AoFrio Results Presentation 4th March 2024

AoFrio Company Confidential ©2024
AoFrio Company Confidential ©2024
AoFrio FY23 Results
Presentation
March 2024
Greg:
Hello everyone. Thank you for making time today to join AoFrio’s FY23 results
presentation.
My name is Greg Balla, I am the CEO of AoFrio, and I am looking forward to
presenting today.
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AoFrio Company Confidential ©2024
We will be making some forward-looking
statements today and as these are
predictive in nature, they are subject to
a number of risks and uncertainties relating
to the company, its operations and the
markets in which it competes. Some
things are beyond the control of the
company and actual results and conditions
may differ materially from those expressed
or implied by such forward-looking-
statements.
Safe harbour
Slide 2
Greg: Please note the safe harbour statement on the screen. I will give you a
minute to read the statement.
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AoFrio Company Confidential ©2024AoFrio Company Confidential ©2024
AoFrio Company Confidential ©2024
John Scott
Chairman AoFrio
Greg Balla
CEO AoFrio
Howard Milliner
CFO AoFrio
Slide 3
Greg:
I also have presenting with me today, Howard Milliner, CFO of AoFrio and John
Scott our Board Chairman will say a few words as a summary.
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AoFrio Company Confidential ©2024
Agenda
01
Year in review
02
Business update
03
FY24 outlook
04
Q&A
Slide 4
Greg:
The agenda for the today is on the screen. We are going to provide some
context for the FY23 year, a business update highlighting the progress we’ve
made against our business strategy and then discuss our FY24 outlook.
At the end of the session, we’ll have time for questions. So, if you have any
questions, please type them into the Q&A tab at the top of your screen at
anytime
Now I’ll hand you over to Howard to provide some context to the FY23 results.
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AoFrio Company Confidential ©2024
Year in Review: Revenue Trend
Influenced byNZ$000’sGrowth
Pre-Covid Levels61,722019
Covid36,882020
Recovery64,222021
Component shortages74,322022
Overstocking and macroeconomic issues 66,552023
Slide 5
Howard:
Thanks Greg.
Our Annual Report was released last Thursday and that includes a commentary
on the 2023 year. Today, I will provide context to the result and recent
performance and highlight the more significant trends.
The last four years have certainly been interesting and challenging.
2020 was the year impacted by Covid.
2021 saw a big lift in volumes as end customers restarted their cooler
investment programme.
In 2022 there was a global electronic component supply shortage
impacting our ability (and other suppliers) to meet customer demand.
We entered the 2023 year with the component supply issue largely
resolved, only then to find that many customers had excess inventory to
consume first. As an example, our biggest motor customer advised us in
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January that they would be purchasing 5 fewer containers in 2023. Other
customers said their demand would also be less. Demand began to
increase in the 2
nd
half.
Our view is COVID has delayed our Growth by three years.
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AoFrio Company Confidential ©2024
Year in Review – Financials
Revenue
Revenue down 10.5%
$66.6
million
Gross margin
Gross margin up 2.3pp
30.0
%
EBITDA
EBITDA down $0.6m
1.0
million
Operating Cash
Operating Cash up $8.3m
$3.9
million
Slide 6
Howard:
2023 ended as we have reported. Revenue for the year at $66.6m, EBITDA
within guidance at $1.0m.
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AoFrio Company Confidential ©2024
Year in Review- HI vs H2
NZ$000’s
IncreaseH2-23H1-23
+6,33636,44430,108Revenue NZ$000’s
29.8%30.5%Gross margin
+2,415+1,712-703EBITDA
+6,771-2,823Operating cash inflow
Slide 7
Howard:
Performance in the 2
nd
half was a big improvement on the 1
st
half.
This improved 2
nd
half the result of increased volumes supplied and an increase
in our product development effort. Operating cash flows improved significantly to
a $3.9 cash inflow by end of year.
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AoFrio Company Confidential ©2024
Year in Review- IoT Growth
NZ$000’s
IoTMotors
35,05431,498Revenue NZ$000’s
41.7%17.1%Gross margin
Slide 8
Howard:
The other trend I would like to highlight is the growth in our IoT business.
In 2015 we had no IoT revenue at all. Our first IoT product was launched in 2016
and today IoT revenue represents 52.7% of total revenue. IoT revenue growth
over the last 6 years from 2017 is an impressive CAGR of 22.5%, even with the
challenges of the last four years.
Over to you Greg to provide a business update and comment on the outlook.
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AoFrio Company Confidential ©2024
AoFrio Company Confidential ©2024
Business update
Slide 9
Greg
We are now going spend time discussing what AoFrio is focussed on in FY24
and as part of that I would like to re-present the slide we discussed at the
Analyst Briefing and the ASM in May last year.
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AoFrio Company Confidential ©2024
AoFrio Company Confidential ©2024
Growth aspirations to deliver shareholder returns
Connected
devices
10m
IoT Annual Growth
30%
Serviceable
Available Market
$6B
Market Share
??%
ESG Metrics
Gender Diversity
:40:40:20
Net Zero by 2040
Slide 10
Growth funded from internally generated cash flow
Greg:
This slide shows some of the growth aspirations we presented in May 23 and
our aspirations haven’t change.
Our plans and aspirations see us continuing to grow in the Cold Drink
Equipment (CDE) market, but also entering adjacent new markets with our IoT
and motor solutions expanding our Serviceable Available Market from $300
million today to over $6B.
We believe we can leverage our global footprint, current channel relationships
and our leading technology position to accelerate our business over time. While
it will be challenging, we believe we have the capability and have staged plans
to assess and if validated enter these new verticals and take share in this $6B
market. I will update you on our positive progress shortly.
We are not looking for additional capital from shareholders to support this
strategy as we are investing the internally generated cash flow to do this.
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Connected Devices
AoFrio Company Confidential ©2024
Slide11
Greg:
On the previous slide we talked about a target of 10m connected devices, this
slide show the progress we are making as we increase the number of assets
connected to our platform. The growth strategies I will discuss soon will further
accelerate connections.
Our IoT GAGR since 2017 is 22.5% we believe with the plans we have in place
the aspirational target is achievable.
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AoFrio Company Confidential ©2024
Growth plans
•For the Cold Drink Equipment (CDE)
market we are focused on:
•Entering new geographies for IoT
•Increasing value for customers by
leveraging the data and algorithms in
our platform
•Energy management
•Other asset types that can be
connected
•Entering adjacent markets: Food Service
and Retail
•Accelerating and investing in new product
development as revenue allows.
Slide 12
Greg:
No I am going to talk to you about our growth plans and approach.
Looking forward we are focused on protecting and growing our core business
the cold drink equipment business (CDE).
The new geographies we are focused on are the US and Europe and our new
gateway, network pro one, has allowed us to enter these markets. I will talk
more about this on the next slide.
Our current solution offering allows us to address certain asset types and we are
investigating the value of expanding the range of assets we can connect. This
would add significant value to customers as it would allow them to go to one
place to gain insights into their complete fleet.
In May 23 we discussed that we were evaluating the Food Service & Retail
markets as potential adjacent markets. We have since commenced developing a
solution for that market and I will give update on our progress in a few slides.
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The graph on the right-hand side shows the change in focus of the product &
engineering team. The team had spent 18 months focused on support existing
products due to the electronic component shortages as we have previously
discussed but are now focused on New Product development supporting growth
initiatives.
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AoFrio Company Confidential ©2024
New Product and Market Development
•ECR 2 26W
oNew higher-power ECR 2 26W motor is
near-launch.
oSeveral customer trials underway.
•Network Pro
oNetwork Pro ONE launched Oct 2023
oNetwork Pro TWO estimated launch H2 2024
•Remote Asset Management
oLaunched capability to change cooler parameter
settings remotely via the web.
•Energy efficiency
oAward-winning solution enables bottlers to reduce
energy consumption by up to 54% compared to
their shaded pole cooler configuration.
oPlan is to commercialise the AoFrio Inside solution
in 2024.
AoFrio Company Confidential ©2024
Slide 13
Greg:
I am now going to highlight some of the new product and market development
activities that will impact FY24.
Firstly, ECR 2 26W.
The ECR 2 26W, a new higher-powered motor, has been designed for use in
larger supermarket and larger bottle cooler applications. We have several
customer trials underway and are currently finalising compliance and certification
requirements production ramp-up is expected by the end of Q1 2024.
Then Network Pro ONEis part of the US and Europe market entry strategy,
AoFrio launched NetworkPro ONE in October 2023. This is a new variant of
the NetworkPro family and is a, single-cooler cellular connected gateway. It’s
installed as a part of the cooler manufacturing process.
While the original Network Pro has proven effective at activating stores with
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multiple coolers, the Network Pro ONE is targeted as a cost-effective new build
and retrofit cellular connected solution for single coolers. This new option has
been well-received by customers, with trials underway across 13 different
OEMs/Bottlers, primarily in North America. We received our first order in
December 2023.
As part of the Network Pro ONE launch, AoFrio introduced the capability to
change cooler parameter settings remotely via the web. This remote asset
managementoffers significant benefits to customers looking to optimise their
fleet energy consumption by allowing the remote change of seasonal energy
parameters across a fleet. AoFrio plans to extend this capability in 2024 to
further manage, adjust parameters, and report on energy savings and carbon
reduction.
Energy efficiency has rapidly increased in importance for our customers with
most now having large energy reduction targets in place for their cooler fleets.
We presented a proposed solution to the Bier Coolition in October 23. The
solution we presented combined our complete technology stack including a SCS
controller, high efficiency motors ECR2, Network Pro and our Platform to deliver
an estimated 54% energy reduction. This solution will require us to deliver to new
functionality which we had in pilot at the time of the presentation. There has been
significant interest in our solution.
This year we will formally launch this integrated solution as AoFrio Inside.
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AoFrio Company Confidential ©2024
Spotlight on Food Service and Retail
•Solution definition: working with two potential customers as
development partners
•Onboarding next 3 potential customers for solution
validation starting March.
•Subscription revenue.
•Plan to launch the first Food Services solution in H2 to target
customers.
NZTE Small Box Retail Dynata Research & Allied Market Research Global Refrigeration Market (2019 -2027)
0
2
4
6
8
10
12
14
16
18
$4.5B
$17B
$300M
$900M
Food Services and Retail
Cold Drink Equipment
SAM
(Serviceable Available Market)
TAM
(Total Addressable Market)
Slide 14
Greg:
We are continuing to make progress on developing and validating our food
service and food retail market entry strategy.
We are doing this because we believe we can leverage the capability of the
organisation to generate significant profitable growth in this adjacent market.
The market is estimated to be at least 10 times the size of our current market,
(shown by the graph) the market is at the early stage of development it terms of
IoT solutions, and customers have problems that are similar to the types of
problems we understand making it a good fit for AoFrio.
We have been working with two potential customers as development partners
one in the food service market and one in the food retail market and this is
progressing well.
• With the first partner an early proof of concept identified opportunities for
efficiency, resulting in a fast return on investment for the brand. The proof-of-
concept has progressed to a five-site trial running from October 2023 through
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to March 2024.
• The second development partner is a major global supermarket chain in South
America aiming to automate their refrigeration monitoring and alerting system.
This has now moved from a proof of concept to a multi site trial which will run
until the end of July24.
• We have commenced working with the next 3 potential retail customers on
solution validation trials.
• Working with NZTE we completed a second round of research in the US
market. The aim of the research was to further understand the need for a
solution and validate the commercial model. This provided great insight into
this market.
• AoFrio plans to launch its first Food Services solutions in H2 FY24 to targeted
customers
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AoFrio Company Confidential ©2024
AoFrioTechnology Platform
IoT devices
Mobile
Web
Cloud to cloud
DevOps tools
Monitoring
Services
DatabasesData lake
VisualisationQA tooling
Slide 15
Greg:
In these presentations we spend a lot of time talking about the hardware part of
our solution, i.e the top left-hand box of this slide labelled ‘Services’, but it is only
one part of our technology platform. While our hardware is high quality, rich in
functionality and a key part of our solution it is the software solution that brings it
to life and what our customers use and value to manage their fleets of coolers.
The technology used as part of delivering this software solution is represented
by the other parts of this diagram.
oWe are modernising the platform to reduce costs, increase speed
to market, improve interoperability and resilience
oBuilding with reusable components and building blocks to provide
a connected ecosystem across all applications.
oModernising also allows for easier adoption of new technology
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like machine learning and AI.
This diagram looked very different 2 years ago we have invested in modernising
the platform and with rapid technology change it will continue to evolve.
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AoFrio Company Confidential ©2024
ESG progress
•In FY23 we completed a review of ESG framework,
achievements include:
oUpdated Board and Committee charters.
oSustainability Policy and a Modern Slavery
Statement launched.
oEcoVadis Bronze Medal.
•Next steps include:
oEstablishing baselines for reporting and target
setting.
oIntegrating product circularity into the product
development process
oAdvancing organisational culture and
enhancing global collaboration, inclusivity, and
innovation.
Slide 16
Greg:
ESG is an important driver for us at AoFrio and for our customers as we deliver
solutions for energy savings and energy monitoring to support their carbon
reduction objectives.
In early FY23, AoFrio completed a review of its ESG framework and created a
plan to continue to improve performance and effectiveness. As noted on the
slide we completed the updating the Board and Committee charters to clarify
roles and responsibilities. Current policies have been updated and new policies
implemented including a Sustainability Policy and a Modern Slavery Statement.
In FY24 we will establish baselines for reporting and target setting. Commence
integrating product circularity into the product development process.
During the year we undertook recertification of our ESG systems and processes
through an independent global body, EcoVadis, and we were awarded a bronze
medal which puts us in the top 35% of companies assessed. There are 130,000
companies assessed across four categories. (Environment, Ethics, labour &
Human Rights, Sustainable Procurement)
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We have been evolving our organizational culture focusing on global
collaboration, inclusivity, and innovation. Areas highlighted in the employee
engagement (72% average score) and diversity, equity, and inclusion surveys
(80% inclusion score).
As part of the Board succession planning process, the Board announced
the appointment of John Scott as Board Chairman, following the resignation of
Gottfried Pausch who had been on the AoFrio Board for almost ten year. During
the year, AoFrio also appointed two new Board Members. Melissa Clark-
Reynolds and Roz Buick.
Melissa became a Futurist after 25 plus years’ experience as an entrepreneur
and CEO of a number of Technology companies. She was awarded the ONZM
for Services to Technology in 2015. Melissa is a director of Atkins Ranch Lamb
Inc, Alpine Energy and Wētā workshop. Melissa works with food companies to
execute transformational strategies.
Roz has 27 years’ experience leading businesses that digitally transform
industries via innovative workflow re-engineering & automation across hardware,
SaaS, and software platforms. A catalyst for change, she has consistently scaled
growth via synergistic product and go-to-market strategies across agriculture,
architecture, engineering & construction, geospatial, property and land
management. Previously Roz was Senior Vice President at Oracle and Trimble
Inc leading global businesses, she is now an independent consultant and Board
Director on technology, research and construction companies in ANZ, the
Americas.
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AoFrio Company Confidential ©2024
FY24 outlook
•AoFrio expects FY24 to show positive momentum, initial
revenue from new solutions and geographies, including:
oThe launch of a new solution for energy reduction in
the CDE market.
oCommence entering the US & EMEA regions for
CDE
oThe first targeted solution release for the Food
Service
and Retail markets.
•AoFrio expects a modest recovery in its base business.
•Continuing to align investment in new product development
and launch activity to revenue and gross margin
generation, as well as managing operational expenditure.
•Guidance for FY24
•Revenue between $70m and $80m
•EBITDA around $2.5m
AoFrio Company Confidential ©2024
Slide 17
Greg:
The FY24 outlook.
We made clear progress on product development in the last financial year and
as a result we expect FY24 to show positive momentum with
new solutions coming to market, including:
• The launch of our new solution, AoFrio Inside, for energy reduction in the Cold
Drinks Equipment (CDE) market.
• Entry into the US & EMEA regions with the Always on Network Pro One for
CDE IoT
• The first targeted solution release for the Food Service and Retail markets.
AoFrio expects a modest recovery in its base business as the customer
inventory overstocking that impacted FY23 appear to have normalised.
We are continuing to align our investment in new product development and
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launch activity to revenue and gross margin generation and we are tightly
managing operational expenditure. This should ensure that both ongoing
operations and growth activities can be funded through internally generated cash
flows.
AoFrio’s FY24 revenue guidance is $70m to $80m, 13% at the midpoint of the
range, with a target EBITDA of $2.5m. Guidance is subject to the usual risk
caveats around market and macroeconomic conditions.
The year has started positively, and we look forward to updating you on our
initiative progress and our results as the year progresses.
I will now hand over to John Scott Chairman of the AoFrio Board to provide some
closing comments.
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AoFrio Company Confidential ©2024
Summary
•FY23 Revenue $66.6m EBITDA $1m
•Guidance FY24 $70-80m EBITDA $2.5m
•Focus on execution
•Growth plans funded from internally
generated cash flow.
Slide 18
John Scott
Thank you, Greg,
This feels like it could be shaping up to be the most normal year, whatever that
is, since 2019 although there is still macroeconomic uncertainty and geopolitical
factors at play, we are optimistic about the year.
Our focus is on delivering what we say with the belief that the market will value
us as a technology company with revenue multiples like our peers if we
consistently deliver the type of results we believe are possible
Technology companies' biggest assets are its people, and we have a talented
group of people whom we will see benefit from over the next 24 months now that
we are not chasing our tail. I have enough experience and line of sight to know
we have a well-run company, and we will demonstrate that to the market.
Thank you.
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AoFrio Company Confidential ©2024
Q&A
Greg:
Now I’ll open up to questions
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AoFrio Company Confidential ©2024
AoFrio Company Confidential ©2024
Thank you
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AoFrio Company Confidential ©2024
AoFrio Company Confidential ©2024
Email: sales@aofrio.com
Telephone: +64 9 477 4500
Website: www.aofrio.com
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