Kitron Asa · OSL:KIT
Kitron Asa — Investor Day (December 2022)
24 slides from Kitron Asa's investor day presentation, Dec 13, 2022
Slide 1: Capital Markets Presentation
Capital Markets Presentation Kitron Group, 13 December 2022
Slide 2: Agenda
AGENDA ▪ Kitron in brief ▪ Markets and growth ▪ Opportunities in defence industry ▪ Future capacity ▪ Long-term financial targets ▪ Sustainability, ESG and EU taxonomy ▪ Summary, Q&A and wrap up Peter Nilsson Cathrin Nylander H.P. Thomassen Kristoffer Asklöv President & CEO CFO VP North America COO
Slide 3: Core business and operations
Core business and operations ▪ Our business: Industrial partner with focus on electronics. ▪ Operations: Manufacturing services of electronics and related products ▪ Modern, highly competitive facilities globally ▪ Continuous equipment investments of 2-3% of sales ▪ Global footprint of more than 100
Slide 4: Long-term growth and value creation
DEVELOPMENT 2014 – 2022* Long-term growth and Revenue EBIT Employees Market Cap 6 500 455 2 800 5 120 value creation 1 200 FULL YEAR 2022 OUTLOOK 1 751 ▪ Record revenues 30 297 ▪ Strong order backlog 2014 2022 2014 2022 2014 2022 2014 2022 ▪ EBIT margin and capital efficiency improving ▪ Substantial
Slide 5: Proven track record
Proven track record Recap of last strategic period’s accomplishments REVENUE GROWTH ▪ CAGR > 10% (ex. M&A) ▪ Customer development ▪ From 4 to 9 factories globally PROFITABILITY – EBIT MARGIN IMPROVED ▪ World-class operations management ▪ Proven economies of scale concept ▪ OPEX reduced from 35% to 2
Slide 6: Markets and growth
Markets and growth Kitron Group, 13 December 2022 6
Slide 7: Customers and positioning
Customers and positioning Kitron’s customers are often market leaders in their business. Our partnerships generally date back a decade or more. Sales is strongly characterized by repeat business ▪ Long-term, repeat business continuously renewed by new product generations. ▪ Customers often market le
Slide 8: General distinguishing features by market sector
General distinguishing features by market sector High Volume, automation, utilization Low Low Cost of failure High Six to eighteen months Life cycle three to thirty years High Demand and product affected by general business cycle Low CONNECTIVITY ELECTRIFICATION INDUSTRY MEDICAL DEVICES DEFENCE/AERO
Slide 9: Strategies to build a recession resistant long-term plan
Strategies to build a recession resistant long-term plan 1 2 3 4 Establish exposure to global markets Build a strong base of defence, aerospace Secure medical device customers where Target business-to-business in segments enabling diversified business cycles and security customers with long-term pro
Slide 10: Growth strategy in market sectors
EMS Market Europe €70B Growth strategy €45B in market sectors CONNECTIVITY: 15% CAGR • Focus: IOT, Sensors, Optical networks, Intelligent asset tracking • Drive for high utilization, high automation – economies of scale • Take advantage of application know-how and rapid time-to-market ELECTRIFICATIO
Slide 11: Opportunities in the defence industry
Opportunities in the defence industry Kitron Group, 13 December 2022
Slide 12: What is driving demand in the defence sector?
What is driving demand in the defence sector? ▪ Positioning of US military assets abroad ▪ Security situation in Europe ▪ NATO countries defence spend ▪ US foreign military sales program ▪ Growth from leveraging existing relations supplemented by new technology companies entering the defence sector
Slide 13: What does it take to deliver to the defence industry?
What does it take to deliver to the defence industry? • Long-term strategy and commitment • Robust and verifiable processes • Cost control - internal and downstream to supplier base, capable to deliver certified cost and pricing data • Contract risk management to support range from time and material
Slide 14: Future capacity
Future capacity Kitron Group, 13 December 2022
Slide 15: Improving competitiveness and margins
Improving competitiveness and margins ▪ Focus on economies of scale ▪ Enable real-time visibility ▪ Process automation ▪ Continuous improvement ▪ Best in class training and onboarding KEY TAKE-AWAY Kitron has demonstrated tremendous economies of scale when fully utilizing flexibility and capacity. 1
Slide 16: Strategies to manage acquisitions and greenfield investments
Strategies to manage acquisitions and greenfield investments GREENFIELD (financed through existing 2-3% capex) Capacity-driven, existing growth opportunities ▪ Region ▪ Access to labor pool ▪ Growth strategy ACQUISITIONS (Debt financing and/or equity) Driven by long-term new growth opportunities ▪ R
Slide 17: Footprint and capacity expansion
Footprint and capacity Year end capacity by production region (€M) expansion 1 600 2022 1 400 ▪ >30 fully automated production lines for electronics 1 200 >100% ▪ Multiple lines for automated high-level assembly of end-customer-products ▪ Automation center established in India. 1 000 2023 800 ▪ Inve
Slide 18: Long-term financial targets
Long-term financial targets Kitron Group, 13 December 2022
Slide 19: We raise our ambition to 10 billion in 2027
2022 GUIDANCE We raise our ambition Revenue: NOK 6 450 to 6 550 million EBIT: 440M to 470M to 10 billion in 2027 2015-2020 ▪ In 2015, we set the 2020 target at NOK 3 billion ▪ Revenue in 2020 almost NOK 1 billion over organic target of REVENUE 10 000 NOK 3 billion 2027 ▪ Organic ambition: 7 000 6 50
Slide 20: Five long term financial targets
Five long term financial targets REVENUE: ~10% ORGANIC CAGR • Financed through cash flow PROFITABILITY: > 8% EBIT MARGIN • Driven by growth, scale and efficiency ROOC: > 25% • Assets and liabilities are well balanced in our business model CASH FLOW: 80% OF EBITDA • Limited by growth NIBD / EBITDA: <
Slide 21: Sustainability
Sustainability ESG TARGET EU TAXONOMY TARGET 100% Sustainable energy supply >20% Sales aligned with taxonomy Current status: 66% Current status: 18% KEY TAKE-AWAY Kitron has strong stakeholder requirements, and we are as committed to their ambitions as our own. 21
Slide 22: Key take-aways
Key take-aways ▪ Market sector segmentation: Focus on high growth sectors Electrification and Connectivity with CAGR 15% ▪ Overall achieve 10% growth each year with 5% CAGR on existing customer base and adding an additional 5% on new program acquisition. ▪ Focus on existing capacity utilization and
Slide 23: Q&A
Q&A Kitron Group, 13 December 2022
Slide 24: Appendix: Definition of alternative performance measures
Appendix: Definition of alternative performance measures Order backlog Return on capital employed (ROCE) Cash conversion cycle (CCC) All firm orders and 4 months of committed customers forecast at EBIT/(Total assets - short term debt) Days of inventory outstanding + Days of receivables outstanding –