For personal use only. Traffic Technologies Ltd Investor Presentation 29 January 2014

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1 Traffic Technologies Ltd Investor Presentation 29 January 2014

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3 H1 14 EARNINGS GUIDANCE

4 H1 14 EARNINGS GUIDANCE Earnings Guidance - Half Year to 31 Dec 2013 Half Year Ended 31 Dec 2013 ($m) 31 Dec 2012 ($m) Revenue EBITDA EBIT NPAT (0.6) (0.8) 1.6 First half of FY 14 behind expectations, reflecting State government expenditure cutbacks & Federal Election uncertainty Slower than expected start to NSW traffic signals upgrade Restructuring costs and acquisition costs of QTC in December 2013 Results due to be released in final week of February 4

5 OUTLOOK FY 14 Outlook Too early to give FY 14 guidance but expect: Pick up in revenue from NSW traffic signals upgrade Improved revenue & earnings from exports & road lighting QTC expected to contribute to second half of FY 14 Medium Term Outlook Major contributors to growth in medium term are: 1. Intersection Products $25m NSW upgrade underpins major contract revenue until late CY 15 (slow start, but project is expected to complete on time) Further upgrade projects across Australia with ~35% of market not yet LED Expansion of product range with QTC acquisition Implementation of new products e.g. electronic speed signs 2. Road Lighting LED road light trials (VIC, NSW & SA) expected to complete in near term Market is 2-3x size of intersection products LED product offers - Increased energy efficiency + reduced carbon footprint - Operational cost savings - longer life + reduced maintenance costs over life Traditional road lighting contracts in conjunction with Rexel 3. Exports Export opportunities for existing product to 27 countries with SCATS operated traffic systems Further sales into UK Market for emergency telephones also large offshore Expanded worldwide distribution network from QTC acquisition Exports vs. Domestic Revenue Exports Domestic 4. Operations Continued focus on margin improvement with further product rationalisation & manufacturing efficiencies Synergy benefits of QTC acquisition 5

6 COMPANY OVERVIEW

7 Share Price ($) Volume (millions) COMPANY SNAPSHOT Traffic Technologies (TTI) Company Background TTI is Australia s premier traffic solutions company Established 2004 and listed on ASX 2005 TTI s head office is in Eltham, Victoria with offices in all Australian States and the UK TTI designs, manufactures and supplies - Technical Products including traffic intersection products (signals, timers, controllers etc), road lighting and emergency phones through its Aldridge, QTC and Clearsonics businesses - Road Signage through its De Neefe, Sunny Signs and Norsign businesses Majority of earnings come from Technical Products Shares on Issue 275.6m Price 7.0c 12 month (Low - High) 5-10c Market cap $19.3m Net Debt (pro forma Jun 13) $21.9m EV $41.2m Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Revenue 2013 EBIT Earnings Summary Y/E June FY11A* FY12A* FY13A* Revenue ($m) EBITDA ($m) EBIT ($m) NPAT ($m) (0.2) Technical Signage EPS (cents) (0.13) DPS (cents) * Numbers from continuing operations and pre 2013 placement 7

8 STRATEGIC HIGHLIGHTS Since the GFC we have been repositioning the company, now we are finally poised for growth Balance Sheet Remediation Streamlined Operations Invested in Core Product Development Balance Sheet Remediation Sold non-core divisions Acquired small but direct competitor Resolved legacy legal issues Stable management Manufacturing efficiencies Supply renegotiation Overhead cost reduction Continuing to deliver margin improvements Higher efficiency signal products Countdown timers Conventional road lights LED road lights Reduced debt from peak of ~$46m to net debt of $21.9m* Ongoing focus on debt repayment from operating cash flows Positioned for Growth 1. Core business stabilised, profitable and growing 2. Short term growth underpinned by NSW signals upgrade project (up to $25m over 30 months) 3. Strong growth expected in the UK (Signals and countdown timers) 4. Strong growth expected from entry into road lights (conventional and LED) 5. Entry into controller market with acquisition of QTC, significant synergies and growth potential * Post placement pro forma 30 June

9 PRODUCT OFFERING TECHNICAL PRODUCTS Intersection Products Traffic signals Pedestrian count-down timers Electronic road signs Traffic signal controllers Road Lighting Category V luminaires Category P luminaires HID and LED products Technical Products Revenue Mix Majority of Technical Product income is derived from Traffic Signals Traffic Signals Road Lighting Other Other Portable Roadside Technology Roof mounted signs Portable traffic signals Variable message signs Emergency Telephones Roadside pole telephones Pedestal and bollard telephones SIGNAGE Directional, regulatory + information signs Portable signs Vehicle decals Other Signage market share TTI 9

10 TECHNICAL PRODUCTS: INTERSECTION PRODUCTS TTI is a fully integrated designer, manufacturer and supplier* of road intersection products including LED traffic signals Pedestrian push-buttons Count-down timers Traffic controllers Australian Market 12,000+ signalled intersections in Australia, of which ~35% are old technology Core Market (maintenance + new installations) ~ $15-18m pa Major Upgrades (upgrades of legacy infrastructure) ~$200m+ opportunity TTI s market leading position TTI has an estimated 90%+ market share of LED traffic signals *TTI does not install or maintain products 10

11 TECHNICAL PRODUCTS: ROAD LIGHTING Traditional road lighting In partnership with Rexel (180+ branches), TTI supplies category-v (major roads) & category-p (residential, minor) conventional road lighting New LED Technology TTI has developed and is trialling (in VIC, NSW, SA) new LED lighting for category-v applications 43% Types of installed lighting 5% 52% High Pressure Sodium (HPS) Mercury Vapour (MV) Other Australian Market Approx. 2.3m road lights across Australia Up to 60% of local government energy costs and greenhouse gas emissions attributable to road lighting TTI s market position Potential market size of 2-3x intersection market LED offers substantial reduction in emissions and increased life Economic Benefit MV HPS LED Emissions Service Life (years) 11

12 INTELLIGENT TRANSPORT SYSTEMS QTC acquisition was the missing piece within the Intelligent Transport Systems (ITS) Sector ITS are advanced applications which aim to make safer, more coordinated and smarter use of roadways ITS uses information and communication technology to manage traffic flows Communicate Through State of the art Emergency Roadway Systems Communicate Direct Traffic through energy efficient, long lasting LED traffic signals Inform Emergency Systems Direct Guide Illume Motorists, cyclists and pedestrians through the use of static signage on roadways and public spaces Illuminating roadways and public spaces to the highest standards with state of the art LED technology Addressable Messaging Controllers Market Size $300m Traffic Signals Signage Instruct Traffic signals to change phase and coordinate the phase changes that occur between the relationship to other nearby intersections and signals or to pedestrian buttons Instruct Road Lighting Guide Inform Motorists, cyclists and the public of traffic hazards ahead of the current position for continual flow and management of roadways Illume 12

13 QTC ACQUISITION Acquisition of Quick Turn Circuits (QTC) Completed acquisition of QTC in December 2013 Purchase Price $4m consists of business, inventory and IP Expected to be earnings accretive in 2014 QTC Traffic Solutions Sydney based manufacturer of SCATS* based traffic controllers** Established in 1995 TTI has been distributing QTC controllers in VIC since 2010 Export opportunities to 27 countries with SCATS systems Strategic Rationale of QTC acquisition Expansion of intersection product range Opens up new export markets for TTI s existing SCATS accredited products Acquisition of IP will negate substantial R&D costs of developing a controller and time associated with obtaining accreditation * SCATS (Sydney Coordinated Adaptive Traffic System) is a fully adaptive urban traffic control system that optimises traffic flow. The system is recognised worldwide as an intelligent transport system and has been deployed to over 35,000+ intersections in 27 countries. ** Traffic controller is an automated device that regulates the sequencing and timing of traffic signals by monitoring vehicular and pedestrian demands and adjusting to meet these requirements. The controller has the ability to allow co-ordination of traffic flows between adjacent intersections when connected to a co-ordinated adaptive traffic system. 13

14 TECHNICAL PRODUCTS: POSITIONED FOR GROWTH After years of investment and development we now have four areas of growth that are beginning to contribute to earnings Intersection Products Road Lighting Australia & NZ Export markets Conventional LED Dominant position in traffic lights QTC acquisition enables complete package to be offered Medium term outlook underpinned by NSW signals upgrade project (up to $25m over 30 months ending late CY 15) Further upgrade projects with ~35% of Australian intersections still utilising old technology Well positioned to win further large scale project work in coming years QTC acquisition opens up further export markets - 27 countries using SCATS London market alone has ~6,000 intersections: Already supplying countdown timers Appointed to panel to supply traffic intersection products Road lighting market in Australia estimated to be 2-3x intersection market Agreement with Rexel to manufacture and supply a range of traditional road lighting products for distribution through Rexel s branch network across Australia Developing Category V & P LED luminaires Initial focus on Category V: Trials conducted on roads in SA, VIC and NSW First commercial sales on a trial basis in SA Formal approval in SA, VIC and NSW expected in the near term 14

15 DISCLAIMER This document has been prepared by Traffic Technologies Ltd (TTI) and comprises written material/slides for a presentation concerning TTI. The presentation is for information purposes only and does not constitute or form part of any offer or invitation to acquire, sell or otherwise dispose of, or issue, or any solicitation of any offer to sell or otherwise dispose of, purchase, or subscribe for, any securities, nor does it constitute investment advice, nor shall it or any part of it nor the fact of its distribution form the basis of, or be relied on in connection with, any contract or investment decision. Certain statements in this presentation are forward looking statements. You can identify these statements by the fact that they use words such as anticipate, estimate, expect, project, intend, plan, believe, target, may, assume and words of similar import. These forward looking statements speak only as at the date of this presentation. These statements are based on current expectations and beliefs and, by their nature, are subject to a number of known and unknown risks and uncertainties that could cause the actual results, performances and achievements to differ materially from any expected future results, performance or achievements expressed or implied by such forward looking statements. No representation, warranty or assurance (express or implied) is given or made by TTI that the forward looking statements contained in this presentation are accurate, complete, reliable or adequate or that they will be achieved or prove to be correct. Except for any statutory liability which cannot be excluded, TTI and its respective officers, employees and advisers expressly disclaim any responsibility for the accuracy or completeness of the forward looking statements and exclude all liability whatsoever (including negligence) for any direct or indirect loss of damage which may be suffered by any person as a consequence of any information in this presentation or any error or omission therefrom. Subject to any continuing obligation under applicable law or any relevant listing rules of the ASX, TTI disclaims any obligation or undertaking to disseminate any updates or revisions to any forward looking statements in these materials to reflect any change in expectations in relation to any forward looking statements or any change of events, conditions, or circumstances on which any statement is based. Nothing in these materials shall under any circumstances create an implication that there has been no change in the affairs of TTI since the date of this presentation. 15