Avon Technologies Plc · LSE:AVON
Avon Technologies — Avon Rubber p.l.c. — FY2020 Earnings Presentation
37 slides from Avon Technologies's earnings presentation, December 2020
Slide 1: Year End Results 2020
1 YEAR END RESULTS 2020 Focusing on protection
Slide 2: Forward-Looking Information
FORWARD-LOOKING INFORMATION Avon Rubber p.l.c. (the ‘Group’) is providing the following cautionary statement: This document contains certain statements that are or may be forward-looking with respect to the financial condition, results or operations and business of the Group. These statements are so
Slide 3: Agenda
AGENDA HIGHLIGHTS FINANCIAL FOCUSING ON REVIEW PROTECTION 3 YEAR END RESULTS 2020 Focusing on protection
Slide 4: Highlights
Highlights Paul McDonald Chief Executive Officer 4 YEAR END RESULTS 2020 Focusing on protection
Slide 5: Focusing on Protection
FOCUSING ON PROTECTION • Business refocused as a leading provider of life critical personal protection systems • Completed acquisition of Helmets & Armor, on 2 January, with integration on track to deliver $5m synergies • Completed divestment of milkrite | InterPuls on 25 September • Completed acqui
Slide 6: COVID-19 Update
Employees Operations • The wellbeing of our employees and customers • We have continued to operate with only minor remains our top priority disruption, playing a crucial role in supporting our customers ongoing requirements • We have adapted our working practices and facilities to ensure our people
Slide 7: Further Progress Against Our Investor Proposition
FURTHER PROGRESS AGAINST OUR INVESTOR PROPOSITION ORGANIC SALES VALUE ENHANCING ATTRACTIVE EBITDA STRONG CASH DIVIDEND GROWTH ACQUISITIONS MARGINS GENERATION GROWTH 0.1% 22.9% 84.9% +30% at constant Acquisitions of +140 bps cash conversion Increase over currency Helmets & Armor at organic prior year
Slide 8: Financial Review
Financial Review Nick Keveth Chief Financial Officer 8 YEAR END RESULTS 2020 Focusing on protection
Slide 9: Continued Strong Financial Momentum
CONTINUED STRONG FINANCIAL MOMENTUM REVENUE SPLIT BY BUSINESS 2020 % Change % Organic Constant Currency Military Orders received £160.8m 23.9% 4.5% Closing order book £79.8m 117.4% 19.3% £168.0m First Responder (2019: £128.4m) Revenue £168.0m 30.8% 0.1% Helmets & Armor Adjusted EBITDA £38.4m 35.2% 6
Slide 10: 30.8% Revenue Growth
30.8% REVENUE GROWTH £40.8m £8.2m (£5.0m) (£3.1m) (£1.2m) £168.0m £128.4m £127.2m 10 YEAR END RESULTS 2020 Focusing on protection
Slide 11: Strong Balance Sheet and Liquidity
STRONG BALANCE SHEET AND LIQUIDITY £171.2m (£86.1m) 84.9% cash conversion (£4.4m) 123.3% excluding £38.4m (£5.7m) (£15.6m) Helmets & Armor (£27.8m) £93.2m (£7.0m) (£5.1m) £35.4m (£0.1m) 2019 EBITDA Working Capex Interest, Dividends Lease FX milkrite | Helmets & Team 2020 Net Cash Capital Pensions Mo
Slide 12: FY21 Building Blocks
FY21 BUILDING BLOCKS Team Wendy • EBITDA margin improvement • Cash conversion: 90%+ • CAPEX: ~$25m • D&A: ~$20m Body Armor • Adjusted tax rate: 21% Helmets & Armor Annualisation Respiratory and Organic Growth Organic Growth $213.6m (£168.0m) FY20 FY21 Revenue Revenue 12 YEAR END RESULTS 2020 Focusin
Slide 13: Confidence in FY21 Expectations
CONFIDENCE IN FY21 EXPECTATIONS • Medium-term outlook underpinned by multi-year military contracts across the portfolio • Military contracts, strong opening order book of $101.7m and ongoing demand from first responders provides excellent visibility going into 2021 • 2021 benefits from full year of
Slide 14: Focusing on Protection
Focusing on protection Paul McDonald Chief Executive Officer 14 YEAR END RESULTS 2020 Focusing on protection
Slide 15: Successful Execution of Our Strategy
SUCCESSFUL EXECUTION OF OUR STRATEGY… GROWING SELECTIVE PRODUCT VALUE ENHANCING THE CORE DEVELOPMENT ACQUISITIONS 15 YEAR END RESULTS 2020 Focusing on protection
Slide 16: …Has Transformed the Business
…HAS TRANSFORMED THE BUSINESS RESPIRATORY PROTECTION RESPIRATORS POWERED AIR SUPPLIED AIR A LEADING PROVIDER OF LIFE CRITICAL PERSONAL BALLISTIC PROTECTION PROTECTION LINER & BODY HELMETS RETENTION ARMOR SYSTEMS 16 YEAR END RESULTS 2020 Focusing on protection
Slide 17: Military – Respiratory Outlook Underpinned
MILITARY – RESPIRATORY OUTLOOK UNDERPINNED Potential annual order intake M50 Mask System/M61 Filter $30-45m Sole-source / Commercial pricing Contract period M53A1 Mask and Powered Air System $25-30m Sole-source / Commercial pricing In service M69 Aircrew Mask $15-20m Sole-source/Cost plus Total pote
Slide 18: Military – Ballistic Outlook Underpinned
MILITARY – BALLISTIC OUTLOOK UNDERPINNED Potential annual order intake IHPS Helmet $40-60m Single-source Contract period VTP Body Armor $25-45m Multi-source In service Legacy ESAPI Body Armor $40-60m Multi-source Total potential annual order intake $115-185m Flat Armor $5-10m Multi-source Rest of Wo
Slide 19: First Responder Outlook
FIRST RESPONDER OUTLOOK Potential annual order intake Respiratory Protection $50-70m RESPIRATORS POWERED AIR SUPPLIED AIR Total potential annual order intake $55-80m Ballistic Protection $5-10m HELMETS 19 YEAR END RESULTS 2020 Focusing on protection
Slide 20: Leveraging Our Existing Product Portfolio
LEVERAGING OUR EXISTING PRODUCT PORTFOLIO • 10-year NATO Support & Procurement Agency contract to supply FM50 mask systems, powered and supplied air systems, filters, spare parts and accessories • Contract available to military and law enforcement agencies within all NATO members and associates • De
Slide 21: Developing Products in Partnership
DEVELOPING PRODUCTS IN PARTNERSHIP • Our new product development is undertaken in partnership with our customers • This ensures products are designed to customer requirements and needs are met • During the year we have focused on: • Developing the next generation IHPS helmet and VTP body armor for t
Slide 22: Helmets & Armor Acquisition
HELMETS & ARMOR ACQUISITION • Helmets & Armor acquisition completed on 2 January • Adds ballistic helmets and armor to our portfolio • High quality business, with a strong management team, backed by leading proprietary technology, established contract platforms and well invested manufacturing operat
Slide 23: Acquisition of Team Wendy
ACQUISITION OF TEAM WENDY • Acquisition of Team Wendy creating a global leader in military and first responder helmets completed on 2 November • High-quality complementary business, with an experienced management team and a strong record of growth • Focused on designing and manufacturing head protec
Slide 24: Confidence in the Medium-Term Outlook
CONFIDENCE IN THE MEDIUM-TERM OUTLOOK • Focused life critical personal protection business • Military contracts underpin our medium-term outlook with significant growth opportunities in all our markets • Significant opportunity across all product lines to continue delivering against our three strate
Slide 25: Questions
Questions 25 YEAR END RESULTS 2020 Focusing on protection
Slide 26: Income statement
Income statement 2020 2019 2020 2019 £m £m $m $m (Restated) (Restated) Revenue 168.0 128.4 213.6 162.0 Adjusted EBITDA 38.4 28.4 49.0 36.2 Adjusted depreciation and amortisation (8.2) (5.8) (10.5) (7.4) Adjusted operating profit 30.2 22.6 38.5 28.8 Adjusted net finance costs (2.0) (0.4) (2.6) (0.5)
Slide 27: Reported to adjusted reconciliation
Reported to adjusted reconciliation 2020 2019 2020 2019 £m £m $m $m (Restated) (Restated) Operating profit 5.9 9.9 8.9 12.6 Amortisation of acquired intangible assets 6.5 4.7 8.3 6.0 Defined benefit scheme past service costs - 3.5 - 4.5 Acquisition costs and accounting adjustments 17.8 4.5 21.3 5.7
Slide 28: Revenue by line of business
Revenue by line of business 2020 2019 2020 2019 £m £m $m $m Military 82.8 87.2 104.8 108.8 First Responder 44.4 41.2 56.8 53.2 Respiratory 127.2 128.4 161.6 162.0 Helmets & Armor 40.8 - 52.0 - Total 168.0 128.4 213.6 162.0 2020 2019 2020 2019 £m £m $m $m Military 121.2 87.2 150.3 108.8 First Respond
Slide 29: Balance sheet
Balance sheet 2020 2019 2020 2019 £m £m $m $m (Restated) (Restated) Intangible assets 70.2 35.3 89.4 43.5 Property, plant and equipment 51.7 30.6 65.9 37.7 Current assets 64.6 56.1 82.3 69.1 Current liabilities (46.1) (35.3) (58.7) (43.5) Non-current assets 9.0 7.2 11.5 8.9 Net cash 93.2 35.4 118.7
Slide 30: Cash flow
Cash flow 2020 £m 2019 £m 2020 $m 2019 $m (Restated) (Restated) Cash flows from continuing operations before the impact of exceptional items 32.6 18.4 41.6 23.5 Cash impact of exceptional items and discontinued operations (4.8) 6.6 (6.1) 8.4 27.8 25.0 35.5 31.9 Cash flows from operations Net interes
Slide 31: U.S. $ 5 year track record
U.S. $ 5 year track record 2020 2019 2018 2017 2016 Closing order book $101.8m $45.2m $47.5m $38.6m $26.5m Revenue $213.6m $162.0m $155.7m $139.1m $136.8m Adjusted EBITDA $49.0m $36.2m $32.8m $31.8m $27.5m Adjusted EBITDA margin 22.9% 22.4% 21.0% 22.9% 20.1% Adjusted operating profit $38.5m $28.8m $
Slide 32: Foreign exchange and sensitivities
Foreign exchange and sensitivities Average rate Closing rate Average rate Closing rate 2020 2020 2019 2019 U.S. Dollar 1.275 1.274 1.276 1.232 1$ cent movement £m Revenue 0.9 Operating profit 0.2 Net assets 0.3 32 YEAR END RESULTS 2020 Focusing on protection
Slide 33: IFRS 16 Leases Impact
IFRS 16 Leases Impact Organic Helmets & Total Armor Adjusted EBITDA 1.0 1.2 2.3 Adjusted operating profit 0.5 (0.1) 0.4 Adjusted earnings - (0.1) (0.1) Organic Helmets & Total Total ($m) Armor Right of use asset 7.3 12.9 20.2 25.7 Lease liability (10.0) (12.8) (22.8) (29.0) Deferred tax asset 0.5 -
Slide 34: Glossary of financial terms
Glossary of financial terms Term Explanation Adjusted basic earnings per Adjusted profit for the period divided by the weighted average number of shares in issue share Adjusted EBITDA Adjusted EBITDA is defined as operating profit before depreciation, amortisation, exceptional items and defined bene
Slide 35: Glossary of financial terms (continued)
Glossary of financial terms (continued) Term Explanation Dividend per share Dividends paid / proposed, divided by the weighted average number of shares in issue EBITDA The Group’s earnings before charging interest, tax, depreciation and amortisation Exceptional items Significant non-recurring items
Slide 36: Abbreviations
Abbreviations Term Explanation 50 Series A range of masks based on the proven technology of the M50 mask system BPS Basis points CBRN Chemical, Biological, Radiological, Nuclear CE CE markings indicate conformity to health and safety standards sold within the European Economic area DLA Defense Logis
Slide 37: Abbreviations (continued)
Abbreviations (continued) Term Explanation IHPS Integrated Head Protection System MOD Ministry of Defence PAPR Powered air breathing apparatus ROW Rest of World SCBA Self-contained breathing apparatus VTP Vital Torso Protection XSBI X-Side Ballistic Insert XSAPI X-Small Arms Protective Insert 37 YEA