Slide 1: TT Electronics plc 2018 Interim Results
Engineering smarter solutions together TT Electronics plc 2018 Interim Results August 2018 1
Slide 2: H1 2018 overview
H1 2018 overview • Strong financial results, ahead of expectations Strong organic • Continued order book momentum performance, enhanced by • R&D, sales success, operational excellence acquisitions • Margin progression, up 170bps to 7.5% • Investing more in the business for future growth • Strong bal
Slide 3: Financial review
Financial review Mark Hoad, CFO 3
Slide 4: H1 2018 overview
H1 2018 overview 5% 45% 60% Strong organic performance, enhanced by acquisitions Like-for-like revenue Underlying operating Increase in EPS growth profit growth 7.5% 105% 11% Underlying operating Cash conversion Increase in the dividend margins, up 170 bps to 1.95p TT Electronics plc interim results
Slide 5: Group financial performance
Group financial performance Continuing operations £m (except where stated) HY 2018 HY 2017 Change Change constant fx Revenue 194.2 180.5 8% 12% • Revenue up 5% on a like- for-like basis Operating profit* 14.6 10.9 34% 45% • Operating profit up by 45%; Operating profit margin* 7.5% 6.0% 150bps 170bps
Slide 6: Sensors and Specialist Components
Sensors and Specialist Components Strong growth and margin improvement • Organic revenue up 7% Change constant • Demand remaining positive H1 2018 H1 2017 Change fx • Operating profit up 24% Revenue (£m) 71.3 71.0 0% 7% • Drop through on increased volumes • Operational efficiency Underlying operatin
Slide 7: Power and Connectivity
Power and Connectivity Investing for growth and acquisitions contributing • Revenue up 18%, down 12% organically Change as expected constant H1 2018 H1 2017 Change fx • Organic decline largely relates to absence of one-off last time buy activity Revenue (£m) 38.7 33.2 17% 18% • Acquisitions contribu
Slide 8: Global Manufacturing Solutions
Global Manufacturing Solutions Growth continues and step-change in margins • Revenue up 13%, of which organic 6% Change constant • Growth in Asia and North America led by H1 2018 H1 2017 Change fx medical customers • Revenues from acquisitions £4.9m Revenue (£m) 84.2 76.3 10% 13% • Operating profit
Slide 9: Group operating profit bridge
Group operating (H1 2018 vs H1 2017), £m profit bridge Operating margin, % Continuing operations 6.0% (0.2)% 5.8% 2.0% (0.4)% - 0.1% 7.5% Profit and margin 1.4 14.6 improvement from volume (0.6) 3.8 growth and operational efficiency (0.1) 10.9 (0.8) 10.1 FX H1 2017 Organic Power and Corporate H1 201
Slide 10: Free cash flow and net funds
Free cash flow and £m H1 2018 H1 2017 Underlying EBITDA 21.0 17.5 • Capital and net funds Net capital expenditure & capitalised development (6.7) (6.9) development expenditure at 1.0x DA Working capital (0.5) 2.0 Profit growth underpinned Cash flow from discontinued operations - 3.7 • Sustained work
Slide 11: Other financial matters / guidance for FY 2018
Other financial matters / guidance for FY 2018 Exceptional items Tax • Restructuring costs offset by property disposal • Effective rate remains at lower end of 20-22% guidance • Circa £7m of M&A related cash costs • Cash payments circa 90% of P&L charge Capital and development expenditure Pensions •
Slide 12: Strategy and outlook
Strategy and outlook Richard Tyson, CEO 12
Slide 13: Our strategy
Our strategy The right strategy to Clear market focus deliver growth and value • We are focused on building leading positions in areas of the market where there for our shareholders are structural growth drivers, and the proliferation of electronics is driving demand for our solutions Creating diffe
Slide 14: Market growth driving demand for our solutions: Industrial and Medical
Market growth driving demand for Markets our solutions Industrial Medical Structural growth drivers leading to increasing sales ‘Connected everything’ Increasing remote care trends Macro • Robotic automation • Increased investment in patient monitoring for sensing and power • ‘smarter home’ and care
Slide 15: Market growth driving demand: Aerospace and defence, Transportation
Market growth driving demand for Markets our solutions Aerospace and defence Transportation Structural growth drivers leading to increasing sales ‘The more electric aircraft’ Hybrid and electric vehicles trends Macro • ‘Cleaner skies’ • Increase power density for sensing and power • Reduced size, we
Slide 16: Successful execution of strategy
Successful execution of strategy 194.2 10.0% 9.0% 3 year record of revenue growth and margin 174.1 progression 8.0% 7.5% 164.1 7.0% 5.8% 5.5% 6.0% 5.0% 120 4.0% HY 2016 HY 2017 HY 2018 Revenue at CC, excluding disposal of Transportation division £m Operating margin, % TT Electronics plc interim resu
Slide 17: Strategic priorities
Strategic business development R&D and value-added product solutions Strategic priorities Delivering future growth and margin progression Operational excellence Value-enhancing acquisitions TT Electronics plc interim results 2018 17
Slide 18: Strategic business development
Strategic business development • Increasingly design-led focus of the business • Changing approach to business development • Up-skilling and training of our sales force • More strategic relationships with our customers Growth with Cross selling New customer key accounts sales win wins • Extended TT
Slide 19: R&D and value-added product solutions
R&D and value- added product solutions • R&D cash spend up 23%, £5.7 million • Continued momentum in new product launches – 3 times 2015 run rate • Focus on value-added product solutions as our portfolio becomes increasingly design- led and collaborative Advanced New product Technology Increasing in
Slide 20: Operational excellence
Operational excellence • Continued application of lean techniques enhancing performance for customers and driving margin improvement • More BE Lean practitioners trained and deployed • Enhancing supply chain capability and commodity projects Site improvements BE Lean Supply chain yielding culture sa
Slide 21: Value-enhancing acquisitions
Value-enhancing Acquisition of Stadium • Stadium acquired in April 2018 for £59.7m acquisitions • Leading provider of design-led solutions across our four markets Acquisition of Stadium and • Integration has shown new opportunities Precision following emerging from extended capabilities disposal of
Slide 22: Stadium integration highlighting new opportunities for growth
Stadium integration highlighting new opportunities for growth • Integration progressing well • On track to deliver cost synergies • Brings new offering for connected devices linked to the Internet of Things • Stadium product capabilities combined with our market presence and scale points to future p
Slide 23: Precision integration highlighting product solution opportunities
Precision integration highlighting product • Precision electromagnetic product solutions solution opportunities for critical applications • FY17 revenues $21m • Enhanced presence in the US; proximity to hub of medical customers in Minneapolis • Extends capabilities; adds new design, simulation and m
Slide 24: Consistent delivery against all metrics
Organic growth ahead Revenue up 5% on a like-for-like basis of the market Consistent delivery against all metrics Cash conversion of Three years of excellent cash conversion, average above 100% 80%+ R&D investment to R&D cash spend up 23% y-o-y, £5.7m support growth Operating margin Operating margin
Slide 25: Summary and outlook
Summary and outlook • Strong financial results, ahead of expectations First half performance and • Continued order book momentum order momentum give us • R&D, sales success, operational excellence confidence of progress for the full year ahead of our • Investing more in the business for future growt
Slide 26: Appendix
Appendix TT Electronics plc interim results 2018 26
Slide 27: Appendix: The TT Electronics business
Appendix: The TT Electronics business Revenue (HY18) Underlying operating profit (HY18) Sensors and Specialist Components 37% Sensors and Specialist Components 68% Power and Connectivity 20% Power and Connectivity 17% Global Manufacturing Solutions 43% Global Manufacturing Solutions 40% Central cost
Slide 28: Appendix: Impact of FX
Appendix: Impact of FX Sensors and Global Specialist Power and Manufacturing Continuing Sales (£m) Components Connectivity Solutions Corporate Operations 2018 71.3 38.7 84.2 - 194.2 2017 at 2018 rates 66.7 32.8 74.6 - 174.1 FX impact 4.3 0.4 1.7 - 6.4 2017 as published 71.0 33.2 76.3 - 180.5 Operati
Slide 29: Appendix: Cash Conversion
Appendix: Cash Conversion Cash Conversion (£m) HY2018 HY2017 Underlying EBITDA (continuing operations) 21.0 17.5 Net capital expenditure (5.1) (6.1) Capitalised development expenditure (1.6) (0.8) Working capital (0.5) 2.0 Other 1.5 1.3 Underlying Operating Cash Flow 15.3 13.9 Underlying operating p
Slide 30: Exceptional Items
Exceptional Items Continuing operations Exceptional Items (P&L) • Restructuring costs: restructuring £m HY 2018 HY 2017 £1.8m offset by property disposal gains £3.6m Restructuring costs 1.8 (0.1) Acquisition related costs (8.7) (4.0) • Acquisition costs: Amortisation of acquisition intangibles and f
Slide 31: Disclaimer
IMPORTANT INFORMATION For the purposes of the following disclaimers, references to this “document” shall be deemed to include Disclaimer • references to the presenters’ speeches, the question and answer session and any other related verbal or written communications. • This document contains certain