Strong H1 financial performance. Acquisition of OrthoLite and divestiture of US Yarns positions portfolio for higher growth

Strategic Highlights

• Further market share gains in Apparel and Footwear⁸, again demonstrating the ability to outperform the market
• Exit from North American Yarns business completed, accelerating Performance Materials (‘PM’) margin recovery and enabling focus on core parts of the Group’s attractive portfolio
• Reinforced position as global market leader in 100% recycled thread products with revenue increased 73% to $269 million
• Sales in organic adjacencies up 30% year-on-year, supporting top line growth

Landmark acquisition of OrthoLite Holdings LLC

• Definitive agreement signed today to acquire 100% of OrthoLite Holdings LLC for a $770 million enterprise value. Creates a ‘super tier 2’ supplier for footwear components, significantly strengthening the existing business by expansion into the high growth insole segment
• Funded through a combination of new debt facilities with existing lenders and proceeds of an equity placing of up to 19.99% of issued share capital
• Adds market leadership in a further critical footwear component, significantly strengthening Coats’ Footwear portfolio by expansion into the high growth insole segment
• Transaction anticipated to close in Q4 2025; expected to generate compelling financial returns as joint cost and growth synergies are delivered

Financial Highlights

• Group revenue up 2% on a CER basis:
  • Good momentum in January-April, then following the announcement of US tariff increases, we saw a softening in demand reflecting general market uncertainty
  • Apparel and Footwear CER revenue growth of 3% and 1% respectively, PM 2% lower
• Group adjusted EBIT margin up 100bps on a CER basis to 19.8%, within the 19-21% medium-term target range, driven by Apparel and PM; strong Footwear margin maintained
• Adjusted basic earnings per share⁷ increased 4% to 4.7 cents
• Step-up in free cash flow⁹, pre dividend, of $54 million (2024: $39 million)
• Net debt (excluding lease liabilities) at $430 million with leverage⁵ at 1.4x net debt/EBITDA
• Interim dividend of 1.0 cent, +8%, reinforcing the Board’s confidence in the performance of the business and its long-term potential

Outlook

The Group’s full year outlook remains unchanged and is in line with current market expectations with a balanced weighting between first and second half trading overall. Our full year confidence is supported by continued market share gains in Apparel and Footwear and our growth in adjacencies. This is underpinned by the strong operating margin performance, already within the middle of our medium-term target range of 19-21%, and the growth in free cash flow, which is expected to further increase in the second half and into 2026.

The Group is mindful of the current market uncertainty, including from the dynamic tariff backdrop, and continues to monitor this closely but we believe we are well placed to navigate these challenges.

Commenting on the results David Paja, Group Chief Executive, said:

“I am really pleased with the Group’s performance in my first full reporting period as CEO. We have outperformed our markets, achieving top-line growth in a period of significant external uncertainty due to tariffs, and delivered our medium-term margin target in advance of plan.

We have continued to improve the quality of our portfolio, completing the exit from US Yarns, and made further progress against our strategic enablers. This includes increasing our revenue from 100% recycled thread products by 73% and delivering 30% growth in the attractive market adjacencies we set out earlier in the year.

We are fundamentally reshaping the quality and growth profile of the Group by expanding into the growing insole segment of the footwear market with the agreed acquisition of OrthoLite for an enterprise value of $770 million. This exciting acquisition of a high quality, margin accretive business further consolidates our leadership position in footwear components, bringing into the Group a business with deep brand relationships, a complementary market-leading portfolio and a business model that is very similar to our own. We are in an excellent position to create value from this combination by accelerating innovation and realising the exciting growth synergy opportunities it provides.

Coats is a global market leader with a high-quality portfolio, improved structural exposure to higher growth segments, and a best-in-class global footprint that enables responsiveness to customer needs. Taken together, we are excited about the Group’s growth, margin and cash generation potential over the medium-term. I am proud of what our teams have accomplished so far this year and view the rest of the year with confidence despite the continuing macro uncertainties.”

Notes:

1. 1. Represented to reflect the results of the Americas Yarns business as a discontinued operation, where relevant (see note 1)
2. 2. Adjusted measures are non-statutory measures (Alternative Performance Measures). These are reconciled to the nearest corresponding statutory measure in note 13.
3. 3. Constant Exchange Rate (CER) metrics are 2024 results restated at 2025 exchange rates.
4. 4. Reported metrics refer to values contained in the IFRS column of the primary financial statements in either the current or comparative period.
5. 5. Leverage calculated on a frozen GAAP basis and therefore excludes the impact of IFRS 16 on both adjusted EBITDA and net debt. See note 13b for details.
6. 6. EBIT (Earnings before interest and tax) relates to Operating Profit as shown on the face of the P/L Reconciliation between the Adjusted EBIT and Reported EBIT is disclosed in the Financial Review section
7. 7. From continuing operations.
8. 8. Coats’ estimates
9. 9. Free cash flow after interest, tax, minority interests and exceptionals

Conference Call

Coats Management will present its interim results and cover the acquisition of OrthoLite Holdings LLC in a webcast for analysts at 8.00am BST tomorrow (Thursday, 17 July, 2025).

About Coats Group plc

Coats is a world leader in thread manufacturing and structural components for apparel and footwear, as well as an innovative pioneer in performance materials. These critical solutions are used to create a wide range of products, including ones that provide safety and protection for people, data and the environment. Headquartered in the UK, Coats is a FTSE250 company and a FTSE4Good Index constituent. Revenue in 2024 was $1.4 billion.

Trusted by the world’s leading companies to deliver crucial, innovative, and sustainable solutions, Coats provides value-adding products including apparel, accessory and footwear threads, structural footwear components, fabrics, yarns and software applications. Customer partners include companies from the apparel, footwear, automotive, telecoms, personal protection, and outdoor goods industries.

With a proud heritage dating back more than 250 years and a spirit of evolution to constantly stay ahead of changing market needs, Coats has operations across some 50 countries with a permanent workforce of more than 16,000, serving its customers worldwide.

Coats connects talent, textiles, and technology, to make a better and more sustainable world. Worldwide, there are four dedicated Coats Innovation Hubs, where experts collaborate with partners to create the materials and products of tomorrow. It participates in the UN Global Compact and is committed to validated Science Based sustainability targets for 2030 and beyond, with a commitment to achieving Net Zero by 2050. Coats is also committed to achieving its goals in Diversity, Equity & Inclusion, workplace health & safety, employee & community wellbeing, and supplier social performance.

Cautionary statement

Certain statements in this interim report are forward-looking. Although the Group believes that the expectations reflected in these forward-looking statements are reasonable, we can give no assurance that these expectations will prove to have been correct. Because these statements contain risks and uncertainties, actual results may differ materially from those expressed or implied by these forward-looking statements. We undertake no obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise.

ENDS