Senior Plc · LSE:SNR
Senior — Investor Day (October 2010)
60 slides from Senior's investor day presentation, Oct 19, 2010
Slide 1: Capital Markets Seminar 19 October 2010
CAPITAL MARKETS SEMINAR 19 October 2010 Capital Markets Seminar
Slide 2: Purpose of Today
PURPOSE OF TODAY TO DEMONSTRATE THAT: SENIOR HAS DEVELOPED A BROAD AND EXTENSIVE RANGE OF TANGIBLE, PROFITABLE GROWTH OPPORTUNITIES AND IT HAS THE DEPTH OF MANAGEMENT TO EXPLOIT THEM Capital Markets Seminar Purpose
Slide 3: Agenda
AGENDA Q3 IMS & Introduction Simon Nicholls Group FD Markets, Products and Growth Flexonics Division Mike Sheppard Div CEO Aerospace Division Fluid Systems Group Launie Fleming Div CEO Aerostructures Group Jerry Goodwin Div CEO Group Strategy Mark Rollins Group CEO Dinner To end around 9.00pm Capita
Slide 4: Q3 IMS
Q3 IMS Simon Nicholls – Group FD Capital Markets Seminar
Slide 5: Q3 Interim Management Statement
Q3 INTERIM MANAGEMENT STATEMENT Q3 trading healthy – slightly ahead of Board expectations Aerospace as expected: Large commercial build rates increasing. 787 to customers Q1 2011. Military healthy; regional jets weak; biz jets mixed (larger better). Flexonics better than expected: Heavy truck volume
Slide 6: Introduction
INTRODUCTION Simon Nicholls – Group FD Capital Markets Seminar
Slide 7: What is Senior?
WHAT IS SENIOR? International manufacturing Group with 26 operations across 11 countries Market-leading engineering solutions provider for OEMs in the worldwide aerospace, defence, land vehicle and energy markets Operates through two Divisions: Aerospace (Fluid Systems & Aerostructures) & Flexonics
Slide 8: Where do we operate?
WHERE DO WE OPERATE? 26 Operating Units UK 11 - Flexonics 10% sales / 14% OP 22 23 8 - Fluid Systems 24 7 – Structures 16 17 18 North America 64% sales / 69% OP H1 2010 Sales & OP shown by place of manufacture 1&2 15 14 20 19 Rest of Europe 3 12 18% sales / 3% OP 13 21 11 4 5 7 6 26 8 Rest of World
Slide 9: What do we do?
WHAT DO WE DO? FLEXONICS AEROSPACE Land Vehicle Emission Control Fluid Conveyance Systems Fluid Systems Heat Exchangers Low Pressure Ducting Exhaust Flexes High Pressure Ducting Common Rail Diesel Aerospace Control Products Non-Aerospace Control Products Industrial Process Control Gas Turbine Engine
Slide 10: How are we performing?
HOW ARE WE PERFORMING? H1 2010 H1 2009 Change Revenue £287.7m £275.9m +4.3% Adjusted Operating Profit £37.7m £28.9m +30.4% Adjusted Operating Margin 13.1% 10.5% - Revenue Operating Profit Headcount (4,777) 20% 31% 29% 41% 38% 48% 32% 28% 33% Aerospace – Aerostructures Aerospace – Fluid Systems Flexo
Slide 11: Flexonics Division Markets, Products & Growth
FLEXONICS DIVISION MARKETS, PRODUCTS & GROWTH Mike Sheppard – Divisional CEO Capital Markets Seminar
Slide 12: Flexonics Division: A Summary
FLEXONICS DIVISION: A SUMMARY H1 2010 H1 2009 Change 11 Operations Revenue £118.0m £107.0m +10.3% NAFTA 3 Europe 3 Adjusted Operating Profit £15.2m £9.6m +58.3% UK 2 Adjusted Operating Margin 12.9% 9.0% - ROW 3 Markets Customers Other Industrial 10% PSA 10% Petrochemical 10% Ford 8% Other Passenger
Slide 13: Land Vehicle Emission Control
Land Vehicle Emission Control Common Rails Tubes Turbo-oil feed and drain High Pressure Fuel Lines Exhaust Bellows EGR Coolers/Heat Exchangers Main Operations: Bartlett, Kassel, Blois, Cape Town, Sao Paulo, New Delhi Main Customers: Cummins, Perkins, CAT, Man, Scania, JCB, PSA, Ford, Renault, Faurec
Slide 14: Industrial Process Control (1)
Industrial Process Control (1) Metal Expansion Joints Fabric Expansion Joints Refineries Power Steel Mills Generation Metal Expansion Joints Dampers/Diverters Main Operations: Pathway, Wahlco Metroflex Main Customers: US domestic operators (400+), Constructors (Global), Engineering specifiers Capita
Slide 15: Industrial Process Control (2)
Industrial Process Control (2) Flexible Tubes & Hoses HVAC Ducting Instrument Control Medical Heat Bellows Exchangers Main Operations: Bartlett, Hargreaves, Canada, Kassel Main Customers: Balfour, Costain, Doosan Babcock, Medtronics, Valliant, Siemens Capital Markets Seminar Page 9
Slide 16: Industrial Process Control: Renewable Energy
Industrial Process Control: Renewable Energy Heat Exchangers Fluid Lines Vacuum Seal Bellows RotationFlex ® Fuel Cells – CHP/Power Gen CSP - Solar Troughs Heater Head CSP - Solar Dish Solar Heating Main Operations: Kassel, Bartlett, Crumlin, Main Customers: Schott, Stirling, Bloom, CERES, Abengoa Ca
Slide 17: Flexonics: Organic Growth 1
Flexonics: Organic Growth ……….. 1 New Industries – Renewable Energy - Concentrated Solar Power • Stirling, Schott, Abengoa, Siemens, BOSCH – Alternative Energy - Fuel Cells (Power Gen, CHP) • Bloom, Ceres, PowerCell, Valiant, De Dietrich Thermique Market Recovery – General Industrial • Steel Mills,
Slide 18: Flexonics: Organic Growth 2
Flexonics: Organic Growth ……….. 2 Environmental Legislation – EPA CAIR Rules • Pathway/WahlcoMetroflex • Expansion Joints & Dampers – On Road Truck EPA10, Euro V & VI • EGR Coolers, Common Rail Fuel, Exhaust Bellows – Off Road Tier 4 • EGR Coolers, Common Rail Fuel, Exhaust Bellows Capital Markets S
Slide 19: Flexonics: Organic Growth 3
Flexonics: Organic Growth ……….. 3 Development of New Customers – New emission laws will drive need for technology for all engine manufacturers. – Increasingly Global Engine Programs requiring suppliers with a Global Footprint Growth with Current Customers – Development of advanced technologies such
Slide 20: Aerospace – Fluid Systems Markets, Products & Growth
AEROSPACE – FLUID SYSTEMS MARKETS, PRODUCTS & GROWTH Launie Fleming – Divisional CEO Capital Markets Seminar
Slide 21: Fluid Systems Division: A Summary
FLUID SYSTEMS DIVISION: A SUMMARY H1 2010 H1 2009 Change 8 Operations Revenue £80.5m £87.1m -7.6% NAFTA 3 Europe 3 Adjusted Operating Profit £13.5m £12.1m +11.6% UK 2 Adjusted Operating Margin 16.8% 13.9% - ROW - Markets Other Non Customers Aerospace 12% GKN 10% Other Non Aerospace 16% Airbus & EADS
Slide 22: Fluid Conveyance: Low Pressure Ducting
Fluid Conveyance: Low Pressure Ducting Engineered Composite Duct Assembly Low Pressure Ducting Typical Rotorcraft Assembly Ducting Layout Various Composite Duct Products Typical Business Jet Composite Wall Panels Ducting Layout Main Operations: BWT, SA Composites Main Customers: Bombardier, Cessna,
Slide 23: Fluid Conveyance: High Pressure Ducting
Fluid Conveyance: High Pressure Ducting HP Bleed Air Duct Engineered Solutions Typical Bizjet Engine Bleed Ducting HP Bleed Air Duct Typical Wing Duct Products Bombardier C Series High Pressure Ducting Layout Main Operations: SSP, Bird Bellows, Calorstat Main Customers: Airbus, Boeing, Bombardier, E
Slide 24: Fluid Conveyance: Aerospace Control Products
Fluid Conveyance: Aerospace Control Products Hydraulic System Couplings Control Actuators Hydraulic Bellows Accumulators Pressure/Temp Sensors Hydraulic Control Manifold Compressor Assembly Main Operations: Metal Bellows, Calorstat, Bird Bellows, Ermeto Main Customers: Airbus, Boeing, Lockheed Marti
Slide 25: Fluid Conveyance: Non-Aerospace Control Products
Fluid Conveyance: Non-Aerospace Control Products Pin Lift Actuator Bellows Assembly (Semi-Conductor) (Nuclear industry) Process Control Valves Drug Pump Implant (Chemical process) (Medical) Main Operations: Calorstat, Metal Bellows, Ermeto, Bird Bellows Main Customers: AECL Nuclear, Volvo, LAM Indus
Slide 26: Gas Turbine Engines: Fluid Systems
Gas Turbine Engines: Fluid Systems Hydraulic/Fuel Feed Manifolds Active Clearance Control System Engine Bleed Ducting Bellows Face Seal Main Operations: Bosman, Ermeto, Metal Bellows, Bird Bellows, SSP Main Customers: Rolls Royce, Snecma, MTU, Pratt & Whitney Capital Markets Seminar Page 19
Slide 27: Fluid Systems: Organic Growth 1
Fluid Systems: Organic Growth ……….. 1 Build rates trend 2011-2015 Platform Lockheed Martin Bombardier C Series Airbus A320 C130J Lockheed C130J Lockheed F-135 NEW EADS A400M NEW Lockheed Martin F-35 Mitsubishi RJ Bombardier C Series NEW Mitsubishi RJ NEW Russian RJ NEW Russian regional jet Bombardie
Slide 28: Fluid Systems: Organic Growth 2
Fluid Systems: Organic Growth ……….. 2 Business Jet Deliveries Bizjet recovery gradually from 2011 to 2017 1400 1200 Deliveries 1000 • 13% of Fluid Systems sales 800 600 400 200 0 Regional jet growth linked to new platforms 05 07 09 11 13 15 17 20 20 20 20 20 20 20 Per Credit Suisse – Sept 2010 • C S
Slide 29: Fluid Systems: Organic Growth 3
Fluid Systems: Organic Growth ……….. 3 Increasing market share and value • Customers resourcing poor suppliers e.g. C130J • Sub-assembly/test of components e.g. C Series, Mitsubishi RJ, Russian RJ • Development of balanced cabin air distribution Group collaboration • Regional sales support • Access t
Slide 30: Aerospace – Aerostructures Markets, Products & Growth
AEROSPACE – AEROSTRUCTURES MARKETS, PRODUCTS & GROWTH Jerry Goodwin – Divisional CEO Capital Markets Seminar
Slide 31: Aerostructures Division: A Summary
AEROSTRUCTURES DIVISION: A SUMMARY H1 2010 H1 2009 Change 7 Operations Revenue £89.4m £82.1m +8.9% NAFTA 7 Europe - Adjusted Operating Profit £11.8m £9.9m +19.2% UK - Adjusted Operating Margin 13.2% 12.1% - ROW - Other Non Markets Customers Aerospace 9% Other Non Space & Non Military Aerospace 9% He
Slide 32: Gas Turbine Engine: Engine Components
Gas Turbine Engine: Engine Components 307 Combustion Case (Dassault 7X) TFE 731 Lear Jet/Hawker Front F-35 Front Strutted Frame Case Typical Gas Turbine Aero-engine Trent 1000 Engine Casing Trent 1000 Combustor TFE 731 Learjet/Hawker (B787) Case (B787) Bearing Support Housing Main Operations: Ketema
Slide 33: Structures: Airframe
Structures: Airframe 747 Frame 787 Aft Engine 737 Main Landing Gear Support Assy. Pylon Wheel Well 787 Vertical Fin 737 Boeing Wing Ribs Main Operations: AMT, Absolute Main Customers: Boeing, Spirit, Goodrich Capital Markets Seminar Page 25
Slide 34: Structures: Assemblies
Structures: Assemblies 737 Air Inlet (2ea) 737 Wing to Body Ram Air 767 Engine Pylon Frame (Birdcage) 787 Wing to Body Frame 737 V-Blade Assembly (potential) Main Operations: AMT, Jet (potential) Main Customers: Boeing, Spirit, Goodrich Capital Markets Seminar Page 26
Slide 35: Structures: Nacelles
Structures: Nacelles 777 Load Share Ring GE 90 Inlet Attach Rings (B777) B777 Engine Nacelle Housing CF34-10 Torque Box Ring, 737 Cascade (Embraer 190) Support Ring Main Operations: Jet, Ketema Main Customers: Boeing, Goodrich, Spirit, Middle River (GE) Capital Markets Seminar Page 27
Slide 36: Structures: Helicopter Transmissions
Structures: Helicopter Transmissions Sikorsky UH60 Blackhawk Sikorsky S-92 Rotorcraft UH60 Blackhawk Housing Assy. Blackhawk Gear Housing Assy. S-92 Swash Plate Guide S-92 Carrier Assy. Blackhawk Carrier Assy. Blackhawk Spindle Main Operations: Sterling Main Customers: Sikorsky, Rolls-Royce (potenti
Slide 37: Aerostructures: Organic Growth 1
Aerostructures: Organic Growth ……….. 1 Future Build Rate 2011-2015 Platform Boeing 747-8 NEW Boeing 747-8 Airbus A330 Lockheed Martin F35 Boeing 787 NEW Boeing 777 Boeing 787 Airbus A350 Sikorsky Boeing 767 Blackhawk Boeing 737 Airbus A330 Boeing 777 Airbus A320 Airbus A350 NEW Airbus A320 Boeing 76
Slide 38: Aerostructures: Organic Growth 2
Aerostructures: Organic Growth ……….. 2 Meeting customer needs with exceptional operational performance • Quality • Delivery • Cost effective (Lean) • Parts rationalisation (make as one) • Engineered products & processes Cross pollination between businesses to leverage existing customer relationships
Slide 39: Aerostructures: Organic Growth 3
Aerostructures: Organic Growth ……….. 3 Customer trend is towards….. • Higher value added offerings • More product from fewer suppliers Move from “parts” to integrated assemblies Customers out-sourcing due to….. • Rate increases • Introduction of new platforms • Customer focus on core competencies Cu
Slide 40: Capital Markets Seminar 19 October 2010
CAPITAL MARKETS SEMINAR 19 October 2010 Capital Markets Seminar
Slide 41: Capital Markets Seminar 19 October 2010
CAPITAL MARKETS SEMINAR 19 October 2010 Capital Markets Seminar
Slide 42: Group Strategy
GROUP STRATEGY Mark Rollins – Group CEO Capital Markets Seminar
Slide 43: Capabilities Aligned to Market Sectors
CAPABILITIES ALIGNED TO MARKET SECTORS FLEXONICS AEROSPACE Land Veh Emission Control (£113m) Fluid Conveyance Systems (£105m) Heat Exchangers Low Pressure Ducting Fluid Systems Exhaust Flexes High Pressure Ducting Common Rail Diesel Aerospace Control Products Non-Aerospace Control Products Industria
Slide 44: Gas Turbine Engines
GAS TURBINE ENGINES Sales £44m. Below average GM%. Estimated addressable market £600m Engine rings, casings, combustors, diffusers, ducting, fluid conveyance, exhaust, active clearance control, bellows Ketema, Jet, Capo, SSP, Calorstat, Ermeto, Bosman, Bird • Market to grow at healthy rate • New tec
Slide 45: Fluid Conveyance
FLUID CONVEYANCE Sales £105m. Above average GM%. Estimated addressable market £1bn+ Engine bleed air, avionics cooling, environmental control, de-icing systems BWT, Composites, SSP, Bird, Ermeto, Metal Bellows, Calorstat, Bosman • Military, large commercial aircraft & biz/reg jet markets in balance
Slide 46: Structures
STRUCTURES Sales £141m, Average GM%. Est addressable market £20bn+ (OEMs large %) Airframe, wing, fuselage, nacelle, cabin interior, transmission, casings AMT, Composites, Sterling, Jet, Capo, Absolute, Mexico • Heavy bias to large commercial aircraft (Boeing) & Black Hawk • Operations currently all
Slide 47: Land Vehicle Emission Control
LAND VEHICLE EMISSION CONTROL Sales £113m, Average GM%. Estimated addressable market £10bn Heat exchangers, EGR coolers, common rail, fluid conveyance, exhaust flex, Turbo oil drain/feed Bartlett, Crumlin, Blois, Cape Town, Sao Paulo, Berghofer, Olomouc, N.Delhi • Backdrop of increasing emission leg
Slide 48: Industrial Process Control
INDUSTRIAL PROCESS CONTROL Sales £85m, Above Average GM%. Estimated addressable market £1.2bn Expansion joints, HVAC ducting, dampers, hoses/connectors, on-site services Pathway, Canada, Calorstat, Berghofer, Hargreaves, New Delhi, Sao Paulo • Market growth determined by global GDP – demand is later
Slide 49: Renewable Energy
RENEWABLE ENERGY Sales £16m, Average GM%. Est addressable market unknown: developing fast Solar, wind, fuel cells, combined heat & power (CHP) Bartlett, Berghofer, Crumlin • Explosive but stuttering growth foreseen • Large potential opportunity but risks will need managing • Today the industry needs
Slide 50: Overview: Value Add Model
OVERVIEW What Technology & innovation ED D AD r LUE me e) Note v Engineered SENIOR VA usto ecti “Value add” to solution FUTURE (C rsp customer does not pe always translate SENIOR into value added TODAY for the supplier Build to print Commodity How Component Kitting/Assy System Platform integrator Sp
Slide 51: Group Revenue & ROS%
GROUP REVENUE & ROS% 1000 Organic e.g. 9.8% CAGR 900 800 Revenue £m & 2015 = £875m Acquisitions 700 e.g. 3.5% CAGR ? (inflation?) 600 2015 = £690m 9.8% CAGR 500 400 City consensus 300 200 04 05 06 07 08 09 10 11 12 13 14 15 16 15 City consensus 14 13 ROS % Any ROS% growth to come from 12 improved op
Slide 52: Key Group Growth Drivers
KEY GROUP GROWTH DRIVERS Global GDP passenger & freight air traffic, land vehicles, energy and industrial processes demand Environmental Legislation affects aerospace, land vehicles and industrial Content on New Programmes particularly for aerospace & heavy truck as long development cycles Renewable
Slide 53: Principal Growth Opportunities – 2011 to 2015
PRINCIPAL GROWTH OPPORTUNITIES – 2011 to 2015 Build Rates: 737 from 31.5 to 38 p.m. in 2013 $ 17m JSF from 12 to 75? p.a. in 2015 (Cost pressure) $ 15m New Aircraft: 787 from 30 in 2011 to 120? in 2014 $ 67m A350 from nil in 2011 to 60? in 2015 $ 18m C Series from nil in 2011 to 60? in 2015 $ 20m Pr
Slide 54: Acquisition Framework
ACQUISITION FRAMEWORK More Likely Less Likely Division Fluid Systems Structures New Markets Flexonics Large Commercial Rotorcraft Regional Jet Business Jet VLJ Defence Renewables Nuclear Energy Truck Automotive Market General Industrial Medical Semi-conductor Aero Ducting Control Bellows Simple Comp
Slide 55: Acquisition Framework: WahlcoMetroflex
ACQUISITION FRAMEWORK: WahlcoMetroflex More Likely Less Likely Division Fluid Systems Structures New Markets Flexonics Large Commercial Rotorcraft Regional Jet Business Jet VLJ Defence Renewables Nuclear Energy Truck Automotive Market General Industrial Medical Semi-conductor Aero Ducting Control Be
Slide 56: A Consistent Strategy
A CONSISTENT STRATEGY Alignment of capabilities to six market sectors Aerospace: Fluid Conveyance Systems, Structures, Gas Turbine Engines Flexonics : LV Emission Control, Industrial Process Control, Renewables Well positioned for growth - no shortage of opportunities – execution key Future profit g
Slide 57: In Summary
IN SUMMARY SENIOR HAS DEVELOPED A BROAD AND EXTENSIVE RANGE OF TANGIBLE, PROFITABLE GROWTH OPPORTUNITIES AND HAS THE DEPTH OF MANAGEMENT TO EXPLOIT THEM AND IS WORKING TO DEVELOP NEW ONES Capital Markets Seminar Strategy - page 14
Slide 58: Appendices
APPENDICES Capital Markets Seminar
Slide 59: Presenter Biographies
PRESENTER BIOGRAPHIES Mark Rollins (Group CEO) Degreed engineer and chartered accountant, qualifying with BDO Binder Hamlyn in 1990. Various group and operational finance roles with Morgan Crucible between 1991 and 1998. Joined Senior in divisional finance role in 1998, before being appointed as Gro
Slide 60: Group Evolution
GROUP EVOLUTION Revenue (£m) Adjusted Operating Profit (£m) Adjusted Operating Margin (%) 600 16 70 Total after central costs Total after central 14 500 60 costs 12 400 50 10 300 40 8 30 6 200 20 4 100 10 2 0 0 0 2006 2007 2008 2009 H1 2010 2006 2007 2008 2009 H1 2010 2006 2007 2008 2009 H1 2010 Aer