Electro Optic Systems Holdings Limited · ASX:EOS
Electro Optic Systems — Investor Presentation (March 2024)
31 slides from Electro Optic Systems's investor presentation, Mar 22, 2024
Slide 1: Investing for accelerated growth
NOT FOR RELEASE TO U.S. WIRE SERVICES OR DISTRIBUTION IN THE UNITED STATES Investing for accelerated growth Equity raising presentation Andreas Schwer, Managing Director & Chief Executive Officer Clive Cuthell, Chief Financial Officer & Chief Operating Officer 22 March 2024 Approved for release by t
Slide 2: Disclaimer and important notices
Disclaimer and important notices The following notice and disclaimer applies to this investor presentation (Presentation) and you are therefore advised to read this carefully before reading or making any other use of this Presentation or any information contained in this Presentation. By accepting t
Slide 3: Disclaimer and important notices
Disclaimer and important notices Not financial product advice This Presentation does not constitute financial product or investment advice or any recommendation to acquire New Shares or accounting, legal or tax advice. Each recipient of the Presentation should make its own enquiries and investigatio
Slide 4: Disclaimer and important notices
Disclaimer and important notices Effect of rounding A number of figures, amounts, percentages, estimates and calculations of value in this Presentation are subject to the effect of rounding. Forward-looking statements This Presentation contains certain "forward looking statements" that are based on
Slide 5: Executive Summary
Executive Summary Geopolitical uncertainty is creating supportive market conditions and opportunities to accelerate growth • EOS designs, manufactures, and exports high precision remote weapon systems (“RWS”) and other products Leading developer • Product range covers traditional remote weapon syste
Slide 6: EOS Overview
EOS Overview EOS has designed, manufactured and exported advanced technology systems for nearly 40 years STRATEGIC POSITIONING OUR STRENGTHS PRODUCT AREAS >65% export Accuracy and revenue tracking Remote Weapon Systems Space Global Non- Technology and ITAR market innovation (non-US) Established Grow
Slide 7: Recent Financial Performance
Recent Financial Performance Strong recent financial performance and robust execution allows EOS to focus on acceleration of organic growth FY2023 results summary Highest ever Highest ever revenue $219.3m up $81.3m on prior year continuing operations revenue • • Underlying EBITDA1 positive $5.7m up
Slide 8: Accelerating Growth
Accelerating Growth
Slide 9: Market Conditions
Market Conditions Geopolitical uncertainty is creating supportive market conditions, particularly for counter-drone products Context Outcome • Entrenched conflict in Ukraine and • Increased defence spending broadening conflict in Middle East • Global defence spending increased by 9% to a record US$2
Slide 10: Recent Business Wins
Recent Business Wins The business has recently demonstrated a strong track record in winning contracts (including with new products), which is expected to drive momentum for the future Contract Expected Contract Revenue announcement Timing 13 Nov 2023 R600 RWS customer in Southeast Asia $28m 2024-26
Slide 11: Expanding Customer Base
Expanding Customer Base Significant progress was made in 2023 in expanding and diversifying the customer base Revenue by geography, % • Significant opportunities arising: 100% • Market-leading products • Market growth driven by conflict 80% • Focus on European opportunities: 60% • Significant growth
Slide 12: Contract Backlog
Contract Backlog During 2023 EOS widened the product base and significantly increased the order book size Contract Backlog, $m Contract Backlog (secured) - 31 December 2023 Description $m Business 700 622 RWS 206 Defence 600 181 Royal Australian Navy 187 EM Solutions 500 400 Other 48 300 Total 441
Slide 13: Identified Growth Opportunities
Identified Growth Opportunities Current market demand expected to be filled through the innovative products launched by EOS during 2023 Indicative revenue timing * • Formal production launch in 2023 R150 Lightweight • Suitable for light vehicles 2023-25 System • Future UGV opportunity • Launched “Sl
Slide 14: Equity Raising
‘Eos ing ity Rais Equ
Slide 15: Equity Raising Overview
Equity Raising Overview Equity Raising of up to $40m to enable acceleration of growth EOS is raising $35 million via a fully underwritten institutional Placement1, comprising the issue of approximately 20.6 million New Shares, equivalent to 12% of total EOS existing issued share capital. Offer Siz
Slide 16: Use of Funds
Use of Funds Proceeds from the Equity Raising are expected to allow EOS to accelerate growth in RWS Near-term RWS sales prospects Investing for growth • The market for RWS is strengthening, particularly in counter-drone applications • The large, lumpy nature of EOS’ cash inflows (e.g. contract recei
Slide 17: Timetable
Timetable Event Date (2024)1 SPP record date Wednesday, 20 March Trading halt Thursday, 21 March Launch of Placement Friday, 22 March Results of Placement announced, trading halt lifted and recommencement of trading Monday, 25 March Settlement of Placement Thursday, 28 March Despatch of SPP Offer Bo
Slide 18: Appendix
Appendix 18
Slide 19: Remote Weapon Systems Product Range
Remote Weapon Systems Product Range Sensor Unit Ultralight RWS Light RWS Medium RWS Heavy RWS Light Turret Multi-Mission R150 R400 R600 R800 T1600 Sensors Common Range of Platforms and Applications Common Control Interfaces MLRS Protected Truck UGV CUAS Vehicle 19
Slide 20: Debt Position
Debt Position $m Principal Term Maturity Total Rate Repayment1 Status Working Capital Facility 20.0 12m Sep 23 19% 26.9 REPAID TO BE REPAID ON OR BEFORE Working Capital Facility 15.0 18m Apr 24 19% 20.5 SCHEDULED DATE IN APR-24 FROM EXISTING CASH RESERVES Term Loan Facility 35.0 36m Oct 25 26% 52.1
Slide 21: Reconciliation of Statutory Profit / (Loss) and Non-GAAP measures
Reconciliation of Statutory Profit / (Loss) and Non-GAAP measures EOS generated positive Underlying EBITDA in 2023 Total Operations (Continuing & Discontinuing) 2022 2022 2022 2023 $m Continuing Discontinuing Total Loss for the year (34.1) (53.6) (81.7) (135.3) Gain on assignment and effective dispo
Slide 22: Key risks
Key risks This section describes the key business risks of investing in EOS, together with the risks relating to participation in the Equity Raising each of which may affect the value of the New Shares. It does not describe all the risks of an investment. Before investing in EOS, you should be aware
Slide 23: Key risks
Key risks Supply chain EOS’ supply chain is globally distributed and a majority of its production activity is outsourced to suppliers of components, assemblies and sub-systems. A failure or delay in the supply chain caused by, or in connection with, an individual supplier, shipping agent, government
Slide 24: Key risks
Key risks Competition EOS operates in markets which attract strong competition. Accordingly, there is no certainty that EOS' current market share will be maintained or that its expected market share will be achieved in the near future or if at all. Taxation Unanticipated tax laws or any changes in t
Slide 25: Key risks
Key risks Foreign exchange risks The Group typically incurs costs in Australian dollars and United States dollars, and sells products priced in Australian dollars, United States dollars and other currencies. This can create a foreign exchange exposure, particularly as costs are often incurred prior
Slide 26: Key risks
Key risks Product development risks Ongoing sales of existing products to customers require the maintenance and development of these existing products and services to ensure that they remain effective and saleable. In order to continue operating, existing products require the maintenance of legacy s
Slide 27: Key risks
Key risks GENERAL RISKS Market perceptions Shares are a speculative investment and are vulnerable to macroeconomic changes including sudden changes in the market's perception of a company’s value. Positive financial returns are not guaranteed, and the EOS share price may be affected by various facto
Slide 28: International Selling Restrictions
International Selling Restrictions This document does not constitute an offer of New Shares of the Company in any jurisdiction in which it would be unlawful. In particular, this Presentation may not be distributed to any person, and the New Shares may not be offered or sold, in any country outside A
Slide 29: International Selling Restrictions
International Selling Restrictions Singapore This document and any other materials relating to the New Shares have not been, and will not be, lodged or registered as a prospectus in Singapore with the Monetary Authority of Singapore. Accordingly, this document and any other document or materials in
Slide 30: Underwriting Agreement Summary
Underwriting Agreement Summary EOS has entered into an underwriting agreement with the Joint Lead Managers in respect of the Placement (Underwriting Agreement). The Underwriting Agreement contains representations and warranties and indemnities in favour of the Joint Lead Managers. Details of the fee
Slide 31: Underwriting Agreement Summary
Underwriting Agreement Summary B. at any time prior to 4.01pm on the settlement date (SD) for the Placement, the ASX/S&P 200 Index closes at the end of an ASX trading day at a level that is 10% or more below its level at market close on the ASX trading day immediately prior to the date of this agree
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