Filtronic Plc · LSE:FTC
Filtronic — FY2020 Earnings Presentation
39 slides from Filtronic's earnings presentation, August 2020
Slide 1: Investor Presentation: Preliminary Results FY2020
Investor Presentation Preliminary Results FY2020
Slide 2: Contents
Contents 1. Executive Summary 2. Financial Results 3. Outlook FY2021 4. Continuing Business 5. Markets and Positioning 2
Slide 3: 1. Executive Summary
Together we build a stronger connection 1. Executive Summary f} Filtronic
Slide 4: Key H2 & FY2020 Highlights
Key H2 & FY2020 Highlights Filtronic plc is a designer and manufacturer of advanced RF communications products supplying a number of market sectors, including mobile telecommunications infrastructure, defence & aerospace and public safety. • Decoupling from the disposed Telecoms Antenna business com
Slide 5: 2. Financial Results
/f\, Filtronic| Together we build a stronger connection 2. Financial Results www.filtronic.com SUM POR NAR Sn Pe RS a a pment area ERR StS tI) SHSM ess ee ee
Slide 6: Profit and Loss Statement – continuing operations
Profit and Loss Statement – continuing operations FY2020 FY2019 • Group revenue £17.2m (2019: £15.9m). Year to 31 May 20 Year to 31 May 19 Sales revenue increase of 8% ‐ XHaul product growth replacing legacy filter Audited Audited product sales. £’000 £’000 Half‐on‐half growth from core programm
Slide 7: Balance Sheet
Balance Sheet FY2020 FY2019 Right of use assets ‐ £2.7m (2019: £nil) Year to 31 May 20 Year to 31 May 19 property leases (£1.1m) Audited Audited plant and machinery (£1.6m) purchased under £'000 £'000 asset finance to increase capacity and capability Goodwill and other intangibles 1,847 1,247 at
Slide 8: Cash Flow Statement
Cash Flow Statement FY2020 FY2019 Cash Position and Cashflows Year to 31 May 20 Year to 31 May 2019 • Cash outflow from operating activities £2.6m (2019: £0.0m outflow). Audited Audited Discontinued operation loss‐making. £’000 £’000 Exceptional items to dispose of FTAO and restructure. Net cash
Slide 9: 3. Outlook for FY2021
f} Filtronic | Together we build a stronger connection 3. Outlook for 4 fix. Sey FY2021 | “a www.filtronic.com
Slide 10: Covid-19 Impacts continue into FY2021
Covid‐19 Impacts continue into FY2021 • Opening Order Book (“OOB”) comparable with FY2020 OOB. • Production programmes re‐mapped to optimise resource use across Q1 FY2021. • 23 manufacturing related staff furloughed in June 2020 for an anticipated 12 weeks. • US manufacturing employee salaries cover
Slide 11: Covid-19 Liquidity and Going Concern
Covid‐19 Liquidity and Going Concern Business forecasts and stress testing Three‐year modelling including severe downside stress test – models an average 36% drop in revenue in FY2021 and demand recovery to no more than 75% against base case thereafter. ◦ Severe downside test went significantly fu
Slide 12: Momentum Rebuilding
Momentum Rebuilding • £4.9m Defence order received in June 2020 to cover two year supply. • New Defence project NRE order received in July 2020. • Lead public safety customer has advised that our recently launched TTA product is now specified in their new project proposals ‐ First orders expected in
Slide 13: Market Landscape Reshaping
Market Landscape Reshaping • Decision to remove Huawei from the UK’s 5G networks does not provide an immediate uplift but does open up new business potential – We are engaged in various government “encouraged” initiatives to develop secure sovereign capabilities in our markets. • The UK government’s
Slide 14: Key Foreseeable Risks – Covid-19 Remains #1
Key Foreseeable Risks – Covid‐19 Remains #1 Risk Mitigation Second Covid‐19 Lockdown We believe we can manage a second lockdown as we did the first Covid‐19 out‐break within our operations We have adequate internal protective measures and disciplines to minimise the risk, but we have standby arrange
Slide 15: New CEO – Richard Gibbs – Joins 1 September 2020
New CEO – Richard Gibbs – Joins 1 September 2020 During a 37‐year career in the Electronics Industry Richard has accumulated extensive experience in all aspects of the Semiconductor Market including foundry services, ASIC design, wafer & die services, and semiconductor product development in both Ga
Slide 16: 4. Continuing Business Activities
4. Continuing Business Activities
Slide 17: Continuing Business – 3 Broadly Equivalent Revenue Streams
Continuing Business – 3 Broadly Equivalent Revenue Streams • 3 Key Revenue Streams: Public Safety, mmWave (XHaul), Defence & Aerospace • Each based around a strategic customer with whom we have long standing relationships • Each with a foreseeable runway of revenue projecting at least 2‐3 years ahea
Slide 18: Objectives & Strategy
Objectives & Strategy Filtronic’s objective is to grow profitably and to achieve this by being an embedded partner to our customers for technically advanced Radio Frequency (RF) components and sub‐systems on “long tail” projects of strategic value to our clients. We will focus on markets and applica
Slide 19: Organisational overview
Organisational overview Our locations are: • Leeds, UK – Head office and engineering. • Sedgefield, UK – mmWave engineering, manufacturing, sales and central services. • Salisbury, MD, USA – Sales, repair and service and public safety manufacturing. Our Objectives are: • To exceed expectations Our b
Slide 20: 5. Markets, Applications and Positioning
5. Markets, Applications and Positioning
Slide 21: Applications
Applications Filtronic serves challenging, growing markets that require technically innovative, high quality, robust products that are often required to work in harsh environments and to demanding specifications. Core applications: • 5G mmWave (X‐Haul). • Public safety. • Defence and aerospace. Pote
Slide 22: Market Based Solutions
Wireless Communication Market Solutions Markets To Serve Market Based Solutions Aviation & Airborne Land Comms Maritime Comms Oil and Gas Transportation Market Challenges 1. Different agencies and organizations are expected to communicate / collaborate with each other across disparate networks 2. En
Slide 23: 5G Backhaul – The Market
5G Backhaul – The Market • Backhaul represents the various connection stages between the edge of network, remote radio heads and the core fibre network. • Approximately 65% of backhaul connections (excl. China, Japan and South Korea) are sub 23GHz wireless. • 5G deployment is leading to a significan
Slide 24: mmWave Converging Wireless Networks
mmWave Converging Wireless Networks
Slide 25: An Evolving Market
An Evolving Market • According to the GSMA, Global mobile data usage will grow five‐fold by 2024, spurred by increased smartphone adoption and availability of affordable high‐speed networks. Demand for many types of connection will not correspond to major population centres and terrestrial network
Slide 26: Potential Points of Play for Filtronic mmW Transceivers
Potential “Points of Play” for Filtronic mmW Transceivers Converged Network Inter‐Sat Sat F F Sat‐HAP Backhaul HAP Inter‐HAP F M‐PM Base Station HAP Rural BS Ultra Rural Sat Feeder HAP Backhaul Backhaul F F F F PtP IOT Backhaul F Backhaul Ultra Rural HAP Feeder Cell Sites 26
Slide 27: Terrestrial Network Points of Play
Terrestrial Network Points of Play F F F F F Core network F F F RU = Radio Unit DU = Distributed Unit CU = Centralised Unit X‐Haul (Backhaul/Midhaul/Fronthaul) 27
Slide 28: mmWave Evolution for 4.5G & 5G X-Haul: W-band / D-band
mmWave Evolution for 4.5G & 5G X‐Haul: W‐band / D‐band • E‐band solutions (71‐76GHz / 81‐86GHz) are now common‐place addressing requirements up to 10Gbps (20Gbps dual channel) • Significantly more spectrum is essential for medium to longer term X‐Haul requirements to provide densification • Frequenc
Slide 29: mmWave XHaul Market Growth
mmWave XHaul Market Growth “To keep up with capacity demands, mobile operators are dependent on access to more spectrum across a multitude of bands. For example, the number of base stations using frequencies between 41 GHz and 100 GHz is expected to grow by almost 150%” Source: GSMA Source: Ericsson
Slide 30: Trackside – Train E-band Use Case
Trackside – Train E‐band Use Case • Fit E‐band (70/80GHz) radios at front and rear of train (employing Filtronic E‐ band transceivers) • Mount 2 x E‐band radios on each mast (electric pylon) facing in opposite directions along the rail track • Install 10GE switches at each radio pair node to connect
Slide 31: Core Technology Platforms
Core Technology Platforms High power mmWave Transceiver & Converter Modules • High power, low latency E‐band radios for High Frequency Trading Networks • Long range point to point links for connection to off‐shore Oil & Gas facilities • Long range point to point links to unmanned surface vehicles •
Slide 32: Public Safety Communications
Public Safety Communications
Slide 33: Public Safety Comms Networks w/FirstNet
Public Safety Comms Networks w/FirstNet™
Slide 34: Anatomy of a P25 Network
Anatomy of a P25 Network Active Filtronic Business Telephone Targeted Filtronic Business Gateway Remote P25 Console Access Gateway Site Dispatcher Linking Data Gateway PSAP Mgmt Config ANTENNA Remote Site Trunking Controller Master Site Portable Wide Area Radios Network VEHICLE AVL VEHICLE TTA GPS R
Slide 35: LMR Marketplace - USA
LMR Marketplace ‐ USA Market Share Est. Market Estimates 16 14 12 10 8 6 4 2 0 2019 2020 2021 2022 Motorola Harris Tait JVC Kenwood Rev $B ‐ Lo Rev $B ‐ Hi 35
Slide 36: Public Safety Comms Landscape
Public Safety Comms Landscape Industry Standard Association of Public Safety The European Telecommunications ETSI, Digital Mobile Radio (“DMR”) Communications Officials Standards Institute (“ETSI”) Terrestrial and Professional Commerical Radio Definition Project 25 Standard (“P25”) Truncked Radio St
Slide 37: Defence & Aerospace
Filtronic Together we build a stronger connection Defence & Aerospace www.filtronic.com
Slide 38: Defence and Aerospace – The Market
Defence and Aerospace – The Market • Increasing geopolitical tensions leading to increased defence spending by national governments. The focus is on agility and intelligent capability rather than “boots and bombs”. • Sophisticated, resilient, high performance communications and radar systems are cor
Slide 39: Defence and Aerospace – Our Position
Defence and Aerospace – Our Position • Defence and aerospace is a traditional market for Filtronic where we have been working hard to develop our position • Existing contracts are for long durations, with follow‐on business likely as more of the same aircraft type are sold. • Current major contracts