Avon Technologies Plc · LSE:AVON
Avon Technologies — Avon Rubber p.l.c. — FY2017 Earnings Presentation
52 slides from Avon Technologies's earnings presentation, 2017
Slide 1: Preliminary Results 2017
PRELIMINARY RESULTS 2017
Slide 2: Forward-looking information
Forward-looking information Avon Rubber p.l.c. (the ‘Group’) is providing the following cautionary statement: This document contains certain statements that are or may be forward-looking with respect to the financial condition, results or operations and business of the Group. These statements are so
Slide 3: Agenda
Agenda Strategy Financial and Future Highlights Review Investor Outlook Proposition PRELIMINARY RESULTS 2017 3 Building a brighter future
Slide 4: Highlights
Highlights Paul McDonald Chief Executive Officer PRELIMINARY RESULTS 2017 4 Building a brighter future
Slide 5: A year of significant progress
A year of significant progress • Engaged management team delivering strong results • Ambitious strategy that is building a brighter Orders received future • Strong financial position with cash to fund £173.9m dividends, growth and future acquisitions 22.2% • 30% proposed dividend increase, reflectin
Slide 6: All markets contributing to delivery
All markets contributing to delivery MILITARY LAW ENFORCEMENT & FIRE MILKRITE | INTERPULS • FM50 order offsetting lower DoD • Exceptional growth in Fire for • Improving market conditions as M50 volumes both argus & Self-Contained milk prices continue to rise Breathing Apparatus • Strong order book c
Slide 7: Financial Review
Financial Review Nick Keveth Chief Financial Officer PRELIMINARY RESULTS 2017 7 Building a brighter future
Slide 8: Strong financial performance
Strong financial performance FINANCIALS REVENUE SPLIT BY BUSINESS % Constant 2017 % Change Currency Orders received £173.9m 22.2% 11.8% 2017 2016 Closing order book £34.0m 45.3% 46.3% £163.2m £142.9m Revenue £163.2m 14.2% 4.5% Adjusted EBITDA £36.0m 20.4% 12.1% Avon Protection milkrite | InterPuls A
Slide 9: 4.5% revenue growth at constant currency
4.5% revenue growth at constant currency +£1.6m +£0.7m +£2.5m +£0.7m +18.9% +£1.7m +4.3% +20.2% +£13.3m +17.7% -£0.2m +6.1% milkrite | InterPuls £3.0m +6.6% £163.2m Avon Protection £4.0m +3.6% £142.9m 2016 2016 FX Military LE Law Fire Interface PCI Farm Services 2017 Revenue Enforcement Revenue PREL
Slide 10: 16.1% adjusted operating profit growth at constant currency
16.1% adjusted operating profit growth at constant currency +£0.4m +£3.6m +£1.4m +5.8% -£0.5m +22.2% £25.8m £20.9m 2016 2016 FX Avon Protection milkrite | InterPuls milkrite|InterPuls Corporate costs 2017 2017 Adjusted Adjusted operating profit operating profit PRELIMINARY RESULTS 2017 10 Building a
Slide 11: £22.7m increase in net cash
£22.7m increase in net cash +£36.0m -£1.6m -£5.5m -£2.1m +£1.1m -£3.2m -£1.0m -£1.0m Cash conversion 98.1% £24.7m £2.0m 2016 EBITDA Working Capex Tax/Interest Dividends Purchase of Pension Other (non 2017 Net Cash capital own shares cash) Net Cash PRELIMINARY RESULTS 2017 11 Building a brighter futu
Slide 12: Avon Protection
Avon Protection FINANCIALS REVENUE SPLIT BY MARKET 2017 % Change % Constant Currency Orders received £123.9m 24.3% 14.6% Closing order book £30.5m 45.9% 50.0% 2017 2016 25% 25% Revenue £113.8m 12.8% 3.6% £113.8m £100.9m Adjusted EBITDA £27.1m 26.0% 16.6% Adjusted EBITDA margin 23.8% 2.5% - Adjusted
Slide 13: milkrite | InterPuls
milkrite | InterPuls FINANCIALS REVENUE SPLIT BY MARKET 2017 % Change % Constant Currency Orders received £50.0m 17.4% 8.5% Closing order book £3.5m 40.0% 20.1% 2017 2016 Revenue £49.4m 17.6% 6.6% £49.4m £42.0m Adjusted EBITDA £10.9m 11.2% 4.7% Adjusted EBITDA margin 22.1% (1.2%) - Adjusted operatin
Slide 14: How we measure our performance
How we measure our performance Closing order Constant currency Adjusted EBITDA Product development book revenue growth margin % % of revenue £34.0m 4.5% 22.1% 5.1% +45.3% +5.1% +1.2% -0.7% 2017 £34.0m 2017 4.5% 2017 22.1% 2017 5.1% 2016 £23.4m -0.6% 2016 2016 20.9% 2016 5.8% Adjusted earnings Return
Slide 15: Strategy & Investor Proposition
Strategy & Investor Proposition Paul McDonald Chief Executive Officer PRELIMINARY RESULTS 2017 15 Building a brighter future
Slide 16: Our strategy…
Our strategy… …for creating shareholder value is based upon 3 key elements: 1. Maximise organic sales growth from our core business 2. Selective product development to maintain our innovation leadership position 3. Value enhancing acquisitions to complement our existing business and accelerate growt
Slide 17: Growing the core
Growing the core Maximizing growth from a world leading product and service portfolio • Leveraging the product and customer base – growing market share and driving increased cross-selling • Responding to increasingly complex needs – migrating customers through the product portfolio • Offering new co
Slide 18: Selective product development
Selective product development We have a reputation for technological excellence and innovation, with a strong tradition of new product development. We see organic growth opportunities through: • Maintaining our innovative leadership position • Enabling technologies and integrated systems • Moving up
Slide 19: Value enhancing acquisitions
Value enhancing acquisitions Targeting acquisitions with Avon Protection and milkrite | InterPuls to complement organic growth Commercial Criteria Financial Criteria • Strong brand recognition • EPS enhancement • Technology which broadens our product • Organic revenue growth, margins and cash range
Slide 20: Why invest in Avon Rubber?
Why invest in Avon Rubber? 3% + 20% + 90% + 30% CORE ACCELERATE SUSTAINABLE CASH PROGRESSIVE BUSINESS GROWTH PROFITABILITY GENERATION DIVIDEND PRELIMINARY RESULTS 2017 20 Building a brighter future
Slide 21: Our 2017 numbers speak for themselves
Our 2017 numbers speak for themselves +4.5% Integration 22.1% 98.1% +30% AT CONSTANT ARGUS AND 120 BPS £22.7M CASH INCREASE OVER CURRENCY INTERPULS IMPROVEMENT IN THE YEAR PRIOR YEAR PRELIMINARY RESULTS 2017 21 Building a brighter future
Slide 22: Future Outlook
Future Outlook Paul McDonald Chief Executive Officer PRELIMINARY RESULTS 2017 22 Building a brighter future
Slide 23: Future outlook
Future outlook MILKRITE | INTERPULS MILITARY • Market outlook remains • Flat Military revenue with positive higher margins • Precision, Control & Intelligence • Lower M50 mask systems product growth for all regions offset by new programmes • Farm Services launch of Pulsator & Tag Exchange • UK GSR c
Slide 24: Questions & Answers
Questions & Answers PRELIMINARY RESULTS 2017 24 Building a brighter future
Slide 25: Appendices
Appendices PRELIMINARY RESULTS 2017 25 Building a brighter future
Slide 26: Our strategy in detail…
Our strategy in detail… …for creating shareholder value is based upon 3 key elements: 1. Maximise organic sales growth from our core business 2. Selective product development to maintain our innovation leadership position 3. Value enhancing acquisitions to complement our existing business and accele
Slide 27: Growing the core
Growing the core We have established ourself as a technology and service leader in our chosen markets, with a range of innovative products and an established global customer base. We see opportunities to generate further, profitable growth from our core business through a number of initiatives: • Le
Slide 28: Selective product development
Selective product development As the established leader, we are committed to remaining at the forefront of technology evolution in our markets. To generate the best return on our innovation investment we need to ensure that our development is closely aligned with our customers to enable us to delive
Slide 29: Value enhancing acquisitions
Value enhancing acquisitions Through ‘Growing the Core’ and ‘Selective Product Development’, we believe that Avon can sustain attractive and profitable organic growth into the future. However, we also see the potential to complement this growth and accelerate our strategy through additional carefull
Slide 30: Avon Protection
Avon Protection Fire Military Law Enforcement Fire Global leader within Military CBRN for Supplying a range of NIOSH & CE Leading provider of thermal imaging masks and filters, with leading portfolio approved mask solutions for global camera technology and one of the of respirators and filters and l
Slide 31: Masks
Masks FM12 EL50 FM50 M53A1 M69 With an unrivalled pedigree in mask design dating back to the 1920s we have developed an Product range: extensive range of mask systems for military and civil use. In addition to market leading • FM12 • FM54 M50 and FM50 general service respirators we have developed a
Slide 32: Supplied & Powered Air
Supplied & Powered Air Under Project Fusion we have Product range: developed a modular range of • EZAir supplied and powered air • MP-PAPR products. This range combines our • CS-PAPR mask systems with self-contained • ST53 breathing apparatus (“SCBA”) and • ST53SD powered air purifying respirators •
Slide 33: Fire
Fire Product range: Mi-TIC E Mi-TIC E L Mi-TIC 320 Mi-TIC S P-Type TT-Type Deltair Magnum Mi-TIC S Deltair Magnum Our fire range comprises the argus thermal imaging camera and the Deltair SCBA. We are in the process of upgrading our SCBA system to comply with the latest NFPA fire saf
Slide 34: Filters
Filters The FM61 uses pioneering Product range: conformal filter technology MILCF50 FM61 for closer integration and CTC50 designed with a bayonet CBRNCF50e quick fit for use only with CBRNF12CE the M50 mask. CSCF50 GPCF50 The MILCF50 filter has a unique conformal shape providing a low
Slide 35: Escape hoods
Escape hoods The NH15 Escape Hood Product range: range is the smallest NH15 NH15 Combo NIOSH-certified CBRN/CO air purifying escape respirator on the market and is designed for police, emergency medical services and fire officers seeking immediate or emergency respiratory protection in a CBRN/CO
Slide 36: Underwater
Underwater The MCM100 is a state of Product range: the art underwater MDC150 MCM100 rebreather range for military diving use. During 2017 we obtained the CE European safety approval for the product and post year end we have secured the first orders for this product from military customers. Our u
Slide 37: milkrite | InterPuls
milkrite | InterPuls Fire Interface Precision, Control, Intelligence Farm Services milkrite | InterPuls is the market leader Precision refers to the set up of the air system within the Whilst offering the entire product for cluster technology to remove milk milking process to maximise the performanc
Slide 38: Interface
Interface Liners Tubing Impulse Claw 300 Shells Wash Trays The Impulse and Our premium The Impulse Claw Our lightweight Our liner washing Impulse Air ranges are silicone tubing is 300 with its durable, shells are designed systems are designed to minimise made from a strong lightweight and to optimis
Slide 39: Precision, Control & Intelligence
Precision, Control & Intelligence LO2Air iMilk600 iFarm We are the world-leading manufacturer of state We provide a range of control products used to Our iFarm software consolidates and analyses of the art electronic pulsators designed to manage the milking process. iMilk600 is a state data captured
Slide 40: Farm services
Farm services Cluster Exchange Service Pulsator Exchange Service Tag Exchange Service Through our first exchange offering, the Cluster During 2017 we expanded Farm Services with We are currently piloting the Tag Exchange Exchange Service, farmers lease complete the launch of the Pulsator Exchange Se
Slide 41: Group income statement
Group income statement 2016 Adjusted 2017 Adjusted (restated) £’m £’m Revenue 163.2 142.9 EBITDA 36.0 29.9 Depreciation and amortisation (10.2) (9.0) Operating profit before amortisation of acquired intangibles, exceptional items and defined 25.8 20.9 benefit pension costs Amortisation of acquired i
Slide 42: Avon Protection income statement
Avon Protection income statement 2017 2016 (restated) £’m £’m Revenue 113.8 100.9 Adjusted EBITDA 27.1 21.5 Adjusted operating profit 19.8 15.1 Adjusted EBITDA margin% 23.8% 21.3% Adjusted operating profit margin % 17.4% 15.0% PRELIMINARY RESULTS 2017 42 Building a brighter future
Slide 43: milkrite | InterPuls income statement
milkrite | InterPuls income statement 2017 2016 (restated) £’m £’m Revenue 49.4 42.0 Adjusted EBITDA 10.9 9.8 Adjusted operating profit 8.0 7.2 Adjusted EBITDA margin% 22.1% 23.3% Adjusted operating profit margin % 16.2% 17.1% PRELIMINARY RESULTS 2017 43 Building a brighter future
Slide 44: Reported to adjusted reconciliation
Reported to adjusted reconciliation 2017 2016 (restated) £’m £’m Statutory operating profit 19.8 16.8 Amortisation of acquired intangible assets 3.0 3.3 Impairment of capitalised development expenditure 2.6 - Impairment of plant and machinery 0.3 - Post-acquisition working capital adjustment (0.3) -
Slide 45: Balance sheet
Balance sheet 2017 2016 £’m £’m Intangible assets 40.4 47.3 Property, plant and equipment 26.3 30.1 Current assets 45.8 40.6 Current liabilities 36.9 34.2 Non-current liabilities 0.6 3.9 75.0 79.9 Net cash 24.7 2.0 99.7 81.9 Retirement benefit scheme 44.1 39.9 Net assets 55.6 42.0 PRELIMINARY RESULT
Slide 46: Cash flow
Cash flow 2017 £’m 2016 £’m Cash generated from operations 35.6 32.4 Interest paid/received (0.1) (0.4) Payments to pension scheme (1.0) (0.7) Tax paid (2.0) (1.0) Purchase of property, plant and equipment (2.6) (3.6) Capitalised development costs and purchased software (2.9) (3.3) Acquisitions - (3
Slide 47: Foreign exchange and sensitivities
Foreign exchange and sensitivities Average rate Closing rate Average rate Closing rate 2017 2017 2016 2016 US Dollar 1.267 1.339 1.423 1.296 Euro 1.147 1.134 1.282 1.161 1$ cent 1€ cent movement movement £m £m Revenue 1.0 0.1 Operating profit 0.1 - Net assets 0.3 0.2 PRELIMINARY RESULTS 2017 47 Buil
Slide 48: Share based payment restatement
Share based payment restatement 2016 2015 As reported Restatement Restated As reported Restatement Restated £m £m £m £m £m £m Adjusted operating profit 21.8 (0.9) 20.9 20.2 (1.0) 19.2 Operating profit 17.7 (0.9) 16.8 18.9 (1.0) 17.9 Profit before tax 16.8 (0.9) 15.9 17.9 (1.0) 16.9 Tax 1.8 0.2 2.0 (
Slide 49: Avon Protection - Revenue Split
Avon Protection - Revenue Split 2017 2016 4% 5% 14% 11% 31% 40% £113.8m £100.9m 31% 37% 14% 13% DOD DOD SPARES EMEA/NA FIRE AEF PRELIMINARY RESULTS 2017 49 Building a brighter future
Slide 50: Avon Protection – M50 Masks and M61 Filter Pairs
Avon Protection – M50 Masks and M61 Filter Pairs M50 Mask Systems Delivered M61 Filter Pairs Delivered 3000 1000 Sole-Source Contract Vehicle 2500 Mask systems (thousands) Filter pairs (thousands) Total Service Requirement 750 2000 1500 500 1000 250 500 0 0 2008 2009 2010 2011 2012 2013 2014 2015 20
Slide 51: milkrite | InterPuls – Revenue split and market share
milkrite | InterPuls – Revenue split and market share Liner market share 8% Revenue split by geography 24% 36% 31% 3% 30% 2017 38% 5% 13% 20% 10% 10% US EU 47% 51% 6% 36% 28% 29% 38% 39% 26% 2016 22% 40% 10% 2017 2016 US EU US EU Asia South America Impulse Air Non-Impulse Air Avon made OEM Others PR
Slide 52: milkrite | InterPuls – Revenue split
milkrite | InterPuls – Revenue split Revenue split by brand Cluster Exchange Service growth 60 700 No. of cows (thousands) 50 600 500 Revenue (£m) 40 400 30 300 20 200 10 100 0 0 2011 2012 2013 2014 2015 2016 2017 2013 2014 2015 2016 2017 OEM milkrite | InterPuls Total US EU Total PRELIMINARY RESULT