Zotefoams Plc · LSE:ZTF
Zotefoams — FY2018 Earnings Presentation
33 slides from Zotefoams's earnings presentation, Mar 19, 2019
Slide 1: Investing in our Future
Preliminary Results 19 March 2019 Investing in our Future 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: 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 5: Strategy
Strategy We believe our existing strategy “Our ambition is to continues to serve us well and be the world leader continues to enable us to grow in cellular materials strongly technology in our We intend to develop chosen markets” business through sustained high levels of organic growth and through p
Slide 6: Significant financial and strategic progress
Preliminary Results Highlights Significant financial and strategic progress EBITDA1 Adjusted2 profit Full year dividend Gross revenue before tax increased by up 16% up 29% to up 21% 3.2% to to £81.0m £16.66m to £11.1m 6.12p HPP sales up 67% and now represent 27% (2017: 19%) of Group revenue Core AZO
Slide 7: Segment Overview
Segment Overview Revenue by geography Revenue by business unit Polyolefins HPP MEL UK £70.15m 2018 17% 21% Europe 15% 18% Dec 17 N America 2017 ROW £81.04m 30% 37% 26% 36% 2018 vs 2017 Dec 18 - UK up 4% - Europe up 12% - USA up 1% - ROW up 69% - 20,000 40,000 60,000 80,000 £ THOUSANDS Revenue by ind
Slide 8: Financial Review
Financial Review AZOTE® / ZOTEK® / T-FIT® / MuCell® 8
Slide 9: Financial headlines
Financial headlines Group Adjusted Operating Cash Revenue up Operating Flow before 17% in Profit up 22%, working capital constant Adjusted PBT movements up currency up 21% 31% to £17.5m Bank facilities increased approx. GMP-related Adjusted 64%, exceptional EPS up 15% oversubscribed operating item o
Slide 10: Abbreviated income statement
Abbreviated income statement £ million Dec-18 Dec-17 % Change Reported Group revenue 81.04 70.15 16% Gross profit 29.00 25.49 14% Gross profit margin 35.8% 36.3% Adjusted operating profit 11.84 9.70 22% Adjusted profit before tax 11.07 9.14 21% Tax charge 2.00 1.54 30% Adjusted profit after tax 8.90
Slide 11: Abbreviated statement of financial position
Abbreviated statement of financial position £ million Dec-18 Dec-17 % Change Reported Intangible assets 6.52 6.68 (2)% Tangible assets 67.61 54.12 25% Net working capital 32.94 24.01 37% Post-employment benefits (8.08) (6.17) 31% Net debt (12.96) (17.96) (28%) Other (0.95) (1.59) Total net assets 85
Slide 12: Free cash flow and net debt
Free cash flow and net debt £ million Dec-18 Dec-17 £ million Dec-18 Dec-17 Profit before tax 9.86 7.55 Net cash used in investing Depreciation 5.08 3.50 activities (16.09) (11.74) Proceeds of share issue 20.08 0.00 Other 2.54 2.25 Repayment of borrowings (45.06) (1.31) Operating profit before movem
Slide 13: Key performance metrics
Key performance metrics Polyolefin Foams Growth % HPP and MEL Share of Gross Revenue Group Operating Margin % Return on Capital Employed 2017 data as not disclosed at June 2018 AZOTE® / ZOTEK® / T-FIT® / MuCell® 13
Slide 14: Segment headlines
Segment headlines High-Performance MuCell Extrusion Products sales up restructured with 67%, driven by return to growth ZOTEK® PEBA expected in 2019. elastomeric foams Polyolefin Foams Strong IP sales up 8%, development supported by new USA capacity AZOTE® / ZOTEK® / T-FIT® / MuCell® 14
Slide 15: HPP results
HPP results ZOTEK with the added benefits of consistent foaming ® ZOTEK® foams: retaining the attributes of high-performance polymers T-FIT® T-FIT® high-performance insulation Revenue HPP Dec 18 Dec 17 Change £m £m • 67% sales growth (71% constant currency) Segment revenue 22.01 13.15 67% • Footwear
Slide 16: HPP: high-margin growth portfolio
HPP: high-margin growth portfolio ZOTEK® T-FIT® Investment in UK plant to deliver significant uplift on HPP capacity during 2019 Footwear • Significant strategic partnership announced HPP Sales History December 2017 with Nike, exclusive supply • Materials performance extremely well received in certa
Slide 17: Polyolefin Foams results
Polyolefin Foams results AZOTE ® Common polymers made extraordinary by Zotefoams’ unique process, creating premium, durable, consistent materials Polyolefin Dec-18 Dec 17 Change Revenue £m £m Foams • 8% sales value growth (9% constant currency) Segment revenue 57.16 52.82 8% • US capacity came on str
Slide 18: MuCell Extrusion results
MuCell Extrusion results MuCell® MEL Dec 18 Dec 17 Change Revenue £m £m • Equipment revenue £1.05m (2017 £3.26m) with Segment revenue 1.95 4.25 (54%) sales in 2017 benefitting from the shipment of a full extrusion line to a customer in Japan Segment loss pre (1.63) (1.03) (58%) amortisation • Licenc
Slide 19: Global investment strategy
Global investment strategy North America 26% Europe 53% ROW 21% of Revenue of Revenue of Revenue ROW North America capacity capacity development European capacity development 1. Infrastructure & first high- development • Growing capacity pressure line in place 1. Two low-pressure at T-FIT® factory 2
Slide 20: Capacity expansion projects
Capacity expansion projects Everything is on track UK - £12m project • High-temperature low-pressure autoclaves to increase HPP expanding capacity • Building completed and autoclaves installed • Commissioning Q2 2019 • Available Q3 2019 USA - $10m project • 2nd high-pressure autoclave to increase gl
Slide 21: Key message & outlook
Key message & outlook KEY MESSAGES OUTLOOK Significant financial progress Strong start to the year Step-change in HPP, now 27% Zotefoams well positioned for further of Group sales growth following recent investments in products, people and productive All three major capital capacity projects to expa
Slide 22: Appendices
Appendices AZOTE® / ZOTEK® / T-FIT® / MuCell® 22
Slide 23: 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 24: Revenue and profit momentum
Revenue and profit momentum Divisional Revenue Split Group Revenue Autoclave technology Extrusion technology POLYOLEFINS HPP MEL AZOTE® / ZOTEK® / T-FIT® / MuCell® 24
Slide 25: 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 Licencing for spe
Slide 26: Group overview - locations
Group overview - locations MuCell Extrusion HQ Woburn, MA, USA Zotefoams Plc Kunshan ZOTEK licenses MuCell® Croydon UK KingLai Co Ltd. technology to end Block foam main Kunshan, PRC users manufacturing site T-FIT® products manufacturing site Zotefoams Poland, Foam manufacture (from 2020) Zotefoams Z
Slide 27: 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 28: Autoclave foaming process
Autoclave foaming process What sets us apart from competition is a unique, environmentally- friendly process that uses nitrogen gas to produce a range of uniform closed cell crosslinked foams. Stage 1 Stage 2 High quality Impregnation extrusion and and cross- saturation linking of solid polymeric sh
Slide 29: MuCell process technology
MuCell® process technology MuCell® technology produces foam that performs like solid plastic. It creates microbubbles in the centre of plastic extrusions by injecting gas into the melt during manufacture. Lighter Greener Lower cost AZOTE® / ZOTEK® / T-FIT® / MuCell® 29
Slide 30: Major investment history
Major investment** history based on commissioning dates of capacity Pre 2000: Croydon, UK site ‒ 4 large + 1 small high-pressure autoclaves ‒ 2 low-pressure autoclaves, 2 small high-temperature*** low-pressure autoclaves 2001: New site, Kentucky, USA ‒ Buildings, infrastructure, low-pressure autocla
Slide 31: Polymer (LDPE) prices
Polymer (LDPE) prices AZOTE® / ZOTEK® / T-FIT® / MuCell® 31
Slide 32: Market information Shareholder Profile
Market information Shareholder Profile* AZOTE® / ZOTEK® / T-FIT® / MuCell® 32
Slide 33: Board of Directors
Board of Directors Steve Good Non-Executive Chairman Angela Bromfield MBA Non-Executive Director (Chair of the Nominations Committee and a member of the (Chair of the Remuneration Committee and member of the Audit and Remuneration Committee) Nominations Committees) Appointed to the Board in October 2