Slide 1: 2023 FY results presentation
© Morgan Advanced Materials 2023 FY results presentation Results in line, business simplification, higher growth outlook 12 March 2024
Slide 2: Agenda
© Morgan Advanced Materials 2 Agenda • Introduction and summary – Pete Raby • 2023 Full year results – Richard Armitage • Operational and strategic update – Pete Raby
Slide 3: Results in line, business simplification, higher growth outlook
© Morgan Advanced Materials 3 Results in line, business simplification, higher growth outlook • Organic constant-currency* revenue growth of 2.5%, with 10.4% from our faster growing markets • Adjusted operating profit of £120.3m, adjusted operating profit margin of 10.8% and ROIC of 17.6% • Recovery
Slide 4: 2023 Full year results – Richard Armitage
© Morgan Advanced Materials 4 2023 Full year results Richard Armitage
Slide 5: Group Performance
© Morgan Advanced Materials 5 Group Performance % change from FY 2022 £m FY 2023 FY 2022 At organic constant- As reported currency Revenue 1,114.7 1,112.1 0.2% 2.5% Group adjusted operating profit1 120.3 151.0 (20.3)% (16.6)% Group adjusted operating profit margin % 10.8% 13.6% Return on invested ca
Slide 6: Group adjusted operating profit bridge
© Morgan Advanced Materials 6 Group adjusted operating profit bridge • Principal impacts of cyber security incident are: - lower volume due to capacity constraints; and - costs of inefficient operation during the cyber incident • Volume shows impact of industrial slowdown impacting core markets in H
Slide 7: Cash flow summary
© Morgan Advanced Materials 7 Cash flow summary Working capital outflow of £(3.0)m 2022 : £(44.7)m Working Capital Capital investment of £58.5m Capex Lease 2022 : £57.4m payments Dividends Tax Free cash flow of £200.4m EBITDA Exceptional £14.6m net debt items FX, £232.3m net Dec 22 Interest debt FY
Slide 8: Simplification and restructuring
© Morgan Advanced Materials 8 Simplification and restructuring £m FY 2023 FY 2024 FY 2025 Total Adjusted operating profit¹ benefits (incremental) 1 7 10 - Costs charged to specific adjusting items (7) (11) (2) (20) • Simplification into three segments supports our growth ambition by allowing resourc
Slide 9: FY2023 Specific adjusting items
© Morgan Advanced Materials 9 FY2023 Specific adjusting items Cyber security incident: £14.7m Legal, advisory, IT recovery and impairment charges arising from the cyber incident Argentina: Impairment and currency adjustments arising from the devaluation of the Argentine Peso in £5.8m December 2023 R
Slide 10: FY2024 technical guidance
© Morgan Advanced Materials 10 FY2024 technical guidance Capital expenditure c. £120m Net finance charge: Interest charges (c. £16-17m) IAS 19 pensions net interest charge (c. £0.5m) c. £18-20m IFRS 16 lease interest (c. £2m) © Morgan Advanced Materials Effective tax rate 25-27% Non-UK defined benef
Slide 11: A disciplined approach to delivering improving growth and returns
© Morgan Advanced Materials 11 A disciplined approach to delivering improving growth and returns Delivering enhanced EPS growth Clear through cycle financial framework Organic revenue growth 4-7% organic revenue growth (increased from 3-6%) + Continuing profit growth 12.5% to 15% adjusted operating
Slide 12: Operational and strategic update – Pete Raby
© Morgan Advanced Materials 12 Operational and strategic update Pete Raby
Slide 13: Growth across major market segments
© Morgan Advanced Materials 13 Growth across major market segments Year-on-year organic % change at constant-currency Semiconductors 20.4% • Strong semiconductor growth in both carbon and ceramic products with SiC power electronics particularly strong 1 Healthcare 5.8% • Growth in vacuum insulation
Slide 14: Segmental performance
© Morgan Advanced Materials 14 Segmental performance Revenue Organic constant- Adjusted operating profit1 Margin £m currency growth £m % FY 2023 FY 2022 % FY 2023 FY 2022 FY 2023 FY 2022 Thermal Ceramics 402.2 421.4 (0.7)% 34.5 48.7 8.6% 11.6% Molten Metal Systems 52.2 57.8 (8.1)% 5.7 7.8 10.9% 13.5
Slide 15: CO2e emissions now 50% below 2015 baseline
© Morgan Advanced Materials 15 CO2e emissions now 50% below 2015 baseline Absolute CO2e (Scope 1 and 2)1 25% reduction in absolute CO2e emissions compared with FY 2022 driven by: • Green energy procurement: transition to renewable and other carbon free energy sources 343 338 339 328 319 • Efficiency
Slide 16: Water, Safety and Diversity
© Morgan Advanced Materials 16 Water, Safety and Diversity Water usage Water usage in stressed areas Lost time accident rate % Female leadership population1 1 Leadership population consists of approximately 400 of the most senior individuals in the organisation.
Slide 17: Our strategy for growth
© Morgan Advanced Materials 17 Our strategy for growth Three distinctive capabilities... …applied to markets where we are differentiated, can grow and operate at scale Core • Industrial & metals • Petrochemical • Aerospace & Defence Reliable Problem Faster growing Solving • Semiconductors • Healthca
Slide 18: Leading differentiated positions
© Morgan Advanced Materials 18 Leading differentiated positions Share of revenue (%) Market (FY 2023) Market Position Differentiation Faster growing L H Semiconductors 9.7% Emerging/Top 3 Healthcare 7.1% Leader Clean energy + clean transportation 4.5% Emerging 21.3% Core L H Industrial 28.3% Leader/
Slide 19: Semiconductors are growing more quickly and accelerating Group growth
© Morgan Advanced Materials 19 Semiconductors are growing more quickly and accelerating Group growth Semiconductors CAGR % Faster Growing Markets CAGR % Group Guidance CAGR % 20% 15% 15% 13% 12% 12% 10% 7% 7% 6% 4% 3% 2019-2023 2023-2027 2019-2023 OLD: Guidance NEW: Guidance OLD: Guidance NEW: Guida
Slide 20: Business Simplification
© Morgan Advanced Materials 20 Business Simplification Thermal Ceramics Thermal Products Molten Metal Systems Technical Ceramics Technical Ceramics c.10% Seals and Bearings c.90% Electrical Carbon Performance Carbon
Slide 21: New segmental reporting format for 2024
© Morgan Advanced Materials 21 New segmental reporting format for 2024 Revenue Adjusted operating profit1 Margin £m £m % FY 2023 FY 2022 FY 2023 FY 2022 FY 2023 FY 2022 Thermal Products 454.4 479.2 40.2 56.5 8.8% 11.8% Performance Carbon 327.2 321.7 50.0 57.3 15.3% 17.8% Technical Ceramics 333.1 311
Slide 22: Why Morgan?
© Morgan Advanced Materials 22 Why Morgan? 1 2 3 4 Well positioned Leading, differentiated Sustainable solutions Resilient group in attractive, high- market positions for a greener future delivering attractive growth markets through cycle returns Sustainable solutions for a greener future
Slide 23: Summary
© Morgan Advanced Materials 23 Summary • Despite the cyber security incident, we have grown revenue +2.5%, with +10.4% growth from our faster growing markets • Margins recovered to 12.5% in the second half, in line with our financial framework • We are increasing our investment in capacity for the s
Slide 24: Appendix
© Morgan Advanced Materials Appendix
Slide 25: End-market mix (as a % of revenue)
© Morgan Advanced Materials 25 End-market mix (as a % of revenue) Main markets by GBU1 Thermal Ceramics Industrial, Chemical and petrochemical, Metals, Automotive MMS Aluminium (automotive), Copper (construction), Precious metals Electrical Carbon Rail, Industrial equipment, Power generation, Electr
Slide 26: Reported statutory figures
© Morgan Advanced Materials 26 Reported statutory figures Year ended 31 December 2023 Year ended 31 December 2022 £m Results before Results before Specific adjusting Specific adjusting specific adjusting Total specific adjusting Total items items items items Revenue 1,114.7 - 1,114.7 1,112.1 - 1,112
Slide 27: Cash flow summary
© Morgan Advanced Materials 27 Cash flow summary £m FY 2023 FY 2022 EBITDA 159.8 189.1 Change in working capital (3.0) (44.7) • Working capital shows recovery from Change in provisions and other (30.5) (85.3) cyber incident with a £45.2m Cash generated from continuing operations 126.3 59.1 improveme
Slide 28: Strong balance sheet and available liquidity
© Morgan Advanced Materials 28 Strong balance sheet and available liquidity Headroom on banking covenants • Net debt to EBITDA excluding the impact of IFRS 16 leases: 1.2x (FY 2022: 0.8x). Significant liquidity • £187.9m available RCF plus available net cash and cash equivalents of £123.9m • No sche
Slide 29: Foreign currency impacts
© Morgan Advanced Materials 29 Foreign currency impacts The principal exchange rates used in the translation of the results of overseas subsidiaries were as follows: FY 2023 FY 2022 Closing Average Closing Average GBP to: rate rate rate rate USD 1.27 1.24 1.21 1.24 Euro 1.15 1.15 1.13 1.17 For illus
Slide 30: Adjusted earnings per share
© Morgan Advanced Materials 30 Adjusted earnings per share £m FY 2023 FY 2022 Profit for the period attributable to shareholders of the Company 47.3 88.0 Profit from discontinued operations (0.7) (1.1) Profit from continuing operations 46.6 86.9 Specific adjusting items 25.1 5.5 Amortisation of inta
Slide 31: ROIC Definition Chart
© Morgan Advanced Materials 31 ROIC Definition Chart Return on invested capital (ROIC) has been simplified this year so that it can be recalculated from published data. It is now defined as: 12-month adjusted operating profit (operating profit excluding specific adjusting items and amortisation of i
Slide 32: Contact
© Morgan Advanced Materials 32 Contact investorrelations@morganplc.com +44 (0)1753 837 000 morganadvancedmaterials.com