Dialight Dialight plc 2014 Interim Results 21 July 2014 1 Highlights of six months to 30 June 2014 Dialight • Lighting revenues increased by 46% to £43.0m (Constant currency +53%) • Lighting operating profit increased 60% to £7.1m (Constant currency + 73%) • Group underlying operating profit increased 18% to £6.5m (Constant currency + 26%) • Underlying EPS up 22% at 14.2p (2013 11.6p) • Basic EPS 10.5p (2013 12.8p) • Interim dividend increased to 5.2p (2013: 4.9p) • Net cash of £2.8m (31 Dec 2013: £7.1m) with new 4-year committed bank facility signed 2 Summary Profit and Loss Continuing Operations H1 2014 £'m Revenue 70.9 Gross Profit 20.9 Distribution and Administration costs Underlying Operating Profit Non underlying items Operating Profit • • • • 3 Dialight % 29% % 18.0 131.2 41.6 30% (12.5) 9% 5.5 8% 5.1 32% (27.1) 14.5 9% (0.4) (1.1) 5.4 FY 2013 £'m 59.9 (14.4) 6.5 H1 2013 £'m 11% (2.9) 11.6 9% Revenue up 18% (constant currency up 25%) Underlying Operating Profit up 18% (constant currency up 26%) Translation impact of £0.4m on underlying H1 Operating Profit Full year impact of $0.01 = £120k 3 9% Summary Profit and Loss continued Underlying Tax Rate • Dialight H1 2014 H1 2013 FY 2013 33.7% 31.0% 31.3% Underlying EPS Basic 14.2p 11.6p 30.8p Statutory EPS Basic 10.5p 12.8p 26.2p Underlying tax rate increased from 2013 due to non recurrence of prior year tax loss recognition in Germany. 4 Revenue Dialight 2014 2013 2013 As Reported At 2014 FX Rates % Growth At Constant FX £'m £'m £'m % Lighting 43.0 29.3 27.8 53% Signals 18.3 20.2 19.1 (4%) 9.6 10.4 9.8 (2%) 70.9 59.9 56.8 25% Components • • Continued strong growth in Lighting with constant currency revenue up 53% Signals: Obstruction – encouraging signs Traffic – challenging 5 Revenue By Territory • Dialight Americas EMEA Asia Total H1 2014 £'m 47.4 16.1 7.4 70.9 H1 2013 £'m 39.3 14.9 5.7 59.9 Lighting growth % 59% 29% 17% 47% Strong growth in each Lighting market 6 Underlying Operating Profit Bridge Dialight £'m H1 2013 EBIT Lighting 5.5 - contribution 6.4 - sales force cost increases (1.7) - other production and overhead (2.0) 2.7 Signal & Components Contribution (1.5) Other (0.2) H1 2014 EBIT • • 6.5 Increase in Lighting contribution to 45% Lighting sales force increased to 108 7 Segmental Summary Dialight H1 2014 H1 2013 Revenue Contribution £'m % Revenue Contribution £'m % FY 2013 Revenue Contribution £'m % Lighting 43.0 45% 29.3 44% 68.5 46% Signals 18.3 41% 20.2 40% 41.8 42% 9.6 44% 10.4 51% 20.9 47% Components 70.9 • 59.9 131.2 Continued growth in Lighting contribution 8 Lighting • Dialight H1 2014 £'m H1 2013 £'m Revenue 43.0 29.3 Contribution 19.3 12.9 Overhead costs (12.2) (8.5) Operating Profit 7.1 4.4 Contribution Margin 44.9% 44.0% Operating Margin 16.5% 15.0% Continued growth in revenue and contribution margin 9 Signals Dialight • Challenging conditions in Traffic but offset by encouraging growth in Obstruction, particularly in the US 10 Components Dialight • Impacted by one off costs securing efficient channel access 11 2014 Non-Underlying Items Dialight H1 2014 £'m Restructuring costs H1 2013 £'m 1.1 0.4 1.1 0.4 • Cash impact in H1 2014 of £1.2m. Anticipated cash impact in H2 of c. £0.5m • No further significant non-underlying costs expected in 2014 12 Summary Cashflow Dialight H1 2014 Underlying EBIT Depreciation & Amortisation Other non cash Non underlying items paid Capex Underlying Working Capital Tax and interest Dividends Disposals / Acquisitions Other FX Movement in net cash Opening net cash Closing net cash H1 2013 £'m FY 2013 £'m 6.5 1.9 0.2 5.5 1.7 0.2 14.5 3.0 0.4 8.6 (1.2) (3.3) (3.2) (1.9) (3.1) 0.0 (0.2) 7.4 (0.4) (3.7) (3.6) (1.4) (3.1) 1.2 (0.3) 0.1 17.9 (0.7) (9.2) (9.7) (2.3) (4.6) 1.2 (0.5) 0 (4.3) 7.1 2.8 (3.8) 15.0 11.2 (7.9) 15.0 7.1 - 13 Summary Cashflow continued Dialight Capex • • £1.8m spend mainly on manufacturing process improvements, principally in Mexico £1.5m capitalised on new product development, predominantly in Lighting (H1 2013: £1.3m) Working Capital 30-Jun-14 £'m Inventory (0.7) • More efficient inventory management Accounts Receivable (0.5) • Accounts Payable (2.0) • Improved collection management Payables restored to more normal levels Net working capital movement (3.2) 14 Banking Facilities Dialight • New £25m term loan in place with HSBC (including £1m overdraft facility) • Term: to 30 June 2018 • Very competitive terms • Principal covenants: 2.5 : 1 Net debt:EBITDA 4.0 : 1 Interest coverage • Outline accordion of additional £25m, if required 15 Summary Balance Sheet Dialight 30-Jun-14 £'m 31-Dec-13 £'m 34.9 34.5 2.8 7.1 Net Working Capital 33.2 31.1 Pension Provision (0.3) (0.4) Other Provisions (4.9) (5.6) Net assets 65.7 66.7 Fixed and Intangible Assets Net Cash 16 Dialight Business Overview 17 Business Segments Dialight Three Key Business Segments Lighting Signals Components 18 Components Dialight •Small indicators for the professional electronics sector •Multiple customers with majority of sales through electronics distributors •Revenues down marginally in 2014 •Contribution margins broadly stable before one-offs •Ongoing revenues expected to be broadly in line with 2013 •No customer concentration issues •Little to no investment 19 Signals – Traffic & Transportation •Transportation flat and expected to continue flat - Niche business with high share - Sales to US Transit bus market only - Sales expected to continue marginally above 2013 level •Traffic down 29% due to bad Winter and ending of Manchester contract in Europe. - H2 expected to be broadly in line with H1 Dialight Signals – Obstruction Dialight •Revenue up 20% •Continued strong recovery in US •No major contracts let, significant day-to-day business with major operators •Expanded capability of monitoring and controls •Well positioned to compete for any major contracts •Continued expansion in Europe with wind turbine market •Expansion of customer base 21 Lighting – Driver for growth Dialight Lighting Revenue History Dialight 23 Market Positioning (just to remind you) Dialight •Market focus is Heavy Industrial and Lighting for Hazardous Locations or where Lighting is seen as being mission critical This would be where Lighting is used 24x7 Where access is difficult Where energy is expensive/scarce Where the environment is challenging Where flammable/explosive materials are handled This translates into….. Markets Served- Hazardous & Industrial Dialight Oil, Gas & Petrochem • Upstream (exploring & drilling) • Downstream (refining) • Transportation (terminals & pipelines) Heavy Industrial • Steel processing • Pulp & paper • Auto plants • Aircraft plants Power Generation • Nuclear • Fossil (coal, natural gas, petroleum) • Renewable (wind, solar, geothermal) Chemical & Pharma Mining • Surface mining Food & Beverage • Food processing • Agricultural • Cold Storage • Food grains 25 Investing for Growth Dialight •Investing c. £6m this year in R&D •Recruited 19 additional sales people in Lighting •Continued spend on manufacturing capability and capacity •Lighting lab now NVLAP certified (NVLAP Lab Code: 2010330) – faster to market •Significant strengthening of management team 26 New Products in H1 2014 Vigilant 125 LPW High Bay - Hazardous & Non-Haz - Industry best 125 LPW - Multiple optics 55,000 Lumen Flood Light - Non-Hazardous - 55,000 Lumens - Replacement for 1,000W Vigilant High Bay w/ Controls Area Light w/ Retro Adapter - Non-Hazardous - Hazardous & Non-Haz - Zigbee & DALI - GE & Appleton - CE (UL, VDE pending) - Install time – 5 minutes 27 Dialight SafeSite Low Profile Linear - Hazardous & Non-Haz - 3” Tall - Adaptable for non-US 15,000 Lumen Flood Light - Hazardous & Non-haz - 5 optical options - Improved cost Vigilant® 26K LED High Bay Dialight • 11,000 – 26,000 lumen models • 125 Lumens per Watt • Now available with controls • 10 Year Full Performance Warranty • 25% more efficient compared to DuroSite® and 70% less glare 28 28 H1 – DuroSite vs. Vigilant Split 29 Dialight LED Light Output Progression Dialight Here’s what we were able to accomplish with our High Bay 2014 – Q1 2012 26,000 lumens 2011 2010 14,000 lumens 2009 10,000 lumens 8,000 lumens 30 25,000 lumens Vigilant® 60K LED High Bay Dialight True 1,000W HID Replacement • 60,000 lumens 18” • Single 475W power supply • 126 Lumens Per Watt • 10 Year Full Performance Warranty 31 24” 31 Market Size Dialight •Market is installed base not just new build sales •Market is estimated to be tens of billions of dollars •Market penetration still limited •Longer term opportunity in new build with a need to design in with EPCs 32 Summary •Lighting growth continues strongly •Lighting margins maintained •Encouraging signs in Obstruction •Management team strengthened in anticipation of continued growth •Funding for growth in place •We remain on track for the year Dialight Dialight Dialight plc 2014 Interim Results 34 Appendix I – FX Rates Dialight 2013 2014 Income Statement Balance Sheet USD Eur USD Eur H1 1.669 1.217 1.545 1.176 FY - - 1.565 1.178 H1 1.710 1.248 1.529 1.174 FY - - 1.658 1.248 35 Appendix II – Segment Reconciliation Dialight 36