Slide 1: Interim results for the period ending 29 February 2020
Interim results for the period ending 29 February 2020 May 2020
Slide 2: Disclaimer
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
Slide 3: Agenda
Agenda Introduction and Highlights Brand Alignment Product Sectors Financial Review Growth Strategy Conclusions Tim Carroll Jeremy Wilson Chief Executive Chief Financial Officer Officer 3
Slide 4: Introduction
Introduction Focusrite plc is a global audio products group that develops and markets proprietary hardware and software products. Used by audio professionals and musicians, its solutions facilitate the high-quality production of recorded and live sound Founded in 1989 Six brands: o Focusrite: audio
Slide 5: Highlights for the period ended 29 February 2020
Highlights for the period ended 29 February 2020 Revenue £m o Revenue up 23.5% (25.3% at constant 90.0 exchange rates1) 80.0 84.7 70.0 75.1 o EBITDA2 up 2.9% to £9.1 million 60.0 66.1 50.0 54.3 48.0 49.9 40.0 o Net debt of £19.9 million having bought Martin 30.0 36.1 41.0 Audio 20.0 20.2 25.3 10.0 1
Slide 6: Brand alignment
Brand alignment New Creator Passionate Maker Market size: $225m-325m Market size: $250m-300m • Very likely to have little or no previous musical knowledge • May or may not play traditional instruments • Demands an immediate, joyful experience • Little or no songwriting experience • Demands ease, acc
Slide 7: Brand alignment
Brand alignment Serious Aspiring Producer The Master/Facility Market size: $100m-150m Market size: $250m-350m • More than just a hobby • Highly skilled musician or audio engineer • Strong demands on gear/technology to achieve • Depends on technology to do the job and make a living professional-level
Slide 8: Martin Audio: Markets and Customer examples
Martin Audio : Markets and Customer examples • Festivals • Small installs • Glastonbury multiple • Microsoft global offices stages) • Caesar's Palace • Rock in Rio • Marriot’s The View NYC • BST Hyde Park • Rock in Japan • Large installs – nightclubs to churches • Corporate • Ministry of Sound Londo
Slide 9: Product sectors: Focusrite
Product sectors: Focusrite Focusrite HY20 HY19 FY19 £m £m £m Revenue 25.6 26.3 57.6 o Scarlett and Clarett down 3% on prior year o Initial stocks of the new generation of Scarlett shipped prior to the previous year end o Total end user registrations significantly up year on year, which is good lead
Slide 10: Product sectors: Focusrite Pro
Product sectors: Focusrite Focusrite Pro HY20 HY19 FY19 £m £m £m Revenue 1.9 2.6 4.7 o RedNet and Red down 27% compared to prior year o Red products nearing the end of their lifecycle o Changes made to the sales organisation 10
Slide 11: Product sectors: Novation including Ampify
“The SL Mark III does indeed change the game for controllers and sets a Product sectors: Novation new benchmark for i n c lu d in g A m p if y which future controllers will be judged.” Novation HY20 HY19 FY19 Loopop £m £m £m Revenue 9.9 9.8 17.7 o Novation revenue up 1% year on year o Introduction o
Slide 12: Product sectors: ADAM Audio
Product sectors: ADAM Audio ADAM Audio HY20 HY19 FY19 £m £m £m Revenue 7.0 - 1.8 o Purchased July 2019 o High precision studio monitors o AX and S series used professionally. T series for home studio and aspiring professionals o Integration progressing well o Revenue c13% up on their prior year (whi
Slide 13: Product sectors: Martin Audio
Product sectors: Martin Audio ADAM Audio HY20 HY19 FY19 £m £m £m Revenue 4.5 - - o Purchased December 2019 o Solutions for live/tour sound and installed sound o Revenue c22% up on their prior year (which was prior to acquisition) o Likely hiatus during COVID-19 upheaval but medium-term growth in rev
Slide 14: Financial highlights for the period ended 29 February 2020
Financial highlights for the period ended 29 February 2020 o Group revenue up by 23.5% to £49.9 million (HY19: £40.4 million) o Adjusted EBITDA up by 2.9% to £9.1 million (HY19: £8.9 million) o Adjusted operating profit down by 12.0% to £6.4 million (HY19: £7.3 million) o Adjusted diluted earnings p
Slide 15: HY20: Regional performance
HY20: Regional performance Segmental Revenue HY20 HY19 FY19 £m £m £m HY20 Europe, Middle East and Africa 23.1 19.3 36.4 North America 18.1 15.0 34.0 Rest of World 8.7 6.1 14.3 ROW Consolidated revenue 49.9 40.4 84.7 18% EMEA o EMEA: up 19.7% to £23.1m 46% North o Focusrite Audio Engineering products
Slide 16: Income Statement
Income Statement o Revenue up 23.5% HY20 HY19 FY19 o Constant currency growth 25.3% £m £m £m o Revenue boosted through inclusion of Revenue 49.9 40.4 84.7 ADAM and Martin Cost of sales (26.9) (22.5) (48.9) Gross profit 23.0 17.9 35.8 o COVID-19 stopped £2m of orders in Feb Operating expenses before
Slide 17: Revenue to diluted EPS bridge
Revenue to diluted EPS bridge Earnings per share Movement o Revenue up due to newly acquired ADAM Increase in Revenue 23.5% and Martin. Focusrite down 5.1%. Effect of change in cost of sales 9.8% o GM 46.1% vs 44.3% in HY19. ADAM GM Effect of change in administrative costs (30.4)% 54%. Also the lowe
Slide 18: Balance Sheet
Balance Sheet HY20 HY19 FY19 o Intangible fixed assets: £m £m £m o Acquisition of Martin: £22.7m of identified Intangible assets 59.1 6.7 24.1 intangible assets and £12.3m of goodwill Tangible assets 4.2 1.2 1.6 Total non current 63.3 7.9 25.7 o Includes ADAM intangibles £12.0m (at assets acquisitio
Slide 19: Cash flow
Cash flow HY20 HY19 FY19 o Working capital 20.9% of revenue (HY19: 19.8%) £m £m £m EBITDA 9.1 8.9 17.2 Movement in working (0.1) (1.8) (2.6) o Investing £41.2m, (HY19: £2.2m) capital o Acquisition of Martin (£35.3m, net of cash Operating cash flow 9.0 7.1 14.6 acquired) Interest received/(paid) (0.2
Slide 20: Outlook
Outlook o Since the half year, consumer demand has been high o Record levels of product registrations at Focusrite indicating positive sell- through to end-users but demand for Martin Audio products affected by the temporary hiatus in live music o Manufacturing in China is back up to speed and we ar
Slide 21: Focusrite Growth Strategy
Focusrite Growth Strategy Grow the core customer base The number of musicians not yet using technology to sculpt, perform or capture sound outnumbers those who do by as many as 14:1. Through innovation, disruptive technology and an unfaltering focus on our customers’ needs, we can change this. Our m
Slide 22: Conclusions
Conclusions o Revenue up 23.5% to £49.9 million (HY19: £40.4 million) o Focusrite plc revenue boosted by ADAM and Martin products o All regions grew o EBITDA up by 2.9% to £9.1 million (HY19: £8.9 million) o Whole team performing well amongst COVID-19 pandemic o Consumer demand now at record levels
Slide 23: Additional Information
Additional Information May 2020 23
Slide 24: Product sectors: Focusrite
Product sectors: Focusrite o Focusrite Pro RedNet: Enterprise, Live, Broadcast, Education. Networked Audio over IP $3,000 upwards Red: Creative Professional, Music, Post $2,000 to $3,500 o Focusrite Clarett: Intermediate / Professional user $400 to $1,200 Scarlett: Mass market interface. Home user $
Slide 25: Product sectors: Novation including Ampify
Product sectors: Novation i n c lu d in g A m p if y o 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 - $3
Slide 26: Focusrite Growth Strategy
Focusrite Growth Strategy Grow the core customer base The number of musicians not yet using technology to sculpt, perform or capture sound outnumbers those who do by as many as 14:1. Through innovation, disruptive technology and an unfaltering focus on our customers’ needs, we can change this. Our m
Slide 27: Grow the core customer base
Grow the core customer base o Innovations that make music-making and audio production accessible o Disruptive technology that genuinely challenges the status quo o Perfectly integrated hardware and software that tackles our customers’ pain points o ‘Best choice’ solutions to fit every budget 27
Slide 28: Expand into new markets
Expand into new markets o Expansion of core products into new verticals: o Podcasting, streaming o Geographic expansion: o Regional based personnel o Localisation initiatives o Closer touch with end-users o Acquisition of more businesses that fit both strategically and culturally 28
Slide 29: Lifetime value for our Customers
Lifetime value for our Customers o Lead the industry in putting the needs of the music-maker and audio engineer first o Offer software and content to augment and enhance their creative process o Create a connected experience that pulls their music-making environment together o Support them on their
Slide 30: Foreign exchange
Foreign exchange Exchange rates HY20 HY19 FY19 o Average US$ declined by 0.8%. Average o US and ROW. Total c50% of revenue but US$:£ 1.28 1.29 1.29 almost all cost of sales so minor net profit €:£ 1.16 1.13 1.13 outflow. Average rate of forward contracts o Average reported € increase by 2.7%. €:£ 1.
Slide 31: Number of shares
Number of shares Shares HY20 HY19 FY19 Shares in issue 58,111,639 58,111,639 58,111,639 Less shares held by -383,114 -795,499 -801,447 EBT o Shares in issue currently 58,111,639 Weighting through -191,535 -94,520 -89,286 period o But required to deduct EBT shares Weighted average 57,536,990 57,221,6
Slide 32: Earnings per share
Earnings per share Earnings per share HY20 HY19 FY19 Movement p p p Basic 3.6 11.1 20.4 (67.6)% Diluted 3.5 11.0 20.1 (68.2)% Adjusted basic 9.4 11.1 21.7 (15.3)% Adjusted diluted 9.3 11.0 21.4 (15.5)% Basic and diluted EPS include £3.4m of non-underlying costs relating to the acquisition of ADAM an
Slide 33: Enriching Lives Through Music
Enriching Lives Through Music 33