Attached files
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| 8-K - 8-K - IEC ELECTRONICS CORP | a8-kinvestorpres01302017.htm |
Investor Presentation
IEC ELECTRONICS 2017©
2
Cautionary Note Regarding Forward-Looking Statements
References in this report to “IEC,” the “Company,” “we,” “our,” or “us” mean IEC Electronics Corp. and its subsidiaries except where the context otherwise
requires. This presentation contains forward- looking statements. In some cases, you can identify forward-looking statements by terms such as “may,” “will,”
“should,” “expects,” “plans,” “anticipates,” “could,” “intends,” “targets,” “projects,” “contemplates,” “believes,” “estimates,” “predicts,” “potential” or
“continue” or the negative of these terms or other similar expressions. These forward-looking statements include, but are not limited to, statements
regarding future sales and operating results, future prospects, the capabilities and capacities of business operations, any financial or other guidance and all
statements that are not based on historical fact, but rather reflect our current expectations concerning future results and events. The ultimate correctness of
these forward-looking statements is dependent upon a number of known and unknown risks and events and is subject to various uncertainties and other
factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements
expressed or implied by these forward-looking statements.
The following important factors, among others, could affect future results and events, causing those results and events to differ materially from those views
expressed or implied in our forward-looking statements: our ability to successfully remediate material weaknesses in our internal controls; litigation; business
conditions and growth or contraction in our customers’ industries, the electronic manufacturing services industry and the general economy; variability of our
operating results; our ability to control our material, labor and other costs; our dependence on a limited number of major customers; the potential
consolidation of our customer base; availability of component supplies; dependence on certain industries; variability and timing of customer requirements;
technological, engineering and other start-up issues related to new programs and products, uncertainties as to availability and timing of governmental
funding for our customers; the impact of government regulations, including FDA regulations; the types and mix of sales to our customers; intellectual property
litigation; unforeseen product failures and the potential product liability claims that may be associated with such failures; the availability of capital and other
economic, business and competitive factors affecting our customers, our industry and business generally; failure or breach of our information technology
systems; and natural disasters. Any one or more of such risks and uncertainties could have a material adverse effect on us or the value of our common stock.
For a further list and description of various risks, relevant factors and uncertainties that could cause future results or events to differ materially from those
expressed or implied in our forward-looking statements, see our Annual Report on Form 10-K, our Quarterly Reports on Form 10-Q and other filings with the
Securities and Exchange Commission (the “SEC”).
All forward-looking statements included in this presentation are made only as of the date indicated or as of the date of this presentation. We do not
undertake any obligation to, and may not, publicly update or correct any forward-looking statements to reflect events or circumstances that subsequently
occur or which we hereafter become aware of, except as required by law. New risks and uncertainties arise from time to time and we cannot predict these
events or how they may affect us and cause actual results to differ materially from those expressed or implied by our forward-looking statements. Therefore,
you should not rely on our forward-looking statements as predictions of future events.
IEC ELECTRONICS 2017©
IEC Electronics Profile
3
• Customized outsource electronic
manufacturing
• Small business certified
• 350,000 square feet of
manufacturing space
Company Overview
• Complex, highly engineered
products
• Encrypted Satellite Communication
• Weapons Systems
• Infusion Pumps
• Ruggedized Industrial Controls
• Intellectual property protection
• Defense industry requirements for
National Security
• Nearshoring trends occurring
• Highly responsive to volatile end
market demands
U.S. Outsource
Manufacturing
Rochester, NY
Newark, NY
Albuquerque,
NM
Locations of IEC Current Customers
IEC Manufacturing Locations
IEC ELECTRONICS 2017©
IEC Electronics Overview
4
• Develop Customized Stress Testing
Platforms to Simulate a Product’s End
Application
• Laboratories to Perform Counterfeit
Component Detection & Complex
Failure Analysis
• Vertical Manufacturing of Critical Key
Components
• Control Cost, Time, and Quality
• Custom Configuration, Full System
Assembly & After Market Services
• Direct Fulfillment to End Customer
Unique Capabilities
IEC ELECTRONICS 2017©
Our Focus
5
• Focus on growing market sectors*
- Medical +7.4% CAGR
- Industrial +6.9% CAGR
- Military +6.2% CAGR
• Providing full life-cycle, advanced
manufacturing support
• Long term relationships and
proven performance with Blue
Chip customers
Life Saving and Mission
Critical Products
*Projected CAGR 2014-2019
Source: New Venture Research Corp.
Medical
$6.5B TAM
Industrial
$9.4B TAM
Military
$5.9B TAM
Representative Key Customers
Market Opportunity
IEC ELECTRONICS 2017©
High-Margin in Highly Regulated Markets
6
G
ro
ss
Ma
rgi
n
(
T
TM
)*
20%
6%
14%
Consumer, Computing, Communications, Auto Medical, Industrial, Aerospace & Defense
Portfolio Mix
High Concentration High Concentration Mixed Portfolio
*Source: Yahoo Finance as of January 2017
IEC ELECTRONICS 2017©
7
Industry Leading Operating Margins
0%
1%
2%
3%
4%
5%
6%
IEC PLXS DCO BHE KE SANM CLS JBL SPA KTCC FLEX SMTX SGMA NSYS
Industry Average: 2.95%
Operating Margin (ttm)
5.48%
More than 1.5X Industry Average
*Source: Yahoo Finance as of January 2017
IEC ELECTRONICS 2017©
$0
$20
$40
$60
$80
$100
$120
$140
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
$0
$2
$4
$6
$8
$10
$12
$14
Sales ($M)
Op Income ($K)
Proven Leadership Driving Turnaround
8
Solid Growth Performance
• February 2015 Proxy Contest Resulted in Leadership Change
• During previous tenure (2004-2012) current CEO, Jeff Schlarbaum drove 32% sales CAGR
• Business declined during his absence 2013-2015
Sales
Note: Sales &Op Income from continuing operations excludes revenues of Southern California Braiding divested July 2015
Oper.
Income
Schlarbaum EVP & President Post Schlarbaum Departure
IEC ELECTRONICS 2017© | CANNOT BE PRESENTED, REDISTRIBUTED, OR SHOWN TO ANYONE WITHOUT EXPRESS WRITTEN PERMISSION
New Strategic Direction
9
IEC ELECTRONICS 2017© | CANNOT BE PRESENTED, REDISTRIBUTED, OR SHOWN TO ANYONE WITHOUT EXPRESS WRITTEN PERMISSION
10
Substantial Progress To Date
Gross Margin Improvement
Net Income Improvement
‣ Divested Non-Core
Underperforming West Coast
Operation
‣ Restructured HQ Facility to Unlock
Greater Efficiencies, Productivity,
and Margin Accretion
‣ Unified All Operating Units Under
IEC Brand and Established One
Shared Vision
($
M
)
5%
10%
15%
2013 2014 2015 2016
($15)
($10)
($5)
$0
$5
2013 2014 2015 2016
IEC ELECTRONICS 2017© | CANNOT BE PRESENTED, REDISTRIBUTED, OR SHOWN TO ANYONE WITHOUT EXPRESS WRITTEN PERMISSION
$15
$20
$25
$30
$35
2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16
11
Strengthened Balance Sheet
($M)
Net Debt Reduction*
($16.7)
Reduced Debt/EBITDAS To 2X**
Decreased Inventory by $10.4M since 4Q15
* Debt, less cash ** Calculated in accordance with our credit agreement, as disclosed in 10-K
IEC ELECTRONICS 2017© | CANNOT BE PRESENTED, REDISTRIBUTED, OR SHOWN TO ANYONE WITHOUT EXPRESS WRITTEN PERMISSION
12
Improved Cash Flow
Free Cash Flow
-$10
-$5
$0
$5
$10
2012 2013 2014 2015 2016
Enhanced Asset Management Creates Flexibility
($M)
IEC ELECTRONICS 2017© | CANNOT BE PRESENTED, REDISTRIBUTED, OR SHOWN TO ANYONE WITHOUT EXPRESS WRITTEN PERMISSION
13
Driving Long Term Growth
‣ Reinvigorated Existing Customer
Relationships to Restore Confidence
‣ Driving Cross-Selling Opportunities Amongst
In-house Verticals
‣ Reformulating New Customer Acquisition
Structure to Drive Organic Growth
IEC ANNOUNCES
$3.7 MILLION
CONTRACT
IEC RECEIVES $10.2
MILLION CONTRACT
FROM TOP GLOBAL
DEFENSE COMPANY
Top 5 Medical
Device Company
IEC ELECTRONICS 2017©
Rebuilding the Funnel
14
Year End Backlog
‣ Onboarding of new customers is typically 12-18
month process
• New customer funnel has deteriorated since
2013/2014, negatively impacting 2016 backlog
‣ Existing customer base is solid
• Two key customers experiencing expected short
term volume reductions
‣ Executing several new customer acquisition
initiatives
• Restructured entire sales team and go to
market strategy
$0
$25
$50
$75
$100
2014 2015 2016 ($M)
IEC ELECTRONICS 2017©
Improved Revenue Mix
15
Communications/Other
2%
Aerospace &
Defense
38%
Medical
34%
Industrial
26%
Strategic Shift Towards Revenue Composition Better Suited to Our
Capabilities; Increased Percentage of Revenue from High Growth
Medical Sector
Year Ended September 30, 2015
Communications/Other
6%
Aerospace &
Defense
43%
Medical
23%
Industrial
28%
Year Ended September 30, 2014
Sales by Market Sector
Industrial
16% Aerospace &
Defense
40%
Medical
42%
Communications/Other
2%
Year Ended September 30, 2016
IEC ELECTRONICS 2017© | CANNOT BE PRESENTED, REDISTRIBUTED, OR SHOWN TO ANYONE WITHOUT EXPRESS WRITTEN PERMISSION
16
Looking forward
Rebuild & Strengthen
Bridge
Growth
Retraction
• Underperformance
with previous
management
• Loss of $34.7M
through 2015
• Profit erosion
• Turnaround
commenced
• Return to profitability
• Strengthened balance
sheet
• Solidified operational
excellence
• Rebuild new customer
sales funnel
• Proactively address
expected $20-25M
volume decline for two
existing customers
• Reinstate proven
practices to drive
sustained growth
We Are Here
2015 – 2016 2017 2018 2013 - 2014
• Drive Organic
Growth
• Return IEC brand
to leadership
position as
demonstrated in
2012
Success
2012
• Revenue
$130.4
• Gross Margin
18.9%
• Operating
Margin
10.1%
Thank you