Slide 1: Results for the period ended 28 February 2022
Results for the period ended 28 February 2022 April 2022
Slide 2: 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 or organis
Slide 3: Agenda
Agenda Introduction and Highlights Operational Review Financial Review Growth Strategy Tim Carroll Sally McKone Chief Executive Officer Chief Financial Officer Summary and Outlook 3
Slide 4: Introduction
Introduction A global music and audio products Group for amateurs and professionals. Founded in 1989 consisting of 9 brands o Focusrite: audio recording equipment o Focusrite Pro: audio recording and broadcasting equipment for commercial operations o Novation: hardware and software for creating and
Slide 5: Content Creation and Sound Reproduction
Content Creation Sound Reproduction: Music, Podcasting, Post production, Streaming Live Events, Nightclubs, Auditoria, Hospitality, Worship 5
Slide 6: Highlights for the period ended 28 February 2022
Highlights for the period ended 28 February 2022 o Revenue and EBITDA in line with half year expectations: o Revenue retaining much of demand generated during COVID. -2.5%1 vs HY21 (-8.7%2 OCC), but up 86% vs HY20 and 18% ahead of H2 FY21 o Gross margin down 1.4% points to 46.6%. Pricing actions off
Slide 7: Product sectors: Focusrite
Focusrite HY22 HY21 HY20 FY21 Product sectors: Focusrite £m £m Growth £m Growth £m Revenue 52.4 58.3 -10% 25.6 105% 97.2 • Focusrite -10% on unusually strong first half in FY21 reflecting COVID tailwind • Growth in customer base during lockdowns maintained post-COVID: 105% growth on HY20 • Component
Slide 8: Product sectors: Focusrite Pro
Product sectors: Focusrite Focusrite HY22 HY21 HY20 FY21 Pro Pro £m £m Growth £m Growth £m • Focusrite Pro -6% compared to HY21 Revenue 2.5 2.7 -6% 1.9 33% 4.9 • Sector hardest hit by fire in a key industry manufacturer (AKM) requiring significant redesign and ongoing chip shortages • Rework ongoing
Slide 9: Product sectors: Novation
Product sectors: Novation Novation HY22 HY21 HY20 FY21 £m £m Growth £m Growth £m • Novation -19% compared to strong pandemic Revenue 10.5 13.0 -19% 9.9 6% 22.3 HY21. Mix of new products performing well and others at late stage of lifecycle • Launch of significant new products in H1: Circuit Tracks a
Slide 10: Product sectors: Ampify
Product sectors: Ampify • Bundled with all Focusrite and Novation hardware • Expands Group’s offering into iOS and cross platform desktop solutions • Still relatively small in terms of Group revenue, but growing : • Number of subscribers grew 245% in H1 FY22 • Monthly Recurring Revenue (MRR) from su
Slide 11: Product sectors: ADAM Audio
ADAM Product sectors: ADAM Audio Audio HY22 HY21 HY20 FY21 £m £m Growth £m Growth £m • Revenue -33% compared to strong HY21 Revenue 8.4 12.6 -33% 7.0 20% 23.9 • Component supply issues impacting supply of entry level T-series during key holiday period • Core A series range transition delayed due to
Slide 12: Product sectors: Martin Audio
Product sectors: Martin Martin Audio Audio HY22 HY21 HY20 FY21 £m £m Growth £m* Growth £m Revenue 12.4 8.7 44% 4.5 175% 20.4 • Revenue +44% compared to lockdown impacted HY21 * Acquired December 2019– 2 months revenue • Broad portfolio of installed sound products fuelling this growth • Live sound ma
Slide 13: Product sectors: Sequential
Product sectors: Sequential Sequential HY22 HY21 HY20 FY21* £m £m Growth £m Growth £m Revenue 6.6 - - - - 5.3 o Leading American synthesiser company and iconic brand headquartered in San Francisco * Acquired April 27 2021 – 4 months revenue o Revenues ahead of expectations, despite component supply
Slide 14: Post Balance Sheet Acquisition: Linea Research
Post Balance Sheet Acquisition: Linea Research o Market leader in amplifier technology based in Letchworth, UK o Acquired 10 March 2022, £12.1 million on completion with up to £0.5 million future potential earn out – including approx. £1m of cash on the balance sheet at acquisition o Existing suppli
Slide 15: Financial highlights for the period ended 28 February 2022
Financial highlights for the period ended 28 February 2022 • Group revenue maintains volumes gained during pandemic down only 2.5% to £92.9 million compared to HY21: £95.3 million • Gross margin at 46.6% higher than pre pandemic but lower than HY21 due to short-term freight impacts • Adjusted EBITDA
Slide 16: HY22 Revenue: Regional performance
Revenue HY22 HY21 HY20 FY21 HY22 Revenue: £m £m Growth £m Growth £m North America 39.8 41.8 -5.0% 18.1 119.8% 74.6 Regional performance Europe, Middle East and 35.4 36.9 -4.1% 23.1 53.3% 69.3 Africa Rest of World 17.7 16.5 7.3% 8.7 103.1% 30.0 Consolidated revenue 92.9 95.3 -2.5% 49.9 86.1% 173.9 •
Slide 17: Income Statement
HY22 HY21 HY20 FY21 £m £m £m £m Income Statement Revenue 92.9 95.3 49.9 173.9 Cost of sales (49.6) (49.6) (26.9) (89.8) Gross profit 43.3 45.7 23.0 84.1 • Revenue -2.5% (organic constant currency -8.7%) Operating expenses before non-underlying • Gross margin 46.6% (HY21: 48.0%) items (24.2) (19.4) (
Slide 18: Gross Margin
o Gross margin is down 1.4% points from H1 Gross Margin last year o Brand strength has enabled price increases to offset cost increases – with underlying product margin increasing by c 1.5% points o Freight costs have increased by c 2% of sales, due to an increased mix of air freight and spiking cos
Slide 19: Balance Sheet
HY22 HY21 HY20 FY21 £m £m £m £m Balance Sheet Intangible assets 59.7 47.4 59.1 59.2 Tangible assets 6.5 3.8 4.2 3.6 Total non current assets 66.2 51.2 63.3 62.8 • Intangible fixed assets Inventories 25.7 15.9 18.6 20.8 • £14m increase due to Sequential acquisition, Debtors and other investments 23.7
Slide 20: Cash flow
HY22 HY21 HY20 FY21 Cash flow £m £m £m £m EBITDA 21.4 29.0 9.1 47.5 Movement in working capital (10.1) (3.8) (0.1) 1.6 • Free cash flow before acquisition 3.1% of revenue Operating cash flow 11.3 25.2 9.0 49.1 • Long term average 10-12% Interest received/(paid) 0.2 (0.1) (0.2) (0.9) Tax paid (2.7) (
Slide 21: Ongoing challenges have been well managed
Ongoing challenges have been well managed • Russian invasion of Ukraine • The Group has ceased trading with Russia and Belarus and can no longer ship to Ukraine • Impacted revenues are approx. 1% of Group total, with no employees or significant suppliers in this region • Component supply issues • On
Slide 22: Embedding best practice in our strategy and charities supported
Embedding best practice in our strategy: and some of the many Charities we have supported People: Building a great place to work and engaging with our Empowering Artists with Disabilities worldwide broader communities Planet: Designing each generation of products to have a smaller carbon footprint S
Slide 23: Scarlett carbon footprint: a case study
Scarlett carbon footprint: a case study • Product lifecycle is our greatest impact on green house gases (GHG) – scope 3 emissions • Recycled aluminium has 95% lower emissions. 40% of each Scarlett’s mass is the aluminium chassis • First Scarletts using recycled aluminium manufactured in March with a
Slide 24: Focusrite Growth Strategy
Focusrite Growth Strategy Creating a great place to work We embrace the diverse foundations of the world of audio and nurture our talent to build a culture of equity and inclusion. We now have a full time Head of Sustainability, a Chief People officer as well as numerous working groups focussed on D
Slide 25: Summary and Outlook
Summary and Outlook • Revenue maintains much of COVID increase and only -2.5%1 (-8.7% organic constant currency2) • EBITDA3 £22.2 million (24% of sales), lower than prior year due to reversal of COVID savings and investment to support growth and expansion but significantly ahead of pre pandemic leve
Slide 26: Additional Information
Additional Information April 2022 26
Slide 27: Customers and markets: audio creation
Customers and markets: audio creation Strong demands on gear Highly skilled musician or Highly skilled musician or Very likely to have little or May or may not play /technology to achieve audio engineer audio engineer no previous musical traditional instruments knowledge professional-level results D
Slide 28: Global market overview
AMPIFY [}nevation Focusrite Focusrite GR) € ADAMAUDIO SeQuENtiaL GLOBAL MARKET aoe eosc ssn one 2021 RECORDED MUSIC MARKET OVERVIEW 2021 ° . A resilient industry continues to grow Number of podcast listeners worldwide from 2019 to 2024 | | | $ Streaming music revenue
Slide 29: Live sound market expected to return to 2019 levels
• Headline – market expected to return to 2019 levels in 2023. • Touring & Rental: confidence returns, but challenges remain. Back to 2019 levels in 2024 • A similar fall but a quicker recovery for portable sound • Installed Leisure - providing positivity across certain sub verticals. Back to 2019 l
Slide 30: Customers and markets: Live venues
Customers and markets: Live venues Hospitality: Cafes, bars, restaurants and Worship: From 50 seat chapels to 10,000 hotels such as Caesar's, W and Marriott seat mega churches, including Westminster Abbey and Calvary Church Nightclubs: From Beijing, London to LA, nightclubs of all sizes, including M
Slide 31: Product sectors: Focusrite
Product sectors: Focusrite Focusrite Scarlett: Mass market interface. Home user $100 to $500 Clarett: Intermediate / Professional user $400 to $1,200 Focusrite Pro RedNet: Enterprise, Live, Broadcast, Education. Networked Audio over IP $3,000 upwards Red: Creative Professional, Music, Post $2,000 to
Slide 32: Product sectors: Novation including Ampify
Product sectors: Novation including Ampify 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 - $330. Keyboa
Slide 33: 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: $1,750- $400-$500 per pair $700-$2,000 per pair $20,000 per unit Subwoofers Headphones $700-$8,000 per unit SP-5 headphones: $500 33
Slide 34: Product sectors: Martin Audio
Product sectors: Martin Audio TH Series Small Sound Systems Medium Format Systems Large Format Systems From For up to 250 people. From From 250-1500 people: prices 1500 to 10,000+ people. Prices $500 from $2,000 from $40,000 34
Slide 35: Product sectors: Optimal Audio
Product sectors: Optimal Audio ZonePad wall controllers Zone processors SmartAmp DSP amplifiers Up ceiling speakers Sub sub-woofers Cuboid on-wall speakers Systems start from £2,000 35
Slide 36: Product sectors: Sequential
Product sectors: Sequential 36
Slide 37: Product sectors: Linea Research
Product sectors: Linea Research M Series Touring amplifiers- £4,500 - £6,400 C Series Installation amplifiers- £4,200 - £6,000 ASC Loudspeaker and System Processor - £1,650 XiB installation amplifiers - £1,650 37
Slide 38: Foreign exchange
Foreign exchange Exchange rates HY22 HY21 HY20 FY21 • Average US$ strengthened by 0.7%. • US and ROW. Total c50% of Average revenue but almost all cost of US$:£ 1.35 1.36 1.28 1.36 sales so minor net profit inflow €:£ 1.18 1.14 1.16 1.14 Average rate of forward contracts €:£ 1.13 1.11 1.12 1.12 • Av
Slide 39: Earnings per share
Earnings per share Earnings per share HY22 HY21 Movement HY20 FY21 Decrease in EPS broadly in line with Pence Pence Pence Pence decrease in EBITDA Basic 23.1 33.2 -30% 3.6 48.8 Diluted 22.8 32.7 -30% 3.5 48.2 Adjusted basic 27.4 36.9 -26% 9.4 58.2 Adjusted diluted 27.1 36.3 -25% 9.3 57.5 Shares HY22
Slide 40: Enriching Lives Through Music
Enriching Lives Through Music 40