Slide 1: TT Electronics Half Year Results 2024
TT ELECTRONICS HALF YEAR RESULTS 2024 © TT Electronics 1
Slide 2: Clear Visibility to Unchanged FY Outlook
CLEAR VISIBILITY TO UNCHANGED FY OUTLOOK ▪ Revenue up 1% organically excluding unwind of pass-through revenue ▪ Strong European and Asian growth offset by weakness in components demand impacting North American region ▪ £9m of volume related headcount cost savings already actioned ▪ Adjusted operatin
Slide 3: Financial Review
FINANCIAL REVIEW MARK HOAD, CFO © TT Electronics 3
Slide 4: Group Financial Performance
GROUP FINANCIAL PERFORMANCE £m (except where Change • 1% organic revenue increase excluding pass- HY 2024 HY 2023 Change constant stated) fx through Revenue 274.4 309.1 (11)% (8)% • Operating profit down 8% on constant currency basis, 5% ex Albert divestment 258.3 275.6 (6)% (3)% Excl divestment • A
Slide 5: Group Financial Performance
GROUP FINANCIAL PERFORMANCE £m (except where • Cash generation reflecting H1 seasonality HY 2024 HY 2023 Change stated) and mix impact – growth in businesses with longer customer payment terms Free cash flow (7.8) 6.9 • ROIC reflects lower H1 EBIT weighting, Net debt/EBITDA† 1.9x 1.7x^ ROIC excludin
Slide 6: H1 Dynamics Position Group Well
H1 DYNAMICS POSITION GROUP WELL Order intake (£m)* +15% 283 246 228 H1 2023 H2 2023 H1 2024 * Constant currency, excluding Project Albert © TT Electronics 6
Slide 7: End Market Revenue
END MARKET REVENUE £m (except where stated) Change HY 2024 HY 2023 Change constant fx Healthcare 59.5 76.3 (22)% (17)% Aerospace & Defence 66.3 48.3 37% 40% Automation and Electrification 88.4 88.3 0% 4% Distribution 44.1 62.7 (30)% (28)% • Healthcare revenue decline includes 8% impact of pass-throu
Slide 8: Europe – Strong Improvement
EUROPE – STRONG IMPROVEMENT HY HY Change 2024 2023 Change constant fx ▪ HY revenue up 17% organic Revenue (£m) 77.1 81.5 (5)% (5)% ▪ Adjusted operating profit up 74% and margins up 440 basis points Revenue ex divestment 65.3 56.0 17% 17% ▪ Much improved performance driven by operational Adjusted ope
Slide 9: North America – Improving Order Dynamics
NORTH AMERICA – IMPROVING ORDER DYNAMICS ▪ Revenue decline in components business where order HY HY Change hiatus from distributors has persisted due to de-stocking 2024 2023 Change constant fx ▪ Margin impacted by loss of high margin components Revenue (£m) 95.5 115.4 (17)% (14)% business and assoc
Slide 10: Asia – Strong Performance
ASIA – STRONG PERFORMANCE HY HY Change 2024 2023 Change constant fx ▪ Revenue down 3% at constant currency, flat ex divestment but 10% up excluding £9 million Revenue (£m) 101.8 112.2 (9)% (3)% unwind of pass through revenues Revenue ex divestment 97.5 104.2 (6)% 0% ▪ Adjusted operating profit growt
Slide 11: H1 Leverage Increase Expected to Unwind in H2
H1 LEVERAGE INCREASE EXPECTED TO UNWIND IN H2 ▪ Cash performance in H1 impacted by £21m working capital outflow (see next slide) ▪ Minimal cash exceptional items and no UK pension contributions ▪ £1.8m US pension buy-out in H1 ▪ Net debt excluding leases £110.3m ▪ Leverage 1.9x – visibility to reduc
Slide 12: Working Capital Evolution
WORKING CAPITAL EVOLUTION Working Capital as % of Revenue ▪ Working capital as a % of revenue increased 30% as lead times extended and as committed 25% order book grew 20% ▪ H1 2024 impacted by several factors: 15% 2018 2019 2020 2021 2022 2023 H1 2024 ▪ H1 seasonality causing £6m outflow ▪ Growth i
Slide 13: Peter France, CEO
PETER FRANCE, CEO © TT Electronics 13
Slide 14: Strategic Focus
STRATEGIC FOCUS Focusing on efficiency to boost productivity and reduce costs Enhancing collaboration and commercial focus, facilitated by moving to a function-led regional Unlocking value structure through disciplined Promoting innovation, design, engineering and manufacturing expertise execution D
Slide 15: Significantly Increased Opportunity Potential to Unlock Value
SIGNIFICANTLY INCREASED OPPORTUNITY POTENTIAL TO UNLOCK VALUE Efficiency Growth Innovation Increase margins from Enhance commercial focus Further leveraging our improving operational execution delivering organic sales growth manufacturing and engineering and effectiveness across verticals in identif
Slide 16: Increased Structural Improvements
INCREASED STRUCTURAL IMPROVEMENTS % split of savings £17m net opportunity ▪ £6m of SG&A savings Efficiency ▪ £8m of additional efficiency projects Growth scoped ▪ £7m of growth and innovation benefits Innovation ▪ £(4)m reinvestment to support delivery and growth ▪ £17 million run-rate opportunity p
Slide 17: Project Dynamo Near-Term Focus
PROJECT DYNAMO NEAR-TERM FOCUS Efficiency Growth Innovation SG&A SAVINGS COMMERCIAL - PRICING INNOVATION LOGISTICS & ENERGY PIPELINE & SALES GROWTH INVENTORY MANAGEMENT MAKE vs BUY & ASSET OPTIMISATION COST OF PRODUCTION © TT Electronics 17
Slide 18: SG&A and Logistics/Energy
Efficiency SG&A AND LOGISTICS/ENERGY ISSUE : Duplication of overhead through ISSUE : Elevated UK energy costs and divisional structure inefficient use of logistics providers SG&A savings £6m Logistics & Energy As shared at CME: Logistics: • Travel savings • Consolidation of multiple providers to sho
Slide 19: Inventory Management Underpinning Cashflow
INVENTORY MANAGEMENT UNDERPINNING CASHFLOW ISSUE : Increased inventory levels caused by order book growth, supply chain issues and production planning processes ACTIONS • Short term mitigation actions to drive inventory reduction: • 7 sites in special measures with spending caps & elevation of deleg
Slide 20: Make vs Buy and Cost of Production
Efficiency MAKE VS BUY AND COST OF PRODUCTION ISSUE : Value leakage through outsourcing ISSUE : Current processes leading to higher production costs in 4 manufacturing sites Make vs Buy Cost of Production ACTIONS ACTIONS • Creating Centres of Excellence for connectors, • Teams formed to focus on del
Slide 21: Growth and Innovation Actions
GROWTH AND INNOVATION ACTIONS Current status Management action COMMERCIAL - £30m+ of low margin revenue identified, inconsistent PRICING Global Account Management process refreshed pricing discipline and disparate divisional go to market approach Exploring pricing reset Focus on new business opportu
Slide 22: Outlook
OUTLOOK ▪ Completion of Albert divestment, continued focus on execution, cost savings already actioned and strong order book underpin second half delivery ▪ The Board’s expectations remain unchanged and the business remains on track to deliver 10% adjusted operating margin for the year ▪ FY24 levera
Slide 23: Our Medium-Term Financial Goals
OUR MEDIUM-TERM FINANCIAL GOALS Committed to deliver exceptional value for shareholders % GROWTH MARGINS1 CASH ROIC GENERATION Ahead of end 12% in FY 2026 85%+ cash Mid to high market growth of conversion teens ROIC2 4-6% Strong FCF generation Project Dynamo actions making TT stronger for the future
Slide 24: Q&A
Q&A © TT Electronics 24
Slide 25: Financial Guidance for 2024
FINANCIAL GUIDANCE FOR 2024 Revenue Capital and development expenditure ▪ Divestment £16m in FY 24, £68m in HY23 ▪ Capex and devex circa £15-18m ▪ FX headwind -2% Working capital ▪ Reduction in pass-through -2% ▪ Modest working capital outflow ▪ Organic growth ex pass-through +3-4% Adjusting items c
Slide 26: Power & Connectivity
POWER & CONNECTIVITY Change HY 2024 HY 2023 Change constant fx Revenue (£m) 83.8 79.9 5% 7% Adjusted operating profit (£m) 7.2 5.9 22% 26% Adjusted operating margin (%) 8.6 7.4 120bps 130bps © TT Electronics 26
Slide 27: Global Manufacturing Solutions
GLOBAL MANUFACTURING SOLUTIONS Change HY 2024 HY 2023 Change constant fx Revenue (£m) 138.7 153.8 (10)% (5)% Adjusted operating profit (£m) 16.1 13.8 17% 27% Adjusted operating margin (%) 11.6 9.0 260bps 290bps © TT Electronics 27
Slide 28: Sensors & Specialist Components
SENSORS & SPECIALIST COMPONENTS Change HY 2024 HY 2023 Change constant fx Revenue (£m) 51.9 75.4 (31)% (29)% Adjusted operating profit (£m) 3.0 9.8 (69)% (68)% Adjusted operating margin (%) 5.8 13.0 (720)bps (710)bps © TT Electronics 28
Slide 29: The TT Electronics Business
THE TT ELECTRONICS BUSINESS Revenue (HY 24) Underlying operating profit (HY 24) Revenue by end market (HY 24) Europe 34% Healthcare 23% Europe 28% North America 22% Aerospace & Defence 26% North America 35% Asia 63% Automation & Electrification 35% Asia 37% Central costs (18)% Distribution sales cha
Slide 30: Revenue by Market and Geography
REVENUE BY MARKET AND GEOGRAPHY Europe North America Asia Revenue by market (%) Revenue by market (%) Revenue by market (%) Healthcare 4% Healthcare 13% Healthcare 45% Automation & Electrification Automation & Electrification Automation & Electrification 20% 32% 50% Aerospace & Defence 54% Aerospace
Slide 31: Summary Income Statement
SUMMARY INCOME STATEMENT £m H1 2024 H1 2023 Revenue 274.4 309.1 Adjusted operating profit 22.2 25.6 Net finance cost (5.2) (4.9) Adjusted profit before taxation 17.0 20.7 Adjusting items (7.1) (4.7) Profit before taxation 9.9 16.0 Taxation (3.9) (4.1) Profit after taxation 6.0 11.9 © TT Electronics
Slide 32: Summary of Revenue and Operating Profit by Region Impact of FX
SUMMARY OF REVENUE AND OPERATING PROFIT BY REGION IMPACT OF FX North Europe America Asia Corporate Group Revenue (£m) 2024 77.1 95.5 101.8 - 274.4 2023 at 2024 rates 81.5 111.6 105.3 - 298.4 FX impact - (3.8) (6.9) - (10.7) 2023 as published 81.5 115.4 112.2 - 309.1 Operating Profit (£m) 2024 7.5 4.
Slide 33: Income Statement – Adjusting Items
INCOME STATEMENT – ADJUSTING ITEMS £m H1 2024 H1 2023 Operating profit 15.1 20.9 Adjusted to exclude: Restructuring and other items Restructuring - (0.3) Pension related costs INCOME STATEMENT – ADJ USTING ITEMS (0.8) (0.9) (0.8) (1.2) Acquisition related costs Amortisation of intangible assets aris
Slide 34: Cash Conversion
CASH CONVERSION £m H1 2024 H1 2023 Adjusted operating profit 22.2 25.6 Depreciation and amortisation 7.4 8.6 Net capital expenditure (3.1) (9.3) Capitalised development expenditure (0.5) (0.9) Working capital (21.3) (6.9) Other 1.9 1.9 Operating cash flow after capex 6.6 19.0 Operating profit 22.2 2
Slide 35: Movement in Net Debt
MOVEMENT IN NET DEBT £m H1 2024 H1 2023 Operating cash flow after capex 6.6 19.0 Net interest and tax (10.1) (8.8) Pensions (US scheme) (1.8) - Lease liability repayments (2.0) (2.3) Restructuring and acquisition related costs (0.5) (1.0) Free cash flow (7.8) 6.9 Dividends (8.2) (7.5) Lease payments
Slide 36: Cautionary Statement
CAUTIONARY STATEMENT For the purposes of the following disclaimers, references to this ‘document’ shall be deemed to include references to the presenters speeches, the question and answer session and any other related verbal or written communications. This document contains forward-looking statement