Slide 1: Eurocell Plc 2017 Full Year Results
EUROCELL PLC 2017 Full Year Results
Slide 2: Agenda
AGENDA Manufacturer Business Review Mark Kelly Chief Executive Financial Review Distributor Michael Scott Chief Financial Officer Strategy and Outlook Mark Kelly Recycler 1
Slide 3: Overview
OVERVIEW Mark Kelly – Chief Executive Overview Revenue More challenging backdrop and markets Good progress with strategic priorities £224.9m ▲10% (8% excluding acquisitions) Significant investments in business expansion Financial results Good sales growth Adjusted PBT Raw material cost inflation £24
Slide 4: Market Backdrop: Mixed Economic Indicators
MARKET BACKDROP Total Window Units Supplied to Each Sector of the Market (%) Mixed Economic Indicators 15% 14% 7% Driver Description UK GDP has slowed and is forecast to grow by 1.5% in 21% GDP 43% 2018 (2017: 1.8%) Consumer confidence dropped sharply in the aftermath Consumer of the vote to leave t
Slide 5: Market Backdrop: Subdued RMI Market
Private Housing RMI Spend (£bn) 19.4 19.1 MARKET BACKDROP 18.7 18.0 18.3 18.1 17.8 Subdued RMI Market 16.7 17.1 18.0 17.4 15.5 16.9 Gaining share in a flat RMI market '13A '14A '15A '16A '17E '18E '19E Lower scenario Central scenario Upper scenario More challenging backdrop and markets in H2 Number
Slide 6: Profiles – Performance in 2017
DIVISIONAL REVIEW Profiles – Performance in 2017 ► Gaining share – 6% like-for-like(1) growth Profiles Division P&L - More challenging backdrop in H2 £m 2017 2016 Change ► Private new build up > 15% in 2017 3rd Party Revenue 94.2 87.4 ▲8% - Dedicated specification and business development teams Orga
Slide 7: Profiles – Focus for 2018
DIVISIONAL REVIEW Profiles – Focus for 2018 ► Continued focus on specifications Off-site Construction Windows fitted in factory: Eurocell profile and hinge - New build, public sector and commercial work ► Develop stronger partnerships with key customers - Support large fabricator expansion plans ► B
Slide 8: Building Plastics – Performance in 2017
DIVISIONAL REVIEW Building Plastics – Performance in 2017 ► Gaining share – 9% organic growth Building Plastics Division P&L - More challenging backdrop in H2 £m 2017 2016 Change ► Like for like(1) sales up 3% 3rd Party Revenue 130.7 117.5 ▲11% - Driven by maturing branches – opened 2015 and prior O
Slide 9: Building Plastics – Focus for 2018
DIVISIONAL REVIEW Building Plastics – Focus for 2018 Indicative Branch Economics (Rounded) ► 2018 focus on optimising existing estate Branch Open - Historically 2 years to break-even and 4 years to maturity <2 2-4 >4 - 50 branches < 2 years old years years years - Significant improvement in performa
Slide 10: Increasing Recycling Capability
BUSINESS REVIEW Increasing Recycling Capability Use of Recycled PVC in Manufacturing (%) ► Significant increase in resin costs - Up 13% in 2017 and by c.£150/t over last 2 years 20% 17% - Driven by underlying commodity prices and currency 16% 14% - Widening gap of recycled vs virgin compound 12% 9%
Slide 11: Financial Highlights
FINANCIAL HIGHLIGHTS Michael Scott – Chief Financial Officer Revenue Gross Margin Adjusted(2) PBT £224.9m 51.0% £24.5m ▲10% (8% excluding acquisitions) ▼ 1% (2016: 52.0%) ▲ 1% (2016: £24.3m) Adjusted(2) Basic EPS Net Debt Total Dividends 20.4p £14.5m 9.0p per share ▲ 2% (2016: 20.0p) ▼ £5.8m (2016:
Slide 12: Financial Performance: Solid Financial Results
FINANCIAL PERFORMANCE Solid Financial Results £m 2017 2016 Change Revenue 224.9 204.8 p 10% Gross Margin % 51.0% 52.0% Overheads (82.9) (75.2) Adjusted EBITDA(1) 31.7 31.3 p 1% Depreciation and Amortisation (6.7) (6.3) Finance Costs (0.5) (0.7) Adjusted Profit Before Tax(2) 24.5 24.3 p 1% Tax (4.1)
Slide 13: Sales Performance: Good Sales Growth
SALES PERFORMANCE Good Sales Growth 230 Like-for-like(1) 4.8 224.9 225 sales ▲4% 7.0 220 215 4.5 213.1 3.8 £m 210 204.8 205 200 195 190 2016 Building Plastics Profiles L4L Group L4L 2016 / 2017 Acquistions 2017 L4L branches ► Sales ▲ 8% excluding acquisitions ► Building Plastics: ▲ 6% from branches
Slide 14: Gross Margin Performance: Raw Material Cost Inflation
GROSS MARGIN PERFORMANCE Raw Material Cost Inflation 120 118 8.9 (4.3) 1.1 (1.0) 114.6 116 3.3 114 112 0.3% £m 110 (1.1%) 108 106.6 (0.2%) 106 104 102 52.0% 51.0% 100 2016 gross Volume Raw Selling Increased Other 2017 gross margin material prices recycling margin costs ► Raw material cost increases
Slide 15: Overheads: Investment in Business Expansion
OVERHEADS Investment in Business Expansion 84 2.3 Like-for-like(1) 82.9 overheads▲2% 82 3.8 80 78 0.3 £m 1.3 76.8 76 75.2 74 72 70 2016 Wage inflation Other Group L4L 2016 / 2017 Acquistions 2017 branches ► Like-for-like(1) cost increase ▲ 2% ► 49 new branches opened in 2016 / 2017 - Impact of minim
Slide 16: Capex: Investment in Business Expansion
CAPEX Investment in Business Expansion Total Capital Expenditure 8 7.5 7.2 ► 2017 capex £7.5m (2016: £7.2m) 6 6.4 - Growth capex £2.8m 5.1 £m • Increase recycling capacity £0.9m 4 • New branches £1.9m - Recurring / maintenance capex £4.7m 2 • Operations £3.1m includes tooling costs • Other £1.6m inc
Slide 17: Working Capital: Cash Flow Management
WORKING CAPITAL Cash Flow Management Key Working Capital Metrics(1) Stock Debtor Creditor Days Days Days ► Net outflow from working capital £2.6m Dec 2016 58 36 40 - Prior year inflow included stock reduction ▼ £1.6m Dec 2017 55 37 43 ► Stock days at 55 vs 58 at Dec 2016 - Stocks ▲ £2.8m Inventory a
Slide 18: Cash Flow: Robust Cash Flow Conversion
CASH FLOW Reconciliation of Net Debt Robust Cash Flow Conversion £m 2017 2016 Change Cash 11.4 5.5 5.9 Borrowing (25.9) (25.8) (0.1) 35 31.7 2.6 Net Debt (14.5) (20.3) 5.8 5.4 30 (1) 25 23.7 7.5 20 0.4 8.7 £m 15 10 1.3 5.8 5 0 2017 Working Tax and Net Cash Capex Financing Dividends Acquisition Chang
Slide 19: Strategic Priorities
STRATEGIC PRIORITIES Mark Kelly – Chief Executive Clear strategy to create long term value Focus in 2018 Increase use of recycled materials Further investment Expand the branch network Optimise existing estate 5 Target growth in market share No change strategic priorities Develop innovative new prod
Slide 20: Strategic Priorities Progress Report
STRATEGIC PRIORITIES Progress Report STRATEGIC PRIORITIES PROGRESS IN 2017 FOCUS IN 2018 INCREASE USE OF 1st phase of expansion complete – with usage 2nd phase of expansion – increase usage to c.20% RECYCLED MATERIALS increased to 17% (8.3kt) Capex – recycling plant and tooling Waste collect
Slide 21: Summary and Outlook
Manufacturer SUMMARY And Outlook Financial results Good sales growth Raw material cost inflation Distributor Solid profitability and robust cash flow conversion Operational performance Driving growth in new build Investment in new branches Increased use of recycled material Recycler Strategy and out
Slide 22: Appendices
Appendices eurocell: All together better
Slide 23: Product Range
PRODUCT RANGE Ranges of window and door profile Skypod pitched skylights Aspect bi-folding doors Conservatories and Equinox tiled roofs Fascias, soffits and guttering Traded goods 22
Slide 24: Corporate and Operational History
CORPORATE AND OPERATIONAL HISTORY Eurocell Building Branch expansion Branch expansion Branch expansion Plastics launched reaches 50 reaches 100 reaches 150 Operational Branch 1st Eurocell expansion Building Plastics reaches 190 branch Extrusion Rebranding: business single brand founded, Primary Prim
Slide 25: Locations
LOCATIONS Centrally located Extrusion centre Secondary Recycling Warehousing & HQ, Manufacturing, 140,000 sq ft operations (foiling) Factory (Merritt) Conservatory Warehousing, 51 extruders 120,000 sq ft Injection Moulding 10 extruders 75,000 sq ft Roofs and Recycling 12 extruders 260,000 sq ft Inje
Slide 26: Route to Market
ROUTE TO MARKET Recycling: Merritt Plastics 8,300 tonnes of recycled compound consumed (17% of profile raw material consumed) Third Party Suppliers Manufacturing Facilities: Retail Branches: Third Party 35,000 tonnes of virgin Eurocell Profiles Eurocell Building Plastics Suppliers e.g. compound cons
Slide 27: Recycling at Merritt Plastics
RECYCLING AT MERRITT PLASTICS Post-consumer Post-industrial 14,200 tonnes 6,300 tonnes collected and collected and recycled by Merritt recycled by Merritt 8,300 tonnes 4,900 tonnes Recycled recycled compound recycled compound compound used in production of used in trade stock rigid profile extrusion
Slide 28: Eurocell Profiles
EUROCELL PROFILES ► Manufactures: - Extruded rigid and foam PVC profiles - Manufacturing margin recorded in Profiles – benefits from branch expansion ► Sells: - Rigid PVC profiles to a network of > 350 third party fabricators and - Foam PVC profiles to customers through our nationwide branch network
Slide 29: Eurocell Building Plastics
EUROCELL BUILDING PLASTICS ► Sells: - Range of Eurocell manufactured and branded PVC foam roofline products - Vista doors - Third party manufactured ancillary products: sealants, tools and rainwater products - Windows fabricated by third parties using products manufactured by the Profiles Division ►
Slide 30: Disclaimer
DISCLAIMER This Presentation may contain forward-looking statements form of commitment on the part forward-looking statements that involve risks and uncertainties of the Company to proceed with involve substantial risks and because they relate to events and any transaction. uncertainties, and actual
Slide 31: Eurocell
eurocell ® All together better 30