Essentra Plc · LSE:ESNT
Essentra — FY2022 Earnings Presentation
38 slides from Essentra's earnings presentation, Mar 29, 2023
Slide 1: Accelerating our potential as a pure-play Components business
Essentra plc Accelerating our potential as a pure-play Components business Full Year 2022 results 29 March 2023 y EJEsseNTRA
Slide 2: Scott Fawcett, CEO
Scott Fawcett CEO 5 EvESsENTRA 2
Slide 3: Agenda
Agenda 1 Overview 2 Financial performance 3 Strategic update 4 Outlook yo EvEsseNTRA 3
Slide 4: Essentra is now a focused business with a clear strategy to deliver
Essentra is now a focused business with a clear strategy to deliver Our vision is to be the world’s leading responsible hassle-free supplier of essential industrial components Clear strategy to High margin Market leader with a drive organic growth business with scope Strong returns and unique propos
Slide 5: FY2022 highlights
• • • • • • • • • • 1 Operating profit before adjusting items and acquired intangible amortisation 2 Assumes that the Components business absorbs £20.7m of the £38.6m central services costs incurred in the year 5
Slide 6: Financial Performance
Financial Performance Jack Clarke CFO 5 EJEssENTRA 6
Slide 7: Prior year numbers re-presented on a continuing operations basis
Prior year numbers re-presented on a continuing operations basis 1 Before adjusting items and acquired intangible amortisation 2 Assumes that the Components business absorbs £20.7m of the £38.6m central services costs incurred in the year 3 Adjusted operating cash flow is net cash flow from operatin
Slide 8: FY2022 Revenue: Continuing business
FY2022 Revenue: Continuing business +12.0% reported growth, +9.5% constant currency * Increased focus on service to our 3.0% 42.5% £337.9 +2. +6.5% — — customers and being “hassle-free” £301.7 we . we . 7 * Pricing actions are delivering, offsetting inflation £255.0 +12.0% reported * Driving cross-s
Slide 9: Operating profit and earnings, continuing operations
1 Prior year numbers re-presented on a continuing operations basis 2 Adjusted to exclude intangible amortisation of £10.4m and an adjusting items pre-tax charge of £26.0m along with associated tax impact 3 £43.0m adjusted operating profit proforma assumes that the on-going Components business absorb
Slide 10: Income statement, continuing operations
1 Prior year numbers re-presented on a continuing operations basis 2 Adjusted to exclude intangible amortisation of £10.4m and an adjusting items pre-tax charge of £26.0m along with associated tax impact 10
Slide 11: Adjusting items
1 Incurred in relation to defined benefit pension scheme charges which, following the outcome of the strategic review, no longer pertain to the continuing operations of the Group 2 £0.3m incurred in relation to the acquisition of the Wixroyd Group, acquired in December 2022. £0.2m incurred in relati
Slide 12: Cash flow
1 Adjusted to exclude intangible amortisation and adjusting items 2 Being depreciation and amortisation of £16.6m, right-of-use asset depreciation of £5.6m, Share Option Expense of £1.4m offset by other movements (£1.5m) 3 Tax paid excludes the tax received on business acquisitions/disposals 12
Slide 13: Net cash and debt movement
1 Net of lease liabilities transferred, costs associated with the transaction and net working capital adjustments 2 Includes £1.9m dividends to non-controlling interests in the year 3 Movement in loan hedging derivatives £14.8m, revaluation of loans (£1.6m), arrangement fee write off (£3.2m) and amo
Slide 14: Uses of disposal proceeds
Uses of disposal proceeds Balance sheet strength provides strategic optionality £423.0m net disposal proceeds received incl. leases, after customary adjustments and re-organisation costs Strengthened balance sheet and improved liquidity * In December 2022, RCF facility drawn balance was repaid * In
Slide 15: Shareholder return and ordinary dividend
Shareholder return and ordinary dividend Shareholder return £90m special dividend to be paid on 27 April 2023 (representing c.29.8p per ordinary share) c£60m share buyback programme announced today Ordinary dividend Final ordinary dividend of 1.0p per share recommended, to be paid 30 June 2023 (resu
Slide 16: Capital allocation policy
Capital allocation policy A clear policy to support organic and acquisitive growth © ORGANIC GROWTH INNOVATION ACQUISITIONS ORDINARY DIVIDENDS Capital investment remains core to strategic growth Capex expected to be maintained between 4-5% of sales Sustainable new product development and proposition
Slide 17: Leverage after return of capital
1. In the near-term, after the return of capital, the Group anticipates operating between 0x - 1.0x 17
Slide 18: Strategic Update
Strategic Update Scott Fawcett CEO 5 EvEssENTRA 18
Slide 19: Clear strategy for growth and market share gains
CLEAR STRATEGY FOR GROWTH & MARKET SHARE GAINS Strong progress achieved across our service metrics * Our two closely linked customer experience KPls have improved in 2022 “l * NPS +11 points to 34 * OTIF delivery improved to 78.8% (54.1% 2021) 2019 2020 2021 2022 . % j. j Employee engagement of 83%
Slide 20: Digital progress enhances our hassle-free proposition
CLEAR STRATEGY FOR GROWTH & MARKET SHARE GAINS Digital progress continues to enhance our “hassle-free” proposition Enhancing the customer experience Anew ERP will streamline internal processes * Digital hub in Turkey established * Underpins improvements in supply chain and operations, : . . . suppor
Slide 21: Progressive margin enhancement: optimising global footprint
PROGRESSIVE MARGIN ENHANCEMENT Optimising our global footprint We have a service driven, global distribution footprint. Our manufacturing presence continues to evolve In 2022, we opened a new distribution hub in Poland, enhancing our European distribution footprint * Provides capacity to enable grow
Slide 22: Central services cost absorption
1 In 2022, the Components business absorbed £20.7m of the £38.6m central services costs incurred in the year. 22
Slide 23: Value enhancing M&A: Wixroyd acquisition
VALUE ENHANCING M&A Acquisition of Wixroyd demonstrates our inorganic growth strategy Strategically aligned bolt-on acquisition In December, Essentra acquired Wixroyd, a leading UK supplier of parts for the automation sector for an initial consideration of £29.5m * Expansion of Essentra's capabiliti
Slide 24: Our M&A pipeline is strong
Our M&A pipeline is strong Our pipeline is strong, and we are actively managing A highly disciplined approach to M&A and deal rationale Our initial focus will be bolt-on acquisitions Targeting new product capabilities that can be cross-sold, including existing suppliers of sourced products ESG impac
Slide 25: Sustainability as a source of advantage: refreshed ESG framework
SUSTAINABILITY AS A SOURC! Our refreshed ESG framework We are committing to additional sustainability targets in 2023, covering each of our refreshed ESG pillars: Planet Driving resource and energy efficiency, reducing emissions and embracing renewables Excellent progress made on 2025 targets In 202
Slide 26: Outlook
Outlook Scott Fawcett CEO = EvEssENTRA 26
Slide 27: All data correct as of FY2022
All data correct as of FY2022 27
Slide 28: Outlook: signs of improving conditions
aaa Outlook Signs of improving conditions * We have continued to see distributor destocking, however indicators are signalling normalisation Trading in Europe continues to be robust and China’s reopening will increasingly benefit our business in Asia Industrial Production growth is forecast for H2 T
Slide 29: A strategically transformational year
Essentra is now a focused business with a clear strategy to deliver A strategically transformational year * FY 2022 performance of the continuing business in line with the Board’s expectations * Components business has sustained growth with strong margins * Strong balance sheet post-capital returns,
Slide 30: EvEssENTRA
y EvEssENTRA 30
Slide 31: Appendices
Appendices yo EvEsseNTRA 31
Slide 32: Essentra key facts and figures
13 80m 45,000+ 24 1bn manufacturing parts produced SKU’s distribution parts in stock sites per week centres 33 c.75k 1.8m 17k c.3,000 sales and service customers order lines orders shipped employees locations per year per week worldwide 32
Slide 33: Revenue by region, channel and offer type
Revenue by region Revenue by channel Revenue by offer type Custom, Asia, 14% Distributors, 8% 21% Standard, Configured, End 64% Europe & users, 28% ROW, 79% Americas, 51% 35% Customer count by customer Revenue by customer segment segment SME/ Consumers, 7% Sales, SME/ Consumers, 31% Sales, Larger SM
Slide 34: Income Statement - Reported basis
Income Statement - Reported basis FY 2022 FY 2021 £m £m Adjusted operating profit 25.1 26.4 Intangible amortisation (10.4) (8.6) Adjusting items Reported operating profit Net finance charge Loss before tax Taxation (expense) /credit Net income/ (loss) (Loss)/profit from discontinued operations (Loss
Slide 35: Operating margin FY20-FY22
% 14.3 13.3 7.6 FY 20 FY 21 FY 22 Prior years have been adjusted to present the business on a continuing operations basis 35
Slide 36: Discontinued operations and impairment
The operating result of discontinued operations is stated after impairment charges and the costs of preparing the disposed businesses for sale. An impairment charge of £181.6m was recognised at 30 June 2022 following the Group’s impairment assessment in respect of the carrying value of goodwill allo
Slide 37: Exchange Rates
Exchange Rates Os8r Impact on FY2022 of a one cent increase in rate Adjusted Op. profit movement (£m) USS/E (0.1) Euro €/£ (0.1) Year ended 31 December 2021 Average Closing USS/E 1.38 1.35 Euro €/£ 1.16 1.19 yo EvEssENTRA 37
Slide 38: Disclaimer
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