Zotefoams Plc · LSE:ZTF
Zotefoams — H1 2024 Earnings Presentation
31 slides from Zotefoams's earnings presentation, Aug 6, 2024
Slide 1: H1 2024 Interim Update
H1 2024 Interim Update Ronan Cox, Group CEO Gary McGrath, Group CFO 06 AUGUST 2024 H1 2024 INTERIM UPDATE
Slide 2: Important Information
Important No representation or warranty, expressed or implied, is made or given by or on behalf of Zotefoams plc (“Zotefoams”, the “Company” or the “Group”) or any of its Directors or any other person as to the accuracy, completeness or fairness of the information contained in this Information prese
Slide 3: Ronan Cox, Group CEO
Ronan Cox Group CEO H1 H1 2024 2024 INTERIM INTERIM UPDATE UPDATE Zotefoams plc 3
Slide 4: Record H1 Performance in Revenue & Profit: Results Highlights
RECORD H1 PERFORMANCE IN REVENUE & PROFIT Results Highlights Record Sales Performance Record Earnings & Improved Margins Group Revenue Gross Margin → 10% to £71.1m → 40 bps to 33.2% High-Performance Products (HPP) revenue Profit Before Tax → 37% to £36.1m → 12% to a record £8.3m (excl. MEL up 12% to
Slide 5: Record H1 Performance in Revenue & Profit: Strategic Highlights
RECORD H1 PERFORMANCE IN REVENUE & PROFIT Strategic Highlights Footwear Investment for growth → Continued strong performance in North America driven by our partnership → Second low-pressure vessel with Nike on track for mid-2025 commissioning ReZorce® Circular Packaging Shincell Global Alliance → Si
Slide 6: H1 Segment Performance
H1 SEGMENT PERFORMANCE High Performance Products Polyolefin Foams £m HY 2024 HY 2023 Change £m HY 2024 HY 2023 Change Revenue 36.1 26.4 +37% Revenue 34.4 37.7 -9% Segment margin 28% 27% +100 bps Segment margin 9% 13% -400 bps Sales Exceed Polyolefin Foams for First Time Mixed Market Demand Condition
Slide 7: High Performance Products
HIGH PERFORMANCE PRODUCTS Revenue Split by Product 1% 5% 8% £m H1 2024 H1 2023 Change Footwear Revenue 36.1 26.4 +37% T-FIT® Insulation Segment margin 28% 27% +100 bps £36.1m ZOTEK® F ZOTEK® N 86% Key Messages → Strong footwear sales helped by tailwinds, → Exclusivity agreement with Design Blue Sale
Slide 8: Polyolefin Foams
POLYOLEFIN FOAMS Revenue Split by Region 4% £m H1 2024 H1 2023 Change Continental Europe Revenue 34.4 37.7 -9% UK 37% 43% Segment margin 9% 13% -400 bps £34.4m USA ROW 16% Key Messages → Mix enrichment continues to be positive in → USA margins to recover as we continue to Mixed Demand Conditions Eur
Slide 9: MEL
MEL Key Messages → Transformative opportunity in consumer → £2.2m (HY23: £2.0m) operational loss packaging: fully recyclable and circular → £2.6m of capitalised investment (HY23: £1.0m) Attracting Investing Partners alternative to liquid paperboard → Strategic positioning: potential to position → 1%
Slide 10: Gary McGrath, Group CFO
Gary McGrath Group CFO H1 H12024 2024INTERIM INTERIMUPDATE UPDATE Zotefoams plc 10
Slide 11: H1 Key Financials
H1 KEY FINANCIALS Group Revenue Gross Margin Operating Profit £71.1m 33.2% £9.7m up 10% up 40bps up 14% HY23: £64.6m HY23: 32.8% HY23: £8.5m Profit Before Tax EPS Interim Dividend £8.3m 12.89p 2.38p up 12% up 12% up 4.4% HY23: £7.4m HY23: 11.53p HY23: 2.28p Given immateriality, an adjustment for amo
Slide 12: H1 Key Financials
H1 KEY FINANCIALS Operating Performance Interest & Tax Business Unit Performance £m HY24 HY23 Change £m HY24 HY23 Change £m HY24 HY23 Change Operating profit – Foams 11.8 10.5 13% Group revenue 71.1 64.6 10% Interest charge (1.4) (1.1) (29%) Operating loss – MEL (2.2) (2.0) (10%) Gross profit 23.6 2
Slide 13: H1 Key Financials
H1 KEY FINANCIALS EBITDA1 Capital Expenditure Working Capital Movement £14.6m £8.1m £5.9m up 8% up 3x down 9% HY23 : £13.5m HY23: £2.6m HY23: £6.5m Final Dividend Net Debt2 as at 30.06.24 Leverage on a rolling 12-month basis £2.4m £35.1m 1.4 up 6% up 31% up 27% 31.12.23: £30.2m 31.12.23: 1.2 HY23: £
Slide 14: H1 Key Financials: Capital Expenditure
H1 KEY FINANCIALS Capital Expenditure (£m) ReZorce LP2 Shincell Other Total Intangible 1.8 Intangible Intangible Intangible 0.2 Intangible 2.0 Right of Use Right of Use Right of Use 0.7 Right of Use Right of Use 0.7 Tangible 0.8 Tangible 1.9 Tangible Tangible 2.7 Tangible 5.4 Total 2.6 Total 1.9 Tot
Slide 15: Movement in Net Debt During the Period
H1 KEY FINANCIALS Movement in Net Debt During the Period £m 2.3 44.6 7.1 2.4 1.1 0.6 35.1 31.6 30.2 0.8 (1.3) Net debt Leases Net debt Free cash flow Dividend Tax Shincell first Net debt Shincell Other leases Net debt (IFRS) 1.1.24 payment 30.6.24 Liability (IFRS) 1.1.24 30.6.24 Key Messages → Ex IF
Slide 16: Free Cash Flow and Net Debt Movement
H1 KEY FINANCIALS Free Cash Flow Net Cash Used from Financing Activities £m Jun-24 Jun-23 £m Jun-24 Jun-23 Profit before tax 8.3 7.4 c/fwd (0.8) 2.3 Depreciation/Amortisation 4.2 4.1 Tax paid (1.1) (0.9) Finance costs 1.4 1.1 Lease payments (1.0) (0.4) Other 0.9 0.2 Dividend paid (2.4) (2.2) Op prof
Slide 17: Ronan Cox, Group CEO
Ronan Cox Group CEO H1 H12024 2024INTERIM INTERIMUPDATE UPDATE Zotefoams plc 17
Slide 18: Staying True to Zotefoams DNA
STAYING TRUE TO ZOTEFOAMS DNA Robust People Sustainable Innovation Foundations Many talented STEM Production techniques Built on process and Strong IP around a unique employees have laid the offer cleanest foam product innovation technology that has been foundations of the foam solutions in industry
Slide 19: First Impressions
FIRST IMPRESSIONS Market Leader Longstanding Access to High In cross-linked Relationships Growth Markets microcellular super Provides a platform Opportunities for critical foams in for growth, win with business expansion EMEA and NA the winners with a right to win Chemical Flexibility Attractive Val
Slide 20: Key Reflections
KEY REFLECTIONS Visited all main sites and met customers representing > 80% of existing revenue → Our closed cell low-density foams are regarded by many as the best on the market → Have a right to win in several markets if we have the courage to move along the value chain → Emerging technology oppor
Slide 21: Key Priorities
KEY PRIORITIES Commercial Global ReZorce® Circular Transformation Leverage Packaging Pivot from product to Enhance existing Deliver the best 1.5l customer and market. footprint with carton product and get Go deep in c5-6 key operational leverage an investor on board to markets and decentralisation a
Slide 22: H1 2024 Summary
H1 2024 SUMMARY Record first half performance ReZorce Circular Packaging → Revenue up 10% to £71.1m → Refresco announced as joint development partner & preparing for in market trials in → Profit before tax up 12% to £8.3m Western Europe → May media event generated significant industry interest globa
Slide 23: Full Year Outlook
FULL YEAR OUTLOOK Confident in full year Momentum growing in ReZorce performance → Bold development targets with the aim of → Entering second half with positive bringing onboard investing partners momentum → Expected to be in line with market expectations Footwear demand expected Building & executin
Slide 24: Appendices
Appendices H1 2024 INTERIM UPDATE Zotefoams plc 24
Slide 25: Balance Sheet and Cash Flow
BALANCE SHEET AND CASH FLOW Balance Sheet Cash Flow £m Jun-24 Jun-23 Change Dec-23 £m Jun-24 Jun-23 Intangible assets 11.1 8.0 39% 9.4 Profit before tax 8.3 7.4 Property, Plant & Equipment 93.3 90.5 3% 91.7 Depreciation/Amortisation 4.2 4.1 Right of use assets 9.9 1.5 - 1.3 Finance costs 1.4 1.1 Tan
Slide 26: Five-Year Trading History
FIVE-YEAR TRADING HISTORY Revenue & Profit Capital Expenditure & Cash Generation £m 12.8 12.2 £m 2023 2022 2021 2020 2019 9.8 8.3 Capital expenditure 8.5 7.0 7.0 12.7 24.4 7.0 (including intangibles) 127.4 127.0 100.8 Cash generated from operations 12.1 23.0 12.2 13.0 11.8 80.9 82.7 2019 2020 2021 2
Slide 27: How Our Unique Foams Business Works
HOW OUR UNIQUE FOAMS BUSINESS WORKS Starting with a core process Developing HPP portfolio to further mix-enrich → Proprietary three-stage process → More global in nature, close and direct collaboration with → Meaningful and sustainable competitive advantage customers → High investment levels deliver
Slide 28: Business Overview
BUSINESS OVERVIEW POLYOLEFIN FOAMS HPP MEL AZOTE® ZOTEK® T-FIT® ReZorce® Premium durable foams Lightweight technical foams Technical insulation for industry Based on MuCell® innovative technology for greener, lower cost Uniformly dense foam sheets with a Foams which offer superior technical A range
Slide 29: Three Stage Process
THREE STAGE PROCESS Polymer Granules Feed STAGE 1 EXTRUSION cutting STAGE 2 NITROGEN SATURATION STAGE 3 EXPANSION At the heart of what we do is a unique, environmentally friendly three-stage process that uses nitrogen gas to produce a range of premium & high-performance closed cell, cross-linked foa
Slide 30: Group Main Sites & Locations
GROUP MAIN SITES & LOCATIONS ZOTEFOAMS plc Croydon UK Block foam manufacture AZOTE® and ZOTEK® foams Factory / plant ZOTEFOAMS T-FIT Material Technology Sales Office MuCell Extrusion (Kunshan) China HQ & Development Centre T-FIT ® products Leominster, MA, USA manufacture AZOTE® Develops & licenses M
Slide 31: Key Markets & Typical Applications
KEY MARKETS & TYPICAL APPLICATIONS Product Protection Transport Industrial › Luxury, fine art and museum › Aircraft seats and seals › Seals and gaskets › Industrial protective and transit › Automotive seals and gaskets › Marine hoses and fenders › Aviation & aerospace › Galley areas, window seals, E