Dialight Plc · LSE:DIA
Dialight — H1 2022 Earnings Presentation
26 slides from Dialight's earnings presentation, 2022
Slide 1: Dialight Plc Interim Results 2022
DIALIGHT PLC INTERIM RESULTS 2022
Slide 2: Our strategy is working
OUR STRATEGY IS WORKING WE ARE EXCUTING WELL WE ARE EXCITED ABOUT THE FUTURE
Slide 3: Our Strategy
OUR STRATEGY ORGANIC GROWTH INNOVATION EXPANDED REACH Grow our market leading position by Pushing technological boundaries to Identify and engage with new key continuing conversion of our core support our environmental targets and accounts through strategic sales heavy and harsh industrial markets s
Slide 4: Strategy Execution in H1
STRATEGY EXECUTION IN H1 DEVELOP STRATEGIC ORGANIC GROWTH RELATIONSHIPS • Lighting orders up 28% • Strategic sales team YoY already delivering • Capex projects now multi-million $ orders 35% of Lighting orders for shipment in H2 and • 2 Source and Sell 2023 EXPAND MARKET PEOPLE products launched – 2
Slide 5: H1 Financial Highlights
H1 FINANCIAL HIGHLIGHTS CONTINUED STRONG GROSS MARGIN BALANCE SHEET / REVENUE GROWTH MAINTAINED CASHFLOW • Revenue up 27% (ccy) • 35% margin maintained • Continued NPD and • Lighting revenue +33% - • Prices raised - will benefit factory automation capex projects increasing H2 and 2023 investment • O
Slide 6: Financial Review
FINANCIAL REVIEW CLIVE JENNINGS
Slide 7: Income Statement
INCOME STATEMENT REVENUE • Revenue up 27% (ccy) • Lighting up 33% and Signals & Components up 14% Constant • Expect similar H2 revenue growth given substantial Actual currency order book HY-22 HY-21 HY-21 £m £m £m GROSS MARGIN • Gross margin held at 35% despite significant cost Revenue 80.8 60.2 63.
Slide 8: Gross Profit Bridge (ccy)
GROSS PROFIT BRIDGE (CCY) Future margin expansion Operating leverage Further efficiencies Improved gross margin post global supply £6.0m £1.1m (£0.8m) (£0.4m) chain crisis £28.2m £22.3m REVENUE MATERIAL COST LABOUR COST PRODUCTION HY-21 INCREASE INCREASE INCREASES EFFICIENCIES HY-22 8
Slide 9: Underlying EBIT Bridge (ccy)
UNDERLYING EBIT BRIDGE [CCY] £1.2m (£1.2m) (£4.4m) £6.0m GROSS COST MARGIN INFLATION* £3.1m £1.5m HY-21 HY-22 REVENUE NET SG&A INCREASE CHANGE £1.8m £1.6m £0.6m £0.4m Additional sales Headcount & Foreign Travels and NET SG&A commissions Bonus exchange other costs provisions CHANGE *Material and labo
Slide 10: Segment Performance
SEGMENT PERFORMANCE LIGHTING SIGNALS & COMPONENTS £m (Actual) HY-2022 HY-2021 Variance £m (Actual) HY-2022 HY-2021 Variance Revenue 57.1 40.8 +40% Revenue 23.7 19.4 +22% Gross Profit 20.1 15.1 +33% Gross Profit 8.1 6.1 +33% Gross margin 35.2% 37.0% (180)bps Gross margin 34.2% 31.4% +280bps Overheads
Slide 11: Net Debt
NET DEBT £m UNDERLYING EBITDA • Higher EBITDA, up £2m on H1 2021 Net debt at 31 December 2021 (15.7) Inflows WORKING CAPITAL • Inventory increase due to continuing supply concerns Underlying EBITDA 6.5 and significant increases in key component costs Outflows • Trade receivables higher as shipments
Slide 12: 2022 Assumptions
2022 ASSUMPTIONS NET INTEREST Small increase in H2 INCOME STATEMENT TAX RATE Effective tax rate c.25% c.£4m production capex CAPEX c.£4m product development CASH FLOW WORKING CAPITAL Targeted inventory reduction Net debt at 1x EBITDA H2 weighting as in previous years • Private and confidential 12
Slide 13: Business Review
BUSINESS REVIEW FARIYAL KHANBABI
Slide 14: Structural Trends for Future Growth
STRUCTURAL TRENDS FOR FUTURE GROWTH c.80% LEGISLATION CHANGES governments keen to drive of global GDP committed to net zero by 2050 change The industrial sector accounts for 1/3 of 2023 global emissions ban on all fluorescent lighting in EMEA LED lighting has 2/3 fewer carbon emissions vs. legacy li
Slide 15: Lighting End Market Exposures
LIGHTING END MARKET EXPOSURES Diverse end markets, driven by 65% of Group Revenue generated significant requirement for from annual maintenance and infrastructure upgrade operational budgets Oil & Gas Heavy industrial 15% 20% 22% Mining Maintenance and repair 8% Power Small projects 20% 16% Pulp & P
Slide 16: Lighting Order Performance Year-on-Year
LIGHTING ORDER PERFORMANCE YEAR-ON-YEAR • +46% (+36% CCY) Orders • Continuing MRO gains AMERICAS • Increased capex projects • Growing strategic sales £61m • +29% (+21% CCY) • Improved performance as EMEA restrictions lifted £46m • -22% Australia (-27% CCY) due to APAC Covid-19 lockdowns, now improvi
Slide 17: Products Launched
PRODUCTS LAUNCHED Area Light 90° Bracket SafeSite Bulkhead – Zone 1 & 2 ProSite Floodlight – Zone 2 SOURCE & SELL PRODUCTS DuroSite® Full Cut-Off Wallpack LED Emergency & Exit Lighting DuroSite® High Bay DuroSite® NSF Linear Private & Confidential 17
Slide 18: Signals & Components
SIGNALS & COMPONENTS BUSINESS PERFORMANCE (ccy) • Revenue up 14% – record sales in 2021 and 2022 to date • Gross margin +290bps to 34% MARKET CONDITIONS as mix moved to higher margin STRATEGIC FOCUS • Strong Opto-Electronic (OE) • Increase NPD – 7 launched and OE products demand returned to normal 1
Slide 19: Operational Performance
OPERATIONAL PERFORMANCE CONTINUED INVESTMENT IN SUPPLY AUTOMATION CHAIN • Increased automation • Engineering resources of sub assemblies dedicated to alternate EQUIPMENT BOTTLENECK • Further investment supplies INVESTMENT REDUCTION planned for 2023 to • £1m investment to • Reduced single source incr
Slide 20: Supply Chain
SUPPLY CHAIN 34% of 33% of REVENUE REVENUE SKU reduction Reducing complexity INVENTORY £m £42.1m £49.7m VMI/Consignment inventory £22.2m Safeguarding against shortages £24.7m £8.7m £11.8m £11.2m £13.2m Localising supply Utilising local suppliers to reduce lead times/risk Dec-21 Jun-22 Finished Goods
Slide 21: Net Zero Journey by 2040
NET ZERO JOURNEY BY 2040 SBTi Timetable Emissions (excluding use phase) • H1-22 Assessment of Scope 1 • Base year 2020 and 2 emissions by process • Full inventory completed for • H2-22 Scope 3 assessments 2020 and 2021 and verified • H1-23 Formal target to be • Scope 1 & 2 1%* submitted to SBTi • Sc
Slide 22: Social Responsibility
SOCIAL RESPONSIBILITY Our people • Safety continues to be a key priority, both physical and Covid related • Dialight Foundation hardship fund supported vulnerable staff People in our Supply Chain • On-going ESG surveillance of Top 30 suppliers • Supplier localisation Communities where we operate • R
Slide 23: Key Messages
KEY MESSAGES • Our markets are underpinned by long term sustainability, safety and regulatory drivers • Specifically, Net Zero commitments and recent legislative changes • We are delivering on our strategy focused on organic growth through expanding market reach and product innovation • Increasing c
Slide 24: Appendix
APPENDIX
Slide 25: Overview
OVERVIEW LED INDUSTRIAL LIGHTING SIGNALS & COMPONENTS MARKET PENETRATION OVERVIEW • Cumulative penetration of industrial LED lighting is • Dialight has operated in these well establish still low, enabling strong growth potential for markets since 1938 some years to come • Sales channels comprise of
Slide 26: Segments
SEGMENTS Lighting Actual currency Constant currency £m HY-2022 HY-2021 Variance HY-2021 Variance Revenue 57.1 40.8 +40% 42.9 +33% Gross Profit 20.1 15.1 +33% 15.8 +27% Gross margin 35.2% 37.0% (180)bps 36.8% (160)Bps Overheads (16.2) (12.8) (27%) (13.5) (20%) EBIT 3.9 2.3 +70% 2.3 +70% Signal and Co