Avon Technologies Plc · LSE:AVON
Avon Technologies — Avon Protection — FY2022 Earnings Presentation
29 slides from Avon Technologies's earnings presentation, 2022
Slide 1: Year End Results 2022
YEAR END RESULTS 2022 STRONG H2 RECOVERY AND SIGNIFICANT LONG-TERM GROWTH OPPORTUNITY
Slide 2: Forward-Looking Information
YEAR END RESULTS 2022 FORWARD-LOOKING INFORMATION Avon Protection plc (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.
Slide 3: Our Agenda Today
YEAR END RESULTS 2022 OUR AGENDA TODAY 1. 2. STRATEGIC & OPERATIONAL FINANCIAL REVIEW REVIEW 3. 4. OUTLOOK QUESTIONS Year End Results 2022 3
Slide 4: Strong H2 Recovery and Significant Long Term-Growth Opportunity
YEAR END RESULTS 2022 STRONG H2 RECOVERY AND SIGNIFICANT LONG TERM-GROWTH OPPORTUNITY • Solid order intake and strong organic revenue growth • Successes in developing the head protection business and accelerating our growth in international markets • Profitability impacted by identified issues, with
Slide 5: Strategic & Operational Review
WE USE OUR INGENUITY TO DESIGN NEXT GENERATION PROTECTION, CONSTANTLY ANTICIPATING AND ADAPTING TO THE EVER-INCREASING NEEDS OF OUR CUSTOMERS. STRATEGIC & OPERATIONAL REVIEW Year End Results 2022 5
Slide 6: Heightened Threat Environment
STRATEGIC & OPERATIONAL REVIEW HEIGHTENED THREAT ENVIRONMENT • Current threat environment driving greater focus on protective technologies and capabilities throughout Europe and beyond • NATO nations continue to safeguard against the threat of adversarial use of CBRN capabilities • We are well place
Slide 7: Organic Growth in Respiratory Portfolio
STRATEGIC & OPERATIONAL REVIEW ORGANIC GROWTH IN RESPIRATORY PORTFOLIO • Long-standing relationships with U.S. DOD and U.K. MOD • NSPA continues to be a strong vehicle for providing our life-critical personal protection to NATO countries • Deliveries made to 7 countries within the year; more expecte
Slide 8: Developing Our Head Protection Portfolio
STRATEGIC & OPERATIONAL REVIEW DEVELOPING OUR HEAD PROTECTION PORTFOLIO • First delivery order worth $42m received from the U.S. Army in September 2022 for NG IHPS • Award of ACH GEN II contract in February 2022, with first article testing commencing in the first half of FY23 • Combination of the ab
Slide 9: Successfully Addressing Challenges
STRATEGIC & OPERATIONAL REVIEW SUCCESSFULLY ADDRESSING CHALLENGES • Buy-forward of long lead-time components to improve ability to react to strong demand environment, enabling greater productivity and efficiency • Significant progress made against previously announced cost reduction programmes • Hal
Slide 10: Financial Review
WE HAVE A HIGHLY SKILLED TEAM, STRONG MARKET POSITIONS AND WORLD-LEADING TECHNOLOGY. COMBINED WITH OUR LONG-TERM STRATEGY TO DRIVE SUSTAINABLE GROWTH. FINANCIAL REVIEW Year End Results 2022 10
Slide 11: FY22 Summary
FINANCIAL REVIEW FY22 SUMMARY REVENUE SPLIT BY MARKET (EXCL. ARMOR) Group Excluding armor 2022 2021 2022 2021 U.S. DOD $m $m $m $m $263.5m Commercial Americas Orders received 280.1 282.7 267.9 281.0 FY21: $241.8m Closing order book 151.3 143.1 120.9 116.5 U.K. & International Revenue 271.9 248.3 263
Slide 12: Income Statement
FINANCIAL REVIEW INCOME STATEMENT Excluding Increase in U.K. & International partially armor Armor 2022 Total 2021 offset by decline in U.S. DOD $m $m $m $m Revenue 263.5 8.4 271.9 248.3 Adjusted EBITDA 38.8 (13.3) 25.5 37.6 Adjusted EBITDA margin 14.7% (158.3%) 9.4% 15.1% 2021 includes ($8.4m) EBIT
Slide 13: Revenue Growth in U.K. & International Offsets Decline in U.S. DOD
FINANCIAL REVIEW REVENUE GROWTH IN U.K. & INTERNATIONAL OFFSETS DECLINE IN U.S. DOD *Excluding armor Year End Results 2022 13
Slide 14: Increased Revenue Offset by Mix and Operational Inefficiencies
FINANCIAL REVIEW INCREASED REVENUE OFFSET BY MIX AND OPERATIONAL INEFFICIENCIES *Excluding armor Year End Results 2022 14
Slide 15: Cash Conversion >140% Reflects Tight Control of Working Capital
FINANCIAL REVIEW CASH CONVERSION >140% REFLECTS TIGHT CONTROL OF WORKING CAPITAL 2022 2021 $m $m Adjusted EBITDA 25.5 37.6 Includes $4.0m prepayment covering Working capital and other adjustments 10.9 (6.3) FY23 contributions Cash flows from continuing operations before exceptional items 36.4 31.3 E
Slide 16: Cash Conversion >140% Reflects Tight Control of Working Capital
FINANCIAL REVIEW CASH CONVERSION >140% REFLECTS TIGHT CONTROL OF WORKING CAPITAL Year End Results 2022 16
Slide 17: Balance Sheet
FINANCIAL REVIEW BALANCE SHEET Reduction in capital assets as total statutory 2022 2021 depreciation, amortisation and impairment of $m $m $26.4m higher than capital expenditure of $8.9m Intangible assets 171.0 181.0 Property, plant and equipment 39.9 48.6 Net other non-current assets 16.3 28.7 Incr
Slide 18: Outlook
WE ARE LEADERS IN OUR FIELD, PUSHING THE BOUNDARIES OF WHAT OTHERS THINK IS POSSIBLE. OUTLOOK Half year results 2023 Avon Protection plc 18
Slide 19: FY23 Expectations
OUTLOOK FY23 EXPECTATIONS • Q1 performance to date has been in line with expectations • Opening order book of $151.3m provides good visibility into FY23 • Mid-single-digit revenue growth (excluding armor) with increase in head protection more than offsetting modest decline in respiratory • Armor rev
Slide 20: Confident in the Medium & Long-Term Outlook
OUTLOOK CONFIDENT IN THE MEDIUM & LONG-TERM OUTLOOK • Greater focus on protective technologies and capabilities throughout Europe and beyond, resulting in a higher-demand environment and a greater awareness of threat capabilities • Ongoing proliferation of CBRN offensive capabilities in hostile nati
Slide 21: Avon Protection
AavenN PROTECTION
Slide 22: Thank You
THANK YOU Year End Results 2022 22
Slide 23: Appendix
WE USE OUR INGENUITY TO DESIGN NEXT- GENERATION PROTECTION, CONSTANTLY ANTICIPATING AND ADAPTING TO THE EVER-INCREASING NEEDS OF OUR CUSTOMERS. APPENDIX Year End Results 2022 23
Slide 24: Technical Guidance FY23
APPENDIX TECHNICAL GUIDANCE FY23 2021 2022 2023 guidance $m $m $m Research and development expenditure 19.1 10.9 11-14 Of which customer funded 2.3 1.4 2-3 Group expenditure 16.8 9.5 9-11 Capitalised development costs 15.0 5.8 5-7 Expensed development costs 1.8 3.7 3-5 Other capital expenditure 16.6
Slide 25: Income Statement by Line of Business
APPENDIX INCOME STATEMENT BY LINE OF BUSINESS Armor Excluding Armor Total FY22 $m $m $m Orders received 12.2 267.9 280.1 Closing order book 30.4 120.9 151.3 Revenue 8.4 263.5 271.9 Adjusted EBITDA (13.3) 38.8 25.5 Adjusted EBITDA margin (158.3%) 14.7% 9.4% Adjusting operation profit/(loss) (13.3) 23
Slide 26: Reported to Adjusted Reconciliation
APPENDIX REPORTED TO ADJUSTED RECONCILIATION 2022 2021 $m $m Statutory operating loss (2.1) (29.0) Amortisation of acquired intangibles 6.8 14.2 Impairments and provisions related to armor assets 1.8 46.8 Release of contingent consideration (3.9) (15.7) Impairment of non-current assets 3.6 0.7 Restr
Slide 27: Revenue by Line of Business
APPENDIX REVENUE BY LINE OF BUSINESS 2022 2021 Revenue $m Respiratory Head Protection Armor Total Respiratory Head Protection Armor Total U.S. DOD 63.2 35.5 - 98.7 86.1 39.1 - 125.2 Commercial Americas 40.5 25.2 - 65.7 40.4 22.4 - 62.8 U.K. & International 89.3 9.8 - 99.1 42.1 11.7 - 53.8 Total Excl
Slide 28: Abbreviations
APPENDIX ABBREVIATIONS Term Explanation Term Explanation 50 Series A range of masks based on the proven technology of the M50 mask system KPIs Key Performance Indicators AGM Annual General Meeting LTIP Long Term Incentive Plan APAC Asia-Pacific MENA Middle East and North Africa APC Avon Protection C
Slide 29: Appendix Sustainability Agenda Highlights
APPENDIX SUSTAINABILITY AGENDA HIGHLIGHTS 1. We have concentrated our efforts into 3 areas: Identified key sustainability areas, Assessing our existing greenhouse has (GHG) data and building an action plan for delivering net zero, Governance of our sustainability agenda and TCFD reporting. 2. We hav