Dialight plc · LSE:DIA
Dialight — FY2010 Earnings Presentation
53 slides from Dialight's earnings presentation, Feb 14, 2011
Slide 1: Dialight plc 2010 Preliminary Results
Dialight plc 2010 Preliminary Results 14 February 2011
Slide 2: Agenda
Agenda ● Business review and outlook ● Financial results ● Q&A
Slide 3: Highlights
Highlights ● Profit before tax of £11.3m (2009: £5.3m) ● Full year Revenues grew 28.3% to £99.2m (2009: £77.3m) ● Signals/Illumination segment revenues increased to £61.1m (2009: £46.4m) ● Lighting sales more than doubled to £11.6m (2009: £5.5m) ● Two international initiatives completed ● Strong ope
Slide 4: Revenues
Revenues 2010 2009 Revenue £99.2m £77.3m Signals/Illumination £61.1m £46.4m Electromagnetic Components £14.6m £13.3m LED Indication Components £23.5m £17.6m
Slide 5: Contribution Margins
Contribution Margins 2010 2009 Signals/Illumination 42.2% 38.8% Electromagnetic Components 17.2% 23.8% LED Indication Components 52.9% 52.7%
Slide 6: LED Indication Components
LED Indication Components ● Niche with over 15,000 customers – strong profit and cash generator ● Revenues increase over 33% versus 2009 ● Strong growth in H1 with consequent inventory build up ● Slower H2 as predicted ● Fundamentals of the business unchanged ● Margins good ● Expect flat performance
Slide 7: Electromagnetic Components
Electromagnetic Components ● Revenues up £1.3m versus 2009 with growth coming from US smart meter manufacturers selling to US utilities ● New contract win expected to drive higher future growth with 100m US homes still to adopt smart meters ● Rest of the world is also moving towards mass conversion
Slide 8: Signals/Illumination Revenue
Signals/Illumination Revenue 2010 2009 Revenue: £61.1m £46.4m Traffic £27.4m £23.6m Obstruction £12.3m £7.0m Transportation £9.8m £10.2m Lighting £11.6m £5.5m
Slide 9: Signals - Traffic
Signals - Traffic ● European traffic up 34% with strong performance both in the UK and the rest of Western Europe ● US Traffic up 9% in spite of no large projects ● Margins improved ● Some interest in street lights from customers in both US and Europe
Slide 10: Obstruction Lighting
Obstruction Lighting
Slide 11: Global Markets Served
Global Markets Served Telecom Markets Utilities • Cellular • Stacks, Chimneys & • Private Microwave Cooling Towers networks • Catenary Systems • Private Pager networks Wind Markets Marine • Onshore • Offshore Platforms • Offshore • Fixed & Seasonal Aids Broadcast Market Tall Structures • 500-2,200 F
Slide 12: Signals - Obstruction
Signals - Obstruction ● 76% year on year growth – 50% excluding BTI acquisition ● Margin improvement driven by new Beacon and Strobe designs ● More than 2400 White Strobes supplied to US Cell Tower market in 2010 – 76000 to go! ● Sales to 8 of the top 10 tower operators in 2010 ● Acquisition of BTI
Slide 13: New Products
New Products High Intensity Strobe (270,000 cd) Catenary Strobe System Onshore Wind W-ROT Beacon Tall Turbine Market (100,000 cd)
Slide 14: 100m mast
Demonstration of 100,000cd High Intensity LED Light in Sweden 100m mast
Slide 15: Aviation Obstruction Lighting and Marine Aids to Navigation
Aviation Obstruction Lighting and Marine Aids to Navigation Medium Intensity Obstruction Lights Antenna Obstruction Light Power Supply Photocell GPS Controller and Monitor Photocell Receiver Detector Floodlights and Spootlights Low Intensity Marker Lights Tower and Sign Lighting Marine Lanterns Rada
Slide 16: WW Growth Offshore Wind Farms
WW Growth Offshore Wind Farms 30,000.00 25,000.00 Asia North America Europe 20,000.00 Megawatts 15,000.00 10,000.00 5,000.00 0.00 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 Year Source: EWEA 2009
Slide 17: Illumination
Illumination ● Revenues up over 100% ● 20,000 Industrial White Lights shipped ● High Bay Light major success ● Winner of Techmark and Elektra awards ● Sales to over 300 customers in 2010 ● Pipeline of new/improved products ● 2011 starting strongly
Slide 18: LED Developments – Canaccord view
LED Developments – Canaccord view ● Very high rate of LED adoption up to 60% by 2020 – growing the LED cumulative revenue to $313bn – taking the equivalent of nearly 600 power stations from the world grid by 2020 – equivalent to the emissions of all passenger cars in the world today ● Traditional li
Slide 19: LED Performance
LED Performance ● Cree, Philips and Nichia all supplying high performance devices ● Typical lumens/watt 135 ● Device output possible to 235 lumens ● LED cost per fixture reduced by 50% in the year ● More LED suppliers entering the market
Slide 20: Evolution of Energy Efficient Lighting
Evolution of Energy Efficient Lighting Lumens per watt 200+ LPW 200 186 LPW 180 XM 161 LPW Lumens / Watt 160 LED T8 Fluorescent XPG T5 HO Fluorescent 140 130 LPW High Pressure Sodium Metal Halide Pulse Start 120 XPE 114 LPW Metal Halide REBEL 100 LPW 100 0 2009 2010 2011 2012
Slide 21: Advantage for Dialight
Advantage for Dialight ● More lumens/watt means 1. Less LEDs 2. Less power 3. Less heat 4. Smaller power supply 5. Less thermal management 6. More applications for our products…. …if we work with short product life cycles… ….not typical for the Lighting Industry !
Slide 22: Solid State Lighting
Solid State Lighting
Slide 23: Lighting Market Sizing
Lighting Market Sizing 2010 Global Projection: $75 billion Industrial 7% Parts & Residential Accessories 23% 18% Portable 18% Outdoor Commercial 17% 21% 2010 Global Industrial Sales: $5.25 billion Source: Freedonia / IMS
Slide 24: Market Sizing: Hazardous Lighting
Market Sizing: Hazardous Lighting 2010 Estimated Global Sales: $900+ Million Source: Freedonia Growth projections 7%+ CAGR 2011 - 2015
Slide 25: Americas – Markets Currently Served
Americas – Markets Currently Served Industrial Hazardous Markets Industrial Markets ● Oil & Gas ● Water Treatment ● Pipelines ● Power Plants & Utilities ● Petrochemical & Chemical ● Manufacturing ● Pharmaceuticals ● Automotive ● Mining (Surface) ● Freezers, Cold Storage ● Waste Treatment ● Food Proc
Slide 26: Progress to date – Customers/Segments
Progress to date – Customers/Segments Oil & Gas, Petrochemical & Pharmaceutical AES Formosa Plastic Proctor & Gamble Alyeska Pipeline Services Co. Great Salk La Rain CII Carbon LLC Arkema Chemicals ke Minerals Red Cedar Gathering Baxter Hess (2 locations) Reichart Chemicals Baxter Caribe Inc. Indole
Slide 27: Progress to date – Customers / Segments
Progress to date – Customers / Segments Mining & Power Generation Colorado Springs Utilities Montana Power (PPL) Colstrip Antelope Coal Mine Connectiz Power Plant Arch Black Thunder Coal Mine Anderson PNM NM Climax Molybdenum Henderson Chamming Electric Portland General Electric Mine Coal Peers Ches
Slide 28: Progress to date – Customers / Segments
Progress to date – Customers / Segments Water, Waste Water, Processing & Food Plants ADM Corn Processing Golden Plump Chickens North Dakota Mill ADM Wallhalla GS Dunn Passaic Valley Sewage Arbiti Bowater Hatfield Quality Meats Patrick Cudahy Bar-S Foods Heinz Riverview Dairy Farm BNS Fererro Henkel
Slide 29: Progress to date – Customers / Segments
Progress to date – Customers / Segments Warehouse & Manufacturing 3E - Electrical Eng & Flexicon Inc Meng Xue Song Equipment Co. Frontline Int. Metal Container Aisin – Japan Galavan Industries Mozel Inc. Alcoa General Machinery Noctur Allsteel Panel Glenadale Complex Pilkington North Anderson Graphi
Slide 30: Multiplier Effect
Multiplier Effect ● Typical Customer Cycle − 1 – 10 Small test area − 10 – 50 Small Application − 100+ Retrofit process, multiple facilities ● e.g. Sherwin Alumina 10pcs, Multiple 100+pcs, 50/wk Oct – Dec ● e.g. Entergy 5pcs, 3 x 100+pcs, potential 3000pcs ● Average Order Size Today * 10 – 15pcs
Slide 31: Dialight LED Product Differentiators
Dialight LED Product Differentiators ● All encompassing 5 year Warranty ● T Rating on Dialight fixtures is typically higher ● More Efficient Design/Better Power Consumption ● Wider Operating Temperature Range ● Thermal Protection is Superior ● Power Factor is Superior ● Very Cost Competitive vs Curr
Slide 32: Market Size
Market Size World Lighting Demand by Region Source: Freedonia
Slide 33: Worldwide Expansion
Worldwide Expansion ● Majority of Industrial Lighting sales in 2010 were in North America ● H2 2010 invested in R & D Centre in UK to address IEC Specifications ● Sales Managers now in UK, Germany, France, Dubai, Singapore, Australia ● Recruitment planned for Korea, Japan ,Eastern Europe
Slide 34: Primary Oil & Gas Activity
Primary Oil & Gas Activity London Paris Houston Seoul Singapore UAE Perth Saudi Arabia Primary Oil & Gas Engineering Centres
Slide 35: Current Oil & Gas Projects & $ Values
Current Oil & Gas Projects & $ Values Europe 900+ projects, value Russia 300+ projects, value $971 billion + $650 billion + Asia 800+ projects, value $550 billion + Middle East 400+ projects, value $600 billion + Information Source Australasia 200+ projects, value $325 billion +
Slide 36: Technology Effect / The Future
Technology Effect / The Future ● Existing industrial markets further enabled ● Contribution margins improved ● Much improved solar packaging ROI’s ● Emergency back up ROI enhanced ● Controls and communications ● Expanded core market opportunities
Slide 37: 2010 Outlook from early 2010
2010 Outlook from early 2010 ● Signals/Illumination positioned for continued growth with stronger margins ● Improved LED efficiency and cost is moving the adoption point ● Pipeline of new and improved White Lighting products ● Continued reengineering and cost reduction ● LED Indication showing recov
Slide 38: 2011 Outlook from early 2011
2011 Outlook from early 2011 ● Signals/Illumination positioned for continued growth with stronger margins ● Improved LED efficiency and cost is moving the adoption point ● Pipeline of new and improved White Lighting products ● Continued reengineering and cost reduction ● Executive confident in furth
Slide 39: Mark Fryer, Group Finance Director
Mark Fryer Group Finance Director
Slide 40: Five Year History
Five Year History 2010 2009 2008 2007 2006 £m £m £m £m £m Turnover 99.2 77.3 77.9 63.4 52.3 Profit before tax 11.3 5.3 5.6 4.5 5.8 Operating Cash 14.0 11.0 6.0 5.8 2.2 flow Net Cash 10.4 9.1 4.1 4.4 2.2 Shareholders 46.2 40.1 37.5 30.8 29.7 Funds Return on Sales 11.4 6.9 7.2 7.1 11.1 % Return on 31.
Slide 41: Signals / Illumination Five Year History
Signals / Illumination Five Year History 2010 2009 2008 2007 2006 £m £m £m £m £m Turnover 61.1 46.4 43.3 33.4 28.6 Operating Profit 8.7 3.3 1.7 0.1 (0.5) Return on Sales 14.2 7.1 3.9 0.3 n/a % % of Group 77.7 62.2 30.4 2.2 n/a Profit
Slide 42: Summary Profit & Loss
Summary Profit & Loss 2010 £M 2009 £M Revenue 99.2 77.3 Gross Profit 27.3 18.7 Gross Profit % 27.7 24.2 Overhead costs (16.5) (13.2) Operating profit 11.2 5.5 Net financing 0.1 (0.2) income / (cost) Profit before tax 11.3 5.3 Tax (3.8) (2.0) Net Profit 7.5 3.3 Adjustment to profit - 2.1 Retained pro
Slide 43: 2010 Segment Result
2010 Segment Result Emech LED Signals/ Total £M Components Indication Illumination £M £M £M Revenue 14.6 23.4 61.1 99.2 Contribution 2.5 12.4 25.8 40.7 Contribution % 17.2 52.9 42.2 41.0 Overheads (2.4) (6.8) (17.2) (26.4) Segment profit 0.1 5.6 8.6 14.3
Slide 44: Taxation
Taxation ● Reduced effective tax rate in 2010 was 34.0%, reduced from 37.5% in 2009 and 38.5% in 2008 ● Profit in high tax locations ● Increased mix of lower tax UK profit going forward ● Lower UK corporate tax rates ● Continue to marginally lower effective tax rate
Slide 45: Dividends and Earnings Per Share
Dividends and Earnings Per Share 2010 2009 Dividends per share 8.0p 6.6p Basic EPS 23.8p 17.5p Dividend cover 3.0 times 2.7 times Underlying EPS 23.8p 10.6p Adjusted Dividend cover 3.0 times 1.5 times
Slide 46: Summary Balance Sheet
Summary Balance Sheet 2010 £M 2009 £M Non current 21.9 17.8 assets Cash 10.4 9.1 Other current 28.0 27.3 assets Current (12.2) (12.1) liabilities Non current (1.9) (2.0) liabilities Net Assets 46.2 40.1
Slide 47: Working Capital
Working Capital 2010 £M 2010 £M 2009 £M Inc BTI Exc BTI Inventories 9.2 8.6 9.2 Trade and 18.9 18.4 18.2 other receivables Trade and (11.3) (10.9) (11.0) other payables Working 16.8 16.1 16.4 Capital
Slide 48: Summarised Cash flow
Summarised Cash flow 2010 £M 2009 £M Operating cash 15.1 8.3 Working capital 0.2 4.0 Pension (1.3) (1.3) contribution Cash from 14.0 11.0 operations Tax/financing (4.7) (1.6) Investing (3.9) (2.5) activities Dividend (2.2) (1.9) Acquisition (2.1) - Net cash 1.1 5.0 generated
Slide 49: Cash Flow
Cash Flow ● Inventory – effective inventory management ● Almost 15 days out of receivables days ● Working capital constant excluding BTI ● Cash - Continuing strong cash flow from Operations with debt free balance sheet
Slide 50: Pensions
Pensions ● Group deficit increased from £0.9m to £1.4m ● US deficit constant at £1.8m ● UK surplus £0.4m ● IAS 19 deficit smaller than ongoing or termination deficit ● Termination basis would increase US deficit to over £3.0m ● Contributions of £1.3m in 2010 (£1.1m in US) – addition administration c
Slide 51: Banking
Banking ● Transferred 2011 banking relationship to Barclays ● £10m initial facilities with fees paid for £3m overdraft only ● Discussions with regard to additional £13m facility ● £33m of cash and potential facilities for corporate initiatives excluding equity funding ● SME Eurofinance and Capital O
Slide 52: Summary and outlook
Summary and outlook ● High growth across all segments and territories ● Strong signals and illumination performance ● High H2 2010 investment in overhead to support 2011 growth although seasonality and growth mean H2 strength over H1 ● Profitable business (both return on sales and net assets %) in m
Slide 53: Q&A
Q&A