Zotefoams Plc · LSE:ZTF
Zotefoams — FY2017 Earnings Presentation
33 slides from Zotefoams's earnings presentation, Mar 13, 2018
Slide 1: Preliminary Results 2017
Preliminary Results 2017 David Stirling: Group CEO Gary McGrath: Group CFO Presentation Title Presented by 13 March 2018
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: Positioning & Strategy
Positioning & Y zoreroams Strategy
Slide 4: Business Overview
Business Overview ZOTEFOAMS POLYOLEFINS AZOTE® Premium, durable, foams Uniformly dense foam sheets with a consistent cell structure. These foam sheets and blocks are manufactured from common polymers using our unique nitrogen-expansion process. HPP MEL ZOTEK® T-FIT® MuCell® Lightweight technical foa
Slide 5: Segment Overview
Segment Overview Revenue by Geography Revenue by Business Unit ROW UK 15% 18% North America Continental 30% Europe 37% 40% 35% 30% Revenue by Industry 25% A well balanced geographical and 20% industrial spread, with improving 15% mix of higher value HPP business 10% 5% 0% Page : 5
Slide 6: Zotefoams' Strategy
Zotefoams’ Strategy “We intend to be the world leader in cellular materials We deliver stakeholder technology in our value by using unique chosen markets” technology to create a portfolio of differentiated products. We focus Title resources primarily on markets where we are, or have We intend to dev
Slide 7: The Year
The Year YX ZOTEFOAMS
Slide 8: Main achievements in period
Main achievements in period ✓ 7% volume growth though improved utilisation of existing assets ✓ Double-digit growth in all business units ✓ Completed major US capacity expansion investment, now producing high-quality foam and providing 20% increased global capacity ✓ Strategic partnership with Nike
Slide 9: Strong results
Strong results Adjusted Revenue Gross Margin Operating Profit £70.15m 35.3% £9.70m + 22% + 90bps reported + 20% reported before exceptional item + 17% constant currency + 15% constant currency Business Units Adjusted Full Year EPS Dividend AZOTE® +18% 16.64p 5.93p HPP +32% +14% +3.1% MuCell® +56% be
Slide 10: Polyolefin Foams
Polyolefin Foams Common polymers made extraordinary by Zotefoams’ unique process, creating premium, durable, consistent materials Revenue Polyolefin Foams Dec-17 Dec-16 % £m £m Change • Croydon at full capacity • 7% volume growth Group revenue 52.82 44.73 18% • 6% price increases and mix improvement
Slide 11: MuCell Extrusion
MuCell Extrusion MuCell® Revenue MEL Dec-17 Dec-16 % £m £m Change • Further 22 lines installed at licensees, bringing total installed base to 133 Group revenue 4.25 2.73 56% • Completion of largest contract in MuCell history, representing 25% of equipment Segment loss pre (1.03) (0.40) (158%) revenu
Slide 12: High-Performance Products (HPP)
High-Performance Products (HPP) AX® resin ZOTEK® ZOTEK® foams: retaining the attributes of high-performance polymers with the added benefits of (consistent) foaming T-FIT® high-performance insulation ZOTEK® F fire, smoke, chemical performance foams HPP Dec-17 Dec-16 % ZOTEK® N high-temperature polya
Slide 13: HPP: a growth portfolio
HPP: a growth portfolio ZOTEK® £000s HPP Sales History Technical Development of 3D foaming 14,000 – Capability to create solid 3D shape and 12,000 retain this shape through the foaming 10,000 process – Large-scale plant trials ongoing with key 8,000 sponsor 6,000 – Potentially applicable to all prod
Slide 14: Global Capacity
Global Capacity & ZOTEFOAMS
Slide 15: Capacity Development
Capacity Development Global capacity management for local and global markets Geographic markets for Block Foams • 2017 : operating at capacity Local AZOTE® • 2018 : USA “HP1” investment commissioned Q1 • 2019 : USA “HP2” investment expected to commission H2 ZOTEK® N • 2019 : UK “High-Temp LPs” expec
Slide 16: Financial Review
Financial Review YX ZOTEFOAMS
Slide 17: Key Performance Metrics
Key Performance Metrics Polyolefin Foams Growth % HPP & MEL Share of Gross Revenue 20% 31% 15% 26% 10% 21% 5% 16% 0% 11% 2012 2013 2014 2015 2016 2017 -5% 6% -10% 2012 2013 2014 2015 2016 2017 Group Operating Margin % Return on Capital Employed % 14% 20% 13% 15% 12% 11% 10% 10% 9% 5% 8% 0% 7% 2012 2
Slide 18: Income Statement
Income Statement % Change £million Dec-17 Dec-16 Reported • Exceptional item of Group Revenue 70.15 57.38 22.3% £1.27m, following legal advice related to the Group Profit 25.49 20.34 25.3% effective closing of the scheme to future accrual Gross Profit Margin 36.3% 35.4% of salaries. Adjusted Operati
Slide 19: Revenue Bridge
Revenue Bridge • 22% increase in revenue on a reported basis, 17% in constant currency • Growth across all business units £m 75.00 1.34 70.15 70.00 2.79 5.78 65.00 2.86 60.00 57.38 +13% +28% +49% 55.00 50.00 45.00 40.00 Group Revenue FX Polyolefin foams HPP MuCell Eliminations Group Revenue 2016 201
Slide 20: Adjusted Operating Profit Bridge
Adjusted Operating Profit Bridge • Foreign exchange impact £0.4m • £3.4m of increased overhead to support pursuit of expansion strategy £m 12.00 0.67 0.54 2.34 0.14 11.00 0.74 9.70 10.00 9.00 8.11 8.00 7.00 +29% +28% -66% 6.00 5.00 4.00 Operating Profit Polyolefin foams HPP MuCell Amort'n Other Oper
Slide 21: Investments
Investments • HP1 in Kentucky, USA (previously a site with one low-pressure vessel), $33m • Includes infrastructure and ancillary equipment for 3 high-pressure vessels • Includes 2 extrusion lines • Includes a 1st high-pressure vessel • Includes a 2nd high-pressure vessel to be commissioned when the
Slide 22: Net Debt & Covenants
Net Debt & Covenants • Net debt up £5.4m to £18.0m, vs £12.6m at Dec 2016 • Net cash inflow from operations of £9.98m (up 57% vs 2016) used to support £11.4m of investment in property, plant, equipment and intangibles • Net debt/EBITDA of 1.4 and interest cover 29x (as measured by banking agreement
Slide 23: Key Messages & Outlook
Key Messages & Outlook (YB zoreroams
Slide 24: Key Messages & Outlook
Key Messages & Outlook Another record year for sales and profits • 22% increase in Group revenue to a record £70.15m (2016: £57.38m) • 18% up in AZOTE® foams, with strong market mix improvements • 32% up in High-Performance Products (HPP) • 56% up in MuCell Extrusion • 17% increase in Group revenue
Slide 25: Appendices
Appendices & ZOTEFOAMS
Slide 26: Investment Case
Investment Case Sustained high levels of organic growth with margin enhancement through product mix and operational gearing Flexible core ZOTEK® F autoclave capacity MuCell optionality: fluoroploymer for block foam investment in foams for aviation production customer remains base with the largest (A
Slide 27: Overview
Overview Organisation Products Founded on AZOTE® Innovation HPP stretching back to Polyolefin Foams 1921 ZOTEK® Environmentally friendly High Performance Nitrogen/CO2 gas A world leader in Products foaming Barriers to cellular materials processes MuCell® entry: IP, technology capital, Technology Lic
Slide 28: Group Overview - Locations
Group Overview - Locations MuCell Extrusion HQ Zotefoams Plc Woburn, MA, USA Croydon UK licences MuCell® Block foam technology to end users Main manufacturing site Zotefoams Inc, Walton, KY, USA AZOTE® block foam expansion AZOTE® Asia Limited Hong Kong Zotefoams Midwest Sales Joint Venture Tulsa, OK
Slide 29: Main markets & typical applications
Main markets & typical applications Packaging Transport Industrial AZOTE® ZOTEK® MuCell® AZOTE® ZOTEK® AZOTE® T-FIT® Luxury, fine art and museum Galley areas / window seals Seals and gaskets Industrial protective and transit ECS (air ducting) Marine hoses and fenders Aviation & aerospace Soft touch
Slide 30: Technology Block Foams
Technology Block Foams What sets us apart from competition is a unique, environmentally friendly process that uses nitrogen gas to produce a range of uniform closed-cell cross-linked foams. Stage 1: High quality extrusion and cross-linking Stage 2: Impregnation and saturation of solid polymeric shee
Slide 31: MuCell Process Technology
MuCell® Process Technology MUCELL® technology produces foam that performs like solid plastic. It creates microbubbles in the centre of plastic extrusions by injecting gas into the melt during manufacture. • Lighter • Greener • Lower cost Sheet Film Blow moulding Pipe and profile Consumer Automotive
Slide 32: Polymer (LDPE) Prices
Polymer (LDPE) Prices 24-month Polymer (LDPE) Prices 1.50 1.45 1.40 1.35 1.31 1.30 1.30 1.25 1.20 1.15 Price € Page : 32
Slide 33: Market Information
Market Information Share price 495p (07/03/18) Market Main Market Ticker ZTF.L Shareholder Profile* Market cap. £220.0m 14.2% Ord. shares in issue 44,414,442 550 1,000 27.7% 900 500 13.6% 800 700 Traded volume ('000s) 450 2.6% Share price (p) 600 2.9% 9.2% 400 500 4.0% 400 4.1% 350 8.6% 300 5.3% 8.1