Eurocell Plc · LSE:ECEL
Eurocell — H1 2021 Earnings Presentation
32 slides from Eurocell's earnings presentation, Sep 3, 2021
Slide 1: Eurocell Plc 2021 Half Year Results
EUROCELL PLC 2021 Half Year Results
Slide 2: Agenda and Presenters
Agenda Presenters Business Review Mark Kelly Chief Executive Officer Financial Review Michael Scott Strategy and Outlook Chief Financial Officer 1
Slide 3: Overview
Overview Mark Kelly – Chief Executive Officer Revenue Strong first half £168.1m ▲ 23% H1 2019: £136.3m Strategy delivering Profit before tax Powerful sustainability credentials £14.2m ▲ 37% H1 2019: £10.4m Further increase in full year expectations Net cash (pre-IFRS 16) £1.3m Robust market set to c
Slide 4: Divisional Review: Profiles H1 2021 Performance
Divisional Review Profiles – H1 2021 Performance Profiles Division P&L H1 H1 £m Change 2019 2021 ► Sales up 19% on H1 2019 3rd party revenue 57.6 68.5 ▲ 19% - Includes 6% from selling price increases / surcharge - Driven by trade fabricators focused on RMI market and Vista doors Inter-segmental reve
Slide 5: Profiles: Opportunities to Grow Market Share
Divisional Review Profiles – Opportunities to Grow Market Share Strategic objective to target > 20% share and consolidate position as largest supplier of rigid PVC profile to UK market ► Opportunities to grow market share - Investment in additional capacity coming on line in H2 - Building regulation
Slide 6: Divisional Review: Building Plastics H1 2021 Performance
Divisional Review Building Plastics – H1 2021 Performance Building Plastics Division P&L H1 H1 £m Change 2019 2021 ► Sales up 27% on H1 2019 - Includes 4% from selling price increases / surcharge 3rd party revenue 78.7 99.6 ▲ 27% - Equivalent to 23% on a like-for-like(2) basis - Excellent performanc
Slide 7: Building Plastics: Opportunities to Grow Market Share
Divisional Review Building Plastics – Opportunities to Grow Market Share Strategic objective to target world class operations from 270-300 sites ► Market very fragmented, with >80% served by small independents - No barriers to further consolidation ► Service – be recognised as first for service for
Slide 8: Financial Highlights
Financial Highlights Michael Scott – Chief Financial Officer Revenue Gross margin Profit before tax £168.1m 50.2% £14.2m ▲ 23% H1 2019: £136.3m ▼ 0.9% H1 2019: 51.1% ▲ 37% H1 2019: £10.4m Earnings per share Interim dividend Net cash (pre-IFRS 16) 9.9p 3.2p per share £1.3m ▲ 14% H1 2019: 8.7p H1 2019
Slide 9: Financial Performance: Group Income Statement
Financial Performance Group Income Statement Change v £m H1 2019 H1 2020(1) H1 2021 H1 2019 Revenue 136.3 93.6 168.1 ▲ 23% Gross profit 69.7 43.8 84.4 Gross margin % 51.1% 46.8% 50.2% Overheads (49.8) (41.3) (57.8) ▲ 16% Adjusted EBITDA 19.9 2.5 26.6 ▲ 34% Depreciation and amortisation (8.6) (9.9) (
Slide 10: Sales Performance
Sales Performance Continued Successful Delivery of Commercial Strategies Total Like-for-like(1) sales ▲ 23% 180 sales ▲ 21% 2.7 168.1 170 6.1 165.4 15.5 160 150 £m 7.5 140 136.3 130 120 110 100 H1 2019 Profiles LFL Building Plastics Sales price increase Group LFL New branches and H1 2021 LFL and sur
Slide 11: Gross Margin
Gross Margin Recovering Higher Raw Material Costs 51.1% +0.6% -0.7% -1.2% +0.6% -0.2% 50.2% 90 1.0 84.4 12.8 (1.1) 1.0 1.0 80 69.7 £m 70 60 50 H1 2019 Volume Stock provision Price Recycling New branches H1 2021 ► Volume (▲60bps) ► Price (▼120bps) - Increased production volumes and therefore greater
Slide 12: Overheads
Overheads Impact of Higher Production and Sales Volumes Overheads ▲ 16% 59 2.8 (1.0) 0.9 57.8 57 5.3 55 53 £m 51 49.8 49 47 45 H1 2019 Volume Wage inflation, bonus & Bad debts New branches H1 2021 SBP ► Volume ▲£5.3m ► IFRS 9 bad debts ▼£1.0m - Impact on direct labour and transport of higher product
Slide 13: Capex
Capex Continued Investment in Operating Capacity Total Capital Expenditure (£m) 16.0 15.2 ► H1 2021 capex £7.3m (H1 2019: £8.8m) 13.7 14.0 - Manufacturing capacity expansion c.£2m 12.0 - New warehouse fit-out completion £1m 10.0 8.7 - Other c.£4m 8.0 7.2 7.5 7.3 • Recycling, new and refurbished bran
Slide 14: Working Capital
Key Working Capital Metrics(1)(2) Working Capital Stock Days Debtor Days Good Cash Flow Management June 2020 (1) (2) 79 27 December 2020 (1) (2) 83 32 ► Strong cash flow performance – outflow from working capital £0.9m June 2021 (1) 72 34 ► Stock days at 72 vs 83 at December 2020 - Stocks ▲ £3.1m si
Slide 15: Cash Flow
Net Debt Reconciliation £m Dec 2020 Jun 2021 Change Cash Flow Cash & overdraft 2.6 7.9 5.3 Significant Headroom and Good Liquidity Borrowings (12.5) (6.6) 5.9 Net debt (pre-IFRS 16) (9.9) 1.3 11.2 IFRS 16 leases (48.4) (53.6) (5.2) 28 26.6 (0.9) Net debt (58.3) (52.3) 6.0 (1.5) (1) 24.2 (7.3) 24 20
Slide 16: Capital Allocation
Capital Allocation Strong Balance Sheet 1 2 3 4 Organic Ordinary Selective Efficient growth dividends acquisitions balance sheet ► Capital investment to expand ► Dividend cover of 2x through ► Disciplined approach to ► £75m unsecured sustainable organic capacity the cycle acquisitions RCF, matures i
Slide 17: Financial Summary Including Guidance for 2021
Financial Summary Including Guidance for 2021 2020 2021 Guidance stated post-IFRS 16 Reported Guidance ► Strong H1 financial performance Underlying income statement - Continued success of commercial strategies and high levels of Depreciation and amortisation £19.5m c.£22m demand in the RMI market Fi
Slide 18: Strategy Update
Strategy Update Mark Kelly – Chief Executive Officer Strategic framework: Overall objective to deliver sustainable growth in shareholder value Develop Eurocell brand Leverage vertical integration Drive sustainability ► Refined and updated priorities in 2021 - 5 strategic priorities established in 20
Slide 19: Sustainability Key Performance Indicators
Sustainability Key Performance Indicators KPI 2020 Base Target Link to UN SDGs ► Strong on sustainability as leading UK-based recycler of Environmental – circular economy PVC windows Recycled material used in production % used 25% 1% increase per year ► Commitment to substantial CO2 saved by recycli
Slide 20: Recycling: Carbon and Cost Savings
Recycling Carbon and Cost Savings ► Expanding recycling is at the heart of our sustainability strategy Use of Recycled PVC in Manufacturing - Environmental – carbon savings 30% 28% - Economic – cost of recycled compound < price of virgin 25% 25% 23% - Commercial – leverage sustainability with custom
Slide 21: Outlook
Outlook Strong Market and Opportunities for Growth ► Market dynamics CPA Construction Industry Forecasts 2021-23(1) - Sustained recovery in RMI market Private Housing RMI Growth - New build increasing, supported by high levels of mortgage approvals 16.0% Central scenario 13.9% - Sector close to capa
Slide 22: Summary
Summary Strong first half Strategy delivering Powerful sustainability credentials Further increase in full year expectations Robust market set to continue 21
Slide 23: Appendices
Appendices eurocell. All together better
Slide 24: Investment Case
Investment Case ✓ Clear strategy and priorities ✓ Proven ability to deliver revenue growth ✓ Operational capacity constraints resolved through major investments ✓ Now delivering improving returns ✓ Uniquely differentiated on sustainability through recycling operation ✓ Leading market positions and g
Slide 25: Product Range
Product Range Ranges of window profile and doors Skypod pitched skylights Syncro patio and Aspect bi-fold doors Fascias, soffits and guttering Conservatories and Equinox tiled roofs Traded goods 24
Slide 26: Profiles Division
Profiles Division Use of Recycled PVC in Manufacturing 30% 28% ► Manufactures: 25% 25% 23% - Extruded rigid and foam PVC profiles using virgin PVC compound 20% 17% 17% - Rigid products also include recycled compound 14% 15% ► Recycles: 10% 9% - Factory offcuts (post-industrial) and old windows (post
Slide 27: Building Plastics Division
Building Plastics Division Number of Branches ► Sells: 250 - Range of Eurocell manufactured and branded PVC foam roofline and 208 212 202 206 window fitting / maintenance products 200 190 - Third party manufactured ancillary products: sealants, tools and 159 150 141 rainwater products - Vista doors
Slide 28: Route to Market
Route to Market Third Party Suppliers Recycling: Eurocell Recycle Third Party Suppliers 31,000 tonnes of virgin e.g. compound consumed (1), 12,400 tonnes of recycled • Rainwater products plus 5,600 tonnes of compound consumed • Sealants other raw materials (2) (25% of profile raw material • Tools co
Slide 29: Recycling Inputs and Outputs
Recycling Inputs and Outputs Major Cost and Carbon Savings K tonnes 2019 2020 H1 2021 ► Leading UK-based recycler of PVC windows Inputs – waste recycled - Substantial investments since 2018 (> £10m) Post-consumer 31.4 27.0 20.5 - Keeping pace with sales growth and increasing % Post-industrial 9.9 6.
Slide 30: Group History
Group History Branch expansion Branch expansion Eurocell Building Branch expansion reaches 100 reaches 150 Plastics launched reaches 50 Operational Branch expansion 1st Eurocell Building Plastics reaches 200 Extrusion branch business Rebranding: Primary founded, single brand extruders: Primary Prima
Slide 31: Disclaimer
DISCLAIMER This Presentation may contain forward-looking uncertainties because they relate to events and In no circumstances will the Company be statements that involve substantial risks and depend on circumstances that may or may not responsible for any costs, losses or expenses uncertainties, and
Slide 32: Eurocell: All together better
eurocell All together better