Eurocell Plc · LSE:ECEL
Eurocell — H1 2020 Earnings Presentation
33 slides from Eurocell's earnings presentation, Sep 4, 2020
Slide 1: Eurocell Plc 2020 Half Year Results
EUROCELL PLC 2020 Half Year Results
Slide 2: Agenda
Manufacturer AGENDA Business Review Mark Kelly Chief Executive Officer Distributor Financial Review Michael Scott Chief Financial Officer Outlook Mark Kelly Recycler 1
Slide 3: Overview
OVERVIEW Mark Kelly – Chief Executive Decisive action in response to COVID-19 Revenue Operational, health & safety and financial measures to safeguard the business £93.6m Successful phased re-opening starting in May ▼ 31% (H1 2019: £136.3m) Significant impact of COVID-19 on H1 results Sales and prof
Slide 4: Response to COVID-19: Well Positioned for Recovery
RESPONSE TO COVID-19 Well Positioned for Recovery COVID-19 Protection Measures ► Operational actions - Controlled closure in line with UK Government guidance on 23 March - Phased re-opening following updated guidance in May • All sites open in June, except Eurocell Recycle North, which followed in J
Slide 5: Sales Overview: Post-lockdown Recovery
SALES OVERVIEW Post-lockdown Recovery Eurocell Revenue by Market (%) Like-for-like (1) July / Q1 April May June H1 sales growth Aug Total Group 3% n/a -21% -6% -4% 12% Profiles 1% n/a -52% -25% -14% 2% Building Plastics 5% n/a 2% 7% 3% 20% ► Performance to 20 March in line with expectations, with Q1
Slide 6: Profiles Divisional Review: H1 Performance
PROFILES DIVISIONAL REVIEW Profiles Division P&L H1 Performance H1 H1 £m Change 2019 2020 ► Gaining market share – estimate now c.17% ▼ 37% 3rd Party Revenue 57.6 36.4 ► Sales down 37% – impact of COVID-19 lockdown Inter-segmental 28.2 19.0 ▼ 33% - Equivalent to -14% on a like-for-like(3) basis Reve
Slide 7: Profiles Divisional Review: Opportunities to Grow Market Share
PROFILES DIVISIONAL REVIEW Opportunities to Grow Market Share Syncro Sliding Patio Door Strategic objective to target 20% share and consolidate position as largest supplier of rigid PVC profile to UK market ► Opportunities to grow market share - Competitor weakness - Comprehensive product range - Ne
Slide 8: Building Plastics Divisional Review: H1 Performance
BUILDING PLASTICS DIVISIONAL REVIEW Building Plastics Division P&L H1 Performance £m H1 H1 Change 2019 2020 3rd Party Revenue ▼ 27% ► Gaining share – estimate now > 20% (roofline) 78.7 57.2 Organic 78.5 57.0 ▼ 27% ► Sales down 27% – impact of COVID-19 lockdown Acquisitions (1) 0.2 0.2 flat - Equival
Slide 9: Building Plastics Divisional Review: Opportunities to Grow Market Share
BUILDING PLASTICS DIVISIONAL REVIEW Opportunities to Grow Market Share Strategic objective to target world class operations from Kyube Garden Room at least 300 sites ► Opportunities to grow market share - Competitor branch footprint reduction - Simplified pricing and margin management - Consistent i
Slide 10: Warehouse Capacity Expansion: Facilitating Future Growth
WAREHOUSE CAPACITY EXPANSION Facilitating Future Growth Mobile Racking Fit-out ► Fit-out on track – expect to be operational from new site early in 2021 ► Key to increasing capacity and delivering further operational efficiencies - 260k square feet, state-of-the-art site • 3 miles from HQ and existi
Slide 11: Financial Highlights
FINANCIAL HIGHLIGHTS Michael Scott – Chief Financial Officer Revenue Gross Margin Loss Before Tax(2) £93.6m 46.8% (£8.6m) ▼ 31% (H1 2019: £136.3m) ▼ 4.3% (H1 2019: 51.1%) (H1 2019 Profit Before Tax: £10.4m) Non-underlying Charge Losses Per Share(2) Net Debt (pre-IFRS 16) £7.9m (5.0p) £23.5m (H1 2019
Slide 12: Financial Performance: Group Income Statement
FINANCIAL PERFORMANCE Group Income Statement £m H1 2019(1) H1 2020(1) Change Revenue 136.3 93.6 ▼ 31% Gross Profit 69.7 43.8 Gross Margin % 51.1% 46.8% Overheads(2) (49.8) (41.3) ▼ 17% EBITDA 19.9 2.5 ▼ 87% Depreciation and Amortisation (8.6) (9.9) Finance Costs (0.9) (1.2) Profit / (Loss) Before Ta
Slide 13: Sales Performance: Post-lockdown Recovery
SALES PERFORMANCE Post-lockdown Recovery Like-for-like(1) 150 sales ▼ 4% (8.3) 136.3 2.7 130.7 (37.6) 130 110 £m 0.5 93.6 90 70 50 30 H1 2019 Profiles LFL Building Plastics LFL Group LFL COVID impact 19/20 Branches H1 2020 ► Group like-for-like(1) sales ▼4% on trading day basis ► COVID-19 impact ref
Slide 14: Gross Margin: Improving as Volumes Increase
GROSS MARGIN Improving as Volumes Increase 51.1% -3.1% -1.6% +0.8% -0.4% 46.8% 69.7 (24.7) 70 60 £m 50 (1.5) 0.7 (0.4) 43.8 40 H1 2019 Volume / COVID Increase in stock Material costs Recycling H1 2020 provision ► Volume impact (-310 bps) driven by COVID ► Impact of recycling (-40 bps) - Reduced prod
Slide 15: Overheads: Reduction in Overheads
OVERHEADS Reduction in Overheads 52 49.8 (3.0) 50 48 (6.3) 46 Overheads ▼ 17% £m 44 42 2.9 41.3 (1.1) 40 (1.0) 38.4 38 36 H1 2019 Volume / Job Retention Furlough Building H1 2020 IFRS 9 H1 2020 COVID Scheme cost saving Plastics (pre-IFRS 9) impairments (20% of Government salary) support ► Volume imp
Slide 16: Non-underlying Costs
NON-UNDERLYING OVERHEADS COSTS Impact of COVID-19 ERN(1) goodwill Description H1 2020 £m ► Lower projected cash flows, reflecting impact of COVID on: Impairment • ERN(1) goodwill 5.8 - Customer demand and production volumes in the short-term charges • Receivables and 0.8 contract assets - Selling pr
Slide 17: Capex: Investment in Operating Capacity
CAPEX Investment in Operating Capacity Total Capital Expenditure (£m) 16 15.2 14 ► 2020 capex £4.6m (H1 2019: £8.8m) 12 - New warehouse £2.6m 10 8.7 8.8 - Increase recycling capacity £0.7m 7.2 7.5 8 - Other £1.3m 6 4.6 • Maintenance capex, new branches, branch refurbishments, IT and COVID-secure 4 ►
Slide 18: Working Capital: Cash Flow Management
WORKING CAPITAL Key Working Capital Metrics(1)(2) Cash Flow Management Stock Days Debtor Days June 2019 67 44 ► Net inflow from working capital £4.8m December 2019 76 37 ► Stock days at 79 vs 76 at December 2019 June 2020 (1)(2) 79 27 - Stocks ▼ £3.4m since December 2019 • Manufactured products: imp
Slide 19: Cash Flow: Cash Flow Generation
Reconciliation of Net Debt CASH FLOW £m Dec 2019 Jun 2020 Change Cash 4.9 2.9 (2.0) Cash Flow Generation Borrowings (39.5) (26.4) 13.1 Net debt (pre- (34.6) (23.5) 11.1 IFRS 16) IFRS 16 leases (34.1) (52.1) (18.0) Net Debt (68.7) (75.6) (6.9) 20 17.6 (23.2) 16 12 8 4.8 (1.4) (1.1) (1) £m 4.8 (4.9) 4
Slide 20: Financial Guidance Including Warehouse Capacity Expansion
FINANCIAL GUIDANCE Including Warehouse Capacity Expansion Warehouse Capacity Expansion Other 2020 Guidance Item Financial Impact All Guidance Stated Post-IFRS 16 2019 Reported 2020 Guidance 2020 • £8.5m Underlying Income Statement Fit-out Capex • Includes racking c.£3m, picking c.£3m, Depreciation a
Slide 21: Market Outlook
MARKET OUTLOOK Mark Kelly – Chief Executive Total Construction Output (£bn) Total Construction Growth (%) Total Construction Growth Rates Comparison (%) Forecast Forecast 2020 vs 2021 vs 2021 vs 19% 160 161 164 18% 2019 2020 2019 151 153 15% 146 6% Main Scenario (21%) 18% (6%) 142 4% 2% W shaped (27
Slide 22: Summary and Outlook
Manufacturer SUMMARY And Outlook Decisive action in response to COVID-19 Operational, health & safety and financial measures to safeguard the business Successful phased re-opening starting in May Distributor Significant impact of COVID-19 on H1 results Sales and profits down on lower volume and impa
Slide 23: Appendices
Appendices eurocell: All together better
Slide 24: Investing in Sustainability
INVESTING IN SUSTAINABILITY Eurocell BuildingFact File – Plastics Performance in H1 2019 Investing in sustainability and consolidating our position as the leading UK-based recycler of PVC windows 23
Slide 25: 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) 24
Slide 26: Profiles Division
PROFILES DIVISION Use of Recycled PVC in Manufacturing ► Manufactures: 16 - Extruded rigid and foam PVC profiles using virgin 14 13.4 PVC compound 12 9.5 10 8.3 - Rigid products also include recycled compound Kt 8 6.0 6.4 6 4.7 ► Recycles: 4 4.1 2 9% 14% 17% 17% 23% 22% 26% - Factory offcuts (post-i
Slide 27: Building Plastics Division
BUILDING PLASTICS DIVISION Number of Branches ► Sells: 250 208 - Range of Eurocell manufactured and branded 202 206 190 PVC foam roofline and window fitting / 200 159 maintenance products 141 150 - Third party manufactured ancillary products: 100 sealants, tools and rainwater products 50 - Vista doo
Slide 28: 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 North and Mids) Roofs and Recycling 280,000 sq
Slide 29: Route to Market
ROUTE TO MARKET Third Party Suppliers Recycling: Eurocell Recycle Third Party Suppliers 40,000 tonnes of virgin e.g. compound consumed (1), 13,400 tonnes of recycled • Rainwater products plus 6,000 tonnes of compound consumed • Sealants other raw materials (2) (23% of profile raw material • Tools co
Slide 30: Recycling – Inputs, Outputs, Usage
RECYCLING – INPUTS, OUTPUTS, USAGE K tonnes1 2018 2019 Change Change % Inputs – Waste Recycled Post-consumer 22.8 31.4 Post-industrial 7.6 9.9 Total 30.4 41.3 10.9 36% Outputs – Recycled Material Produced Total 18.2 24.9 6.7 37% Usage Primary Extrusion 9.5 13.4 3.9 41% Products Made From 100% Recycl
Slide 31: Group History
GROUP HISTORY Branch expansion Branch expansion Eurocell Building Branch expansion reaches 100 reaches 150 Plastics launched reaches 50 Operational Branch 1st Eurocell expansion Building Plastics reaches 200 Extrusion branch business Rebranding: Primary founded, single brand extruders: Primary Prima
Slide 32: 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 33: Eurocell: All together better
eurocell ® All together better 32