Avon Protection bounces back after announcing it was shutting down its armor business

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London – Like the material that was until recently at the center of its name, Avon Protection has seen a rubber-like rebound in its stock value over the past few days.

Immediately after the Melksham, UK-based company announced it was shutting down its bulletproof vests business on December 15, shares of the UK protective equipment group fell around 15% to 916p.

Confidence, however, appeared to be quickly restored, with the Avon share price rallying sharply to trade in London at 1184p on December 21, 23% above the previous week’s low.

The rebound may have reflected financial details and medium-term outlook presented in Avon’s annual report released on December 17 and reassuring comments from Paul McDonald, CEO of the company, formerly known as Avon Rubber.

McDonald’s was generally optimistic about the strength of Avon’s head-protection and respiratory equipment order pipeline for military and first-responder applications.

In particular, Avon sees the ramp-up of a NATO framework contract for its FM50 respirator mask as a key growth driver, as do other opportunities with the US Department of Defense (DOD) customers. military and first responders from around the world. .

“Everyone knows this has been a tough time for the company,” McDonald told investment analysts on a call to discuss Avon’s full year results, which had been delayed pending a strategic review of the armor activity.

“But we believe we have taken decisive steps that allow the company to return to the forefront with strong margins, strong cash flow and consistently positive growth prospects with the technologies and products we have. “

For its 2021 fiscal year ended September 30, which included the $ 130 million acquisition of Team Wendy in November 2020, Avon reported order intake up 34.9% to $ 282.7 million. The increase equates to 38.8% excluding Team Wendy and Armor.

Revenue increased 16.2% to $ 248.3 million, including a first contribution of $ 41.0 million from Team Wendy. Sales of respiratory and head protection products increased 21.0% to $ 241.8 million, but only 0.8% excluding the acquired business.

An adjusted profit margin (EBITDA) of 15.1%, reflecting lower than expected ballistic protection revenue, Avon noted. EBITDA margin excluding shielding is 19.0%

A reported operating loss of $ 29.0 million, on the other hand, included $ 14.2 million of amortization of acquired intangible assets and $ 46.8 million of impairment of assets related to the shielding business. ,

Avon expects annual cost savings of $ 15 million from the liquidation compared to the expected net cash costs of the closure and resizing of continuing operations of $ 3 million to $ 5 million in its next two fiscal years.


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