Senior Plc · LSE:SNR
Senior — Investor Day (May 2019)
86 slides from Senior's investor day presentation, May 20, 2019
Slide 1: Senior Plc Capital Markets Day 20th May 2019
SENIOR PLC CAPITAL MARKETS DAY 20th MAY 2019 Capital Markets Day 2019
Slide 2: Notices
NOTICES Safety Cautionary Statement This document contains certain forward-looking statements. Such statements have been made in good faith based on information available at the time of the Capital Markets Day 2019 on 20 May 2019. These statements should therefore be treated with caution due to the
Slide 3: Today's Key Objectives
TODAY’S KEY OBJECTIVES Deeper insight into Senior and its end markets Substance of Senior’s technology & IP The common technology themes across the Group Future proofing the business ROCE targets and improvement path Capital Markets Day 2019 Page 3
Slide 4: Agenda
AGENDA 2:00pm SENIOR PLC – Introduction to Senior David Squires, Group CEO – Our Strategy – Our Markets – Technology Themes 2:25pm FLUID CONVEYANCE – Understanding Bellows Technology Mike Sheppard, Flexonics CEO – Fluid Conveyance Technology Launie Fleming, Fluid Systems CEO – Flexonics Technology U
Slide 5: Senior Plc Leadership Team
SENIOR PLC LEADERSHIP TEAM Ian King David Bindi Foyle Chairman Squires Group Finance Group CEO Director Mike Sheppard Launie Fleming Joe Mockus CEO CEO CEO Flexonics Division Fluid Systems Aerostructures Division Division David Beavan Andrew Bodenham Jane Johnston Director of Business Group Company
Slide 6: Presenters
PRESENTERS Krist Khodjasaryan Parag Hegday VP, Engineering and Director of Technology Program Management Senior Aerospace Structures Senior Aerospace SSP Shaz Malik Ryan Collins VP, Business Development Director of Engineering Senior Flexonics Senior Flexonics Bartlett Capital Markets Day 2019 Page
Slide 7: Senior Plc
SENIOR PLC Capital Markets Day 2019
Slide 8: Introduction to Senior, Our Strategy, Our Markets
• Introduction to Senior • Our Strategy • Our Markets • Technology Themes David Squires Group CEO Capital Markets Day 2019
Slide 9: What Senior Is
WHAT SENIOR IS is an international, market-leading, engineering solutions provider Publicly Traded - London FTSE 250 as “SNR” 2018 split Sales Employees N. America 59% 3,528 International manufacturing group: UK 16% 1,504 • 32 operations (including 1JV), across 14 Rest of Europe 12% 1,157 Rest o
Slide 10: Evolution of Senior
EVOLUTION OF SENIOR 1836 2000 Baxter Woodhouse and A new automotive factory at Olomouc, Czech Republic is Taylor (BWT) was built. Commenced disposal of various industrial businesses. established in Manchester 2006 as a cotton goods trader. 1995 Acquired Sterling Machine Co., Inc. and Aerospace Manuf
Slide 11: Our Business Model
OUR BUSINESS MODEL Long-Term Sustainable What We Do How We Do It Value Design and manufacture of Create value for all our highly engineered, Our Values Our Strengths Strategic Priorities stakeholders through our technology rich products and business model systems for OEMs in the Autonomous and follo
Slide 12: Our Six Strategic Priorities
OUR SIX STRATEGIC PRIORITIES Focus on Growth Strategic Priorities Outgrow our end markets by: Growing market share, particularly with key customers Autonomous and Collaborative Business Model Focusing on innovation Focus on Growth Geographical expansion Rigorous Seeking out and exploiting ad
Slide 13: Our Markets
OUR MARKETS Power & Energy 14% Land Vehicles 16% 52% Civil Aerospace Other Aerospace 7% 11% Military Aerospace End markets composition based on 2018 revenue Capital Markets Day 2019 Page 13
Slide 14: Civil Aerospace (52% of Group)
CIVIL AEROSPACE (52% of Group) Demand for new civil aircraft remains robust Boeing, Airbus and independent forecasters predicting air traffic to grow > 4% p.a. over the next 20 years By 2037, approx. 85% of emerging country populations will fly (up from 30% in 2017) World Air Traffic Trips per
Slide 15: Military Aerospace (11% of Group)
MILITARY AEROSPACE (11% of Group) Global defence spending to exceed $2 trillion in 2022 The US continues to spend more on defence than the next 7 countries combined Senior is well placed with good content on F-35, CH-53K and T-X Trainer The United States spends more on defence than the next se
Slide 16: Land Vehicles (16% of Group)
LAND VEHICLES (16% of Group) Commercial vehicles grow at 4% p.a. and passenger vehicles grow at 2% p.a. through the cycle Growth in GDP and tighter emissions regulations increase demand for Senior’s land vehicle products Senior is addressing the changing landscape with innovative products Worl
Slide 17: Power & Energy (14% of Group)
POWER & ENERGY (14% of Group) Projected increases in global energy usage, tightening emission control regulations and emerging changes in power generation will drive increased demand for Senior’s power & energy products Senior supplies into oil and gas and power generation, including nuclear and
Slide 18: Two Technology Themes
TWO TECHNOLOGY THEMES Fluid Conveyance Structures Flexonics Aerospace World Class Mechanical Engineering Capabilities Capital Markets Day 2019 Page 18
Slide 19: Technology Theme One: Fluid Conveyance
TECHNOLOGY THEME ONE: FLUID CONVEYANCE Aircraft Low Pressure Ducting High Pressure Ducting Aerospace Control Products Non-Aerospace Control Products Gas Turbine Engines Complex Ducts, Tubes & Pipes Bellows Seals & Controls Aerospace Controlling the flow of fluids within systems Extending the technol
Slide 20: Technology Theme Two: Structures
TECHNOLOGY THEME TWO: STRUCTURES Airframe Structures & Assemblies Airframe Structures Airframe Assemblies Helicopter Transmission Structures Hard & Soft Metal Machined Parts Engine Structures & Mountings Nacelle Rings Engine Casings Aerofoils Aerospace Precision Machined Components and Assemblies La
Slide 21: Intellectual Property (IP) Rich Business
INTELLECTUAL PROPERTY (IP) RICH BUSINESS Structures Complex Machining and Manufacturing Know-How: Process IP Flexonics IP is inherent in both design and manufacturing Fluid Conveyance Aerospace Product and System Design & Manufacturing IP Capital Markets Day 2019 Page 21
Slide 22: Fluid Conveyance
FLUID CONVEYANCE Capital Markets Day 2019
Slide 23: Understanding Bellows Technology
• Understanding Bellows Technology Mike Sheppard Flexonics CEO Capital Markets Day 2019
Slide 24: What Is a Bellows?
WHAT IS A BELLOWS? A bellows is a zero leakage dynamic seal capable of a range of motion. Made from thin gauge metal: stainless steel, high nickel alloys, titanium or other alloys ranging from 0.001” to 0.125” thick. Some multiple plies Capital Markets Day 2019 Page 24
Slide 25: Bellows Technology
BELLOWS TECHNOLOGY Bellows are used for: Thermal expansion/contraction Absorbing vibration and/or motion Seals Heat transfer Senior has 100+ years of integrating Formed Bellows & Welded … Into higher value Medical, Aerospace, Oil & Gas, Industrial, Auto and Truck / Off-road applications fo
Slide 26: Variety of Bellows
VARIETY OF BELLOWS Welded Formed or Bellows: Female Diaphragm Welded Male Diaphragm Round, Oval Convolution Weld Rectangular,… Bellows Capsule Weld Metal, Fabric, Rubber Metal Hoses Capital Markets Day 2019 Page 26
Slide 27: Senior's Bellows Come in a Variety of Sizes
SENIOR’S BELLOWS COME IN A VARIETY OF SIZES Bellows underpinning technology at the heart of our most successful businesses Capital Markets Day 2019 Page 27
Slide 28: Unique Characteristics to Solve Complex Problems
UNIQUE CHARACTERISTICS TO SOLVE COMPLEX PROBLEMS Critical Applications where Pressure, High Temperatures, and Motion require unique solutions Bespoke Highly Engineered Designs Senior provides Design, Modeling, and Validation - often customer does not really understand the actual requirements.
Slide 29: Leads to Broad Range of Products and Industries
LEADS TO BROAD RANGE OF PRODUCTS AND INDUSTRIES Land Vehicle Refinery Aerospace Solar Power Semi-con Oil & Gas Nuclear Aerospace Land Vehicle Capital Markets Day 2019 Page 29
Slide 30: Fluid Conveyance Technology
• Fluid Conveyance Technology Launie Fleming Fluid Systems CEO Capital Markets Day 2019
Slide 31: High Performance Duct Systems
HIGH PERFORMANCE DUCT SYSTEMS Total engineered systems resources Environmental Control Effective solutions to complex fluid conveyance Ducting System tubes, pipes and ducting requirements Airframe and Turbine Engine duct system Complex Engine Buildup Fabrications Ducting System designs Design,
Slide 32: Fluid Systems High Performance Ducts
FLUID SYSTEMS HIGH PERFORMANCE DUCTS Sample Transport Sample Regional / Business High Pressure / Bleed Ducting Jet Bleed Ducting Telescopic duct Typical wing duct products HP bleed air duct HP bleed air duct Capital Markets Day 2019 Page 32
Slide 33: Fluid Systems High Performance Ducts
FLUID SYSTEMS HIGH PERFORMANCE DUCTS Custom Design / Build to Specification Titanium, Stainless Steel, Inconel® bellows Formed or Edge-Welded Bellows Conception to Qualification Software simulation & analysis Project management Validation, Qualification, Certification INDUSTRIAL APPLICATIO
Slide 34: Engine Build-Up Units (EBUs)
ENGINE BUILD-UP UNITS (EBUs) Senior Aerospace is an expert EBU designer and manufacturer EBU system includes: Starter Ducts Bleed Ducts Fuel Lines Fuel Lines Leak Detection Systems for Hot Ducts Hydraulic Lines Oil Drains Lines Capital Markets Day 2019 Page 34
Slide 35: Senior Flexonics Land Vehicle
SENIOR FLEXONICS LAND VEHICLE Daimler Heavy Duty Truck Engine Senior supplies: Exhaust Manifold Tubes Exhaust Gas Recirculation (EGR) Lines Turbo Charger Pipes Scania Heavy Duty Truck Engine Exhaust System Components Oil Drain Lines for Turbo Chargers Capital Markets Day 2019 Page 35
Slide 36: Process Equipment
PROCESS EQUIPMENT Renewable Energy Heating & Ventilation Lubrications Systems Valve Seals Instrument & Control Seals Medical Equipment Metal Hose for Industrial Technology Capital Markets Day 2019 Page 36
Slide 37: Power & Energy Expansion Joints & Dampers
POWER & ENERGY EXPANSION JOINTS & DAMPERS Capital Markets Day 2019 Page 37
Slide 38: Flexonics Technology Update
• Flexonics Technology Update Shaz Malik Business Development Flexonics Ryan Collins Director of Engineering Senior Flexonics Bartlett Capital Markets Day 2019
Slide 39: Land Vehicle Technology Trends
LAND VEHICLE TECHNOLOGY TRENDS Today 2021 2025 2030 2035 Source: Senior plc, Cummins Capital Markets Day 2019 Page 39
Slide 40: Evolution of Land Vehicle Powertrains
EVOLUTION OF LAND VEHICLE POWERTRAINS Addressing the Changing Landscape Battery Cooling Waste Heat Recovery Heat Sink in Hybrid Cars Developing New Products for Electrification New Development – 3D Printed Thermal Plastic Radial Fin EGR Coolers – Combining Highest Efficiency with Highest Durabilit
Slide 41: EGR Cooler Journey – Challenge
EGR COOLER JOURNEY – CHALLENGE Landscape Commercial Vehicle OEMs must meet Emissions Legislation Cracks Exhaust Gas Recirculation (EGR) is needed Existing heat exchanger suppliers respond with their standard know how Rectangular Tube/Fin Header (Failed) Problem Large warranty return rate
Slide 42: EGR Cooler Journey – Solution
EGR COOLER JOURNEY – SOLUTION Problem Solving Senior Flexonics team leaned on 100 year history of thermal compensation Issue was assessed and underlying failure mechanism quantified Senior’s Bend-a-FlexTM tube technology was utilised F = Force applied on the spring and assembled into a conve
Slide 43: Land Vehicle Electrification – Challenge
LAND VEHICLE ELECTRIFICATION – CHALLENGE Landscape City governments are moving to ban/reduce vehicle NOx Climate change legislation will drive down permissible CO2 levels NOx is a city problem, CO2 is a global problem Meeting 95g/km CO2 combined with trend toward CUV Problem Electrific
Slide 44: Land Vehicle Electrification – Powertrain Solution
LAND VEHICLE ELECTRIFICATION – POWERTRAIN SOLUTION Battery Cooler Power Inverter Chill Plate Problem Solving Thermal management is one of the key levers to battery performance Efficiency, weight reduction, packaging, material selection are all areas within Senior’s expertise Current State
Slide 45: Land Vehicle Electrification – Powertrain Solution
LAND VEHICLE ELECTRIFICATION – POWERTRAIN SOLUTION Senior Flexonics are working in close collaboration with our long term partner, Cummins, to develop a battery thermal management system for their 74kWh Goodwood battery module. The system is designed in Crumlin and will be manufactured in Bartle
Slide 46: Next Generation Technology – Radial Fin Cooler
NEXT GENERATION TECHNOLOGY – RADIAL FIN COOLER Future powertrains will have integrated electric machinery with reduced displacement and “last mile” capability This environment will place significant space and performance constraints on engine heat exchangers such as EGR Cooler Senior has devel
Slide 47: Fluid Conveyance Summary
FLUID CONVEYANCE SUMMARY Market leading Bellows technology is at the heart of many of Senior’s proprietary products That has evolved into higher level proprietary product and system offerings where we also lead the market We are protecting and enhancing market leading positions by investing in
Slide 48: Coffee Break
COFFEE BREAK Capital Markets Day 2019
Slide 49: Structures
STRUCTURES Capital Markets Day 2019
Slide 50: Structures Know-How
• Structures Know-How Joe Mockus Structures CEO Capital Markets Day 2019
Slide 51: Structures
STRUCTURES Precision machining, fabricating and assembling of medium to high complexity build-to-print structures Gas turbine engines Airframe Power & Energy (rotating & structural) Key differentiators: Unique manufacturing processes Proprietary Computer Numerical Control (CNC) code State-of-the-art
Slide 52: Innovative Process Technology: Aero Structural Components
INNOVATIVE PROCESS TECHNOLOGY: AERO STRUCTURAL COMPONENTS Flash Butt Welding Basics Flash Butt Welding Deliver lower costs via innovative manufacturing process solutions for nacelle Typical manufacturing process uses ring forgings (significant waste) Flash-butt welding allows use of rolled e
Slide 53: Structures Expertise
STRUCTURES EXPERTISE Intermediate Case Intermediate Case A350 - Trent XWB 97k B787 - Trent 1000 Raw Casting Final product with Final product with 9600 close 7200 close tolerance features tolerance features Common Manufacturing Processes 1. Complex 5-axis machining 2. Precision mechanical assembly 3.
Slide 54: Structures Expertise
STRUCTURES EXPERTISE Boeing 777X Folding Wing Tip – Extended Wing Box Assembly Proprietary assembly jig designed in-house Combines complex machining and assembly work Automating key processes to reduce cost Capital Markets Day 2019 Page 54
Slide 55: Structures Division Technology Development
• Structures Division Technology Development Parag Hegday Director of Technology – Structures Capital Markets Day 2019
Slide 56: Structures Technology Development: Focus Areas
STRUCTURES TECHNOLOGY DEVELOPMENT: FOCUS AREAS Focus areas aligned with Group strategic priorities Common machine standards & sharing Best Practices Numerical Control (NC) Programming Standards / Optimisation Machines / Tooling / Equipment Manufacturing 4.0 / Digitisation Capex selection /
Slide 57: Implementing Common Standards & Best Practices
IMPLEMENTING COMMON STANDARDS & BEST PRACTICES NC Program Optimisation Collaborated with third-party to introduce proprietary software Simulates tool-path to predict cutting forces Optimises tool-path to reduce cutting time Pilot showing good results Overall 15% cycle time reduction on f
Slide 58: Manufacturing 4.0 / Digitisation
MANUFACTURING 4.0 / DIGITISATION Various pilot initiatives with Internet of Things & Digital Thread Initial Big Data project underway Long-term goal: reduce / eliminate coordinate measuring machine (CMM) inspection Uses high-frequency sampling to predict part conformance Insights & automat
Slide 59: Process Technology Improvement (Examples)
PROCESS TECHNOLOGY IMPROVEMENT (EXAMPLES) Robotic Deburr Multiple sites using robots to replace manual operations Robotic Assembly Developed & implemented metered adhesive dispensing for fasteners Full robotic assembly on complex modules in future (cobots) Additive Manufacturing (AM) P
Slide 60: Factory of Future (Vision)
FACTORY OF FUTURE (VISION) Digital information thread (Manufacturing Execution Systems) Best-in-class equipment & methods Machining of Aluminium & Titanium, Fabrication Automation Mechanical Assembly Augmented Reality Robotics (deburr, assembly cobots) Manufacturing 4.0 (Machine moni
Slide 61: Additive Manufacturing
ADDITIVE MANUFACTURING Krist Khodjasaryan VP, Engineering and Program Management SSP Capital Markets Day 2019
Slide 62: Why Has Senior Invested in Additive?
WHY HAS SENIOR INVESTED IN ADDITIVE? Reduce Waste Improved Buy:Fly Ratios Increased Supply Chain Control Costs similar to casting without the headache of supplier management Improved Quality Control Automated Processes Statistical Process Control Reduced Variability Reduced Cost
Slide 63: Facility and Hardware
FACILITY AND HARDWARE Senior has invested in an Additive Manufacturing Technology Center in Burbank, CA to support all Senior additive initiatives and projects Senior has selected the EOS M400-4 More mature than other options on the market. Used in Aerospace production today Large build volume
Slide 64: Qualification Test Lab and Material Analysis Lab
QUALIFICATION TEST LAB AND MATERIAL ANALYSIS LAB ISO17025 Certified Test Lab Current Capabilities: • Vibration, Endurance, Pressure, Temperature, Motion, Environmental New Capabilities: • Tensile Testing (300kn) • Fatigue Testing (100kn) Material Analysis Lab Current Capabilities: • Micros
Slide 65: Design Expertise / Design Authority
DESIGN EXPERTISE / DESIGN AUTHORITY Senior Fluid Systems companies have design, engineering, and integration capabilities: System Level Component Level Importance of being the Product Design Authority Equipped with engineering experience, analysis tools, and testing infrastructure to lead
Slide 66: Launch Customer
LAUNCH CUSTOMER Memorandum of Agreement (MoA) signed with launch customer Machined titanium nacelle/engine brackets Cost/weight savings through bill of material (BOM) reduction and material optimisation Block 1 production slated to start in early 2020 Initial certification with launch cust
Slide 67: Future Opportunities
FUTURE OPPORTUNITIES Several prime candidates within existing product portfolio Complex multi-component, multi-weld (sub)assemblies OEMs looking for sub tier additive suppliers to complement internal capabilities Additional capacity for production scaling Risk reduction through dual source
Slide 68: Structures and Additive Summary
STRUCTURES AND ADDITIVE SUMMARY Our Structures business has significant IP Market leading positions in our chosen sub-sectors Investing for future growth and competitiveness State of the art equipment and facilities Processes and digitisation Additive manufacturing - a game changer for c
Slide 69: New Product Introduction & Industrialisation
NEW PRODUCT INTRODUCTION & INDUSTRIALISATION Capital Markets Day 2019
Slide 70: New Product Introduction (NPI)
• New Product Introduction (NPI) David Squires CEO Capital Markets Day 2019
Slide 71: Unprecedented Transition in Civil Aerospace
UNPRECEDENTED TRANSITION IN CIVIL AEROSPACE Aircraft Deliveries/Production (number) 2,200 2,000 1,800 2018 was the cross-over year for new and mature aircraft platforms 1,600 1,400 2019 will be the peak transition year 1,200 Many thousands of new parts 1,000 introduced for these new platforms
Slide 72: Delivering Profitable Growth
DELIVERING PROFITABLE GROWTH NPI and Industrialisation Typical Aerospace Programme Profile Moving through the learning curve INCREASES PRODUCTIVITY & EFFICIENCY, DRIVES DOWN Length of contract COST Volume ROCE Capital expenditure investments Focus on: Delivering profitable growth Driving shareho
Slide 73: NPI Process
NPI Process Testing Low Rate Initial Design Qualification Serial Production Production (LRIP) Certification Specifications Component Design Tool optimization Qualification freeze/maturity Analysis Equipment investment Firm up make/buy, Ground test and flight tooling, and test hardware manufacturing
Slide 74: Examples of NPI Activity
• Examples of NPI Activity Launie Fleming Fluid Systems CEO Joe Mockus Structures CEO Capital Markets Day 2019
Slide 75: NPI – Coming Down the Cost Curve
NPI – COMING DOWN THE COST CURVE Complex Large Commercial Aircraft Fluid System Cost Profile Learning curve improvements Baseline YoY 41% reduction Senior Operating System lean activities driving down labour YoY 18% reduction hours (new tooling concepts, YoY 18% reduction material flow reduction
Slide 76: NPI – Improving Gross Margins
NPI – IMPROVING GROSS MARGINS Thermal Valves Cost & Margin Profile $4,500 60% Learning curve improvements $4,000 50% $3,500 40% Capital investment in an automated test stand that significantly reduced test times $3,000 30% $2,500 20% Tool design and development to improve $2,000 10% throughput
Slide 77: NPI – Learning Curve Improvement
NPI – LEARNING CURVE IMPROVEMENT Large Commercial Aircraft Engine Structure with Complex Fabrication & Assembly Reduction in labour hours achieved Labour Hours Reduction 200% through operational excellence: 180% Dedicated manufacturing cell 160% 140% Senior Operating System with 120% focus on le
Slide 78: Our Financial Framework
OUR FINANCIAL FRAMEWORK Bindi Foyle Group Finance Director Capital Markets Day 2019
Slide 79: Financial Framework
FINANCIAL FRAMEWORK The Group uses the following 5 financial metrics to measure progress in implementing our strategy: Return on Revenue Organic Revenue Growth Margin (OP%) To grow organic revenue Return on Capital To increase the Group’s (at constant currency) Employed adjusted operating profit fas
Slide 80: Value Tree
VALUE TREE Revenue The Group’s ROCE is translated to a Return on Asset Gross Margin (ROTA) measure for each Operating operating business Cost of Sales Profit Support Costs All investment decisions are ROTA Inventory assessed in terms of: Turns Working • Strategic value to the Group Capital Debto
Slide 81: Example of an Operating Business Value Tree
EXAMPLE OF AN OPERATING BUSINESS VALUE TREE Revenue Gross Margin Illustrates year-to-date Operating performance compared to Cost of Sales Profit budget Support Costs Cost of sales higher due to higher revenue, but Inventory maintaining gross margin ROTA Turns Working Focus is on improving work
Slide 82: Steps to Achieve Target ROCE of 13.5% (post IFRS 16)
STEPS TO ACHIEVE TARGET ROCE OF 13.5% (post IFRS 16) 13.5%(2) Capital Deployment • Capital Expenditure to Depreciation Ratio reduces over time from Operating Margin Improvement and Profitable Growth Working Capital current levels Efficiency • Prune to Grow Activity • Acquisitions that meet • Lean ma
Slide 83: Capital Deployment Framework
CAPITAL DEPLOYMENT FRAMEWORK Prioritising organic investment To support growing revenue faster than end-market growth To improve cost efficiency with investments in automation and best in class equipment Supporting investment in Research & Development Well placed for evolving technology tr
Slide 84: Closing Remarks
CLOSING REMARKS Capital Markets Day 2019
Slide 85: Today's Key Messages
TODAY’S KEY MESSAGES Senior operates in attractive end markets There is a rich heritage of market leading technology that underpins the whole business Ongoing investment is future proofing the business in line with market trends and customer requirements Collaboration across the Group ensures the wh
Slide 86: Thank You
THANK YOU Capital Markets Day 2019