Myeco Group Ltd · ASX:MCO
Myeco — FY2020 Earnings Presentation
27 slides from Myeco's earnings presentation, Aug 31, 2020
Slide 1: FY20 Full-Year Results Presentation
Changing the World of Packaging FY20 Full-Year Results Presentation August 2020 1 (ASX: SES)
Slide 2: SECOS Company Profile
SECOS Company Profile SECOS Group Limited (ASX: SES) is a leading developer and manufacturer of sustainable packaging materials. Based in Melbourne, Australia, SECOS produces eco-friendly bioplastics using thermoplastic starch-based polymers to produce a wide range of certified (Industrial & Home) c
Slide 3: FY20 Performance Highlights
FY20 Performance Highlights SECOS has become a leader in the supply of compostable and biodegradable bioplastic resins and products • 20% yoy sales growth in Bio-polymer business • 86% improvement in gross margins year on year • Positive EBITDA in H2 FY20 • Strong balance sheet: 6% borrowings/equity
Slide 4: Corporate Overview
Corporate Overview Substantial Shareholders ASX Code: SES BELGRAVIA STRATEGIC EQUITIES PTY LTD 13.2% Share Price (28 August 2020) $0.14 R&K EDWARDS INVESTMENTS LLC 11.7% DONALD HALLER JR 8.8% Market capitalisation (@ 14 cents) $60.3m Top 20 65.8% Shares on issue (listed) 430m Total Board and managem
Slide 5: The Biopolymer market is growing rapidly
The Biopolymer market is growing rapidly Source: https://www.marketsandmarkets.com/Market-Reports/biopolymers-bioplastics-market Source: https://www.european-bioplastics.org/market/ Biobased and biodegradable/compostable products utilize renewable materials such as starch and other ingredients whi
Slide 6: Regulators globally are demanding compostable solutions
Regulators globally are demanding compostable solutions Over 130 countries have moved to ban or partially ban the use of single-use plastics. Regulatory changes drive demand as brands look to comply with city, state or country bans on plastic bags. SECOS’ advantage of Integration from Biopolym
Slide 7: Recycling is not the solution
Recycling is not the solution • Since China stopped accepting waste, recycling has reduced • USA recycle rates have fallen to 9% • Australian Recycle rates have also fallen • In all markets very little flexible plastic (single use plastic) is recycled - due to contamination and unfavorable economics
Slide 8: Recycling is not the solution – Biopolymers are the solution
Recycling is not the solution – Biopolymers are the solution Australian Packaging Covenant Commitment has 1400 brands signing up to use materials that are either recyclable or renewable Recycling is really downcycling & is still using plastic! 1. Design for Recovery Continued recycling of plastic
Slide 9: SECOS produces a wide range of compostable and biodegradable products
SECOS produces a wide range of compostable and biodegradable products Cast Film using traditional Compostable/Bio-Hybrid™ Biopolymer resin polyolefins & compostable film Blown Film and Bags Cardia Resin for Convertors Cardia Film for Hygiene Cardia bags for Council food waste diversion, to produce t
Slide 10: SECOS Business Model
SECOS Business Model SECOS has a fully vertically integrated production capacity from raw materials to finished product This provides SECOS with cost and supply chain efficiencies, and flexibility in best utilising production capacity At each stage SECOS can sell globally to converters or use intern
Slide 11: Global Sales & Distribution Infrastructure
Global Sales & Distribution Infrastructure Compounding Lines Blown Film Lines Cast Lines Cast Lines Biopolymer resin lines – Malaysia & China Traditional Film Lines (Malaysia) Biopolymer Film Lines (China) Geographic sales mix FY20 on Direct Sales Offices in Melbourne, Dallas, Nanjing & Kuala Lumpur
Slide 12: Recent Customer Wins
Recent Customer Wins The quality and scale of recent significant new customers demonstrates the strength of SECOS’ market position and opportunities for growth Council Compostable Bin Liners Bags • New Council Business with 4 new council customers totalling in excess of $0.6m • Woolworths; 2 new SKU
Slide 13: Global client base
Global client base Over 358 Clients globally, including: 13
Slide 14: Competitive Advantages
Competitive Advantages • Superior biopolymer development expertise: SECOS has extensive expertise in the development of thermoplastic starch based formulations for a wide range of applications which provide superior mechanical properties and higher flow characteristics. SECOS products are certified
Slide 15: Key Markets – Biopolymer Bags
Key Markets – Biopolymer Bags ($m) Biopolymer Bag Sales $3.5 $3.0 $2.5 $2.0 $1.5 $1.0 $0.5 $0.0 H1 FY19 H2 FY19 H1 FY20 H2 FY20 SECOS biopolymer bag sales are driven by Council Food Organics and Garden Organics (FOGO) programs, bin liner sales and dog bags: o Launch of MyEcoBag range after investmen
Slide 16: Key Markets – Biopolymer Film
Key Markets – Biopolymer Film ($m) Biopolymer Film Sales $0.8 $0.7 $0.6 $0.5 $0.4 $0.3 $0.2 $0.1 $0.0 H1 FY19 H2 FY19 H1 FY20 H2 FY20 Biopolymer Film sales is the fastest growth category (albeit from a low base): o Hygiene/Diaper demand for compostable film for diaper back sheet and packaging contin
Slide 17: Key Markets – Biopolymer Resin
Key Markets – Biopolymer Resin ($m) Biopolymer Resin Sales $2.5 $2.0 $1.5 $1.0 $0.5 $0.0 H1 FY19 H2 FY19 H1 FY20 H2 FY20 Bioresin sales continue to demonstrate growth: 57% year on year in H2 FY20 o New grades gaining traction in American market across a wide range of applications o Development work
Slide 18: Key Markets – Traditional Plastic Film
Key Markets – Traditional Plastic Film ($m) Traditional Plastic Film Sales $7.0 $6.0 $5.0 $4.0 $3.0 $2.0 $1.0 $0.0 H1 FY19 H2 FY19 H1 FY20 H2 FY20 Traditional Film sales has seen some impact from COVID-19 o Effect of lower volumes has been offset by better margins and better plant efficiencies o Hyg
Slide 19: Growth Strategy
Growth Strategy • Sharp focus on growing higher margin sales ensuring plant capacity can be allocated to more profitable Resin • Continue development of resin grades for new applications • Both Compostable & Biohybrid (bio-based PE) business to optimize working capital • Target Higher margin bioresi
Slide 20: Strong Growth Trajectory
Strong Growth Trajectory Gross Margin % 20.0% Significant work has been undertaken to build margins; 18.0% reduce costs and enhance market position 16.0% All plants are now profitable at an EBITDA level and business is moving into positive cash flow from 14.0% operations New sales opportunities in r
Slide 21: Summary Profit & Loss
Summary Profit & Loss $’000 2020 2019 • Better yield focusing on product application and Sales 21,038 20,851 asset utilization Cost of sales (17,350) (18,918) Gross profit 3,688 1,932 • Leaner corporate structure and cost discipline Gross Margin % 17.5% 9.3% • Business transformation program complet
Slide 22: Balance Sheet
Balance Sheet $’000 2020 2019 Cash 2,878 2,874 • $2.9m cash on hand Inventories 2,449 2,439 Receivables and other receivables 3,780 3,930 • Borrowings reduced to $0.7m (further Total Current Assets 9,107 9,243 reduced to $0.4m post June 2020) Other assets 23 19 Property, plant and Equipment 1,830 1,
Slide 23: Operating Cashflow
Summary Cash Flow A$ Thousands Operating Cashflow $500.0 • Strong and sustained improvement in 121 Operating Cash Flow $- • Positive operating cash in second half • Cash Flow improvement driven by: -$500.0 Strong cost discipline (772) Stable cost base -$1,000.0 Increased sales (1,107) Improv
Slide 24: Outlook FY21
Outlook FY21 SECOS is committed to reducing Single Use plastics; and in so doing reducing environment contamination as well as marine plastic waste As margins improve and volumes increase, we believe SECOS Group is heading for improved profitability in FY21 The forward pipeline for the Company
Slide 25: Investment Highlights
Investment Highlights • SECOS is benefitting from a global wave of regulatory and consumer pressure to replace single use plastics • Accelerating growth in demand for biopolymers being driven by multiple converging industry drivers — Regulators demanding elimination of single use plastics (latest ex
Slide 26: Disclaimer
Disclaimer This presentation has been prepared by SECOS Group Limited (SECOS). Whilst the information in this presentation has been prepared in good faith and with reasonable care, no representation or warranty, express or implied, is made as to the accuracy or reliability of any statements, estimat
Slide 27: Changing the World of Packaging
Changing the World of Packaging 27 (ASX: SES)