D&l Industries, Inc. · PSE:DNL
D&l Industries — Q1 2024 Earnings Presentation
31 slides from D&l Industries's earnings presentation, May 8, 2024
Slide 1: D&L Industries Media Presentation for 1Q24
D&L’s expansion site in Batangas, Philippines FILIPINO MANUFACTURING CUSTOMIZED B2B2C SPECIALTY PRODUCTS D&L INDUSTRIES Media Presentation for 1Q24 May 08, 2024
Slide 2: 1Q24 Highlights
1Q24 Highlights 1 1Q24 earnings up 4% YoY to P618 mn with Batangas plant almost breaking even; EBITDA for the period was up 17% YoY to P1.25 bn 2 HMSP margins for the quarter up 4.5 ppts YoY, surpassing pre-pandemic level; HMSP volumes +13% YoY, up for the third consecutive quarter 3 Export sales co
Slide 3: Earnings up 4% YoY as Batangas nears breakeven
Earnings up 4% YoY as Batangas nears breakeven Net Income (Php mn) Net income breakdown Consumer 3,318 Products ODM, 5% 2,643 2,295 Specialty Food Plastics, 34% Ingredients, 36% +4% 594 618 Chemrez Group, 24% FY21 FY22 FY23 1Q23 1Q24 Start of commercial operations of Batangas plant. Incremental expe
Slide 4: Losses from Batangas narrow as operations continue to ramp up
Losses from Batangas narrow as operations continue to ramp up; Plant may breakeven ahead of schedule Quarterly losses from Batangas plant 3Q22 4Q22 1Q23 2Q23 3Q23 4Q23 1Q24 - -16 -50 -100 -101 -111 -150 -132 -132 -152 -200 Pre-operating rental expenses -250 -300 -315 -350 Start of commercial operati
Slide 5: Batangas Plant – D&L's next leg of growth
Batangas Plant – D&L’s next leg of growth 5
Slide 6: Batangas plant has already surpassed its first-year export commitment to PEZA
Batangas plant has already surpassed its first-year* export commitment to PEZA Batangas plant export revenues As of March 2024, D&L’s Batangas plant has already delivered 230% its first-year export commitment to PEZA First-year commitment to PEZA Cumulative export sales as of March 2024 *the first-y
Slide 7: Condensed Income Statement
Condensed Income Statement *number of outstanding shares: 7,142,857,990 7
Slide 8: Sales mix back to pre-pandemic level
Sales mix back to pre-pandemic level REVENUES % share to total group revenues 33% 34% 33% 31% 41% 40% 39% 37% 37% 38% 42% 42% 43% 43% 49% 67% 66% 67% 69% 59% 60% 61% 63% 63% 62% 58% 58% 57% 57% 51% 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 1Q24 High Margin Specialty Produ
Slide 9: HMSP Volume Growth (YoY)
HMSP Volume Growth (YoY) HMSP volumes up YoY for the third consecutive quarter HMSP volume growth (YoY) 40% Confluence of events such as the late 36% passage of the budget, US- China trade war, and spillover of negative consumer sentiment dampened overall volume in 2019 13% 14% 13% 13% 11% Average q
Slide 10: Exports sales contribution approaching record high
Exports sales contribution approaching record high Sharp recovery in exports following a soft FY2023 FY18 FY19 FY20 FY21 FY22 FY23 1Q23 1Q24 EXPORT/ SALES 24% 21% 29% 33% 31% 27% 24% 32% Breakdown of exports Oleochemicals 13.6 33% Food 10.2 51% 9.1 6.3 6.3 +39% 4.7 Specialty Plastics 16% 2.9 Consume
Slide 11: Condensed Statement of Cash Flows
Condensed Statement of Cash Flows FCF remained positive In P mn 1Q24 FY23 EBITDA 1,252 4,415 Interest Received 2 16 Paid taxes 36 (729) Non cash items (138) 48 Change in working 1,770 (1,096) capital Net Operating Cash 2,923 2,654 Flow Capex (232) (1,511) FCF remained positive as Free Cash Flow 2,69
Slide 12: Capex normalizing after the completion of Batangas plant
Capex normalizing after the completion of Batangas plant Capex (P mn)* • Capex peaked in 2022 and started to normalize in 2023 after the completion of the plant • No other major capex requirement in the near-term 3,497 3,179 2,114 1,552 1,441 443 456 300 2017 2018 2019 2020 2021 2022 2023 1Q24 *accr
Slide 13: Pass-through pricing mechanism as natural hedge against volatility
Pass-through pricing mechanism as natural hedge against volatility in forex and commodity prices 20.9% 19.1% 16.8% 18.3% 17.3% 17.1% GP Margin 15.1% 15.7% 14.8% 13.4% 13.9% We expect margins to continue to 12.6% 12.4% 12.0% 10.5% 11.7% 10.8% 9.9% 10.9% 11.4% EBIT Margin improve over time as we furth
Slide 14: Quarterly revenues reflecting movements in commodity prices
Quarterly revenues reflecting movements in commodity prices Evidencing the company’s ability to pass on raw material prices Sales (P mn) 12,329 11,578 9,996 9,582 9,324 8,787 8,832 8,414 8,485 7,627 7,816 7,004 6,901 5,831 5,672 5,745 5,822 4,501 Coconut oil Palm oil 4Q19 1Q20 2Q20 3Q20 4Q20 1Q21 2Q
Slide 15: 1Q24 Group Results
1Q24 Group Results Food Ingredients Oleochemicals & Specialty Consumer D&L Industries - Other Specialty Plastics Products ODM Consolidated Chemicals % change in +13% (11%) +13% (37%) +5% Revenues % change in Net +24% (-9%) +76% (60%) +4% Income* 15
Slide 16: DOE plans to increase Biodiesel blend to 3% (B3) from 2%
DOE plans to increase Biodiesel blend to 3% (B3) from 2% (B2) this year Impact of a higher biodiesel blend Biofuels industry short overview to the industry 2006 – Biofuels law was passed with the intention of a 5% biodiesel blend (B5) Volume 2007 – implementation of 1% blend (B1) Overall industry pr
Slide 17: Asset-Light Model
ASSET-LIGHT MODEL Rental expenses Management and Shared Service Fees (paid to affiliates) (MSSF) D&L provides management and shared services to its subsidiaries and affiliates, including executive management and admin support such as legal, MIS, accounting, human resource, and finance land, faciliti
Slide 18: Balance Sheet remains robust
Balance Sheet remains robust As of end As of end As of end As of end In Pmn In P mn Mar-24 Dec-23 Mar-24 Dec-23 Cash 3,637 2,844 Book Value 21,485 20,868 Current Assets 23,486 22,583 BVPS1 (in P) 3.01 2.92 Debt-to-equity Total Assets 43,148 42,625 0.72x 0.82x (Borrowings/E quity) Return on Borrowing
Slide 19: Capital Structure
Capital Structure Philratings reaffirmed its highest credit rating (PRS Aaa with a stable outlook) on D&L’s maiden bond offering Borrowings (Pmn) Equity (Pmn) Net Gearing 67% 20,868 62% 20,651 21,485 interest 5x 19,105 50% 55% cover P11.9 net 17,764 15,217 16,565 17,112 25% 15,487 17,135 15,496 Bill
Slide 20: Net debt, effective interest rate, and interest cover
Net debt, effective interest rate, and interest cover Interest rate (%) Interest cover (x) 35 7.0% 14.3 30 6.0% 12.0 12.0 11.9 11.9 11.2 25 5.0% 10.0 9.5 9.0 8.6 20 4.0% 6.6 15 3.0% 4.4 4.0 10 3.7 2.0% 2.9 3.0 2.8 2.1 2.2 2.0 2.1 1.9 1.9 1.6 1.6 5 1.2 1.2 1.4 1.4 1.4 1.0% - 4Q16 1Q17 2Q17 3Q17 4Q17
Slide 21: Working Capital Cycle
Working Capital Cycle 16,000 CASH CONVERSION 12,000190 140 161 143 170 INVENTORY 14,000 133 120 10,000150 12,000 127 120 117 111 With the commercial operations 14,590 8,000 130 101 of100 the Batangas plant, the 10,000 101 13,142 110 90 91 company 80 has started ramping 11,823 8,000 6,00090 74 up inv
Slide 22: D&L receives Gawad Yamang Isip Award for Invention from IPOPHL
D&L receives Gawad Yamang Isip Award for Invention from the Intellectual Property Office of the Philippines (IPOPHL) Gawad Yamang Isip (GYI) is the premiere national award for intellectual property (IP) creators and owners whose works helped improve Filipinos’ lives using the IP system. This year’s
Slide 23: Investor Relations
INVESTOR RELATIONS Ownership as of 12-Month Daily Trading Average* March 2024 #55 Public, 27% Lao Family, 73% P44 bn* w US$234k Foreign Ownership as % Ranked 55th of Outstanding Shares among Philippines’ 16 % 14 14 14 14 largest companies 14 14 13 13 14 14 14 13 % % % % % % % % % % % % by market cap
Slide 24: Investor Relations
INVESTOR RELATIONS Return since IPO Price Change Total Return DNL PM +191% +295% PCOMP Index +15% +30% Price as of 05/06: P6.10 Market Cap as of 05/06: P44bn USD 762 mn (USD1:P57.23) Outstanding Shares: 7,142,857,990 DNL +191% DLNDY:US Unsponsored ADR (BNY Mellon & Citi) PCOMP 1ADR = 25 Ordinary +15
Slide 25: Q&A
Q&A 25
Slide 26: Foundation of future growth
Foundation of future growth High value, high margin products: Expansion in export zones & “Pack at source” initiative 26
Slide 27: FIT Expansion
FIT Expansion Natura Aeropack D&L Premium Foods Natura Aeropack 27
Slide 28: CNO & CPO 1-yr Price Chart
CNO & CPO 1-yr Price Chart Track Annotate = News ©, Zoom Last Price IECNOIRDM1 Index (USD) 1400.00 KO1 Comdty (USD) 809.34662 P1500 | la ‘ns P1300 | JY f > 1200 \ Fil Ii’ oe J val aia - p900 p700 Jan Feb Mar Apr May Jun Jul ‘Aug Sep Oct Nov Dec Jan Feb Mar Apr
Slide 29: CNO & CPO 2-yr Price Chart
CNO & CPO 2-yr Price Chart 29
Slide 30: Maiden Bond Offering
MAIDEN BOND OFFERING *Awarded Best New Bond (Philippines) by the Asset Magazine Offer Size Interest Rate Tenor Spread over BVAL Base offer: P3bn (Series A) 2.7885% p.a. 3 years +50 bps Oversubscription option: P2bn (Series B) 3.5962% p.a. 5 years +60 bps Bond Rating PRS Aaa with Stable Outlook Use o
Slide 31: 3yr and 5yr BVAL rates
3yr and 5yr BVAL rates D&L Bond Listing September 2021 31