Nexteq Plc · LSE:NXQ
Nexteq — Quixant — FY2022 Earnings Presentation
42 slides from Nexteq's earnings presentation, March 2023
Slide 1: Quixant plc 2022 Annual Results
Quixant plc 2022 Annual Results J O N J AYA L A N D J O H A N O L I V I E R March 2023
Slide 2: Record FY22 performance
HIGHLIGHTS Record FY22 performance 1 2 3 Strong financial performance Resilient business and trusted partner Gross margin progression Strong Order intake Partial recovery in profitability Record revenues Effective supply chain management Operational leverage Ahead of initial expectations minimised i
Slide 3: A platform for success
BUSINESS OVERVIEW A platform for success 22 Track record of growth patents +19% CAGR Who we are Quixant plc is a global technology business which empowers 28 since float industrial customers in selected vertical markets to outsource non- trademarks core aspects of their products to us, empowering th
Slide 4: Group growth strategy
QUIXANT PLC Group growth strategy 22 patents Identify Acquire R&D Penetrate M&A target vertical customers in of bespoke technology further up value chain where appropriate to markets which chosen target solutions which allowing customers to accelerate success in would benefit from a market segments
Slide 5: Quixant Gaming Overview
QUIXANT PLC Quixant Gaming Overview Key Metrics What we do Our gaming computer and cabinet solutions provide a purpose- built, regulatory compliant hardware and software platform upon >$3bn Total Annual Addressable Market which global slot machine manufacturers can unleash their creativity to develo
Slide 6: Broadcast Overview
QUIXANT PLC Broadcast Overview Key Metrics What we do Our human machine interface (HMI) solutions allow broadcast customers to revolutionise the way they control their equipment $880m Total Annual Addressable Market by replacing the widely used but antiquated mechanical controls with touch screens a
Slide 7: Densitron Display Components Overview
QUIXANT PLC Densitron Display Components Key Metrics Overview What we do $6bn We supply electronic display modules to a wide range of industrial Total Annual Addressable Market customers who integrate them into their equipment. We source these displays from carefully selected manufacturers located i
Slide 8: Platform to scale
QUIXANT PLC Platform to scale Account Product Account Product Sales Sales Management Innovation Management Innovation 37% In product development roles Design Engineering 23% in commercial roles Supply Chain & Manufacturing 6 Finance IT Legal HR years average tenure Copyright Quixant PLC 2023 8
Slide 9: Financial Results
Financial Results Copyright Quixant PLC 2023 9
Slide 10: 2022 Quixant Group financial highlights
GROUP HIGHLIGHTS 2022 Quixant Group financial highlights Revenue Gross Margin Adjusted Profit Before Tax $119.9m 32.2% $10.2m +37% +250bps +87% Adjusted Diluted EPS Operating Cashflow Net Cash 17.8c $0.8m $12.9m +199% -$3.6m -27% Comparators are against the year ending 31 December 2021 Copyright Qui
Slide 11: Record Revenue
CONTINUED POSITIVE REVENUE GROWTH MOMENTUM Record Revenue Top 10 Customers (%) 70.0 66.6 64.8 60.0 2022 56% 53.3 50.3 50.4 50.6 50.0 42.0 2021 48% 40.0 35.9 36.5 2020 45% 30.0 27.9 20.0 2019 52% 10.0 2018 62% 0.0 H1 2018 H2 2018 H1 2019 H2 2019 H1 2020 H2 2020 H1 2021 H2 2021 H1 2022 H2 2022 30% 35%
Slide 12: Strong Demand driving Gaming Recovery
DIVISIONAL REVENUES Strong Demand driving Gaming Recovery Gaming Revenues by Half year Gaming Platforms shipped 50.0 46.2 70.0 45.0 42.7 61.1 60.0 40.0 52.0 35.0 32.6 50.0 31.4 31.4 28.9 40.1 Quantity 000s 30.0 39.4 40.0 23.6 $m 25.0 18.4 18.4 30.0 20.0 22.0 15.0 11.9 20.0 10.0 10.0 5.0 - 0.0 2018 2
Slide 13: Robust gaming end-market
GAMING MARKET Robust gaming end-market European Gaming Revenues US Commercial Casino Land-Based Slot Gross Gaming Revenue 10.0 9.0 8.0 7.0 6.0 $bn 5.0 4.0 3.0 2.0 1.0 0.0 Q1'19 Q2'19 Q3'19 Q4'19 Q1'20 Q2'20 Q3'20 Q4'20 Q1'21 Q2'21 Q3'21 Q4'21 Q1'22 Q2'22 Q3'22 Q4'22 Source: American Gaming Associati
Slide 14: Densitron Record Revenues
DIVISIONAL REVENUES Densitron Record Revenues 30.0 25.0 23.9 21.9 • H2 2022 revenues 10% ahead of H2 21.7 2021 and 9% ahead of H1 2022 driven 20.0 18.9 18.6 18.4 18.1 by strong demand for products 17.8 17.5 16.0 • 2022 Revenues of $45.8m is a 2nd US$'m 15.0 consecutive record year since acquisition
Slide 15: Strong demand for our industrial HMI solutions
DIVISIONAL REVENUES Strong demand for our industrial HMI solutions • Customers relied on our deep supply chain connections in Asia to support them through the shortages seen since 2021. • In the competitive industrial display components market, our better availability and partnership approach led to
Slide 16: Gross Margin recovery continuing
GROSS MARGIN Gross Margin recovery continuing Gross Margin Mix • Gross margin recovery continuing in H2 2022, 40.0% up 110bps from H1 2022 and 340bps up from H2 2021 35.3% 33.4% 34.0% 32.7% 31.6% 31.5% 31.5% 31.6% 30.3% 29.3% • The gross margin recovery reflects 30.0% ⁃ Levelling off in component pr
Slide 17: Robust supply chain management
SUPPLY CHAIN MANAGEMENT Robust supply chain management • 2021 and 2022 saw the most acute electronic component crisis technology markets have ever experienced, with demand dramatically exceeding supply capacity across almost all components. • Effective management was essential for technology busines
Slide 18: Improved profitability
YEAR ON YEAR PROFIT BRIDGE Improved profitability • Revenue increase of $33m, delivering additional margin of $9.8m at 2021 gross margins, with 2022 gross margin increase to 32.2% adding a further $2.9m • Operating expenses increased by $8.9m due to investment in headcount to support business growth
Slide 19: Working capital investment to meet demand
YEAR ON YEAR PROFIT BRIDGE Working capital investment to meet demand • Positive operating cash flow despite investment in stock to secure critical components and meet current and future demand driving working capital outflow • H2 2022 saw decrease in stock balances as we consumed strategic stock, su
Slide 20: Strategic Progress
Strategic Progress Copyright Quixant PLC 2023 20
Slide 21: Strategy driving value enhancement and diversification benefits
GROUP GROWTH STRATEGY Strategy driving value enhancement and diversification benefits Identify Acquire R&D Penetrate M&A Strategic target verticals which customers in chosen of bespoke technology further up value chain where appropriate to would benefit from a target market segments solutions which
Slide 22: Strategy in action: Gaming computer innovation
STRATEGY IN ACTION Strategy in action: Gaming computer innovation Target markets High-end casino, electronic table games 60,000 Opportunities Intel/NVIDIA based QMAX-3 offers greater flexibility than predecessors 50,000 40,000 Target markets 51% Mainstream casino, VLTs 41% Opportunities 30,000 IQON-
Slide 23: Strategy in action: Gaming value-chain penetration
STRATEGY IN ACTION Strategy in action: Gaming value-chain penetration Game content Game content Game content Game content Game content What we do We supply electronic display modules to a wide range of industrial customers who integrate them into their equipment. We source these displays Software pl
Slide 24: Gaming computer customer 13+ years
CASE STUDIES Gaming computer customer Key Metrics 7,000+ 13+ years • Longstanding customer relationship Gaming Cabinets being Service for AGT manufactured each year • AGT manufactures and distributes over 7,000 Gaming Cabinets each year and is renowned for excellent game content “Quixant is an essen
Slide 25: Gaming computer customer 10+ years
CASE STUDIES Gaming computer customer Key Metrics 12,000+ 10+ years • Customer relationship for 10 years Gaming Cabinets being Service for Everi manufactured each year • Everi is a market leading gaming manufacturer, producing over 12,000 machines each year “Our partnership with Quixant is essential
Slide 26: Broadcast opportunity
Broadcast opportunity Densitron CEO, Simon Jones, explains the Broadcast market opportunity Copyright Quixant PLC 2023 26
Slide 27: The most concentrated opportunity for Densitron
$880m • The Broadcast Workflow describes PCR market annually the process which takes content ‘from Glass to Glass’ The most concentrated opportunity for Densitron • This is the glass of the capture to support the switch to camera to the glass of your TV modern touch-screen based • The PCR sits at th
Slide 28: Three clear offerings
Three clear offerings Finished Hardware and Software 1 Products The best of Densitron’s HMI technology ready to use out of the box by End Users and System Integrators, or for Broadcast Manufacturers to white label HMI Modules 2 Subassemblies of Densitron’s HMI technology which can be incorporated to
Slide 29: Routes to market
Routes to market System Broadcast Sales Channel End User Our $220m current addressable Integrators Manufacturers market opportunity exists through Ross Video, Evertz, Example three product offerings supplied customers BBC, NBC, CBC Diversified, NEP Grass Valley, Inspired Communications through three
Slide 30: Replacing antiquated mechanical buttons
FINISHED HARDWARE AND SOFTWARE PRODUCTS The Problem Public sector broadcast PCR The customer’s PCR was struggling with an inflexible control system – they use a third- party’s software but the control panels were Replacing mechanical so did not allow the customer the range of User Interface options
Slide 31: Revolutionising audio mixing console HMI
HMI MODULES The Problem Mixing console manufacturer Audio mixing consoles area premium product which can cost $250k and use hundreds legacy of rotaries and buttons which limit real estate Revolutionising for touch screens and therefore limited flexibility through modern user interfaces. audio mixing
Slide 32: Broadcast recap
Broadcast recap Technology Attractive and change growing market opportunity Established Small but customer growing market relationships share Industry Innovative specialists in products team Copyright Quixant PLC 2023 32
Slide 33: Sustainability
SUSTAINABILITY Target Progress Comment Sustainability Appoint Charity of the Year and UNICEF selected at charity of the year and over arrange fund raising events $26,000 donated Confirm compliance with Quixant The Board believes strong Suppler Code of Conduct, which is based on the principles set
Slide 34: Welcome to NEXTEQ plc
REBRAND Welcome to NEXTEQ plc • Quixant was founded as a technology business to serve the casino gaming and slot machine market with specialist technology solutions. • 18 years later we have become the market leader and have expanded our range of products for Gaming. • We have also however diversifi
Slide 35: Outlook
OUTLOOK Outlook Continued Robust trading Continuing gross margin recovery Investments in Broadcast HMI with order backlog providing and operational leverage driving and Gaming Cabinets support visibility enhanced profitability in 2023 medium term growth Subject to sensible caution over recession and
Slide 36: Investment case
Investment case Attractive & growing markets Cash generative Strong positioning in gaming market for Net cash with minimal debt and future growth and early seeds of strong operational cash opportunity in broadcast sector conversion Broad expertise and skillset Global operations Domain knowledge, har
Slide 37: Disclaimer
XXXXXXXX Disclaimer • For the purposes of the following disclaimers, references to this presentation shall be deemed to include references to the presenters speeches, the question and answer session and any other related verbal or written communications. This presentation may contain forward-looking
Slide 38: Appendix
Appendix Copyright Quixant PLC 2023 38
Slide 39: 2022 Profit & Loss Statement
APPENDIX 2022 Profit & Loss Statement $m 2022 2021 Var Revenue 119.9 87.1 38% Cost of sales (81.3) (61.2) 33% Gross profit 38.6 25.9 49% Gross Profit Margin 32.2% 29.7% 250 bp Operating expenses (29.6) (21.4) 39% Operating profit 8.9 4.5 97% Finance income - 0.5 (100%) Finance expense (0.1) (0.2) (5
Slide 40: 2022 Cashflow Statement
APPENDIX 2022 Cashflow Statement $m 2022 2021 Operating cashflow before working capital 13.8 7.3 (Increase)/Decrease in trade and other receivables (1.7) (6.7) Increase in inventories (4.9) (7.7) (Decrease)/Increase in trade and other payables (4.6) 12.2 Cash generated by operations 2.6 5.1 Interest
Slide 41: Balance Sheet at 31 December 2022
APPENDIX Balance Sheet at 31 December 2022 $m 31-Dec-22 31-Dec-21 Property, plant and equipment 5.7 5.9 Intangible assets 15.5 16.0 Right-of-use assets 1.7 1.9 Investment property - - Deferred tax asset 2.6 0.1 Trade and other receivables 0.7 0.4 Non-current assets 26.2 24.3 Inventories 32.2 29.1 Tr
Slide 42: Board of directors
BOARD OF DIRECTORS Board of directors Francis Small Nick Jarmany Jon Jayal Independent Non-Executive Vice Chief Executive Officer Non-Executive Chair Chairman Chair of Remuneration Founder Committee Guy van Zwanenberg Gary Mullins Johan Olivier Senior Independent Non-Executive Chief Financial Office