Judges Scientific plc · LSE:JDG
Judges Scientific — H1 2023 Earnings Presentation
38 slides from Judges Scientific's earnings presentation, Sep 20, 2023
Slide 1: Half Year Results
Half Year Results Six months ended 30 June 2023 David Cicurel, CEO Brad Ormsby, CFO Mark Lavelle, COO Tim Prestidge, GBDD 20th September 2023
Slide 2: About Judges Scientific
About Judges Scientific Buy and build model within the scientific instrument market Long term drivers Shareholder Low capital use value Large deal pool Execution Strict acquisition discipline Reputation as a good acquirer Organic growth Buying sustainable businesses at 22 acquisitions since Business
Slide 3: Acquisition criteria
Acquisition criteria • Strict acquisition discipline • Acquisition attributes: – Strong exporters in their global niche markets; solid EBIT margins – Generate sustainable profits and cashflows – Pay 3 to 7 times EBIT according to size – Borrow up to 3 times EBITDA @ 3 to 8% Reduce debt Long deal Cry
Slide 4: The Judges Group
The Judges Group KE 2005 2006 2006 2006 2009 2010 2011 2012 2012 2013 2015 Fire Testing PE. UHV Aitchee Quorum Sircal Deben GDS KE Scientifica Armfield Technology fibreoptics Design Engineering Technologies Instruments Instruments Developments FIRE 2023 2023 2022 2020 2020 2019 2017 2016 2016 2016 2
Slide 5: Post acquisition
Post acquisition Good financial Promoting controls excellence Autonomy Focus on long-term 5
Slide 6: Key Messages
Key Messages Ongoing strategic Unpredictable Outlook execution business environment Solid organic and acquisitive growth across Progress with supply Robust order book all regions chain challenges Strong H2 anticipated Two small acquisitions Continued geopolitical driven by coring expedition concerns
Slide 7: Performance review
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Slide 8: Highlights
Highlights Organic revenue Cash from operations HY 2023 HY 2023 + 16.5% HY 2022 £ 11.5m HY 2022 Total revenue up 32% (HY 2022: £8.2m) (2016: £2.7 million) Organic order intake HY 2023 Interim dividend HY 2023 +14% HY 2022 +23% HY 2022 Organic order book 22.4 weeks 27p per share (2016: £ Adjusted net
Slide 9: Performance
Performance HY 2023 HY 2022 Variance Variance (£m) (£m) (£m) (%) 16.5% organic revenue growth plus Revenue 61.3 46.4 14.9 32% significant Geotek contribution Operating costs (47.1) (36.3) (10.8) 30% Adjusted operating Organic operating margin reduced 14.2 10.1 4.1 41% profit to 20.7% (H1 2022: 21.8%
Slide 10: Order intake
Order intake • Organic order intake up 14% on H1 150 22 and continued to be ahead of Millions 140 revenue 130 • Geographically: 120 110 – North America up 7% 100 90 – China up 78% (end of China 80 lockdown); Rest of the World up 70 4% 60 – UK up 4%, Rest of Europe up 8% 50 40 • Organic order book of
Slide 11: Profit bridge
Profit bridge £000s 16,000 14,000 12,000 10,000 8,000 6,000 4,000 2,000 0 H1 2022 contribution* Organic growth Organic decline Acquisitions H1 2023 contribution* *Contribution is EBIT from trading subsidiaries before central costs 11
Slide 12: Balance sheet and cash flow
Balance sheet and cash flow Jun 23 Dec 22 H1 2023 H1 2022 Balance Sheet summary Cashflow summary (£m) (£m) (£m) (£m) Cash 14.6 20.8 Adjusted EBITDA 15.6 11.1 Debt (excl IFRS 16) (64.6) (72.8) Working capital movements (4.0) - Adjusted net debt (50.0) (52.0) DB pension contributions - - Working Capit
Slide 13: Return on Total Invested Capital
Return on Total Invested Capital ROTIC (Trailing 12 months)* FTT acquisition 50% GDS March 2012 THT May 2020 40% Organic Scientifica June 2013 (excl. Geotek) 30% 20% 10% Armfield January 2015 Geotek May 0% 2022 *excludes central costs and properties, and the effect of R&D capitalisation 13
Slide 14: Diversification
Diversification Group organic revenue Group organic orders Group revenue by geography by geography FTT Sircal PFO GDS UK Armfield Dia-Stron Quorum UHV Rest of Europe EWB Scientifica CoolLED Deben North America Oxford Moorfield THT Korvus China/Hong Kong Geotek Henniker Rest of World >85% of revenue
Slide 15: Financial history
Financial history 150,000 200 EPS and Dividends (Excluding special dividends) 400.0 Revenue and profit 150 300.0 100,000 100 200.0 50,000 50 100.0 - 0 - 12 13 14 15 16 17 18 19 20 21 22 23 12 13 14 15 16 17 18 19 20 21 22 23 Revenue H1 Revenue H2 Operating Profit H1 Operating Profit total Special di
Slide 16: Growth strategy
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Slide 17: Growth drivers: M&A and organic growth
Growth drivers Organic M&A growth 17
Slide 18: Acquisitions
Acquisitions @ 8 Judges Scientific plc
Slide 19: Acquisition of Henniker
Acquisition of Henniker • Manufacturer of plasma deposition instruments based in Runcorn, Cheshire • Initial consideration of £1.8m (4x multiple) • Earn-out capped at £0.5m based on calendar year 2023 EBIT 19
Slide 20: Acquisition of Bossa Nova Vision (BNV)
Acquisition of Bossa Nova Vision (BNV) • Manufacturer of imaging measurement instruments for the cosmetic industry • Based in Los Angeles, California • Cash consideration of $1.6m (4x multiple) • Complementary to Dia-Stron 20
Slide 21: Organic growth
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Slide 22: Post acquisition
Post acquisition Finance and Governance Operational Excellence • Implement robust financial controls • Require excellent monthly forecasting and delivery performance • Culture and processes for governance and compliance • Operational and performance KPIs • Improve business information, data, and • G
Slide 23: Outlook and investment case
Outlook and investment case
Slide 24: Outlook
Outlook Business model proven Uncertainty remains Current trading robust Strong balance sheet Inflation and high interest Robust organic intake and rates order book Long-term fundamentals of the Group unchanged Volatile geopolitical Strong H2 expected driven environment by coring expedition Focused
Slide 25: Investment Case
Investment Case Diverse Sustainable Growing Portfolio Returns Dividends • Robust business model; pursued with discipline • Large pool of targets, every acquisition is earnings enhancing • Strong long-term growth drivers in higher education and process optimization • Well diversified by geography and
Slide 26: Judges Scientific plc
@® Judges Scientific plc
Slide 27: Appendices
Appendices • Management team • Major shareholders • Group customers • ESG • Trading businesses
Slide 28: Management team
Management team David Cicurel Chief Executive Founded Judges in 2003; Turnaround specialist and veteran deal-maker Brad Ormsby Chief Financial Officer Eight years as Judges’ CFO; PwC trained Chartered Accountant, previously CFO of Kalibrate Technologies plc Mark Lavelle Chief Operating Officer 15 ye
Slide 29: Major shareholders – at 31 August 2023
Major shareholders – at 31 August 2023 David Cicurel (including SIPP, SIP and 63,000 non-beneficial) 711,320 10.8% Odin Global 407,726 6.2% Broadcrest 263,743 4.0% JP Morgan Asset Management 251,796 3.8% Interactive Investor 235,236 3.6% Liontrust Asset Management 234,463 3.5% Capital Group 222,591
Slide 30: A snapshot of Group customers
A snapshot of Group customers Universities Industry Other research and compliance OEMs 30
Slide 31: Environment, Social & Governance
Environment, Social & Governance • Nature of our business is not capital intensive manufacturing and environmental impact is limited. Environment • Aim to minimise environmental impact across all aspects of business, including consideration for energy consumption and packaging of instruments. • Resp
Slide 32: Our businesses
Our businesses 1 2 3 FTT is internationally recognised as the PE.fiberoptics is a leading manufacturer of UHV Design, founded in 1993, specialises in the world’s leading supplier of fire testing test equipment that measures optical and design, manufacture and supply of high precision instrumentation
Slide 33: Our businesses
Our businesses 4 5 6 Aitchee Engineering is a well established East Sussex-based Quorum Technologies Sircal designs, manufactures and distributes precision engineering company that can manufactures market-leading scientific rare gas purifiers typically for use in metal offer high end sheet metalwork
Slide 34: Our businesses
Our businesses 7 8 9 Deben is a precision engineering company GDS designs, develops and manufactures Scientifica is a multi-award winning, globally providing innovative solutions for SEM and equipment and software used for the recognised manufacturer of advanced μX-Ray CT in-situ tensile testing. De
Slide 35: Our businesses
Our businesses 10 11 12 Armfield offers unrivalled experience in the CoolLED designs and manufactures cutting-edge Dia-Stron is the leading manufacturer of design and provision of teaching equipment illumination systems for microscopy and other automated measurement systems for single fibres aligned
Slide 36: Our businesses
Our businesses 13 14 15 EWB Solutions specialises in the design Oxford Cryosystems is a market-leading Moorfield Nanotechnology design and and manufacture of edge-welded metal manufacturer of cryogenic devices. Spun out manufactures R&D/pilot-scale laboratory bellows where a high integrity hermetic
Slide 37: Our businesses
Our businesses 16 17 18 THT is a world leader in the design, Korvus Technology sells and manufactures Geotek Ltd. (UK) specialises in high- manufacture and supply of specialised highly modular thin film deposition systems resolution, non-destructive analysis of calorimeters for use in the chemical a
Slide 38: Our businesses
Our businesses 19 20 Henniker designs and manufactures Founded in 2018 by experts in optics and plasma surface treatment systems and non-destructive testing, Bossa Nova Vision is processes for advanced cleaning, surface specialized in the development of innovative activation to improve adhesion, and