Trifast Plc · LSE:TRI
Trifast — H1 FY2022 Earnings Presentation
56 slides from Trifast's earnings presentation, Nov 23, 2021
Slide 1: Innovation today for a better tomorrow
Innovation today for a better tomorrow Trifast plc Presentation for the six months ended 30 September 2021
Slide 2: Our purpose
Our purpose To provide ‘Trusted Reliability’ at every turn to our customers, suppliers and our people, empowering them to deliver sustainable products and solutions that add value to society and our planet Our fastenings enable innovation today to build a better tomorrow
Slide 3: HY2022 highlights
HY2022 highlights Trifast plc Presentation for the six months ended 30 September 2021 1
Slide 4: HY2022 highlights
HY2022 highlights Highlights Revenue growth (CER)* Underlying operating profit Gross margin (CER)* (CER)* +31.4% +73.7% -80bps^ HY2022 £106.4m HY2022 £7.7m HY2022 26.2% HY2021 £81.0m HY2021+ £4.5m HY2021 27.0% HY2020 £103.1m HY2020+ £10.4m HY2020 28.8% Project Atlas: Acquisition: 2 site implementati
Slide 5: HY2022 highlights
HY2022 highlights • Strong rebound in Q1 and solid Q2 growth drives year-on-year revenue increase of 31.4% and an increase of 3.2% over the pre-Covid HY2020 period The level of demand in the market • Operational gearing underpins underlying operating margin increase has never been higher and the of
Slide 6: Financial review
Financial review 4 Trifast plc Presentation for the six months ended 30 September 2021
Slide 7: Financial results
Financial review Financial results Movement at CER vs HY2021 (AER for HY2022 HY2022 adjusted net CER+ AER debt & ROCE) HY2021 HY2020 Revenue £106.4m £103.8m 31.4% £81.0m £103.1m GP% 26.2% 26.3% (80)bps 27.0% 28.8% Underlying operating profit (UOP)* £7.7m £7.4m 73.7% £4.5m £10.4m UOP%* 7.3% 7.2% 180b
Slide 8: Revenue by region and sector (CER)
Financial review Revenue by region and sector (CER) HY2022 £106.4m^ 31.4% HY2021 £81.0m^ Revenue split by region* External revenue split by sector 2022 2022 19% 25% £27.2m 16% 24% £22.4m £40.3m £28.8m 12% 2021 13% £7.2m £4.2m 2021 4% 4% 18% £31.4m 26% 17% 22% £41.2m HY2022 external revenue mix by re
Slide 9: Strong revenue recovery across all sectors (CER)
Financial review Strong revenue recovery across all sectors (CER) Europe Asia UK USA Group Light vehicle 43.2% 1.6% 27.1% 72.6% 34.3% Heavy vehicle 53.3% 41.0% 26.6% 110.6% 39.0% Health & home 23.8% 9.4% 39.7% 143.7% 14.4% Energy, tech & infrastructure (ET&I) 20.1% 22.8% 26.3% 34.8% 24.4% Distributo
Slide 10: The supply chain challenge: our response
Financial review The supply chain challenge Our response e Our spons me re diu rm Cap ac ity in ve stm e nt m -te -te rm um i e O u r d e po ns r im res me c es e an di rm al te po ia b al price in c re at o a e ns l b s ed Ou G e programme r n In e io cr ut m ea es rib m y chain cha se po ppl ri is
Slide 11: Financial review
Financial review Trifast plc Presentation for the six months ended 30 September 2021 9
Slide 12: Europe
Financial review Europe Highlights Revenue split by region (CER)* • Strong bounce back delivers 31.4% revenue growth (11.2% higher than HY2020) HY2022 HY2021 • Robust health & home sales in Italy – strong order book builds as demand outstrips short-term capacity £41.2m 31.4% £31.4m • Vehicle sales i
Slide 13: Asia
Financial review Asia Highlights Revenue split by region (CER)* • Strong growth against HY2021, but below pre-Covid levels due to temporary lockdowns in Malaysia HY2022 HY2021 • Robust growth in Taiwan as distributor sales recover beyond pre-Covid levels in key European end £27.2m 21.4% £22.4m marke
Slide 14: UK
Financial review UK Highlights Revenue split by region (CER)* • Very high growth against HY2021 and 4.9% up on HY2020 HY2022 HY2021 • Distributor sector increases the most as price increases are directly passed on and demand £40.3m 39.9% £28.8m accelerates – especially in the stainless steel Externa
Slide 15: USA
Financial review USA Highlights Revenue split by region (CER)* • Exceptional sales growth – organic 53.4% up, 16.1% via acquisition (19.0% up organically on HY2022 HY2021 pre‑Covid levels) • Light vehicle sector drives the largest organic £7.2m 69.5% £4.2m increase as market share gains more than of
Slide 16: Underlying operating profit bridge
Financial review Underlying operating profit bridge* £16.0m £14.0m £(2.8)m £9.7m £12.0m £10.0m £(1.6)m £(2.1)m £8.0m £7.4m £(0.3)m £6.0m £4.0m £4.5m £2.0m £0m HY2021+ Sales Gross margin Overheads Removal of FX – CER HY2022 increase change^ movement^ government to AER AER support schemes * Before sep
Slide 17: Gross margins hold steady against HY2 of FY2021
Financial review Gross margins hold steady against Offset by transitional Increased HY2 of FY2021 at Product under-recovery of sales and 26.2%, but reduce mix shifts higher freight and higher prices 80bps against raw material costs HY2021 due to: Underlying The removal of operating margins Offset in
Slide 18: Underlying operating profit and margin by region (CER)
Financial review Underlying operating profit and margin by region (CER)* HY2022 HY2021 £7.7m^ 7.3% £4.5m^+ 5.5% £0.4m 1.5% £3.4m 12.7% £4.0m 10.0% £3.2m £2.2m 14.2% 7.1% £(0.2)m (3.0)% £2.6m 6.3% £(0.2)m (4.4)% UK USA UK USA Europe Asia Europe Asia * Before separately disclosed items which are shown
Slide 19: Operating margin movement by region
Financial review Movement: (80)bps Movement: (150)bps HY2022: 6.3% 1 HY2022: 12.7% 1 HY2021: 7.1% HY2021: 14.2% 5 2 5 2 Europe Asia 4 3 3 4 Movement: 850bps Movement: 140bps HY2022: 10.0% 1 HY2022: (3.0)% 1 HY2021: 1.5% HY2021: (4.4)% 2 6 2 6 UK USA 3 — 3 5 4 — 1 Increased sales 4 Removal of governm
Slide 20: Adjusted net cash/(debt) bridge (AER)
Financial review Adjusted net cash/(debt) bridge (AER)* £20.0m £15.0m £7.7m £(16.3)m £(5.9)m £13.3m £10.0m £5.0m £0m £(5.1)m £1.4m £(2.7)m £(5.0)m £(2.6)m £(10.0)m Adjusted Acquisition of Operating Increase Other working capital Capital Purchase of Adjusted net cash subsidiary cash inflow in stock &
Slide 21: A strong balance sheet and significant facility headroom
Financial review A strong balance sheet and Investment significant facility headroom • Acquisition of Falcon, 31 August 2021 – £6.2m (£5.9m net of cash provides flexibility and confidence acquired) to invest for future growth • Capital expenditure of £1.7m and Project Atlas spend of £1.0m of which £
Slide 22: Dividend
Financial review Dividend Dividend progression Dividend cover 4.50p Interim FY2021 4.00p Final 3.9x Total* 3.50p 3.00p FY2020 7.2x 2.50p 2.00p FY2019 3.0x 1.50p 1.00p FY2018 3.6x 0.50p FY2017 0.0p 3.7x 2018 2019 2020 2021 2022 * In FY2021, one dividend payment was made, rather than an interim and fi
Slide 23: Interim dividend
Financial review The Board recognises the role Interim dividend of dividends in forming part • The HY2022 interim dividend is 0.70p (HY2021: nil) of our TSR and is committed to maintaining a progressive Target dividend cover range dividend policy in line with • We continue to consider that an approp
Slide 24: Delivering against our strategy
Delivering against our strategy 22 Trifast plc Presentation for the six months ended 30 September 2021
Slide 25: Trifast – the medium-term plan
Delivering against our strategy Trifast – the medium-term plan The last five years have been a period of targeted investment with one clear ambition in mind – to support Trifast in its aspiration to become a much bigger, more profitable company than the one we are today So what does medium-term succ
Slide 26: Organic growth
Delivering against our strategy Organic growth Core strategy – growing with, and further into, our multinational OEM/Tier 1 customers >100 • Significant opportunities for ongoing revenue established Average tenure growth exist at the majority of our key strategic multinational of 10+ years global cu
Slide 27: Engineering and innovation; Investing for growth
Delivering against our strategy Newly emerging technologies, particularly electric vehicles, require us to provide a greater degree of engineering support to our customers Engineering and innovation Investing for growth • Design and application engineering expertise • Manufacturing capacity investme
Slide 28: Project Atlas
Delivering against our strategy Project Atlas Our greatest example of continuous improvement The rationale – Project Atlas is about real, tangible benefits driving organic growth and margin improvement Gross financial outcome* Key identified benefits ROI >25% Supporting our core strategy: Incrementa
Slide 29: The timetable – Project Atlas multi-year investment programme
Delivering against our strategy The timetable – Project Atlas is a multi‑year investment programme that is now in roll-out phase June 2019 October 2020 March 2022 End of FY2023 Global processes, Pilot site Roll-out of our global All relevant distribution policies and successfully talent management e
Slide 30: Project Atlas
Delivering against our strategy Project Atlas The medium-term benefits case The timing supporting this investment have • We expect full benefit realisation to start in the always been very compelling with second half of FY2024 following roll-out across an ROI of >25% expected at the the Group point
Slide 31: Delivering against our strategy
Delivering against our strategy Trifast plc Presentation for the six months ended 30 September 2021 29
Slide 32: Acquisitions
Delivering against our strategy Acquisitions A North American ambition North America is the biggest fastenings The rationale market in the world, and yet it forms • A truly global fastenings business needs a North less than 10% of the Group’s revenue. America region of credible scale and reach Our s
Slide 33: A successful first step on the journey – Falcon acquisition
Delivering against our strategy A successful first step on the journey – We view non-organic growth as an Falcon acquisition 31 August 2021 opportunity beyond North America, • An established fastenings distributor located in allowing us to North Carolina specialising in the ET&I and general • Accele
Slide 34: Securing a sustainable future
Delivering against our strategy Securing a sustainable future Trifast is committed to securing a Good foundations already in place in sustainable future. Our new sustainability strategy will help us to play our part in Environment, Social & Governance shaping a sustainable economy, using our • Susta
Slide 35: Our five-year sustainability strategy framework (2022–2026)
Delivering against our strategy Our five‑year sustainability strategy framework (2022–2026) t Atlas, risk registe Projec r, cle i t tee, an me omm tric C s SG em lE be ona Act dd t i ed na on environment er in and climate change nt to ,i bu ng We will manage environmental issues sin rti effectively
Slide 36: Securing a sustainable future: Our ESG structure
Delivering against our strategy Securing a sustainable future Our ESG structure Plc Board Executive Management Network of Sustainability Sustainability Sustainability Working Sustainability Committee Committee Group Champions Purpose: To understand Purpose: To understand Purpose: To understand Purpo
Slide 37: Commitments and key projects
Delivering against our strategy Commitments and key projects Act on environment and climate change Build a sustainable supply chain Commitments: Commitments: • We will set a science‑based net zero target for scope 1 and 2 emissions • We will develop a sustainable supply chain strategy by 2025 by 202
Slide 38: Summary & outlook
Summary & outlook 36 Trifast plc Presentation for the six months ended 30 September 2021
Slide 39: Summary and outlook
Summary & outlook Summary Strong revenue growth Atlas on track High demand across all sectors US target acquired Supply chain issues effectively managed Significant facility headroom Operational gearing gains Sustainability Report published Outlook • Global price increase programme to pass-through •
Slide 40: Appendices
Appendices 38 Trifast plc Presentation for the six months ended 30 September 2021
Slide 41: Company overview
Company overview Leading international specialist in the design, engineering, manufacture, and distribution of high-quality industrial fastenings and Category ‘C’ components principally to major global assembly industries Customers Competitive advantages • Established customer base of >100 • Technic
Slide 42: Company overview: investment case
Appendices Company overview Investment case – an attractive market position Highly fragmented TR is a High customer Sector diversity c.£60bn market trusted loyalty, with average limits cyclicality favours a few key global brand tenure of 10+ years impact global players Increasing Inflationary Higher
Slide 43: A model for profitable growth; Our strategic pillars
A model for profitable growth Our strategic pillars • Proven strategy of growing with, and into, • Strong and experienced Operational Executive existing multinational OEM/Tier 1 customer team driving ambitious medium-term base aspirations • Engineering led route to market differentiates • Project At
Slide 44: The world of Trifast
Appendices The world of Trifast UK Additional facts Trifast plc & Group Services head office – Uckfield TR Fastenings Lancaster PTS Europe Germany Holland C. 1,300 Hungry colleagues Ireland Italy Norway Poland 5,000 Spain Sweden C. customers C. 8bn parts produced p.a. Asia TR Asia headquarters – Sin
Slide 45: Five year history (AER)
Five year history (AER) Not restated for IFRS16 Not restated for IFRS2 FY2018 FY2019 FY2020 FY2021 HY2021 HY2021 ◊ HY2022 Revenue £197.6m £209.0m £200.2m £188.2m £81.0m £81.0m £103.8m GP margin^ 30.5% 30.0% 27.5% 26.5% 27.0% 27.0% 26.3% Underlying EBITDA*^ £24.7m £23.9m £21.2m £17.6m £7.4m £7.3m £10
Slide 46: Manufacturing and distribution revenue split
Appendices Manufacturing and distribution revenue split HY2022 HY2021 30% 33% 70% 67% Manufacturing Manufacturing Distribution Distribution 44 Trifast plc Presentation for the six months ended 30 September 2021
Slide 47: Capital allocation summary
Capital allocation summary 2. Capex c.£2m annual maintenance spend. 1. Working capital Conservative leverage Capacity investments Support growth 1.0x – 2.0x Underlying EBITDA (c.3 year payback) Protect supply Project Atlas – £17.5m up to FY2024 (to date: £13.3m) 3. Acquisitions 4. Buybacks/special G
Slide 48: Our plc team
Appendices Our plc team Jonathan Shearman Mark Belton Clare Foster Independent Non-Executive Chair Chief Executive Officer Chief Financial Officer 46 Trifast plc Presentation for the six months ended 30 September 2021
Slide 49: Clive Watson, Scott Mac Meekin, Claire Balmforth
Clive Watson Scott Mac Meekin Claire Balmforth Senior Independent Independent Non-Executive Director Independent Non-Executive Director Non-Executive Director Trifast plc Presentation for the six months ended 30 September 2021 47
Slide 50: Our culture
Appendices Our culture Our values Trusted Reliable Inclusive Fair Ethical Excellent The organisation and We do what we say We work together as We are thoughtful of We are mindful We add value and its employees need we will do when we a team and respect every individual and of our impact on quality t
Slide 51: Notes
Notes Trifast plc Presentation for the six months ended 30 September 2021 49
Slide 52: Notes
Appendices Notes 50 Trifast plc Presentation for the six months ended 30 September 2021
Slide 53: Appendices
Appendices Trifast plc Presentation for the six months ended 30 September 2021 51
Slide 54: Notes
Appendices Notes Disclaimer: This document contains certain forward-looking statements which reflect the knowledge and information available to the Company during the preparation and up to the publication of this document. By their very nature, these statements depend upon circumstances and relate t
Slide 55: Slide 55
Slide 56: Trifast House, Bellbrook Park, Uckfield
Trifast House, Bellbrook Park, Uckfield, East Sussex TN22 1QW Tel: +44 (0)1825 747366 Fax: +44 (0)1825 747368 www.trifast.com