Investor Seminar
FUNCTIONAL SOLUTIONS A KEY GROWTH PLATFORM
18th November 2020
1 | Synthomer Investor Seminar 2020
Investor Seminar
Introducing the presenters
Calum MacLean | Rob Tupker | Marshall Moore | Robin Harrison | Stephen Bennett |
Chief Executive Officer | President - Functional | Chief Technology Officer & | VP Platform Technology & | Chief Financial Officer |
Solutions & Europe | President Americas | External Innovation |
2 | Synthomer Investor Seminar 2020
Investor Seminar
Functional Solutions - A key growth platform
1
2
Welcome and Introduction | Calum MacLean |
Rob Tupker
Functional Solutions a Key Growth Platform Marshall Moore
Robin Harrison
3
4
Funding for Growth | Stephen Bennett |
Summary | Calum MacLean |
5 | Q&A | |
6 | Close | Calum MacLean |
3 | Synthomer Investor Seminar 2020
Investor Seminar
Sustainable growth through strategic focus since 2015
Safety | Organic | Product | ||
Growth | Differentiation | |||
Top quartile | Increased capex | 70% + differentiated | ||
performance - target | achieving Y-O-Y | |||
zero incidents | growth | |||
Manufacturing | Innovation | M&A | ||
Excellence | ||||
Delivering upper | Delivering 20% + | 4 acquisitions | ||
quartile economics | target | completed | ||
4 | Synthomer Investor Seminar 2020
Investor Seminar
Strong progress and positioned for further growth
- Synthomer has delivered strong and consistent growth
- Balanced organic and inorganic strategy CAGR of 13%
- Consistent proven strategy in place
- Growth capex investment programme 2017-19 and Omnova acquisition provides momentum
- Diversified end markets and increasing differentiation prove resiliency of business model during COVID-19 stress test
- Pro forma leverage expected to be ~2x EBITDA by end of 2020
EBITDA (£m)
CAGR 13%
300 | |||||||
272 | |||||||
250 | 232 | ||||||
200 | 176 | 181 | 178 | ||||
160 | |||||||
150 | |||||||
118 | 125 | ||||||
100 | |||||||
50 | |||||||
0 | |||||||
2014 | 2015 | 2016 | 2017 | 2018 | 2019 | 2020 | 2021 |
2020 company guidance provided on the 14th of October 2020 2021 consensus (sourced: Teneo), not a forecast
5 | Synthomer Investor Seminar 2020
Investor Seminar
Resilient business model with catalysts in place to drive growth
Catalysts in place to drive further growth:
- Sustainable water-based solutions provide excellent ESG platform
- OMNOVA cost synergy programme increased to $40m by end 2022
- Slow to recover markets (automotive/ oil & gas) will return in 21/22
- Growth capex investment delivers further Nitrile 60kt in 2021 with Functional Solutions 50kt capacity in 2019 full by 2022
- SBR strategic review largely complete to support 21/22 performance
- On target leverage opens options for accelerated growth
6 | Synthomer Investor Seminar 2020
Investor Seminar
Robust investment case in line with global megatrends
Global, | Growing | Strong | Sustainable | Attractive | ||||||
differentiated | proportion of | Resilient | organic and | and | ||||||
financial | ||||||||||
chemical | speciality | demand | inorganic | responsible | ||||||
metrics | ||||||||||
company | chemicals | growth drivers | operator | |||||||
Accelerating | Demographic & | Climate Change & | Shifting Economic | |
Urbanisation | Social Change | Sustainability | Power | |
7 | Synthomer Investor Seminar 2020
FUNCTIONAL SOLUTIONS
A KEY GROWTH PLATFORM
8 | Synthomer Investor Seminar 2020
Investor Seminar
Functional Solutions - A key growth platform
1
2
3
4
5
Business Background & Overview | |
Omnova, the Perfect Fit | Rob Tupker |
The Case for Growth | |
Innovation | Marshall Moore |
Robin Harrison | |
Summary | Rob Tupker |
9 | Synthomer Investor Seminar 2020
Functional Solutions - A Key Growth Platform
Functional Solutions 2019: £70M EBITDA, 37% of Synthomer
Synthomer 2019 Business Performance
9% | 13% | 50% | |
58% | |||
Volume | EBITDA* | ||
1,466kt | £178M | ||
33% | 37% |
Performance Elastomers | Functional Solutions | Industrial Specialities |
10 | Synthomer Investor Seminar 2020
________________________
*2019 EBITDA after deducting corporate costs
Functional Solutions - A Key Growth Platform
A history of investment and growth, organic and inorganic
2016 | 2019 | 2020 | |||||||
Acquisition of Hexion PAC division | Global FS business | Omnova acquisition | |||||||
- | 30% volume increase for FS | - Launch of global | - | 40% volume increase for FS | |||||
- | Regional and product expansion | Functional Solutions | - | Regional expansion (US, | |||||
- | Re-dispersible powders, first US | Division Jan 1st | China) | ||||||
footprint | - | Increased speciality grades | |||||||
- Increased Oil & Gas presence | |||||||||
2018 EBITDA £64M | 2019 EBITDA £70M | Pro Forma 2020 EBITDA est £95-£100M | |||||||
2011
Polymer Latex acquisition
- Regional expansion
- Improved positioning in Europe and Asia Pacific
2018-2019
Plant Investments
Worms, Germany
- Additional 36kt acrylics dispersions
- Strengthening of specialty business in central Europe Roebuck, USA
- Upgrade and expansion of local capacity (12kt) and capability
11 | Synthomer Investor Seminar 2020
Functional Solutions - A Key Growth Platform
FS now global top 5 supplier with leading positions in EMEA
Rank | ||
Market Position | ||
Key | ||
Points
Plant Network | # Locations |
SYN | |
Key | |
Points |
Global | EMEA | Americas | Asia | ||||||||
SYN: 3rd / FS: Top 5 | SYN: 1st / FS: 2nd | SYN: 5th / FS: Top 10 | SYN: 4th / FS: Mid-tier | ||||||||
▪ FS now Top 5 | ▪ | FS now number two | ▪ | FS NORAM business | ▪ | FS Top 6 among | |||||
supplier globally | in EMEA | tripled with Omnova | global players; many | ||||||||
local and regional | |||||||||||
manufacturers | |||||||||||
SYN: 38 / FS: 18 | SYN: 20 / FS: 8 | SYN: 11 / FS: 6 | SYN: 7 / FS: 4 | ||||||||
▪ | Third largest plant | ▪ | Largest plant network | ▪ | Third largest plant | ▪ | Two Production | ||||
network globally | in EMEA | network in Americas | locations in China | ||||||||
▪ | Plants based in 17 | ▪ | Plants based in 9 | ||||||||
countries | countries | ||||||||||
Top 5 Supplier in an estimated £12B addressable market
12 | Synthomer Investor Seminar 2020
________________________
Sources: Kline, KNG, internal analysis
Functional Solutions - A Key Growth Platform
Applications driven business derived from C2-C4 chemistry
Monomer | Polymer | Application |
▪ | PVAc | ▪ | Wall paint | ||||
C2 | ▪ | Styrene | ▪ | Intumescent | |||
▪ | VACO | ||||||
▪ | Vinyl Acetate | ▪ | Wood glue | ||||
▪ | RDP | ||||||
▪ | Tiles adhesives | ||||||
▪ | Acrylic acid | ▪ | Flooring adhesives | ||||
C3 | ▪ | Butyl acrylate | ▪ | SA | |||
▪ | Tapes | ||||||
▪ | 2-EHA | ▪ | PA | ||||
▪ | MMA | ▪ | Sealants | ||||
Oil & Gas | ▪ | XSBR | ▪ | Waterproofing | |||
▪ | Mortar | ||||||
C4 | |||||||
▪ | Butadiene | ▪ | HSSBR | ||||
▪ | Nonwovens | ||||||
▪ | XNBR | ▪ | Wovens | ||||
Benefits: | Large Buyer, | Broadest | Differentiation through | ||||
Diverse Supply | Water Based | Innovation and | |||||
Base | Dispersion* | Application know how | |||||
portfolio |
- A dispersion is a system in which distributed particles of one material (e.g. a polymer) are dispersed in a continuous phase of another material (e.g. water or solvent)
13 | Synthomer Investor Seminar 2020
Functional Solutions - A Key Growth Platform
FS holds leading positions in a variety of industries
Coatings | Textiles | Construction | Adhesives | Oil & Gas | |||||
Business | 42% | 24% | 17% | 14% | 3% | |||||||||
Volume Split | ||||||||||||||
▪ | Global #5 | ▪ | Global #4 | ▪ | Global #4 | ▪ | Mid-tier | ▪ Global leader in | ||||||
Market | ▪ | #3 in EMEA | ▪ | Leading position in | ▪ | #2 in EMEA | ▪ | Leader in Europe in | specialty drilling and | |||||
Position | ▪ | Global leader in | EMEA | WB specialty tapes | cementing additives | |||||||||
intumescent | and filmic labels | |||||||||||||
▪ | Architectural | ▪ | Insulation systems | ▪ | Repair mortars | ▪ | Packaging & | ▪ | Drilling fluid | |
Main | coatings | ▪ | Deco Laminates | ▪ | Ceramic tile | specialty tapes | additives | |||
▪ | Wood trim | ▪ | Disposables (e.g., | adhesives | ▪ | Paper & filmic labels | ▪ | Cement | ||
Applications | ||||||||||
▪ | Intumescent | diapers) | ▪ | Waterproofing | ▪ | Contact adhesives | enhancement | |||
membranes | ▪ | Can sealings | additives |
14 | Synthomer Investor Seminar 2020
Functional Solutions - A Key Growth Platform
FS serves a variety of diversified consumer end markets
Construction & | Food & Beverage | Home Furnishing | Automotive | Hygiene & | ||||
Home Improvement | Personal Care | |||||||
Architectural | Bottle Labels | Wood Coatings | Underbody | Opacifiers | ||||||||||||||
Coatings | Coatings | |||||||||||||||||
Tile Adhesives | Can Sealings | Wood Adhesives | Liquid Applied | Lamination | ||||||||||||||
Sound Damping | Adhesives | |||||||||||||||||
Construction | Cheese Coatings | Decorative | Automotive Tapes | Diapers | ||||||||||||||
Tapes | Laminates | |||||||||||||||||
Insulation | Sausage | Blackout for | Engine Gaskets | Wipes | ||||||||||||||
Systems | Wrapping | Curtains | ||||||||||||||||
Coatings Construction Adhesives Textiles
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Functional Solutions - A Key Growth Platform
Our products improve the quality of your life
Binding | Bonding | Coating | |||
SYN dispersion | SYN dispersion | ||||
SYN dispersion | supports the | ||||
coated on a | |||||
binds different | bonding of two | ||||
substrate for | |||||
ingredients in end | separate | ||||
protection or | |||||
formulation | substrates to one | ||||
finishing | |||||
another | |||||
Wall Paint | Tile Adhesives | Seed Coatings | ||||||||||||||||||||||||
Waterproofing | Bottle Labels | Sport Surfaces | ||||||||||||||||||||||||
Membrane | ||||||||||||||||||||||||||
Caulk Sealant | Yarn Sizing | |||||||||||||||||||||||||
Glass Fibre | ||||||||||||||||||||||||||
Oil Well | ||||||||||||||||||||||||||
Cementing | ||||||||||||||||||||||||||
Coatings | Construction | Adhesives | Textiles | Oil & Gas | ||||||||||||||||||||||
16 | Synthomer Investor Seminar 2020
Functional Solutions - A Key Growth Platform
FS is a strategic supplier into many well-recognised brands
Synthomer is a key supplier of distribution layer binders to a leading diaper producer
Top 3 supplier to leading paints & coatings producers
Synthomer is the global leading supplier for can sealings, serving well-known brands in the industry
Hydro Pliolite -
the 'Intel Inside®'
equivalent in the chemical industry
Strategic supplier to global customers with top consumer brands
Close collaboration in innovation, supply chain and branding
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Functional Solutions - A Key Growth Platform
Blue chip customer base with long term relationships
3,000+ | ||||||||||
2.5% | 20% | 15 years | ||||||||
customers | of sales from largest customer | of sales from top 20 customers | average length of relationship | |||||||
Coatings | Construction | Oil & Gas | ||||||||
Adhesives | Textiles |
18 | Synthomer Investor Seminar 2020
Functional Solutions - A Key Growth Platform
FS in times of Covid: Passing the ultimate resilience test
→ Diversified end markets and differentiation help mitigate most of COVID-19 impact
→ Robust network of sites, strong Covid protocols and supplier management has ensured and today ensures continuity of supply
→ FS geographic, chemistry and end market diversification means:
- Most end markets bounced back rapidly in Q3, Q4 holding up to datefrom Impact COVID
- Coatings benefitting from enduring DIY surge
- Automotive and Oil & Gas hit hardest with Automotive recovering through Q3
- Oil & Gas drilling will remain sluggish with gradual improvement through 2021
80% of Functional Solutions Revenues
on Resilient side of spectrum
Least Impacted by Covid
Nonwovens
Adhesives & sealants
Construction
Paints & coatings
Textiles
Leather
Automotive
Oil & Gas
Most Impacted by Covid
19 | Synthomer Investor Seminar 2020
OMNOVA THE PERFECT FIT
20 | Synthomer Investor Seminar 2020
Omnova The Perfect Fit
Strong strategic fit between heritage Synthomer and Omnova
Synthomer | Omnova | |||||
Key Activities | Key Activities | |||||
Coatings | Coatings | |||||
Functional | Adhesives | Adhesives | CAST | |||
Solutions | ||||||
Textiles | Textiles & Surface Treatments | |||||
Construction | Oil & Gas | |||||
11 (incl. 6 OMN) Technical | 3,000 (incl. 700 OMN) | ||
18 (incl. 7 OMN) Plants in 10 | Centres & 240 (incl. 80 OMN) | Customers | 900 (incl. 300 OMN) |
Countries | Technical Staff | 100+ Countries served | Products |
21 | Synthomer Investor Seminar 2020
Omnova The Perfect Fit
Becoming a true global player in water based dispersions
EMEA | ||
23% | ||
Americas | 62% of | |
Total FS | ||
31% | Sales | |
23% of | 77% | |
Total FS | ||
Sales | SYN | OMN |
69%
SYN OMN
- Significantly improved presence in US
- Manufacturing assets in China
FS within Synthomer | ||||
100% | ||||
APAC | ||||
22% | ||||
15% of | ||||
Total FS | (%) | |||
Sales | 50% | |||
Sales | ||||
78% | ||||
SYN | OMN | |||
0% | ||||
Americas | EMEA | APAC | ||
SYN Other | FS |
22 | Synthomer Investor Seminar 2020
________________________
Base year 2019
Omnova The Perfect Fit
FS - Oil & Gas a global leader in drilling and cementing niche
Drilling Fluid | Cement Advancement | |
Additives | Additives | |
Acquisition strengthens position in Energy sector
- 'Oil based economy' will remain in place for many years to come and medium term outlook for drilling remains strong
- Provides platform to expand into adjacencies
Value through Differentiation
PEXOTROLTM - dynamic particles that reduce fluid loss across a wide range of temperature and base oils
PEXOSEALTM - special deformable microparticles that seal off depleted formations under high differential pressures
VERIFLEXTM - flexible copolymer powders enhance set cement mechanical properties in a life of well cement design
VERILOKTM - additives deliver gas migration control, bonding, and low fluid loss values sustaining low viscosity
- Preferred additives for the most challenging environments:
- Offshore
- High-Temperature,High-Pressure
- High Differential Pressures
- Tier I supplier to major service companies
Global leader in specialty polymeric solutions that promote wellbore stability, overall drilling efficiency and reduce Non- Productive Time
23 | Synthomer Investor Seminar 2020
FUNCTIONAL SOLUTIONS
THE CASE FOR GROWTH
Functional Solutions - The Case for Growth
FS is well positioned to participate in global megatrends
Accelerating | Demographic & | Climate Change & | Shifting Economic | |||||||
Urbanisation | Social Change | Sustainability | Power | |||||||
▪ | Migration from rural areas | ▪ | Aging population | ▪ | Economic centre of gravity | |||||
to cities | ▪ | Growing middle class in | shifting toward Asia | |||||||
▪ | Increase in infra-structure | emerging markets | ||||||||
developments | ||||||||||
▪ | Construction materials | ▪ | Nonwovens for diapers | ▪ | Heat reflection (coatings) | ▪ | Expanding presence in | |||
▪ | Architectural coatings | ▪ | Adhesives & textiles for | and insulation (textiles) | Asia through plant network | |||||
Automotive and Food & | ▪ | Energy savings through | ▪ | Launch of Asia Innovation | ||||||
Beverage | reduced drying time | Centre; develop in Asia for | ||||||||
Asia | ||||||||||
25 | Synthomer Investor Seminar 2020
Functional Solutions - The Case for Growth
Synthomer continues to invest in sustainable solutions
Low VOC & hazardous | Energy saving & | Bio-degradable & | Bio-based material | Circular economy |
substance emission | carbon footprint | compostable material | ||
reduction | ||||
▪ Conversion of solvent | ▪ Products resulting in: | ▪ Degradable materials | ▪ Products wholly or | ▪ Development of |
based to water based | ✓ lower energy | from the action of | partly derived from | material that can be |
products | needs | naturally occurring | biological origin | a recyclable waste |
▪ Further VOC reduction | ✓ reduced steps | micro-organisms | ▪ Manufacturing of | |
▪ Move away from | ✓ higher productivity | ▪ Industrially | material from | |
hazardous substance | at our customers. | compostable products | recycled material |
26 | Synthomer Investor Seminar 2020
________________________
Sources: Morgan Stanley report, internal information
Functional Solutions - The Case for Growth
Regulations support GDP+ growth for water based dispersions
Market Share | SB | |
WB | ||
CAGR 2019-2024 | WB |
SB |
Key Facts | ||||||||
→ Water based outperforming | ||||||||
Solvent based growth | ||||||||
Global | EMEA | Americas | Asia | → Significant Solvent based | ||||
volumes still transitioning | ||||||||
60% | 65% | 65% | 50% | → Strongest growth and | ||||
transition potential in APAC | ||||||||
40% | 35% | 35% | 50% | |||||
→ FS growing at GDP+ rates | ||||||||
4-5% | 2% | 2-3% | 7-8% | |||||
3-4% | 1% | 0-2% | 4-5% | |||||
Regulations and industry trends:
- EU as main driver but other regions picking up
- Synthomer at forefront of regulatory trends
- Alkyl Phenol Ethoxylate (APEO) free
- Formaldehyde free product range
- Enables biocide-free paints
- Low VOC
27 | Synthomer Investor Seminar 2020
________________________
Synthomer driving change toward water-based technology:
Intumescent | Specialty | Wood | ||
Coatings | Tapes | Coatings |
Asphalt/ Road | Anti Corrosion | Trim | ||
Repair | Coatings | Paints |
Sources: Internal analysis, KNG report (2019)
Functional Solutions - The Case for Growth
Revenue synergy potential through complementary offerings
Technology Drivers
Regional Drivers |
Intumescent
Coatings
Specialty
Tapes
Textiles
Oil & Gas
NORAM &
APAC
Synthomer | Omnova | ||||||
▪ | Leader in water-based | ▪ | Leader in solvent-based | ▪ | Leading position globally | ||
technology | technology | ▪ | Ability to guide existing solvent- | ||||
based business to water-based | |||||||
▪ | Leading position in pressure | ▪ | Saturants and release | ▪ | One-stop-shop for all solutions | ||
sensitive adhesives | coatings | needed in tape production | |||||
▪ | Focus on woven, abrasives, | ▪ | Focus on nonwoven, | ▪ | Complementary textiles | ||
and technical fibres | especially hygiene and | business with strong positions | |||||
personal care | in both woven and nonwoven | ||||||
▪ | Small player in ME and | ▪ | Global leader in | ▪ | Strengthen global position, | ||
Europe | dispersions niche | particularly in Middle East | |||||
▪ | Local footprint in ME | ▪ | Footprint in NORAM | ||||
▪ | US: 1 plant, 1 lab | ▪ | US: 5 plants, large R&D | ▪ | Expanded plant network, | ||
▪ | Asia: 4 plants in SEA, 2 | centre | development and applications | ||||
labs | ▪ | Asia: 1 plant in China, 1 lab | in NORAM and APAC | ||||
28 | Synthomer Investor Seminar 2020
DIFFERENTIATION THROUGH INNOVATION
29 | Synthomer Investor Seminar 2020
Differentiation Through Innovation
Continued technology & capability development and acquisition
2016 | 2020 |
Acquisition of Hexion division | Omnova acquisition |
Roebuck Technical | Advances Adhesive | Americas Innovation | Mogadore Process | |
Centre | Formulation & Testing | Centre | Technology | |
Redispersible | Polyester Powder | Advanced Materials | Advances Oil Field | ||
Powders | Coatings | Characterisation | Formulation & Testing | ||
2015 | 2017 | 2020 | 2020 |
Harlow Innovation Centre | Micro-biology Lab | Asia Innovation Centre | Biodegradability Testing |
30 | Synthomer Investor Seminar 2020
Differentiation Through Innovation
Enhanced innovation capability and capacity
Before
- 2 competing organizations
- Neither truly global
- Agile innovation models
- Customer intimate
- Resources focused to incremental innovation
Synthomer
Innovation Team
Coatings | Textiles | Adhesives | Construction | ||||
Coatings | Textiles | & Adhesives Release | ||||
& Oil Gas | ||||||
Omnova
Innovation Team
New Combined Organisation | |
→ Single global organization with | |
strengths of both | |
→ 50% more resources to execute the | |
strategy | |
Deliver Innovative | → Truly global footprint |
→ Dedicated team to explore new | |
Solutions Ahead of | |
Changing Market | technologies |
Demand | → Best practices in IP management, |
advanced material characterization, | |
microbiology, toxicology, and | |
multiple specialty applications. | |
→ New leadership to pursue | |
sustainable innovation goals |
31 | Synthomer Investor Seminar 2020
Differentiation Through Innovation
Global footprint with 17 technology centres in 9 countries
Accrington, UK | |||
Stallingborough, UK | |||
Auburn, PA | Le Havre, FR | Marl, DE | |
Jeannette, PA | |||
Mogadore, OH | Harlow, UK | ||
Monroe, NC | |||
Akron, US | Villejuste, FR | ||
Chester, SC | |||
Roebuck, SC | |||
St. Albano, IT | Shanghai, CN | ||
Houston, TX | Sintra, PT | Rayong, TH | |
Johor Baru, MY
- State of the art facilities for all technology functions
- Polymer synthesis
- Materials characterisation
- Applications technology
- Technical service
- Production scale-up
- Leveraging and transferring knowledge across regions
- Customer proximity and intimacy
Centre of excellence | Other technical centre |
32 | Synthomer Investor Seminar 2020
Differentiation Through Innovation
Robust innovation framework for market driven innovation
Establishing an ESG governance | |||
framework and Sustainability Goals to | SHE | ||
guide how we innovate and operate. | |||
Sustainability
Occupational safety in our Innovation Centres & Labs.
Responsible Care Management System. |
Designing-in process safety. |
Protecting our proprietary knowledge and maximizing the value capture
from inventions through patents. |
IP &
Knowledge
Management
Innovating new technology platforms to fuel sustainable growth with differentiated products.
Global | ||
Platform | Technology & | Material |
Innovation | ||
Technology & | ||
Characterization | ||
External | ||
Innovation
Product Advanced
Stewardship & Process
Regulatory Innovation
Compliance
Understanding materials at a molecular level to enable smarter product design.
Ensuring that the products we sell are safe and compliant, and guiding inherently safe product design.
Industrializing new innovations and engineering safer, more effective and efficient ways to manufacture our products.
33 | Synthomer Investor Seminar 2020
Differentiation Through Innovation
Effective and efficient delivery of innovation
- Market centric model driven by megatrends
- A well balanced business driven project portfolio
- Focussed and disciplined execution of projects
- Broad technology in polymer and applications
- Well invested and constantly evolving technical capability
- Leveraging knowhow through global R&D
- Platform approach for tailored customer solutions
- Strengthened capability through acquisition
Climate Change & | Demographic & |
Sustainability | Social Change |
Accelerating | Shifting Economic |
Urbanisation | Power |
34 | Synthomer Investor Seminar 2020
Differentiation Through Innovation
Enabling new innovation platforms for growth
Bio-degradable & industrial- compostable material
Bio-based
material
Low VOC & hazardous substance emission
Collaborative
Program
Internally &
Externally
Energy saving & carbon footprint reduction
Circular economy
35 | Synthomer Investor Seminar 2020
Differentiation Through Innovation
Driving change through product innovation
36 | Synthomer Investor Seminar 2020
Differentiation Through Innovation
Hydro PlioliteTM - Thin film intumescent coatings
Key Applications
- Reactive fire protection coatings for structural steel in construction
- Protects people and property by delaying possible structural collapse
Performance benefits
- Provides fire protection by creating a layer of thermal insulation
- Preserves the aesthetics of the steel structure
- Applicable on complex shapes and easily repairable if damage
-
Improved water resistance for durability during construction
Environmental impact - Enables low VOC and low odour coatings systems
- Free of APEO's and other harmful additives
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Differentiation Through Innovation
Litex LB - Binders for automotive battery cells
Key Applications
- Binder for graphite based anode batteries in automotive applications
- Provides key role in cell integrity and lasting performance
Performance benefits
- High adhesion binders to maintain cell integrity during manufacture
- Formulation optimisation to maximise active material density
- Stable electrochemistry through cell discharge/recharge cycles
Environmental impact
- Water based technology to minimise air emissions in application
- Improved air quality through shift from internal combustion to electric vehicle
38 | Synthomer Investor Seminar 2020
Differentiation Through Innovation
A pipeline of innovation for a sustainable future
Low VOC & hazardous | Energy saving & carbon | Bio-degradable & industrial- | Bio-based material | Circular economy |
substance emission | footprint reduction | compostable material | ||
Differentiation Through Innovation
FS innovation delivering differentiated solutions
- Close collaboration with customers who value our partnership & products
- Efficient development of differentiated local solutions delivered on a global basis
- Investment in new platforms to support future growth driven by megatrends
- Omnova acquisition has further strengthened technology and capability
- Excellence in technology & IP management to capture and exploit knowhow
- Proven track record in portfolio management to deliver winning products
40 | Synthomer Investor Seminar 2020
FUNCTIONAL SOLUTIONS
SUMMARY
Functional Solutions - A Key Growth Platform
Summary
01 A global top 5 water based dispersions provider, with regional and
product leadership positions and the ambition to become a top 3 player | |
Resilient performance based on diversified end markets, | 02 |
customer base and products |
03 | Excellent competitive position: broadest portfolio, |
customer intimacy and responsiveness, strong local |
presence and platform driven innovation
Core markets have GDP+ growth based on favourable mega trends, most notably the drive for sustainable solutions, where we have an extensive track record
04
05 Poised for accelerated growth with Omnova fully integrated
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SYNTHOMER
FUNDING FOR GROWTH
43 | Synthomer Investor Seminar 2020
Funding for Growth
Strong and resilient profitability and cash flow generation
Resilient EBITDA and low maintenance capex
EBITDA (£m)
232* | ||||||
160 | 176 | 181 | 178 | |||
118 | 125 | |||||
2014 | 2015 | 2016 | 2017 | 2018 | 2019 | 2020 |
Capex (£m)
76 | 69 | |||||
60 | 54 | |||||
46 | 51 | |||||
48 | ||||||
41 | 31 | |||||
26 | ||||||
22 | 23 | |||||
7 | 4 | |||||
24 | 24 | |||||
15 | 19 | 20 | 20 | 21 | ||
2014 | 2015 | 2016 | 2017 | 2018 | 2019 | 2020 |
SHE & sustenance capex | Growth capex | |
Cash flow generation pre and post growth capex**
FCF Conversion
66% | 69% | |||||
62% | 64% | 63% | ||||
61% | ||||||
57% | 59% | |||||
51% | 50% | 47% | ||||
41% | 42% | |||||
35% | ||||||
2014 | 2015 | 2016 | 2017 | 2018 | 2019 | 2020 |
FCF conversion | FCF conversion pre growth capex |
- High cash conversion underpinned by low capex
- Continued robust free cash flow generation despite challenging sector backdrop
44 | Synthomer Investor Seminar 2020
________________________
Source: Company information, annual reports; *2020 EBITDA consensus (source: Teneo), **FCF conversion defined as FCF (excluding WC movements and growth capex) over EBITDA
Funding for Growth
Strong cash flow expected 2020F - indicative 2.0x leverage
Free cash flow - 2020 | EBITDA to FCF Reconciliation (£m) |
- EBITDA growth ~ EBITDA at £232m (2019: £178m)
- Capex ~ £54m (2019: £69m)
- Interest ~ £30m ~ 50% cash cost 2020
- Tax ~ 22% ETR plus adjustments
- Pensions ~ Synthomer and OMNOVA - £16m and $6m
- Working capital inflow ~ 10% of sales with lower raw material prices
Indebtedness 1 April and indicative 31 December 2020
- 1 April 2020 - post acquisition ~ £658m
- 31 December - year end indicative ~ £500m
Indicative leverage 31 December 2020 circa 2.0x
- £500m indebtedness / £232m EBITDA plus OMNOVA proforma
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*2020 EBITDA consensus (source: Teneo)
Funding for Growth
Investing in growth - capex and acquisitions
Synthomer Acquisition History
June 2016 | Hexion PAC | FS | $226m |
March 2017 | Speciality Additives | IS | €78m |
January 2018 | BASF Pischelsdorf | PE | €30m |
April 2020 | Omnova Solutions | FS | $824m |
Net Debt / EBITDA
~2,0x | ||||||
1,0x | 1,0x | 1,2x | 1.0x | |||
0,9x | ||||||
0,6x | ||||||
-0,1x | ||||||
2014 | 2015 | 2016 | 2017 | 2018 | 2019 | 2020 |
2019 assuming the rights issue did not occur
- Organic growth capex programme from late 2016 including:
- PE - Pasir Gudang - 90kt Nitriles on line Q4 2018 £45m
- FS - Worms and Roebuck - 50kt Dispersions on line Q2/Q3 2019 £40m
- PE - Pasir Gudang - 60kt Nitriles on line Q4 2021 £30m
- PE Asia Innovation Centre on line Oct 2020 £5m
- Inorganic growth through acquisitions
- Significant expansion of FS - largest acquisitions
- Synergies - costs and revenues
- Improved innovation
- Capex and acquisitions underpinning future growth
- Investment funded within conservative capital allocation policy
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Source: Company information, Heritage Synthomer for illustration purposes. Annual reports; (1) FCF conversion defined as FCF (business cash flow, net movement in borrowings before dividends, FX, and cash impact of specia l items, asset disposals and business
combinations) over EBITDA (excluding IFRS16 impact) ; (2) FY19A EBITDA includes the impact of IFRS16
Funding for Growth
2020 acquisition refinancing complete, significant funding and headroom
01 | 03 | Facilities |
Available Expiry Facilities
Strong balance | Conservative | Multi currency | €460m | July 2024 | |||||||||||
sheet and | capital policy in | revolving facilities | |||||||||||||
02 | 04 | ||||||||||||||
finance | place | Term loan | $260m | July 2024 | |||||||||||
structure | |||||||||||||||
01 | Significant | Investment | Bond 3 7Τ8% | €520m | July 2025 | ||||||||||
liquidity in place | opportunities | ||||||||||||||
▪ | Strong structure in place to July | ||||||||||||||
2024 | |||||||||||||||
▪ Leverage ~2.0x with single | |||||||||||||||
covenant in 2021 of 4.0x | |||||||||||||||
04 | ▪ | Capex for growth projects including | |||||||||||||
▪ | High cash conversion will drive | ||||||||||||||
further deleveraging in 2021 | growth on newly acquired Omnova sites | ||||||||||||||
02 | 03 | ▪ | |||||||||||||
▪ | Step change capex (Nitriles) | ||||||||||||||
▪ | £1,080m committed | ▪ Target range 1 to 2x | M&A activity (consolidation, new | ||||||||||||
technology, bolt on and transformational) | |||||||||||||||
unsecured | |||||||||||||||
net debt/EBITDA | |||||||||||||||
- Indicative net debt circa £500m
- Indicative liquidity circa £580m
47 | Synthomer Investor Seminar 2020
Investor Seminar
SUMMARY
Investor Seminar
Synthomer: Resilient and sustainable growth
Clear and consistent strategy delivering strong performance
Functional Solutions a key growth platform through consistent investment
Global mega trends driving demand across diversified end markets
Increasing proportion of differentiated products
Strong financial position from which to fund organic and inorganic investment
Multiple catalysts to drive future growth
EBITDA (£m)
CAGR 13%
300 | |||||||
272 | |||||||
250 | 232 | ||||||
200 | 176 | 181 | 178 | ||||
160 | |||||||
150 | |||||||
118 | 125 | ||||||
100 | |||||||
50 | |||||||
0 | |||||||
2014 | 2015 | 2016 | 2017 | 2018 | 2019 | 2020 | 2021 |
2020 company guidance provided on the 14th of October 2020 2021 consensus (sourced: Teneo), not a forecast
49 | Synthomer Investor Seminar 2020
Investor Seminar
Q&A
50 | Synthomer Investor Seminar 2020
Investor Seminar
Appendix
51 | Synthomer Investor Seminar 2020
Investor Seminar
List of abbreviations
Abbreviation Meaning | Slide | |
ESG | Environmental, Social, and Governance | 6, 33 |
PAC | Performance Adhesives & Coatings | 11 |
2-EHA | 2-Ethylhexyl Acrylate | 13 |
MMA | Methyl Methacrylate | 13 |
PVAc | Polyvinyl Acetate | 13 |
VACO | Vinylacetate Copolymer | 13 |
RDP | Re-Dispersible Powder | 13 |
SA | Styrene Acrylic | 13 |
PA | Pure Acrylic | 13 |
XSBR | Carboxylated Styrene Butadiene Rubber | 13 |
HSSBR | High-SolidsStyrene-Butadiene Rubber | 13 |
XNBR | Carboxylated Nitrile Butadiene Rubber | 13 |
WB | Water Based | 10, 27 |
CAST | Coatings, Adhesives & Surface Treatments | 21 |
VOC | Volatile Organic Compound | 26, 35 |
SB | Solvent Based | 27 |
SHE | Safety Health & Environment | 33, 44, 46 |
52 | Synthomer Investor Seminar 2020
Investor Seminar
Strong trading momentum across all divisions
→ FY 2020 EBITDA guidance raised 10% to ~£232m in Q3 |
trading update on 14th October 2020 |
→ Indicative 2020 Divisional split to be circa PE 50%, FS |
35% IS 15% |
→ Reporting in 2020 will separate OMN from Synthomer |
but 2021 reporting will only be for enlarged group |
Indicative EBITDA by Division 2020
15%
£232m*
→ All revenue synergies will be reported within the |
businesses with no further increase to $40m synergy |
target anticipated |
35%
50%
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Performance | Functional | Industrial |
Elastomers | Solutions | Specialities |
*After deducting Corporate Costs ~£16m
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Synthomer plc published this content on 18 November 2020 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 18 November 2020 17:14:00 UTC