Dialight Plc · LSE:DIA
Dialight — H1 2020 Earnings Presentation
27 slides from Dialight's earnings presentation, 2020
Slide 1: H1 2020 Results
H1 2020 RESULTS For a video of this presentation, click here. Dialight
Slide 2: H1 Results
H1 RESULTS Q1 trading in line, Q2 significantly impacted by COVID-19 Operating loss reflects lower revenue due to COVID-19, impact offset by cost savings Maintained un-interrupted supply to our customers Net debt increase of £1.5m since year-end Inventory reduced by £7.0m, at constant FX £10.0m of a
Slide 3: Our COVID-19 Response
OUR COVID-19 REPSONSE Prioritising safe work environment Balancing impact Agility : rapid decision- across key stakeholder making groups Central and Focus on key Focus on cash regional investment and liquidity support groups priorities We have continued to ensure delivery of critical safety and envi
Slide 4: COVID-19 Mitigations
COVID-19 MITIGATIONS • Salary reductions across the Group ranging from 5% to 20% • Utilised government incentives of furloughs and payroll tax deferral • Deferral of rents and capex • Additional £10m of liquidity with existing covenant waivers to Q3-21 • Costs relating to factory shutdowns estimated
Slide 5: Financial Results
FINANCIAL RESULTS Revenue Gross margin % Debt facilities 30% 28% £76.1m £35.0m £56.3m £25.0m H1-19 H1-20 H1-19 H1-20 FY-19 H1-20 26% 34% £18.0m Excluding impact of Net debt Revenue reduction additional COVID-19 costs (FY-19: £16.5m) Private & confidential 5
Slide 6: EBIT Bridge
EBIT BRIDGE 0.9 (5.3) Revenue reduction of 26% COVID-19 costs (3.6) 1.5 (5.5) Reduced travel 1.0 Underlying EBIT EBIT H1 2020 Furlough and salary reductions H1 2019 Private & confidential 6
Slide 7: Lighting
LIGHTING Lighting Reported £m H1-20 H1-19 Variance Gross margin bridge Revenue 40.7 56.4 (28%) Underlying gross margin H1-2019 35% Gross profit 11.7 19.6 (40%) Less non-underlying costs H1-2019 (5%) Gross margin 29% 35% -600bps Insourcing of painting and machining 5% Overheads (14.4) (17.7) 19% COVI
Slide 8: Signals & Components
SIGNALS & COMPONENTS Revenue Gross margin Orders 31% £19.7m £21.3m £20.1m 24% £15.6m H1-19 H1-20 H1-19 H1-20 H1-19 H1-20 21% 100 bps 6% Revenue reduction Improvement in gross margin Reduction in orders (excluding impact of COVID-19) Private & confidential 8
Slide 9: Inventory
INVENTORY £45.7m £38.7m • Distribution centres key to order fulfilment during COVID-19 enforced plant shutdowns £28.5m • H1 2020 position includes £2.5m of £25.6m advanced raw materials purchases • Expecting further inventory reduction by full year £17.2m £13.1m FY 2019 H1 2020* Finished goods Raw m
Slide 10: Net Debt
NET DEBT £m Net debt at 31 December 2019 (16.5) Inflows £7.0m – Unwind in inventory EBITDA (before COVID 19-costs) 0.8 Unwind of inventory 7.0 7.8 Outflows £3.6m- COVID-19 related costs Working capital (excl. inventory) (1.8) Investment in new products (2.2) COVID-19 related costs (3.6) £2.2m - Inve
Slide 11: FY 20 Planning Assumptions
FY 20 PLANNING ASSUMPTIONS Net Interest Broadly in line with FY-19 INCOME STATEMENT c.26% (before any one-off tax Tax Rate credits) c.£1m operational capex Capex c.£5m product development CASH FLOW Expecting further H2 Working capital improvement Revenue performance dependent on impact of COVID-19 o
Slide 12: Operations
OPERATIONS PRODUCT DEVELOPMENT SALES Private & confidential 12
Slide 13: Improving Operational Performance
IMPROVING OPERATIONAL PERFORMANCE 84% 3 WEEKS 200 people unavailable to On time delivery % Lead time work due to health restrictions Production units Additional shift capacity Strong H&S record Jan-20 Feb-20 Mar-20 Apr-20 May-20 Jun-20 60% Additional capacity Private & confidential 13
Slide 14: Health & Safety Measures
HEALTH & SAFETY MEASURES All facilities have implemented safety and hygiene measures to minimise infection risk 1.5m distance between employees maintained resulting in layout changes to production lines Dialight is supporting employees with additional benefits such as lunch and groceries Increased e
Slide 15: Supply Chain
SUPPLY CHAIN Order fulfilment Robust sales and operation planning (S&OP) process Management of critical components Focus on long lead time components Supplier Relationship Management Re-negotiated supplier terms Cost reductions Strong focus on achieving lower prices Local sourcing Reduce lead times
Slide 16: Product Development
OPERATIONS PRODUCT DEVELOPMENT SALES Private & confidential 16
Slide 17: Product Development
PRODUCT DEVELOPMENT Quick wins Power supply Largest differentiator • Specification lock with customers Controls & sensors New products are field upgradeable Protecting our core products • Cost reductions • Performance upgrades New products • Filling portfolio gaps Materials and mechanical Polymer ba
Slide 18: Sales
OPERATIONS PRODUCT DEVELOPMENT SALES Private & confidential 18
Slide 19: Lighting Order Intake
LIGHTING ORDER INTAKE AMERICAS (31%) • US market impacted by customer site closures and soft end markets • US well positioned despite these headwinds, recovering MRO market share EMEA (37%) £56m • Positive start to year before COVID-19 £44m • Heavily project reliant • Geographical focus under review
Slide 20: Sales Initiatives
SALES INITIATIVES • Sales teams – most have been on “lockdown” since end of March • Orders stabilised in June and in some regions starting to increase • MRO business has grown – recapturing lost share • Pivoted to electronic selling techniques • Conducted over 250 sales calls over Zoom • Conducted h
Slide 21: Environmental, Social & Governance
ENVIRONMENTAL, SOCIAL & GOVERNANCE Enhanced health and Core product drives: safety culture and training • energy savings • reduces carbon footprint Increased support to • provides better workforce during COVID-19, working environment including establishing Dialight Foundation Strong Board diversity
Slide 22: Summary
SUMMARY Q1 started positively, Q2 impacted by COVID-19 Operational performance continues to improve Balance sheet strengthened in H1, expecting further inventory unwind in H2 Private & confidential 22
Slide 23: Outlook
OUTLOOK In the remainder of 2020, the impact of COVID-19 on the economies in which we operate is likely to continue to impact demand from industrial customers and add to operating costs. With the current economic uncertainty, we continue to focus on our employees, our customers, our communities and
Slide 24: Appendix
APPENDIX Private & confidential 24
Slide 25: Investment Case
INVESTMENT CASE POSITIONED FOR GROWTH Diverse customer base DIFFERENTIATED Technological leadership INTELLIGENT Integrated controls TRUSTED Long term track record SUSTAINABLE Environmentally friendly SCALABLE Significant capacity Private & confidential 25
Slide 26: Vertical Segments
VERTICAL SEGMENTS H1 2020 H1 2019 Obstruction 4% 9% Food & Beverage 6% 6% Heavy industrial 18% 17% Mining 12% 10% Oil & Gas 23% 21% Power 12% 10% Pulp & Paper 11% 14% Other industrials 14% 13% 100% 100% Private & confidential 26
Slide 27: Disclaimer
DISCLAIMER Certain statements included or incorporated by reference within this presentation may constitute “forward-looking statements” in respect of the Group’s operations, performance, prospects and/or financial condition. By their nature, forward-looking statements involve a number of risks, unc