Filtronic Plc · LSE:FTC
Filtronic — H1 2023 Earnings Presentation
29 slides from Filtronic's earnings presentation, February 2023
Slide 1: Interim Results for Financial Year to 30 November 2022
Interim Results for Financial Year to 30 November 2022 Richard Gibbs, CEO Michael Tyerman, CFO
Slide 2: Agenda
1. Executive Overview 2. Financial Review 3. Operational Review 4. Strategy & Growth Update 5. Summary 2
Slide 3: Enabling the future of RF Microwave and mmWave communications
Enabling the future of RF Microwave and mmWave communications Creating value for our stakeholders through technology leadership 3
Slide 4: Executive Overview
Qfiltronic Innovation in RF technology Executive Overview filtronic.com
Slide 5: Overview
Overview Filtronic plc is a designer and manufacturer of advanced RF communications products serving five core markets: Telecommunications Aerospace & Critical Private Networks / Space / Infrastructure (X‐Haul) Defence Communications Transport *HAPS/LEO • HAPS: High Altitude Pseudo Satellites • LEO:
Slide 6: Half Year Highlights
Half Year Highlights Revenue Awarded a $2.8m (£2.3m) contract with a leading global provider of low earth £8.4m (+5%) orbit (“LEO”) satellite communications equipment expanding our presence in the new space market. Adjusted EBITDA* Increased level of engagement with key strategic target customer
Slide 7: Financial Summary
Financial Summary filtronic.com © filtroni Innovation in RF technol logy
Slide 8: Revenue: Growth of 5% over FY2022
Revenue: Growth of 5% over FY2022 Strongest H1 revenue for over 5 years Key strategic objective: Group revenue £8.4m (2022: £8.0m) Continue to develop customer base outside of top three customers • 5G rollouts generating strong demand evidenced through improved order book, particularly with E‐band l
Slide 9: Component shortages defers progress in H2
Component shortages defers progress in H2 Adjusted EBITDA in line with internal forecasts • Weaker sales mix from stronger trading in 5G backhaul offsets the sales uplift ‐ COGS 16% higher on 5% revenue increase. • Investment in sales channels and engineering ‘bench strength’ increases the overhead
Slide 10: Balance sheet
Balance sheet Capital expenditure Nov‐22 May‐22 Nov‐21 • Depreciation > capital expenditure reflecting low level of capex in H1 £m £m £m but a couple of sizeable projects in H2 to install plastic encapsulation Goodwill and intangible assets 1.6 1.5 1.6 technology and Q/V‐band capability for Space pr
Slide 11: Cash
Cash Nov‐22 May‐22 Nov‐21 £m £m £m Net cash generated from/(used in) operating activities (0.2) 1.7 0.6 Net cash (used in)/generated from investing activities (0.4) (0.2) (0.1) Net cash used in financing activities (0.4) (0.6) (0.4) Movement in cash and cash equivalents (1.0) 1.0 0.1 Currency exchan
Slide 12: Revenue and EBITDA – outlook
Revenue and EBITDA – outlook • Strong order book rolling into FY2024 gives good level of coverage particularly on 5G backhaul product. • Number of aerospace & defence opportunities at key strategic targets. • LEO space market momentum building with current key players and well‐funded disruptors ente
Slide 13: Operational Summary
Operational Summary filtronic.com iltronic Ofiltr F technology
Slide 14: Recent Business Highlights
Recent Business Highlights • Awarded significant production order (£2.3m) with a leading global provider of low earth orbit (“LEO”) satellite communications equipment • Robust order book for 5G backhaul products as India awards first tranche of 5G licences including E‐band backhaul • Second DSTL dev
Slide 15: Building Momentum
Building Momentum Terrestrial telecommunications infrastructure and commercial LEO space investment continues to build momentum and opportunity for Filtronic technology: Telecoms & Space • 5G deployment continues world wide • Consumer demand drives a migration to higher frequency bands in backhaul •
Slide 16: Strategy & Growth
Qfiltronic Innovation in RF technology Strategy & Growth filtronic.com
Slide 17: Market Dynamics
Market Dynamics Telecommunications Aerospace & Critical Private Telecom Space Telecoms Infrastructure (X‐haul) Defence Communications Networks HAPS/LEO Primary Application E‐band mmWave backhaul RF / microwave hybrid TRM Subsystems for LMR secure Private Telecom links, Low Up‐link / Down‐link ‐ mmWa
Slide 18: Strategy & Growth – markets / applications update
Strategy & Growth – markets / applications update Vertical Market & Application Progress in 1st year Target mid term Interim Update Target long term Aerospace • TRM + filter development • Tx Rx Module + filter • Investments made in QFN • Qualification of prototypes for contracts for MKII upgrade. pr
Slide 19: Strategy & Growth – operations / capability update
Strategy & Growth – operations / capability update Business Function Progress in 1st year Target near term Interim Update Target long term Sales & • Build the roster of sales reps • Expand UK defence sales and • Full BD team in place driving • Bring Channel Management in North America business devel
Slide 20: Key Investments in HY2023
Key Investments in HY2023 Business Activity Investments and Progress Against Objectives Sales and • Senior BD hires in place since Q2 FY2023 targeting aerospace & defence and space market opportunities. marketing • Expanded trade exhibition coverage with increased number of shows on the roster. • Fu
Slide 21: Summary
Summary filtronic.com © filtronic Innovation in RF technology
Slide 22: Summary
Summary • Filtronic continues to evolve • Focused on four strategic pathways (X‐haul telecoms / defence comms / EW aerospace and LEO space) • Well positioned in markets where we can differentiate, add value and command sustainable margins • Strengthening sales and engineering to open the aperture on
Slide 23: Filtronic contact details
Q filtronic Innovation in RF technology UK Office NETPark Plexus 1, Thomas Wright Way, Sedgefield, County Durham, TS21 3FD T: +44 1740 618 800 E: [email protected] USA Office 700 Marvel Road, Salisbury, Maryland, 21801 USA T: +1 410 202 8811 E: [email protected] filtronic.com
Slide 24: Appendices
Appendices © filtroni Innovation in RF technol logy filtronic.com
Slide 25: Income statement
Income statement H1 2023 H1 2022 Variance H2 2022 Variance £000 £000 £000 £000 £000 Revenue from goods and services 7,924 7,428 496 9,152 (1,228) Revenue from non‐recurring engineering (NRE) 441 576 (135) (104) 545 Revenue 8,365 8,004 361 9,048 (683) Material costs of goods sold 2,994 2,584 (410) 3,
Slide 26: Telecoms Infrastructure
Telecoms Infrastructure • Unrelenting demand for 5G performance over the next 5 years and high frequency E‐ band backhaul will be a key enabler for network deployment (20% p/a growth*) • Filtronic has a long history in the design and manufacturing of Xhaul communications equipment at Q/V and E‐band
Slide 27: Aerospace & Defence
Aerospace & Defence • The MoD has announced £2.4b funding to develop the next generation ECRS radar system for upgrade of the current UK Typhoon fleet • The UK is committed to Tempest a next generation fast jet platform that will incorporate leading edge electronic warfare solutions • Filtronic secu
Slide 28: HAPS and LEO Space
HAPS and LEO Space • Rapid convergence of satellite and terrestrial telecom networks to provide ubiquitous network coverage • The race to build infrastructure and secure market share is accelerating UK and EU investment strategy in LEO communications • Filtronic successfully developed and deployed t
Slide 29: Adjacent Market Applications
Adjacent Market Applications • Filtronic investment in core semiconductor technology coupled with a hybrid manufacturing capability for Aerospace and Defence, Telecom and Critical Comms enables access to adjacent high reliability markets • Adjacent markets help to diversify customer base, justify ca