Volex Plc · LSE:VLX
Volex — H1 FY2023 Earnings Presentation
22 slides from Volex's earnings presentation, Nov 9, 2022
Slide 1: Half Year Results FY2023 H1
HALF YEAR RESULTS FY2023 H1 RESULTS 6 months ended 2 October 2022 NAT ROTHSCHILD Executive Chairman JON BOADEN Chief Financial Officer 9 November 2022
Slide 2: Robust and resilient business, delivering profitable growth
Robust and resilient business, delivering profitable growth 2 Strong organic growth • Group revenue up 22.1% year-on-year, 14.3% constant-currency organic growth • Underlying operating profit up 17.6% to $32.1m, at margin of 9.0% • Interim dividend increased by 8.3% to 1.3 pence per share Momentum i
Slide 3: Deploying our design expertise in attractive markets with structural growth
Deploying our design expertise in attractive markets with structural growth 3 Electric Vehicles Consumer Electricals Growth drivers Design and Innovation Growth drivers Design and Innovation Adoption of EV technology Industry leading design team Enhanced technology Vertically integrated Out of home
Slide 4: Financial Review
FINANCIAL REVIEW
Slide 5: Diverse and resilient business with defensive characteristics
Diverse and resilient business with defensive characteristics 5 Revenue Underlying Underlying operating profit operating margin $357.5m +22.1% $32.1m 9.0%-30bps +17.6% H1 FY2022: $292.7m H1 FY2022: $27.3m H1 FY2022: 9.3% Organic revenue Profit before tax Interim dividend growth per share 14.3% $21.5
Slide 6: Underlying operating margin maintained
Underlying operating margin maintained 6 H1 FY2022 Foreign exchange Cost optimisation Product mix Acquisitions Inflation Other H1 FY2023 • With sales in USD and operating costs in a mix of local currencies, there is an FX gain due to the strong dollar • Savings are generated through continuous impro
Slide 7: Delivering excellent return on investment
Routine Delivering excellent return on investment capex 7 Investment for growth Investment capex We are investing in expanding our capabilities and capacity to meet customer requirements and 90% of capex approved this year will deliver growth For the growth projects, the average cash payback is 20 m
Slide 8: Group Cash Flow
Group Cash Flow 8 $m Routine Investment H1 FY23 H1 FY22 Routine and investment free cash flows Underlying EBITDA 38.1 - 38.1 31.8 Net capital expenditure (1.0) (9.0) (10.0) (4.9) Underlying working capital (7.5) (13.7) (21.2) (19.2) Net interest and tax (5.9) - (5.9) (3.9) Other including pension (0
Slide 9: Earnings per share
Earnings per share 9 Underlying basic EPS before tax (cents) EPS (cents Before tax Change in Tax on FX Other tax After tax per share) tax rates rate changes H1 FY23 18.2 - (0.6) 3.2 14.4 H1 FY22 16.3 0.8 (0.1) 3.2 13.8 H1 FY2022 EPS Profit growth Finance costs Change in H1 FY2023 EPS Movement 1.9 (0
Slide 10: Electric Vehicles revenue growing strongly; New project wins in Consumer Electricals
Electric Vehicles revenue growing strongly 10 $69m • Strong momentum continued in Electric Vehicles responding to increasing demand for EVs $45m • Our customer base has diversified and we have successfully developed our range of products H1 FY2022 H1 FY2023 +53% • Providing solutions to support fast
Slide 11: Medical revenues strong; Complex Industrial Technology showing strong growth
Medical revenues strong as supply chain challenges improve 11 • Strong revenue from Medical customers as supply $62m $67m chain challenges begin improving • Our major customers are reporting significant increases in order books +8% • Momentum expected to be sustained over the medium term with near-s
Slide 12: Strategy and Operations
STRATEGY AND OPERATIONS
Slide 13: Delivering a high-performance business through investment and innovation
Delivering a high-performance business through investment and innovation 13 • Majority of capex investments deliver cash pay back within Investment Consistent two years and innovation operating • Investment in innovation margins • Margins have been in the results in incremental customer projects 9-1
Slide 14: RDS is an excellent complementary addition to our UK operations
RDS is an excellent complementary addition to our UK operations 14 • Specialist distributor and value added reselling of display and embedded solutions Acquired Oct 2022 • Retains c. 200 active clients worldwide, 85% Based in Westerham, UK provide ongoing, repeat business • Combined business has Ini
Slide 15: Encouraging start to five year plan
Encouraging start to five year plan 15 Sector 5 year expected market growth H1 FY2023 organic growth Electric Vehicles 19% 53% Consumer Electricals 4% 4% Medical 5% 12% Complex Industrial Technology 10% 9% 5 year plan: FY2023 – FY2027 Underlying Revenue from Revenue operating margin acquisitions $1,
Slide 16: Summary and Outlook
SUMMARY AND OUTLOOK
Slide 17: Summary and Outlook
Summary 17 Strong financial results with Very encouraging early Attractive return on robust organic growth and progress against five year investment supports growth operating margins growth plan plan Outlook Continuing to effectively Structural long-term growth Confident in delivering full manage th
Slide 18: Appendices
SUMMARY AND OUTLOOK APPENDICES
Slide 19: Gross margin movements and inflation effect
Gross margin movements and inflation effect 19 H1 FY2022 Foreign Inventory Cost Product mix Acquisitions Investments Margin Inflation H1 FY2023 exchange provision optimisation before inflation Dealing successfully with inflation • We pass on higher raw material costs to our customers through regular
Slide 20: Continued confidence in mitigating inflationary pressures
Continued confidence in mitigating inflationary pressures 20 Copper LME Prices ($ per tonne) Freight costs ($ per 40ft container) PVC Resin ($ per tonne) 12,000 12,000 2,000 1,800 10,000 10,000 1,600 1,400 8,000 8,000 1,200 6,000 6,000 1,000 800 4,000 4,000 600 400 2,000 2,000 200 0 0 0 Apr Jun Aug
Slide 21: Balance sheet
Balance sheet 21 $m H1 FY2023 H1 FY2022 Goodwill and intangible assets 116.5 99.7 Property, plant and equipment 68.6 50.0 Investments 2.2 1.0 Inventories 127.0 96.9 Trade and other receivables 158.4 126.8 Trade and other payables -155.7 -140.5 Pensions and provisions -3.8 -6.0 Taxation (net) 4.6 8.6
Slide 22: Volex
Volex