Slide 1: Results for the period ended 31 August 2022
Results for the period ended 31 August 2022 November 2022
Slide 2: Disclaimer
The content of this document (the “Presentation”) has not been approved by an authorised person within the meaning of the Financial Services and Markets Act 2000 (“FSMA”), as amended. Reliance on this document for the purpose of engaging in any investment activity may expose an individual or organis
Slide 3: Agenda
Agenda Introduction and Highlights Operational Review Financial Review Growth Strategy Tim Carroll Sally McKone Chief Executive Officer Chief Financial Officer Summary and Outlook 3
Slide 4: Focusrite plc: A global music and audio products Group
Focusrite plc: A global music and audio products Group CONTENT CREATION : 83% of revenue AUDIO REPRODUCTION: 17% of revenue • Focusrite: audio recording equipment • Martin Audio: live and installed sound, acquired December 2019 • Focusrite Pro: audio recording and broadcasting equipment for commerci
Slide 5: Highlights for the year ended 31 August 2022
Highlights for the year ended 31 August 2022 o A resilient year despite well publicised headwinds o Revenue retaining much of demand generated during COVID. 5.6%1 vs FY21 (-2.8%2 OCC), and up 41% vs FY20 o Gross margin down 3.1% points to 45.3%. 1% point due to duty rebates in FY21. Pricing actions
Slide 6: Revenue by brand
Revenue by brand FY22 to FY21 FY22 FY21 FY20 reported FY22 to FY21 FY22 to FY20 £m £m growth OCC1 growth £m growth Focusrite (inc Pro) 97.2 102.1 -4.8% -6.2% 79.7 22.0% Novation 20.6 22.3 -7.5% -8.9% 19.4 6.2% ADAM 17.8 23.8 -25.2% -24.0% 17.4 2.4% Martin (inc Optimal & Linea) 31.9 20.4 56.4% 39.5%
Slide 7: Product sectors: Focusrite
Product sectors: Focusrite FY22/21 FY22/21 FY22/20 FY22£ FY21 FY20 Focusrite Reported OCC1 Reported m £m £m Growth growth Growth Revenue 97.2 102.1 -4.8% -6.2% 79.7 22.0% • Focusrite -4.8% on a strong FY21 reflecting COVID tailwind • Growth in customer base during lockdowns maintained post COVID: 22
Slide 8: Product sectors: Novation and Ampify
Product sectors: Novation and Ampify FY22/21 FY22/21 FY22/20 Novation FY22 FY21 FY20 Reported OCC1 Reported £m £m £m Growth growth Growth Revenue 20.6 22.3 -7.5% -8.9% 19.4 6.2% • Novation -7.5% compared to strong pandemic FY21. Mix of new products performing well and others at late stage of lifecyc
Slide 9: Product sectors: ADAM Audio
Product sectors: ADAM Audio FY22/21 FY22/21 FY22/20 ADAM Audio FY22 FY21 FY20 Reported OCC1 Reported £m £m £m Growth growth Growth Revenue 17.8 23.8 -25.2% -24.0% 17.4 2.4% • Revenue -25.2% compared to strong FY21 • Component supply issues impacting supply of entry level T-series during key holiday
Slide 10: Product sectors: Martin Audio
Product sectors: Martin Audio Martin Audio FY22 £m FY21 £m FY22/21 Reported FY22/21 OCC1 FY202 £m FY22/20 Reported Growth growth Growth Revenue 31.9 20.4 56.4% 39.5% 12.0 165% • Now includes both Optimal Audio and Linea Research • Revenue +57% compared to lockdown impacted FY21 • 32% vs 2019 (Pre Co
Slide 11: Product sectors: Sequential
Product sectors: Sequential Sequential FY22 FY212 FY22/21 Reported FY22/21 OCC1 FY20 FY22/20 Reported £m £m1 £m Growth growth Growth Revenue 16.2 5.3 206% 17.9% - - o Leading American synthesizer company and iconic 1 OCC (organic constant currency growth). This is calculated by comparing FY22 revenu
Slide 12: Acquisition: Linea Research
Acquisition: Linea Research • Market leader in amplifier technology based in Letchworth, UK • Acquired 10 March 2022, £12.3m on completion with up to £0.5m future potential earn out – including approx. £1.3m of cash on the balance sheet at acquisition • Existing supplier to Martin with the successfu
Slide 13: Acquisition: Oberheim
Acquisition: Oberheim • Rights to the world famous American synthesizer brand acquired In May 2022 • £1.0m on completion with further staged payments totalling £3.5m over the next 5 years • Successful launch of the OB-X8 synthesizer with more planned 13
Slide 14: Financial highlights
Financial highlights • Group revenue maintains volumes gained during pandemic up 5.6% reported (-2.8% organic constant currency) • Gross margin at 45.3% is higher than pre pandemic but lower than FY21 due to prior year duty rebates, component pricing and high freight rates throughout the year • Adju
Slide 15: FY22 Revenue: Regional performance
FY22 FY21 FY20 FY22 Revenue: FY22 to FY22 to FY21 FY22 to FY20 £m £m FY21 growth OCC1 growth £m growth North America 74.5 74.6 -0.2% -9.4% 50.9 46.5% Regional performance Europe, Middle East and Africa 70.1 69.3 1.2% -6.1% 56.5 24.2% Rest of World 39.1 30.0 30.3% 20.5% 22.8 71.4% Group Revenue 183.7
Slide 16: Income Statement
FY22 FY21 FY20 Income Statement £m £m £m Revenue 183.7 173.9 130.1 Cost of sales (100.4) (89.8) (70.2) • Revenue 5.6% (organic constant currency -2.8%) Gross profit 83.3 84.1 59.9 Operating expenses before non- • Gross margin 45.3% (FY21: 48.4%) (48.6) (42.7) (36.9) underlying items Operating profit
Slide 17: Gross Margin
Gross Margin o FY21 benefited from a one off US duty rebate of £1.5m (0.9% pts of 1.1% pt delta) o Brand strength has enabled price increases FY21 to FY22 margin bridge to offset cost increases – with underlying product margin largely stable with a 0.4% 48.4% +0.4% points increase. Promotional activ
Slide 18: Balance Sheet
Balance Sheet FY22 FY21 FY20 £m £m £m Intangible assets 76.6 59.1 48.2 • Intangible fixed assets Tangible assets 10.9 3.6 4.1 • Acquisitions: £6.5m increase from Linea, £4.5m Total non current assets 87.5 62.8 52.3 for Oberheim, Inventories 48.3 20.7 19.4 • Investment: £7.9m of R&D and £1.7m of lice
Slide 19: Cash flow
FY22 FY21 FY20 Cash flow EBITDA £m 41.7 £m 47.5 £m 28.6 Non cash items 0.2 (0.2) (1.3) • Adjusted Free cash flow1 as a % of sales -1.9% of revenue Movement in working capital (26.8) 1.6 13.7 Operating cash flow 15.0 49.0 40.9 • Long term average 10-12% Interest paid (0.3) (0.3) (0.4) Tax paid (3.4)
Slide 20: Ongoing challenges have been well managed
Ongoing challenges have been well managed • Freight and logistics challenges • Freight costs have remained high throughout the year, but have declined significantly since the year end, with sea freight more readily available • Now direct in Australia enabling us to supply that market from our own in
Slide 21: Our Environmental Strategy
Our Environmental Strategy We need to start by getting our own Our products are over 99% of our CO2e Setting bold, robust and public targets will house in order. footprint, and we need to reduce that. set us up for long term success. Target: Ensure our internal business Target: Reduce and Neutralise
Slide 22: Focusrite Growth Strategy
Focusrite Growth Strategy Create a We embrace the diverse foundations of the • First ever Group engagement survey Great Place world of audio and nurture our talent to build • Global Head of People in place to Work a culture of equity and inclusion. • Global Employee led D&I teams Grow the We invest
Slide 23: Summary and Outlook
Summary and Outlook • Revenue broadly maintained 5.6% reported, -2.8% organic constant currency1 • EBITDA2 £47.1m (22.7% of sales), lower than prior year due to reversal of COVID savings and investment to support growth and expansion but ahead of pre pandemic levels (FY20: £28.6m – 22% of sales) • S
Slide 24: Additional Information
Additional Information November 2022 24
Slide 25: Our Audience
Our Audience £450m-£500m £625m-£675m £250m-£275m £200m-£250m £300m-£350m AMPIFY AMPIFY Qrovation Qrovation Focusrite oe cache Focusrite Focusrite Focusrite i) Focusrite Focusrite Focusrite i) Focusrite G9) & ADAM AUDIO ne ADAM AUDIO & ADAMAUDIO. © ADAMAUDIO SEOUENTAL RESEARCH ZOUENTiAL 8 SEQUENTIAL
Slide 26: Our Audience
Our Audience Audio Reproduction Less than Throw range 15 metres 15-30 metres rket size £960m-£1,20 ~ £960m-£1,200m ——«£480m-£600m Products IRA] martin auvio IRAl martin aunio CO Optimal Audio CO optimal Audio LINEA LINEA RESEARCH RESEARCH Market sizing determined using 2 combination of US Retail dat
Slide 27: Product sectors: Focusrite
Product sectors: Focusrite Focusrite Scarlett: Mass market interface. Home user $100 to $500 Clarett: Intermediate / Professional user $400 to $1,200 Focusrite Pro RedNet: Enterprise, Live, Broadcast, Education. Networked Audio over IP $3,000 upwards Red: Creative Professional, Music, Post $2,000 to
Slide 28: Product sectors: Novation including Ampify
Product sectors: Novation including Ampify Novation CONTROLLERS Physical interfaces to control music creation software Grid controllers: Launchpad - $100 to $300. Keyboard controllers: Launchkey - $100 to $250. STANDALONE Function on their own as sound generating devices Grid: Circuit - $330. Keyboa
Slide 29: Product sectors: ADAM Audio
Product sectors: ADAM Audio T Series AX Series S Series Entry level studio monitor: Mid level studio monitor: High end studio monitor: $1,750- $400-$500 per pair $700-$2,000 per pair $20,000 per unit Subwoofers Headphones $700-$8,000 per unit SP-5 headphones: $500 29
Slide 30: Product sectors: Martin Audio
Product sectors: Martin Audio TH Series Small Sound Systems Medium Format Systems Large Format Systems From For up to 250 people. From From 250-1500 people: prices 1500 to 10,000+ people. Prices $500 from $2,000 from $40,000 30
Slide 31: Product sectors: Optimal Audio
Product sectors: Optimal Audio ZonePad wall controllers Zone processors SmartAmp DSP amplifiers Up ceiling speakers Sub sub-woofers Cuboid on-wall speakers Systems start from £2,000 31
Slide 32: Product sectors: Sequential
Product sectors: Sequential 32
Slide 33: Product sectors: Linea Research
Product sectors: Linea Research M Series Touring amplifiers- £4,500 - £6,400 C Series Installation amplifiers- £4,200 - £6,000 ASC Loudspeaker and System Processor - £1,650 XiB installation amplifiers - £1,650 33
Slide 34: Foreign exchange
Foreign exchange Exchange rates FY22 FY21 • Natural hedge for USD • US and ROW revenue. Average US$:£ 1.31 1.36 • Total c50% of revenue but €:£ 1.18 1.14 almost all cost of sales so minor net profit inflow Average rate of forward contracts €:£ 1.13 1.12 Weighted average applicable rate • Euro hedged
Slide 35: Removing Barriers to Creativity
Removing Barriers to Creativity 35