Senior Plc · LSE:SNR
Senior — Investor Day (October 2011)
66 slides from Senior's investor day presentation, Oct 25, 2011
Slide 1: Capital Markets Event
Capital Markets Event 25th October 2011
Slide 2: Agenda
Agenda 16.40 Welcome Mark Rollins 16.45 Q3 IMS Simon Nicholls 17.00 Scene Setting Mark Rollins 17.15 Commercial Aerospace Markets Peter Woolfrey 17.35 Aerostructures Division Overview Jerry Goodwin 17.55 Senior Aerospace AMT Mark Riffle 18.15 Senior Aerospace Mexico Aldo Rodriguez 18.35 Senior Aeros
Slide 3: Q3 IMS
Q3 IMS (Simon Nicholls) 25th October 2011 Capital Markets Event
Slide 4: Q3 Interim Management Statement
Q3 Interim Management Statement Performance Q3 healthy and in line with expectations. Net debt below June level of £63m. Replacement £60m RCF (2016) in place. Undrawn today. Aerospace Boeing/Airbus deliveries healthy but flat. Orders up 100%. B737 Max announced – following A320NEO earlier in year. B
Slide 5: Scene Setting
Scene Setting (Mark Rollins) 25th October 2011 Capital Markets Event
Slide 6: Purpose of the Event
Purpose of the Event To provide a better understanding of: What makes Senior tick; The commercial aerospace market; Senior’s Aerostructures products, capabilities and facilities; The nature of Senior’s future opportunities in these areas; and The management Senior has to deliver on such opportunitie
Slide 7: What is Senior
What is Senior International manufacturing Group with 27 operations in 11 countries Market-leading engineering solutions provider for OEMs in the worldwide aerospace, defence, land vehicle and energy markets Operates through two reporting (three management) Divisions: Aerospace (Fluid Systems & Aero
Slide 8: Group Structure
Group Structure Attending this evening 25th October 2011 Capital Markets Event Page 5
Slide 9: H1 2011 Group Performance
H1 2011 Group Performance H1 2011 H1 2010 Change Revenue £315.6m £287.7m +10% Adjusted Operating Profit £43.0m £37.7m +14% Adjusted Operating Margin 13.6% 13.1% - Revenue Operating Profit Headcount (5,307) 23% 31% 28% 41% 36% 45% 32% 28% 35% Aerospace – Structures Aerospace – Fluid Systems Flexonics
Slide 10: Group Markets (H1 2011)
Group Markets (H1 2011) Other Industrial 4% Petrochemical 4% Heating, Ventilation & Solar 5% 24% Large Commercial Aircraft Power & Energy 6% 40% Flexonics 60% Aerospace Truck 8% Passenger Vehicles 13% 18% Military/Defence Aerospace Other Aerospace Division 8% 8% Regional & Business Jets 2% Space & N
Slide 11: Aerospace Markets (H1 2011)
Aerospace Markets (H1 2011) Other Non Aerospace 10% Structures Division Space & Non Military Helicopter 1% Regional Jets 3% Large Commercial Aircraft 56% Business Jets 5% Fluid Systems Division Other Non Aerospace 16% Military/ Defence Military/ Defence Aerospace 25% Aerospace 36% Space & Non Milita
Slide 12: An Encouraging Outlook
An Encouraging Outlook Build rates increasing quickly – but can the supply chain keep up? Average Monthly Aircraft Deliveries 1.5 60 120 3.5 7.3 55 +41% 9.9 50 100 45 42.0 33.4 40 80 35 30 60 2.0 10.0 6.2 25 8.0 20 40 15 31.3 10 20 37.0 5 0 0 2010 2010 2011 2012 2013 2013 737 777 787 747-8 A320 A330
Slide 13: Commercial Aerospace Markets
Commercial Air traffic has doubled every 15 years Aerospace Markets 20 year annual traffic growth 5% (Peter Woolfrey) 25th October 2011 Capital Markets Event
Slide 14: Commercial Aerospace
Commercial Aerospace Peter Woolfrey, Head of Business Development, Senior Plc A 31 year veteran of Aerospace and Defence having worked for Dowty Group, Smiths Aerospace and GE Aviation before taking up current role with Senior Plc in 2009. A graduate engineer by training, received an MBA from Bath U
Slide 15: Commercial Aerospace: Why is it attractive?
Commercial Aerospace Why is it attractive? • YoY global growth (5%) over long timeframe • Resilience to market disruptions Global Annual Traffic (RPKs-trillions) • Excellent forward order visibility 9 e.g. 7 - 8 year backlog 8 7 6 Air traffic has • Long term contracts 5 doubled 20 year 4 every 15 an
Slide 16: Commercial Aerospace: Market sector
Commercial Aerospace Market sector $95 bn market in 2011 Rotorcraft Bizjets 4% 17% New Entrants Boeing ARJ 21 (China) 36% MRJ 100 (Japan) Regional 7% New Entrants Superjet 100 Bombardier C series (Canada) Comac 919 (China) Airbus 36% 72% held by Airbus and Boeing 25th October 2011 Capital Markets Ev
Slide 17: Commercial Aerospace: Growth drivers
Commercial Aerospace Growth drivers 10 8 + Economic (GDP) growth driven by 6 % YoY growth emerging economies 4 2 + Yield increase (cost reduction) 0 -2 10 10 11 11 7 7 8 8 9 9 + Deregulation: Asia, Latin America, Africa 1/ 3/ 1/ 3/ 1/ 3/ 1/ 3/ 1/ 3/ Q Q Q Q Q Q Q Q Q Q -4 + Tourism development -6 Gl
Slide 18: Major platforms - top by sector
Commercial Aerospace Major platforms - top 8 by sector Air transport >100 seats Regional Bizjets Platform Price Annual Platform Price Annual Platform Price Annual $m’s values $m’s values $m’s values A320 48 19.4 ERJ 190/195 34 1.83 G500/550 54 1.89 B737 45 17.3 ERJ 170/175 30 0.99 Falcon 7X 50 1.43
Slide 19: A320 NeO, B737 MAX
Commercial Aerospace A320 NeO, B737 MAX % fuel cost of operating costs 40 35 Fuel cost 30 = 1/3 of 25 operating 20 15 costs 10 (average) 5 • Single aisle fuel costs equate typically to 0 1/3 of airline direct operating costs (DOC) Traditional carriers Low cost operators 20000 18000 • New Geared Turb
Slide 20: New program status
Commercial Aerospace New program status Platform Shipset Program status Delivered/ content Orders $k’s A380 292 Entered service in 2007 following a 2 year delay 57/179 Airbus business case originally based upon 600 a/c B787 871 First delivery (to ANA) in late September 2011 after a 1/820 40 month de
Slide 21: Market sector – order status
Commercial Aerospace Market sector – order status 3,600 narrow bodies to meet growth and replacement demand thru 2016 Airbus Del’s Orders Boeing Del’s Orders A320 4822 1859 737 3718 1719 A320 Ne0 0 1245 737 MAX 0 496 A330/340 1187 366 B777 963 325 1700+ “new engine” a/c A350 0 567 B787 1 820 ordered
Slide 22: 20 year forecast demand by region
Commercial Aerospace 20 year forecast demand by region (>100 seats) 6.6% 14000 1600 12000 1400 4.2% 1200 10000 Value $Bn's 3.4% 1000 Aircraft 8000 800 6000 9.8% 6.9% 600 4000 5.6% 6.3% 400 2000 200 0 0 ca fic IS a a st pe ic ic C Ea fri ci ro er er Pa A Eu m Am e dl A a id si th tin M A or La N Regi
Slide 23: Forecast comparisons / summary
Commercial Aerospace Forecast comparisons / summary Key takeaways 40000 4500 4000 • Air transport 5% YoY growth 35000 Aircraft deliveries Value $bn's 3500 30000 • Regionals lower growth (dis- 3000 25000 economies of scale) 2500 20000 2000 • Bizjets strong growth after 2014 15000 1500 10000 1000 5000
Slide 24: Aerospace Structures Division
Aerospace Structures Divison (Jerry Goodwin) 25th October 2011 Capital Markets Event
Slide 25: Senior Aerospace – Aerostructures: Jerry Goodwin
Senior Aerospace – Aerostructures Jerry Goodwin, Aerostructures Division CEO • US Citizen, located Monroe, WA USA • Aerospace Experience – 24 years within Executive Leadership • Senior Aerospace Aerostructures, CEO 2 years • Senior Aerospace – AMT, CEO 2007 to 2008 • VP & General Manager of Northwes
Slide 26: Aerostructures Overview
Senior Aerospace – Aerostructures Overview Damar, Monroe, WA Business Acquired % H1 Cashmere, Wenatchee, sales WA 1 AMT 10 / 2006 34% AMT, Arlington, 2 Absolute 12 / 2007 5% WA Sterling 3 Damar 03 / 2011 4% Machine, Enfield, CT 4 Capo 01 / 2008 7% Absolute, Arlington, WA 5 Jet Products 11 / 1998 17%
Slide 27: Markets and Customers
Senior Aerospace - Aerostructures Markets and Customers Markets Customers Space & Non Military Helicopter 1% Other Non Aerospace 10% Other Non Aerospace 7% Other Aerospace 11% Boeing 23% Regional Jets 3% Business Jets 5% Hexcel 3% Finmeccanica 3% Caterpillar 3% GE 5% UTC 16% Goodrich 6% Military/ De
Slide 28: Operating philosophy
Senior Aerospace – Aerostructures Operating philosophy • Consistent focus on cash generation and operating in a safe environment • “Tell it as it is” philosophy throughout • Exceptional Operational Performance • Quality Performance • Delivery Performance • Competitiveness through Lean Manufacturing
Slide 29: Damar
Damar 737 Air Markets 4% of divisional revenues Outlet Other Non Kitted Assy. Aerospace 12% Monroe, Washington USA Military/ Defence Aerospace 9% Large Precision Machining and Commercial Assembly Aircraft 79% Point of use and JIT to Boeing Hawker Beechcraft T-6 Growth from new platforms (787) Wing S
Slide 30: Absolute
Absolute 777 Crane Tyre Pressure & Markets Temp. Monitoring 5% of divisional revenues Other Non Large Commercial Aerospace 38% Arlington, Washington USA Aircraft 57% Precision CNC Machining •Aluminum and Hard Metals Precision Assembly and Kitting Business Jets 2% Growth through developing new Milita
Slide 31: Capo
TFE 731 Lear Jet/Hawker Bearing Support Capo Housing Markets • 7% of division revenues Space 1% • Chino, California USA Other Non Aerospace 5% Military/ Defence 6% • High Precision Complex Regional Jets 7% Large Machine Components and Commercial TFE 731 Lear Assemblies Aircraft 41% Jet/Hawker Front
Slide 32: Ketema
JSF Front Strutted Case Ketema Markets 15% of divisional revenues Other Non Aerospace 17% Military/ Defence Aerospace 44% El Cajon, CA USA Space 7% Large complex engine components Business Jets 8% In house specialized processing Regional Jets 10% Trent 1000 (787 Growth on major new platforms Engine
Slide 33: Sterling Machine
Blackhawk Carrier Sterling Assembly Machine Markets 15% of divisional revenues Non Military Helicopter 1% Enfield, Connecticut USA Precision military and engine machining Achieving “Supplier Gold” with Sikorsky S-92 Carrier Assembly Growth thru customer diversification eg with Rolls-Royce / Pratt &
Slide 34: Outlook - Adding Additional Value
Senior Aerospace – Aerostructures Outlook - Adding Additional Value • Strong developed customer relationships • Boeing, Spirit, Goodrich, R-R • Responding to customer “value drivers” • Higher value assemblies, lower parts count • Customer’s offloading to meet increased ramp rates • Both components a
Slide 35: Divisional Outlook - Increased Build Rates
Senior Aerospace - Aerostructures Divisional Outlook-Increased Build Rates Max Ship-Sets per Month 2011 2012 2013 2014 737 31.5 35 38 42 747 1.5 2 2 2 767 2 2 2 2 777 7 7 8.3 8.3 787 3.5 7 10 10 A350 TBD A320 38 40 42 42 A330 8.2 9.5 10 10 • Long term agreements in place A380 2.4 3 3.5 3.5 • Structu
Slide 36: AMT
Senior Aerospace AMT (Mark Riffle) 25th October 2011 Capital Markets Event
Slide 37: AMT Introduction
Senior Aerospace AMT Introduction Mark Riffle, CEO, Senior Aerospace AMT • US Citizen, Facility in Arlington , WA USA • Aerospace Experience – 26 years within Leadership Positions • Senior Aerospace – AMT CEO 18 months • VP Global Operations SPX Corporation from 2002 – 2010 • Engineering & Operation
Slide 38: AMT Facilities
Senior Aerospace AMT Facilities • 34% of divisional revenues (largest revenue in Senior Aerospace) • 326 employees • Four adjacent facilities representing 180,000 square feet: • Building 100 (80,000 sq ft) 5 & 4-axis high speed machining, 100 primary inspection, engineering, tooling, and procurement
Slide 39: AMT Company History
Senior Aerospace AMT Company History $35m sales $55m sales $82m sales $84m sales $105m sales 25th October 2011 Capital Markets Event Page 33
Slide 40: AMT Markets
Senior Aerospace AMT Markets Military / Defence 3% Other Aerospace 5% Other 8% Business Jets 3% Avcorp 5% Hexcel 8% Boeing 56% Spirit 23% Markets Customers Large Commercial Aircraft 89% Value Per Ship Set $400,000 $350,000 $300,000 $250,000 $200,000 $150,000 First Airbus platform $100,000 $50,000 $-
Slide 41: AMT Capabilities
Senior Aerospace AMT Capabilities Investment • Senior has invested $32m in AMT since acquiring it in Oct 06 Assemblies • Bench top – Providing the next level of value to our customer. • Complex – Providing the highest level of value to our customer with flawless high level assemblies. • Kitting – Ab
Slide 42: AMT Products
Senior Aerospace AMT Products 787 Mid Cage Assembly 737 Wheel Well 767 Skirt Beam Assembly 777 Aft Pylon 777 Nose Beams 777 IRC Stow Bin Components 737 Wing Ribs 25th October 2011 Capital Markets Event Page 36
Slide 43: AMT Key Platforms
Senior Aerospace AMT Key Platforms Boeing 787 Boeing 777 Boeing 767 – Tanker Boeing 747 Boeing 737 Airbus A350 Hawker Beechcraft Global G500/550 Blackhawk 25th October 2011 Capital Markets Event Page 37
Slide 44: AMT Growth Strategy
Senior Aerospace AMT Growth Strategy Organic Growth • Maintain Operational Excellence during production rate changes. • Collaboration – refine the work packages for the new platforms • Value engineering - add value through optimization of part geometry Adjacent work • Expand work packages to adjacen
Slide 45: AMT Outlook - Increased Build Rates
Senior Aerospace AMT Outlook- Increased Build Rates Max Ship-Sets per Month 2011 2014 • Long term agreements in place through 2016 737 31.5 42 • Strong content on growth platforms 747 1.5 2 • Good collaboration environment with customers 767 2 2 • Winning extra content from outsourcing activities 77
Slide 46: Mexico
Senior Aerospace Mexico (Aldo Rodriguez) 25th October 2011 Capital Markets Event
Slide 47: Senior Aerospace Mexico Introduction
Senior Aerospace Mexico Aldo G. Rodriguez, CEO, Senior Aerospace Mexico • Citizen of Mexico. • Senior Aerospace Mexico since 2006. • 5 Years experience in Land Vehicle (1995 – 2000) and 10 Years in Aerospace Manufacturing (2000 – to date). • Previous companies: Rockwell Automotive, John Deere, Honey
Slide 48: Mexico Company History / Milestones
Senior Aerospace – Mexico Company History / Milestones Startup. Build Effective Systems. Obtain and maintain Industry approvals (AS9100, Nadcap). Achieve operational excellence. Access to Industry OEMs and Primes. Win more work as “Tier One” supplier. Focus on profitability. Access to new markets, c
Slide 49: Mexico Markets / Customers
Senior Aerospace – Mexico Markets / Customers Markets Customers 3% of divisional revenues 25th October 2011 Capital Markets Event Page 42
Slide 50: Mexico Capabilities
Senior Aerospace – Mexico Capabilities Fabrication processes: sheet-metal trimming, forming, and welding. Special Processes: chemical finishes (i.e. anodising, passivation), heat treatment for aluminum, stainless steel, titanium and nickel-base alloys, including internal laboratory for materials and
Slide 51: Mexico Capabilities
Senior Aerospace – Mexico Capabilities Value added processes: assembly, engineering analysis (solid modeling, CATIA V5), duct insulation, and CNC water jet sheet metal cutting. New-generation ERP system installed in Q3 2011. 25th October 2011 Capital Markets Event Page 44
Slide 52: Mexico Products
Senior Aerospace – Mexico Products Miscellaneous metallic details for external structures (i.e. thrust reverser assembly) for fuselage for airplanes/helicopters. Insulation of high–pressure ducting for aircraft. Air Inlets & exhaust collectors for industrial turbines, mid-range rating 10 – 60 MW. 25
Slide 53: Mexico Key Platforms
Senior Aerospace – Mexico Key Platforms • Boeing 737, 747-8, 767, 777. • Bombardier CSeries • Bell Helicopter 212, 206, 429 • Solar Titan, Mercury, Mars, Saturn (Mid-size Industrial Turbines, ranging 10 – 60 Megawatt) 25th October 2011 Capital Markets Event Page 46
Slide 54: Mexico Growth Strategy
Senior Aerospace – Mexico Growth Strategy • Leverage strength of Senior global foot- print & best practices into Mexico. • Further develop process capabilities and Senior Aerospace Mexico build upon the existing platform of customer approvals. • Provide solutions for OEMs and Primes as they establis
Slide 55: Mexico Outlook
Senior Aerospace – Mexico Outlook • Young, motivated group, building foundations for a successful presence in Mexico. • Clear trend for OEMs and Primes moving into Mexico, focusing on labor-intensive activities e.g. assembly work. • Senior Aerospace Mexico aims to be a partner and preferred supplier
Slide 56: Jet Products
Senior Aerospace Jet Products (Damon Evans) 25th October 2011 Capital Markets Event
Slide 57: Jet Products Introduction
Senior Aerospace – Jet Products Introduction Damon Evans, CEO, Jet Products Division. • US Citizen, office/operation in San Diego, California. • 21 years of Operational and Executive Leadership: • Senior Aerospace Jet Products CEO for 8 years • Senior Flexonics Automotive/Ind. Divisions for 8 years
Slide 58: Jet Products Background
Senior Aerospace - Jet Products Background • Founded in 1965. • Moved to San Diego, Balboa Ave. in 1968 on 9 acre site, 150,000 sq/ft facility. • Acquired by Senior Plc in 1998. • 17% of divisional revenues (2nd largest operation) • 185 employees. 25th October 2011 Capital Markets Event Page 50
Slide 59: Jet Products Markets served
Senior Aerospace - Jet Products Markets served Markets Customers Other Non Aerospace 2% Regional Jets 7% Other 7% Military/ Defence Finmeccanica 9% Aerospace 7% Spirit 31% GE 24% Goodrich 29% Large Commercial Aircraft 84% Large Commercial Aircraft – key growth platforms: - B777, B747-8, B787, B737,
Slide 60: Jet Products Capabilities
Senior Aerospace - Jet Products Capabilities • Monolithic design approach to reduce cost and weight • Generating value through next level assemblies 25th October 2011 Capital Markets Event Page 52
Slide 61: Jet Products Capabilities
Senior Aerospace - Jet Products Capabilities Near-net shape and flash-weld technology: - Roll forming & computer controlled rounding of Ti, Inconel, & Aluminium - 300kva, 600kva and 1000kva capability in multiple alloys. • High speed turning and 5-axis Milling: - Size range up to 180” turning diamet
Slide 62: Jet Products Capabilities
Senior Aerospace - Jet Products Capabilities • Assembly capability: – Cellular assembly capability, fastener type and class-A welding. • Engineering and New Product Introduction (NPI): – In-house Engineering utilizing state of the art software. – Dedicated “New Program Manager” with direct link to c
Slide 63: Jet Products Applications
Senior Aerospace - Jet Products Applications 25th October 2011 Capital Markets Event Page 55
Slide 64: Jet Products Growth
Senior Aerospace - Jet Products Growth Growth Strategy: Listen, understand and solve customers problems with engineered solutions and innovative approaches to manufacturing challenges An excitingly healthy outlook: Continue to build successful new product introduction and cost reduction opportunitie
Slide 65: Summary
Summary (Mark Rollins) 25th October 2011 Capital Markets Event
Slide 66: Summary
Summary Large commercial aerospace market visible & expected to grow strongly Senior well positioned to gain market share within the growing market Management in place to deliver profitable growth Continuing healthy overall Group performance Much of Group has good organic growth opportunities Macroe