Slide 1: Interim Results 2023
Interim Results 2023 1 August 2023
Slide 2: Disclaimer
The information contained in this document is for Investors should not place undue reliance on such background purposes only and does not purport to forward-looking statements, and XP Power Limited be full or complete. No reliance may or should be does not undertake any obligation to update publicly
Slide 3: H1 Summary
H1 Summary A significantly improved performance ● Revenue £160m, record performance, up 24% y-o-y at constant FX ● Orders, as expected, slowed at £116m but order book still c.£250m ● Adjusted operating profit £21.8m, 36% increase at constant FX y-o-y, 13.6% margin ● Supply chains have eased but Grou
Slide 4: We have a clear strategy
We have Market leading product portfolio (built organically and through M&A) a clear Target & drive penetration in accounts where we can add value strategy Continually enhance our global supply chain Focus on people and talent development Lead our industry on environmental responsibility 4
Slide 5: Executing our strategy
Through-cycle Executing our strategy performance c.10% Organic Sales Growth PHASE 1: Recovery - Supply Chain/COVID-19 Supply chains issues eased, but some disruption remains Executing better, Pricing offsetting inflation c.20% Adjusted Operating Margins PHASE 2: Optimising supply chain and manufactu
Slide 6: Financial Highlights
Financial Highlights
Slide 7: Key performance indicators
Key performance indicators ORDERS GROSS MARGIN ADJUSTED OPERATING ADJUSTED OPERATING £115.6 million 41.8% PROFIT2 CASHFLOW CONVERSION2 (44)% CER1 +160bps £21.8 million 139% +36% CER1 2022: (23)% REVENUE ADJUSTED ADJUSTED DILUTED NET DEBT3 £160.2 million OPERATING MARGIN2 EPS2 £148.4 million +24% CER
Slide 8: Income statement
Income statement £ Million HY HY % Change % Change 2023 2022 Reported at CER ● Strong revenue performance in all sectors Revenue 160.2 123.6 30% 24% ● Gross margin benefiting from continued Gross margin 67.0 49.7 35% 28% 41.8% 40.2% stabilisation of supply chain Gross margin % Adjusted operating exp
Slide 9: Orders slower as market destocking continues
Orders slower as market destocking continues YoY change at YoY change at constant FX -61% -38% -21% -44% constant FX -49% -53% -29% -44% 11.7 (43.3) 11.7 (57.1) 193.1 193.1 (36.2) (14.7) (17.3) (9.6) 115.6 115.6 £ Million £ Million HY 2022 FX Semi Industrial Healthcare HY 2023 HY 2022 FX North Europ
Slide 10: Strong revenue growth as we deliver our order book
Strong revenue growth as we deliver our order book YoY change at YoY change at constant FX 5% 26% 59% 24% constant FX 19% 35% 18% 24% 13.7 160.2 13.3 3.0 160.2 14.1 14.3 6.0 2.8 6.0 123.6 123.6 £ Million £ Million HY 2022 FX Semi Industrial Healthcare HY 2023 HY 2022 FX North Europe Asia HY 2023 Fab
Slide 11: Order book remains well above historical levels
Order book remains well above historical levels 350 2.0 ● Order book reducing as we work 300 through the backlog 250 1.5 ● Moderation of orders reflects normalisation of leadtimes across 200 supply chain, including for XP 1.0 150 ● Customer order patterns expected to return to more normal rates in 1
Slide 12: Adjusted operating profit recovery from prior year and momentum into H2
Adjusted operating profit recovery from prior year and momentum into H2 13.0 1.1 ● Operational leverage driving a greatly improved H1 2023 (5.2) 21.8 (2.1) ● Gross margin improvement reflects supply chain improvement 15.0 £ Million – well set for further improvement in H2 ● Operating expenses includ
Slide 13: Specific items
Specific items £ Million HY HY 2023 2022 Comet case related costs 1.4 55.3 ● The Group is investing to increase capacity and Costs related to ERP implementation 0.2 3.6 transform our supply chain with the construction of Supply chain transformation: Malaysia setup 0.8 0.0 Malaysia facility. We expec
Slide 14: Net debt and leverage improvement in H1
Net debt and leverage improvement in H1 (11.4) (1.3) (151.0) ● As planned, significant increase in (148.4) capital investment includes Malaysia (7.6) 7.7 site construction and relocation of (13.7) customer design centre in North America £ Million 27.7 ● Modest working capital unwind through 1.2 inve
Slide 15: Inventory beginning to reduce, further benefit expected in H2
Inventory beginning to reduce, further benefit expected in H2 114.4 • December 2022 was a result of 8.1 significant increase in prior year from (3.6) key component lead times and 106.5 purchases for exceptional order levels (5.9) (6.5) £ Million • Raw material reduction in progress as supply chain c
Slide 16: 2023 Modelling Guidance
2023 Modelling Guidance ● Modest H2 weighting ● Gross margins expected to continue progress, but not to return to historic levels in 2023 ● Continued working capital unwind ● Capex expectations unchanged ● Specific items cash c.£5m ● Interest cost now c.7% on gross debt ● Income statement tax rate –
Slide 17: Business Update
Business Update
Slide 18: XP Power long term growth drivers
XP Power long term growth drivers Rapid increase of electronic devices Digital transformation Structural growth in Healthcare ● More products need power converters ● Increase in smart technology ● Growing and aging global population ● Pace of innovation ● More sophisticated customer products ● Healt
Slide 19: Industrial Technology
Healthcare 23% Semi Fab 34% H1 2023 Revenue by Industrial Technology Sector 43% Industrial Technology ● Orders of £51.2 million, 38% below the prior year, an exceptional period when supply chain issues temporarily drove orders to unparalleled levels ● Revenue was £68.7 million, up 30% on the equival
Slide 20: Semiconductor Manufacturing Equipment
Healthcare 23% Semi Fab H1 2023 34% Revenue by Sector Semiconductor Manufacturing 43% Equipment Industrial Technology ● Orders in Semiconductor Manufacturing Equipment were weaker as a result of the global semiconductor market slowdown. Through the trough in Q2 and expect orders to improve ● Revenue
Slide 21: The next semiconductor upcycle...market to double to $1trillion by 2030
The next semiconductor upcycle...market to double to $1trillion by 2030 Global Semiconductor Sales, $Bn $1 Trillion revenue 1,000 forecast by 2030 2002-2021 Mobile computing & phones combined from AI, EV, with Datacentres drive growth at 7% CAGR to Cloud, IOT 750 >$500Bn 500 c. $140Bn in WFE spend p
Slide 22: Healthcare
Healthcare 23% Semi Fab 34% H1 2023 Revenue by Sector Healthcare 43% Industrial Technology ● The Healthcare market continues to be an attractive sector for the Group driven by the growing global demand for healthcare infrastructure and the pace of innovation ● Order momentum was sustained in the per
Slide 23: We are investing in our supply chain for the long term
We are investing in our supply chain for the long term ● Construction of new manufacturing facility in north-west Malaysia remains on track to commission in H2 2024 ● Part of a global supply chain transformation to scale operations Construction progress at our site in Malaysia (July 2023) and establ
Slide 24: Strategy in action: R&D
Strategy in action: R&D ● Focus on anticipating future demand and working with customers to solve power issues ● Our differentiators include variation in terms of density, interconnectivity and application specific know how that ultimately creates the customer value ● Customers know our technical ca
Slide 25: Leading the industry on sustainability
Leading the industry on sustainability ● We have calculated XP Power’s full carbon footprint including scope 3 - Initial findings show majority of emissions are outside of our operations – mostly from components we purchase and our products in use ● Net Zero Transition Plan published in ● We continu
Slide 26: 2023 and long-term outlook
2023 and long-term outlook ● Order book provides significant visibility ● Passed the Semiconductor market trough in Q2 2023 ● Mindful of ongoing uncertainties but full year expectations unchanged ● Working capital improvements expected as inventory unwinds ● Higher capital expenditure in H2 2023 inc
Slide 27: Q&A
Q&A
Slide 28: Appendices
Appendices
Slide 29: Market data – a growing addressable market
Market data – a growing addressable market Market Size Share1 XP 2023 Revenue North Share of XP ($ Million) Asia Europe Total (£ Million) America (%) Asia 1,517 1.8% Healthcare 3.2 14.3 19.6 37.1 23% Europe 802 10.7% Industrial Technology 7.8 35.4 25.5 68.7 43% North America 1,241 13.5% Semi Fab 8.2
Slide 30: Well invested global manufacturing footprint
Well invested global manufacturing footprint Adding Capacity in all production sites ● In all LV, RF and HV sites ● Added RF manufacturing capability to China, diversifying from US ● ‘Customer value add’ in Vietnam Pangbourne FuG and Guth acquisitions in Germany Kunshan Sunnyvale Gloucester to compl
Slide 31: Balance sheet and cash flow
Balance sheet and cash flow Balance sheet HY FY Cash flow HY HY £ Million 2023 2022 £ Million 2023 2022 Cash 25.5 22.3 Profit after tax 7.8 (35.4) Inventory 106.5 114.4 Non-cash items 19.8 2.0 Trade receivables 44.8 42.4 Change in working capital 1.2 21.7 Other current assets 43.6 47.5 Provisions -
Slide 32: XP Power
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