Calnex Solutions Plc · LSE:CLX
Calnex Solutions — FY2024 Earnings Presentation
27 slides from Calnex Solutions's earnings presentation, May 28, 2024
Slide 1: Final Results FY24
Final Results FY24 Tommy Cook, CEO Ashleigh Greenan, CFO
Slide 2: Calnex Solutions
Calnex Solutions A selection of our customers Test solutions for the world’s telecoms and cloud computing industries • Established a position at the forefront of the global test and measurement industry • Our portfolio enables our customers to validate the performance of the critical infrastructure
Slide 3: Why we are needed
Why we are needed New product development lifecycle R&D Design Validation and Conformance Maintenance Testing post deployment Monitoring networks Testing ▪ Deep insight is required to identify and rectify ▪ Monitor all end points to identify when faults occur. complex maintenance issues. ▪ Collate d
Slide 4: Review of the year
Review of the year
Slide 5: FY24 overview
FY24 overview Performance impacted by Order inflow remained at Measured cost actions and Continued product the challenging trading the subdued levels refocusing of R&D spend innovation with early environment expected successes Flattening of business from the Refocused engineering Expect to launch a
Slide 6: Long-term telecoms market drivers intact and growth opportunity in cloud computing and defence
Long-term telecoms market drivers intact and growth opportunity in cloud computing and defence Growing need Evolution of networking for infrastructure and techniques, technology cloud-based Application and standards to meet test future demands. Growth in AI will increase data Increasing telecoms Nee
Slide 7: Financial review
Financial review
Slide 8: Stable customer metrics
Stable customer metrics Revenue streams (£000) Geographic Split Telecoms/cloud computing market (3 year order average) (orders) Americas North Asia Rest of world Hardware and software revenue Warranty support revenue Cloud Computing Market Telecoms Top 10 customers Repeat Customers Telecoms Customer
Slide 9: Revenue analysis
Revenue analysis Region • ROW: Least affected by slow-down, with resilient performance in EMEA as business derived from a wide range of sectors. • North Asia: China still remains challenging due to impact of US restrictions. Focusing on growing business in Taiwan and Japan. • Americas: Most impacted
Slide 10: Income statement reflects challenging year
Income statement reflects challenging year Margins remain stable FY24 £000 FY23 £000 • Revenue decline of 41% driven by subdued order levels. Revenue 16,274 27,449 Cost of sales (4,327) (6,977) • Gross margin 73% - broadly in line with prior year. Gross Profit 11,947 20,472 Other income 797 751 • On
Slide 11: Robust cash position
Robust cash position FY24 FY23 £000 £000 • Net cash outflow from operating activities £0.8m (FY23: cash inflow Cashflows from operating activities of £11.1m). EBITDA 3,860 11,295 Add back non cash items (55) (177) • Working capital cash outflow of £3.7m (FY23: £1.2m), predominantly Movements in net
Slide 12: Financial resilience
Financial resilience • New products performing well. Final dividend Total dividend • Gross margins have remained healthy. 0.62p 0.93p • Costs under control, while continuing to FY23 final: 0.62p FY23 total: 0.93p invest in the areas which will generate future growth. • Increased inventory allows for
Slide 13: Strategy and market opportunity
Strategy and market opportunity
Slide 14: Three-Pillar Strategy
Three-Pillar Strategy Consistent Strategic Focus Continued product Expand within the Cloud Target select acquisition and innovation to capitalise on Computing sectors strategic partnership growth of 5G Infrastructure and applications/end opportunities to add to devices utilising centralised processi
Slide 15: Evolving product portfolio
Evolving product portfolio • • • • • • • Calnex May 2024 15
Slide 16: Product innovation to stimulate growth in FY25
Current innovation programmes Product innovation to Lab sync 800G Telecoms stimulate growth in FY25 Paragon Neo, release 12 Telecoms X, release 30 Non-Telecoms, Automotive Dual approach - new capability in the Telecom Network sync market to stimulate growth, plus entry into Non- Sentinel & Telecoms
Slide 17: Strong early progress within Cloud Computing
Strong early progress within • SNE-Ignite: Hardware base delivers high accuracy performance e.g. 5G O-RAN. Cloud Computing • SNE-X: High port density applications e.g. 5G Services. • SNE: Lower speed, high complexity applications e.g. SD-WAN, Broadcast, etc. SNE-X, is already finding some promising
Slide 18: Evolving sales channels
Evolving sales channels To support future expansion Appropriate time to carry out a Actions now underway to Confident in successful transition review of sales channels and facilitate changes channel partner arrangements Growth in our product offering and Discussions have commenced with new and Have
Slide 19: Route to market
Route to market Defence sector buys solutions not components Calnex products are utilised as part of large-scale technology solutions for Defence Contracts Benefits: • Added to Build of Materials as priced component • Margin Protection - as negotiations are for the solution cost not component cost •
Slide 20: Selling into the Defence sector: Customer successes
Selling into the Defence sector Customer successes 01 02 03 Cyber Ranges - US Network robustness – UK with US Applications field deployment expansion potential robustness - UK NE-ONE selected as a solution for NE-ONE used for simulation of DDIL NE-ONE selected for realistic test services ensuring ne
Slide 21: Positive Outlook
Positive Outlook • Recently launched products are gaining traction, providing confidence in a return to growth in FY25. Long-established Proven business model • Challenges across the wider telecoms market industry position with provides a strong reputation for winning expected to remain for the dura
Slide 22: Q&A
Q&A
Slide 23: Appendix
Appendix
Slide 24: Balance sheet
Balance sheet Mar-24 Mar-23 £000 £000 Non-current assets Intangible assets 12,110 10,565 Goodwill 2,000 2,000 Tangible & right of use assets 628 937 Deferred tax asset 1,246 272 15,984 13,774 Current assets Inventories 5,373 2,748 Trade and other receivables 3,775 3,130 Cash and cash equivalents 11,
Slide 25: The Board
The Board Tommy Cook Ashleigh Greenan Stephen Davidson Graeme Bissett Margaret Rice-Jones Helen Kelisky CEO CFO Non-Exec Chairman Non-Exec Director Non-Exec Director Non-Exec Director Tommy is the founder and Ashleigh qualified as a Stephen joined the Board of Graeme is an experienced Margaret has o
Slide 26: General information
General information ▪ Share Price 62.5p (at 20.11.2023) Major Shareholders % of Issued Share Shareholder ▪ Market AIM Capital Thomas (Tommy) Cook (CEO) 19.9% ▪ Ticker CLX BGF Investment Management Limited 12.0% ▪ Market Cap. £54.72m Scottish Enterprise 9.0% Close Brothers Asset Management 9.0% ▪ Ord
Slide 27: Financial structure
Financial structure • Two revenue streams: Revenue • Bundled hardware & software recognised on delivery • Warranty and software support recognised over life of product • Gross margin: approx. 73-75% net of discounts given to channel partners Gross • Cost of sales: approx. 87-85% is cost of billing f