Avon Technologies (AVON) Status update summary

Performance and improvement system

• FY23 baseline: revenue fell 7.5%, adjusted EBIT 9.8% and adjusted EPS 26%; operating margin and ROIC were 8.7%, and cash conversion was 7%.

• From FY23 to FY26, revenue rose from $244m to ~ $350m, adjusted EBIT from $21.1m to $40.3m, adjusted EPS from 40.3c to 91.2c and ROIC from 8.7% to 18.6%.

• Exceeded all prior Capital Markets Day targets a year early; revenue increased by over $100m, while adjusted EPS, ROIC and EBIT each tripled or more.

• The Business Improvement System combines sequenced transformation projects, daily management, coaching and continuous improvement to release cash, capacity and leadership bandwidth for growth; transformation cases typically target three-year payback.

• Avon Protection inventory turns improved from 2.9 to 4.2 and on-time delivery from 96% to 97% between HY23 and FY26; Team Wendy production capacity rose from 20,000 to 165,000 units.

Markets and organic growth

• Mission-critical protection technology TAM is $20bn–$30bn, including $5bn–$10bn in current core markets and $15bn–$20bn in close adjacencies; selected markets forecast 3%–6% CAGR for FY26–30.

• Demand drivers include defence modernisation, higher protection requirements, equipment replacement, complex threats, domestic security and greater focus on readiness and stock levels.

• Competitive strengths include customer-funded R&D, 66 granted and 47 pending patents, 58 design registrations, over 4m active respiratory users and high qualification and switching barriers.

• Long product lifecycles and installed bases generate recurring demand for spares, sustainment, replenishment and replacement; program wins add future recurring revenue.

Avon Protection growth plan

• Respiratory protection serves over 4m users in more than 75 countries, with #1 global CBRN respiratory market share and a $400m accessible market; established relationships span the U.S. military, NATO and Five Eyes.

• The U.S. military has 1.8m M50 respirators in service, with 150,000 reaching 20 years of age annually; MITR was selected by U.S. SOCOM, and filter backlog is at a record high.

• European sales grew over 90% since 2023, with more than 500,000 respirators in service and record boots and gloves backlog; defence spending is forecast to increase 20% into FY27.

• Adjacent opportunities include an integrated CBRN market above $800m and underwater respiratory protection with over $40m accessible market, as well as boots, gloves and EXOSKIN adoption.

• Step-change opportunities include a U.S. CBRN suit in phase 3 trials, U.S. rebreathers under evaluation, NATO combination systems and work shaping next-generation U.S. CBRN requirements.