Slide 1: Half Year Results 2022
HALF YEAR RESULTS 2022 HALF YEAR 2022 RESULTS © TT Electronics 1
Slide 2: Strong Growth and Momentum, Full Year Outlook Unchanged
STRONG GROWTH AND MOMENTUM FULL YEAR OUTLOOK UNCHANGED ▪ Revenue increase reflects successful positioning in structural growth markets ▪ Book to bill of 144% with order book more than double pre-pandemic levels and up 55% versus prior year ▪ 23 new significant contract wins in the half delivering ov
Slide 3: Financial Review – Mark Hoad, CFO
FINANCIAL REVIEW MARK HOAD, CFO HALF YEAR 2022 RESULTS © TT Electronics 3
Slide 4: Group Financial Performance
GROUP FINANCIAL PERFORMANCE £m (except where stated) Change HY 22 HY 21 ▪ 8% organic revenue growth – c. 2/3 pricing/pass through, 1/3 constant fx volume Revenue 269.2 235.6 10% ▪ Operating profit up 5% on constant currency basis Operating profit* 18.3 15.9 5% ▪ Adjusted operating margin of 6.8% Ope
Slide 5: Temporary Headwinds to Operating Margin
TEMPORARY HEADWINDS TO OPERATING MARGIN ▪ Ferranti delivering high-teen margins ▪ Dilutive impact of pass-through in GMS ▪ Benefits of growth offset by Covid and supply chain issues ▪ Continuing to realise benefits from self-help programme ▪ Adding back discretionary costs as planned ▪ Adjusted oper
Slide 6: Power & Connectivity
POWER & CONNECTIVITY Change ▪ 2% revenue decline at constant currency, 7% organic HY 22 HY 21 Change constant fx decline Revenue (£m) 68.8 68.2 1% (2)% ▪ Performance impacted by supply chain, timing of programme revenues and COVID related shutdowns Adjusted operating profit (£m) 2.1 3.6 (42)% (48)%
Slide 7: Global Manufacturing Solutions
GLOBAL MANUFACTURING SOLUTIONS Change ▪ 17% organic growth in revenue, driven by US and Asia HY 22 HY 21 Change constant fx ▪ Strong order intake, now booking orders for H2 2023 Revenue (£m) 135.3 109.6 23% 17% ▪ Operating margins reflect £10m of pass-through (7.5% margin excluding pass through elem
Slide 8: Sensors and Specialist Components
SENSORS AND SPECIALIST COMPONENTS Change ▪ Revenue grew by 8% organically HY 22 HY 21 Change constant fx ▪ Strong demand from distribution customers Revenue (£m) 65.1 57.8 13% 8% ▪ Customers booking orders to secure capacity; order book for 2023 already building Adjusted operating profit (£m) 10.6 7
Slide 9: Free Cash Flow Reflecting Investment for Growth
FREE CASH FLOW REFLECTING INVESTMENT FOR GROWTH ▪ Cash performance in H1 impacted by £33m working capital outflow ▪ Continued investment in inventory to support material order book growth ▪ Impact compounded by supply chain delays affecting product shipment and conversion to EBITDA and cash ▪ Zero p
Slide 10: Expanded Self-Help Programme Progressing Well
EXPANDED SELF-HELP PROGRAMME PROGRESSING WELL Programme scope ▪ 3 main site closures + 4 smaller sites £m 2020 2021 2022 Total ▪ Net headcount reductions c. 500 FTEs Cash cost ▪ Relocation/end-of-life lower margin product lines Restructuring (1.6) (1.8) (5.9) (9.3) Progressing to plan ▪ Closure of 6
Slide 11: Richard Tyson, CEO
RICHARD TYSON, CEO HALF YEAR 2022 RESULTS © TT Electronics 11
Slide 12: Targeted Exposure to Structural Growth Markets
TARGETED EXPOSURE TO STRUCTURAL GROWTH MARKETS MEDIUM TERM NEAR TERM DRIVERS OF HIGHER GROWTH % OF TT REVENUE H1 22 MARKET GROWTH RATE 26% Healthcare +5-7% • Growth in surgical navigation for minimally invasive, digital and robotic surgery • New applications for implantable devices expanding our add
Slide 13: Growth from Business Development in Our Target End Markets
GROWTH : FROM BUSINESS DEVELOPMENT IN OUR TARGET END MARKETS Healthcare Aerospace and Defence Automation and Electrification Surgical navigation Defence Automation • £8m win (over 5 years) with a medical device and • Design and develop win for electrical cable harness • Industrial customer currently
Slide 14: Order Book Strength and Momentum Giving Good Visibility
ORDER BOOK STRENGTH AND MOMENTUM GIVING GOOD VISIBILITY ▪ Expected strong 2022 revenue growth fully covered, book to bill of 144% in H1 ▪ Recovering inflation and transparent pass through of extreme cost increases ▪ Gross profit margins being maintained ▪ Ongoing successful order book re-pricing, wi
Slide 15: Order Book Strength Secures 2022 – Supports 2023 Growth
ORDER BOOK STRENGTH SECURES 2022 – SUPPORTS 2023 GROWTH Order book* at June (£m) TT inventory as a % of ▪ Successfully repriced around 80% of our order book order book with fixed terms and conditions 666 ▪ Distributor inventory levels are 5% lower than at the 35% beginning of 2020 431 29% 27% 309 ▪
Slide 16: Confidence in Outlook for H2 and Beyond
CONFIDENCE IN OUTLOOK FOR H2 AND BEYOND DOUBLE DIGIT MARGINS THROUGH SELF-HELP, GROWTH & PORTFOLIO CHANGE • Self-help: £13-14m run rate benefit by 2023 from site closures and overhead reduction • Growth: Operational leverage on market growth of 3–5% p.a. • Acquisitions of higher margin business with
Slide 17: Outlook
OUTLOOK ▪ Strong order and sales momentum; order book more than double pre-pandemic levels and up 55% vs prior year ▪ Expect to continue to offset inflationary pressures through pricing and operation efficiency ▪ Net debt to adjusted EBITDA expected to be back within 1-2x range by year end ▪ Clear l
Slide 18: Thank You
THANK YOU HALF YEAR 2022 RESULTS © TT Electronics 18
Slide 19: Financial Guidance for 2022
FINANCIAL GUIDANCE FOR 2022 Adjusting items cash spend Pension ▪ £6m on self-help programme ▪ UK deficit contributions £5.7m – payments outside of scheme to avoid trapped surplus ▪ £1m on acquisition integration ▪ UK scheme fully funded on a self-sufficiency ▪ £2m on pension projects basis ▪ Further
Slide 20: Building a Sustainable Business
BUILDING A SUSTAINABLE BUSINESS Environmental Social Governance Net Zero target by 2035 for Scope 1&2 emissions ▪ Employee engagement – 85% participation rate ▪ 33% female representation on the Board and maintained 2* ranking by Best Companies ▪ 25% reduction in emissions delivered in 2021 ▪ ED& I P
Slide 21: Delivering Growth and Creating Value
DELIVERING GROWTH AND CREATING VALUE Megatrends driving revenue growth A high quality, IP rich business, Strong cash generation to invest in IP and demand for products that with cleaner, smarter and and value-enhancing acquisitions contribute to a more sustainable world healthier solutions 90%+ cash
Slide 22: Capital Allocation Priorities
CAPITAL ALLOCATION PRIORITIES Our objective is to maintain a strong financial position and provide flexibility for growth Free cash flow priorities Maximise organic investment including R&D to 1 support growth 2 Maintain our progressive dividend policy Continue to support our strategy with targeted,
Slide 23: The TT Electronics Business
THE TT ELECTRONICS BUSINESS Revenue (H1 2022) Underlying operating profit (H1 2022) Revenue by market (H1 2022) Revenue by geography (H1 2022) Power & Connectivity 26% Power & Connectivity 12% Healthcare 26% UK 22% Global Manufacturing Solutions 50% Global Manufacturing Solutions 51% Aerospace & Def
Slide 24: Revenue by Market and Geography by Division
REVENUE BY MARKET AND GEOGRAPHY BY DIVISION Power and Connectivity Global Manufacturing Solutions Sensors and Specialist Components Revenue by market (%) Revenue by market (%) Revenue by market (%) Healthcare 13% Healthcare 46% Healthcare -% Automation & Automation & Automation & electrification 36%
Slide 25: Summary Income Statement
SUMMARY INCOME STATEMENT (£m) H1 2022 H1 2021 Revenue 269.2 235.6 Adjusted operating profit 18.3 15.9 Net finance cost (3.3) (1.8) Adjusted profit before taxation 15.0 14.1 Adjusting items (9.4) (6.6) Profit before taxation 5.6 7.5 Taxation (1.5) (1.7) Profit after taxation 4.1 5.8 HALF YEAR 2022 RE
Slide 26: Summary of Revenue and Operating Profit by Division, Impact of FX
SUMMARY OF REVENUE AND OPERATING PROFIT BY DIVISION IMPACT OF FX Global Sensors and Power and Manufacturing Specialist Connectivity Solutions Components Corporate Group Revenue (£m) HY 2022 68.8 135.3 65.1 - 269.2 HY 2021 at HY 2022 rates 70.2 115.3 60.2 - 245.7 FX impact 2.0 5.7 2.4 - 10.1 HY 2021
Slide 27: Income Statement – Adjusting Items
INCOME STATEMENT – ADJUSTING ITEMS £m H1 2022 H1 2021 Operating profit 8.9 9.3 Adjusted to exclude: Restructuring and other items INCOME STATEMENT – ADJ USTING ITEMS Restructuring (4.5) (3.3) Property disposals - 1.3 Pension related items (1.0) (0.6) (5.5) (2.6) Acquisition related costs Amortisatio
Slide 28: Cash Conversion
CASH CONVERSION £m H1 2022 H1 2021 Adjusted operating profit 18.3 15.9 Depreciation and amortisation 7.9 8.0 Net capital expenditure (5.0) (6.2) Capitalised development expenditure (1.0) (1.0) Working capital (33.0) (18.9) Other 2.8 1.1 Operating cash flow after capex1 (10.0) (1.1) Cash conversion (
Slide 29: Movement in Net Debt
MOVEMENT IN NET DEBT £m H1 2022 H1 2021 Operating cash flow after capex (10.0) (1.1) Net interest and tax (4.6) (4.0) Lease repayments (1.9) (1.9) Restructuring and acquisition related costs1 (7.0) (0.6) Pensions - (2.7) Free cash flow (23.5) (10.3) Dividends (6.7) (8.2) Acquisitions (8.3) (0.5) Equ
Slide 30: 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