Volex plc · LSE:VLX
Volex — FY2011 Earnings Presentation
24 slides from Volex's earnings presentation, June 2011
Slide 1: Preliminary Results for the financial year ending 3 April 2011
Preliminary Results for the financial year ending 3 April 2011 Building for the Future
Slide 2: Financial summary
Financial summary 1. Revenues of £316m up 38% year-on-year (35% constant currency) 2. Gross profit up 29% on FY10. Gross margin % down to 18.8% from 20.1% last year, mainly due to unprecedented increases in raw material costs 3. Normalised operating profit1 up 64% from £10.3m to £16.8m 4. Profit bef
Slide 3: Operational and strategic highlights
Operational and strategic highlights 1. Improving customer engagement driving significant revenue growth, ahead of industry peers 2. LEAN manufacturing and continuous improvement initiatives generating operational and financial benefits 3. Steps taken to mitigate temporary raw material price related
Slide 4: Return to dividend
Return to dividend 1. The Volex Board announces today that it will be recommending a dividend of 2p per share to the shareholders at the upcoming AGM 2. This would be the first ordinary dividend paid by Volex since FY02 3. The recommendation equates to a total payout of £1.1m, to be paid following a
Slide 5: US$225m financing
US$225m financing 1. Volex announces today the signing of a 4 year, US$225m loan facility with Lloyds, HSBC and Clydesdale. 2. Core US$75m facility replaces previous US$76m facility with Lloyds • Extended from June 2012 to June 2015 • Improved investment grade pricing • Increased covenant headroom •
Slide 6: Financial Highlights
Financial Highlights June 2011
Slide 7: Strong revenue growth across all sectors
Strong revenue growth across all sectors Quarterly revenue by Sector, £m 90 80 70 60 50 40 30 20 10 0 Q1 FY10 Q2 FY10 Q3 FY10 Q4 FY10 Q1 FY11 Q2 FY11 Q3 FY11 Q4 FY11 Consumer Telecoms / Datacoms Healthcare Industrial £m FY11 FY10 Growth Consumer 196.3 139.3 41% Broad based growth, Asia particularly
Slide 8: Broad geographic revenue growth
Broad geographic revenue growth Quarterly revenue by geographic region, £m 90.0 80.0 70.0 60.0 50.0 40.0 30.0 20.0 10.0 0.0 Q1 FY10 Q2 FY10 Q3 FY10 Q4 FY10 Q1 FY11 Q2 FY11 Q3 FY11 Q4 FY11 Asia Americas Europe India £m FY11 FY10 Growth Asia 165.4 113.0 46% Revenue growth led by strong Consumer busine
Slide 9: Absolute gross profit increasing, gross margin % held back by input costs
Absolute gross profit increasing…. gross margin % held back by increased input costs Quarterly gross profit £m Quarterly gross margin % 16.0 14.8 14.2 14.3 20.9% 21.4% 11.8 12.4 19.2% 19.1% 19.7% 19.6% 11.6 18.0% 18.0% 10.4 Q1 10 Q2 10 Q3 10 Q4 10 Q1 11 Q2 11 Q3 11 Q4 11 Q1 10 Q2 10 Q3 10 Q4 10 Q1 1
Slide 10: Longer term gross margin trending in right direction
Longer term gross margin trending in right direction Annual GM% 20.2% 18.8% 15.9% 13.8% FY08 FY09 FY10 FY11 • Longer term trend favourable - Group’s focus on design content, increased customer engagement and earlier participation in product lifecycle • While FY11 GM% was adversely impacted by unprec
Slide 11: Strong delivery of profits
Strong delivery of profits Quarterly normalised1 operating profit, £m 4.4 4.4 3.8 4.0 4.0 3.4 3.0 3.1 £m FY11 FY10 ∆ Group 16.8 10.3 64% Q1 10 Q2 10 Q3 10 Q4 10 Q1 11 Q2 11 Q3 11 Q4 11 Normalised operating profit Exceptional items • Stable operating profit, despite cost related margin pressure • Nor
Slide 12: Disciplined cash management
Disciplined cash management Net working capital efficiency (as % sales) Net debt at year end 16.3% £m FY11 FY10 ∆ 15.9% 15.4% 15.1% 15.2% 15.0% 13.9% 13.9% Group 4.6 7.6 39% Q1 10 Q2 10 Q3 10 Q4 10 Q1 11 Q2 11 Q3 11 Q4 11 • Operating cash flow before movement in working capital of £16.0m up from £11
Slide 13: Other key financials
Other key financials Pension deficit (£m) Effective tax rate (% of profit before tax) 56% Assets 9.2 11.1 11.6 24% Liabilities 11.1 18% 13.5 12.9 Deficit (1.8) (2.4) (1.3) FY09 FY10 FY11 • Deficit reduced from already low level • Effective tax rate substantially reduced Total CAPEX and R&D spend (£m
Slide 14: Individual Sector Performance
Individual Sector Performance June 2011
Slide 15: Strong Consumer sector growth
Strong Consumer sector growth Consumer revenues, £m 60 50 40 30 20 10 0 Q1 FY10 Q2 FY10 Q3 FY10 Q4 FY10 Q1 FY11 Q2 FY11 Q3 FY11 Q4 FY11 Asia Americas Europe India • Revenue in FY11 up 41% year on year (38% constant currency) • Gross margins of 17.6%, down from 22.1% in FY10 due to increased raw mate
Slide 16: Telecoms / Datacoms – healthy save India
Telecoms / Datacoms – healthy save India Telecoms / Datacoms revenue, £m 20 15 10 5 0 Q1 FY10 Q2 FY10 Q3 FY10 Q4 FY10 Q1 FY11 Q2 FY11 Q3 FY11 Q4 FY11 Asia Americas Europe India • FY11 Revenue up 19% on FY10, 54% excluding India where we have exited low margin “feeder” business and where telecoms inf
Slide 17: Healthcare robust and steady progress
Healthcare robust and steady progress Healthcare revenue, £m 8 7 6 5 4 3 2 1 0 Q1 FY10 Q2 FY10 Q3 FY10 Q4 FY10 Q1 FY11 Q2 FY11 Q3 FY11 Q4 FY11 Asia Americas Europe India • Revenue in FY11 up 39% year on year • Gross margins of 23.5%, up from 21.6% in FY10, achieved by early design cycle engagement w
Slide 18: Industrial revenue doubled
Industrial revenue doubled Industrial revenues, £m 7 6 5 4 3 2 1 0 Q1 FY10 Q2 FY10 Q3 FY10 Q4 FY10 Q1 FY11 Q2 FY11 Q3 FY11 Q4 FY11 Asia Americas Europe India • Revenue in FY11 up 101% year on year • Gross margins of 23.7%, up from 22.7% in FY10 • Strong growth in telematics and automation • Year on
Slide 19: Key themes for FY12
Key themes for FY12 1. Quality of earnings • Steady, sustainable organic revenue growth above sector average • Gross margin % to exit the year around 20% en route to mid 20%’s during the next 3 – 5 years • Predictable and reliable earnings • High profit to cash conversion 2. Building for the future
Slide 20: Conclusions
Conclusions 1. Business has revenue and margin momentum 2. Experienced management team with ambition 3. Attractive organic and inorganic market opportunities 4. Clear strategy and plan of execution 5. Robust balance sheet and expansion capital available 6. Return to dividend for first time since 200
Slide 21: Appendices: Abridged financial statements
Appendices Abridged financial statements
Slide 22: A. Abridged income statement
A. Abridged income statement £m FY 11 FY10 Revenue 316.0 229.0 Cost of sales (256.6) (182.8) Gross margin 59.4 46.2 Operating expenses (incl. non-recurring items) (42.6) (35.9) Operating profit (b/f share based payments) 16.8 10.3 Share based payments (1.7) (-) Operating profit 15.1 10.2 Net Finance
Slide 23: B. Abridged statement of financial position
B. Abridged statement of financial position £m FY11 FY10 Goodwill 1.9 1.9 Property, plant and equipment and intangible assets 9.1 8.2 Other non-current assets 1.5 0.5 Total Non-current Assets 12.5 10.6 Inventories 32.2 27.5 Trade receivables 65.3 51.4 Other receivables 8.4 9.1 Cash and cash equivale
Slide 24: C. Abridged statement of cash flows
C. Abridged statement of cash flows £m FY11 FY10 Operating cash flow before working capital movements 16.3 11.3 Movement in working capital (3.2) 4.6 Cash generated by operations 13.1 15.9 Tax and interest payments (6.1) (4.0) Purchases of tangible and intangible assets (3.5) (1.7) Operating cashflo