities and P&L - Aligns presentation of leased assets more closely with owned assets Income state
Slide 31: Disclaimer
DISCLAIMER This Presentation may contain forward-looking statements form of commitment on the part forward-looking statements that involve risks and uncertainties of the Company to proceed with involve substantial risks and because they relate to events and any transaction. uncertainties, and actual
Slide 32: Eurocell – All together better
eurocell ® All together better 31