Avon Technologies Plc · LSE:AVON
Avon Technologies — Avon Rubber p.l.c. — H1 2019 Earnings Presentation
47 slides from Avon Technologies's earnings presentation, 2019
Slide 1: Half Year Results 2019: Transforming our future
HALF YEAR RESULTS 2019 Transforming our future
Slide 2: Forward-looking information
Forward-looking information Avon Rubber p.l.c. (the ‘Group’) is providing the following cautionary statement: This document contains certain statements that are or may be forward-looking with respect to the financial condition, results or operations and business of the Group. These statements are so
Slide 3: Agenda
Agenda Financial Transforming Highlights review our future HALF YEAR RESULTS 2019 3 Transforming our future
Slide 4: Highlights
Highlights Paul McDonald Chief Executive Officer HALF YEAR RESULTS 2019 4 Transforming our future
Slide 5: A transformational half year
A transformational half year Transformational six months, $340m of new contracts underpin mid-term outlook M69 aircrew mask contract extends portfolio reach into aviation sector M53A1 mask and powered air system multi-customer contract Closing order book U.K. GSR remains on track with first deliveri
Slide 6: Financial Review
Financial Review Nick Keveth Chief Financial Officer HALF YEAR RESULTS 2019 6 Transforming our future
Slide 7: Half year performance
Half year performance FINANCIALS REVENUE SPLIT BY BUSINESS H1 2019 % Change % Constant Currency Orders received £94.9m 7.5% 2.1% Avon Protection Closing order book £59.1m 45.6% 38.2% £73.6m (2018: £77.7m) Revenue £73.6m (5.3%) (8.7%) milkrite | InterPuls Adjusted EBITDA £12.8m (17.4%) (20.3%) Adjust
Slide 8: Revenue impacted by timing of orders
Revenue impacted by timing of orders £2.1m (£7.6m) £3.0m (£0.9m) (£0.2m) (£0.5m) - £77.7m Avon Protection £73.6m (£6.4m) milkrite | InterPuls (10.8%) (£0.7m) (2.6%) 2018 H1 Military Law Fire Interface PCI Precision, Farm Services FX 2019 H1 Revenue Enforcement Control and Revenue Intelligence HALF Y
Slide 9: Strong cash conversion continues
Strong cash conversion continues £12.8m (£1.2m) (£1.4m) (£4.1m) (£1.8m) (£1.3m) (£3.3m) (£0.8m) - £0.1m Cash conversion £46.5m 91.5% £46.8m Capex Dividends Pension Other (non EBITDA 2018 Net Tax/Interest 2019 HY Net Working Purchase of own shares capital cash cash) cash HALF YEAR RESULTS 2019 9 Tran
Slide 10: Avon Protection
Avon Protection FINANCIALS REVENUE SPLIT BY MARKET 2019 % Change % Constant Currency Orders received £69.3m 7.9% 1.4% Military Closing order book £55.4m 47.7% 39.8% Law Enforcement £49.3m Revenue £49.3m (7.2%) (10.8%) (2018: £53.1m) Fire Adjusted EBITDA £9.1m (22.2%) (25.8%) Adjusted EBITDA margin 1
Slide 11: milkrite | InterPuls
milkrite | InterPuls FINANCIALS REVENUE SPLIT BY MARKET 2019 % Change % Constant Currency Orders received £25.6m 6.2% 3.8% Interface Closing order book £3.7m 19.4% 17.4% £24.3m PCI Revenue £24.3m (1.2%) (2.6%) (2018: £24.6m) Farm Services Adjusted EBITDA £4.8m (4.0%) (5.0%) Adjusted EBITDA margin 19
Slide 12: Excellent order book visibility for H2
Excellent order book visibility for H2 +48.3% +117.6% FY19 £44.2m FY19 FY18 £8.3m +51.2% £30.1m +80.8% FY18 FY19 FY19 £3.6m FY18 £3.7m FY18 £2.9m £2.5m £1.6m Military Law Enforcement Fire milkrite | InterPuls Growth percentages are calculated on a constant currency basis HALF YEAR RESULTS 2019 12 Tr
Slide 13: FY19 revenue building blocks
FY19 revenue building blocks Impact of U.S. Other Avon milkrite | FX Government Protection InterPuls Partial £165.5m Shutdown M50 M53A1 M69 FY18 ~4% FY19 constant currency growth HALF YEAR RESULTS 2019 13 Transforming our future
Slide 14: Improving dairy market conditions
Improving dairy market conditions $/kg 2.8% 45.00 • Dairy market conditions improving, underpinning 2.6% 40.00 confidence in stronger H2 2.4% 35.00 • Milk price improvement due to demand outstripping 2.2% 30.00 supply 2.0% 25.00 • Moderate growth in milk production 1.8% 20.00 1.6% 15.00 • Broadly st
Slide 15: Confident in FY19 expectations
Confident in FY19 expectations • Board remains confident on delivery of current year expectations • Opening order book of £59.1m and continuing order momentum provides excellent visibility going into the second half of 2019 • Scheduling of Military order fulfilment will be managed alongside expected
Slide 16: Transforming our future
Transforming our future Paul McDonald Chief Executive Officer HALF YEAR RESULTS 2019 16 Transforming our future
Slide 17: Changing portfolio landscape
Transforming our future: Changing portfolio landscape • Transition to multi-product, multi-contract, modular portfolio • High barriers to entry with sole-source U.S. DOD contracts • M69 aircrew mask contract first move into aviation sector • M53A1 mask and powered air system drawing from benefits of
Slide 18: Military outlook underpinned
Potential order intake Military outlook underpinned Current contract period per annum In Service M50 Mask System* £20-30m Sole-source / Own IP M53A1 Mask and £15-20m Powered Air System Sole-source / Own IP M69 Aircrew Mask £10-15m Sole-source / Own IP MCM100 Underwater £5-10m Rebreather Own IP £3-5m
Slide 19: First orders of M69 aircrew mask received
Transforming our future: First orders of M69 aircrew mask received • Multi-year sole-source contract for $93 million awarded in January with first order received soon after • M69 aircrew mask developed and tested in partnership with the U.S. DOD • This is our first mask developed to meet the CBRN pr
Slide 20: M53A1 contract awarded
Transforming our future: M53A1 contract awarded • Multi-year, sole-source contract to supply all branches of the DOD with the M53A1 mask and powered air system • The M53A1 is a modular system that has been specifically designed to meet the unique requirements of specialist users • Also includes addi
Slide 21: Consolidation of milkrite | InterPuls EU operations
Transforming our future: Consolidation of milkrite | InterPuls EU operations • milkrite | InterPuls EU commercial operations consolidated into existing Italian facility • All EMEA Interface, PCI and Farm Services customers now serviced out of Italy • Integrated and streamlined customer order process
Slide 22: Value enhancing acquisitions to further accelerate growth
Transforming our future: Value enhancing acquisitions to further accelerate growth • We continue to actively explore acquisition opportunities to accelerate our strategy • We are evaluating a number of opportunities but will only proceed where we believe they meet our strict criteria • Clear strateg
Slide 23: Why invest in Avon Rubber?
Why invest in Avon Rubber? 3% + 20% + 90% + 30% CORE ACCELERATE SUSTAINABLE CASH PROGRESSIVE BUSINESS GROWTH PROFITABILITY GENERATION DIVIDEND HALF YEAR RESULTS 2019 23 Transforming our future
Slide 24: Greater certainty and opportunity
Greater certainty and opportunity • Multi-year contracts and modular product portfolio transforming visibility of future performance across the business • High barriers to entry for competitors • Committed to product development in partnership with customers to develop next generation products • Str
Slide 25: Questions & Answers
Section Questions & heading here Answers SUBHEADING HERE HALF YEAR RESULTS 2019 25 Transforming our future
Slide 26: Appendices
Section Appendices heading here SUBHEADING HERE HALF YEAR RESULTS 2019 26 Transforming our future
Slide 27: Avon Protection
Avon Protection Fire Military Law Enforcement Fire Global leader within Military CBRN for Supplying a range of NIOSH and CE Leading provider of thermal masks and filters, with leading portfolio of approved mask solutions for global imaging camera technology and respirators, filters, powered and supp
Slide 28: Masks
Masks GSR M50 FM54 M69 M53A1 Our world leading Developed with the U.S. The ‘first to market’ Based on the proven 50 A technical evolution of expertise and reputation Department of Defense, combination respirator, series mask platform, the the 50 series mask for quality in respiratory the M50 is desi
Slide 29: Supplied & powered air
Supplied & powered air MP-PAPR CS-PAPR ST54 A departure from The CS-PAPR is the newest The ST54 combines Avon traditional rigid plastic generation of modular CBRN Protection’s FM54 mask construction systems, the powered air purifying respirator technology with a lightweight, MP-PAPR is the world’s (
Slide 30: Fire
Fire MI-TIC E L DELTAIR MAGNUM Premium lightweight Developed to deliver ruggedness and We are in the process of thermal imaging with reliability, Deltair has been approved testing our upgraded Deltair industry leading dynamic to meet NFPA, NIOSH, and MIL Spec SCBA system to comply with range and ove
Slide 31: Accessories
Accessories FILTERS VISION COMMUNICATIONS HYDRATION SYSTEMS We have a range of CBRN filters Our mask outserts attach to the For enhanced communication, Our hydration systems designed to meet the relevant 50 series mask range to provide an optional Voice Projection integrate with our masks, criteria
Slide 32: Escape hoods
Escape hoods NH15 The Avon NH15 CBRN Air Purifying Escape Respirator is the smallest and most compact CBRN escape hood on the market, approved to carry NIOSH and CE marking. Its low cost makes it ideal for military, first responders, security and protection teams seeking immediate or emergency respi
Slide 33: Underwater
Underwater MCM100 The MCM100 is a configurable platform to meet multiple military Underwater Breathing Apparatus (UBA) requirements. It is a fully closed circuit, electronically controlled, mixed gas rebreather CE tested to 100m, suitable for a large range of military or tactical diving disciplines
Slide 34: milkrite | InterPuls
milkrite | InterPuls Fire Interface Precision, Control, Intelligence Farm Services milkrite | InterPuls is the market Precision refers to the set up of the air system within the Whilst offering the entire product leader for cluster technology to milking process to maximise the performance and effici
Slide 35: Interface
Interface LINERS TUBING IMPULSE CLAW 300 CALF NURSER The Impulse and Impulse Air ranges Our premium silicone The Impulse Claw 300 with its For use in feeding newborn calves, are designed to minimise slip and tubing is made from a durable, lightweight and the Merrick’s calf nurser features a improve
Slide 36: Precision, Control & Intelligence
Precision, Control & Intelligence LO2AIR IMILK600 HD IFC MYFARM.CLOUD Precision refers to the set up of the air Control is the physical control of the milking Intelligence is the critical part of the dairy system system within the milking process to system to provide automation opportunities to whic
Slide 37: Farm Services
Farm Services CLUSTER EXCHANGE SERVICE PULSATOR EXCHANGE SERVICE TAG EXCHANGE SERVICE Through Cluster Exchange Service, farmers The Pulsator Exchange Service enables farmers Tag Exchange Service enables farmers lease leg lease complete milking clusters and outsource to lease our market leading pulsa
Slide 38: Group income statement
Group income statement 2019 2018 £m £m Revenue 73.6 77.7 Adjusted EBITDA 12.8 15.5 Depreciation and amortisation (4.1) (3.9) Operating profit before amortisation of acquired intangibles, exceptional items and defined benefit 8.7 11.6 pension costs Amortisation of acquired intangibles, exceptional it
Slide 39: Reported to adjusted reconciliation
Reported to adjusted reconciliation 2019 2018 £m £m Operating profit 3.8 9.9 Amortisation of acquired intangible assets 1.8 1.5 GMP equalisation 2.9 Defined benefit pension administration costs 0.2 0.2 Adjusted operating profit 8.7 11.6 HALF YEAR RESULTS 2019 39 Transforming our future
Slide 40: Revenue by line of business
Revenue by line of business 2019 2018 £m £m Military 30.9 27.3 Law Enforcement 11.7 18.6 Fire 6.7 7.2 Avon Protection 49.3 53.1 Interface 17.4 17.2 Precision, Control & Intelligence 4.3 4.8 Farm Services 2.6 2.6 milkrite | InterPuls 24.3 24.6 Group total 73.6 77.7 HALF YEAR RESULTS 2019 40 Transform
Slide 41: Balance sheet
Balance sheet 2019 2018 £m £m Intangible assets 39.2 39.1 Property, plant and equipment 22.3 21.9 Current assets 43.9 41.0 Current liabilities (36.4) (36.0) Non-current assets/(liabilities) 2.4 (0.7) 71.4 65.3 Net cash 46.8 39.1 118.2 104.4 Retirement benefit scheme (46.5) (42.5) Net assets 71.7 61.
Slide 42: Cash flow
Cash flow 2019 £m 2018 £m Cash flows from continuing operations before exceptionals 11.7 19.2 Cash impact of exceptionals (0.2) - Cash flows used in discontinued operations - (0.2) Cash flows from operations 11.5 19.0 Interest paid/received 0.1 - Payments to pension scheme (0.8) (0.8) Tax paid (1.9)
Slide 43: Foreign exchange and sensitivities
Foreign exchange and sensitivities Average rate Closing rate Average rate Closing rate 2019 2019 2018 2018 U.S. Dollar 1.294 1.309 1.359 1.408 Euro 1.135 1.165 1.130 1.143 1$ cent 1€ cent movement movement £m £m Revenue 0.4 0.1 Operating profit 0.1 - Net assets 0.3 0.2 HALF YEAR RESULTS 2019 43 Tran
Slide 44: Glossary of financial terms
Glossary of financial terms Term Explanation Adjusted basic earnings per Adjusted profit for the period divided by the weighted average number of shares in issue share Adjusted EBITDA Adjusted EBITDA is defined as operating profit before depreciation, amortisation, exceptional items and defined bene
Slide 45: Glossary of financial terms (continued)
Glossary of financial terms (continued) Term Explanation Dividend per share Dividends paid / proposed, divided by the weighted average number of shares in issue EBITDA The Group’s earnings before charging interest, tax, depreciation and amortisation Intellectual Property Intangible property created
Slide 46: Abbreviations
Abbreviations Term Explanation 50 Series A range of masks based on the proven technology of the M50 mask system BPS Basis points CBRN Chemical, Biological, Radiological, Nuclear CE CE markings indicate conformity to health and safety standards sold within the European Economic area CES Cluster Excha
Slide 47: Abbreviations (continued)
Abbreviations (continued) Term Explanation NFPA National Fire Protection Association, a North American trade association that maintains usage standards for the Fire service NIOSH National Institute of Occupational Safety and Health. NIOSH approval indicates conformity to health and safety standards