Synthomer Plc · LSE:SYNT
Synthomer — H1 2022 Earnings Presentation
28 slides from Synthomer's earnings presentation, Aug 2, 2022
Slide 1: Interim Results: Performance ahead of pre pandemic level
INTERIM RESULTS PERFORMANCE AHEAD OF PRE PANDEMIC LEVEL 2nd August 2022 1 | 2022 Interim Results 2 August 2022
Slide 2: Safe harbour statement
Safe harbour statement The information contained in this presentation in relation to Synthomer plc ("Synthomer" or the "Company") and its subsidiaries has been prepared solely for use at this presentation. The presentation is not directed to, or intended for distribution to or use by, any person or
Slide 3: Agenda
Agenda 1 Highlights 2 Financials 3 Greater scale and geographic diversity 4 Summary and Outlook 5 Q&A 3 | 2022 Interim Results 2 August 2022
Slide 4: 1. Highlights
1. Highlights 4 | Synthomer Investor Seminar 2020
Slide 5: Performance ahead of pre pandemic level
Performance ahead of pre pandemic level → EBITDA 78.3% higher compared to pre pandemic 2019 as strategy progresses – Organic growth delivers one third of additional EBITDA EBITDA by Division (1) → Revenue up 8.6% to £1.3bn (2021: £1.2bn, 2019: £0.8bn) → Group EBITDA lower at £173.1m (2021: £322.7m,
Slide 6: Focused capital deployment to drive sustainable and differentiated growth
Focused capital deployment to drive sustainable and differentiated growth → New Adhesive Technologies Division – completed April 2022 – North America now accounts for 27%+ of Group revenues – Improving portfolio adds differentiation and specialisation – Attractive innovative end markets in adhesives
Slide 7: 2 Financials
2 Financials 7 | 2022 Interim Results 2 August 2022
Slide 8: Growth in all businesses with exception of NBR
Growth in all businesses with exception of NBR → EBITDA performance materially ahead of 2019 and 2020 Group EBITDA Bridge (£m) CY vs PY – 2019 - £99.7m, 2020 - £100.2m, 2021 - £322.7m 100.2 322.7 (181.6) +10.7 +3.9 +0.1 +18.3 (0.6) (0.4) 173.1 → Strong growth across all divisions, other than PE whic
Slide 9: PE: Destocking in NBR and good progress in SBR
PE: Destocking in NBR and good progress in SBR “Following exceptional pandemic trading in NBR market destocking underway with lower utilisation seen in 2022” → EBITDA down 81% at £41.8m (2019 £53.5m) – NBR – exceptional COVID-19 demand in H1 21 % Constant Underlying H1 2022 H1 2022 % Change – SBR Eu
Slide 10: FS: Strong progress as benefits of scale, geographic diversity and improved mix emerge
FS: Strong progress as benefits of scale, geographic diversity and improved mix emerge “FS EBITDA benefited from strong demand across attractive end markets, with improved mix and revenue synergies from the OMNOVA acquisition being delivered" → EBITDA up 15% to £80.6m % Constant – Strong performance
Slide 11: Adhesive Technologies (AT): Encouraging first quarter in line with expectations
Adhesive Technologies (AT): Encouraging first quarter in line with expectations “Solid first quarter, integration well under way with clear synergy plan in focus" → EBITDA at £18.3m – Solid performance across all our end markets Underlying H1 2022 – Early actions taken using the proven integration t
Slide 12: IS: Another strong EBITDA performance from portfolio of specialities
IS: Another strong EBITDA performance from portfolio of specialities “EBITDA performance based on strong end markets, improved mix and margin management” → EBITDA up 16% at £29.3m % Constant – Businesses and end markets continuing to benefit from solid Underlying H1 2022 H1 2021 % Change FX demand V
Slide 13: AM: Further progress on exceptional 2021 as favourable market conditions maintained
AM: Further progress on exceptional 2021 as favourable market conditions maintained “Tight European supply resulted in top of cycle market conditions and expanded margins” → EBITDA up 1% at £14.3m % Constant – High demand combined with ongoing tight market supply persisted in H1 Underlying H1 2022 H
Slide 14: Focused capital deployment supporting growth
Focused capital deployment supporting growth → Working capital: – Significant raw material price rises continued into H1 2022 – Higher WC mitigates supply chain disruption 173.1 (0.6) (128.0) (33.2) (13.9) (49.3) (11.5) +1.4 (62.0) – WC/revenue ratio for legacy Synthomer June 2022 marginally higher
Slide 15: Balance sheet post Adhesive Technologies acquisition
Balance sheet post Adhesive Technologies acquisition → Net debt leverage ratio 2.3x, with net debt @ £993m £m H1 2022 H1 2021 → An increase of £879m from December 2021, from – Accretive acquisition of Adhesive Technologies Opening net debt (114.2) (462.2) – Free cash outflow—working capital investme
Slide 16: 3 Greater scale and geographic diversity
3 Greater scale and geographic diversity 16 | 2022 Interim Results 2 August 2022
Slide 17: Synthomer has greater scale and differentiation
Synthomer has greater scale and differentiation “20% EBITDA CAGR from 2019 to 2022” → Following major acquisitions in 2020 and 2022 and strategic transformation in past 10 years Synthomer now has 99.7 +34.2 +18.3 +25.6 (4.7) 173.1 – Critical mass and leading positions in attractive end markets – A P
Slide 18: Adhesive Technologies first three months in line with expectation
Adhesive Technologies first three months in line with expectation → Integration ahead of schedule Revenue by End-Market* Revenue by Geography* – Financial results in line with investment case – Operational performance in line – rigorous cost management and overdue pricing actions implemented 20% 20%
Slide 19: NBR glove destocking continues whilst glove use increasing
NBR glove destocking continues whilst glove use increasing Challenging market conditions – NBR margins broadly stabilised but volumes remain subdued in line with industry trends due to persistent high inventory levels of medical gloves and additional global glove capacity – Market dynamics being imp
Slide 20: Synthomer has resilience from geographic, product differentiation and end market diversification
Synthomer has resilience from geographic, product differentiation and end market diversification EBITDA by Division (1) - Functional Solutions – exposure to hygiene and sustainability driven applications and energy (oil and gas) - Performance Elastomers – Health and protection end market - Adhesive
Slide 21: Innovation: Creating value with our customers sustainably
Innovation: Creating value with our customers sustainably + = Customer Sustainable Consistent Innovation Collaboration Innovations Driving Organic Growth New and Protected Products (% of sales) FY21A 24% OEKO-TEX Decorative Compliant Laminates FY20A 22% 2021 Innovation FY19A 22% Award FY18A 21% FY17
Slide 22: Synthomer's strategy – where and how we will drive value
Synthomer’s strategy – where and how we will drive value Synthomer is a specialty solutions platform for Coatings & Construction, Adhesives and Health & Protection market segments Organic growth in Rigorous and Operational and Differentiated Diversity, equity & attractive end consistent commercial s
Slide 23: 4 Summary and Outlook
4 Summary and Outlook 23 | 2022 Interim Results 2 August 2022
Slide 24: Summary and Outlook
Summary and Outlook Summary Outlook – Larger scale, differentiated speciality chemicals – Further progress delivered across the portfolio business – NBR destocking continues – Solid H1 performance, pricing power demonstrated – Adhesive Technologies H2 contribution – Adhesive Technologies on track, w
Slide 25: Q&A
5 Q&A
Slide 26: Appendix
5 Appendix
Slide 27: Technical guidance/Key takeaways
Technical guidance/Key takeaways → FX translation exposure – EBITDA impact: H1 2022 Translation H1 2021 H1 2022 Currency Movement Currency July 2022 sensitivity £m Average Average EUR €0.01 £0.6m EUR 1.16 1.19 1.18 USD $0.01 £0.2m USD 1.39 1.30 1.20 MYR MYR 0.01 £0.0m MYR 5.70 5.55 5.36 → Tax: – 202
Slide 28: Financing facilities, expiry profile and covenant schedule
Financing facilities, expiry profile and covenant schedule Facilities Available Facilities Expiry Multi-currency revolving facilities €460m July 2024 Term loan $260m July 2024 Term loan facility $300m October 2024 Bond 3 7/8% €520m July 2025 28 | 2022 Interim Results 2 August 2022