Zotefoams Plc · LSE:ZTF
Zotefoams — H1 2023 Earnings Presentation
34 slides from Zotefoams's earnings presentation, Aug 8, 2023
Slide 1: Interim Results
Interim Results 8 August 2023 David Stirling Group CEO Gary McGrath Group CFO
Slide 2: Important notice
Important notice By attending the meeting where this presentation is made, or by reading the Notwithstanding the aforesaid, nothing in this paragraph shall exclude liability for any presentation slides, you agree to be bound by the following limitations: undertaking, representation, warranty or othe
Slide 3: Introduction
Introduction 3
Slide 4: Business overview
Business overview AUTOCLAVE TECHNOLOGY EXTRUSION TECHNOLOGY POLYOLEFIN FOAMS 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 Foams which offer superior technical A ra
Slide 5: Strategy
Strategy “Our ambition is to be the world leader in cellular materials technology in our chosen markets” We focus resources primarily on markets where we are, or have the potential to be, a market leader We deliver stakeholder value by using unique technology to create a portfolio of differentiated
Slide 6: Results highlights
Results highlights • Group revenue of £64.6m, 9% higher year-on-year (HY 2022: £59.0m) Gross revenue up 9% to £64.6m – High-Performance Products (HPP) sales up 11% to £26.4m (HY 2022: £23.7m) (HY22: £59.0m) – Polyolefin Foams sales up 10% to £37.7m (HY 2022: £34.3m) (CC HY23: £61.3m) • Improved gros
Slide 7: Strategic highlights
Strategic highlights • Margin recovery delivered with realignment of selling prices to input costs after a volatile post-COVID period • Well positioned to benefit from aviation market recovery • Exclusivity agreement with Nike extended to 31 December 2029 • Joint development agreement with a world-l
Slide 8: Segment overview
Segment overview Revenue by business unit Revenue by geography £m HY22 HY23 Revenue by industry Not updated at the half year A well balanced geographical and industrial spread Growth delivered though pricing actions in Polyolefin Foams, volume increases in HPP and FX tailwind. Stable industry split
Slide 9: Financial review
Financial review 9
Slide 10: Abbreviated income statement
Abbreviated income statement £million HY23 HY22 Change Group revenue 64.6 59.0 9% • Revenue up £5.6m, with £3.3m benefit from currency Gross profit 21.2 17.1 24% • Gross profit up £4.1m: Gross profit margin 32.8% 28.9% • full-period impact of price adjustments of 2022 Distribution expenses 4.0 3.7 (
Slide 11: Abbreviated Statement of Financial Position
Abbreviated Statement of Financial Position £million Jun-23 Jun-22 Change Dec-22 Intangible assets 8.0 7.2 12% 7.8 Property, Plant & Equipment 90.5 94.6 (4%) 94.3 Right of use assets 1.5 0.9 56% 0.9 Key observations • Intangible asset growth due to investment in ReZorce Tangible assets 92.0 95.6 (4%
Slide 12: Statement of cash flows
£million Jun-23 Jun-22 Statement of cash flows Profit before tax 7.4 5.7 Depreciation/Amortisation 4.1 3.9 Other 1.2 1.9 O.P. before movements in W/C & Provisions 12.8 11.5 Pension contributions (0.4) (0.4) Movement in receivables (2.8) (9.6) • Good profit performance Movement in inventory (4.0) (1.
Slide 13: Inflation and FX influencers
Inflation and FX influencers Energy (costs) • 3 main sites (Croydon UK, Kentucky USA, Brzeg Poland) • Approx 75% of Group energy consumption is on the UK site • Prices have stabilised and forward purchasing of 2023 energy requirements close to complete • HY23 costs 20% above previous year Foreign Ex
Slide 14: Business review
Business review 14
Slide 15: Polyolefin Foams results
Polyolefin Foams results Common polymers made extraordinary by Zotefoams’ unique process, creating premium, AZOTE® durable, consistent materials Revenue: up 10% (58% of Group sales) Jun 23 Jun 22 Polyolefin Foams £m £m Change • Sales increased by 10% despite a • Selling prices increased to align 5% d
Slide 16: HPP results
HPP results ZOTEK foams: retaining the ZOTEK® attributes of high-performance polymers with the added benefits of consistent foaming T-FIT® T-FIT high-performance insulation Revenue: up 11% (41% of Group sales) Jun 23 Jun 22 HPP Change • Footwear sales up 14% to £22.3m • T-FIT insulation sales increa
Slide 17: MuCell Extrusion (MEL) results
MuCell Extrusion (MEL) results Mucell® Polymer reduction technology ReZorce® technology MuCell Jun 23 Jun 22 MEL Change £m £m • Significant focus on ReZorce, which largely • Resources continue to drives the increase in segment loss in the year, be redeployed from Segment revenue 0.6 1.1 (44)% with £
Slide 18: Sustainability
CeCe Sustainability* foams
Slide 19: Sustainability: Approach and Progress
Sustainability: Approach and Progress Four aspects of our business will enable us to thrive in a lower carbon economy • Our nitrogen-based process • Efficient use of raw material • Our products’ role in avoiding emissions (Scope 3) • New product development (including ReZorce) Focus & Progress • Sus
Slide 20: Circular Packaging
Circular Packaging Positioning • The first fully recyclable beverage carton with performance to match current multi-material solutions • Upto 53% less energy; 51% less water; 50% lower Global Warming Potential 1 • 100% recyclable (up to 100% recycled content2) • Complies with forthcoming legislation
Slide 21: Key messages & outlook
Key messages & outlook KEY MESSAGES: HY 2023 OUTLOOK Strong revenue growth along with margin recovery in Polyolefin The short-term outlook for the remainder of the year is somewhat Foams tempered by market expectations of squeezed consumer spending and industrial deflation, resulting in inventory re
Slide 22: Appendices
Appendices 22
Slide 23: Overview
Overview Founded on innovation AZOTE® stretching back to 1921 Polyolefin Foams Environmentally friendly ZOTEK® Nitrogen/CO2 High- gas foaming Performance processes Barriers to Products entry: IP, MUCELL® capital, Organisation application Technology Products specifications licensing for and supply mi
Slide 24: Investment case
Investment case ReZorce® mono-material barrier packaging has Flexible core potential for a autoclave capacity for transformational block foam sustainability production (AZOTE® & improvement in beverage ZOTEK®) cartons and other packaging platforms Downstream HPP growth rates investments (ZMW, T-FIT
Slide 25: How our business works
How our business works Leveraging our unique technology with an innovation-led portfolio of advanced products Starting with a core process Developing our HPP portfolio to further mix-enrich • Proprietary three-stage process • More global in nature, close and direct collaboration with customers • Mea
Slide 26: Three stage process
) Three stage process 26
Slide 27: MuCell process technology
MuCell® process technology MuCell technology creates revolutionary microcellular materials that perform like a solid plastic for lighter, greener, lower-cost 27
Slide 28: Group locations
Group locations Zotefoams plc Croydon UK Block foam manufacture Zotefoams T-FIT Material Technology (Kunshan) Zotefoams Denmark China MuCell Extrusion T-FIT ® products Stilling HQ & Development Centre MuCell® / ReZorce manufacture Woburn & Leominster,MA, USA Pilot manufacturing Develops & licenses M
Slide 29: Group main sites
Group main sites Croydon, UK: largest site, AZOTE and all Brzeg, Poland: AZOTE foams HPP foams Foam Production: • UK • USA • Poland Walton, KY, USA: AZOTE foams MuCell Extrusion Massachusetts USA Stilling, Denmark ReZorce: pilot line ReZorce: pre-production 29
Slide 30: Main markets & typical applications
Main markets & typical applications Product Protection Transport Industrial AZOTE® ZOTEK® MuCell® AZOTE® ZOTEK® MuCell® AZOTE® ZOTEK® T-FIT® Luxury, fine art and museum Aircraft seats and seals Seals and gaskets Industrial protective and transit Automotive seals and gaskets Marine hoses and fenders
Slide 31: Market information
Market information Source: Factset Source: Company share register 31
Slide 32: Board of Directors
Board of Directors Dr Alison Fielding Non-Executive Director (Chair of the Remuneration Committee and member of the Audit and Nomination Committees) Appointed to the Board in May 2020. Alison is a Non-Executive Director and Chair of the Remuneration Committee at both Nanoco plc and Maven Income and
Slide 33: Five-year trading history - KPIs
Five-year trading history - KPIs 2022 2021 2020 2019 2018 £m £m £m £m £m Group revenue 127.4 100.8 82.7 80.9 81.0 Operating profit (before exceptional item) 13.9 8.1 9.1 9.1 11.6 Profit before tax (before exceptional item) 12.2 7.0 8.3 8.8 10.8 Profit before tax 12.2 7.0 8.3 9.8 9.9 Profit after tax
Slide 34: Optimal material solutions for the benefit of society
Optimal material solutions for the benefit of society 34