Castings Public Limited Company · LSE:CGS
Castings Public — Castings — H1 FY2023 Earnings Presentation
26 slides from Castings Public's earnings presentation, November 2022
Slide 1: Castings PLC Interim results to 30 September 2022
Castings PLC Interim results to 30 September 2022 November 2022 1
Slide 2: Timeline
Timeline Foundry Brownhills Robotic production site CNC Highly automation commences production Walsall Speedwell project invested in Walsall begins site closed acquired commences iron foundry 1835 1907 1957 1960 1977 1991 1996 2009 2016 2022 and Castings Floated on William Major new machine Limited
Slide 3: The Castings group
The Castings group Foundry | Brownhills Foundry | Dronfield Machinist | Brownhills Founded 1835 Acquired 1991 Acquired 1996 30,000 tonnes capacity 40,000 tonnes capacity Over 100 CNC machines 390 employees 441 employees 350 employees www.castings.plc.uk 3
Slide 4: Revenue profile
Revenue profile Revenue by sector Revenue by location 0.5% 16% Heavy truck - 8.0% UK engine 18.0% 36% Heavy truck - Europe 10% chassis Automotive North & South America 73.5% 38% Other Rest of world www.castings.plc.uk 4
Slide 5: Our customers
Our customers Other 16% Auto 10% Commercial vehicle 74% www.castings.plc.uk 5
Slide 6: Commercial vehicle customer revenue mix
Commercial vehicle customer revenue mix 2011 2016 2018 2019 2020 2021 2022 Customer A 23% 25% 30% 29% 28% 28% 23% B 11% 13% 13% 13% 13% 14% 15% C 1% 4% 8% 10% 9% 10% 12% D 10% 9% 10% 10% 9% 7% 7% Total 45% 51% 61% 62% 59% 59% 57% 70 % of external revenue 60 50 D 40 C 30 B 20 10 A 0 2011 2016 2018 20
Slide 7: H1 headlines
H1 headlines Customers Production Costs • Increased truck demand • Automation investment • Input price increases • Improved schedule o Automated pouring • Labour cost increases conversion o Robotic investment • Surcharge mechanisms • New engine platforms for two • New platform transitional • Additio
Slide 8: H2 outlook
H2 outlook • High build rates for heavy trucks continues • Pent-up demand • OEMs restricting order intake due to capacity • New engine platforms • Increased content • Embedded into production • US opportunity • Other sector contribution • Improved balance between plants • Skilled recruitment progres
Slide 9: Interim results overview
Interim results overview £m (unless stated) Sep-18 Sep-19 Sep-20# Sep-21 Sep-22 Revenue 68.3 73.1 41.7 69.7 85.6 Profit/(loss) before tax* 5.8 7.3 (1.3) 5.4 7.5 Gross margin 19.9% 21.6% 12.3% 20.0% 20.3% Net margin* 8.5% 10.0% -3.1% 7.8% 8.7% Interim dividend per share declared 3.38p 3.48p 3.57p 3.6
Slide 10: Summary cash flow statement
Summary cash flow statement £m Sep-18 Sep-19 Sep-20 Sep-21 Sep-22 PBT net of tax payments 4.4 3.7 (1.4) 4.0 6.0 Depreciation 3.9 4.2 4.3 4.1 4.0 Working capital movement (3.5) 3.3 6.0 (0.9) (3.7) Capex (3.2) (3.7) (2.6) (2.4) (3.4) Sale of property - - 1.9 - - Free cash flow (excluding pension payme
Slide 11: Dividend growth record
Dividend growth record Ordinary dividend declared per share 16.00 10.0% 9.3% 9.0% 14.00 7.5% 8.0% 12.00 7.0% 6.4% 10.00 6.0% Pence / share 5.0% 5.0% 5.0% 8.00 4.7% 4.7% 4.7% 5.0% 4.3% 4.3% 3.8% 3.5% 4.0% 6.00 2.9% 3.1% 2.6% 2.6% 3.0% 4.00 1.9% 1.9% 2.0% 2.00 3.48 3.57 3.66 3.84 2.91 2.98 3.13 3.22 3
Slide 12: Foundry sales weight
Foundry sales weight 6 month period to: Sep-18 Sep-19 Sep-20 Sep-21 Sep-22 Foundry sales weight (tonnes) 23,900 25,200 14,350 24,300 25,100 -25% -59% www.castings.plc.uk 12
Slide 13: Heavy truck registrations (70% of group revenue)
Heavy truck registrations (70% of group revenue) European heavy truck registrations (calendar year) 350,000 300,000 250,000 Units registered 200,000 Volvo estimate Volvo estimate Volvo estimate Volvo estimate 150,000 100,000 50,000 0 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2
Slide 14: Segmental results - Foundry
Segmental results - Foundry £m (unless stated) Sep-18 Sep-19 Sep-20 Sep-21 Sep-22 Foundry sales weight (tonnes) 23,900 25,200 14,350 24,300 25,100 Average selling price (£/tonne) £2,720 £2,782 £2,822 £2,802 £3,374 Revenue Gross 74.4 79.7 44.6 75.6 95.0 Less: inter-group revenue (9.4) (9.6) (4.1) (7.
Slide 15: Segmental results - Machining
Segmental results - Machining £m (unless stated) Sep-18 Sep-19 Sep-20 Sep-21 Sep-22 Revenue Gross 12.9 13.3 6.0 11.0 10.7 Less: inter-group revenue (9.6) (10.3) (4.8) (9.4) (9.8) External revenue 3.3 3.0 1.2 1.6 0.9 Segmental result (0.8) 0.1 (2.1) 0.05 (0.5) Segmental margin on gross sales -6.0% 1.
Slide 16: Outlook
Outlook Short to medium term Longer term • New platform volume ramp-up • Electrification of heavy duty trucks • Threat to manifold and other engine parts, but • MAN volumes on CBE engine in 2024 what’s the real timeframe? • Volume increases from other sector wins • Scania: 50% electric by 2050 • Vol
Slide 17: Sustainability
Sustainability • Castings plc is a recycler • Electric melting only, unlike a number of competitors • Electricity (scope 2) - 89% of our total energy kWh in FY22 • 100% REGO backed supply • Nil emissions using market based approach • Natural gas (scope 1) • Emissions of 2,984 tCO2e in FY22 (location
Slide 18: In summary
In summary Driving production efficiencies Investment for Investment productivity Ramp-up on new customer platforms Debt free Opportunities Strong Opportunities on next balance generation trucks sheet Bring value add in house – reduce supply chain miles Progressive Agile dividend policy US market –
Slide 19: Additional information
Additional information www.castings.plc.uk 19
Slide 20: Strategy
Strategy Deliver long term sustainable revenues and higher average margins through the following strategic priorities: Reinvestment for innovation and efficiency Increase OEM market share • Innovative design processes • Collaborative, dedicated customer teams • Reinvestment in automation • Increase
Slide 21: Business Model
Business Model Design collaboration & our people Value for stakeholders • Experienced teams • Technical knowledge Customers • Close customer relationships • Flexibility, cost-effective, quality • Latest design simulation • Capability for diverse range • Long term security Foundry production • High v
Slide 22: Revenue and PBIT
Revenue and PBIT 160 20% 18% 140 16% 120 14% 100 12% 80 10% 8% 60 6% 40 4% 20 2% 0 0% 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 Revenue PBIT (excluding exceptionals) PBIT% (RHS)
Slide 23: Track record of strong cash generation
Track record of strong cash generation 45 45 45 40 40 40 Wm Lee CNC 35 35 35 30 30 30 25 25 25 £’m £’m 20 20 20 15 15 15 10 10 10 55 5 00 0 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 1990
Slide 24: Production facilities
Production facilities • Sites: • Castings (Brownhills) – 14 acres • William Lee (Dronfield) – 14 acres • CNC Speedwell – 4 acres • Production facilities: • Castings (Brownhills) – 32,000 m2 (of which 5,000 m2 is warehousing) • 2 x Disamatic vertical moulding lines (up to 15kg part weight) • 1 x GF/D
Slide 25: Recent investments
Recent investments • Robotic handling and processing (started 2016) • 55 robots across the group • £10m investment to date • 4 currently on order and roll-out will continue • Warehouse management system (started 2017) • Bespoke FIFO system in Brownhills • £1m investment and on-going • Heat treatment
Slide 26: Parts in numbers in the period
Parts in numbers in the period • 2,448 – total part numbers sold in the period • £1.6m / 580 tonnes / 46,000 parts – highest revenue single part sold • 14% of revenue generated by top 10 part numbers sold • 21% of revenue generated by top 20 part numbers sold • 352 part numbers each generated over £