Avon Technologies Plc · LSE:AVON
Avon Technologies — Avon Rubber p.l.c. — FY2018 Earnings Presentation
50 slides from Avon Technologies's earnings presentation, 2018
Slide 1: Strong Foundations for Growth - Preliminary Results 2018
STRONG FOUNDATIONS FOR GROWTH PRELIMINARY RESULTS 2018
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 Highlights Financial Strategy Outlook Review in Action PRELIMINARY RESULTS 2018 3 Strong foundations for growth
Slide 4: Highlights
Section heading here Highlights SUBHEADING HERE PAUL MCDONALD Chief Executive Officer PRELIMINARY RESULTS 2018 4 Strong foundations for growth
Slide 5: Strong foundations for growth
Strong foundations for growth Continued strategic momentum with strong financial results Orders received Revenue Order book andgrowth order growth with wider in core portfolio products contributing and markets £173.3m Strategy is delivering - Progress with medium term opportunities 8.1% Additional i
Slide 6: Further progress against investor proposition
Further progress against investor proposition +8.7% Merrick’s 21.3% 108.2% +30% AT CONSTANT acquisition -80 BPS £46.5M NET INCREASE OVER CURRENCY AEF divestment AT CONSTANT CASH PRIOR YEAR CURRENCY PRELIMINARY RESULTS 2018 6 Strong foundations for growth
Slide 7: Financial Review
Section Financial heading here Review SUBHEADING HERE NICK KEVETH Chief Financial Officer PRELIMINARY RESULTS 2018 7 Strong foundations for growth
Slide 8: Strong financial momentum
Strong financial momentum FINANCIALS¹ REVENUE SPLIT BY BUSINESS 2018 % Change % Constant Currency Orders received £173.3m 4.4% 8.1% Avon Protection Closing order book £37.8m 26.0% 23.4% £165.5m (2017: £159.2m) milkrite | InterPuls Revenue £165.5m 4.0% 8.7% Adjusted EBITDA £35.3m (1.2%) 5.1% Adjusted
Slide 9: 8.7% revenue growth at constant currency
8.7% revenue growth at constant currency £7.8m £0.2m £0.9m (£6.9m) (£1.6m) £1.0m 1.9% 19.8% (10.0%) 2.9% £4.9m (4.3%) 28.1% milkrite | InterPuls 8.0% £2.1m 4.3% Avon Protection £165.5m £11.1m Adjusted £159.2m operating profit up 10.6% 11.8% 2017 Revenue Military Law Fire Interface PCI Farm Services
Slide 10: £21.8m increase in net cash
£21.8m increase in net cash £33.9m £2.4m (£8.9m) (£5.0m) (£1.1m) (£1.2m) (£4.1m) £6.5m £6.7m (£1.4m) (£4.2m) (£1.5m) £1.0m £1.0m £1.2m Cash conversion 108.2% £41.2m £41.4m £46.5m £24.7m Purchase of own Working capital Capex Pension Other / FX 2017 Net cash EBITDA 2018 Net cash Acquisition Tax/Intere
Slide 11: Avon Protection
Avon Protection FINANCIALS REVENUE SPLIT BY MARKET 2018 % Change % Constant Currency Orders received £124.6m 7.4% 11.4% Military Closing order book £35.3m 33.2% 30.6% Law Enforcement £115.7m Revenue £115.7m 5.4% 10.6% (2017: £109.8m) Fire Adjusted EBITDA £26.6m (0.7%) 5.3% Adjusted EBITDA margin 23.
Slide 12: milkrite | InterPuls
milkrite | InterPuls FINANCIALS REVENUE SPLIT BY MARKET 2018 % Change % Constant Currency Orders received £48.7m (2.6%) 0.6% Interface Closing order book £2.5m (28.6%) (31.1%) £49.8m PCI Revenue £49.8m 0.8% 4.3% (2017: £49.4m) Farm Services Adjusted EBITDA £10.9m - 5.2% Adjusted EBITDA margin 21.9%
Slide 13: Strategy in Action
Section Strategyhere heading in Action SUBHEADING HERE PAUL MCDONALD Chief Executive Officer PRELIMINARY RESULTS 2018 13 Strong foundations for growth
Slide 14: All elements of the strategy driving performance
All elements of the strategy driving performance • Farm Services expansion • M69 aircrew mask first deliveries • Actively pursuing further expected in 2019 acquisition opportunities • PCI North America growth • Expansion of powered air range • Acquisition of Merrick’s calf • Relocation of West Palm
Slide 15: Strategy in action: Farm Services revenue up 19.8%
Strategy in action: Farm Services revenue up 19.8% • Competitor differentiation through unique leasing model with direct relationship with the customer • Farm Services launched with Cluster Exchange • Established customer base in North America and Europe servicing 2,100 farms with 637,000 cows and 4
Slide 16: Strategy in action: PCI growth North America
Strategy in action: PCI growth North America • Significant growth opportunity in North America to leverage our market leading Interface platform • Heavy duty PCI farm range launched in 2018 to meet usage requirements of larger industrial farms • Multi-site reference farms established in 2018 to demo
Slide 17: Strategy in action: Acquisition of Merrick's calf nurser product line
Strategy in action: Acquisition of Merrick’s calf nurser product line • Acquisition of Merrick’s calf nurser product line assets for $2.1m • Strong brand recognition and long sales history in North America • Smooth integration with milkrite | InterPuls having been the exclusive rubber component manu
Slide 18: Strategy in action: Stronger underlying M50 mask system demand
Strategy in action: Stronger underlying M50 mask system demand • 179,000 M50 mask systems delivered in the year with an FY19 opening order book of 89,000 • Product life cycle anticipated for a further 20 years • Ongoing demand of minimum 50,000 per annum volumes from FY20 with further upside potenti
Slide 19: Strategy in action: Relocation of West Palm Beach manufacturing site
Strategy in action: Relocation of West Palm Beach manufacturing site • West Palm Beach, FL was the assembly line for electronic components used in Deltair SCBA, MCM100 underwater rebreather and argus thermal imaging cameras • The manufacturing facility was relocated to Cadillac, MI in September at a
Slide 20: Strategy in action: First orders of M69 aircrew masks
Strategy in action: First orders of M69 aircrew masks expected for delivery in 2019 • Multi-year sole-source contract expected to be awarded imminently with first deliveries in 2019 • M69 aircrew mask developed and tested in partnership with the US DOD • DOD funded the development and testing progra
Slide 21: Strategy in action: First deliveries of MCM100 underwater rebreather
Strategy in action: First deliveries of MCM100 underwater rebreather • Designed in partnership with specialist military divisions to meet bespoke technical requirements • First orders delivered in 2018 • Product capability and technology advancement very well received by customers • Strong reference
Slide 22: Strategy in action: Production readiness of UK GSR
Strategy in action: Production readiness of UK GSR for first deliveries in 2019 • Entered into a five year contract with the UK MOD in February 2018 for up to £16.0m • Contract to resupply and provide in-service support for the UK General Service Respirator • MOD retains the intellectual property ri
Slide 23: Strategy in action: Expansion of powered air range
Strategy in action: Expansion of powered air range • Powered air range developed in partnership with customers to meet their CBRN protection needs • Modular range provides multiple CBRN threat protection options whilst reducing breathing burden • Strong customer demand in Military and Law Enforcemen
Slide 24: Strategy in action: Value enhancing acquisitions
Strategy in action: Value enhancing acquisitions to further accelerate growth • Clear strategic commercial and financial criteria for acquisitions to enhance core revenue growth • Targeting acquisitions with technologies which are complementary and broaden our existing portfolio • Acquisitions must
Slide 25: Outlook
Section heading here Outlook SUBHEADING HERE PAUL MCDONALD Chief Executive Officer PRELIMINARY RESULTS 2018 25 Strong foundations for growth
Slide 26: Strong foundations for growth
Strong foundations for growth • Strong opening order book provides visibility going into FY19 • Continued underlying momentum of key strategic programmes • Benefits from wider product offering being realised • Committed to investment in technological innovation for the future • Strong financial posi
Slide 27: Questions & Answers
Section Questions & heading here Answers SUBHEADING HERE PRELIMINARY RESULTS 2018 27 Strong foundations for growth
Slide 28: Appendices
Section Appendices heading here SUBHEADING HERE PRELIMINARY RESULTS 2018 28 Strong foundations for growth
Slide 29: 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 30: Masks
Masks GSR M50 FM54 M69 M53A1 Our world leading Developed with the US 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 design
Slide 31: Supplied & powered air
Supplied & powered air MP-PAPR CS-PAPR ST54 CS-ELITE A departure from The CS-PAPR is the newest The ST54 combines Avon The CS-Elite has been traditional rigid plastic generation of modular CBRN Protection’s FM54 mask developed to provide special construction systems, the powered air purifying respir
Slide 32: 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 33: 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 34: 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 35: 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 36: 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 37: 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 38: 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 39: 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 40: Group income statement
Group income statement 2018 2017 £m £m Revenue 165.5 159.2 EBITDA 35.3 35.7 Depreciation and amortisation (8.0) (9.6) Operating profit before amortisation of acquired intangibles, exceptional items and defined benefit 27.3 26.1 pension costs Amortisation of acquired intangibles, exceptional items an
Slide 41: Reported to adjusted reconciliation
Reported to adjusted reconciliation 2018 2017 £’m £’m Operating profit 22.8 20.1 Amortisation of acquired intangible assets 3.1 3.0 Impairment of capitalised development expenditure - 2.6 Impairment of plant and machinery - 0.3 Post-acquisition working capital adjustment - (0.3) Restructuring costs
Slide 42: Revenue by line of business
Revenue by line of business 2018 2017 Restated¹ 2017 £m £m £m Military 66.1 64.2 64.2 Law Enforcement & Civil 35.4 29.0 29.0 Fire 14.2 16.6 16.6 Avon Protection 115.7 109.8 109.8 Interface 35.6 35.9 34.5 Precision, Control & Intelligence 9.0 9.0 10.4 Farm Services 5.2 4.5 4.5 milkrite | InterPuls 49
Slide 43: Balance sheet
Balance sheet 2018 2017 £m £m Intangible assets 41.5 40.4 Property, plant and equipment 22.6 26.3 Current assets 47.2 45.8 Current liabilities (41.4) (36.9) Non-current liabilities (1.1) (0.6) 68.8 75.0 Net cash 46.5 24.7 115.3 99.7 Retirement benefit scheme (30.5) (44.1) Net assets 84.8 55.6 PRELIM
Slide 44: Cash flow
Cash flow 2018 £m 2017 £m Cash flows from continuing operations 38.2 35.0 Cash impact of exceptionals (0.1) 0.3 Cash flows from discontinued operations (0.2) 0.3 Cash generated from operations 37.9 35.6 Net interest paid - (0.1) Payments to pension scheme (1.5) (1.0) Tax paid (5.0) (2.0) Disposal of
Slide 45: Foreign exchange and sensitivities
Foreign exchange and sensitivities Average rate Closing rate Average rate Closing rate 2018 2018 2017 2017 US Dollar 1.346 1.305 1.267 1.339 Euro 1.132 1.127 1.147 1.134 1$ cent 1€ cent movement movement £m £m Revenue 0.9 0.1 Operating profit 0.2 - Net assets 0.3 0.2 PRELIMINARY RESULTS 2018 45 Stro
Slide 46: 2017 Restatements
2017 Restatements FY 2017 Adjusted As previously reported AEF discontinued operations Restated £m £m £m Orders received 173.9 (7.9) 166.0 Closing order book 34.0 (4.0) 30.0 Revenue 163.2 (4.0) 159.2 EBITDA 36.0 (0.3) 35.7 Operating profit 25.8 0.3 26.1 Profit before tax 25.6 0.3 25.9 Tax (0.4) - (0.
Slide 47: Glossary of financial terms
Glossary of financial terms Term Explanation Adjusted basic earnings per Adjusted profit for the year 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 benefi
Slide 48: 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 49: Abbreviations
Abbreviations Term Explanation 50 Series A range of masks based on the proven technology of the M50 mask system AEF Avon Engineered Fabrications, Inc. was the US based hovercraft skirt and bulk liquid storage tank business BPS Basis points CBRN Chemical, Biological, Radiological, Nuclear CE CE marki
Slide 50: 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