Morgan Advanced Materials Plc · LSE:MGAM
Morgan Advanced Materials — H1 2019 Earnings Presentation
28 slides from Morgan Advanced Materials's earnings presentation, Jul 25, 2019
Slide 1: 2019 Interim Results Presentation
2019 Interim Results Presentation 25th July 2019 www.morganadvancedmaterials.com
Slide 2: Agenda
Agenda • Introduction and Key highlights – Pete Raby • 2019 Interim Results – Peter Turner • Operational and Strategic Update – Pete Raby 2
Slide 3: Key highlights
Key highlights • Strategy implementation continuing to progress well and remains on track • Revenue growth of 1.0% on an organic constant-currency basis • Group headline operating profit margin 12.8%, an improvement of 70bps from organic revenue growth and benefit of efficiency actions • Headline EP
Slide 4: 2019 Interim Results
2019 Interim Results Peter Turner 4
Slide 5: Group performance summary
Group performance summary Organic % % change from 1H 1H 2019 1H 2018 change from 1H 2018 2018 At constant- £m £m As reported currency Revenue 525.8 514.4 2.2% 1.0% Group headline operating profit1 67.4 62.4 8.0% 3.1% Group headline operating profit margin % 1 12.8% 12.1% Cash generated from continui
Slide 6: Cash flow summary
Cash flow summary 1H 2019 1H 2018 £m £m • Working capital outflow EBITDA 88.0 77.8 Change in working capital (20.2) (15.6) in 1H Change in provisions and other (6.7) (7.0) • Capex driven by Cash generated from continuing operations 61.1 55.2 investment for growth Capital expenditure (29.2) (23.1) an
Slide 7: Pensions update
Pensions update Deficit movement since 31 December 2018 (£m) Deficit at 31 December 2018 (190) Return on assets 49 Contributions (net of service/finance costs) 4 Actuarial gain/(loss) on liabilities (59) Currency adjustment - Deficit at 30 June 2019 (196) £m 30 June 2019 31 December 2018 31 December
Slide 8: FY19 financial guidance
FY19 financial guidance Headline tax rate 28% Interest charge (at current fx rates) c. £8.5m IAS 19 pensions finance charge c. £4.5m c. £16m IFRS 16 lease interest c. £3m Funded pension scheme contributions c. £17m 8
Slide 9: Operational and Strategic Update
Operational and Strategic Update Pete Raby 9
Slide 10: Mixed market segment growth rates in the first half
Mixed market segment growth rates in the first half Organic % change from 1H 2018 at constant-currency % Group revenue 1 46% • Declines in European and Asian industrial markets, and modest growth in North America 21% • Aerospace growth offset by decline in automotive in Thermal Ceramics and Seals an
Slide 11: Thermal Ceramics: performance summary
Thermal Ceramics: performance summary % change from 1H Organic % change 2018 from 1H 2018 £m 1H 2019 1H 2018 As reported At constant-currency Revenue 207.8 217.3 (4.4)% (3.8)% EBITA 25.7 26.1 (1.5)% (7.2)% EBITA margin % 12.4% 12.0% Performance commentary Strategic focus • Automotive volumes down £7
Slide 12: Molten Metal Systems: performance summary
Molten Metal Systems: performance summary % change from 1H Organic % change 2018 from 1H 2018 £m 1H 2019 1H 2018 As reported At constant-currency Revenue 24.7 24.5 0.8% 0.4% EBITA 2.7 3.6 (25.0)% (25.0)% EBITA margin % 10.9% 14.7% Performance commentary Strategic focus • Flat precious metal refining
Slide 13: Electrical Carbon: performance summary
Electrical Carbon: performance summary % change from 1H Organic % change 2018 from 1H 2018 £m 1H 2019 1H 2018 As reported At constant-currency Revenue 85.4 82.9 3.0% 2.0% EBITA 11.1 10.3 7.8% 6.7% EBITA margin % 13.0% 12.4% Performance commentary Strategic focus • Semiconductor and electronics and •
Slide 14: Seals and Bearings: performance summary
Seals and Bearings: performance summary % change from 1H Organic % change 2018 from 1H 2018 £m 1H 2019 1H 2018 As reported At constant-currency Revenue 71.1 65.6 8.4% 5.2% EBITA 13.4 12.1 10.7% 5.5% EBITA margin % 18.8% 18.4% Performance commentary Strategic focus • Growth driven by petrochemical, •
Slide 15: Technical Ceramics: performance summary
Technical Ceramics: performance summary % change from 1H Organic % change 2018 from 1H 2018 £m 1H 2019 1H 2018 As reported At constant-currency Revenue 136.8 124.1 10.2% 6.0% EBITA 17.5 13.2 32.6% 25.9% EBITA margin % 12.8% 10.6% Performance commentary Strategic focus • Growth in aerospace, renewabl
Slide 16: Our strategy for growth
Our strategy for growth We have a strategy to ensure we are the leaders in our field, with the customer and materials insight to apply our capabilities quickly and effectively We apply these skills to a portfolio of businesses where: • Our technical expertise and differentiation is valued • We can o
Slide 17: Execution priorities - 2019
Execution priorities - 2019 Drive sales Continue the deployment of our tools, processes and training to build our effectiveness and capabilities and market insight and drive sales growth. market focus Extend our technology Accelerate the development of new materials and manufacturing processes, lead
Slide 18: Our strategy in action
Our strategy in action Strengthened material Material science: • additional technical science Customer resources • faster pace on fewer focus projects • improving materials and processes Reliable • closer technical problem relationship with our solving customers Increased customer focus: ethically a
Slide 19: Summary
Summary • Strategy implementation continuing to progress well and remains on track • Revenue growth of 1.0% on an organic constant-currency basis • Group headline operating profit margin 12.8%, an improvement of 70bps from organic revenue growth and benefit of efficiency actions • Headline EPS growt
Slide 20: Appendix
Appendix MMorgan Advanced Materials
Slide 21: End market mix (as a % of revenue)
End market mix (as a % of revenue) Main markets by GBU Thermal Ceramics: Industrial, Chemical & Petrochemical, Metals, Automotive MMS: Aluminium (automotive), Copper (construction), Precious Metals Electrical Carbon: Rail, Industrial Equipment, Power Generation, Electronics and semiconductor Seals a
Slide 22: Divisional performance
Divisional performance Revenue £m EBITA £m EBITA Margin % 1H 2019 1H 2018 1H 2019 1H 2018 1H 2019 1H 2018 Thermal Ceramics 207.8 217.3 25.7 26.1 12.4% 12.0% Molten Metal Systems 24.7 24.5 2.7 3.6 10.9% 14.7% Thermal Products Division 232.5 241.8 28.4 29.7 12.2% 12.3% Electrical Carbon 85.4 82.9 11.1
Slide 23: Reported statutory figures
Reported statutory figures Six months ended 30 June 2019 Six months ended 30 June 2018 Results before Specific Total Results before Specific Total specific adjusting items specific adjusting items adjusting items adjusting items £m £m £m £m £m £m Revenue 525.8 - 525.8 514.4 - 514.4 Operating costs b
Slide 24: Refinancing completed – strengthens balance sheet
Refinancing completed – strengthens balance sheet • Net debt (excluding lease liabilities) to EBITDA: 1.2x (FY2018: 1.2x) Net debt £’m Borrowings 253.6 • $75m Private Placement Notes due December 2019 to be repaid using cash and / or revolving credit facility Cash (59.7) Net debt excluding 193.9 • P
Slide 25: Impact of new accounting standards
Impact of new accounting standards IFRS 16 Leases had the following impact on opening balances in 2019: After Prior lease £m application of Net impact accounting IFRS 16 Revenue - - - Depreciation - (9) (9) Income Other operating costs (12) - 12 statement Headline operating profit1 (12) (9) 3 Financ
Slide 26: Key exchange rates
Key exchange rates 1H 2019 1H 2018 GBP to: Closing Average Closing Average rate rate rate rate USD 1.27 1.29 1.32 1.38 EUR 1.12 1.15 1.13 1.14 Key exchange rate sensitivities on interim results Revenue Headline £m operating profit Increase in half year revenue / headline operating profit if: GBP wea
Slide 27: Headline EPS
Headline EPS 1H 2019 1H 2018 £m £m Profit for the period attributable to Ordinary shareholders 35.3 25.9 Loss from discontinued operations - 8.5 Profit from continuing operations 35.3 34.4 Amortisation 4.1 3.8 Headline earnings 39.4 38.2 Weighted average number of shares in the period 284.6m 285.3m
Slide 28: 2019 Interim Results Presentation
2019 Interim Results Presentation 25th July 2019 www.morganadvancedmaterials.com
Morgan Advanced Materials — H1 2019 Earnings Presentation on 6ix