Dialight plc · LSE:DIA
Dialight — FY2011 Earnings Presentation
56 slides from Dialight's earnings presentation, Feb 27, 2012
Slide 1: Dialight plc 2011 Preliminary Results
Dialight Dialight plc 2011 Preliminary Results 27 February 2012 1
Slide 2: Highlights
Highlights Dialight • Underlying Profit before tax of £15.1m (2010: £11.3m) – 33.6% Growth • Full year Revenues grew 14.4% to £113.5m (2010: £99.2m) • Signals/Illumination segment revenues increased 29.0% to £78.8m (2010: £61.1m) • Lighting sales more than doubled to £26.3m (2010: £11.6m) • Strong o
Slide 3: Mark Fryer, Group Finance Director
Dialight Mark Fryer Group Finance Director 3
Slide 4: 2011 Financial Results
2011 Financial Results Dialight £m 2010 EBIT 11.2 OE Volume – Exceptional Q1 2010 (0.4) Signals & Illumination 10.1 Foreign Currency Translation (0.8) Increased Production Costs – Volume Related (2.1) Development investment and capitalisation (0.4) Investment in Additional Sales & Marketing (2.0) Lo
Slide 5: LED Indication Components
LED Indication Components Dialight • Niche with over 15,000 customers – strong profit and cash generator • Revenues decrease 11.5% as expected • Slow H2 as predicted • Fundamentals of the business unchanged • Margins good • Expect flat performance in 2012 with sales to rise or fall with the general
Slide 6: Electromagnetic Components
Electromagnetic Components Dialight • Plan for disposal • Impact £10.7m sales reduction and £1.6m contribution reduction and transfer of £0.75m of overhead to remaining segments. • Assets involved circa £1.0m 6 6
Slide 7: Signals/Illumination Revenue
Signals/Illumination Revenue Dialight Total £78.8m £61.1m Contribution % 43.7% 42.2% 7 7
Slide 8: Signals/Transportation
Signals/Transportation Dialight • Comparison affected by non-repeat of European Rail order • US Transit bus business steady but affected by currency • No change to business for the future 8 8
Slide 9: Signals/Traffic
Signals/Traffic Dialight • Dialight is the world’s largest manufacturer of LED Traffic Lights • European traffic weak especially in Southern Europe • US traffic flat but down 5% with currency • Margins improved • Single digit growth for the future driven by further adoption of LED traffic lights – M
Slide 10: LED Obstruction Lighting
LED Obstruction Lighting Dialight 10 10
Slide 11: Signals/Obstruction
Signals/Obstruction Dialight • 45% year on year growth versus continued guidance of 30-50% • Margin improvement driven by new Beacon and Strobe designs • More than 7000 White Strobes supplied to US Cell Tower market since 2007 – 73000 to go! Only FAA approved supplier • Sales to 9 of the top 10 towe
Slide 12: New Products – High Intensity Strobe
New Products – High Intensity Strobe Dialight First LED high intensity strobe to market Vigilant™ LED High Intensity Strobe - 270,000 candelas of white light - Towers above 500’ - FAA certified - Replaces Xenon technology with a 2 year life - Reduces massive maintenance costs Scale of opportunity -
Slide 13: Illumination
Illumination Dialight 13 13
Slide 14: Vertically Focused – Hazardous & Industrial
Vertically Focused – Hazardous & Industrial Dialight Regulated Primary Markets Oil & Gas Power Gen Mining Chemical Pharmaceutical Water & Sewage Food & Beverage Secondary Markets Manufacturing Warehousing Cold Storage Data Centers 14 14
Slide 15: Signals/Illumination
Signals/Illumination Dialight • Revenues up over 128% versus guidance of 100% • 75,000+ Industrial White Lights shipped in the year • High Bay Light major success • Sales to many new customers in 2011 • Pipeline of new/improved products • 2012 starting strongly 15 15
Slide 16: Cash flow
Cash flow Dialight 2011 2010 £M £M EBIT 15.1 11.2 Operating cash 17.7 15.1 Working capital (2.5) 0.2 Pension contribution (2.8) (1.3) (inc non-recurring) Cash from operations 12.4 14.0 Tax/financing (1.7) (4.7) Investing activities (4.2) (3.9) Dividend (2.7) (2.2) Acquisition (0.4) (2.1) Net cash ge
Slide 17: Cash Flow
Cash Flow Dialight • Inventory – higher – equal to December sales • Working capital to sales constant despite higher inventory • Cash - Continuing strong cash flow from Operations with debt free balance sheet • Pension deficit sold off at cost of £2.3m • Two acquisitions for £0.4m 17 17
Slide 18: Roy Burton, Chief Executive Officer
Dialight Roy Burton Chief Executive Officer 18
Slide 19: What is Dialight’s advantage?
Dialight What is Dialight’s advantage? First mover advantage, constant technical improvement 19
Slide 20: Largest industrial & hazardous LED lighting company
Dialight • We are currently the largest industrial & hazardous LED lighting company • Our goal is to be the largest lighting company in these markets, regardless of technology 20 20
Slide 21: Dialight’s LED Lighting Fixtures – Broadest in the Industry
Dialight’s LED Lighting Fixtures – Broadest in the Industry Dialight High Bay Linear Fixture Area Light Power Consumption: 123-170W Power Consumption: 50-100W Power Consumption: 43-70W Replaces: 400W HID Replaces: 200W Fluor Replaces: 200W Fluor Energy Savings: 65% Energy Savings: 50% Energy Savings
Slide 22: Evolution of Energy Efficient Lighting
Evolution of Energy Efficient Lighting Dialight 22 22
Slide 23: Improving our LED High Bay
Improving our LED High Bay Dialight So how does Dialight provide value to LEDs? Mechanical design / thermal heatsinking Key to longevity of LED fixtures is proper heat management Electrical design Highly efficient universal power supplies built custom for each luminaire, tailored to meet specific ce
Slide 24: Dialight LED High Bay
Dialight LED High Bay Dialight • 60,000+ units – total installed base • Multiple award winning luminaire • Fixture efficiency – 100 lm/W (*industry avg – 77 lm/W) • Mounting options for any application • 200 different variations - Certifications - Lumen output, power consumption - Light distribution
Slide 25: LED Progression
LED Progression Dialight Here’s what we were able to accomplish with our high bay PRESENT 2011 2010 17,000 lumens 100 lm/W 2009 14,000 lumens 90 lm/W 12,000 lumens 80 lm/W 8,000 lumens 53 lm/W 25 25
Slide 26: LED Progression
LED Progression Dialight And if you remember what we were able to do with our strobe 2007 2008 2009 2010 26 26
Slide 27: How do we Sustain Growth?
Dialight How do we Sustain Growth? 27
Slide 28: How big is the market, is the opportunity real?
How big is the market, is the opportunity real? Dialight • Freedonia says Industrial Lighting is approx., $5Bn Annually • We address the installed base which is probably 10 times that size • Hazardous and Heavy is about 20% of that • Dialight has achieved between 0.1 and 0.5% penetration • Major inv
Slide 29: Case Study: Top US Refinery
Case Study: Top US Refinery Dialight Total Plant Opportunity (20,000+ fixtures) • 19 GWh Energy Savings / yr • 16,000 tons CO2 Reduced • Equivalent savings of powering 2,000 households and removing 2,750 cars from the road Current Installed Base • (335) 150W High Bay replacing up to 400W HID • (300)
Slide 30: Refinery Lighting Opportunity
Refinery Lighting Opportunity Dialight Scale of opportunity ~ 660 refineries worldwide ~ 6,700 lights per refinery • Total opportunity: $2.5Bn • Opportunity per refinery: $4M Typical Lighting Applications: Process Areas Steam Rooms Catwalks Our Customers: 30 30
Slide 31: Power Generation Opportunity
Power Generation Opportunity Dialight Scale of opportunity Total opportunity for coal and nuclear plants: $2.7Bn ~ 1,700 Coal plants worldwide ~ 2,000 lights per coal plant • Opportunity per coal plant: $1.5M 193 Nuclear plants worldwide ~ 1,100 lights per nuclear plant Typical Lighting Applications
Slide 32: Steel Processing Opportunity
Steel Processing Opportunity Dialight Scale of opportunity ~ 2,300 steel mills worldwide ~ 1,500 lights per refinery • Total opportunity: $1.7Bn • Opportunity per steel mill: $750K Typical Lighting Applications: Cranes Blast Furnaces Process Areas Our Customers: 32 32
Slide 33: Surface Mining Opportunity
Surface Mining Opportunity Dialight Scale of opportunity ~ 90,000 surface mines worldwide ~ 500 lights per surface mine • Opportunity per mine: $225K Typical Lighting Applications: Conveyor belts Cranes Our Customers: 33 33
Slide 34: Geographically Focused
Geographically Focused Dialight 34 34
Slide 35: Gulf Coast Lighting Focus
Gulf Coast Lighting Focus Dialight • $300Bn EPC projects worldwide over next 10 yrs • $220M opportunity at 32 refineries • $645M opportunity at 113 offshore rigs and 3,533 offshore platforms • 9% of world’s oil production • 400+ chemical manufacturing sites 35 35
Slide 36: Europe Lighting Focus
Europe Lighting Focus Dialight Target Regions: • Germany • UK • Benelux • France • $600M opportunity at ~150 refineries across Europe • $50M opportunity at 80 nuclear plants across Europe • $90M opportunity at ~500 platforms in North Sea • $12M opportunity at 16 major steel facilities in Germany 36
Slide 37: Middle East Lighting Focus
Middle East Lighting Focus Dialight Target Regions: • UAE • Saudi Arabia • Qatar • Oman • Kuwait • $160M opportunity at 40 refineries • $100M opportunity at 25 new refineries in Saudi Arabia over next 5 yrs • $5.5M opportunity for 121 offshore rigs • Energy savings focus - Deficit in Saudi Arabia 37
Slide 38: ASEAN Lighting Focus
ASEAN Lighting Focus Dialight Target Regions: • Indonesia • Malaysia • Philippines • Singapore • Thailand • $100M opportunity at 40 refineries • $65M opportunity at 43 coal power plants • $6.5M opportunity at 144 offshore rigs across Asia • Petronas - $76.9Bn - #86 on Forbes 500 list 38 38
Slide 39: Australia Lighting Focus
Australia Lighting Focus Dialight • $1.25Bn opportunity at ~565 surface mining operations • $28M opportunity at 8 refineries • $45M opportunity at 30 coal power plants • $13M opportunity at 69 offshore platforms and 10 rigs • ~ 6% of worldwide coal production • 17.5% of worldwide iron ore production
Slide 40: How do we maintain margins?
How do we maintain margins? Dialight LED prices are coming down, how do we maintain margins? • We do not sell lighting- we sell ROI • Most of our sales will be against conventional lighting installations – installed base is 10 times new sales • The sell is not price sensitive, it is payback sensitiv
Slide 41: The Future
The Future Dialight • Multi-Billion Dollar Market • Low penetration • Improving paybacks for the customer base as Dialight’s products improve with LED efficiency and internally driven innovation • Lighting Revenues expected to double year on year 41 41
Slide 42: The Future
The Future Dialight Dialight Signals & Illumination Leverage Base % Fixed % Variable % Revenue 100 Direct Material 45% 0 100 Direct Labour 6% 0 100 Sales Commission 2% 0 100 Freight 2% 0 100 Contribution Margin 45% 0 100 Production Cost 8% 50 50 Gross Margin 37% Development 6% 75 25 Sales & Marketin
Slide 43: Challenging the status quo in the lighting industry
Dialight Dialight Challenging the status quo in the lighting industry 43
Slide 44: Q&A
Dialight Q&A 44
Slide 45: Financial Appendix
Dialight Financial Appendix 45
Slide 46: Summary Profit & Loss
Summary Profit & Loss Dialight 2011 £m 2010 £m Revenue 113.5 99.2 Gross Profit 33.4 27.3 Gross Profit % 29.4 27.7 Overhead costs (18.3) (16.5) Operating profit 15.1 11.2 Net financing income / (0.8) 0.1 (cost) – non-underlying Profit before tax 14.3 11.3 Tax (4.7) (3.8) Net Profit 9.6 7.5 46 46
Slide 47: Five Year History
Five Year History Dialight 2011 2010 2009 2008 2007 £m £m £m £m £m Turnover 113.5 99.2 77.3 77.9 63.4 Profit before tax 15.1 11.3 5.3 5.6 4.5 Operating Cash flow 17.7 15.1 11.0 6.0 5.8 Net Cash 13.7 10.4 9.1 4.1 4.4 Shareholders Funds 54.7 46.2 40.1 37.5 30.8 Return on Sales % 13.3 11.4 6.9 7.2 7.1
Slide 48: Lighting - Five Year History
Lighting - Five Year History Dialight 2011 2010 2009 2008 2007 2006 £m £m £m £m £m £m Turnover 78.8 61.1 46.4 43.3 33.4 28.6 Operating Profit 13.8 8.7 3.3 1.7 0.1 (0.5) Return on Sales % 17.5 14.2 7.1 3.9 0.3 n/a % of Group Profit 91.3 77.7 62.2 30.4 2.2 n/a 48 48
Slide 49: Revenues
Revenues Dialight Revenue 1 10 11 10 iim 13.9 10 14.6 10 23.9 61.1 78.8 Signals/Illumination Electromagnetic Components LED Indication Components 49
Slide 50: 2011 Segment Result
2011 Segment Result Dialight Signals/ Components LED Indication Illumination Total £M £M £M £M Revenue 13.9 20.8 78.8 113.5 Contribution 2.4 11.6 34.5 48.5 Contribution 17.1 55.6 43.7 42.7 % Overheads (2.5) (7.0) (20.7) (30.2) Segment (0.1) 4.6 13.8 18.3 profit Unallocated (3.2) Expenses PBIT 15.1 5
Slide 51: Dividends and Earnings Per Share
Dividends and Earnings Per Share Dialight 2011 2010 Dividends per share 10.0p 8.0p Basic EPS 30.3p 23.8p Dividend cover 3.0 times 3.0 times Underlying EPS 31.7p 23.8p Adjusted Dividend cover 3.2 times 3.0 times 51 51
Slide 52: Taxation
Taxation Dialight • Reduced effective tax rate in 2011 was 33.0%, reduced from 34.0% in 2010, 37.5% in 2009 and 38.5% in 2008 • Profit in high tax locations • Increased mix of lower tax UK profit going forward • Lower UK corporate tax rates • Continue to marginally lower effective tax rate 52 52
Slide 53: Banking
Banking Dialight • Transferred 2011 banking relationship to Barclays • £10m initial facilities with fees paid for £3m overdraft only • Discussions with regard to additional £13m facility • $10m facility in US with Wells Fargo which can be increased up $25m • £40m of cash and potential facilities for
Slide 54: Summary Balance Sheet
Summary Balance Sheet Dialight 2011 2010 £M £M Non current assets 23.8 22.3 Cash 13.7 10.4 Other current assets 38.7 28.0 Current liabilities (20.9) (12.2) Non current liabilities (0.5) (2.3) Net Assets 54.8 46.2 54 54
Slide 55: Working Capital
Working Capital Dialight 2011 2010 £M £M Inventories 15.8 9.2 Trade and other 22.8 18.9 receivables Trade and other payables (19.1) (11.3) Working Capital 19.5 16.8 Working Capital / Sales % 17.2% 17.0% 55 55
Slide 56: Pensions
Pensions Dialight • Group deficit eliminated through sale of US deficit for £2.3m • UK surplus £0.8m (2010: £0.4m) • Premium paid tax allowable – c 9month payback after tax! 56 56