Volex Plc · LSE:VLX
Volex — H1 FY2024 Earnings Presentation
23 slides from Volex's earnings presentation, Nov 23, 2023
Slide 1: H1 FY2024 Results Presentation
6 months ended 1 October 2023 H1 FY2024 RESULTS PRESENTATION 23 NOVEMBER 2023 NAT ROTHSCHILD Executive Chairman JON BOADEN Chief Financial Officer 1
Slide 2: Highlights in H1
Highlights in H1 Strong growth in the first half in line with expectations $397.5m • Revenue growing despite short-term changes in demand profile Revenue • Underlying operating margin enhanced to 9.4% Strength in balance of our chosen markets +4.2% Organic • Very strong growth in Medical and Complex
Slide 3: Volex today: diversified end-markets provide high degree of resilience
Volex today: diversified end-markets provide high degree of resilience Resilient business • Diversified portfolio effect across Electric Off- Vehicles five end markets Highway 13% • Reducing customer concentration 24% • Ability to grow through the cycle Global, blue-chip customer base 26% Consumer •
Slide 4: Firmly on track to deliver our five-year plan
Firmly on track to deliver our five-year plan 4 5-year plan to FY2027 Revenue Underlying operating margin Revenue from acquisitions $1,200m 9-10% $200m Key delivery objectives Expand EV customer Vertical integration and Support customer Invest in next Increase PCBa base automation in supply chain ge
Slide 5: Financial and Operational Review
FINANCIAL AND OPERATIONAL REVIEW 5
Slide 6: Strong financial performance
Strong financial performance Underlying Underlying Revenue operating margin operating profit $397.5m $37.4m 9.4% +11.2% +16.5% +40bps H1 FY2023: $357.5m H1 FY2023: $32.1m H1 FY2023: 9.0% Organic revenue Profit before tax Interim dividend growth per share 4.2% $22.0m 1.4 pence +2.3% +7.7% H1 FY2023:
Slide 7: Electric Vehicles
Electric Vehicles H1 FY2024 highlights • Organic decline of 15.8% in H1 compared to a particularly strong H1 FY2023 due to customers reducing buffer stock levels, following supply chain stabilisation • Short term variability in consumer demand • Three-year compound annual growth rate of 58%, exceedi
Slide 8: Consumer Electricals
Consumer Electricals H1 FY2024 highlights • Volex’s Consumer Electricals business is now best-in-class with a high degree of vertical integration, an unrivalled global footprint and very high customer satisfaction • After two years of strong growth, anticipated normalisation in demand driven by dest
Slide 9: Medical
Medical H1 FY2024 highlights • Delivered an improvement in organic revenues of 17.8% • Strong demand in the Medical sector, with customers using improved component availability to accelerate the delivery of strong order books • Volex's robust supply chain for medical-grade components enables rapid r
Slide 10: Complex Industrial Technology
Complex Industrial Technology H1 FY2024 highlights • Organic growth of 30.1% driven by supply chain improvements • Strong growth in sales of high-speed data centre cables • High diversification in customer end markets and capabilities within this sector • The range of solutions and strategic locatio
Slide 11: Off-Highway
Off-Highway H1 FY2024 highlights • New market sector reported separately for FY2024 • Acquisition of Murat Ticaret establishes immediate scale in the Off-Highway market, now a separate fifth market sector • Off-highway products previously sold in North America and India, reported under Complex Indus
Slide 12: Strong underlying operating margin growth
Strong underlying operating margin growth 12 • Inflation has been well managed with increased costs offset through efficiency savings or through customer pass-through • Acquisitions strengthen blended margins going forward • We continue to make targeted, customer-led investments to support long-term
Slide 13: Group Cash Flow
Group Cash Flow $m H1 FY24 H1 FY23 • Targeted investments in Capex Underlying EBITDA 46.8 38.1 support long-term growth Net capital expenditure (16.0) (10.0) • Working capital outflow (excl. Murat Underlying working capital (7.9) (21.2) Ticaret) in line with growth of Net interest (3.7) (2.3) busine
Slide 14: Strategic Update
STRATEGIC UPDATE 14
Slide 15: Five-year transformation of operations through consistent implementation of strategic initiatives
Five-year transformation of operations through consistent implementation of strategic initiatives Over the last five years we have completely transformed Volex into a dynamic, high-growth business aligned to profitable market sectors Revenue Delivering growth – revenues doubled in five years $398m •
Slide 16: Investment in growth
Investment in growth Programme of targeted investments, led by customer demand, localisation and capability enhancement Mexico India PCBa / EV / complex harnesses Dedicated medical production facility Tijuana: 15,000m2 / 150% (FY24/FY25) 21,300m2 / 159% (FY25) San Luis Potosi: 6,000m2 / 100% (FY26)
Slide 17: Acquisition of Murat Ticaret for $195m
Acquisition of Murat Ticaret for $195m Acquisition rationale 12-week integration findings • Excellent initial customer engagement • Highly fragmented market with Access to new, strong growth potential fifth growth market • Securing incremental customer projects • Large, fragmented market Attractive
Slide 18: Summary and Outlook
SUMMARY AND OUTLOOK 18
Slide 19: Summary and outlook
Summary and outlook Diversified end-markets delivered strong Group performance Launched new Off-Highway sector with acquisition of Murat Ticaret Sector mix will continue to improve operating margins through H2 Structural long-term growth drivers remain in place Excellent progress against the five-ye
Slide 20: Appendices
APPENDICES 20
Slide 21: Capital allocation to deliver sustainable growth
Capital allocation to deliver sustainable growth Capital expenditure Invest to drive organic growth focused on high-growth Payback in 2 years for areas many projects Target net debt to Enhance capability, grow EBITDA of Acquire and integrate customer base, acquire at 1.0 - 2.0x attractive businesses
Slide 22: Balance sheet
Balance sheet $m H1 FY2024 H1 FY2023 Goodwill and intangible assets 253.9 116.5 Property, plant and equipment 121.9 68.6 Investments 6.5 2.2 Inventories 180.4 127.0 Trade and other receivables 203.3 158.4 Trade and other payables (256.7) (155.7) Pensions and provisions (9.1) (3.8) Taxation (net) (14
Slide 23: Volex
Volex