Volex Plc · LSE:VLX
Volex — H1 FY2019 Earnings Presentation
18 slides from Volex's earnings presentation, Nov 9, 2018
Slide 1: Interim Results 2018/19
Interim Results 2018/19 Nat Rothschild Daren Morris 9 November 2018
Slide 2: Disclaimer
Disclaimer This Presentation does not constitute or form part of any offer or invitation to sell or issue, or any solicitation of any offer to purchase or subscribe for, any securities to any person in any jurisdiction to whom or in which such offer or solicitation is unlawful, nor shall it (or any
Slide 3: Volex Today
Volex Today Advanced connectivity solutions for the modern world AC adapters to allow for home charging of the new generation of electric vehicles 40Gbps passive copper cables fill the need for short, cost effective connectivity in the data centre Patient critical medical sub assemblies for advanced
Slide 4: Volex Today
Volex Today • Global leader in the production of interconnect solutions – power products and complex cable assemblies • Strong balance sheet for flexibility through the economic cycle • Strategy to improve profitability in power and cable assemblies is on track and we see continued opportunites for
Slide 5: Summary of H1 Results
Summary of H1 Results Financial Highlights • Pre Exceptional operating profit up 80% to $9.9million (H1FY18 $5.5million) driven by cost reduction, improvement in product mix and contribution from acquisitions • Recovery in profitability of core business driven by Power Cord improvement – Pre Excepti
Slide 6: Summary of H1 Results
Summary of H1 Results Operational Highlights • Successful integration of MC Electronics and Silcotec – diversifying our customer base and manufacturing footprint • Staged restructuring in Shenzhen will allow us to harvest-for-value as our largest power customer declines. Ongoing consolidation of all
Slide 7: Our progress continues
Our progress continues ✔ Reduce customer Success in winning new customers and reducing over reliance on legacy concentration customer base Increase profitability ✔ Margin improvement in Power Cords division as a result of cost reduction, product line simplification and automation ✔ Upgrades to our p
Slide 8: Financial Review
Financial Review
Slide 9: Volex – H1 FY19
Volex – H1 FY19 Power Cords Division Cable Assemblies Division H1 FY19 Sales $104million H1 FY19 Sales $78million OM 7.7% OM 6.7% • 4 Manufacturing locations: • 6 Manufacturing locations: • Shenzhen (China) • Suzhou (China) • Zhongshan (China) • Komarno (Slovakia) • Hanoi (Vietnam) • Bydgoszcz (Pola
Slide 10: Revenue Progression
Revenue Progression Volex H1 Sales - last 4 years 200 • The top 3 customers as a proportion of the 180 total sales has reduced: from 47% in FY15 to 34% in H1 FY19 160 140 $ millions 120 100 80 • Excluding sales to our largest power 60 40 20 0 customer, revenue increased by 10% in H1 H1 - FY16 H1 - F
Slide 11: H1 Revenue Performance
H1 Revenue Performance Note – PY numbers restated to classify our Batam site into Power Cord division Power Cords – HY2018 to HY2019 Cable Assemblies – HY2018 to HY2019 +4% +28% -32% +15% +3% H1-2017/18 H1-2018/19 H1-2017/18 H1-2018/19 Acquisi ons Exis ng Customers Largest Power Customer Other Custo
Slide 12: Financial Summary
Financial Summary $m FY18 H1-18 H1-19 • Sales diversification and growth strategy starting to Revenue 322.4 161.4 182.4 show benefits Gross Profit 56.0 28.9 34.0 - Gross Margin 17.4% 17.9% 18.6% • H1 sales in Power Cords benefited from customers Operating Costs (44.5) (23.4) (24.1) increasing invent
Slide 13: Adjusting Items
Adjusting Items $m FY-18 H1-18 H1-19 Restructuring Costs 0.9 - 1.9 Acquisition Costs 0.1 - 0.8 Amortistion of Acquired Intangibles - - 0.6 Transition to AIM 0.5 - - Exceptional Costs 1.5 - 3.3 Share based payments 1.1 0.4 0.8 2.6 0.4 4.1 • Restructuring costs primarily relate to severance payments r
Slide 14: Cable Assemblies
Cable Assemblies $m FY18 H1-18 H1-19 Change Revenue 118.8 60.9 78.2 28.4% Gross Profit* 22.1 12.7 15.2 19.7% Gross Margin* 18.6% 20.9% 19.5% Operating Costs 18.6 9.7 10.0 3.1% Operating Profit* 3.5 3.0 5.2 73.3% Operating Margin* 2.9% 5.0% 6.7% *Underlying measure before Share Based Payments and Exc
Slide 15: Power Cords
Power Cords $m FY18 H1-18 H1-19 Change Revenue 203.6 100.5 104.2 3.7% Gross Profit* 33.9 16.1 18.8 16.8% Gross Margin* 16.6% 16.0% 18.0% Operating Costs 21.8 11.2 10.7 -4.5% Operating Profit* 12.1 4.9 8.1 65.3% Operating Margin* 6.0% 4.9% 7.7% *Underlying measure before Share Based Payments and Exce
Slide 16: Cash Flow
Cash Flow 9.9 • Net cash has increased from $9.9million to $24.9million • Working capital movement breakdown • $3m increase in inventory • $13m increase in receivables (circa 50% relates to funding Silcotec WC) • $11m decrease in creditors (removal of creditor squeeze) • Investment figure is reduced
Slide 17: Cash Targets
Cash Targets Cash Balances since July 2018 33.0 31.0 29.0 • Management is focused on increasing average cash balances as part of the Cash Balance ($m) 27.0 25.0 23.0 FY2019 incentive scheme 21.0 19.0 17.0 • We are targeting an improvement in 15.0 P4W1P4W2P4W3P4W4P5W1P5W2P5W3P5W4P6W1P6W2P6W3P6W4P6W5P
Slide 18: Outlook for the full year
Outlook for the full year • Revenue expected to exceed $355 million • H2 revenue usually lower than H1 due to Chinese New Year holidays • Power Cord expected to be around $195 million at similar profit margin to H1 • Cable Assemblies pipeline is encouraging and we should see $160 million of revenue