Bodycote plc · LSE:BOY
Bodycote — FY2012 Earnings Presentation
39 slides from Bodycote's earnings presentation, Feb 27, 2013
Slide 1: 2012 Full Year Results
» 2042 Full Year Results __ 27 February 2013
Slide 2: Introduction
Introduction BBodycote Chief Executive
Slide 3: Agenda
BBodycote Agenda Highlights Financial review Business review 4 c 0) = ror xe) 0) > ® ae) 2 D ® L © = n Outlook
Slide 4: Highlights
Highlights Bodycote = Another year of good progress = 3% sales growth (6% at constant currency) = Headline operating profit up 14% = Enhanced mix and operational efficiency Resilience = Margin up to 16.6% from 15.0% = Resilience despite European headwinds =" 113% headline operating cash conversion £
Slide 5: Financial review
Financial review BBodycote David Landless Finance Director
Slide 6: 2012 Results summary
2012 Results summary Bodycote ( Revenue 587.8 570.7 3% | Headline: Operating profit 97.9 85.5 14% Margin 16.6% 15.0% Profit before tax 94.3 80.9 17% Exceptional items' (4.5) (5.1) ( Headline operating cash flow 110.8 96.0 ) Headline operating cash conversion 113% 112% \ Net debt (cash) 34.2 (0.1) J
Slide 7: Divisional summary
Divisional summary Bodycote Underlying — Total £m 2012 2011 growth FX Acquisitions growth ADE ( Revenue 260.4 233.5 ||19.8 8% (2.6) 9.7 26.9 12% Headline Operating Profit’ 69.6 51.1 15.8 31% (0.4) 3.1 18.5 36% Margin 26.7% 21.9% AGI [ Revenue 327.4 337.2 (5.5) -2% (17.0) 12.7 (9.8) -3% Headline Oper
Slide 8: Headline operating profit bridge
Headline operating profit bridge (£m)
Slide 9: Cash flow
Cash flow Bodycote Headline operating profit 97.9 85.5 Add back: Depreciation and amortisation 513 51.4 Share-based payments 3.9 5.4 Capex to depreciation ratio Headline EBITDA 153.1 142. 0.9 times (2011: 0.9 times) Net capital expenditure (47.7) (44.5) Working capital 5.4 (1.8) Headline operating c
Slide 10: Refinancing
Refinancing €125m facility refinanced for 5 years to March 2018 Committed facilities continue at £226m, with weighted average maturity increased to 4.2 years Average margin will increase by 25 basis points in 2013 compared to 2012 Financial covenants unchanged
Slide 11: Five year perspective
Five year perspective At actual exchange rates Free cash flow ROCE £m % 19.5 71 <7¢ 12.1 10.1 a 2008 2009 2010 2011 2012 2008 2009 2010 2011 2012
Slide 12: Business review
Business review Stephen Harris Chief Executive
Slide 13: General Industrial
General Industrial Bodycote End markets Bodycote 2011 2012 Europe: Heavy machinery gg ( Europe & ROW j Sales: £181m General capitalgoods (> —= Growth’: flat ¢ Weakening through year Supply chain stock build ~“ * Outperformed end markets N. America: Heavy machinery Er-_ North America Sales: £56m Gene
Slide 14: Automotive
Automotive End markets 2012 Europe: Car production Heavy truck Supply chain stock build ct N. America: Car production Heavy truck Technology driven change ws —as ET YE 4 Bodycote Bodycote ( Europe & ROW Sales: £105m Growth*: -10% ¢ Eastern Europe particularly weak \3 Q4 destocking ‘North America Sal
Slide 15: Aerospace & Defence
Aerospace & Defence End markets Commercial new build Spares requirement Defence Supply chain stock build 2011 f ff > f 2012 as B ob Bodycote Bodycote Va Sales: £133m Growth*: 13% « Aerospace buoyant globally ¢ European supply chain for narrow body platforms particularly strong ¢ Defence sales robust
Slide 16: Energy
Energy Bodycote End markets Bodycote 2011 2012 Oil & Gas 7 ‘ Oil & Gas Sales: £58m Supply chain stock build =o c Growth*: 15% ¢ Share gains and subsea growth * Overall rig count flat, Bodycote benefiting from rig relocations x I ~ Power Generation ff = ( Power Generation Sales: £25m Growth*: 3% * Co
Slide 17: Revenue mix overview
Revenue mix overview Growth at constant exchange rates Weak macro- economics North America Aerospace, Defence & Energy Secular Western Europe Automotive & General Industrial Western Europe Aerospace, Defence & Energy North America Automotive & General Industrial Eastern Europe Technologies Other YOY
Slide 18: Resilient despite Eurozone headwinds
Resilient despite Eurozone headwinds Bodycote End markets =~ °o 1 European Capital Goods & = Weakening economy in Europe Consumer Durables Index =——3 Mth Moving Ave, YOY Change = Impacts supply chain, particularly Eastern Europe = = Aerospace and Energy markets in bok HON Bb ® O& Dec-10 Feb-11 Apr-1
Slide 19: Strategic development
Strategic development Chief Executive
Slide 20: Developing the business in 2012
Developing the business in 2012 Bodycote Central & Eastern North American network pre-acquisitions e tb <_ von buen e @ ewok | J r Hit e a e e BAS . Noa e e N IRGIN \ MiIssou! . Ki Y is} LINA, i) r
Slide 21: Acquisition of Curtiss-Wright HT business
Developing the business in 2012 Bodycote Acquisition of Curtiss-Wright HT business (©) w fd © sc DY os fm es 8 MICHI 7) x . vam @ ? @ N INDIAN e®@ ut ® \e ves a ? * Completed April 2012 e e . ili ¢ 8 plants siet KANSAS CARL « High Aerospace & Energy content me * Builds logistics network in central r
Slide 22: Acquisition of Carolina Commercial HT business
Developing the business in 2012 Bodycote Acquisition of Carolina Commercial HT business (©) ‘e e IN oy e 2 a es “ee ® e Y e ® ' e600 INDIANA ee C ‘ Pole dns _" issu ain * Completed October 2012 e e %& on - 7 plants be ‘ee. e Re ¢ Market leader in the South East « Fledgling aerospace supply chain
Slide 23: Other acquisitions
Developing the business in 2012 Bodycote Other acquisitions (©) ° ; MICHIGAN . © ewvonx a © ? @ a @ YLVANIA e ® , en noua | @@ og ILUN ®, Py os “es MISSOURI KENTUCKY : VIRGINIA . 2 plants ; “SEER , indiana Ss ® = a ‘s. * Specialised high-growth processes ° seaen >. fe) e
Slide 24: Developing the business in 2012: Acquisitions
Developing the business in 2012 Acquisitions Cc Pre Acquisitions North American business Plants: 37 Revenue: £180m ADE margin: 30% AGI margin: 21% £85m cost Post Acquisitions North American business‘ Plants: Si) Revenue: £235m ADE margin: 30% AGI margin: 20% BBodycote Acquisitions help balance the G
Slide 25: Greenfield sites & growth markets
Developing the business in 2012 Bodycote Greenfield sites & growth markets = Three Greenfields for ADE: = Three Greenfields for AGI: = Capacity enhancements — Airframe components, — Heavy truck, China — HIP in USA for Aero & France — $3P, Sweden Power Generation — Aero engine components, — Automotiv
Slide 26: The strategy in action
The strategy in action Bodycote Divisional market focus Enhance business processes Maximise return on existing assets Expand with our customers to emerging markets Longer term growth from targeting specific technologies Acquisitions Investing where returns are attractive Improved cost efficiency, en
Slide 27: Five year perspective
Five year perspective Bodycote At 2012 exchange rates (£m) pees Margin Acquisitions, £22m % 2008 2009 2010 2011 2012 2008 2009 2010 2011 2012 Headline operating profit Average headcount - excl. 2012 acquisitions £m Acquisitions, £5m (acquisitions add 547 people) lal lin 2008 2009 2010 2011 2012 2008
Slide 28: Outlook
Outlook Stephen Harris Chief Executive
Slide 29: Daily sales trend
Daily sales trend Bodycote At constant exchange rates (£m) Average daily sales ——2011 =——=2012 ---2012 (pre-acquisitions) T T T T T T T 1 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov’ Dec
Slide 30: Bodycote outlook
Bodycote outlook General Industrial Automotive Aerospace & Defence Energy Immediate Europe yet to improve North American sales flat Europe yet to improve North American sales flat “MP Aerospace growth moderating Tr Defence sales flat Bai & Gas destocking im Power Generation steady Bodycote Looking f
Slide 31: Outlook
Outlook “2012 has been another year of good progress. Growth in our global Aerospace and Energy business outweighed the decline in Automotive and General Industrial markets in Europe. Improving business mix and the part-year benefit of acquisitions have enabled further improvements in performance an
Slide 32: Slide 32
Slide 33: Definitions
Definitions Headline Operating Profit Headline Profit Before Tax Headline Operating Cash Flow Headline EBITDA Headline EPS ROCE Capital Employed Headline Operating Cash Conversion Bodycote Operating profit before exceptional costs Profit before tax and exceptional costs Cash generated by operations,
Slide 34: 2012 Statutory income statement
2012 Statutory income statement Revenue 587.8 570.7 Headline operating profit 97.9 85.5 Cash exceptional items Acquisition expenses (2.5) - SSC establishment costs (2.4) - Sale of investment 24 - (2.5) - Non-cash exceptional items Amortisation of acquired intangible fixed assets (2.0) (0.9) Impairme
Slide 35: Net finance charge / facilities
Net finance charge / facilities Va £m 2012 2011 Net interest payable 0.5 4.2 Financing costs a Fe 2.0 Bank and other charges 0.8 0.7 Pension finance charge 1.2 0.7 Net finance charge 3.6 4.6 "= Interest payable: reduction driven by lower average net debt = Financing costs: lower due to 2011 refinanc
Slide 36: Pensions
Pensions Bodycote £m 2012 2011 UK Funded 4.2 1.8 Other Western Europe Funded 0.5 0.7 Other Western Europe Unfunded 12.6 9.9 Western Europe Total 17.3 12.4 North America Funded 0.9 0.9 Emerging Markets Unfunded 0.3 0.2 Total retirement benefit obligations 18.5 13.5 (— > IAS19 (revised) Employee Benef
Slide 37: Financial information
Financial information Shares in issue Average Exchange Rates Euro US Dollar SEK Financial Ratios Net Debt : Headline EBITDA Headline EBITDA Interest Cover Gearing (Net Debt:Total Equity) 2012 2011 187.0m 185.8m 2012 2011 Average (P&L) 1.23 1.15 Closing (B/S) 1.23 1.19 Average (P&L) 1.59 1.60 Closing
Slide 38: Divisional summary - H1 vs H2
Divisional summary - H1 vs H2 £m ADE Divisions H1 H2 Total Revenue 130.3 130.1 260.4 Headline operating profit 1.3) 38.3 69.6 Margin 24.0% 29.4% 26.7% AGI Divisions H1 H2 Total Revenue 171.0 156.4 327.4 Headline operating profit 22.8 20.8 43.6 Margin 13.3% 13.3% 13.3%
Slide 39: Bodycote
Bodycote