Avon Technologies Plc · LSE:AVON
Avon Technologies — Avon Rubber p.l.c. — FY2019 Earnings Presentation
40 slides from Avon Technologies's earnings presentation, 2019
Slide 1: Year End Results 2019: A transformed outlook
YEAR END RESULTS 2019 A transformed outlook
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 A transformed review outlook 3 YEAR END RESULTS 2019 A transformed outlook
Slide 4: Highlights
Highlights Paul McDonald Chief Executive Officer 4 YEAR END RESULTS 2019 A transformed outlook
Slide 5: Strategy delivery has transformed our outlook
Strategy delivery has transformed our outlook Milestone acquisition of 3M’s ballistic protection business expected to close in H1, strengthening our personal protection offering First deliveries under the new M69 and M53A1 long-term contracts with the U.S. DOD U.K. GSR first order and delivery expec
Slide 6: Strong progress against our investor proposition
Strong progress against our investor proposition +4.2% $91.0m 22.0% 63.5% +30% AT CONSTANT ACQUISITION OF +70 BPS £48.3M NET INCREASE OVER CURRENCY 3M’S BALLISTIC AT CONSTANT CASH PRIOR YEAR PROTECTION CURRENCY BUSINESS 6 YEAR END RESULTS 2019 A transformed outlook
Slide 7: Financial Review
Financial Review Nick Keveth Chief Financial Officer 7 YEAR END RESULTS 2019 A transformed outlook
Slide 8: Strong financial performance in a transformational year
Strong financial performance in a transformational year FINANCIALS REVENUE SPLIT BY BUSINESS 2019 % Change % Constant Currency Orders received £181.9m 5.0% 1.4% Avon Protection Closing order book £40.4m 6.9% (0.7%) £179.3m (2018: £165.5m) Revenue £179.3m 8.3% 4.2% milkrite | InterPuls Adjusted EBITD
Slide 9: 4.2% revenue growth at constant currency
4.2% revenue growth at constant currency £18.1m (£9.9m) £6.5m (£0.8m) (£0.1m) (27.1%) (5.3%) (0.3%) 3.9% NEW MILITARY CONTRACTS £179.3m IMPROVED EBITDA £165.5m MARGIN TO 26.1% 22% 2018 M50 New DOD RoW Military LE Fire milkrite | FX 2019 Revenue contracts InterPuls Revenue 9 YEAR END RESULTS 2019 A t
Slide 10: Cash conversion impacted by timing of customer receipt
Cash conversion impacted by timing of customer receipt £39.5m (£0.3m) (£13.5m) (£7.9m) (£5.9m) (£1.3m) (£5.4m) (£1.5m) (£1.9m) Cash conversion £46.5m 63.5% £48.3m Capex EBITDA Working Tax/Interest Purchase of Dividends RoW Contract Other / FX 2018 Net cash Pension 2019 Net cash own shares capital pa
Slide 11: Avon Protection
Avon Protection FINANCIALS REVENUE SPLIT BY MARKET 2019 % Change % Constant Currency Orders received £129.8m 4.2% 0.2% Military Closing order book £36.7m 4.0% (1.1%) Law Enforcement £128.4m Revenue £128.4m 11.0% 5.9% (2018: £115.7m) Fire Adjusted EBITDA £31.4m 18.0% 13.4% Adjusted EBITDA margin 24.5
Slide 12: milkrite | InterPuls
milkrite | InterPuls FINANCIALS REVENUE SPLIT BY MARKET 2019 % Change % Constant Currency Orders received £52.1m 7.0% 4.5% Interface Closing order book £3.7m 48.0% 48.1% £50.9m PCI Revenue £50.9m 2.2% (0.3%) (2018: £49.8m) Farm Services Adjusted EBITDA £10.5m (3.7%) (6.6%) Adjusted EBITDA margin 20.
Slide 13: Stabilising dairy market conditions
Stabilising dairy market conditions $/kg 2.5% 45.0 • Dairy markets stabilising - underpinning confidence in 40.0 a return to growth in FY20 2.0% 35.0 • Milk price improvement due to demand 30.0 outstripping supply 1.5% 25.0 • Modest milk production growth 1.0% 20.0 15.0 • Broadly stable feed prices
Slide 14: Excellent order book visibility for 2020
Excellent order book visibility for 2020 FY20 FY19 £29.4m FY20 £28.1m £7.3m FY19 Fire £5.1m £3.0m Fire £1.6m FY20 £3.7m LE FY19 LE £4.3m £2.5m £3.5m Military First Responders milkrite | InterPuls Growth percentages are calculated on a constant currency basis 14 YEAR END RESULTS 2019 A transformed ou
Slide 15: IFRS 16 Leases
IFRS 16 Leases HIGHLIGHTS IMPACT ON FY19 RESULTS • Effective from 1 October 2019 • Increases Adjusted EBITDA but no impact on Adjusted Adjusted Adjusted Cash Adjusted EPS EBITDA EBITDA % EPS conversion As reported £39.5m 22.0% 91.7p 63.5% • No overall change to cashflows, cash conversion FY19 metric
Slide 16: Confident in FY20 expectations
Confident in FY20 expectations Excellent opening order provides strong visibility going into FY20 Full year of delivery against new M69 aircrew mask and M53A1 mask and powered air system contracts M50 sustainment contract expected in 2020 with improved commercial pricing RoW Military supported by fi
Slide 17: A transformed outlook
A transformed outlook Paul McDonald Chief Executive Officer 17 YEAR END RESULTS 2019 A transformed outlook
Slide 18: We are consistently delivering against our strategy
We are consistently delivering against our strategy Growing Selected Value the core product enhancing development acquisitions 18 YEAR END RESULTS 2019 A transformed outlook
Slide 19: New contracts underpin mid-term outlook
A transformed outlook: New contracts underpin mid-term outlook The award of the M69 and the M53A1 contracts confirm Avon Protection as the sole source provider for all Respirators, PAPRs and tactical SCBA across the U.S. DOD. The M53A1 mask and powered air system is a framework contract that covers
Slide 20: Active trials with MCM100
A transformed outlook: Active trials with MCM100 The MCM100 deep-water rebreather was launched in 2018 and was designed in partnership with specialist military dive teams to meet bespoke technical requirements. During the year we completed the first large order for the Norwegian Military who are a s
Slide 21: Exiting the Fire SCBA Market
A transformed outlook: Exiting the Fire SCBA Market We have taken the decision to move away from the Fire SCBA market to focus Avon Protection on our core growth opportunities within our Military and Law Enforcement customers. Our small position in the fire market, competing against much larger play
Slide 22: Military outlook underpinned
Military outlook underpinned Current contract period Potential medium-term In Service order intake per annum M50 Mask System* £25-35m Sole-source / Own IP / Commercial pricing M53A1 Mask and Powered Air System £20-25m Sole-source / Own IP / Commercial pricing FY19 military revenue: M69 Aircrew Mask
Slide 23: Margin upside across the business
A transformed outlook: Margin upside across the business Avon Protection • Improved margins through M53A1 mix 2019 TARGET • Improved margins from M50 pricing • Higher margin Law Enforcement and 24.5% 25%+ RoW Military growth • Margin benefit from exiting Fire SCBA product line milkrite | InterPuls 2
Slide 24: Continued investment in product development
A transformed outlook: Continued investment in R&D Spend product development £XX.Xm XX.X% We have continued our investment in enhancing the technical capability of our existing portfolio and developing new products that will deliver future growth for the business. Avon Protection significantly inves
Slide 25: Milestone acquisition of 3M's ballistic protection business
A transformed outlook: Milestone acquisition of 3M’s ballistic protection business Systems provider at forefront of technology innovation Broader technology and product portfolio Further deepens our relationship with the U.S. DOD Expands long term contract portfolio Enhances R&D capability Enhanced
Slide 26: System supplier for life critical protection portfolio
System supplier for life critical protection portfolio Powered Respirators Air Supplied Air • Suppl Broad portfolio to ied meet the needs of our growing Air Military and First Responder customer base Helmets Body Armour 26 YEAR END RESULTS 2019 A transformed outlook
Slide 27: Actively exploring acquisition opportunities
A transformed outlook: Actively exploring acquisition opportunities to further accelerate growth We continue to evaluate further opportunities but will only proceed where we believe they meet our strict criteria. Clearly specified commercial and financial criteria remains valid. Targeting acquisitio
Slide 28: Transformed outlook provides greater certainty and opportunity
Transformed outlook provides greater certainty and opportunity New contracts underpin mid term outlook for Military with wider RoW opportunities driving longer term growth Law Enforcement & milkrite | InterPuls will add continued growth over mid term 3M ballistic protection closing expected in the f
Slide 29: Questions & Answers
Section Questions heading &here Answers SUBHEADING HERE 29 YEAR END RESULTS 2019 A transformed outlook
Slide 30: Appendices
Section Appendices heading here SUBHEADING HERE 30 YEAR END RESULTS 2019 A transformed outlook
Slide 31: Group income statement
Group income statement 2019 2018 £m £m Revenue 179.3 165.5 Adjusted EBITDA 39.5 35.3 Depreciation and amortisation (8.2) (8.0) Operating profit before amortisation of acquired intangibles, exceptional items and defined benefit 31.3 27.3 pension costs Amortisation of acquired intangibles, exceptional
Slide 32: Reported to adjusted reconciliation
Reported to adjusted reconciliation 2019 2018 £m £m Operating profit 14.4 22.8 Amortisation of acquired intangibles 3.5 3.1 Defined benefit pension administration costs 0.5 0.5 Exceptional items: Restructuring costs - 0.9 Defined benefit scheme past service costs 3.5 - Acquisition costs 2.9 - Exit c
Slide 33: Revenue by line of business
Revenue by line of business 2019 2018 £m £m Military 87.2 66.1 Law Enforcement & Civil 27.3 35.4 Fire 13.9 14.2 Avon Protection 128.4 115.7 Interface 36.9 35.6 Precision, Control & Intelligence 8.7 9.0 Farm Services 5.3 5.2 milkrite | InterPuls 50.9 49.8 Group total 179.3 165.5 33 YEAR END RESULTS 2
Slide 34: Balance sheet
Balance sheet 2019 2018 £m £m Intangible assets 35.3 41.5 Property, plant and equipment 21.4 22.6 Current assets 56.1 47.2 Current liabilities (36.5) (41.4) Non-current assets/liabilities 4.8 (1.1) 87.1 68.8 Net cash 48.3 46.5 129.4 115.3 Retirement benefit scheme (43.0) (30.5) Net assets 86.4 84.8
Slide 35: Cash flow
Cash flow 2019 £m 2018 £m Cash flows from continuing operations 25.1 38.2 Cash impact of exceptionals (1.9) (0.1) Cash flows from discontinued operations - (0.2) Cash flows from operations 23.2 37.9 Net interest paid 0.2 - Payments to pension scheme (1.5) (1.5) Tax paid (6.1) (5.0) Disposal of busin
Slide 36: Foreign exchange and sensitivities
Foreign exchange and sensitivities Average rate Closing rate Average rate Closing rate 2019 2019 2018 2018 US Dollar 1.276 1.232 1.346 1.305 Euro 1.131 1.126 1.132 1.127 1$ cent 1€ cent movement movement £m £m Revenue 1.1 0.2 Operating profit 0.2 - Net assets 0.3 0.2 36 YEAR END RESULTS 2019 A trans
Slide 37: 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 38: 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 39: 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 40: 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