Scales Corp. Ltd. · NZX:SCL
Scales — Investor Presentation (June 2024)
32 slides from Scales's investor presentation, June 2024
Slide 1: Global Proteins Investor Presentation
Global Proteins Investor Presentation June 2024 SCALES CORPORATION LIMITED - Bringing Nutrition to the World
Slide 2: Global Growth Opportunity
Global Growth Opportunity 2 SCALES - GLOBAL PROTEINS INVESTOR PRESENTATION
Slide 3: Global Petfood Market
Global Petfood Market Large and growing market underpinned by powerful global trends 8 US$100B+ MARKET, SUPPORTED BY MACRO TAILWINDS … … THAT IS EXPECTED TO GROW AT 5-6% P.A. OVER THE NEXT 5 YEARS CAGR: 2023-2029 1.50 6.1% 1.45 1.40 LARGE AND GROWING PET POPULATION INCREASING PRICE PREMIUMISATION 5.
Slide 4: Favourable Industry-Specific Factors
Favourable Industry-Specific Factors Resilient consumer market, supported by health trends, increased trade and petfood penetration INCREASING PETFOOD PENETRATION HAS RESILIENT TO RECESSIONS AND DOWNTURNS4 THE HUMAN-ANIMAL BOND1 INCREASED US / CHINA TRADE5 THE POTENTIAL TO PROVIDE SIGNIFICANT ORGANI
Slide 5: Key Markets
Key Markets Developed markets provide significant scale and continued growth from increases in pet population and premiumisation USA WESTERN EUROPE ASIA PACIFIC Dog and cat food retail market value 2023 56.9 29.7 18.4 (US$b) Household dog / cat ownership (%) 44% / 38% 21% / 24% 14% / 9% Premium Dry
Slide 6: Key Markets
Key Markets An opportunity to increase market share exists across all our geographies, adding to the expected organic market growth. USA WESTERN EUROPE ASIA PACIFIC Total meat ingredients 2023 2,995,175 tonnes 1,506,015 tonnes 237,926 tonnes % Meat inclusion of total ingredients volume 28% 24% 8% Me
Slide 7: Petfood Segments
Petfood Segments Growing petfood segments with high levels of protein DRY DOG WET DOG DRY CAT WET CAT SNACKS & TREATS MARKET SIZE (US$B) 42 13 21 20 19 FORECAST MARKET GROWTH 4.7% 4.7% 6.7% 5.2% 5.5% (CAGR: 2023-29) PROTEIN & FAT % 20% 40% 20% 49% 30% IN FINISHED PRODUCT SCALES PROVIDE INGREDIENTS F
Slide 8: Strong Growth Creating Challenges and Opportunities
Strong Growth Creating Challenges and Opportunities 8 SCALES - GLOBAL PROTEINS INVESTOR PRESENTATION
Slide 9: Rapid Growth Causing Challenges for Manufacturers
Rapid Growth Causing Challenges for Manufacturers Petfood manufacturers are investing to meet customer demand and are looking to mitigate supply chain risks INCREASED INVESTMENT2… COMPOUNDS EXISTING PRODUCTION CHALLENGES6… CREATES AN OPPORTUNITY FOR GLOBAL PROTEINS • Procuring raw materials, scarcit
Slide 10: Scales Global Proteins Growth Platform
Scales Global Proteins Growth Platform 10 SCALES - GLOBAL PROTEINS INVESTOR PRESENTATION
Slide 11: A Global Platform
A Global Platform Scales Global Proteins division is strongly positioned to benefit from growing global demand for the reliable supply of diverse proteins. 11 SCALES - GLOBAL PROTEINS INVESTOR PRESENTATION
Slide 12: Scales Petfood Species Breakdown
Scales Petfood Species Breakdown Species diversification is a key focus, with more recent emphasis on our ‘new’ categories Venison Salmon 2% 2% Lamb / Ovine 23% Chicken / Poultry • Salmon is a key opportunity as 1% another high value species • There is an opportunity to leverage our sales channels a
Slide 13: A Global Platform
A Global Platform Deep industry executive experience across Global Proteins, which we are leveraging to develop our sales teams across the division Brett Frankel: President Shelby Foods John Sainsbury: CEO Meateor Group Tim Harty: General Manager Leon Coolen: Managing Director Brett established Shel
Slide 14: Global Proteins Supply Chain
Global Proteins Supply Chain Global procurement strategies, logistics network and integrated customer relationships provide a unique supply chain advantage PRIME CUTS PHARMA – MULTIPLE USES EDIBLE – MULTIPLE USES ABATTOIRS PROCESSING WET PETFOOD BY-PRODUCT FLOW DRY PETFOOD PET TREATS/SNACKS RENDERIN
Slide 15: Market Participants
Market Participants 15 SCALES - GLOBAL PROTEINS INVESTOR PRESENTATION
Slide 16: Our Customers are Large and Growing
Our Customers are Large and Growing We supply 8 of the top 10 largest global petfood brand owner’s – there is further opportunity to support their growth ambitions MARKET SHARE OF THE 10 LARGEST GLOBAL PETFOOD BRAND OWNERS IN THE US8 SCALES GLOBAL CUSTOMER SPREAD (BASED ON VOLUME) 80 75 Other custom
Slide 17: Scales Global Proteins Supplier Network
Scales Global Proteins Supplier Network Our deep local partnerships and supplier relationships provide customer expansion opportunities SUPPLIER DYNAMICS SUPPLIER DYNAMICS • Highly concentrated among large abattoirs • Large abattoirs fragmented by geography and • By-products are not their core busin
Slide 18: Scales Global Proteins Competitors
Scales Global Proteins Competitors Scales are one of the only global providers of offal, MDM, slurries and blends across a range of diverse species DIVERSE SPECIES / PRODUCT OFFER Market specific competitors – either brokers (greater species diversification), or companies that process Global Protein
Slide 19: Our Strategy and Execution
Our Strategy and Execution 19 SCALES - GLOBAL PROTEINS INVESTOR PRESENTATION
Slide 20: Our Strategic Pillars
Our Strategic Pillars Critical factors in becoming a global integrated partner with both our customers and suppliers GLOBAL SUPPLY AND LOGISTICS EXCELLENCE SPECIES AND PRODUCT DIVERSIFICATION • Network design to ensure supply chain excellence and on- • Leverage supply relationships to aggregate prod
Slide 21: A Proven Track Record
A Proven Track Record Almost 30 years of experience providing the platform for recent and future growth 2024 Shelby have commissioned a new 2023 in-plant collection system with a long-term supply agreement with a 2005 New production key supplier Meateor NZ moves facility in Melbourne from toll proce
Slide 22: Financial Performance
Financial Performance 22 SCALES - GLOBAL PROTEINS INVESTOR PRESENTATION
Slide 23: Strong Growth – Global Proteins
Strong Growth – Global Proteins Global Proteins FY23 target of $25 mill EBITDA was achieved in FY21 – target has now been reset to $70 mill in FY27 Increases in volume and demand as 9 key projects underpin this growth across supply chains continue to be disrupted. NZ, Australia, US and Europe. Impro
Slide 24: Financial Performance – Petfood only
Financial Performance – Petfood only Strong unit economics for the Petfood businesses PETFOOD REVENUE (LHS) AND EBITDA (RHS) (NZ$ / KILOGRAM) KEY PERFORMANCE DRIVERS • Increased % processed vs traded product which drives $3.00 $0.40 greater margins $2.56 $0.35 • Shift to higher volume, higher margin
Slide 25: Return on Capital Employed
Return on Capital Employed Above average returns on invested capital GLOBAL PROTEINS ROCE VS COMPARABLE COMPANIES7 GLOBAL PROTEINS ROCE VS. COMPARABLE COMPANIES AND SECTOR MEDIAN (2023) 7 70% 50% 60% 40% 50% 30% 40% 20% 30% 10% 20% 0% 10% -10% 0% 2019 2020 2021 2022 2023 -20% Comparable companies Sc
Slide 26: Outlook
Outlook 26 SCALES - GLOBAL PROTEINS INVESTOR PRESENTATION
Slide 27: Significant Embedded Growth Options
Significant Embedded Growth Options Short-to-medium term growth opportunities that build on our strategic pillars GLOBAL SUPPLY AND LOGISTICS EXCELLENCE SPECIES AND PRODUCT DIVERSIFICATION • Upgrading our technology and systems to provide more • Increased salmon production through our Esro facility.
Slide 28: Sustainability
Sustainability We are committed to improvements across our network, to align with our customers' requirements INITIATIVES PROGRESS GENERAL PLANT UPGRADES General efficiency improvements with the recent development of new plants (both owned and toll) Upgrade of Hastings refrigeration in 2023, allows
Slide 29: Scales Global Proteins Ambition
Scales Global Proteins Ambition Recognised by global petfood brands as the world's leading natural proteins ingredient supplier 29 SCALES - GLOBAL PROTEINS INVESTOR PRESENTATION
Slide 30: Global Proteins: Tipping the Scales
Global Proteins: Tipping the Scales Our track record, strategy and aspirations to increase the shareholding in our joint ventures overtime provides a roadmap for growth Our Global Proteins A proven track-record of Our customers, Our reputation and track Our global footprint, Global Proteins agility
Slide 31: Appendix: References
Appendix: References 31 SCALES - GLOBAL PROTEINS INVESTOR PRESENTATION
Slide 32: References
References 1. Health for Animals: Global State of Pet Care Stats, Facts and Trends (September 2022) https://www.healthforanimals.org/reports/pet-care-report/global-trends-in-the-pet-population/#:~:text=There%20are%20likely%20over%20a,have%20a%20pet%20at%20home. 2. Nestlé: Consumer Analyst Group of N