Senior Plc · LSE:SNR
Senior — H1 2021 Earnings Presentation
58 slides from Senior's earnings presentation, 2021
Slide 1: Interim Results 2021
INTERIM RESULTS 2021 Resilient – Well Positioned for the Future Interim Results 2021
Slide 2: Agenda and Cautionary Statement
AGENDA Introduction David Squires CEO 2021 Interim Results Bindi Foyle FD Markets, Strategy & Outlook David Squires CEO Cautionary Statement This document has been prepared solely to provide additional information to enable shareholders to assess the Group’s strategy and business objectives and the
Slide 3: Investment Case: Positioned for Growth
INVESTMENT CASE: POSITIONED FOR GROWTH Our purpose to provide safe and innovative products for demanding thermal management and fluid conveyance applications Clear strategy to maximise shareholder value Focus on IP-rich Aerospace fluid conveyance & Leading thermal Long-term Flexonics A differentiate
Slide 4: Medium Term Minimum ROCE Target
MEDIUM TERM MINIMUM ROCE TARGET ≥ 13.5% Confident in Portfolio optimisation strategy to delivering good maximise value creation 11.1% returns on capital and enhanced shareholder value Strategic focus on IP-rich fluid conveyance and thermal management Ongoing End-Market Intrinsically strong cash Reco
Slide 5: H1 Highlights
H1 HIGHLIGHTS • Robust free cash flow of £19.2m • Trading ahead of management’s previous expectations • Successful completion of the divestment of Senior Aerospace Connecticut • Net debt/EBITDA of 2.0x, liquidity headroom increased to £215m • Restructuring benefits tracking ahead of plan; now expect
Slide 6: Environmental, Social & Governance
ENVIRONMENTAL, SOCIAL & GOVERNANCE E S G First worldwide in our sector to have Excellent participation and Updated the Senior Group Code of emission reduction targets approved by engagement for our first group-wide Conduct in July 2021 the Science Based Targets initiative (for Global Employee
Slide 7: 2021 Interim Results
2021 INTERIM RESULTS Interim Results 2021
Slide 8: Financial Headlines
FINANCIAL HEADLINES H1 2021 H1 2020 Change constant currency Revenue £332.8m £409.0m -19% -13% Adjusted Operating Profit £5.2m £9.0m -42% -34% Adjusted Operating Margin 1.6% 2.2% -60bps -50bps Adjusted Profit before Tax £0.9m £3.6m Adjusted Earnings per Share 0.10p 0.72p Free Cash Flow £19.2m £16.0m
Slide 9: H1 2021 Revenue Bridge
H1 2021 REVENUE BRIDGE £m 450 409.0 (25.1) 400 (57.4) $1.39 (H1 20: 1.27) 350 6.3 332.8 0.0 300 250 H1 2020 Exchange Aerospace Flexonics Interdivisional H1 2021 Revenue Reconciliation £m Revenue Reconciliation £m Aerospace (1) H1 2020 revenue 280.5 Flexonics (1) H1 2020 revenue 103.7 Civil aerospace
Slide 10: H1 2021 Adjusted Operating Profit Bridge
H1 2021 ADJUSTED OPERATING PROFIT(2) BRIDGE £m 12 10 9.0 (1.1) (4.4) 8 $1.39 (H1 20: 1.27) 2.8 0.1 (1.2) 5.2 6 4 2 - H1 2020 Exchange Aerospace Flexonics Share of JV Central Costs H1 2021 H1 2021 H1 2020 Change H1 2021 H1 2020 Change Aerospace (1) Flexonics (1) £m £m £m £m Revenue 223.1 280.5 -20.5%
Slide 11: Restructuring
RESTRUCTURING Restructuring adjusted charge and cash cost Savings benefits H1 2021 - £0.1m H2 2021 - Savings of c.£50m expect c.£6m to be delivered in 2020 - £39.0m FY2021 (£25m delivered in H1 2021) H1 2021 - £3.0m 2020 - £15.2m Savings of £36m 2019 - £12.1m 2019 - £2.9m delivered in 2020 Adjusted
Slide 12: Adjusted and Reported Profit
ADJUSTED AND REPORTED PROFIT H1 2021 H1 2020 £m £m Adjusted operating profit 5.2 9.0 Net finance costs – borrowings, cash (3.2) (4.3) – lease liabilities (IFRS 16) (1.3) (1.5) – retirement benefits 0.2 0.4 Adjusted profit before tax 0.9 3.6 Tax (H1 2021: 55.6%; H1 2020: 16.7%) (0.5) (0.6) Adjusted p
Slide 13: Cash Flow and Use of Funds
CASH FLOW AND USE OF FUNDS £m 70 49.7 ( 2.7 ) 60.9 60 50 40 5.8 (7.8) 24.2 0.6 30 (2.6) 25.4 (4.2) ( 2.0 ) 20 19.2 ( 3.0 ) (2.3) 10 5.2 - H1 2021 Depreciation Other items (2) Change in Net Capital Pensions in H1 2021 Net Interest Tax Paid H1 2021 Free Restructuring US Class Net Proceeds Other - H1 2
Slide 14: Balance Sheet Strength
BALANCE SHEET STRENGTH Credit facilities and headroom Profile of committed credit facilities £300m £300m Fixed rate £250m £250m Floating rate Headroom £200m £157.1m £200m Headroom Reduction in £214.7m £150m £150m borrowing £100m £100m Net Debt (1) £50m £129.4m Net Debt (1) £50m Net debt (excluding l
Slide 15: Financial Summary
FINANCIAL SUMMARY Robust cash performance with £19.2m free cash inflow Both Divisions (Aerospace and Flexonics) were profitable £214.7m liquidity headroom; Net debt/EBITDA of 2.0x Restructuring benefits tracking ahead of plan; now expecting cumulative annualised savings of around £50m for 20
Slide 16: Markets
MARKETS Interim Results 2021
Slide 17: Our Markets
OUR MARKETS 34% Flexonics Division Aerospace Division 66% (28%) Power & Energy 16% (72%) (17%) Land Vehicles 18% 36% Civil Aerospace (11%) (49%) Other Aerospace* 11% (7%) Defence 19% (16%) End markets composition based on H1 2021 revenue. % in brackets are H1 2020 comparatives. Revenues of both year
Slide 18: End-Markets Showing Clear Signs of Recovery
END-MARKETS SHOWING CLEAR SIGNS OF RECOVERY World Passengers Flows Long-run Outlook World Vehicles Production Forecast 105 100 95 Million units 90 85 80 75 70 65 60 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 Light Vehicles Medium/Heavy Commercial Vehicles Source: IATA, May 2021. Source: IHS M
Slide 19: Our Diversified Aerospace & Defence Platforms
OUR DIVERSIFIED AEROSPACE & DEFENCE PLATFORMS A320 16% F-35 8% Other 48% C-130 6% A350 5% A220 4% 737 MAX 4% 777 2% 787 3% A330 2% E2 2% Based on H1 2021 Aerospace revenue, pro forma for sale of Senior Aerospace Connecticut. Interim Results 2021 Page 19
Slide 20: Civil Aerospace Shape of Market Recovery
CIVIL AEROSPACE SHAPE OF MARKET RECOVERY (36% of Group) Short-haul domestic travel is recovering first as vaccine rollout takes effect Evidence from the US and China makes clear that there is an appetite for travel In the medium term, IATA forecast that world passenger flows will reach 105% of
Slide 21: Civil Aerospace Single Aisle Growth
CIVIL AEROSPACE SINGLE AISLE GROWTH The lower operating cost and better sustainability of new aircraft will continue to be a necessity for the airline industry Airbus and Boeing have confirmed plans to ramp up single aisle production 737 MAX monthly production rates A320 monthly production rates
Slide 22: Defence (19% of Group)
DEFENCE (19% of Group) Senior focuses on the US as the largest defence market in the world US defence spend continues to grow The US spends almost as much on defence as the next 12 countries combined Source: US Department of Defense, US Office of Management and Budget, May 2021. Senior estimates (
Slide 23: Defence Platforms
DEFENCE PLATFORMS Senior is well placed with good content on key growth programmes such as F-35 and T-7A Red Hawk Mature programmes such as the C-130 transport aircraft continue in series production Senior benefits from positions on important defence programmes F-35 annual production rates incre
Slide 24: Other Markets (11% of Group)
OTHER MARKETS (11% of Group) Senior’s aerospace businesses supply to other markets e.g. space, semi-conductor equipment and medical Global semi-conductor market growth Our diversification into other attractive end-markets 600 8.8% 500 19.7% 400 6.8% US$ billion 300 Space 200 100 0 2020 2021 2022 O
Slide 25: Land Vehicles (18% of Group)
LAND VEHICLES (18% of Group) Truck & Off-Highway (14%) Passenger Vehicles (4%) North American Class 8 Heavy Duty Truck EU and UK Commercial Vehicle Production Forecast EU & UK and India Passenger Cars Production Forecast Production Forecast 400 600 25 India 6% 14% 4% 2% 6% 3% Europe 350 9% 27% -9% 1
Slide 26: Power & Energy (16% of Group)
POWER & ENERGY (16% of Group) Recovery in the oil & gas sector likely to be at end of 2021/ start of 2022 Longer term, share of renewables in power generation expected to increase Senior’s product portfolio supports solutions for solar, wind, nuclear and oil & gas World Liquid Fuels Production
Slide 27: Strategy & Outlook
STRATEGY & OUTLOOK Interim Results 2021
Slide 28: Focus on IP-Rich Technology and Manufacturing
FOCUS ON IP-RICH TECHNOLOGY AND MANUFACTURING Fluid Conveyance and Thermal Management Product and System Design & Manufacturing IP Flexonics ✓ This remains the key strategic focus ✓ Significant current and future opportunities identified within this technology domain Aerospace Structures Complex Mac
Slide 29: Highly Engineered Products in Attractive End-Markets
HIGHLY ENGINEERED PRODUCTS IN ATTRACTIVE END-MARKETS Aerospace Semiconductor equipment Composite ducting Defence Medical Additive manufacturing Fluid conveyance and thermal management technology embedded in our IP-rich products Land Vehicles Power & Energy Hybrid & electric Petrochemical Solar vehic
Slide 30: Future Proofing Our Growth for a Low Carbon World
FUTURE PROOFING OUR GROWTH FOR A LOW CARBON WORLD Fluid Conveyance and Thermal Management Current Aerospace Land Vehicles Power & Energy technologies Existing fluid conveyance Exhaust gas recirculation & Solar farm bellows and products entirely compatible waste heat recovery hoses with sustainable a
Slide 31: Product Development Strategy Compatible with ESG Focus
PRODUCT DEVELOPMENT STRATEGY COMPATIBLE WITH OUR FOCUS ON ESG End-market evolution to achieve net zero Aerospace - Airbus envisions using multiple pathways including use of hydrogen and sustainable aviation fuels to reduce emissions Land vehicles - More efficient diesel engines and accelerating hydr
Slide 32: Our IP-Rich Products Constantly Evolve
OUR IP-RICH PRODUCTS CONSTANTLY EVOLVE WITH CHANGING TECHNOLOGIES 2010s 2020s 2030s 2040s Launch of more efficient aero Application of more advanced More widespread use of SAFs Production ramp-up of Aerospace engines production methods in commercial aircraft* hydrogen-powered aircraft New additive O
Slide 33: Case Study: Fluid Conveyance in Zero Carbon Applications
CASE STUDY: FLUID CONVEYANCE IN ZERO CARBON APPLICATIONS Scenario Capability Matching Result • An established land vehicle ✓ Senior has years of experience in • Senior Canada is producing customer is expanding its terms of handling hydrogen fuel cell stainless steel hoses for the product range to ad
Slide 34: Portfolio Optimisation
PORTFOLIO OPTIMISATION In recent years, we have continued our prune to grow strategy: divesting, closing or combining non-core or performance-challenged assets: – Disposals: Sub-scale composites businesses in Wichita and UK; Blois (France) and Brazil automotive businesses; small precision machinin
Slide 35: Group 2021 Outlook
GROUP 2021 OUTLOOK • For 2021 our current market assumptions are: − Civil aero production volumes lower in 2021 than 2020; varying levels of inventory in different tiers of the supply chain; single-aisle production rates expected to pick up towards end of 2021 and into 2022 − Defence markets to rema
Slide 36: Group Medium Term Outlook
GROUP MEDIUM TERM OUTLOOK ≥ 13.5% Confident in Portfolio optimisation strategy to delivering good maximise value creation 11.1% returns on capital and enhanced shareholder value Strategic focus on IP-rich fluid conveyance and thermal management Ongoing End-Market Intrinsically strong cash Recovery a
Slide 37: Any Questions?
ANY QUESTIONS? Interim Results 2021
Slide 38: Appendices
APPENDICES Interim Results 2021
Slide 39: Group Evolution
GROUP EVOLUTION Revenue (£m) Adjusted Operating Profit (£m) Adjusted Operating Margin (%) 100 12 1200 Total after central costs 90 Total 80 after 10 1000 70 central costs 8 800 60 50 6 600 40 30 4 400 20 200 2 10 0 0 0 2016 2017 2018 2019 2020 H1 2021 2016 2017 2018 2019 2020 H1 2021 2016 2017 2018
Slide 40: Currency Effect
CURRENCY EFFECT Translation Impact on HALF YEAR H1 2020(1) (£m) Avg. H1 Avg. H1 Adj. 2020 Exchange Rates to GBP 2021 Revenue PBT(2) 1.27 US $ 1.39 (22.2) (0.8) 1.14 Euro € 1.15 (0.3) - 20.70 South African Rand 20.18 - - 39.84 Thai Baht 42.84 (1.6) (0.1) 1.71 Canadian $ 1.73 (0.1) - 30.06 Czech Rep.
Slide 41: Earnings per Share
EARNINGS PER SHARE H1 H1 2021 2020 Average number of shares Basic 415.5 414.7 Fully diluted 421.7 416.4 Adjusted earnings per share (1) Basic 0.10p 0.72p Fully diluted 0.09p 0.72p (1) Based on adjusted profit for the period as defined on page 12 Interim Results 2021 Page 41
Slide 42: Balance Sheet
BALANCE SHEET £m H1 2021 H1 2020 FY 2020 FX Impact from Dec 2020 Goodwill and other intangible assets 152.9 206.2 169.8 £m Investment in JV 3.8 3.5 3.6 Non current assets (8.3) Property, plant and equipment 303.0 373.2 330.5 Working capital (2.0) Other long-term assets 4.6 3.2 4.8 Net debt 2.9 Non c
Slide 43: Change in Net Debt
CHANGE IN NET DEBT H1 H1 FY 2021 2020 2020 £m £m £m Free cash flow (page 13) 19.2 16.0 46.5 Net cash inflow/(outflow) from corporate undertakings 47.0 (4.5) (4.2) Restructuring cash outflows (3.0) (5.7) (15.2) US class action lawsuits (2.3) (2.5) (3.9) Net cash inflow 60.9 3.3 23.2 Exchange variatio
Slide 44: Gross Capital Expenditure
GROSS CAPITAL EXPENDITURE H1 2021 H1 2020 Capex Depn (1) Capex Depn (1) £m £m £m £m Aerospace 4.6 17.8 10.3 20.2 Flexonics 3.2 6.1 4.4 6.8 Holding companies 0.1 0.3 0.1 0.3 Total 7.9 24.2 14.8 27.3 (1) Depreciation of £18.6m (H1 2020: £21.3m), IFRS 16 depreciation £4.7m (H1 2020: £5.1m), and amortis
Slide 45: Maturity Profile of Committed Credit Facilities
MATURITY PROFILE OF COMMITTED CREDIT FACILITIES £m 340 320 300 Oct- £15m 280 260 Jun - £35m Net debt (excluding leases) 240 June 2021 - £71m 220 200 Feb - £120m £215m 180 headroom 160 140 120 Jan - £27m 100 80 Oct - £43m Feb - £24m 60 40 Sep - £22m 20 0 June-2021 Dec-21 Dec-22 Dec-23 Dec-24 Dec-25 D
Slide 46: Usage of Credit Facilities – June 2021
USAGE OF CREDIT FACILITIES – June 2021 Usage by Currency Interest Facility Usage £ $ € Other % £m £m US Private placements: $30.0m (Sep 2028) 4.18% 21.7 21.7 - 21.7 - - €28.0m (Feb 2027) 1.51% 24.1 24.1 - - 24.1 - $60.0m (Oct 2025) 3.75% 43.5 43.5 - 43.5 - - £27.0m (Jan 2025) 2.35% 27.0 27.0 27.0 -
Slide 47: Covenants at Frozen GAAP
COVENANTS at FROZEN GAAP (1) Covenant reconciliation (as defined in Group debt agreements, EBITDA and Net interest based on last twelve month figures): Jun 2021 £m Adjusted Operating Profit (last 12 months) (0.1) Add: Net debt - restated at average exchange rates (2) £72.8m Depreciation of property,
Slide 48: Our Business Model
OUR BUSINESS MODEL Our vision is to be a trusted and collaborative high value-added engineering and manufacturing company delivering sustainable growth in operating profit, cash flow and shareholder value Our purpose is to provide safe and innovative products for demanding thermal management and flu
Slide 49: Strategic Priorities
STRATEGIC PRIORITIES Autonomous and Considered and High Performance Competitive Cost Collaborative Business Focus on Growth Effective Capital Talent Development Operating System Country Strategy Model Deployment Empowerment and Outgrow our end Key elements include: Enhance global footprint The exe
Slide 50: Acquisition Framework
ACQUISITION FRAMEWORK More Likely Less Likely Aerospace & Defence Semi-conductor Equipment Market Power & Energy (clean energy) Volume Automotive Land Vehicles (electrification) Medical Fluid Conveyance Products Structures / Machining Product Thermal Management Products Own design / IP products Comm
Slide 51: Our Locations
OUR LOCATIONS UK Rickmansworth H.O H1 2021 split Sales Employees Massachusetts Metal Bellows Crumlin N. America 62% 2,425 Lymington Canada BWT UK 15% 1,050 SF Canada Bird Bellows Rest of Europe 13% 874 Thermal Wisconsin Weston EU Rest of World 10% 1,228 GA Germany Washington SF GmbH AMT & Damar Czec
Slide 52: Our Customers
OUR CUSTOMERS 34% Flexonics Division Other Power & Energy 14% Rolls Royce 7% (10%) Aerospace Division 66% (28%) (14%) (72%) Boeing 6% (9%) Schlumberger 2% all 1% of (3%) Group or less Spirit 6% Other Land Vehicle 7% (5%) (4%) all 1% of Group or less Daimler 2% Airbus 5% (4%) (1%) Caterpillar 4% Lock
Slide 53: Our Products
OUR PRODUCTS 34% Flexonics Division Other machined parts 4% Aerospace Division 66% (28%) (6%) (72%) Industrial flexible parts 12% (11%) High pressure ducting 19% Fuel distribution (LV) 1% (21%) (1%) Off-highway hydraulics (LV) 2% (2%) Exhaust flexes (LV) 4% (2%) Engine structures Emission control (L
Slide 54: Aerospace Division
AEROSPACE DIVISION Interim Results 2021
Slide 55: Aerospace Division: A Summary
AEROSPACE DIVISION: A SUMMARY H1 2021 H1 2020(1) Change 14(3) Operations Revenue £223.1m £280.5m -20.5% NAFTA 6 Europe 2 Adjusted Operating Profit (2) £5.1m £9.5m -46.3% UK 4 Adjusted Operating Margin(2) 2.3% 3.4% -110bps ROW 2 Markets (4) Customers (4) Other 16% Rolls-Royce 10% Other 37% Boeing 10%
Slide 56: Flexonics Division
FLEXONICS DIVISION Interim Results 2021
Slide 57: Flexonics Division: A Summary
FLEXONICS DIVISION: A SUMMARY H1 2021 H1 2020(1) Change 11(3) Operations & JV NAFTA 4 Revenue £110.0m £103.7m +6.1% Europe 2 Adjusted Operating Profit(2) £7.4m £4.6m +60.9% UK 2 ROW 3 Adjusted Operating Margin (2) 6.7% 4.4% +230bps China JV 1 Markets Customers Cummins 16% Other markets 19% Truck & O
Slide 58: Index
INDEX Presentation Appendices Investment case: Positioned for growth 3 Group evolution 39 Medium term minimum ROCE target 4 Currency effect 40 H1 highlights 5 Earnings per share 41 Environmental, social & governance 6 Balance sheet 42 Financial headlines 8 Change in net debt 43 H1 2021 revenue bridg