Slide 1: 2022 Full Year results
2022 Full Year results Enhanced Performance Through Applied Innovation
Slide 2: Cautionary statement
Cautionary statement This presentation, the presentation materials and discussion may contain certain forecasts, projections and forward-looking statements – that is, statements related to future, not past events – in relation to, or in respect of the financial condition, operations or businesses of
Slide 3: Results agenda
Results agenda INTRODUCTION Paul Waterman HIGHLIGHTS & SEGMENT PERFORMANCE Paul Waterman GROUP FINANCIALS Ralph Hewins OUTLOOK & PRIORITIES Paul Waterman QUESTIONS Paul Waterman & Ralph Hewins 3
Slide 4: Highlights
HIGHLIGHTS PAUL WATERMAN, CEO Paul Waterman Ralph Hewins Enhanced Performance Through Applied Innovation
Slide 5: Key messages
Key messages CONTINUING PROFIT RECOVERY; STRATEGIC PROGRESS 1 2 3 4 5 Successful Strong Personal Moved to two Balance sheet Well positioned to Chromium Care & Coatings segments: strengthened make continued divestment performance Performance financial progress Pricing actions Specialties & Net debt/E
Slide 6: Continued focus on safety
Continued focus on safety SAFETY PERFORMANCE HIGHLIGHTS Injuries Recordable Injuries Elementis TRIR TRIR Improved performance ▪ 75% of facilities had no employee recordable injuries in 2022 14 ▪ 8 sites more than 5 years without recordable injuries 12 2 ▪ Introduction of HRP (Hazard Recognition Prog
Slide 7: Continued profit recovery
Continued profit recovery FY2022 FINANCIAL OVERVIEW $m FY 21 FY 22 % Change Sales 709 736 +4% Operating profit* 88 101 +14% Operating margin* 12.4% 13.6% +12bps Profit before tax* 60 81 +36% Diluted EPS* 8.3c 10.9c +31% Net debt 401 367 Net debt / EBITDA 2.6x 2.2x * After adjusting items Financials
Slide 8: Strategic progress
Strategic progress INNOVATION GROWTH EFFICIENCY Record $59m* new 18 new products launched India AP Actives ramping up business won 37% increase in total innovation Record Coatings global key Record savings from continuous sales since 2019 accounts > over $90m revenues improvement program 17 Joint De
Slide 9: Clear ESG progress
Clear ESG progress PROTECT THE ENVIRONMENT FOCUS ON PEOPLE RESPONSIBLE BUSINESS 50% reduction in Scope 1 & 2 since 2019 Employee Value Proposition introduced: New Code of Conduct for ethics & compliance ‘Connect. Grow. Make an Impact’ Scope 3 GHG emissions quantified Global ethics & compliance champ
Slide 10: Protecting the environment
Protecting the environment PROGRESS VS 2030 ENVIRONMENTAL TARGETS REDUCTION 2022 CHANGE VS TARGETS 2019 BASELINE Reduction in GHG Scope 1 + Scope 2 (market-based) emissions -25% -50% Reduction in energy from fuels -20% -4% Reduction in water withdrawn -10% -18% Reduction in waste for third party tre
Slide 11: Becoming a focused Specialty Chemical business
Becoming a focused Specialty Chemical business ELEMENTIS POST CHROMIUM FASTER GROWTH LESS CYCLICAL MORE NATURAL LESS CARBON INTENSIVE Constant currency revenue growth Peak to Trough Earnings Natural Products as a % of Sales GHG Emissions 2017-2022 2017-20221 20222 20223 69% 265kt 6% 5.9x 55% 4% 1.4x
Slide 12: Segment Performance
SEGMENT PERFORMANCE ® INNOVATION | GROWTH EFFICIENCY
Slide 13: Personal Care performance
Personal Care performance RECORD MARGINS AND SALES MOMENTUM FY22 vs FY21 Expanding market % Change share in skin care and AP Actives $m FY 21 FY 22 Constant Currency1 Double digit Sales 175 212 +26% growth in Cosmetics after record FY21 Operating profit* 37 53 +55% Operating margin* 21.0% 25.0% $15m
Slide 14: Personal Care performance
Personal Care performance OUTPERFORMANCE ACROSS RECOVERING END MARKETS COLOUR COSMETICS SKIN CARE AP ACTIVES 140 300 140 ELEMENTIS 130 130 260 120 ELEMENTIS 120 220 110 ELEMENTIS 110 100 180 100 MARKET MARKET 90 90 140 80 MARKET 80 100 70 70 60 60 60 2019 2020 2021 2022 2019 2020 2021 2022 2019 2020
Slide 15: Personal Care performance
Personal Care performance STRONG MOMENTUM, MORE GROWTH TO COME 25 NEW PRODUCT LAUNCHES SINCE 2020 GROWING INNOVATION SALES AND A RECORD NEW BUSINESS PIPELINE Series 1 350 7 Cosmetics 300 250 Series 1 9 200 200 Skin care 180 160 150 140 120 100 100 9 80 AP Actives 60 50 40 20 0 0 2020 2021 2022 2020
Slide 16: Coatings performance
Coatings performance RECORD MARGINS DRIVEN BY IMPROVED PRICE/MIX FY22 vs FY21 Improved price/mix % Change offsetting weak macro environment $m FY21 FY22 Constant currency1 Sales 384 389 +5% Strong growth in Decorative Operating profit* 62 73 +25% $34m of Operating margin* 16.1% 18.8% new business ge
Slide 17: Coatings performance
Coatings performance SHARE GAIN IN NORTH AMERICA DECORATIVE COATINGS GLOBAL SYNERGY EXPANSION SHARE GAIN IN DECORATIVE COATINGS* DELIVERY GOOD GROWTH DESPITE WEAK INDUSTRIAL MARKETS IN CHINA* AMERICAS EUROPE ASIA +16% +[25]% +24% +11% -18% -3% GLOBAL KEY ACCOUNTS* DECO INDUSTRIAL +21% * FY22 vs FY21
Slide 18: Coatings performance
Coatings performance MULTI YEAR PERFORMANCE IMPROVEMENT Adjusted Operating Profit ($M) Margin (%) ACCELERATED INNOVATION 80 20% 73 Revenue from growth platforms +10% y-o-y 70 19% 20% increase in joint product development sales 62 18% 60 52 50 NEW BUSINESS MOMENTUM 16% 16% 41 Expanded sales team deli
Slide 19: Coatings performance
Coatings performance FUTURE GROWTH PLATFORMS UNDERPIN OUR BUSINESS GROWTH PLATFORMS GROWING INNOVATION SALES PIPELINE GROWTH TRIPLED 2019-2022 SALES CAGR High Performance +33% NiSATs Low Temperature +17% Organic Thixotropes +8% Additives for Waterborne Industrial Coatings Performance +6% Hectorite 2
Slide 20: Talc performance
Talc performance EXCEPTIONALLY CHALLENGING MARKET CONDITIONS FY 22 vs H1 21 Significantly % Change weaker demand in key end markets $m FY21 FY22 Constant Currency1 Sales 150 136 +2% Successful price actions offset record cost inflation Operating profit* 14 (0.4) NA Operating margin* 9.3% N/A Good st
Slide 21: Talc performance
Talc performance WEAKENING DEMAND, SOARING COSTS SIGNIFICANT DEMAND HEADWINDS … …SURGING COST INFLATION Russia/Ukraine EUROPEAN ENERGY INFLATION*…. H2 Coatings Weak auto Paper destocking demand strike/demand impact 224% 199% 189% MONTHLY TALC VOLUMES (KT) 23% Q1 22 Q2 22 Q3 22 Q4 22 28000 100 26000
Slide 22: Talc performance
Talc performance FOCUSED PLAN TO RECOVER PROFITABILITY ACTIONS TO DATE ACTIONS IN PROGRESS 2023 OUTLOOK ▪ Multiple pricing actions to ▪ Refocus on higher margin value added ▪ Sequential volumes starting to recover offset cost increases segment on the market ▪ Targeting $5m new business ▪ Implemented
Slide 23: Performance Specialties
Performance Specialties BRINGING TOGETHER COATINGS AND TALC BUSINESSES PRIOR SEGMENTS END MARKETS COATINGS TALC PERSONAL MATERIAL GROWTH CARE OPPORTUNITIES ▪ Attractive end markets shared by both businesses COATINGS ▪ Maximises revenue synergy opportunities ▪ Integrated global sales force CONSTRUCTI
Slide 24: Group Financials
GROUP FINANCIALS RALPH HEWINS, CFO Paul Waterman Ralph Hewins Enhanced Performance Through Applied Innovation
Slide 25: Group revenue
Group revenue STRONG PRICE/MIX DRIVES 10% UNDERLYING GROWTH REVENUE $m Other Asia Coatings +161 736 Talc 709 -39 670 -95 Note: Bridge shown on a continuing operations basis Paul Waterman Ralph Hewins 25
Slide 26: Group operating profit
Group operating profit PRICING ACTIONS MORE THAN OFFSET COST INFLATION ADJUSTED OPERATING PROFIT $m +24 101 88 -6 82 -41 +36 Note: Bridge shown on a continuing operations basis Paul Waterman Ralph Hewins 26
Slide 27: Financial leverage
Financial leverage SUBSTANTIAL DEBT REDUCTION POST CHROMIUM NET DEBT AND LEVERAGE EVOLUTION $m 1 FY18 FY19 FY20 FY21 FY22 FY22 PF 0 ▪ Leverage reduction on track -50 -100 ▪ Refinancing completed - $675m -150 facilities -200 -250 -300 -260 ▪ Debt reduction from Chromium -350 -400 -367 -450 -408 -401
Slide 28: Continued focus on efficiency
Continued focus on efficiency EFFICIENCIES ON TRACK – MORE TO COME $10M COST SAVINGS $10M WORKING CAPITAL REDUCTION SIMPLIFICATION POST CHROMIUM ▪ New India plant lowers costs ▪ 2023 focus - inventory reduction ▪ Elimination of $7m stranded costs ▪ Continuous Improvement programme – Finished goods r
Slide 29: Cash flow
Cash flow NET CASH FLOW AND CHROMIUM EXIT ACCELERATE DELEVERAGING $m FY 21 FY 22 EBITDA 159 173 Change in working capital (32) (59) Capital expenditure (53) (47) Working capital outflow Operating Cash Flow 74 68 Workinginventory capital outflow to increase Pensions - (1) securetocritical service inv
Slide 30: Disciplined capital allocation
Disciplined capital allocation INVEST FOR CAPITAL $40m - $45m capex GROWTH INVESTMENTS Typical returns 20%+ IRR on growth & productivity capex STRONG DEBT Ambition below 1.5x CASH FLOW REDUCTION SHAREHOLDER Look to reinstate dividend later in 2023 RETURNS Paul Waterman Ralph Hewins 30
Slide 31: Outlook & Priorities
OUTLOOK & PRIORITIES PAUL WATERMAN, CEO Paul Waterman Ralph Hewins Enhanced Performance Through Applied Innovation
Slide 32: Strategic priorities
Strategic priorities INNOVATION GROWTH EFFICIENCY Secure $50m of new business $10m cost / $10m working 15 new product launches wins annually capital savings $2m Performance Specialties Drive new products revenue to Deliver Talc profit recovery efficiencies by 2024 17% of sales by 2025 underpinned De
Slide 33: Group: Medium term objectives
Group: Medium term objectives CONTINUED FINANCIAL PROGRESS; COMMITTED TO ACHIEVING 17% MARGIN 2021 2022 OBJECTIVE MARGIN IMPROVEMENT ADJUSTED OPERATING PROFIT MARGIN 12.4% 13.6% 17% CASH CONVERSION 3 OPERATING CASH CONVERSION1, 2 112% 87% > 90% DE-LEVERAGING NET DEBT / EBITDA 2.6x 2.2x < 1.5x 1 Calc
Slide 34: 2023 Outlook
2023 Outlook ON TRACK FOR IMPROVED FULL YEAR FINANCIAL PERFORMANCE & DELEVERAGING 1 2 3 Two strong Continued focus on Good start to 2023 Well positioned to make businesses operational excellence Demand phasing continued financial progress and cash generation Compelling strategy expected to be focuse
Slide 35: Capital Markets Day Q4 2023
Capital Markets Day Q4 2023 UPDATE ON OUR CONTINUING STRATEGIC TRANSFORMATION Q4 | LONDON Paul Waterman President and Chief Executive Officer Ralph Hewins CFO Luc van Ravenstein Senior Vice President, Performance Specialties Stijn Dejonckheere Senior Vice President, Personal Care Joe Lupia Senior Vi
Slide 36: Q&A Thank you
Q&A THANK YOU Paul Waterman Ralph Hewins Enhanced Performance Through Applied Innovation
Slide 37: Appendices
Appendices Enhanced Performance Through Applied Innovation
Slide 38: FY23 Technical Guidance
FY 23 Technical Guidance P&L CASH ▪ Depreciation – $40m - $45m ▪ Net interest c. $20m (of which c.$5m is IFRS 16 related) ▪ Capex $40-45m ▪ Amortisation – c.$15m (of which majority is amortisation of acquired intangibles) ▪ Tax – Adjusted effective rate c.25-26% 38
Slide 39: Adjusting items
Adjusting items $m Expense/(Income) FY 21 FY 22 Talc goodwill impairment $103m Amortisation of intangibles arising on acquisition 16 15 Environmental provisions 5 (4) Environmental provisions lower due to discount rates Business transformation/other 3 5 Impairment (Goodwill/PPE) 52 126 Cash componen
Slide 40: Tax charge
Tax charge $m FY 21 FY 22 Adjusted tax charge 10.9 16.1 Tax charge: adjusting items (10.5) (8.3) FY 23 tax guidance 25-26% Reported tax charge 0.4 7.8 Adjusted tax rate 18.3% 20.0% 40
Slide 41: Chromium performance
Chromium performance STRATEGIC SALE SUCCESSFULLY CONCLUDED FY 22 vs FY 21 % Change High cost inflation in energy and raw materials $m FY 21 FY 22 Constant currency1 Sales 171 185 +8% Cost discipline and pricing actions offset weak markets Operating profit* 19 23 +25% Operating margin* 10.9% 12.5% Sa
Slide 42: Successful divestment of Chromium
Successful divestment of Chromium ▪ Enterprise value of $170m ▪ Total cash proceeds of $119m 1 to reduce debt and strengthen balance sheet resilience ▪ Transaction completes transition of Elementis to a pure Specialty Chemicals company ▪ Reduces exposure to volatile commodity markets ▪ Substantially
Slide 43: Net debt: IFRS16 reconciliation
Net debt: IFRS16 reconciliation 2022 Pre-IFRS 16 Basis Post-IFRS 16 Basis Bank loans and overdraft (421.7) (421.7) Lease liabilities - (36.7) Cash and cash equivalents 54.9 54.9 Net Debt (366.8) (403.5) Adjusted operating profit on total operations 123.7 123.7 Add: Depreciation and amortisation on t