Slide 1: Results for the year ending 31 August 2020
Results for the year ending 31 August 2020 November 2020
Slide 2: Disclaimer
Disclaimer The content of this document (the “Presentation”) has not been approved by an authorised person within the meaning of the Financial Services and Markets Act 2000 (“FSMA”), as amended. Reliance on this document for the purpose of engaging in any investment activity may expose an individual
Slide 3: Agenda
Agenda Introduction and Highlights Customers and Markets Product Sectors Financial Review Growth Strategy Conclusions Tim Carroll Jeremy Wilson Chief Executive Chief Financial Officer Officer 3
Slide 4: Introduction
Introduction Focusrite plc is a global music and audio products group that develops and markets proprietary hardware and software products. Used by audio professionals and amateur musicians alike, its solutions facilitate the high- quality production of recorded and live sound. Founded in 1989. Six
Slide 5: Highlights for the year ended August 2020
Highlights for the year ended 31 August 2020 o Revenue up 53.7%1 (57.1% at constant exchange rates 2) o EBITDA 3 up 66.1% to £28.6 million o Year end net cash £3.3m after paying off the loan taken to buy Martin Audio. o Final dividend of 2.9 pence, resulting in full year dividend of 4.2 pence, an in
Slide 6: Customers and markets
Customers and markets New Creator Passionate Maker Market size: £400-450m Market size: £500-600m • Very likely to have little or no previous musical knowledge • May or may not play traditional instruments • Demands an immediate, joyful experience • Little or no songwriting experience • Demands ease,
Slide 7: Customers and markets
Customers and markets Serious Aspiring Producer The Master/Facility Market size: £200-250m Market size: £500-600m • More than just a hobby • Highly skilled musician or audio engineer • Strong demands on gear/technology to achieve • Depends on technology to do the job and make a living professional-l
Slide 8: Customers and markets: Live venues
Customers and markets: Live venues Market size: £2,000m – £2,500m Worship: From 50 seat chapels to 10,000 seat mega churches, including Westminster Hospitality: Cafes, bars, restaurants Abbey and Calvary Church. and hotels such as Caesar's, W and Marriot Nightclubs: From Beijing, London to LA, night
Slide 9: Product sectors: Focusrite
Product sectors: Focusrite Focusrite FY20 FY19 £m £m Revenue 76.2 57.7 o Segment growth of 32.2% driven by strong demand for Scarlett. o Demand strengthened during lockdown. o Customers reverting to their passion for making music o Also wider uses including podcasting, streaming and video conferenci
Slide 10: Product sectors: Focusrite Pro
Product sectors: Focusrite Pro Focusrite Pro FY20 FY19 £m £m Revenue 3.5 4.7 o Overall segment decline of 25.8% o Live events postponed, theatres and universities closed, post-production slowed o Since year end, back to growth: o New products introduced and shipping o Recovery has begun in post- pro
Slide 11: Product sectors: Novation including Ampify
“The SL Mark III does indeed change the game for controllers and sets a Product sectors: Novation new benchmark for i n c lu d in g A m p if y which future controllers will be judged.” Novation FY20 FY19 Loopop £m £m Revenue 19.3 17.7 o Novation up 9.4% on prior year. o New generation Launchpad and
Slide 12: Product sectors: ADAM Audio
Product sectors: ADAM Audio ADAM Audio FY20 FY19 £m £m Revenue 17.4 1.8 o FY20, full year. FY19, only six weeks o Revenue up 42% on the pre-acquisition prior year o Comfortably ahead of plans made at time of acquisition o ADAM now distributor of Focusrite in Germany & Austria - and vice versa in the
Slide 13: Product sectors: Martin Audio
Product sectors: Martin Audio Martin Audio FY20 FY19 £m £m Revenue 12.0 - o Purchased December 2019, so eight months performance included o Up 22% YoY at half year (pre-COVID-19) o H2 down c41% due to lockdowns o tight control of costs o positive EBITDA o sales increasing steadily during the half ye
Slide 14: Financial highlights for the year ended August 2020
Financial highlights for the year ended 31 August 2020 o Group revenue up by 53.7% to £130.1 million (FY19: £84.7 million) o Adjusted EBITDA1 up by 66.1% to £28.6 million (FY19: £17.2 million) o Adjusted diluted earnings per share 32.8p, up by 53.3% (FY19: 21.4p) o Adjusted free cash flow2 £28.2 mil
Slide 15: COVID-19
COVID-19 o COVID 19 impact overall positive for the Group o Revenue o Significant boost in Focusrite & ADAM products geared to home recording o Significant reduction in Martin Audio & Focusrite Pro o Post lockdown: broader base o Routes to market o Normal balance of online vs bricks and mortar chang
Slide 16: FY20: Regional performance
FY20: Regional performance Revenue FY20 FY19 £m £m North America 50.9 36.4 Europe, Middle East and Africa 56.4 34.0 Rest of World 22.8 14.3 Consolidated revenue 130.1 84.7 o North America: up 39.9% to £50.9m (constant currency growth 40.4%) o FAEL up 16%. Rest is ADAM and Martin o Strong boost in Sc
Slide 17: Income Statement
Income Statement o Revenue up 53.7% FY20 FY19 o Constant currency growth 57.1% £m £m o FAEL up 21.5% helped by COVID Revenue 130.1 84.7 boost. Cost of sales (70.2) (48.9) Gross profit 59.9 35.8 o Rest is ADAM and Martin Operating expenses before non- underlying items (36.9) (22.3) o Gross margin 46.
Slide 18: Balance Sheet
Balance Sheet FY20 FY19 o Intangible fixed assets: £m £m Intangible assets 48.2 24.1 o £40.3m of intangibles + £7.9m goodwill Tangible assets 4.1 1.6 Total non current assets 52.3 25.7 o Working capital 8.8% of revenue Inventories 19.4 15.2 o Inventories now include Martin £5.7m but still Debtors an
Slide 19: Cash flow
Cash flow FY20 FY19 £m £m o Strong positive movement in working capital. EBITDA 28.6 17.2 Movement in working capital 12.3 (2.6) o Assume some reversal in FY21 Operating cash flow 40.9 14.6 Interest received/(paid) (0.8) 0.2 o Investing £44.9m, (FY19: £19.9m) Tax paid (3.5) (0.8) Net cash from opera
Slide 20: Focusrite Growth Strategy
Focusrite Growth Strategy Grow the core customer base The number of musicians not yet using technology to sculpt, perform or capture sound outnumbers those who do by as many as 14:1. Through innovation, disruptive technology and an unfaltering focus on our customers’ needs, we can change this. Our m
Slide 21: Conclusions
Conclusions o Revenue up 53.7% to £130.1 million (FY19: £84.7 million) o FAEL up 21.5% o Benefit from ADAM and Martin acquisitions o All regions grew o Gross margin up from 42.2% to 46.0% o EBITDA up by 66.1% to £28.6 million (FY19: £17.2 million) o Free cash flow 21.6% of revenue. Net debt taken to
Slide 22: Additional Information
Additional Information November 2020 22
Slide 23: Product sectors: Focusrite
Product sectors: Focusrite o Focusrite Pro RedNet: Enterprise, Live, Broadcast, Education. Networked Audio over IP $3,000 upwards Red: Creative Professional, Music, Post $2,000 to $3,500 o Focusrite Clarett: Intermediate / Professional user $400 to $1,200 Scarlett: Mass market interface. Home user $
Slide 24: Product sectors: Novation including Ampify
Product sectors: Novation i n c lu d in g A m p if y o Novation CONTROLLERS Physical interfaces to control music creation software Grid controllers: Launchpad - $100 to $300. Keyboard controllers: Launchkey - $100 to $250. STANDALONE Function on their own as sound generating devices Grid: Circuit -
Slide 25: Product sectors: ADAM Audio
Product sectors: ADAM Audio T Series AX Series S Series Entry level studio monitor: Mid level studio monitor: High end studio monitor: $400-$500 per pair $700-$2,000 per pair $1,750-$20,000 per unit Subwoofers Headphones $700-$8,000 per unit SP-5 headphones: $500 25
Slide 26: Product sectors: Martin Audio
Product sectors: Martin Audio TH Series Small Sound Systems Medium Format Systems Large Format Systems For up to 250 people. From From 250-1500 people: prices from From 1500 to 10,000+ people. $500 $2,000 Prices from $40,000 26
Slide 27: Foreign exchange
Foreign exchange Exchange rates FY20 FY19 o Average US$ strengthened by 2%. Average o US and ROW. Total c60% of revenue but US$:£ 1.27 1.29 almost all cost of sales so minor net profit €:£ 1.14 1.13 inflow. Average rate of forward contracts o Average reported € little changed. €:£ 1.11 1.10 Weighted
Slide 28: Number of shares
Number of shares Shares FY20 FY19 Shares in issue 58,111,639 58,111,639 Less shares held by -359,483 -782,652 EBT o Shares in issue currently 58,111,639 Weighting through -72,437 -108,081 year o But required to deduct EBT shares Weighted average 57,679,719 57,220,906 for EPS calculation shares for E
Slide 29: Earnings per share
Earnings per share Earnings per share FY20 FY19 Movement p p Basic 7.1 20.4 (65.2)% Diluted 7.0 20.1 (65.2)% Adjusted basic 33.2 21.7 53.0% Adjusted diluted 32.8 21.4 53.3% Earnings per share Movement Increase in EBITDA 66.1% Effect of change in dep’n and amort’n 4.5% Effect of change in net finance
Slide 30: User registrations for FAEL products
User registrations for FAEL products Oct 19 Dec 19 Mar 20 May July 30
Slide 31: Enriching Lives Through Music
Enriching Lives Through Music 31