This is the latest in my series of CEO interviews with interesting companies that have passed my 4 key criteria (this is a spin off from the SCVRs) -
- Issued a recent, positive or in line trading update, and reasonably sound outlook comments,
- Strong balance sheet (so little to no dilution or insolvency risk - very important in a downturn)
- Good management (partly subjective!) with a clear strategy, executing well, and a good business model
- Reasonable or cheap valuation, so a possible buying opportunity (long-term).
I don't charge any fees for my interviews, so I'm free to ask anything, and I carefully select only companies that I think are good. They're obviously for general interest, and are never tips, recommendations, nor advice. As you know, our whole ethos here at Stockopedia is about everyone doing your own research & taking responsibility for managing your own portfolios.
Zotefoams (LON:ZTF)
CEO interview with Paul Scott
Audio is here, or on my podcast platforms (“Paul Scott small caps”)
I’ve typed up a summary of the key points, as follows -
- Introduction & disclaimers (no fee, no personal holding, not financial advice nor a recommendation, please do your own research)
- Description of the company please.
ZTF is a manufacturer of high value added block foams products - very lightweight, used in lots of industries. Biggest market is high end running shoes for Nike. Markets - huge variety, e.g. aircraft, space, automotive, medical, biotech, pharmaceutical, insulation, military, sports. Range of product properties - e.g. very lightweight, won’t burn. Proprietary foaming process. Manufacturing in UK, US, and Poland. Also MuCell division. - Positive trading updates, despite macro issues. How are you bucking the trend?
Wide variety of industries. Refocus resources on sectors that are doing better. Challenge is managing raw material & energy prices. Successful in engaging with customers, getting price rises through, and managing margins well. - Q3 trading update - revenues up 27% vs strong LY comp, and up 24% YTD, resilient demand. Is this mainly price increases, or volume growth, or a mix of the two?
Helped by dollar strength, has boosted the top line a bit, 90% sold overseas. Majority of revenue increase is price increases, and improved product mix (higher value products selling faster). - Gross margin - seems quite low, but overheads lean, so decent net margin. Is there scope to raise gross margin?
We’ve invested in capacity, which was under-utilised. There’s now scope for…
