chris tyler - finance director - porvair · rotary kiln filters competitive advantage installed...
TRANSCRIPT
Ben Stocks - Chief Executive
Chris Tyler - Finance Director
SummaryConsistent strategy delivering results
Consistent strategy
Niche positionsin growing, regulated
markets
New product
development and intellectual property
2013-2018
Year ended 30 November 2018
9%
CAGRin revenue
£68mcash from
operations
£42minvested
13%
CAGRin EPS
11% revenue
growth
11% EPSgrowth to
22.9p
£13.5minvested
43% return on
operating capital
employed
Specialist filtrationand environmental technology
Specialist filters are used to protect costly
or complex downstream systems
Attractive business characteristics
Niche
positions:
Long life cycles
Bespoke
Consumable products
Robust demand
drivers:
Secular trends
Regulation/legislation
Maintenance
schedules
Barriers to
entry:
Specialist design skills
Engineering skills
Patent protection
Quality accreditation
Consistent strategic and operational objectives
Long-term growth from
developing specialist
filtration and environmental
technology businesses
both organically and
by acquisition
Into 2019:
capacity in
place for
further growth
A focus on regulated markets
with long-term growth prospects
Four key markets1
Concerted new product
development2
Geographic expansion
to support key markets3
Generate cash to invest in:
Organic growth
Acquisitions
Dividends
4
A focus on regulated markets with long-term growth prospects
Regulation Market growthMarkets
FAA, CAA, EASA
and other specific accreditations
Growth in pax revenue
miles 2018 - 2037 (Source: Boeing 2018)
4.7%p.a.
Aerospace
International nuclear standards:
NQA1, ASME, etc
Long term growth in
nuclear power
generation capacity(Source: IAEA)
3-4%p.a.
Industrial
Approved methods:
EPA, SEPA, EU water directives
Growth in water
analysis consumables(Source: company estimate)
5-6%p.a.
Laboratory
ISO and customer
accreditations; extensive
qualification requirements
Growth in primary
aluminium usage to
2021 (Source: CRU 2018)
3.6%p.a.
Metal Melt Quality
1
2
3
4
1
2
3
4Main marketsand operating companies – new divisions
Business division Principal markets
Approximate share
of Group sales
Metal Melt
Quality30%
Global aluminium
US foundry
Super alloys
SELEE Corp
Laboratory 30%Environmental
Bioscience
Chromatography
Seal Analytical
(Rohasys)
Porvair Sciences
(JG Finneran)
Aerospace
& Industrial40%
Aerospace
General industrial
Energy
Porvair Filtration
Group
Main operating
companies
1
2
3
4
Niche positions
Fuel systems
Coolant systems
Hydraulics
Growth drivers
New build
Maintenance
New airframes and
engines
Retrofit programmes
Recent new
products
Inerting, hydraulics, lube
oil, anti-icing
Boeing 787-10 777
TX P8
Airbus NEO
Rolls Royce Ultrafan
Competitive
advantage
Installed base
Design engineering
Range of media
Design protection
Aerospace
Strong market positions and new product development
1
2
3
4
Niche positions
Hot gas and gasification
Pulse jet systems
Nuclear remediation
Polymer production
Microelectronics
Growth drivers
Gasification build rates
Maintenance schedules
Nuclear clean-up
Energy efficiency and
security
Recent new
products
Gasification spares
2nd generation
Nuclear: Rolls Royce
Rotary kiln filters
Competitive
advantage
Installed base
Range of media
Design engineering
Design protection
Industrial
Strong market positions and new product development
1
2
3
4
Niche positions
Analysis of inorganic
chemicals in water
Sample preparation
Chromatography
consumables
Growth drivers
Regulated water testing
Analytical science:
• Detection limits
• Falling costs per test
• Automation
Recent new
products
Seal: AA500
Minilab sampler
Sample prep ranges
New Vyon
Competitive
advantage
Installed base
Instrument design
protection
Porous plastics IP and
related patents
Laboratory
Strong market positions and new product development
1
2
3
4
Niche positions
Aluminium cast house
filtration
Gray and ductile iron
filtration
Super alloys
Growth drivers
Aluminium consumption
US auto and light truck
production
Increased use of high
grade and exotic alloys
Expansion in China
Recent new
products
Selee CSX™ / CSW™
Selee IC™
Selee SA™
Range extensions
Competitive
advantage
Patent protection
Metallurgical expertise
US / China
manufacturing
Metal Melt Quality
Strong market positions and new product development
Geographic expansion in key markets:
1
2
3
4
£42 million invested in the last five years
Americas
7 sites
2018 update:
Keystone Filter acquired
J G Finneran plant expansion
Microelectronics plant upgrade
Improvements to ceramic 3D capability
Revenue
52% 13%UK
15%Europe
UK and Europe
5 sites
2018 update:
Rohasys acquired
Bioscience media expansion
Revenue
19%
2018 update:
Further investment in Xiaogan
Asia
2 sites
Revenue
Record performancefor the year ended 30 November 2018
11%to £128.8m
Revenue
9%Laboratory
Revenue
5%Metal Melt Quality
Revenue
9%to £13.5m
Adjusted PBT
13%to 22.1p
Basic EPS
1
2
3
4
17%Aerospace & Industrial
Revenue
11%to 22.9p
Adjusted basic EPS
Adjusted income statementfor the year ended 30 November 2018
2017£000
2018£000
Revenue 128,823 116,423
Operating profit 14,343 13,021
Interest (830) (657)
Profit before tax 13,513 12,364
Tax (3,113) (3,011)
Profit for the year 10,400 9,353
Adjusted EPS (basic) 22.9p 20.7p
1
2
3
4
Adjustments to the profit for the yearfor the year ended 30 November 2018
1
2
3
4
2017£000
2018£000
2017£000
2018£000
Adjusted profit for the year 10,400 9,353
Equalisation of GMP (773) -
Amortisation of acquired intangibles (564) (244)
Other acquisition related expenses (138) (438)
Adjustments to profit before tax (1,475) (682)
Tax effect of pre-tax adjustments 325 171
Tax exceptional item 778 -
Adjustments to tax 1,103 171
Profit for the year 10,028 8,842
Cash flowfor the year ended 30 November 2018
2017£000
2018£000
Operating cash flow before working capital movements 16,989 13,651
Working capital movement (1,654) (1,394)
Interest (339) (216)
Tax (2,419) (2,741)
Capital expenditure (net of disposals) (4,452) (5,425)
Net cash from operations 8,125 3,875
Acquisitions (9,007) (5,932)
Proceeds from issue of shares 131 364
Purchase of Employee Benefit Trust shares (416) (475)
Dividends paid (1,957) (1,769)
Exchange movements (37) 90
Net cash at 1 December 9,786 13,633
Net cash at 30 November 6,625 9,786
1
2
3
4
Aerospace & IndustrialResults and progress – year ended 30 November 2018
US nuclear and industrial orders
Keystone filter acquired and integrated
Second half aerospace strength
Gasification servicing and spares
17% revenue growth
2018£000
2017£000
Revenue 50.5 43.2
Operating profit 8.0 6.8
Outlook
Microelectronics plant upgrade
Stronger aerospace order book
Large projects commissioning
1
2
3
4
LaboratoryResults and progress – year ended 30 November 2018
Seal Analytical strong in US, offsetting China falls
Strong performance from JG Finneran
Rohasys acquired and trading in line with targets
9% revenue growth
2018£000
2017£000
Revenue 38.7 35.3
Operating profit 6.5 6.3
Outlook
Seal instrument upgrades
Bioscience capacity and capability increased
JG Finneran plant expansion
Finneran and Rohasys synergies
1
2
3
4
Growth from cast shop and super alloys
Improved plant efficiencies
Record US margins
China revenue up over 30%
Constant currency revenue up 9%
2018£000
2017£000
Revenue 39.6 37.8
Operating profit 2.4 1.7
Outlook
China losses diminish as volumes/margins
increase
Range and volume growth in ceramic 3D printing
1
2
3
4
Metal Melt QualityResults and progress – year ended 30 November 2018
Investment and development opportunities: 2019 – 2022 £42m invested in capex and acquisitions over five years;
£13.5m in the year
Aerospace
Boeing 737 Auto Pilot
Boeing 737 Max
Rolls Royce BR715
Comac C919
Inerting: 3rd Generation
Industrial
Nuclear: HEPA
Gasification spares and
service
USA: 20% CAGR (2013-18)
GasPro microelectronics
Keystone Filter integration
Laboratory
AA500
New Vyon
Molecular coatings
JGF plant expansion: clean
manufacture
Rohasys: NPD process
Metal Melt
Quality
Growth in China based on
value selling
China input cost reduction
Ceramic 3D manufacture –
aerospace and IGT
Organic
growth
Acquired
growth
Summaryand outlook
Results
Revenue
growth11%
PBT growth
to £13.5m9%
EPS growth
to 22.9p11%
Investment
Invested in the
period£13.5m
Rohasys
Keystone FilterACQUIRED
JG Finneran
Microelectronics
Bioscience
CAPACITY
EXPANSION
Outlook
Order books
for 2019HEALTHY
Balance sheetSTRONG
Clear organic
growth targetsORGANIC
OutlookPOSITIVE
Ben Stocks - Chief Executive
Chris Tyler - Finance Director