Zotefoams Plc · LSE:ZTF
Zotefoams — H1 2020 Earnings Presentation
30 slides from Zotefoams's earnings presentation, Aug 11, 2020
Slide 1: Interim results 11 August 2020
1 Interim results 11 August 2020 ZOTEK® AZOTE® MuCell® David Stirling Group CEO Presenters Gary McGrath name Group CFO T-FIT® AZOTE® / ZOTEK® / T-FIT® / MuCell®
Slide 2: Important notice
Important notice By attending the meeting where this presentation is made, or by reading the presentation slides, you agree to be bound by the following limitations: This presentation is being made only in the United Kingdom and this document is being distributed only to and is directed only at pers
Slide 3: Introduction
Introduction AZOTE®® / / ZOTEK AZOTE ZOTEK®® / T-FIT® /®MuCell® ® / T-FIT / MuCell 3
Slide 4: COVID-19
COVID-19 TRADING LIQUIDITY • Q1 – challenging market conditions following • 30 June 2020: slowdown in H2:2019 • Net debt under bank definitions of £35.4m • Q2 – subdued demand, high levels of uncertainty (Dec 19: £30.7m) and rapid response times required • Liquidity headroom of £18.8m (Dec 19: • Eff
Slide 5: Business overview
Business overview EXTRUSION AUTOCLAVE TECHNOLOGY TECHNOLOGY POLYOLEFINS HPP MEL AZOTE® ZOTEK® T-FIT® MuCell® Premium durable foams Lightweight technical foams Technical insulation for industry Innovative and accessible Uniformly dense foam sheets with a Ultra durable, highly heat and A range of bact
Slide 6: Strategy
Strategy “Our ambition is to Zotefoams remains well positioned be the world leader competitively and environmentally. in cellular materials Our core materials offer improved technology in our We intend to develop chosen markets” business through product performance using less sustained high material
Slide 7: Key points on H1:20 trading
Key points on H1:20 trading Gross revenue Gross margin Adjusted1 profit Adjusted1 down 18% to broadly stable at before tax basic EPS £34.6m 34.8% £2.8m 4.73p (30.06.19: 35.5%) (30.06.19: £5.1m) (30.06.19: 8.78p) (30.06.19: £42.3m) • Period severely impacted by the COVID-19 pandemic • Polyolefin sale
Slide 8: Segment overview
Segment overview Six months Revenue by geography Six months to 30 June Revenue by Business Unit to 30 June 2020 UK 18% Europe 27% 15% 25% N America 2019 ROW 35% 25% 27% 28% 35% Product Revenue by industry protection 30% 12 months to Transportation 31 December 19 25% Sports & leisure A well-balanced
Slide 9: Financial review
Financial review AZOTE® / ZOTEK® / T-FIT® / MuCell® 9
Slide 10: Key points on H1:20 financial position
Key points on H1:20 financial position Cash generation - Cash generated from operations £6.0m (30.06.19: £5.2m), before capex, mostly Poland, of £7.4m - Working capital increase of £2.7m includes £2.9m of FX uplift on receivables balance and £6m of inventory build, mostly related to anticipated incr
Slide 11: Abbreviated income statement
Abbreviated income statement £million Jun-20 Jun-19 Change Group revenue 34.63 42.30 (18%) Gross profit 12.04 15.03 (20%) Gross profit margin 34.8% 35.5% Adjusted operating profit 3.26 5.22 (38%) Adjusted profit before tax 2.82 5.07 (44%) Tax expense 0.54 0.83 (35%) Adjusted profit after tax 2.29 4.
Slide 12: Statement of financial position, free cash flow and net debt
Statement of financial position, free cash flow and net debt Statement of financial position Statement of cash flows £million Jun-20 Jun-19 Change £million Jun-20 Jun-19 Intangible assets 6.81 6.50 5% Profit before tax 2.70 4.93 Tangible assets 95.62 80.16 19% Depreciation 3.16 2.87 Net working capi
Slide 13: Business review
Business review AZOTE®® / / ZOTEK AZOTE ZOTEK®® / T-FIT® /®MuCell® ® / T-FIT / MuCell 13
Slide 14: Commercial overview
Commercial overview Markets & programmes • Q1: 2020 saw continuation of subdued demand from 2019 in general with some encouraging signs of improvement in certain segments • COVID-19 effect from late Q1 materially impacted our major volume markets including industrial protection, automotive, aviation
Slide 15: AZOTE Polyolefin Foams results
Polyolefin Foams results ® Common polymers made extraordinary by Zotefoams’ unique AZOTE process, creating premium, durable, consistent materials Revenue Polyolefin June 20 June 19 Change Foams £m £m • Sales down 23% against a strong 2019 Segment revenue 22.0 28.7 (23%) comparative Segment profit 2.0
Slide 16: HPP results
HPP results ® ZOTEK® foams: retaining the attributes of high-performance polymers ZOTEK with the added benefits of consistent foaming T-FIT® T-FIT® high-performance insulation Revenue HPP June 20 June 19 Change £m £m • Sales down 7%, significant growth expected in H2 Segment revenue 11.8 12.7 (7%) •
Slide 17: MuCell Extrusion results
MuCell Extrusion results MuCell® microcellular technology MEL June 20 June 19 Change Revenue & growth £m £m • Equipment sales and related license and royalty Segment revenue 0.9 0.9 2% income • Licensing and royalty growth in line with Segment loss pre (0.6) (1.0) 38% management expectations, equipm
Slide 18: Poland facility: Completing our planned capacity program
Poland facility: Completing our planned capacity program Croydon, UK • +60% Group capacity vs end 2017 • £3.4m capital in H2:2020 to complete Poland • well invested to support growth • capital spend returns to lower levels in line with depreciation North America 28% UK & Europe 45% ROW 27% of Revenu
Slide 19: Key messages & outlook
Key messages & outlook KEY MESSAGES OUTLOOK Effective response to COVID-19 with Visible drivers behind record half good cash and cost management year sales expected H2 Demonstrated our adaptability and General market conditions assumed commercial effectiveness to be subdued but stable Structural gro
Slide 20: Appendices
Appendices AZOTE® / ZOTEK® / T-FIT® / MuCell® 20
Slide 21: Investment case
Investment case Sustained high levels of organic growth with margin enhancement through product mix and operational gearing Flexible core autoclave MuCell optionality: capacity for block investment in foam production customer base (AZOTE® & with long value tail ZOTEK®) Downstream HPP growth rates in
Slide 22: Overview
Overview Organisation Products Founded on innovation Polyolefin stretching back Foams to 1921 Environmentally friendly High- Nitrogen/CO2 A world leader Performance gas foaming in cellular Products processes Barriers materials to entry: technology IP, capital, Technology application licensing for sp
Slide 23: Group overview - locations
Group overview - locations MuCell Extrusion HQ Woburn, MA, USA Zotefoams plc Zotefoams T-FIT licenses MuCell® Croydon UK Material Technology technology to end block foam main (Kunshan) Co. Ltd, users manufacturing site China Zotefoams Poland, T-FIT® products SP z.o.o., Brzeg manufacture Zotefoams In
Slide 24: Main markets & typical applications
Main markets & typical applications Product Transport Industrial Protection AZOTE® ZOTEK® MuCell® AZOTE® ZOTEK® T-FIT® AZOTE® ZOTEK® MuCell® Aircraft seats, seals Seals and gaskets Automotive seals, gaskets Marine hoses and fenders Luxury, fine art and museum Galley areas / window seals Clean room e
Slide 25: Three stage process
Three stage process AZOTE® / ZOTEK® / T-FIT® / MuCell® 25
Slide 26: MuCell process technology
MuCell® process technology MuCell® technology produces foam that performs like solid plastic. It creates micro-bubbles in the centre of plastic extrusions by injecting gas into the melt during manufacture. Lighter Greener Lower cost cost AZOTE® / ZOTEK® / T-FIT® / MuCell® 26
Slide 27: Sustainability
Sustainability Pure Performance Lighter from the outset Durable for a decade Our core AZOTE® and ZOTEK® Our foams are typically 15-20% less A decade ago, one of the largest foams are expanded using pure dense than any competing foam for biotech plants in the world chose T-FIT® nitrogen only. The air
Slide 28: Polymer (LDPE) prices/kg
Polymer (LDPE) prices/kg £ € Polymer (LDPE) prices per Kg (EUR) € 1.50 1.40 € 1.40 1.32 1.31 1.27 € 1.30 1.20 € 1.20 1.27 EUR 1.25 € 1.10 1.11 0.91 € 1.00 1.07 € 0.90 € 0.80 AZOTE® / ZOTEK® / T-FIT® / MuCell® 28
Slide 29: Market information
Market information Share price 354p (05/08/20) Shareholder Profile* Market Main Market Ticker ZTF.L Market cap. £171m Ord. shares in issue 48,621,234 650 3,000 2,500 550 2,000 Traded volume ('000s) Share price (p) 450 1,500 350 1,000 Schroders 11.9% Invesco 8.2% 250 500 Sekisui Alveo 7.9% Canaccord
Slide 30: Board of Directors
Board of Directors Steve Good Non-Executive Chairman Dr Alison Fielding Non-Executive Director (Chair of the Nomination Committee and a member of the Remuneration Committee) (Chair of the Remuneration Committee and member of the Audit and Nomination Committees) Appointed to the Board in October 2014