Bodycote Plc · LSE:BOY
Bodycote — H1 2024 Earnings Presentation
31 slides from Bodycote's earnings presentation, Jul 30, 2024
Slide 1: H1 2024 Results
H1 2024 Results 30 July 2024
Slide 2: Disclaimer
Disclaimer Bodycote plc (the ‘Group’) is providing the following cautionary statement: this presentation has been prepared solely to provide additional information to shareholders to assess the Group’s strategies and the potential for those strategies to succeed. The presentation should not be relie
Slide 3: Introduction
Introduction Jim Fairbairn, Group CEO
Slide 4: Agenda
Agenda 01 Introduction 02 H1 results 03 Opportunities 4 Bodycote plc Half Year Results 2024
Slide 5: Key messages
Key messages Good performance in H1 in a mixed end market environment, led by Specialist Technologies Organic growth delivered: +7.0% headline operating profit growth, on 1.5% higher revenue excluding surcharges1 Margins improved: +170bps to 16.7%, with margins +520bps in ADE and decisive cost actio
Slide 6: Growth delivered despite mixed end markets
Growth delivered despite mixed end markets Revenue by end market 10% +1.5% organic growth, led by Specialist Technologies +8% 11% 29% Strong demand growth in A&D, near-term industry supply chain challenges £399m Automotive and Industrial Markets remain soft, particularly in Europe 26% Growing demand
Slide 7: Ongoing actions to enhance performance
Ongoing actions to enhance performance Aerospace, Defence & Energy Automotive & General Industrial £m 2024 H1 Growth £m 2024 H1 Growth Revenue excluding surcharges 179.6 +6.6%1 Revenue excluding surcharges 199.6 -2.6%1 Headline operating margin 23.0% +520 bps Headline operating margin 16.0% -220 bps
Slide 8: H1 Results
H1 Results Ben Fidler, Group CFO
Slide 9: Key financials
Key financials Revenue Operating profit Operating margin £399m £66.8m 16.7% up 1.5% organic1 excl. surcharges up 7.0% organic1 up 170bps down 3.2% organic1 2023 H1: £420.1m 2023 H1: £62.8m 2023 H1: 15.0% EPS Op. cash flow Interim dividend 25.0p £49.2m 6.9p up 5.0% up 0.8% up 3.0% 2023 H1: 23.8p 2023
Slide 10: H1 2024 results summary
H1 2024 results summary 2024 2023 Growth £m, unless stated H1 H1 Organic Growth Revenue 399.0 420.1 -3.2% -5.0% Revenue excluding surcharges 379.2 380.7 +1.5% -0.4% Positive organic revenue growth excluding surcharges, with strong drop-through Headline operating profit 66.8 62.8 +7.0% +6.4% Headline
Slide 11: Drivers of growth
Drivers of growth Organic revenue growth and Lake City acquisition more than offset by lower surcharges and FX Strong operating profit growth driven by improving mix and near-term management actions Revenue (£m) Headline operating profit (£m) 420.1 2.0 5.6 4.7 4.4 66.8 399.0 62.8 (2.4) (19.2) (12.2)
Slide 12: Further margin progress
Further margin progress Headline operating margin 17.6% Margins up by 170bps to 16.7% (17.6% excluding 16.5% surcharges) 16.7% 14.7% Continued mix shift towards Specialist Technologies 15.6% 15.0% Strong margin improvement in ADE with excellent 14.1% operating leverage Actions taken in AGI to balanc
Slide 13: Specialist Technologies outperforming
Specialist Technologies outperforming Revenue by end market Revenue growth Specialist Technologies Constant currency, excluding surcharges 25% ~10ppts higher Organic revenue growth avg. growth 13% (excluding surcharges) since 2018 15% 31% Aerospace & Defence 5% 19% Automotive £139.1m Industrial Mark
Slide 14: Aerospace & Defence
Aerospace & Defence Revenue Revenue (constant currency) Revenue by geography £115.7m Surcharges 120 Emerging Markets 100 80 29% 60 Western of total revenue Europe £115.7m North 40 America 20 YoY organic growth 0 YoY organic excl. surcharges H1 22 H2 22 H1 23 H2 23 H1 24 Commercial Aerospace organic
Slide 15: Automotive
Automotive Revenue Revenue (constant currency) Revenue by geography £94.4m Surcharges 120 Emerging 100 North Markets America 80 24% 60 of total revenue £94.4m 40 20 YoY organic growth Western 0 Europe YoY organic excl. surcharges H1 22 H2 22 H1 23 H2 23 H1 24 H1 growth reflects challenging prior yea
Slide 16: General Industrial
General Industrial Revenue Revenue (constant currency) Revenue by market £188.9m Surcharges 250 Consumer, 200 Medical & Other 150 47% Industrial of total revenue 100 £188.9m Markets 50 YoY organic growth Energy 0 YoY organic excl. surcharges H1 22 H2 22 H1 23 H2 23 H1 24 Industrial markets (includin
Slide 17: ERP programme review
ERP programme review Reducing the scope of the in-progress ERP implementation Group-wide ERP implementation programme has been ongoing, based on SAP After careful consideration, decision taken to reduce the scope of the roll-out: – The finance and purchasing modules add value and will continue (comp
Slide 18: Cash flow
Cash flow £m 2024 H1 2023 H1 Change Headline operating profit 66.8 62.8 +4.0 Depreciation & amortisation 37.7 37.2 +0.5 Other 0.1 (1.0) +1.1 Headline EBITDA 104.6 99.0 +5.6 Stable headline operating cash flow, with conversion of 74% (2023 H1: 78%) Net maintenance capital expenditure (27.1) (24.7) -2
Slide 19: Capital allocation
Capital allocation Deploying capital to drive shareholder value, including Lake City acquisition and share buyback Capital expenditure broadly stable in H1; expected full year spend to be modestly higher than 2023 Net debt (excluding leases) of £68.0m; leverage remains low at 0.7x net debt / EBITDA
Slide 20: Technical guidance
Technical guidance 2024 2024 Translational foreign exchange H1 FY Guidance Revenue impact £(12.2)m ~£(25)m Translational FX impacts based on current rates Headline operating profit impact £(2.5)m ~£(5)m 2023 2024 2024 Other items FY H1 FY Guidance P&L net finance charge £(7.5)m £(4.6)m £(10)m - £(12
Slide 21: Opportunities
Opportunities Jim Fairbairn, Group CEO
Slide 22: Global leader with strong foundations
Global leader with strong foundations Deep metallurgical competence Market-leading brand Differentiated technologies Passionate team Clear brand identity Specialist processes Strong customer relationships Well respected by customers Market-leading positions World class problem-solving Quality, trust
Slide 23: Reflections & Priorities
Reflections & Priorities Significant number of site visits undertaken to assess the business, with three key conclusions: High quality and attractive outlook of Specialist Technologies confirmed The ‘Classical Heat Treatment’ badge is misleading; significant majority of activities require precision
Slide 24: Opportunities to unlock significant value
Opportunities to unlock significant value Fine-tune Drive operational Optimise growth Simplify plant footprint excellence strategy reporting High quality Group, but with Varied operational Strong foundations and Matrix of divisions, end a wide variation in performance with areas of further potential
Slide 25: 2024 Outlook
2024 Outlook Outlook unchanged, despite mixed end markets: Full year organic revenue growth excluding surcharges, led by Specialist Technologies Year-on-year progress in headline operating margin Materially lower level of energy surcharges (H1: ~50% lower) £60m share buyback expected to be completed
Slide 26: Summary
Summary Good first half Taking short-term performance in mixed actions to balance cost end market conditions base with demand Strong foundations, …strategy optimisation with significant further and footprint potential… assessment underway 26 Bodycote plc Half Year Results 2024
Slide 27: Appendix
Appendix
Slide 28: H1 2024 Statutory Income Statement
H1 2024 Statutory Income Statement £m 2024 H1 2023 H1 Revenue 399.0 420.1 Headline operating profit 66.8 62.8 Amortisation of acquired intangible assets (5.3) (4.1) Acquisition costs (2.4) - Exceptional items (28.3) - Operating profit 30.8 58.7 Net finance charge (4.6) (3.5) Profit before taxation 2
Slide 29: H1 2024 Cash Flow
H1 2024 Cash Flow £m 2024 H1 2023 H1 Headline EBITDA 104.6 99.0 Net maintenance capital expenditure (27.1) (24.7) Expansionary capital expenditure (7.5) (10.4) Principal element of lease payments (6.7) (6.6) Provisions movement (6.4) 0.7 Working capital movement (7.7) (9.2) Cash flow has been restat
Slide 30: Foreign exchange
Foreign exchange B/S currency (at closing rates) 2024 H1 2023 H1 EUR 1.18 1.16 USD 1.26 1.27 SEK 13.40 13.71 TRY 41.43 33.13 Annual Annual P&L currency % of H1 2024 revenue profit (at average rates) 2024 H1 2023 H1 revenue sensitivity1 sensitivity1 EUR 1.17 1.14 33% ~£3m ~£0.5m USD 1.26 1.23 38% ~£3
Slide 31: Definitions
Definitions Term Definition Organic measures At constant currency, and excluding corporate acquisition and disposal activities from the current and comparative periods Headline operating profit Operating profit before acquisition costs, exceptional items and amortisation of acquired intangibles Head