Avon Technologies Plc · LSE:AVON
Avon Technologies — Avon Rubber p.l.c. — H1 2021 Earnings Presentation
39 slides from Avon Technologies's earnings presentation, May 2021
Slide 1: Half Year Results 2021: Positioned for growth
HALF YEAR RESULTS 2021 Positioned for growth
Slide 2: Forward-Looking Information
FORWARD-LOOKING INFORMATION Avon Rubber p.l.c. (the ‘Group’) is providing the following cautionary statement: This document contains certain statements that are or may be forward-looking with respect to the financial condition, results or operations and business of the Group. These statements are so
Slide 3: Agenda
AGENDA HIGHLIGHTS FINANCIAL POSITIONED REVIEW FOR GROWTH 3 HALF YEAR RESULTS 2021 Positioned for growth
Slide 4: Highlights
Highlights Paul McDonald Chief Executive Officer 4 HALF YEAR RESULTS 2021 Positioned for growth
Slide 5: Positioned for growth
POSITIONED FOR GROWTH • Strong start to 2021 with 47% growth in orders received • Positive financial performance • Revenues up 41%; 17.6% excluding Team Wendy • Adjusted EPS up 28% • Team Wendy performing in line with expectations following completion on 2 November • Completed the integration of our
Slide 6: Performance Evolved: name change to Avon Protection plc
PERFORMANCE EVOLVED Reflecting our transformation into a leading provider of life critical personal protection systems, we plan to change our name to 6 HALF YEARAvon Protection RESULTS 2021 plc Positioned for growth
Slide 7: Financial Review
Financial Review Nick Keveth Chief Financial Officer 7 HALF YEAR RESULTS 2021 Positioned for growth
Slide 8: Further progress against our investor proposition
FURTHER PROGRESS AGAINST OUR INVESTOR PROPOSITION ORGANIC SALES VALUE ENHANCING ATTRACTIVE EBITDA STRONG CASH DIVIDEND GROWTH ACQUISITIONS MARGINS GENERATION GROWTH +17.6% Team Wendy acquisition 19.7% 58.5% +30% Excluding completed Cash conversion Team Wendy Ballistic protection integrated 8 HALF YE
Slide 9: Positive financial performance
POSITIVE FINANCIAL PERFORMANCE REVENUE SPLIT BY BUSINESS 2021 2020 Growth Orders received $167.9m $114.6m 46.5% Military Closing order book $156.6m $135.2m 15.8% $122.0m First Responder Revenue $122.0m $86.5m 41.0% (2020: $86.5m) Team Wendy Adjusted EBITDA $24.1m $18.1m 33.1% Adjusted EBITDA margin
Slide 10: 41% revenue growth
41% REVENUE GROWTH $20.3m $20.5m less intercompany eliminations of $0.2m $13.8m $1.9m ($3.0m) $2.5m $122.0m 17.6% $101.7m Organic $86.5m Excluding Team Wendy 10 HALF YEAR RESULTS 2021 Positioned for growth
Slide 11: Strong financial position
STRONG FINANCIAL POSITION ($10.0m) $24.1m ($15.8m) ($2.3m) ($135.2m) ($7.7m) ($4.3m) ($2.2m) $0.6m $147.7m Net cash 58.5% $200m excluding lease liabilities at 30 Sept Cash conversion Revolving Credit 2020 reflecting H2 Facility provides revenue weighting strong liquidity Net debt excluding and inven
Slide 12: $157M order book provides visibility for H2 & beyond
$157M ORDER BOOK PROVIDES VISIBILITY FOR H2 & BEYOND $83.0m FY22 $53.6m ~50% of order book for delivery in H2 21 FY22 H2 21 $15.7m H2 21 H2 21 $4.3m H2 21 Military Respiratory Military Ballistics First Responder Team Wendy 12 HALF YEAR RESULTS 2021 Positioned for growth
Slide 13: FY21 building blocks
FY21 BUILDING BLOCKS • 1c FX ~ $160,000 profit impact • EBITDA margin: ~100 bps reduction • D&A: ~$14m • Adjusted tax rate: 21% • Cash conversion: 90%+ • CAPEX: ~$30m FY21 Consensus $213.6m 13 HALF YEAR RESULTS 2021 Positioned for growth
Slide 14: Confident in full year expectations
CONFIDENT IN FULL YEAR EXPECTATIONS • Excellent revenue visibility going into the second half • Opening order book of $156.6m • Strong pipeline of opportunities • Discussions ongoing with additional countries under the NATO NSPA contract • Actively pursuing several identified opportunities with the
Slide 15: Positioned for growth
Positioned for growth Paul McDonald Chief Executive Officer 15 HALF YEAR RESULTS 2021 Positioned for growth
Slide 16: Well positioned in a growing market
WELL POSITIONED IN A GROWING MARKET • Global security threats are on the rise • Increasing geopolitical tension from China, Russia and asymmetric threats • Proliferation of chemical weapons • COVID-19 raising awareness of biological risks • Growing civil unrest and political tension • Increasing vio
Slide 17: Acquisition integration
ACQUISITION INTEGRATION • Completed integration of ballistic business • Fully aligned management structure • Customer relationships managed through our Military and First Responder lines of business • Global operations organisation responsible for all products • Business transitioned to our IT platf
Slide 18: Our strategy
OUR STRATEGY GROWING SELECTIVE PRODUCT VALUE ENHANCING THE CORE DEVELOPMENT ACQUISITIONS 18 HALF YEAR RESULTS 2021 Positioned for growth
Slide 19: Growing the core
GROWING THE CORE • Current framework contracts underpin our medium-term outlook • Leading position in Military respiratory market consolidated by securing NATO NSPA contract • Actively pursuing several identified opportunities with the DOD and Rest of World Military customers • DOD is current focus
Slide 20: Developing products in partnership
DEVELOPING PRODUCTS IN PARTNERSHIP • Pipeline of new products and enhancements being developed in partnership with our customers ensures • products are designed to customer requirements; and • we maintain and broaden our technological leadership in respiratory and ballistic protection • Current area
Slide 21: Value enhancing acquisitions
VALUE ENHANCING ACQUISITIONS • Strong balance sheet, free cash flow and $200m bank debt facility provides significant capacity and flexibility to execute on acquisition opportunities to accelerate growth • Continuing to target acquisitions which are complementary and broaden our product portfolio •
Slide 22: Confident in the medium-term outlook
CONFIDENT IN THE MEDIUM-TERM OUTLOOK • We continue to focus on delivering against our three strategic priorities of • growing the core • selective product development; and • value enhancing acquisitions • Business performing well delivering strong organic growth with significant further growth oppor
Slide 23: Questions
Questions 23 HALF YEAR RESULTS 2021 Positioned for growth
Slide 24: Successful execution of our strategy…
SUCCESSFUL EXECUTION OF OUR STRATEGY… GROWING SELECTIVE PRODUCT VALUE ENHANCING THE CORE DEVELOPMENT ACQUISITIONS 24 HALF YEAR RESULTS 2021 Positioned for growth
Slide 25: … has transformed the business
… HAS TRANSFORMED THE BUSINESS RESPIRATORY PROTECTION RESPIRATORS POWERED AIR SUPPLIED AIR A LEADING PROVIDER OF LIFE CRITICAL PERSONAL BALLISTIC PROTECTION PROTECTION LINER & BODY HELMETS RETENTION ARMOR SYSTEMS 25 HALF YEAR RESULTS 2021 Positioned for growth
Slide 26: Military – Respiratory outlook underpinned
MILITARY – RESPIRATORY OUTLOOK UNDERPINNED Potential annual order intake M50 Mask System/M61 Filter $30m- $45m Contract period Sole-source / Commercial pricing In service M53A1 Mask and Powered Air System $25m- $30m Sole-source / Commercial pricing Total potential annual order intake $105m-$150m M69
Slide 27: Military – Ballistic outlook underpinned
MILITARY – BALLISTIC OUTLOOK UNDERPINNED Potential annual order intake IHPS Helmet $40m- $60m Contract period Single-source In service VTP Body Armor $25m- $45m Total potential Multi-source annual order intake $115m-$185m Legacy ESAPI Body Armor $40m- $60m Multi-source $5m- $10m H1 2021 Flat Armor M
Slide 28: First Responder outlook
FIRST RESPONDER OUTLOOK Potential annual order intake Respiratory Total potential Protection annual order intake $50-70m RESPIRATORS POWERED AIR SUPPLIED AIR $55m-$80m Ballistic H1 2021 Protection Revenue $5-10m $27.4m HELMETS 28 HALF YEAR RESULTS 2021 Positioned for growth
Slide 29: Team Wendy outlook
TEAM WENDY OUTLOOK Ballistic Helmets Non-Ballistic Helmets Total potential H1 2021 annual order intake Revenue $40-60m $20.5m Liners and Other Retentions 29 HALF YEAR RESULTS 2021 Positioned for growth
Slide 30: Income statement
Income statement HY21 HY20 $m $m (Restated) Revenue 122.0 86.5 Adjusted EBITDA 24.1 18.1 Adjusted depreciation and amortisation (6.6) (4.1) Adjusted operating profit 17.5 14.0 Adjusted net finance costs (1.5) (1.0) Adjusted profit before taxation 16.0 13.0 Adjusted taxation (3.4) (3.2) Adjusted prof
Slide 31: Reported to adjusted reconciliation
Reported to adjusted reconciliation HY21 HY20 $m $m (Restated) Operating profit 6.2 (0.3) Amortisation of acquired intangible assets 7.0 3.0 Acquisition costs and accounting adjustments 4.3 11.3 Adjusted operating profit 17.5 14.0 31 HALF YEAR RESULTS 2021 Positioned for growth
Slide 32: Revenue by line of business
Revenue by line of business HY21 HY20 $m $m Military 74.3 63.5 First Responder 27.4 23.0 Avon Protection 101.7 86.5 Team Wendy 20.5 - Eliminations (0.2) - Total 122.0 86.5 32 HALF YEAR RESULTS 2021 Positioned for growth
Slide 33: Balance sheet
Balance sheet HY21 HY20 $m $m (Restated) Intangible assets 206.6 102.9 Property, plant and equipment 74.6 73.5 Current assets 109.4 115.9 Current liabilities (52.9) (57.1) Non-current assets 16.7 8.1 354.4 243.3 Net debt (44.1) (82.0) Retirement benefit scheme (95.7) (73.1) Net assets 214.6 88.2 33
Slide 34: Cash flow
Cash flow HY21 $m HY20 $m (Restated) Cash flows from continuing operations before exceptional items 14.1 (7.5) Cash impact of discontinued operations and exceptional items (1.6) (0.1) Cash flows from operations 12.5 (7.6) Net interest (2.5) (1.2) Payments to pension plan - (1.3) Tax (11.0) (1.8) Pur
Slide 35: Foreign exchange and sensitivities
Foreign exchange and sensitivities Average rate Closing rate Average rate Closing rate HY21 HY21 HY20 HY20 Sterling - £1 = $ 1.347 1.378 1.283 1.223 1 cent increase $ thousand Revenue 100 increase Operating profit 160 decrease Net assets 320 increase 35 HALF YEAR RESULTS 2021 Positioned for growth
Slide 36: Glossary of financial terms
Glossary of financial terms Term Explanation Adjusted basic earnings per Adjusted profit for the period divided by the weighted average number of shares in issue share Adjusted EBITDA Adjusted EBITDA is defined as operating profit before depreciation, amortisation, exceptional items and defined bene
Slide 37: Glossary of financial terms (continued)
Glossary of financial terms (continued) Term Explanation Dividend per share Dividends paid / proposed, divided by the weighted average number of shares in issue EBITDA The Group’s earnings before charging interest, tax, depreciation and amortisation Exceptional items Significant non-recurring items
Slide 38: Abbreviations
Abbreviations Term Explanation 50 Series A range of masks based on the proven technology of the M50 mask system BPS Basis points CBRN Chemical, Biological, Radiological, Nuclear CE CE markings indicate conformity to health and safety standards sold within the European Economic area DLA Defense Logis
Slide 39: Abbreviations (continued)
Abbreviations (continued) Term Explanation MOD Ministry of Defence NATO North Atlantic Treaty Organization NSPA NATO Support and Procurement Agency PAPR Powered Air Purifying Respirator ROW Rest of World SCBA Self-contained breathing apparatus VTP Vital Torso Protection XSAPI X-Small Arms Protective