Dialight Plc · LSE:DIA
Dialight — FY2017 Earnings Presentation
26 slides from Dialight's earnings presentation, Feb 26, 2018
Slide 1: Full Year Results 2017
FULL YEAR RESULTS 2017 26 FEBRUARY 2018
Slide 2: Key Points 2017
KEY POINTS 2017 OPERATIONAL ACTIONS STABILISE CHALLENGES UNDERWAY OPERATIONS COMPLETE FOCUS ON DELIVERING A ROBUST OPERATIONAL PLATFORM Private and confidential 2
Slide 3: Our Priorities
OUR PRIORITIES REINFORCE OUR STRENGHTENING CREATE AND FOUNDATIONS OUR CAPABILITIES CAPTURE VALUE Private and confidential 3
Slide 4: Financial Review
FINANCIAL REVIEW FARIYAL KHANBABI Private and confidential
Slide 5: Financial Summary
FINANCIAL SUMMARY Revenue Underlying EBIT Net cash £182.2m £13.1m £12.8m £181.0m £9.7m £8.0m 2016 2017 2016 2017 2016 2017 37% £9.4m 17.9p Underlying Underlying profit Underlying gross margin before tax EPS Private and confidential 5
Slide 6: EBIT Bridge
EBIT BRIDGE (£0.4m) Revenue decrease (£2.4m) Freight costs to expedite £13.1m (£1.6m) £1.0m £9.7m Investing in sales Operating costs 2016 2017 Private and confidential 6
Slide 7: Lighting Revenue
LIGHTING REVENUE 2017 2016 The Americas 2017: £103m Obstruction 14% 12% 2016: £100m Food & Beverage 7% 8% Heavy industrial 14% 16% Mining 10% 9% Oil & Gas 18% 16% EMEA Power 10% 10% 2017: £20m Pulp & Paper 11% 7% 2016: £23m Other industrials 16% 22% 100% 100% APAC 2017: £15m 2016: £14m Private and c
Slide 8: Segmental Results
SEGMENTAL RESULTS LIGHTING SIGNALS & COMPONENTS £136.6m £137.5m Revenue Revenue £45.6m £43.5m 2016 2017 2016 2017 Operating profit Operating profit £13.5m £11.2m £4.9m £3.9m 2016 2017 2016 2017 Private and confidential 8
Slide 9: Non-Underlying Costs
NON-UNDERLYING COSTS £m 2017 2016 Employee severance and restructuring costs (0.3) 5.3 Intangible asset impairment 1.2 5.1 Tangible asset impairment and disposals 0.9 (0.2) Inventory write down - 3.7 Production transfer costs 4.6 2.4 Other - 0.1 Non-underlying costs 6.4 16.4 Total cash impact 5.2 4.
Slide 10: Cash
CASH £m 2017 Net cash at 31 December 2016 8.0 Working capital EBITDA (underlying) 13.6 reduced by 14 days Net working capital 5.9 Capex (4.9) Non-underlying (5.2) Taxes & other (3.7) Foreign exchange impact (0.9) Net cash at 31 December 2017 12.8 £31.4m £24.6m Cash conversion 143% £8.7m £7.4 m 2016
Slide 11: 2018 Planning Assumptions
2018 PLANNING ASSUMPTIONS c.23% £1m - £2m c.£6m Group tax rate Savings in cash tax costs Capital investment Net interest Broadly in line with 2017 INCOME STATEMENT Tax rate c23% c.£6m for plant upgrades, IT Capex & product development CASH FLOW Working capital Broadly in line with 2017 Private and c
Slide 12: Business Review
BUSINESS REVIEW MARTY RAPP Private and confidential
Slide 13: Short Term Priorities: Stabilise
SHORT TERM PRIORITIES STABILISE Build a more robust Ensure highly efficient Return to normal on- component supply base manufacturing process time-delivery Private and confidential 13
Slide 14: Current Manufacturing Issues
CURRENT MANUFACTURING ISSUES Materials • Planning and forecasting • Supply chain agility • Industry shortages Production • Cycle of learning • Small batch size • “Tribal knowledge” Private and confidential 14
Slide 15: Current Manufacturing Actions
CURRENT MANUFACTURING ACTIONS PEOPLE IMPROVEMENTS • Additional Dialight resources; to manage material requirements and production planning PROCESS • Complex and lower volume products returned to in house manufacturing Private and confidential 15
Slide 16: Recovery Indicators – Lighting Only
RECOVERY INDICATORS – LIGHTING ONLY Order growth Gross margin On time delivery £151m 74% £145m 42% 40% 48% 2016 2017 2016 2017 2016 2017 2017: (4%) 2017: (200bps) 2017: (26%) Private and confidential 16
Slide 17: Operations: Improve On Time Delivery and Lead Time
OPERATIONS Increase production capacity and geographic footprint Reduce Reduce cost of operational risk goods sold Improve forecast Optimise inventory accuracy and working capital IMPROVE ON TIME DELIVERY AND LEAD TIME Private and confidential 17
Slide 18: Dialight Difference
DIALIGHT DIFFERENCE Cost effective Sustainable Low maintenance integrated design, Environmentally friendly LED technology high efficiency, and an industry leading warranty Convenient Trusted Designed with no field replacement Deep expertise exclusively in LED parts for the lifespan of the fixture an
Slide 19: Strong Sales Platform
STRONG SALES PLATFORM Ford saves enough energy every year from Dialight LED lighting to power a large assembly plant. 150,000 mwh Energy (£8m) 110,000 maintenance hours (£9m) 100,000 metric tons of CO2 Private and confidential 19
Slide 20: Summary
SUMMARY • Operational issues significantly improved by end of H1 2018 • Significant order backlog to reduce as delivery performance improves • Benefits starting to be realised in H2 2018 • Industrial LED market opportunity largely untapped • Compelling market proposition with sustainability benefits
Slide 21: Questions
Questions Private and confidential 21
Slide 22: Disclaimer
DISCLAIMER Certain statements included or incorporated by reference within this presentation may constitute “forward-looking statements” in respect of the Group’s operations, performance, prospects and/or financial condition. By their nature, forward-looking statements involve a number of risks, unc
Slide 23: Income Statement
INCOME STATEMENT Variance £m Constant 2017 2016 Reported Currency Revenue 181.0 182.2 (1%) (4%) Cost of goods sold (114.3) (112.7) Gross Profit 66.7 69.5 (4%) (9%) Distribution costs (34.0) (32.7) Administrative expenses (23.0) (23.7) Underlying EBIT 9.7 13.1 (26%) (33%) Non-underlying costs (6.4) (
Slide 24: Segmental Results
SEGMENTAL RESULTS Lighting £m 2017 2016 Variance Revenue 137.5 136.6 1% Direct costs (83.2) (79.2) (5%) Gross Profit 54.3 57.4 (6%) Gross margin 40% 42% (2%) Overheads (43.1) (43.9) 2% EBIT 11.2 13.5 (17%) Signal & components £m 2017 2016 Variance Revenue 43.5 45.6 (5%) Direct costs (31.1) (33.5) 7%
Slide 25: Case Study
CASE STUDY Pilkington Automotive - 17% Energy savings, dramatic visibility improvement from upgrade to Dialight LED fixtures •Existing HID fixtures provided unsatisfactory visibility and difficult to access fixtures •Controls package added complete flexibility •Delivered 17% energy cost savings •At
Slide 26: Outlook
OUTLOOK 2017 was a disappointing year, in which operational issues hampered our ability to deliver orders 2017to our was customers. We a disappointing are year, in taking corrective action which operational issues hampered our ability to deliver orders to our and in the near term are wholly focused