Nexteq Plc · LSE:NXQ
Nexteq — Quixant — H1 2021 Earnings Presentation
34 slides from Nexteq's earnings presentation, September 2021
Slide 1: Quixant plc H1 2021 Results
September 2021 Quixant plc H1 2021 Results J O N J AYA L A N D J O H A N O L I V I E R
Slide 2: What we do
BUSINESS INTRODUCTION What we do Quixant is a critical technology and supply chain partner for major global industrial electronic equipment manufacturers with a focus on specific vertical markets. We combine hardware, software, display and mechanical engineering expertise with detailed industry know
Slide 3: Quixant Group overview
BUSINESS INTRODUCTION Quixant Group overview Quixant founded in 2005 200 employees Operations in 9 countries AIM flotation in 2013 Customers in 50 countries Origins of Densitron in 1970 20 patents granted 14% CAGR since flotation 4 patents in application to FY20 revenue of $64m 19 registered tradema
Slide 4: Gaming market overview
BUSINESS INTRODUCTION Gaming market overview • Approximately 7.9 million electronic gaming machines installed globally. • Historic annual replacement cycle of c400k machines per year1 (pre-COVID). • Major global machine manufacturers (our customers/prospects) include: ‒ Aristocrat, IGT, Scientific G
Slide 5: Gaming business proposition
BUSINESS INTRODUCTION Gaming business proposition ENABLING CUSTOMERS TO FOCUS ON GAME DEVELOPMENT AND REDUCE INVES TMENT I N T O N O N - D I F F E R E N T I AT I N G A S P E C T S O F T H E M A C H I N E WITHOUT QUIXANT WITH QUIXANT Game development ≠ Game development Game development = Game develop
Slide 6: Gaming machine technology stack
6 BUSINESS INTRODUCTION Gaming machine technology stack Game design, user interface Inventory management Operations Services Pay tables / wager Hardware logistics Graphics engine Machine RMA & servicing Software Game Platform (State machines, Random Number Generator, Logs,…) Player tracking Peripher
Slide 7: Densitron market overview
DENSITRON INTRODUCTION Densitron market overview • Historically, Densitron has supplied industrial display components. The global market for these is valued at around $6bn1. • Densitron was sector agnostic – business leads were generated in sectors on the basis of the features of the display technol
Slide 8: Densitron value proposition
DENSITRON INTRODUCTION Densitron value proposition D E L I V E R I N G I N N O V AT I O N I N H U M A N M A C H I N E I N T E R A C T I O N FOR A RANGE OF GLOBAL INDUSTRIAL MARKETS Control Systems Display + Computing + Tactile + Software $$$$ Margin $$$ Unit Price Control Surfaces Display + Computin
Slide 9: Investment case
BUSINESS INTRODUCTION Investment case Proven effectiveness in delivering technically innovative products to a Strength of balance sheet highly regulated global market – can be applied to other verticals High barriers to entry in gaming Strong cash generation and due to regulation and blend of low le
Slide 10: Group Highlights
Group Highlights SIX MONTHS TO 30 JUNE 2021
Slide 11: Group operational highlights
GROUP HIGHLIGHTS Group operational highlights 31% year-on-year revenue growth in H1. Strong order intake across Gaming and Densitron businesses. 5 new business wins in Gaming in H1. 11 new business wins since start of 2020 of which 4 will enter MP in 2021. Actively managed strategic stock purchase p
Slide 12: Group financial highlights
GROUP HIGHLIGHTS Group financial highlights SIX MONTHS TO 30 JUNE 2021 H1 2020 H1 2021 $m 45.0 H1 2021 H1 2020 Change 40.0 36.5 35.0 30.0 27.9 Revenue $36.5m $27.9m 31% Revenue 25.0 +31% 20.0 Gross Profit $11.1m $8.9m 25% 15.0 GP% 30.3% 31.7% (140 bps) 10.0 5.0 Adjusted Profit before tax1 $1.3m ($
Slide 13: Strong double-digit YoY growth across both business lines
GROUP HIGHLIGHTS Strong double-digit YoY growth across both business lines 20.0 18.4 18.4 20.0 18.1 17.5 18.0 18.0 16.0 16.0 16.0 14.0 14.0 11.9 12.0 12.0 10.0 10.0 8.0 8.0 6.0 6.0 4.0 4.0 2.0 2.0 0.0 0.0 H1 2020 H2 2020 H1 2021 H1 2020 H2 2020 H1 2021 • 55% year-on-year first half growth in Gaming
Slide 14: Gross Margin
GROUP HIGHLIGHTS Gross Margin 50.0% • Gross margin decreased from 31.7% in H1 2020 to 30.3% in H1 2021, due to raw 45.0% material component price inflation driven by global shortages 40.0% 33.8% 34.7% 35.0% 32.3% 31.7% 31.3% 30.3% • Management has taken action to mitigate the impact of component pri
Slide 15: Net Cash bridge
GROUP HIGHLIGHTS Net Cash bridge • Good cash conversion despite investing in strategic stock purchases to support customer demand • Investment in new product development continued with $1m capitalised • 2020 Dividend of $1.8m paid in H1 2021 Copyright Quixant PLC 2021 15
Slide 16: Gaming Business
Gaming Business Quixant
Slide 17: US gaming market buoyant
QUIXANT GAMING US gaming market buoyant • YTD end July US commercial casino revenue: +103% year-on-year vs 2020 +17% year-on-year vs 2019 • YTD end July land-based slot revenues: +96% year-on-year vs 2020 +9% year-on-year vs 2019 • Monthly revenue prints are consistently coming in double-digit ahead
Slide 18: Quixant Gaming Priorities
QUIXANT GAMING Quixant Gaming Priorities FOCUS ON HIGH QUALITY REVENUE Retention and portfolio Conversion of new customers to Creation of new product category management outsource model revenue Copyright Quixant PLC 2021 18
Slide 19: Conversion of new customers to outsource model
QUIXANT GAMING Conversion of new customers to outsource model L E V E R A G I N G P O S T - PA N D E M I C E N V I R O N M E N T T O C O N V E R T N E W B U S I N E S S “I am delighted to be partnering with Quixant. Moving to an • 5 new customers won in H1 2021 bringing total of 11 new outsource par
Slide 20: New product category revenue
QUIXANT GAMING New product category revenue G R O W T H B E Y O N D C O M P U T E R P L AT F O R M S • First turnkey cabinet product – a Self-Service Betting Terminal (SSBT) – “The highly regulated North American market will require that we supply not only mobile but retail operations for brick and
Slide 21: Densitron Business
Densitron Business Densitron
Slide 22: Densitron Display Components
DENSITRON Densitron Display Components • Continued product technology enhancement opportunities for Densitron’s original core business. • Densitron’s new Hover Touch display solution allows interaction with a touch screen without any physical contact. • The displays can recognise touch operations be
Slide 23: Where we're coming from
DENSITRON Where we’re coming from D E N S I T R O N D I S P L AY C O M P O N E N T S Mechanical Controls (buttons, rotaries, faders) Display, Touchscreen Processing Electronics Processing Software Processing Software/Firmware Processing Electronics Display / Touchscreen Mechanical Controls Device En
Slide 24: Human Machine Interface Hardware
DENSITRON Human Machine Interface Hardware D E N S I T R O N C O N T R O L S U R FA C E S User Interface Tactile Overlay Controls Display, Touchscreen Processing Control Software Electronics HMI Driving Electronics Processing Software Processing Software/Firmware HMI Control Control Software Electro
Slide 25: Full Software and Hardware Solution
DENSITRON Full Software and Hardware Solution DENSITRON CONTROL SYSTEMS (IDS) User Interface Tactile Overlay Controls Display, Touchscreen Processing Control Software Electronics HMI Driving Electronics Processing Software Processing Software/Firmware HMI Control Control Software Electronics Process
Slide 26: Tactila®
DENSITRON Tactila® • Patent pending rotary control tactile elements. • Evaluation kits launched in H1 for customer trials. • Critical building block to our HMI Hardware solutions for broadcast. Copyright Quixant PLC 2021 26
Slide 27: Outlook
Outlook Quixant
Slide 28: Outlook
OUTLOOK Outlook • Good order backlog entering H2 2021 driven by strong demand in both Densitron and Gaming divisions. • Component shortages and price inflation expected to continue to cause disruption and profit margin volatility through H2 2021 and into 2022. • Second half weighting consistent with
Slide 29: Appendix
Appendix Quixant
Slide 30: H1 2021 Profit & Loss Statement
FINANCIAL STATEMENTS H1 2021 Profit & Loss Statement $m H1 2021 H1 2020 Var • Group gross margin reduced due to Revenue Gaming Division 18.4 11.9 55% component price inflation from global Densitron Division 18.1 16.0 13% supply shortages 36.5 27.9 31% Gross profit 11.1 8.9 25% • Underlying divisiona
Slide 31: Key balance sheet figures
FINANCIAL STATEMENTS Key balance sheet figures • Capitalised R&D increased by $0.5m due to 30 June 2021 31 December 2020 Change capitalisation of development efforts offset by amortisation Capitalised R&D $5.0m $4.5m $0.5m • Receivables increase of $1.9m due to increased trading compared with the p
Slide 32: Balance Sheet at June 2021
FINANCIAL STATEMENTS Balance Sheet at 30 June 2021 $m 30 June 2021 31 December 2020 PPE 5.9 6.0 Right-of-use assets 1.2 1.3 Intangible assets 16.1 16.2 Investment property - - Deferred tax asset 1.9 1.3 Non-current assets 25.1 24.7 Inventories 24.8 21.6 Trade and other receivables 18.4 16.5 Cash and
Slide 33: H1 2021 Cashflow Statement
FINANCIAL STATEMENTS H1 2021 Cashflow Statement $m H1 2021 H1 2020 Operating cash flows before working capital 2.9 0.1 (Increase)/decrease in receivables (1.8) 6.3 (Increase) in inventories (3.0) (2.5) Increase/(decrease) in payables 3.5 (4.2) Cash generated by operations 1.6 (0.3) Interest paid (0.
Slide 34: Board of directors
BOARD OF DIRECTORS Board of directors Nick Jarmany Francis Small Jon Jayal Founder & Independent Non-Executive Chief Executive Officer Non-Executive Chairman Vice Chairman Gary Mullins Guy van Zwanenberg Founder & Johan Olivier Senior Independent Non-Executive Chief Financial Officer Non-Executive D