Dialight Plc · LSE:DIA
Dialight — H1 2017 Earnings Presentation
28 slides from Dialight's earnings presentation, Jul 24, 2017
Slide 1: Half Year Results 2017
24 JULY 2017 HALF YEAR RESULTS 2017
Slide 2: Positioned for the Future
POSITIONED FOR THE FUTURE Dialight becomes first industrial LED lighting supplier to reach 1 million installed fixtures … 97% of the Scalable Growth Strong market production initiatives balance opportunity capacity on-going sheet remains Private & Confidential 2
Slide 3: Financial Review
1 FINANCIAL REVIEW FARIYAL KHANBABI
Slide 4: Financial Highlights
FINANCIAL HIGHLIGHTS Revenue Underlying EBIT Net cash £92.7m £6.5m £79.8m £12.8m £4.2m £7.2m H1-2016 H1-2017 H1-2016 H1-2017 H1-2016 H1-2017 39% 55% £4.0m 12.8p Underlying Underlying Profit before Underlying EPS Gross margin EBIT growth tax Private & Confidential 4
Slide 5: EBIT Bridge
EBIT BRIDGE £(0.9)m £2.6m Revenue increase £1.3m Material cost savings £0.6m £6.5m £4.2m Factory closure Investing in sales H1-2016 H1-2017 Private & Confidential 5
Slide 6: Lighting
LIGHTING Lighting orders Lighting revenue Oil & Gas Mining 2% £76.9m £75.0m H1 2017: 18% H1 2017: 9% H1 2016: 21% H1 2016: 7% Power Pulp & Paper 2016 2017 H1 2017: 8% H1 2017: 8% H1 2016: 6% H1 2016: 7% Order growth at constant currency Private & Confidential 6
Slide 7: Segmental Results
SEGMENTAL RESULTS Lighting Signals & Components Revenue Revenue £72.4m £59.0m £20.8m £20.3m H1-2016 H1-2017 H1-2016 H1-2017 Operating profit Operating profit £7.5m £5.1m +14% £1.4m £1.6m H1-2016 H1-2017 H1-2016 H1-2017 Private & Confidential 7
Slide 8: Non-Underlying Costs
NON-UNDERLYING COSTS £m H1-2017 H1-2016 Employee severance and restructuring costs - 5.1 Intangible/tangible asset impairment - 5.1 Production transfer costs 2.4 0.7 Other - 0.2 Non-underlying costs 2.4 11.1 Total cash impact 2.4 Final restructuring costs of £4 - £5m in 2017 Private & Confidential 8
Slide 9: Cash
CASH £m H1-2017 Trade working capital days reduced by 44 days Net cash at 31 December 2016 8.0 EBITDA (underlying) 9.1 Net working capital 4.8 108 107 Capex (3.2) Non-underlying (2.4) 83 Taxes & other (3.6) 80 Net cash at 30 June 2017 12.7 64 Jul-16 Oct-16 Jan-17 Apr-17 Cash conversion: 148% Private
Slide 10: Capital Allocation Framework
CAPITAL ALLOCATION FRAMEWORK 1 Sustaining capital Returns to Compelling shareholders growth 2 Cycle of Balance sheet strength Private & Confidential 10
Slide 11: H2-2017 Planning Assumptions
H2-2017 PLANNING ASSUMPTIONS Average US$ rate H1 2017: 1.26 H1 2016: 1.43 £1.1m £10.0m positive positive impact on impact on underlying revenue EBIT Net interest Broadly in line with H1-2017 Income statement Tax rate 35% Capex c.£3m for plant upgrades, IT & product development Cash flow Working capi
Slide 12: Business Review
2 BUSINESS REVIEW MICHAEL SUTSKO
Slide 13: Rebuild Timeline
REBUILD TIMELINE Sanmina Full transfer contract Paint system to be signed commissioned completed October 15 August 16 June 17 March 16 January 17 December 17 Rebuild, Lead First Platform & Grow production engineering completed Robust and scalable operations Private & Confidential 13
Slide 14: Strategic Framework
STRATEGIC FRAMEWORK Strategy Expand industrial LED adoption Grow Beyond lighting: Safety, productivity and automation Maximise supply chain Optimise Strong team and culture, more effective organisation Grow our strategic lighting business Invest Accelerate growth through acquired technologies and se
Slide 15: Go To Market
GO TO MARKET Energy, utilities & mining TRANSACT Industrial manufacturing Through electrical distributors Infrastructure SELL VALUE customer factories and corporate offices £ = + + VALUE PROPOSITION Customer Energy Maintenance Installation savings cost cost cost Private & Confidential 15
Slide 16: Sales Effectiveness
SALES EFFECTIVENESS Regional expansion Lighting revenues per sales head £0.8m £0.7m £0.7m 2015 2016 2017 Private & Confidential 16
Slide 17: Driving Demand
DRIVING DEMAND Enable maintenance Access different Awareness spend budgets • Corporate • Expand market • One year payback sustainability & safety conversion through • Lighting as a service • Design engineering public awareness • Process productivity Private & Confidential 17
Slide 18: Technology Driven Differentiation
TECHNOLOGY DRIVEN DIFFERENTIATION Superior fixture Advanced controls performance & longevity Material cost savings - zero System wide control replacement parts Reduced maintenance Data driven insights downtime Seamless integration with Optimise fixture quantities factory automation Environmentally f
Slide 19: Intelligent Lighting
INTELLIGENT LIGHTING Level 3: Connecting the whole factory Access to built in network of lighting Level 2: Enhancing productivity & safety Environment Power & energy monitoring monitoring Asset & people tracking Emergency & Video & audio safety Level 1: Lighting control Integration with Dialight DAC
Slide 20: Optimise Margins
OPTIMISE MARGINS Reduces inventory obsolescence and increases volume leverage Platform designs Configurable assembly increases customers’ optionality Globally scalable and world class production footprint Scalable operations Increased purchasing power Supplier management; forecasting & planning, log
Slide 21: Capital Allocation
CAPITAL ALLOCATION A clear strategy to deliver value Growth businesses Profit and cash Financial flexibility Capital allocation discipline Balance sheet Compelling Shareholder strength growth returns Private & Confidential 21
Slide 22: Investment Proposition
INVESTMENT PROPOSITION TRUSTED DIFFERENTIATED Deep expertise exclusively in LED and Best-in-class designs that offer superior decades of experience as a lighting partner performance, low maintenance, high to many of the world’s leading efficiency and long-life. That’s how we organisations has helped
Slide 23: Summary and Outlook
• Ambitious growth strategy to capture industrial LED market • Transformation to a robust and scalable manufacturing platform • 9 product lines transferred • 3 product lines remaining to be completed by year end • Confident of delivering continued growth and shareholder value. • Expectations for H2
Slide 24: Questions
Questions Private & Confidential 24
Slide 25: Disclaimer
DISCLAIMER Certain statements included or incorporated by reference within this presentation may constitute “forward-looking statements” in respect of the Group’s operations, performance, prospects and/or financial condition. By their nature, forward-looking statements involve a number of risks, unc
Slide 26: Income Statement
INCOME STATEMENT Variance Constant £m H1-2017 H1-2016 Reported Currency Revenue 92.7 79.8 16% 3% Cost of goods sold (56.5) (51.0) Gross Profit 36.2 28.8 26% 11% Distribution costs (17.4) (14.3) Administrative expenses (12.3) (10.3) Underlying EBIT 6.5 4.2 55% 21% Non-underlying costs (2.4) (11.1) Fi
Slide 27: Segmental Results
SEGMENTAL RESULTS Lighting £m H1-2017 H1-2016 Variance Revenue 72.4 59.0 23% Direct costs (41.8) (35.1) (19%) Gross Profit 30.6 23.9 28% Gross margin 42% 41% 100bps Overheads (23.1) (18.8) (23%) EBIT 7.5 5.1 47% Signals & Components £m H1-2017 H1-2016 Variance Revenue 20.3 20.8 (2%) Direct costs (14
Slide 28: Segments
SEGMENTS £m H1-2017 H1-2016 Obstruction 13% 13% Food & Beverage 7% 9% Heavy industrial 14% 17% Mining 9% 7% Oil & Gas 18% 21% Power 8% 6% Pulp & Paper 8% 7% Other industrials 23% 21% 100% 100% Private & Confidential 28