Volex Plc · LSE:VLX
Volex — FY2019 Earnings Presentation
18 slides from Volex's earnings presentation, Jun 13, 2019
Slide 1: Full Year Results 2018/19
Full Year Results 2018/19 Nat Rothschild Daren Morris 13 June 2019
Slide 2: Disclaimer
Disclaimer This Presentation does not constitute or form part of any offer or invitation to sell or issue, or any solicitation of any offer to purchase or subscribe for, any securities to any person in any jurisdiction to whom or in which such offer or solicitation is unlawful, nor shall it (or any
Slide 3: Volex Today
Volex Today • Global leader in the production of interconnect solutions – power products and complex cable assemblies • Strong balance sheet for flexibility through the economic cycle • Strategy to improve profitability in power and cable assemblies is on track and we see continued opportunities for
Slide 4: Summary of FY19 Results: Financial Highlights
Summary of FY19 Results Financial Highlights • Pre Exceptional operating profit up 88% to $21.6million (FY18 $11.5million) driven by cost reduction, improvement in product mix and contribution from acquisitions • Recovery in profitability of core business driven by operational improvements - existin
Slide 5: Summary of FY19 Results: Operational Highlights
Summary of FY19 Results Operational Highlights • Successful integration of MC Electronics, Silcotec and GTK – diversifying our customer base and manufacturing footprint • Staged restructuring in Shenzhen will allow us to harvest-for-value as our largest power customer declines. Ongoing consolidation
Slide 6: Our progress continues
Our progress continues Reduce customer Success in winning new customers and reducing over reliance on legacy concentration customer base Margin improvement in both divisions Increase profit - Power Cords margin aiming for 8% margins - Cable Assemblies margin aiming for at least 10% Upgrades to our p
Slide 7: Financial Review
Financial Review
Slide 8: FY Revenue Performance
FY Revenue Performance Note – PY numbers restated to classify our Batam site into our Power Cords division Power Cords – FY2018 to FY2019 Cable Assemblies – FY2018 to FY2019 -2% +46% -43% +11% +8% 2017/18 2018/19 2017/18 2018/19 Other Customers Largest Power Customer Existing Customers Acqui sitions
Slide 9: Financial Summary
Financial Summary $m FY19 FY18 • Sales diversification and Revenue 372.1 322.4 acquisition growth strategy starting to show benefits Gross Profit 73.5 56.0 - Gross Margin 19.8% 17.4% • Gross margins improve due to more higher margin cable Operating Costs (51.9) (44.5) assemblies and ongoing focus Op
Slide 10: Adjusting Items
Adjusting Items $m FY-19 FY-18 Restructuring Costs 1.9 0.9 Acquisition Costs 1.8 0.1 Amortistion of Acquired Intangibles 2.0 - Other 0.3 0.5 Exceptional Costs 6.0 1.5 Share based payments 2.4 1.1 8.4 2.6 • Restructuring costs primarily relate to severance payments resulting from a reduction in the S
Slide 11: Cable Assemblies
Cable Assemblies $m FY19 FY18 Change Revenue 173.2 118.8 45.8% Gross Profit* 37.1 22.1 67.9% Gross Margin* 21.4% 18.6% Operating Costs 23.7 18.6 27.6% Operating Profit* 13.5 3.5 283.5% Operating Margin* 7.8% 3.0% *Underlying measure before Share Based Payments and Adjusting Items • Divisional revenu
Slide 12: Power Cords
Power Cords $m FY19 FY18 Change Revenue 198.9 203.6 -2.3% Gross Profit* 36.4 33.9 7.4% Gross Margin* 18.3% 16.6% Operating Costs 23.1 21.8 6.0% Operating Profit* 13.2 12.1 9.4% Operating Margin* 6.7% 6.0% *Underlying measure before Share Based Payments and Adjusting Items • Divisional revenues down
Slide 13: Cash Flow
Cash Flow $60 $50 $40 Cash Flow ($m) $30 $20 9.9 $10 20.6 $0 FY18 Net Cash Operating Cash Increase in Proceeds from Investment (Capex, Other FY19Net Cash Flow Working Capital Equity Raise Acquisitions) • Net cash has increased from $9.9million to $20.6million • Working capital movement breakdown • $
Slide 14: Outlook for FY20
Outlook for FY20 • Expect to continue to grow both the revenue and operating profit lines in FY20 • Effects of “Trump Tariffs” uncertain at this time. Our global footprint remains a strong differentiator when compared to our China-based competition • Volex is reducing capacity at its Shenzhen and Su
Slide 15: Background
Background
Slide 16: Diversified Factory Footprint
Diversified Factory Footprint Power Cords Division Cable Assemblies Division FY19E Sales $199million FY19E Sales $173million OM 6.7% OM 7.8% • 4 Manufacturing locations: • 8 Manufacturing locations: • Shenzhen (China) • Suzhou (China) • Zhongshan (China) • Komarno (Slovakia) • Hanoi (Vietnam) • Bydg
Slide 17: Volex Manufacturing Locations
Volex Manufacturing Locations Bydgoszcz, Poland Basingstoke, UK Komarno, Slovakia Hollister, CA Craiova, Romania Suzhou, China Tijuana, Mexico Shenzhen, China Juarez, Mexico Zhongshan, China Hanoi, Vietnam Batam, Indonesia Volex aims to be able to support our customers on a Global basis 17
Slide 18: Revenue Progression
Revenue Progression Volex Annual Sales Progression • The top 3 customers as a proportion of the 450 400 total sales has reduced: from 47% in FY15 350 to 29% in FY19 300 $ millions 250 200 150 • Excluding sales to our largest power 100 customer and acquisitions, revenue 50 increased by 9.5% in FY19 o