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XP Power - Investor Presentation 2011 Annual Results XP Power - - PowerPoint PPT Presentation

Sep 17, 2022 336 likes •590 views

XP Power - Investor Presentation 2011 Annual Results XP Power Introduction to XP Power Leading developer and manufacturer of mission critical power control hardware Supplies Industrial, Healthcare and Technology sectors Blue

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XP Power - Investor Presentation

2011 Annual Results

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XP Power

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Introduction to XP Power

  • Leading developer and manufacturer of mission critical power control hardware
  • Supplies Industrial, Healthcare and Technology sectors
  • Blue chip client list
  • Historic and ongoing investment in R&D has built a market leading product portfolio
  • Focus on higher margin own design/own manufacture sales
  • Asian low cost manufacturing facilitates further penetration of blue chip customers
  • Global network of offices across North America, Europe and Asia
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XP Power

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2011 Financial Highlights

* Diluted and adjusted for amortisation of intangibles of nil (2010: £0.1 million)

2011 2010 Variance Bookings £98.3M £103.4M

  • 5%

Revenue £103.6M £91.8M + 13% Gross margin 49.1% 48.0% +110 BP Earnings per share* 106.4 pence 83.7 pence +27% Dividend per share 45 pence 33 pence +36%

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Income and Expenditure Statement

£ Millions 2011 Margin 2010 Margin Growth

GBP/USD average exchange rate 1.60 1.54

Revenue 103.6 100.0% 91.8 100.0% +13% Gross margin 50.9 49.1% 44.1 48.0% +15% Research and development (net) 4.2 3.7 +14% Other operating expenses 21.4 20.6 +4% Operating profit Note 1 25.3 24.4% 19.8 21.6% +28% Net interest expense 1.0 1.1

  • 9%

Profit before tax Note 1 24.3 23.5% 18.7 20.4% +30% Taxation and minority interest 3.6 2.6 +38% Minority interest 0.4 0.2 +50% Profit after tax Note 1 20.3 19.6% 15.9 17.3% +28% Adjusted diluted earnings per share 106.4p 83.7p +27%

Note 1: Adjusted for amortisation associated with acquisitions nil (2010: £0.1 million)

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Summary Balance Sheets

£ Millions 2011 2010

GBP/USD year end exchange rate 1.57 1.54

Cash 6.3 5.0 Trade and other receivables 18.7 17.1 Inventories 22.0 21.0 Total current assets 47.0 43.1 Property, plant and equipment 12.9 8.3 Other non-current assets 39.7 39.4 Total non-current assets 52.6 47.7 Trade and other current payables 14.8 19.3 Short term borrowings 13.4 12.7 Total current liabilities 28.2 32.0 Non-current provisions and liabilities 4.1 5.3 Long term borrowings 11.5 10.7 Net assets 55.8 42.8 Net debt 18.6 18.4

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Cash Flow Statements

£ Millions 2011 2010 Earnings Before Interest and Tax 25.3 19.7 Amortisation associated with acquisitions

  • 0.1

Amortisation of development costs 0.9 0.8 Depreciation 1.3 1.0 Change in working capital (6.5) (9.3) Income tax paid (5.0) (2.3) Cash provided by operating activities 16.0 10.3 Capitalised development costs (2.0) (1.7) Interest paid (0.8) (0.9) Free cash flow 13.2 7.7 Opening net debt (18.4) (18.7) Free cash flow 13.2 7.7 Purchase of property and equipment (5.7) (2.1) Acquisition of subsidiary (0.1)

  • Dividends

(7.8) (5.1) Effects of currency translation on cash 0.2 (0.2) Closing net debt (18.6) (18.4)

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Earnings and Dividend Trend

20 40 60 80 100 120 2003 2004 2005 2006 2007 2008 2009 2010 2011 Pence per share Adjusted EPS* Dividend

  • Cash generative business model allows consistent dividend growth
  • Dividend CAGR 20% over last 5 years and 14% over the last 10 years
  • Quarterly dividend payment cycles
  • Earnings CAGR 27% over last 5 years and 18% over the last 10 years

Earnings growth 88% 20% 7% (4%) 11% 17% 105% 28% Dividend growth 17% 14% 12% 11% 5% 5% 50% 36%

Termination of third party lines 2008/9 Recession *Diluted and adjusted for amortisation of intangibles, non-cash foreign exchange gain, and reorganisation costs

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Strategy

  • Target key blue chip accounts
  • Increase penetration of existing key accounts
  • Further expansion of high efficiency (“Green”) product offering
  • Extend manufacturing capacity outside China
  • Increase high margin contribution of own designed/manufactured

products

  • Lead our industry on environmental issues

Continue to gain market share

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Own Design Revenue Trend

20 40 60 80 100 120

£ Millions

Distribution 17.9 15.2 11.4 11.0 9.9 Labelled product 24.5 28.5 29.7 36.7 34.5 Own design product 23.9 25.6 26.2 44.1 59.2 2007 2008 2009 2010 2011

Average compound annual growth rate of 18% for own brand revenue to 2011 (own design 25%)

Own Design Labelled Own Brand 36% 37% 27% 37% 41% 22% 39% 44% 17% 48% 40% 12% 57% 33% 10%

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Vertical Integration – Vietnam Magnetics Facility

  • New Vietnamese facility completed on schedule in December 2011
  • Operations started in Q1 2012 on target
  • Primarily a magnetics manufacturing facility
  • Further vertical integration offers an additional value proposition to customers
  • control of manufacturing, flexibility and lead times
  • Magnetics are labour intensive so the move to Vietnam will also help mitigate

high wage inflation in China

Mitigates continued rises in China costs from salary inflation and currency appreciation and spreads geopolitical risk

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Improving Environmental Performance

  • Board level Environmental Committee focussed on

minimising our environmental impact

  • Environmental concerns and legislation drive demand

for energy efficient products

  • Achieved Full Member Status of the Electronic Industry

Citizenship Coalition (EICC)

  • 92% of revenues now covered by ISO14001
  • Performance recognised by admission to the

FTSE4Good Index in September 2011

  • Responsible corporate behaviour is a major market
  • pportunity

Our goal is to become the leader in our industry on environmental issues

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“Green” Product Introductions

5 10 15 20 25 30 35 2006 2007 2008 2009 2010 2011 High efficiency Low stand-by power Environmental concerns and legislation drive demand for energy efficient products

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Gross R&D Spend and New Product Introductions

0.0 1.0 2.0 3.0 4.0 5.0 6.0 2004 2005 2006 2007 2008 2009 2010 2011 R&D Spend (£ Millions) 5 10 15 20 25 30 35 40 Number of new product introductions R&D Gross Spend New Product Introductions

  • The success of our new products has led directly to significant gains in new program wins
  • Greater focus on modified standards following wave of new product launches
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Selected New Product Introductions

EMH350 – Ultra compact 3 x 5 inch footprint ECS65 – New generation ECM40/60 SHP1000 – 1000W of power for industrial and medical applications

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Selected Design Wins Entering Production in 2011

Application Product Comment Annual value (best year) Hospital Bed MHP650 Modified Unusually Fast Turn $2.4M Robotic Surgical Equipment Various Critical application $1.0M Patient Monitor AHM100 Modified Japan – New Customer $0.2M 3D Printing Systems fleXPower New customer $0.4M Test and Measurement fleXPower New customer $0.9M Semifab Plating HPU1K5 High Power – Value Added $2.0M Video Conferencing EMH350 New Product $0.8M

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Market Data

£ Millions Size Share Rank Asia 630 2%

  • Europe

375 12% 1st (Equal) North America 495 10% 1st Total 1,500 7% £ Millions Asia Europe North America Total % Healthcare 1.3 9.5 15.8 26.6 26% Industrial 1.9 24.3 20.7 46.9 45% Technology 6.0 11.6 12.5 30.1 29% Total 9.2 45.4 49.0 103.6 100% 9% 44% 47% 100%

Source: Micro-Tech Consultants (note market numbers for Asia have been revised up significantly since last report)

XP Power’s revenue mix Market size and XP share

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Geographic Split

0.0 20.0 40.0 60.0

Revenue (£ Millions) 2008 3.4 32.2 33.7 2009 4.6 31.9 30.8 2010 5.6 41.4 44.8 2011 9.2 45.4 49.0 Asia Europe North America

2009 35% (1%) (3%) 2010 22% 30% 45% 2011 64% 10% 9% Growth rates

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Sector Split

0.0 10.0 20.0 30.0 40.0 50.0

Revenue (£ Millions) 2008 36.1 15.1 18.1 2009 28.7 19.8 18.8 2010 42.2 22.8 26.8 2011 46.9 26.6 30.1 Industrial Healthcare Technology

2009 (20%) 31% 4% 2010 47% 15% 43% 2011 11% 17% 12% Growth rates

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Diverse Customer and Sector Exposure

(45%) (26%) (29%)

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Customers

  • We do business with the following proportions of the S&P 500 Equipment Manufacturers:

– Industrial 73% – Healthcare 94% – Technology 69%

  • Over 5,000 active customers the largest of which is <5% of revenue
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Typical Product Life Cycle

0.0 1.0 2.0 3.0 4.0 5.0 6.0 7.0 8.0

Revenue (£ Millions)

Revenue 0.0 0.2 0.9 2.0 3.7 4.6 4.1 6.2 7.4 2003 2004 2005 2006 2007 2008 2009 2010 2011

  • Substantial revenue annuity
  • Design in cycle typically 18 months
  • 2009 dip was due to market down turn and not typical
  • Bodes well for future revenue growth

Dip caused by global recession ECM40/60

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Own Design Product Pipeline

£ Millions 2008 Sales 2009 Sales 2010 Sales 2011 Sales

Design Wins (Best year) at Dec 2011 Design Wins (Best year) at June 2011

2004 releases 4.6 4.1 6.2 7.4 12.2 14.0 2005 releases 1.5 1.8 3.3 4.1 7.3 7.1 2006 releases 1.8 2.2 7.6 9.4 25.0 22.0 2007 releases 1.2 1.4 1.9 2.2 6.5 7.8 2008 releases 0.2 0.6 1.1 2.1 8.0 9.3 2009 releases

  • 0.1

1.7 2.7 14.3 13.7 2010 releases

  • 0.3

1.5 7.4 4.3 2011 releases

  • 0.1

1.8 0.2 Total £9.3 £10.2 £22.1 £29.5 £82.5 £78.4

Growth rate 10% 117% 33%

Pre 2004 releases 10.1 18.6 36.9 Value added 11.9 11.1 25.6 Total own design £25.6 £26.2 £44.1 £59.2 £145.0

Growth rate 2% 68% 34%

Strong pipe of new products and design wins

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Outlook

  • Soft bookings in Q4 2011 mean

revenue in Q1 2012 will be light

  • Strong design wins in 2011 and new

customer approvals should result in good growth once market recovers

  • Focus on taking market share
  • Good platform for further revenue and

earnings growth

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www.xppower.com