Judges Scientific Plc · LSE:JDG
Judges Scientific — H1 2022 Earnings Presentation
38 slides from Judges Scientific's earnings presentation, Sep 22, 2022
Slide 1: Half Year Results
Half Year Results Six months ended 30 June 2022 David Cicurel, CEO Brad Ormsby, CFO 22nd September 2022
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 Twenty acquisitions since Busi
Slide 3: The Judges Group
The Judges Group KE 2005 2006 2006 2006 2009 2010 2011 2012 2012 2013 Fire Testing PE. UHV Aitchee Quorum Sircal Deben GDS KE Scientifica Technology fibreoptics Design Engineering Technologies Instruments Instruments Developments FIRE 2022 2020 2020 2019 2017 2016 2016 2016 2016 2015 Geotek Korvus T
Slide 4: A snapshot of Group customers
A snapshot of Group customers Universities Industry Other research and compliance OEMs 4
Slide 5: Key Messages
Key Messages Continued recovery Challenges and execution of Outlook persist strategy Record performance Variations in Uncertainty remains lockdowns remain Acquisition of Geotek Organic order book funded by new banking Increasing supply of 21 weeks facility chain challenges Confident that results wil
Slide 6: Performance review
on Judges Scientific ple
Slide 7: Highlights
Highlights Organic revenue Cash from operations HY 2022 HY 2022 + 7% HY 2021 £ 8.2m HY 2021 Total revenue up 8% (HY 2021: £8.0m) (2016: £2.7 million) Organic order intake HY 2022 Interim dividend HY 2022 + 4% HY 2021 + 16% HY 2021 Organic order book 21.3 weeks 22p per share (2016: £ Adjusted net deb
Slide 8: Performance
Performance HY 2022 HY 2021 Variance Variance (£m) (£m) (£m) (%) 7% organic revenue growth - Revenue 46.4 43.0 3.4 8% minimal Geotek contribution Operating costs (36.3) (34.2) (2.1) 6% Adjusted operating 10.1 8.8 1.3 15% Operating margin improved to profit 21.8% (H1 2021: 20.5%) Interest (0.5) (0.3)
Slide 9: Order intake
Order intake • Organic order intake up 4.2% on H1 21 and 7.8% above 2019 levels 130 Millions • Not yet full recovery to pre-Covid growth trajectory 120 110 • Order intake still varied from business to business - 100 although less than H1 21 90 • Geographically: 80 – North America up 15.4% 70 60 – Ch
Slide 10: Profit bridge
Profit bridge £000s 12,000 10,000 8,000 6,000 4,000 2,000 0 H1 2021 contribution* Organic growth Organic decline Acquisitions H1 2022 contribution* *Contribution is EBIT from trading subsidiaries before central costs 10
Slide 11: Balance sheet and cash flow
Balance sheet and cash flow Jun 22 Dec 21 H1 2022 H1 2021 Balance Sheet summary Cashflow summary (£m) (£m) (£m) (£m) Cash 36.4 18.4 Adjusted EBITDA 11.1 9.8 Debt (excl IFRS 16) (91.3) (17.0) Working capital movements - (1.6) Adjusted net (debt)/cash (54.9) 1.4 DB pension contributions - (0.2) Workin
Slide 12: Return on Total Invested Capital
Return on Total Invested Capital ROTIC (Trailing 12 months)* FTT acquisition 50% GDS March 2012 THT May 2020 40% Scientifica June 2013 30% 20% 10% Armfield January 2015 0% *excludes central costs and properties, and the effect of R&D capitalisation 12
Slide 13: 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 Rest of World 85% of revenue exported 1
Slide 14: Financial history
Financial history 100,000 200 EPS and Dividends (Excluding special dividends) 250.0 Revenue and profit 150 200.0 150.0 50,000 100 100.0 50 50.0 - 0 - 12 13 14 15 16 17 18 19 20 21 22 12 13 14 15 16 17 18 19 20 21 22 Revenue H1 Revenue H2 Operating Profit H1 Operating Profit total Special dividend Fo
Slide 15: Refinancing of the Group's banking facilities
Refinancing of the Group’s banking facilities Consists of: New 4-year multi- £25m term loan; bank £100m facility £55m Revolving Credit Facility; in May 2022 £20m accordion replaced £60m facility Covenants: Interest rates consistent with Gearing no greater than 3.0 previous facility times Adjusted EB
Slide 16: Growth strategy
on Judges Scientific ple
Slide 17: Growth drivers
Growth drivers Organic M&A growth 17
Slide 18: Acquisitions
Acquisitions @ 8 Judges Scientific plc
Slide 19: 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 @ 2 to 4% Reduce debt Long deal Cry
Slide 20: Geotek business and acquisition rationale
Geotek business and acquisition rationale Acquisition rationale Geotek comprises three divisions of broadly similar Geotek is a world sizes consisting of: Good size at a reasonable leading provider of multiple instruments conducting an instrument development and manufacturing business non-destructiv
Slide 21: Acquisition of Geotek
Acquisition of Geotek • Largest acquisition to date; consideration of up to £80m plus excess cash • Initial £45m consideration - 7x 3-year pre-COVID average EBIT of £6.4m • Earn-out based on calendar year 2022 EBIT achieved - payable where EBIT >£6.4m up to an £11.4m cap at the rate of 7x. • Earnout
Slide 22: Further investment
Further investment • Increased interest in majority owned subsidiary Bordeaux Acquisition Limited from 88% to 100% in June 2022 • Consideration was £2.1m (based on an EV of £12.6m plus excess cash) • In 2021, Bordeaux generated £2.8m EBIT • £2m paid in new shares and balance paid in cash Judges init
Slide 23: Organic growth
on Judges Scientific ple
Slide 24: Post acquisition initiatives
Post acquisition initiatives Financial Operational Strategic • Implement robust financial • Create environment for • Succession planning controls businesses to continue to thrive • Leadership programme • Improve business information • Support and advice for entity • Long term focus & analysis manage
Slide 25: Outlook and investment case
Outlook and investment case
Slide 26: Outlook
Outlook Business model proven robust Uncertainty remains Current trading Strong balance sheet Variations in markets and Organic order book of 21 weeks disciplines Long-term fundamentals of the Order intake 3% ahead at end Group unchanged Geopolitical uncertainty of August Unhindered ability Inflatio
Slide 27: 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 28: Judges Scientific plc
@® Judges Scientific plc
Slide 29: Appendices
Appendices • Management team • Major shareholders • ESG • Trading businesses
Slide 30: Management team
Management team Owners of 15% of equity Alex Hambro Non-Executive Chairman Experienced adviser to private equity and VC funds and family office investors David Cicurel Chief Executive Founded Judges in 2003; Turnaround specialist and veteran deal-maker Brad Ormsby Group Finance Director Seven years
Slide 31: Major shareholders – at 28 February 2022
Major shareholders – at 28 February 2022 David Cicurel (including SIPP, SIP and 59,000 non-beneficial) 709,517 11.2% Liontrust 421,329 6.6% Odin Global 407,726 6.4% Interactive Investor 226,916 3.6% Broadcrest 200,951 3.2% Hargreaves Lansdown 196,819 3.1% Mr Stephen Upton 187,350 3.0% Baillie Giffor
Slide 32: Environment, Social & Governance
Environment, Social & Governance • Defined policy to minimise environmental impact across all aspects of business, including consideration for energy Environment consumption and packaging of instruments. • Nature of our business is not capital intensive manufacturing and environmental impact is limi
Slide 33: 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 34: 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 35: 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 36: 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 37: 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 38: Our businesses
Our businesses 16 17 THT is a world leader in the design, Korvus Technology sells and manufactures manufacture and supply of specialised highly modular thin film deposition systems calorimeters for use in the chemical and designed to allow custom-built systems to be battery industries. Application a