Zotefoams Plc · LSE:ZTF
Zotefoams — FY2023 Earnings Presentation
34 slides from Zotefoams's earnings presentation, Mar 19, 2024
Slide 1: Preliminary Results
Preliminary Results 19 March 2024 David Stirling Group CEO Gary McGrath Group CFO
Slide 2: Important notice
Important notice By attending the meeting where this presentation is made, or by reading the Notwithstanding the aforesaid, nothing in this paragraph shall exclude liability for any presentation slides, you agree to be bound by the following limitations: undertaking, representation, warranty or othe
Slide 3: Introduction
Wearing the new Nike Alphafly 3 with ZoomX foam, Kelvin Kiptum set a stunning new men’s marathon world record with a time of 2:00:35. As we pay tribute to Kiptum and his coach Gervais Hakizimana, we celebrate their unwavering dedication to greatness and incredible achievements together. Introduction
Slide 4: Business overview
Business overview AUTOCLAVE TECHNOLOGY EXTRUSION TECHNOLOGY POLYOLEFIN FOAMS HPP MEL AZOTE® ZOTEK® T-FIT® ReZorce® Premium durable foams Lightweight technical foams Technical insulation for industry Based on MuCell® innovative Uniformly dense foam sheets with a Foams which offer superior technical A
Slide 5: Strategy
Strategy Our ambition is to be the world leader in cellular materials technology in our chosen markets We focus resources primarily on markets where we are, or have the potential to be, a market leader We deliver stakeholder value by using unique technology to create a portfolio of differentiated pr
Slide 6: Strategic Metrics
Strategic Metrics 1. Improved product mix: adjusted average selling price during 2023 improved by 2.7% compared with the prior year 2. High-capacity utilisation to optimise the returns from our assets: • asset utilisation in the year improved by 2.6% • adjusted production volumes were 4.3% higher th
Slide 7: Results summary
Results summary Excluding MEL 4 Group 2023 2022 Change 2023 2022 Change Revenue (£m) 125.7 124.6 1% 127.0 127.4 0% Gross profit (£m) 42.6 38.6 10% 41.1 38.7 6% Gross margin (%) 33.9% 31.0% 290 ppt 32.3% 30.4% 190 ppt Adj. operating profit1 (£m) 19.5 15.8 23% 15.4 14.2 8% Revenue flat at Adj. operati
Slide 8: Strategic highlights
Strategic highlights • Two business streams at different stages of development – both performing well • Foams business o Record profit, strongly ahead of previous year o Margin growth through mix enrichment, efficiency and cost control o Exclusivity agreement with Nike extended to December 2029, fir
Slide 9: Segment overview
Segment overview Revenue by business unit Revenue by geography 2022 2023 Revenue by industry A well balanced geographical and industrial spread 9
Slide 10: Financial review
Financial review 10
Slide 11: Abbreviated income statement
£million 2023 2022 Change Abbreviated income statement Group revenue 127.0 127.4 (0%) Gross profit 41.1 38.7 6% Gross profit margin 32.3% 30.4% 190ppt Distribution and Admin (25.9) (24.8) (5%) • Adjusted numbers exclude amortisation of acquired intangibles at MEL of £257k Adjusted operating profit 1
Slide 12: Statement of cash flows
£million Dec-23 Dec-22 Statement of cash flows Profit before tax 12.8 12.2 Depreciation/Amortisation 8.2 8.2 Finance costs 2.3 1.8 Equity-settled share-based payments 1.3 0.8 Net exchange differences (0.7) 0.9 • Good profit performance Other 0.0 0.2 Operating profit before movements in W/C • Signifi
Slide 13: Abbreviated Statement of Financial Position
Abbreviated Statement of Financial Position £million Dec-23 Dec-22 Change Intangible assets 9.4 7.8 21% Tangible assets 93.0 95.2 (2%) Key observations Net working capital 52.0 42.1 23% • Intangible asset net book value is almost entirely MEL-related Net deferred tax liability (4.8) (3.4) (41%) • Ta
Slide 14: Inflation and FX influencers
Inflation and FX influencers Energy & Nitrogen (costs) • 3 main sites (Croydon UK, Kentucky USA, Brzeg Poland) • Approx 75% of Group energy consumption is on the UK site • Prices have become less volatile and forward purchasing of energy requirements has resumed • 2023 prices approx. 8% above previo
Slide 15: Business review
Business review 15
Slide 16: AZOTE Polyolefin Foams results
Polyolefin Foams results Common polymers made extraordinary by Zotefoams’ unique process, creating premium, AZOTE® durable, consistent materials Revenue: down 4% (53% of Group sales) Dec 23 Dec 22 Polyolefin Foams £m £m Change • Sales decreased 4%, with a 7% • Pricing improvements were primarily volu
Slide 17: HPP results
HPP results ZOTEK foams: retaining the ZOTEK® attributes of high-performance polymers with the added benefits of consistent foaming T-FIT® T-FIT high-performance insulation Revenue: up 7% (46% of Group sales) Dec 23 Dec 22 HPP Change • Overall volumes up 12% • T-FIT insulation sales up 1% to £m £m •
Slide 18: MuCell Extrusion (MEL) results
MuCell Extrusion (MEL) results Mucell® Polymer reduction technology ReZorce® barrier packaging Licensing Dec 23 Dec 22 MEL Change £m £m • Preparing for first fill fruit juice cartons on • Limited new activity in the commercial–scale equipment traditional MEL licensing Segment revenue 1.2 2.8 (54%) •
Slide 19: Sustainability
CC® ZOTE nabilityt foams Sustainability
Slide 20: Sustainability: Approach and Progress
Sustainability: Approach and Progress Four aspects of our business will enable us to thrive in a lower carbon economy • Our nitrogen-based process • Efficient use of raw material • Our products’ role in avoiding emissions (Scope 3) • New product development (including ReZorce) Focus & Progress • Sus
Slide 21: Circular Packaging
Circular Packaging Positioning • The first fully recyclable beverage carton with performance to match current multi-material solutions • Up to 53% less energy; 51% less water; 50% lower Global Warming Potential1 • 100% recyclable (up to 100% recycled content2) • Complies with forthcoming legislation
Slide 22: Key messages & outlook
Key messages & outlook KEY MESSAGES: 2023 OUTLOOK • Two business streams at different stages of development, both • Positive start to 2024 with overall sales in excess of previous year’s performing well record first quarter • Foams business: • Expect further growth in HPP linked to in-year footwear
Slide 23: Appendices
Appendices 23
Slide 24: Overview: A world leader in cellular materials technology
Overview Founded on innovation AZOTE® stretching back to 1921 Polyolefin Foams Environmentally friendly ZOTEK® Nitrogen/CO2 High- gas foaming Performance processes Barriers to Products entry: IP, MUCELL® capital, Organisation application Technology Products specifications licensing for and supply mi
Slide 25: Investment case
Investment case Positioning > Growth > Mix > Return + Optionality HPP growth rates significantly above AZOTE® foam, with superior margins Flexible core Well invested. autoclave capacity Growth at for block foam marginal capital production (AZOTE® cost improves & ZOTEK®) ROCE ReZorce® mono- Product s
Slide 26: How our foams business works
How our foams business works Leveraging our unique technology with an innovation-led portfolio of advanced products • Starting with a core process o Proprietary three-stage process o Meaningful and sustainable competitive advantage • Making the best use of our assets o Running full and mix-enriching
Slide 27: Three stage process
) Three stage process 27
Slide 28: MuCell process technology
MuCell® process technology (as used for ReZorce® barrier packaging) MuCell technology creates revolutionary microcellular materials using less material and creating unique performance attributes With a patented process that creates micro- bubbles in the core of plastic parts through gas injection, t
Slide 29: Group main sites & locations
Group main sites & locations Zotefoams plc Croydon UK Block foam manufacture AZOTE® and ZOTEK® foams Zotefoams T-FIT Material Technology Zotefoams Denmark (Kunshan) China MuCell Extrusion Stilling T-FIT ® products MuCell® / ReZorce HQ & Development Centre manufacture Pilot manufacturing Woburn & Leo
Slide 30: Main markets & typical applications
Main markets & typical applications Product Protection Transport Industrial AZOTE® ZOTEK® MuCell® AZOTE® ZOTEK® MuCell® AZOTE® ZOTEK® T-FIT® Luxury, fine art and museum Aircraft seats and seals Seals and gaskets Industrial protective and transit Automotive seals and gaskets Marine hoses and fenders
Slide 31: Market Information and Shareholder Profile
Market Information Share Price 335p (15/03/2024) Shareholder Profile Market Main Market Ticker ZTF.L Market Cap 166.1m Ord. Shares in Issue 48,846,234 430 1400 410 390 1200 Traded Volume (000’s) 370 1000 Share Price (p) 350 800 330 600 310 400 290 270 200 Schroders, 17.18% BGF Investments, 6.62% 250
Slide 32: Board of Directors
Board of Directors Doug Robertson, Senior Independent Director (Chair of the Audit Committee) Appointed to the Board in August 2017. Doug is a Chartered Accountant and was Dr Lynn Drummond, Non-Executive Director/Chair Appointed Chair of Zotefoams Group Finance Director of SIG plc until his retireme
Slide 33: Five-year trading history - KPIs
Five-year trading history - KPIs 2023 2022 2021 2020 2019 £m £m £m £m £m Group revenue 127.0 127.4 100.8 82.7 80.9 Operating profit (excluding exceptional item) 15.1 13.9 8.1 9.1 9.1 Profit before tax (excluding exceptional item) 12.8 12.2 7.0 8.3 8.8 Profit before tax 12.8 12.2 7.0 8.3 9.8 Profit a
Slide 34: Optimal material solutions for the benefit of society
Optimal material solutions for the benefit of society 34