Gooch & Housego Plc · LSE:GHH
Gooch & Housego — Investor Day (April 2019)
73 slides from Gooch & Housego's investor day presentation, Apr 9, 2019
Slide 1: Capital Markets Day - 9 April 2019
CAPITAL MARKETS DAY- 9 APRIL 2019 Mark Webster CEO Opening remarks
Slide 2: Overview of the day
G&H Capital Markets Day Overview of the day • Today’s event will be focused on Markets and Technology • We will present each of our three market sectors: Industrials, Aerospace & Defence and Life Science / Biophotonics • Highlight the main subsectors, which we believe will be instrumental in driving
Slide 3: Agenda
G&H CAPITAL MARKETS DAY Agenda 14:00 Registration 14:15 Opening remarks Mark Webster CEO 14:25 Aerospace & Defence Jon Goodwin SVP Head of Manufacturing Precision Optics/ Systems 14:45 Life Science / Biophotonics Dr Andrew Robertson SVP Strategic Technologies 15:05 Industrials Adrian Meldrum SVP and
Slide 4: Overview of G&H
Overview of G&H G&H researches, develops and manufactures photonics solutions for our customers across 12 manufacturing sites. (6 in the USA, 5 in the UK and 1 in China) We have world class capabilities across a broad range of photonics technologies G&H participates in three primary sectors: Industr
Slide 5: G&H aims, objectives & strategy
G&H aims, objectives & strategy To deliver superior shareholder performance Over time, continue to grow revenue at 15% CAGR, through a combination of organic and M&A growth Over time, improve the profit before tax through a combination of higher volumes, enhanced manufacturing efficiency and targeti
Slide 6: Financial Overview
Financial Overview Financial Track Record Revenue £’m H1 H2 Adjusted PBT £’m Key points: 140 20 18 120 100 16 14 The business has 80 12 delivered profitable 10 60 8 growth over a nine year 40 6 period. 4 20 2 0 0 15% CAGR in revenues since Dividends pps Net Debt / Cash £’m FY2009. 12 20 Final 10
Slide 7: Half year trading update
Half year trading update Trading in the last six months of FY 2019 reflected previously reported trends G&H has long been aware of the cyclical nature of the microelectronics market and more recently the impact of US/ China trade tariffs. Currently experiencing a cyclical downturn in demand for indu
Slide 8: Summary
Summary • G&H has world class photonic capabilities • Photonics is a fast growing and relatively immature sector • We are well placed to take a leading position in a number of identified sub markets • G&H is targeting to continue to deliver attractive long term profitable growth • Mitigate short ter
Slide 9: Agenda
G&H CAPITAL MARKETS DAY Agenda 14:00 Registration 14:15 Opening remarks Mark Webster CEO 14:25 Aerospace & Defence Jon Goodwin SVP Head of Manufacturing Precision Optics/ Systems 14:45 Life science / biophotonics Dr Andrew Robertson SVP– Strategic Technologies 15:05 Industrials Adrian Meldrum SVP an
Slide 10: Aerospace & Defence Business Unit
AEROSPACE & DEFENCE BUSINESS UNIT (BU) Jon Goodwin Head of Manufacturing – Precision Optics & Systems
Slide 11: A&D BU - Overview
A&D BU - OVERVIEW Aerospace Market Market Applications Photonics Market Sector & Defence (A&D) Imaging •Unmanned Aerial Vehicles •Precision Optical Components & 2018 Revenue: (UAV) Intelligence, Lens Assemblies Surveillance and £40.8m Reconnaissance (ISR) (2017: £34.9m) Directed Energy •Missile Syst
Slide 12: A&D Global Market View
A&D GLOBAL MARKET VIEW A&D Market: £1.5T Commercial Aerospace: £230B 2018 – 2021 CAGR: 2% World-wide spending on A&D end-items and services A&D Photonics TAM: £1.1B All photonics components, 2018 – 2021 CAGR: 8% subsystems and systems serving A&D end-use applications available to G&H A&D Photonics m
Slide 13: Imaging
IMAGING Market Market Applications Photonics Market Sector Imaging •UAV Intelligence, Surveillance and •Precision Optical Components & Reconnaissance (ISR) Lens Assemblies • £300M A&D Aerial Imaging Market* • Market Drivers: • ISR response to increased terror and military threats from rogue nations
Slide 14: Directed Energy Weapons
DIRECTED ENERGY WEAPONS Market Market Applications Photonics Market Sector Directed Energy Weapons •Missile Systems •Sights and Windows (DEW) •Fibre Optics •AO Modulators • £4.5B A&D DEW Market* • Market Drivers: • Worldwide increase of long and medium range missile capabilities by hostile entities
Slide 15: Target Designation & Range Finding
TARGET DESIGNATION & RANGE FINDING Market Market Applications Photonics Market Sector Target Designation and •Missile Systems •Precision Optical Components & Range Finding •Artillery Systems Lens Assemblies • £3.8B A&D Target Designator and Range Finding Market* • Market Drivers: • Increasingly inte
Slide 16: Navigation Systems
NAVIGATION SYSTEMS Market Market Applications Photonics Market Sector Navigation Systems •Ring Laser Gyros (RLG) •Precision Optical Components •Fibre Optic Gyros (FOG) •Fibre Optics • £12B A&D Inertial Platform Market* • Market Drivers: • RLGs in £730M Legacy Inertial Platforms Market: • RLGs are a
Slide 17: Space Photonics
SPACE PHOTONICS Market Market Applications Photonics Market Sector Space Photonics •Telecom & Defence •Fibre Optics Satellites •Precision Optical Components & •Aircraft Platforms Lens Assemblies • £11B A&D Space Photonics Market* • Market Drivers: • End-to-End Radio Frequency (RF) over fibre & Free
Slide 18: Countermeasures
COUNTERMEASURES Market Market Applications Photonics Market Sector Countermeasures •Electronic Warfare (EW) •Fibre Optics •Infrared •Precision Optical Components & Countermeasures Lens Assemblies • £11.5B Infra-Red Countermeasures Market (IRCM)* • Market Drivers: • Increasing augmentation & enhancem
Slide 19: Periscopes and Sighting Systems
PERISCOPES AND SIGHTING SYSTEMS Market Market Applications Photonics Market Sector Periscopes and •Armoured Fighting •Sights and Windows Sighting Systems Vehicles •Submarine Systems • £18.5B Armoured Vehicle Market* • Market Drivers: • Land Vehicles: Increased US DoD and foreign military sales (FMS)
Slide 20: A&D Business Unit Summary
A&D BUSINESS UNIT SUMMARY • Key Market Drivers • A&D is rapidly adopting photonic technologies …. lighter, faster, smaller & more accurate • Growth in worldwide Defence spending: • Electronic Warfare - EW • Naval Surface & Submarine, Aircraft and Land Vehicle Upgrades • Autonomous Platforms • Intell
Slide 21: A&D Business Unit Summary
A&D BUSINESS UNIT SUMMARY • G&H Well Positioned to Exploit Key Market Drivers: • Market growth is strong in the areas that G&H addresses … UAV’s, Imaging, Laser Comms, Missile Defence… • Programmatic experience to support demanding Defence market contract fulfilment • G&H develops & manufactures A&D
Slide 22: Life Science / Biophotonics Business Unit
LIFE SCIENCE / BIOPHOTONICS BUSINESS UNIT (BU) Dr Andrew Robertson SVP– Strategic Technologies
Slide 23: Market, Applications & Sectors
MARKET, APPLICATIONS & SECTORS G&H Life Sciences Market Market Applications Customers Revenue: Laser Surgery Ophthalmic (eye) surgery Leading surgical laser Cosmetic surgery manufacturers £11.2m Prostate surgery (2017: £9.6m) Microscopy Confocal microscopy Leading surgical laser Fluorescence microsc
Slide 24: Global Life Sciences Market View
GLOBAL LIFE SCIENCES MARKET VIEW • Life Sciences TAM US$475 billion* Instrument Biophotonics based + consumables + reagents + medical systems market service agreements $40B TAM Biophotonics based Sub-systems Instruments + other system components + software + power $3B TAM ITL able to address Medtech
Slide 25: Medical Lasers - Trends & Growth
MEDICAL LASERS - TRENDS & GROWTH Market Market Applications Customers Laser Surgery Ophthalmic (eye) surgery Leading surgical laser Cosmetic surgery manufacturers Prostate surgery • The medical laser market size is $1.1B • High growth segments are in cosmetic and eye surgery • G&H Pockels cells cons
Slide 26: Microscopy - Trends & Growth
MICROSCOPY - TRENDS & GROWTH Market Market Applications Customers Microscopy Confocal microscopy Leading surgical laser Fluorescence microscopy manufacturers Digital pathology • Optical microscope market size is $675M • G&H leverage industrial market production and acousto-optic devices provide prec
Slide 27: 3D Medical Imaging - Trends & Growth
3D MEDICAL IMAGING - TRENDS & GROWTH Market Market Applications Customers 3D Medical Imaging Ophthalmic Leading OCT instrument Cardiology manufacturers (Optical Coherence Tomography) Oncology (skin, GI tract) • Global OCT market is $865M • Unique technique for imaging live tissue (in-vivo) • Eye dis
Slide 28: Integrated Medical Technologies (ITL)
INTEGRATED MEDICAL TECHNOLOGIES (ITL) Market Market Applications Customers Medical In-vitro diagnostics Start–ups to global Surgical guidance healthcare providers Instrumentation Controlled drug delivery Organ transplant • In-vitro diagnostics (IVD) • Instruments specifically used to perform tests o
Slide 29: Future trends in medical technology
FUTURE trends in medical technology • Robotic Surgery • Many optical sensors to provide real time measurement data • Personalised Medicine • More in-vitro diagnostics (IVD) required to provide full analysis of medical requirements in order to offer best treatment (precise medication and correct dosa
Slide 30: Life Science & Biophotonics Summary
LIFE SCIENCE & BIOPHOTONICS SUMMARY • Life Sciences is an attractive market • High barrier to entry (regulatory compliance, customer loyalty) • High quality & reliability requirements fit with G&H core expertise • Current acquisition landscape in photonics sector offers synergistic opportunities • G
Slide 31: Industrial Business Unit
INDUSTRIAL BUSINESS UNIT (BU) Adrian Meldrum SVP & Head of Business Unit - Industrial
Slide 32: Industrial BU - Overview
INDUSTRIAL BU - OVERVIEW Industrial Markets Applications Revenue: • Microelectronics Micro-electronics £72.9m and laser manufacturing across multiple (2017: £64.3m) industries – communications, manufacturing display Telecommunications • Semi-conductor equipment manufacturing Optical sensing •
Slide 33: Industrial BU Global Market View
INDUSTRIAL BU GLOBAL MARKET VIEW Wafer Fab Equipment : Global Manufacturing Equipment Market £50B in 2019 2019 Growth predicted to be between 0% to 2% Global Laser Market: $14.6B in 2019 8.7% CAGR 2002 to 2021 Applications: Materials processing / Lithography: $6.4B Communications & optical storage:
Slide 34: Market Trends and Growth Opportunities: Industrial Lasers
MARKET TRENDS AND GROWTH OPPORTUNITIES INDUSTRIAL LASERS Continued and persistent growth in the Industrial Laser Market ~8.7% CAGR 2002 to 2021 (Laser Markets Smartphone OLED Shipment Forecast Research / G&H estimates) 1400 Volume growth in consumer communications and 1200 display products 1000
Slide 35: Ubiquitous Use of Lasers in Micro-Processing
UBIQUITOUS USE OF LASERS IN MICRO-PROCESSING • Pre 2014 • 2014 to 2018 • 2020+ • Package cutting • Package cutting • Package cutting • PC board de-panelling • PC board de-panelling • PC board de-panelling • Flex PCB drilling • Flex PCB drilling • Flex PCB drilling • Camera window cutting • Camera wi
Slide 36: Market Trends and Growth Opportunities: Subsea Communications
MARKET TRENDS AND GROWTH OPPORTUNITIES SUBSEA COMMUNICATIONS Mature subsea communications market now seeing significant growth and demand changes Web 2.0 players aggressively driving bandwidth – Google, Amazon, Facebook, Microsoft Increased bandwidth by physically deploying more fibres per cab
Slide 37: Market Trends and Growth Opportunities: Optical Sensing
MARKET TRENDS AND GROWTH OPPORTUNITIES OPTICAL SENSING LiDAR (Light Detection and Ranging) applications growing across multiple industries and applications Wind turbine efficiency and optimisation – wind shear and wind profiling Ground LiDAR for aerospace and automotive – weather profiling and
Slide 38: G&H Industrial Growth Drivers and Products
G&H INDUSTRIAL GROWTH DRIVERS AND PRODUCTS G&H well positioned to exploit growth across multiple Industrial markets, applications and product groups Industrial Laser Market Acousto optical modulators, Electro-optic Pockels cells, Q- switches, precision optics, Fibre-Q, pump lasers, sub modules
Slide 39: G&H Industrial BU Summary
G&H INDUSTRIAL BU SUMMARY • Key Features of G&H Industrial business • Market leading positions in a number of key areas • Acousto-optic devices, subsea couplers, optical sensing • Long term growth in industrial laser utility driven by micro-electronic device evolution and increasing penetration of l
Slide 40: Research, Development, Innovation
RESEARCH ◦ DEVELOPMENT ◦ INNOVATION Stratos Kehayas CTO
Slide 41: Selected high-growth R&D areas
Selected exciting high-growth R&D AREAS Aerospace & Defence Life Science Industrial Laser Directed Ophthalmic & LiDAR for Energy Weapons intra-coronary imaging wind sensing Source: Lockheed Martin Laser comm Medical lasers Higher power lasers for for UAVs & satellites cosmetic & dentistry metal proc
Slide 42: R&D Team
R&D Team Other 6% HND/BTEC 20% PhD & MSc 41% Torquay Boston BEng/BSc Fibre-optics (FO) 33% •Fibre Systems •Lasers & Fused Ilminster Acousto (AO) & Electro-optics (EO) Optical Systems Keene Cleveland •AO modulators •Sighting Systems •AO/EO drivers •Airborne Systems St Asaph Fremont •AO deflectors •EO
Slide 43: Expanding our skillset
Expanding our skillset Opto-mechanics Optics Mechatronics Photonic systems design Opto-mechanical Modelling Thermal/stress analysis Electronics Mechanics Systems Design Engineering Engineering Electronics & Firmware design Software Development Automated test development NPD Test Dev 43 Coherence + b
Slide 44: Cross-fertilisation
Cross-fertilisation Market awareness Technology awareness Example 1: From space to sensing Example 2: From tanks to retina scanners Amplifiers for satellite communications Thermally stable periscopes to new designs for …to amplifiers for wind sensing spectrometers in Optical Coherence Tomography (OC
Slide 45: R&D Impact: products launched in FY18
R&D Impact 29 products launched in FY18 Revenue from new products grew +8.3% to £12m 14 35 14 Revenue from new products (m£) 12 30 12 Number of new products 10 25 10 R&D Expenditure (m£) 8 20 8 6 15 6 4 10 4 2 5 2 0 0 0 FY16 FY17 FY18 FY16 FY17 FY18 Revenue from new products (m£) Expenditure (m£) Nu
Slide 46: R&D Projects
R&D Projects 46 G&H Capital Markets Day PAGE 46
Slide 47: Active R&D Projects
Active R&D Projects 1-2 years 5+ years Project horizon 2-5 years Maintain leadership position Lead high growth areas Longer term / high-reward profile Leverage core competencies Customer-led R&D Supported by external funding FO fused components and modules for FO sensors on-board commercial & Quantu
Slide 48: Fibre Optics (FO)
CLE TQY FIBre OPTICS (FO) FRE BOS From undersea to outer space ILM BAL ASH STA VIR KNE Developing FO components & Systems for: • A&D • Systems & components for data relay & navigation satellites • UAV laser comms & on-board sensing • Life Sciences • Ultra-wideband/flat couplers for OCT, increasing r
Slide 49: Acousto Optics (AO)
CLE TQY Acousto Optics (AO) FRE BOS Switching and steering light in advanced lasers ILM BAL ASH STA VIR KNE Developing deflectors for UV and visible wavelengths Developing modulators for CO2 lasers Smaller features => shorter wavelengths More powerful lasers => improved heat dissipation Increase ang
Slide 50: Electro Optics (EO)
CLE TQY Electro Optics (EO) FRE BOS Switching light with Pockels cells ILM BAL ASH STA VIR KNE KD*P Pockels cell BBO Pockels cell New materials for Mid-IR and drivers drivers sensing applications Q-switch for Pulse selection and power Industrial LiDAR, threat detection, laser surgery control in high
Slide 51: Optical Systems
CLE TQY Optical Systems FRE BOS Next-generation sighting & airborne optical systems ILM BAL ASH STA Market drivers VIR KNE • Situational awareness & tactical advantages in battlefield • Airborne systems with Low Size, Weight & Power (SWaP)Multi-band Long-wave Infrared Single-aperture Trends • Enhanc
Slide 52: Case Studies
Case Studies 1) Life Sciences / OCT 2) A&D / Space Photonics 3) Industrial / Fiber-optics for wind sensing 52 G&H Capital Markets Day PAGE 52
Slide 53: Optical Coherence Tomography
Optical Coherence Tomography 53 G&H Capital Markets Day PAGE 53
Slide 54: OCT: In vivo imaging of tissue using light
OCT: In vivo imaging of tissue using light OCT is a high resolution (~10um), 3D imaging is simple, non-toxic, non-invasive (non-contact), no ionizing radiation exposure and uses low cost equipment Ophthalmology X-ray fovea Diseases: Age-Related 10 mm Macular Degeneration (AMD), glaucoma & diabetic r
Slide 55: Developing Key Building Blocks of a Retina Scanner
CLE TQY Developing Key Building blocks of a Retina FRE BOS Scanner ILM BAL ASH STA VIR KNE Broadband or swept source controller 2 1 Spectrometer 4 Interferometer 3 5 Or PDR detector 3 Delay line 5 Delay line 2 4 1 PDR detector Spectrometer Interferometer Polarisation Controller 55 G&H Capital Market
Slide 56: New Generation of OCT Components
New Generation of OCT Components Early Glaucoma Detection: Application trend: measurement of layers in macula Higher resolution (~1μm) Higher functionality Technology Trend: Ultra-wide band couplers & Polarisation-Sensitive (PS) OCT Wideband operation Higher resolution Flat spectral Intravascular im
Slide 57: Space Photonics
Space Photonics 57 G&H Capital Markets Day PAGE 57
Slide 58: Space 2.0 & Photonics
CLE TQY Space 2.0 & Photonics FRE BOS ILM BAL ASH STA A decade of constellations VIR KNE From big Geostationary satellites 1-7 tonnes to smallSats 15-20 / year 10-50kg 50-100M$ / sat 1,000s / year $100k - $10M / sat 1-7 tonnes 15-20 / year Opportunity for photonics 50-100M$ / sat Constellations Lase
Slide 59: R&D Focus: Optical Networks in the Sky
R&D Focus: Communications OPTICAL NETWORKS IN THE SKY JPL ESA/JAXA ESA CORNING AIRBUS AMPLIFIERS G&H-rich content in both Transmit transmitters and receivers LASER Fibre to free Tx Rx Receive space PHOTO- & Telescope Rx Tx DETECTOR 59 G&H Capital Markets Day PAGE 59
Slide 60: Our Roadmap for Laser Comms
Our Roadmap for LASER COMMS 2020/2023 Constellations • Small/CubeSats 2018/20 & UAVs • Transmitters LEO-GEO* Relays • Receivers • High-power • Amplifiers amplifiers • Laser Tx/Rx 2016/18 Downlinks • Mid-power amplifiers • Lasers *LEO: Low Earth Orbit 60 G&H Capital Markets Day PAGE 60 GEO: Geostatio
Slide 61: Typical Space Qualification
Typical Space Qualification Qualification mimicking sequence of events during deployment Unit delivered to Thales Alenia Space for in-orbit demonstration Thermal cycling Radiation testing Vibration Shock in vacuum Rocket launch Satellite deployment Satellite orbit 1 2 3 61 G&H Capital Markets Day PA
Slide 62: Transmitter for UAV laser comms
Transmitter for UAV laser comms AIRSTART project led by Airbus Group Innovations LASER TX AMPLIFIER LASER Laser RF Pump laser driver amp drivers Successful flight demos in 2017 & 2018 Analog Data in DC bias monitors & monitors & controls controls Design drivers Lightweight Power-efficient Compact 62
Slide 63: LiDAR - Wind Sensing
LIDAR – WIND SENSING Agios Georgios, Greece 63 G&H Capital Markets Day PAGE 63
Slide 64: Growth drivers in Wind Sensing
Growth drivers In Wind Sensing LiDAR Dynamic control of blade pitch Vertical & horizontal wind profiling Weather monitoring of wind turbines for wind farm planning from space BellLeicester Uni Helicopters Wake turbulence Aviation safety Wind shear From CAA CAP 493 64 G&H Capital Markets Day PAGE 64
Slide 65: Why G&H? G&H inside
Why G&H? System design Vertical integration Cost, quality and performance advantage Component performance G&H inside Laser Fiber-Q RF Driver Fused Amplifier • 1550 nm • High • Interface to • Within the • Hi-Rel • Narrow Extinction the Fiber-Q amplifier • Harsh linewidth Ratio (ER) • Pre-distortion •
Slide 66: Is the Future Bright?
Is the Future Bright? 66 G&H Capital Markets Day PAGE 66
Slide 67: Example from today
Example from today Photo: Royole Laser Sensors 3D facial recognition Photo: Business Wire Enclosure Cutting drilling, marking Photo: Visteon Display Cutting, marking Flex PCBs manufacturing Via drilling and routing PCB manufacturing Drilling, cutting and routing Component processing Photo: DISCO Cir
Slide 68: What about tomorrow?
What about tomorrow? Gartner Hype Cycle Driverless cars (l5) BioChips UAV swarms Smart robots Human augmentation Smart dust 68 G&H Capital Markets Day PAGE 68
Slide 69: A Glimpse into a future enabled by photonics
A Glimpse into A future …enabled by photonics A.I. meets laser-enabled manufacturing Manufacturing by robots Design by robots increasing autonomy AI & Generative design Stage 1 Stage 2 Airbus & Autodesk Mx3D Dreamcatcher project Level of miniaturisation & control not possible with human dexterity an
Slide 70: Summary
Summary • R&D is key to our business for fuelling new product development and enabling growth • Central to our success is our talented people • Expanding our capabilities in optical, electronics, mechanical and firmware/software engineering • Working closely with our customers on their requirements
Slide 71: Whatever the future holds
Whatever the future Holds ....Gooch & Housego will be there to make it happen 71 G&H Capital Markets Day PAGE 71
Slide 72: Conclusions, closing remarks
CAPITAL MARKETS DAY Mark Webster CEO Conclusions, closing remarks
Slide 73: Summary
Summary • G&H has world class photonic capabilities • Photonics is a fast growing and relatively immature sector • We are well placed to take a leading position in a number of identified sub markets • G&H is targeting to continue to deliver attractive long term profitable growth • Mitigate short ter