Slide 1: Annual Results 2019
Annual Results 2019 3 March 2020 xppower.com XP Power Annual Results 2019 1
Slide 2: Disclaimer
DISCLAIMER The information contained in this document is for Investors should not place undue reliance on such background purposes only and does not purport to be full forward-looking statements, and XP Power Limited does or complete. No reliance may or should be placed by any not undertake any obli
Slide 3: Group Highlights
GROUP HIGHLIGHTS • Good revenue growth in Industrial Electronics, Healthcare and Technology sectors offset by cyclical downturn in Semi Equipment • Q4 orders strong driven by recovery in Semis. Group well positioned given multi-year design win momentum • Gross margin down due to US trade tariffs and
Slide 4: Financial Highlights
FINANCIAL HIGHLIGHTS XP Power Annual Results 2019 4
Slide 5: Group Financial Performance
COMPANY PERFORMANCE GROUP FINANCIAL PERFORMANCE Change at "Like for Like" £m 2019 2018 Change Reported revenue growth of 2% CER(2) Change(3) GBP/USD 1.28 1.34 - Industrial Electronics: +7% - SemiFab: -21% Orders (£m) 214.9 198.4 8% 4% 2% - Healthcare: + 6% Revenue (£m) 199.9 195.1 2% (2)% (4)% - Tec
Slide 6: Group Orders & Revenue Performance
COMPANY PERFORMANCE GROUP ORDERS & REVENUE PERFORMANCE ORDERS REVENUE Contribution to Contribution to +2% +2% +4% +8% (4)% +2% +4% +2% YoY change YoY change N. America: In line N. America: £(14.2)m Europe: £(0.7)m Europe: +£1.8m Asia: +£5.5m Asia: +£4.4m XP Power Annual Results 2019 6
Slide 7: Adjusted Operating Profit Performance
COMPANY PERFORMANCE ADJUSTED OPERATING PROFIT PERFORMANCE Gross margin performance impacted by tariffs and mix Gross margin at 45.1%, down 220 bps Annualisation of 2018 investments 2019 adjusted operating margin 18.0% Creditable Glassman performance given market conditions XP Power Annual Results 20
Slide 8: Cash Flow Statement and Net Debt
COMPANY PERFORMANCE CASH FLOW STATEMENT AND NET DEBT Net debt bridge £m 2019 2018 Variance £m Adjusted Operating Profit 36.1 42.9 -16% Amortisation of product development costs 3.9 2.9 Depreciation 5.3 3.4 Change in working capital 8.5 (21.3) (52.0) 26.2 Other 1.8 4.0 Cash generated from Operations
Slide 9: 2020 Modelling Guidance Approximations
OUTLOOK 2020 MODELLING GUIDANCE APPROXIMATIONS CAPEX/CAP PROD DEV/CAP IT INTEREST EFFECTIVE TAX RATE £6.0m / £9.0m / £3.5m c. £2.0-2.5m 17-19% CASH SPECIFIC ITEMS INFLATION COST SAVINGS £3.0 – 4.0m c. £2-3m c. £2-3m REVENUE CASH FLOW NET DEBT / EBITDA Growth H2 weighted – COVID-19 Improved EBITDA &
Slide 10: Business Update
BUSINESS UPDATE XP Power Annual Results 2019 10
Slide 11: Our Strategy: Good Progress in 2019
STRATEGY IN ACTION OUR STRATEGY GOOD PROGRESS IN 2019 ➢ Launched range of 5kW low voltage products Develop a market leading range of competitive ➢ Strong pipeline of new products products, organically and through selective ➢ Next generation RF products under development acquisitions ➢ Acquisitions l
Slide 12: Sector Dynamics
STRATEGY IN ACTION SECTOR DYNAMICS • 45% of revenue • 19% of revenue • 23% of revenue • 13% of revenue • Grew 3% (constant currency YoY) • Contracted 25% (constant currency YoY) • Grew 1% (constant currency YoY) • Grew 29% (constant currency YoY) • Most diverse sector with high level • RF and high v
Slide 13: Revenue by Sector
STRATEGY IN ACTION REVENUE BY SECTOR CAGR +12.0% CAGR +39.1% CAGR +12.7% CAGR +17.2% High level Trends • Increased connectivity of the power converter to the customer's Revenue (£ Millions) equipment • Higher power • Higher engineering services content (customisation) • Industrial revolution 4.0 • I
Slide 14: Building Our Supply Chain Flexibility
SUPPLY CHAIN BUILDING OUR SUPPLY CHAIN FLEXIBILITY Goal is an agile end to end supply chain with high level of customer responsiveness whilst optimising inventory End to End ERP SAP platform – Phase 1 implemented in 2019 Supply chain developing in Vietnam to reduce freight and reliance on Chin
Slide 15: Vietnam: A Competitive Advantage
SUPPLY CHAIN VIETNAM A COMPETITIVE ADVANTAGE Phase II completed in Q1 2019 - significant capacity increase (>75%) Cost competitiveness advantage over China Over 2,000 different products now approved for production in Vietnam Helps mitigate Section 301 Tariffs and provides a competitive advan
Slide 16: COVID-19 Update as at 3 March 2020
SUPPLY CHAIN COVID-19 UPDATE AS AT 3 MARCH 2020 Main priority is the health and safety of our colleagues and Wuhan we are taking all possible actions to support them Closely monitoring the current and potential effects of the Kunshan outbreak. The effect on supply chains continues to evolve Ku
Slide 17: Leading on Environmental Matters
ESG LEADING ON ENVIRONMENTAL MATTERS BUILDING OUR ESG CREDENTIALS Area What we have done Our Environment • “Green” XP Power products sold in 2019 will produce lifetime CO2 savings of 236 tonnes • Targeting 5% reduction per annum, 43 tonnes of CO2 emissions savings from solar PV in Vietnam • Vietnam
Slide 18: Group Outlook: Expect to Make Progress in 2020
HIGHLIGHTS GROUP OUTLOOK EXPECT TO MAKE PROGRESS IN 2020 • Strong order intake in Q4 2019 across the Group. Order book encouraging • COVID-19 virus creating a level of uncertainty, monitoring the supply chain closely • Vietnam performing well, China capacity recovering • Nevada closure and product t
Slide 19: Annual Results 2019 - Appendices
Annual Results 2019 - Appendices xppower.com XP Power Annual Results 2019 19
Slide 20: Top 20 Customers
CUSTOMERS TOP 20 Top 30 customers account for 49% (2018: 52%) of revenue (largest customer ~10%) XP Power Annual Results 2019 20
Slide 21: Market Data
COMPANY OPERATIONS MARKET DATA Market 2018 ($ Millions) Size Share XP Revenue North Share of XP Asia Europe Total (£ Millions) America (%) Asia 1,400 1.4% Healthcare 2.7 12.0 31.2 45.9 23% Europe 750 8.6% Industrial Electronics 10.1 45.8 33.3 89.2 45% North America 1,100 8.3% Semifab 0.4 0.4 36.6 37
Slide 22: XP Power Converters Everywhere
STRATEGY IN ACTION XP POWER CONVERTERS EVERYWHERE Technology Healthcare • High end computing • Imaging • Broadcast • Patient monitoring • Displays • Life science • Communications • Robotic surgical tools • Security • Home healthcare • Diagnostic equipment Semifab Industrial Electronics • Deposition
Slide 23: 2019 Regional Revenue Performance
COMPANY PERFORMANCE 2019 REGIONAL REVENUE PERFORMANCE Reported Revenue Change XP Glassman Region £m LFL change “Book to Bill” vs. 2018 6% Asia North America 103.9 (7)% (12)% 1.12 10% Europe 64.4 5% 3% 1.01 North America 52% Asia 20.0 34% 28% 1.11 XP Glassman 11.6 73% 0.94 Europe Group 199.9 2% (4)%
Slide 24: Product Portfolio: Significant Growth Opportunity
STRATEGY IN ACTION PRODUCT PORTFOLIO SIGNIFICANT GROWTH OPPORTUNITY Acquisitions in high voltage (EMCO and Glassman) and Radio Frequency (RF - Comdel) power expand our addressable market from $2.7Bn to $4.7Bn One of few companies in the world who can provide solutions right across the power and
Slide 25: Typical Product Life Cycle
COMPANY OPERATIONS TYPICAL PRODUCT LIFE CYCLE • Substantial REVENUE (£ MILLIONS) revenue annuity 7.4 7.1 • Design in cycle 6.7 6.2 6.1 typically 18 months 5.4 5.4 • 2009 and 2012 5.2 4.8 4.6 dips due to market 4.1 4.1 downturn and not 3.7 typical 2 0.9 0.2 2004 2005 2006 2007 2008 2009 2010 2011 201
Slide 26: Key Differentiators: What Makes XP Power Successful?
STRATEGY IN ACTION KEY DIFFERENTIATORS WHAT MAKES XP POWER SUCCESSFUL? Service and Support Quality Product Offering Cost • Large technical sales team • Quality is a given • Product has to solve the customer’s power • Not the customers’ top • Significant support at the and paramount problem and work
Slide 27: XP Power Annual Results 2019
XP Power Annual Results 2019 27