Gooch & Housego Plc · LSE:GHH
Gooch & Housego — FY2023 Earnings Presentation
26 slides from Gooch & Housego's earnings presentation, Dec 5, 2023
Slide 1: Full Year Results
FULL YEAR RESULTS Year ended 30 September 2023 5th December 2023 November 2020
Slide 2: Agenda
AGENDA • Highlights • Financial Results • Business Update • Environmental, Social & Governance • Strategy Update • Outlook & Summary Charlie Peppiatt - CEO Chris Jewell - CFO PRELIMINARY RESULTS PRESENTATION – FY 2023 PAGE 2
Slide 3: Highlights
HIGHLIGHTS • Revenue up 19% to £148.5m (FY2022: £124.8m) with continued strong growth in all three end markets • Significant improvement in operational execution and further reduction in overdue backlog • Adjusted operating profit up 28% to £11.3m (FY2022: £8.9m) • Normalised order book remains stro
Slide 4: A Better World With Photonics
A BETTER WORLD WITH PHOTONICS PRELIMINARY RESULTS PRESENTATION – FY 2023 PAGE 4
Slide 5: Summary Income Statement
SUMMARY INCOME STATEMENT Year Ended 30 September 2023 2022 % Change £m £m • Revenue grew by 19%; organic, constant currency up 13.6% Revenue 148.5 124.8 19.0% • Good growth across all three of our end markets Gross profit 44.0 39.1 12.7% • Gross margin declined to 29.6%; inflation continued to impac
Slide 6: Cash Flow
CASH FLOW Year Ended 30 September 2023 2022 £m £m • Total investment in tangible and intangible assets of Reported operating profit/(loss) 6.9 (1.6) £6.9m (2022: £8.6m) Depreciation, amortisation & impairment 11.0 17.2 • Increase in working capital of £2.0m with £3.5m Net capital expenditure (5.8) (
Slide 7: Industrial
INDUSTRIAL Financials (52% of revenue) FY23 FY22 Change Revenue £77.1m £64.6m 19.5% Adjusted £10.5m £8.4m 24.9% Operating Profit % Margin 13.6% 13.0% 60bps Order Book £46.9m £57.5m (18.5)% • Additional productive capacity successfully added to deliver organic constant currency revenue growth of 13.7
Slide 8: Aerospace & Defence
AEROSPACE & DEFENCE Financials (26% of revenue) FY23 FY22 Change Revenue £38.6m £30.6m 26.2% Adjusted £(2.3)m £(2.7)m 14.8% Operating Profit % Margin (6.0)% (8.7)% 270bps Order Book £45.5m £53.5m (14.9)% • Revenue grew by 20.4% on a constant currency basis compared with FY2022 • Additional capacity
Slide 9: Life Sciences
LIFE SCIENCES Financials (22% of revenue) FY23 FY22 Change Revenue £32.8m £29.7m 10.4% Adjusted £4.1m £4.0m 3.9% Operating Profit % Margin 12.5% 13.3% (80)bps Order Book £31.7m £36.6m (13.4)% • Revenues grew by 6.2% compared with FY2022, on a constant currency basis • Strong medical laser demand esp
Slide 10: Responsible Business
RESPONSIBLE BUSINESS Environment • Reduction in our carbon intensity measure of 33% • Site plans in place to reduce energy usage • 69% of the Group’s purchased electricity now from non-carbon sources • On track to achieve target of being net zero scope 1 & 2 by 2035 • CDP (Carbon Disclosure Project)
Slide 11: Strategy Update
STRATEGY UPDATE New strategy focused on becoming an ‘innovative customer focused technology company’ making a ‘better world with photonics’ and the ‘first choice’ for all our stakeholders OFFERING DIFFERENTIATED PERFORMANCE THROUGH 4 KEY STRATEGIC PRIORITIES: 1 2 3 4 Establish dynamic Deliver except
Slide 12: Strategy Progress
STRATEGY PROGRESS Path to mid-teens returns (700-800 bps accretion) over the medium term, net of investments excluding portfolio changes People Self-Help Technology Investment • Recruitment recovery • Operational output • Technology Roadmap • GS Optics • Sustainability agenda • Delivery performance
Slide 13: Outsourcing
OUTSOURCING Proactive outsourcing of products earlier in their life cycle where technological sovereignty is not a differentiator • Dedicated leadership and resources added • Supply of acousto-optic products expanding • Hi-Rel couplers qualified and in production with ramp-up planned in FY2024 • Add
Slide 14: Acquisitions
ACQUISITIONS GS Optics – Total consideration up to $15.7m • Polymer precision optics design, manufacture and coating • Life Sciences (50%), Industrial and A&D applications • Located in Rochester NY, a hub for photonics talent • G&H’s US Life Sciences ‘centre of excellence’ Artemis Optical – Total co
Slide 15: Value Creation from Technology Focus
VALUE CREATION FROM TECHNOLOGY FOCUS • Technology roadmap review complete with focus on where G&H can differentiate and drive ‘value creation’ • Plan deployed prioritising R&D effort and investment behind seven ‘vital few’ areas • Investment into innovation hubs and R&D organisation to enable strate
Slide 16: Example - Undersea Fibre-Optics
EXAMPLE 1 - UNDERSEA FIBRE-OPTICS Significant multi-year design wins for Hi-reliability couplers and sub-systems to enable next generation of higher capacity submarine links • Design and qualification of couplers for new compact undersea repeater systems • Design phase of fibre optic amplifier sub-a
Slide 17: Example - Precision Optics Value-Add
EXAMPLE 2 – PRECISION OPTICS VALUE-ADD G&H Artemis has been awarded a contract to supply the UK Special Forces, Royal Marine Commandos and Army Special Operations Brigades with scope laser protection for the new KS-1 assault rifle • Lasers are in widespread use on the battlefield, with applications
Slide 18: Outlook
OUTLOOK • FY2023 order book normalised but remains strong with supply chain and lead-time improvements • Prior year record order book included £11.2m past due backlog • Healthy order levels across all three end markets • Positive book to bill ratio from H2 has continued into FY2024 • Current order b
Slide 19: Summary
SUMMARY • Order book remains strong despite adjustment to more normalised levels • Significant increase in productive capacity and reduction in overdue backlog • Contract manufacturing partner on track to commence supply of additional product lines • Strategy to deliver sustainable margin growth dep
Slide 20: Appendices
Appendices G&H PRELIM RESULTS PRESENTATION FY2023
Slide 21: 2024 Expected Financial Calendar
2024 Expected Financial Calendar • 21st February 2024 – AGM Trading Update • 4th April 2024 – Half Year Trading Update • June 2024 – Interim Announcement • October 2024 – Full Year Trading Update • December 2024 – Full Year Results Announcement PRELIMINARY RESULTS PRESENTATION – FY 2023 PAGE 21
Slide 22: Non Underlying Items
Non Underlying Items Total non underlying charge of £4.6m (of which cash £2.0m) • Amortisation of acquired intangibles: £1.7m (of which cash - £nil) • Acquisitions: £1.2m (of which cash - £1.1m) • Site closures: £0.9m - closure of our Shanghai facility and transfer of ITL US to our Rochester, NY sit
Slide 23: Other Financial Items
Other Financial Items R&D Spend • The Group’s R&D charge in the year totalled £9.3m (FY2022: £9.2m). This represented 6.2% of revenue (FY2022: 7.4%) • The Group capitalises a portion of its R&D spend in accordance with IFRS. The amount held on the balance sheet is £1.7m (FY2022: £1.9m). Tax • The ta
Slide 24: Targeted R&D
Targeted R&D New products Precision Acousto/ Fibre Optics launched in the Optics & Electro-Optics year Systems Aerospace & 36 2 4 Defence Industrial 6 2 4 Life Sciences 2 - 1 • New products generated £26.1m of revenue in FY2023 (FY2022: £17.9m) “We are increasingly focusing our engineering skills fr
Slide 25: Cautionary Statement
Cautionary Statement ▪ For the purposes of the following disclaimers, references to this ‘document’ shall be deemed to include references to the presenters’ speeches, the question and answer session and any other related verbal or written communications. ▪ This document contains forward-looking stat
Slide 26: PRELIMINARY RESULTS PRESENTATION – FY 2023 PAGE 26
G&H PRELIM RESULTS PRESENTATION FY2023 PRELIMINARY RESULTS PRESENTATION – FY 2023 PAGE 26