Volex Plc · LSE:VLX
Volex — H1 2015 Earnings Presentation
26 slides from Volex's earnings presentation, November 2014
Slide 1: Volex Interim Results to October 5 2014
VOLEX INTERIM RESULTS TO OCTOBER 5 2014 Christoph Eisenhardt, CEO Nick Parker, CFO November 2014
Slide 2: Disclaimer
Disclaimer This Presentation has been prepared by Volex PLC (the “Company”) in connection with the publication of the Company's interim results for the twenty-seven (27) weeks to October 5 2014. This Presentation does not constitute or form part of any offer or invitation to sell or issue, or any so
Slide 3: Key Summary
Key Summary • Tripled sales pipeline with significant new business wins • Strong revenue growth with increased gross margins • Doubled operating margins and profits • Operating cash flow positive • De-risked the balance sheet • Positive EPS the Volex Transformation Plan (VTP) is delivering results
Slide 4: Progress of the Volex Transformation Plan
Progress of the Volex Transformation Plan • Renewed Executive Management and Board • Established new structure with two divisions and four sales regions • Repositioned Volex to focus on its market leadership and differentiation • Realigned product portfolio by divisions • Strong investment in transf
Slide 5: Volex returned to above market growth
Volex returned to above market growth © 2014 Volex plc. 5
Slide 6: Volex growth in both Divisions and across all Regions
Volex growth in both Divisions and across all Regions © 2014 Volex plc. 6
Slide 7: Sales pipeline underpins revenue growth
Sales pipeline underpins revenue growth Sales Pipeline development © 2014 Volex plc. 7
Slide 8: Financial Review
Volex Financial Review
Slide 9: Financial Highlights
Financial Highlights $m FY 2013 FY 2014 H1 2014 H1 2015 • 12% growth in revenue Revenue 473.2 400.2 196.5 220.9 • 125% growth in operating Gross Profit* 85.3 66.5 33.7 38.0 Gross Margin* 18.0% 16.6% 17.1% 17.2% profit Operating Costs (73.0) (62.0) (32.1) (34.5) • Increase in operating costs due to i
Slide 10: Exceptional Costs
Exceptional Costs $m FY 2013 FY 2014 H1 2014 H1 2015 Product portfolio realignment - - - 5.8 Restructuring costs 7.2 8.6 5.8 2.0 Financing - 1.6 - 0.1 Provision for historic tax claims - 0.8 - 0.1 Movement in onerous lease provisions (0.4) 0.6 - - Other 1.2 - - 0.0 Exceptional costs 8.0 11.6 5.8 8.0
Slide 11: Power Division
Power Division $m FY 2013 FY 2014 H1 2014 H1 2015 Revenue 323.1 265.4 128.3 147.2 Gross profit* 48.5 34.5 17.9 20.0 Gross margin* 15.0% 13.0% 13.9% 13.6% Operating costs (29.7) (27.2) (13.9) (14.3) Operating profit* 18.8 7.3 3.9 5.7 Operating margin* 5.8% 2.7% 3.1% 3.9% *Underlying measure before Sh
Slide 12: Data Division
Data Division $m FY 2013 FY 2014 H1 2014 H1 2015 Revenue 150.1 134.8 68.2 73.7 Gross profit* 36.7 32.0 15.8 18.0 Gross margin* 24.5% 23.8% 23.2% 24.4% Operating costs (24.0) (19.4) (10.1) (10.3) Operating profit* 12.8 12.7 5.7 7.7 Operating margin* 8.5% 9.4% 8.3% 10.5% *Underlying measure before Sha
Slide 13: Cash Flow
Cash Flow • Anticipate being cash flow neutral in the current financial year • Successful July refinancing provides the financial flexibility to invest in our business © 2014 Volex plc. 13
Slide 14: Balance Sheet
Balance Sheet $m FY 2013 FY 2014 H1 2015 • Reduction in intangible Goodwill & Intangibles 7.1 8.7 4.4 Property, Plant & Equipment 39.7 38.7 36.7 assets due to impairment Other 5.3 1.3 1.3 of product development Non-current Assets 52.1 48.7 42.4 costs Inventories 43.0 40.0 46.2 Trade & Other Receivab
Slide 15: Strategy and Operating Review
Strategy and Operating Review
Slide 16: Strategic priorities to FY2018
Strategic priorities to FY2018 Global footprint - act globally, operate locally Design-to-Cost • $500m Customer-centric revenue • 5% operating margin Productivity & factory utilisation • Consistent cash generation Best in class procurement High performance culture … through successful execution of t
Slide 17: Power Division – Summary
Power Division – Summary Power products Market Share Power Market Specifics Volex • $2.5bn addressable market • Annual growth 4.9% • Volume and price sensitive • Dynamic customer sourcing through allocations • Regional safety regulations Others • Cosmetic requirements • Increasing demand for local s
Slide 18: Power Division – Shaping the future
Power Division – Shaping the future 1. Leverage blue-chip customer base – Continue developing existing customer relationships as foundation to drive further growth 2. Become partner of choice for customers in a mature and competitive market, by: – Globally increasing sales competence and improving r
Slide 19: Data Division – Summary
Data Division – Summary Data products Market Share Micro-connectivity Market $3bn market (5.8% annual growth) currently segmenting into volume and niche value providers: • Engineered products with long lifecycle • Technical specification and performance • Long term established supplier-customer Vole
Slide 20: Data Division – Shaping the Future
Data Division – Shaping the Future 1. Become partner of choice by leveraging global presence and local proximity, by: • Globally increasing sales competence and improving regional coverage • Supply Chain excellence based on design-to-cost capabilities 2. Design In – Engineered Solutions • Early invo
Slide 21: Excellence in Execution: Operations
Excellence in Execution: Operations Leveraging Volex’s industry leading global manufacturing footprint • Improve plant utilisation over time with limited additional investment • Focus plant on local customer requirements, also aligned to divisional product roadmaps • Increase hybrid space to enable
Slide 22: Excellence in Execution: Supply Chain
Excellence in Execution: Supply Chain Evolve Volex sourcing model from supplier- to customer-centric Year-on-Year Procurement savings • Enforce requirement specific multi-sourcing (design-to-cost approach) • Localisation of supply chain activities from RFQs to continuous improvement • Broaden Catego
Slide 23: Excellence in Execution: Processes
Excellence in Execution: Processes Gradual evolution of process architecture to reflect the increasing need for connectivity and information efficiency • Introduce group-wide harmonised ERP system with industry specific business warehouse and KPI reporting • Establish end-to-end sales process suppor
Slide 24: Excellence in Execution: People
Excellence in Execution: People Become an employer of choice in our industry • Substantial competence build up throughout all levels and functions of the organisation • Foster ownership and accountability, introduce revised incentive schemes • Establish harmonised job architecture and standardise as
Slide 25: Key milestones
Key milestones Strategy to deliver revenues exceeding $500m and 5% operating margin by FY2018 2014 2015 2016 2017 2018 Design Transform Perform • Renew management • Establish new structure • Combined global market presence with & Board of Directors (Divisions & Sales Regions) local customer proxim
Slide 26: Volex today and going forward…
Volex today and going forward… Status H1 2015 Outlook FY 2015 • Tripled sales pipeline with • VTP continues to deliver strong significant new business wins growth in sales and margins • Strong revenue growth • Focus upon strong cash with increased gross margins generation going forward • Doubled ope