Videndum Plc · LSE:VID
Videndum — The Vitec Group — H1 2021 Earnings Presentation
38 slides from Videndum's earnings presentation, Aug 12, 2021
Slide 1: The Vitec Group plc Half Year Results 2021
Enabling the capture and sharing of exceptional content. The Vitec Group plc Half Year Results 2021 12 August 2021
Slide 2: Important notice
Important notice Forward-looking statements This presentation contains forward-looking statements with respect to the financial condition, performance, position, strategy, results and plans of The Vitec Group plc (the “Group”, “Vitec”, or the “Company”) based on Management’s current expectations or
Slide 3: Agenda
Agenda Half Year 2021 Summary > Stephen Bird, Group Chief Executive Market and Strategy Update > Stephen Bird, Group Chief Executive Financial Review > Martin Green, Group Finance Director Summary > Stephen Bird, Group Chief Executive Q&A Page 3
Slide 4: Summary: H1 2021 results highlights
Summary H1 2021 results highlights > Continued strong trading across the Group driven by a faster-growing market, with underlying order intake up 12% compared with H1 2019 > Adjusted operating margin* improvement, driven by strong operating leverage > Excellent cash performance with high operating c
Slide 5: Market & Strategy Update
Market & Strategy Update Page 5
Slide 6: Benefitting from permanent structural changes to the content creation market
Benefitting from permanent structural changes to the content creation market > Pandemic accelerated the democratisation and digitalisation of media driving permanent structural market changes > Dramatic increase in capture, consumption and sharing of video and scripted TV content > Vitec right at th
Slide 7: Content creation market expected to grow faster than pre-pandemic
Content creation market expected to grow faster than pre-pandemic Imaging Solutions Markets* Production Solutions Markets Creative Solutions Markets TAM TAM TAM £1.2bn £0.4bn £1.0bn Market CAGR Market CAGR Market CAGR c. 2%-5% c. 0%-2% c. 20%-25%** 4% 26% 40% 40% 60% 60% 70% Photographic Market Broa
Slide 8: Imaging Solutions
Imaging Solutions > TAM larger and growing faster with vlogging, mechatronics, audio > Continued new product development in faster-growing segments > Transition to the higher margin e-commerce channel continues > e-commerce a strategic strength; direct, digital interaction with global community > Pr
Slide 9: Influencers build a following, then drive revenue from 3rd parties
Influencers build a following, then drive revenue from 3rd parties to market to that audience Advertising Revenue & Subscriptions Sponsorship Product Advertising placement Revenue Page 9
Slide 10: Production Solutions
Production Solutions > Investing in faster-growing on-location markets, e.g. LED lighting, mobile power and flowtech products; growing demand for 24- hour news > Cost pressures in TV studios benefit our robotic camera systems and voice-activated prompting > Rescheduled major global sports events > D
Slide 11: Creative Solutions
Creative Solutions > Greatest market opportunity, fastest area of growth, highest margin potential Cine market > Strong recovery in original content production > Significant multi-year growth opportunity from technology upgrade to 4K/HDR > All Teradek Bolts now 4K/HDR and 8 x 4K/HDR SmallHD monitors
Slide 12: Creative Solutions cont.
Creative Solutions cont. Gaming market > Entered adjacent gaming market with Lightstream acquisition in April 2021 > World leader in cloud-based video production and editing Software-as-a- Service ("SaaS") to enable content creators to enrich their live video streams > Promoting Lightstream Studio a
Slide 13: Page 13
CREATII/e SOLUTION f
Slide 14: Responsibility – continued progress developing our ESG programme
Responsibility – continued progress developing our ESG programme Initiatives centred around seven key pillars: 1. Continue to prioritise Health and Safety 2. Reduce carbon emissions 3. Reduce packaging and waste 4. Embed sustainability into our Product Life Cycle 5. Formalise integrity of entire Sup
Slide 15: Financial Review
Financial Review Page 15
Slide 16: Recovery
Recovery Orders MAT (£m) Reported basis, excluding Olympics order > COVID-19 significantly impacted demand in 2020 > Orders in Q4 2020 began to recover and positioned us well for 2021 > H1 2021 order intake +12% vs H1 2019 (organic, constant currency basis), excluding the Olympics Dec-19 Jun-20 Dec-
Slide 17: Half year 2021 results
Half year 2021 results H1 21 H1 20 H1 19 £m £m £m > Revenue 2% ahead of H1 2019 on an organic constant Revenue 181.4 118.9 184.2 currency basis Gross profit * 79.8 44.4 87.7 Gross margin % * 44.0% 37.3% 47.6% > Gross margin similar to pre-pandemic level Operating expenses * (57.9) (48.8) (61.9) > 20
Slide 18: Divisional performance
Divisional performance Revenue Operating profit* H1 21 H1 20 H1 19 H1 21 H1 20 H1 19 £m £m £m £m £m £m Imaging Solutions 91.7 63.8 95.5 12.8 (1.2) 13.4 Production Solutions 52.8 33.7 54.8 11.3 1.4 8.4 Creative Solutions 36.9 21.4 33.9 4.5 (0.8) 10.2 181.4 118.9 184.2 28.6 (0.6) 32.0 Corporate & unal
Slide 19: Cash generation
Cash generation £m H1 21 H1 20 H1 19 Operating profit* 21.9 (4.4) 25.8 > £2.6m decrease in working capital* Depreciation (1) 9.3 9.4 9.1 Dec/(inc) in working capital* 2.6 5.4 (8.7) > £1.7m increase in capital expenditure vs H1 2020 (2) Capital expenditure (10.2) (8.5) (7.9) Other (3) 2.2 0.6 1.4 > £
Slide 20: Net debt
Net debt £m 110 > Net debt £11.2m higher than Dec-20 but Net lease Jun 21 additions FX Net debt 100 £5.4m lower than Jun-20 Dec 20 Free cash Net debt flow* Acquisitions > Strong free cash flow* 90 Lease Liabilities Lease Employee > Renewal of leases in Feltre, Costa Rica Liabilities 80 Upfront fees
Slide 21: Margin improvement drivers
Margin improvement drivers Tailwinds > Strong operating leverage as we control costs > Optimising our manufacturing and assembly portfolio > Improving productivity with operational efficiencies > Increasing mix of higher margin, higher technology products, especially 4K/HDR > Recovering the margin i
Slide 22: Summary
Summary Page 22
Slide 23: Summary
Summary 1. Continued strong trading across the Group driven by a faster-growing market 2. H2 2021 trading started extremely well 3. On track towards mid-teen margin, driven by strong operating leverage Content creation market expected to grow faster than pre-pandemic with Vitec benefitting 4. from p
Slide 24: Outlook
Outlook “The Group’s positive first half performance is a result of strong demand, market growth and a tightly managed cost base. Second half trading has started extremely well, and we expect the combined order intake for July and August to be approximately 20% above 2019. The Board now expects adju
Slide 25: Q&A
BBC News, 2020 Q&A Phone number: 0800 640 6441 Confirmation code: 706480 Page 25
Slide 26: Appendices
Appendices Page 26
Slide 27: Investment proposition
Investment proposition 1. Content creation market larger and faster-growing than pre-pandemic 2. Vitec at the heart of the dramatic increase in the capture, consumption and sharing of content 3. Margins improving, driven by strong operating leverage 4. Well positioned for long-term organic growth 5.
Slide 28: Medium-term prospects
Medium-term prospects Creative Solutions > Strong recovery in original content production > Significant multi-year growth from 4K/HDR technology upgrade replacement cycle > Growth in Amimon and Teradek streaming in enterprises and other verticals, including medical, governments, education, churches
Slide 29: Where we operate
Where we operate > Sites in 11 countries; sell into 100+ countries > Sales: UK accounts for only 7% of revenue US > Well capitalised, world-class manufacturing facilities in Israel Japan Italy, Costa Rica, UK & US China > Low cost APAC sourcing, including China & Vietnam Costa Rica > R&D centres in
Slide 30: Competitive landscape (pre-pandemic)
Competitive landscape (pre-pandemic) Manual cine/broadcast Supports On Set Wireless Prompters Photographic Bags 6x 13x 4x 5x 55% 37% 27% 85% Photographic Tripods Batteries LED Lights Key 5x Vitec market share 1.4x 4.4x 36% Competition market share 21% 9% For 85% of its revenue, Vitec is #1 or #2 in
Slide 31: Vitec Imaging Solutions products
Vitec Imaging Solutions products Photo & video supports Lighting Smartphonography/Vlogging Audio capture Motion control & stabilisers Bags Clockwise from top left: PHOTO & VIDEO SUPPORTS - Manfrotto: Befree 3 Way Advanced for Sony, Fast Twin Carbon Tripod with Nitrotech 612 head, Gitzo: Légende, Bal
Slide 32: Vitec Production Solutions products
Vitec Production Solutions products Studio pedestals On-location supports Prompters Mobile power Distribution, rental & services Robotic camera systems Lighting & controls Bags & camera accessories Clockwise from top left: STUDIO PEDESTALS - Vinten: Quartz Two pedestal; ON-LOCATION SUPPORTS - OConno
Slide 33: Vitec Creative Solutions products
Vitec Creative Solutions products Video transmission systems Cloud Video Camera accessories Monitors IP Video Clockwise from top left: VIDEO TRANSMISSION SYSTEMS - Teradek: Bolt 4K Max, Bolt 4K LT, Serv Pro; Cloud- Lightstream: Studio, Rainmaker, Cloud; CAMERA ACCESSORIES - Wooden Camera: Accessory
Slide 34: FY Guidance
FY Guidance Profit before tax* Capex > Slightly H2 weighted > JOBY brought in-house (c.£3m capex ) > Higher amortisation charge vs PY: c.£2m > Increased R&D (c.£7m increase on FY20) > Net finance expense: c.£4m Cash/Net Debt > FX headwind vs PY: c.£3m (c.£2m in H2) > Restructuring payments: c.£3m >
Slide 35: FX sensitivities
FX sensitivities Currency Current spot FY 21 FY 20 rates average average (10 Aug 21) rates rates USD 1.38 1.29 1.28 EUR 1.18 1.12 1.14 YEN 153 138 140 > The expected year-on-year impact on H2 2020 adjusted PBT* at current spot rates would be a headwind of £2.0m > The expected further impact from Cur
Slide 36: Five year summary
Five year summary Total performance for continuing and discontinued operations 60 15% 50 40 10% 30 20 5% 10 0% FY16 FY17 FY18 FY19 FY20 HY21 (10) Adjusted operating profit* (£m) H1 H2 Adjusted operating margin* (%) (20) -5% Total continuing and discontinued FY16 FY17 FY18 FY19 FY20 operations Revenu
Slide 37: Our leadership team
Our leadership team Stephen Bird Group Chief Executive Appointed: April 2009 Shares: 196,187 Martin Green Jennifer Shaw Jon Bolton Group Finance Director Group Communications Group Company Secretary Director & HR Director Appointed: April 2003 Appointed: June 2016 Appointed: Sept 2008 Shares: 114,41
Slide 38: The Vitec Group plc
The Vitec Group plc Bridge House Heron Square Richmond TW9 1EN United Kingdom T +44 (0)20 8332 4600 F +44 (0)20 8948 8277 info@vitecgroup.com www.vitecgroup.com Page 38