Slide 1: Full Year Results 2021
FULL YEAR RESULTS 2021 FULL YEAR 2021 RESULTS © TT Electronics 1
Slide 2: Strong Performance & Record Order Book Driving Growth
STRONG PERFORMANCE & RECORD ORDER BOOK DRIVING GROWTH ▪ 2021 was a year of strong performance for the Group ▪ Revenue and adjusted margins back to pre-pandemic levels ▪ Adjusted operating profit up 31%, reflecting benefits of growth, self-help and action to offset cost & supply chain headwinds ▪ Out
Slide 3: Execution & Operational Excellence
EXECUTION & OPERATIONAL EXCELLENCE ▪ Overall excellent execution ▪ Managing supply chain and cost headwinds ▪ Working in partnership with our customers ▪ Innovative software and data analytics to enhance parts sourcing ▪ Largely mitigated through price increases ▪ Delivering self-help programme ▪ Be
Slide 4: Improving the Quality of Our Business Partnerships & Investment for Growth
IMPROVING THE QUALITY OF OUR BUSINESS PARTNERSHIPS & INVESTMENT FOR GROWTH ▪ Long term partnerships with high-quality, blue-chip customers – top 10 OEM customers 32% of revenue (up from 26% in 2018) ▪ More than 30 new significant contract wins in 2021, delivering over £100m of multi-year revenues ▪
Slide 5: Delivering Value Through M&A
DELIVERING VALUE THROUGH M&A Covina and Torotel acquisitions already delivering Ferranti Power & Control ▪ Integrated ahead of plan ▪ Adds further technology capability, IP and scale to our Power business ▪ Torotel enhances our US Power electronics capabilities ▪ Valuable long-term customer relation
Slide 6: Financial Review - Mark Hoad, CFO
FINANCIAL REVIEW MARK HOAD, CFO FULL YEAR 2021 RESULTS © TT Electronics 6
Slide 7: Group Financial Performance
GROUP FINANCIAL PERFORMANCE £m (except where stated) Change 2021 2020 Change ▪ 10% organic revenue increase constant fx ▪ Strong growth drivers in healthcare and automation & Revenue 476.2 431.8 10% 14% electrification Operating profit* 34.8 27.5 27% 31% ▪ Operating profit up 31% on constant currenc
Slide 8: Good Recovery in Operating Margin
GOOD RECOVERY IN OPERATING MARGIN ▪ Good operational leverage on revenue growth ▪ Realising benefits from self-help programme ahead of plan ▪ Rebuild of discretionary costs as expected ▪ Margin accretion from Torotel ▪ Run-rate margins above pre-pandemic levels ▪ Adjusted operating margin of 7.3% FU
Slide 9: Power & Connectivity
POWER & CONNECTIVITY Change ▪ 15% revenue growth at constant currency, 3% organic; 2021 2020 Change constant fx commercial aerospace recovery yet to come Revenue (£m) 140.2 125.1 12% 15% ▪ Inorganic contribution from Torotel acquisition - £15.2m revenue, £1.5m operating profit Adjusted operating pro
Slide 10: Global Manufacturing Solutions
GLOBAL MANUFACTURING SOLUTIONS ▪ 14% organic growth in revenue, strong performance in Change healthcare, automation & electrification 2021 2020 Change constant fx ▪ Order book growth, benefiting from new contract wins – 2022 Revenue (£m) 220.1 197.5 11% 14% revenues fully covered ▪ Growth in operati
Slide 11: Sensors and Specialist Components
SENSORS AND SPECIALIST COMPONENTS ▪ Revenue increased by 11% organically Change 2021 2020 Change constant fx ▪ Strong demand in automation and electrification 115.9 109.2 6% 11% ▪ Customers committing orders further ahead to secure Revenue (£m) capacity in response to lead time extension ▪ Input cos
Slide 12: Free Cash Flow Reflecting Investment Focus
FREE CASH FLOW REFLECTING INVESTMENT FOCUS ▪ Increased working capital requirement to support revenue/order book growth and to mitigate supply chain constraints ▪ Increased investment in capex and restructuring to support growth and margin ▪ Return to normal level of cash improvement tax payments ▪
Slide 13: Guided by a Clear Capital Allocation Policy
GUIDED BY A CLEAR CAPITAL ALLOCATION POLICY Free cash flow priorities Application Maximise organic investment including R&D to £11.4m investment in R&D; £14.9m capex spend; 1 1 £3.6m on self-help net of property disposals support growth 2 Maintain progressive dividend policy 2 £11.4 paid in year, 19
Slide 14: Expanded Self-Help Programme Progressing Well
EXPANDED SELF-HELP PROGRAMME PROGRESSING WELL Programme scope ▪ 3 main site closures + 3 smaller sites £m 2020 2021 2022 Total ▪ Net headcount reductions c. 500 FTEs Cash cost ▪ Relocation/end-of-life lower margin product lines Restructuring (1.6) (2.3) (3.1) (7.0) Progressing to plan ▪ Barbados, Ca
Slide 15: Richard Tyson, CEO
RICHARD TYSON, CEO FULL YEAR 2021 RESULTS © TT Electronics 15
Slide 16: Good Exposure to Structural Growth Markets
GOOD EXPOSURE TO STRUCTURAL GROWTH MARKETS MEDIUM TERM % OF TT REVENUE 2021 MARKET GROWTH RATE SUSTAINABILITY DRIVERS Our focus markets Covid impacts expected to underpin 25% Demographic and ▪ Healthcare +5-7% social change healthcare growth ▪ Western governments indicating increased defence spendin
Slide 17: Building a Sustainable Business
BUILDING A SUSTAINABLE BUSINESS Environmental Social Governance Net Zero target by 2035 for Scope 1&2 emissions ▪ Employee engagement – 85% participation rate ▪ 33% female representation on the Board and maintained 2* ranking by Best Companies ▪ 25% reduction in emissions delivered in 2021 ▪ ED& I P
Slide 18: Transforming the Business: Double Digit Margins
TRANSFORMING THE BUSINESS DOUBLE DIGIT MARGINS THROUGH SELF-HELP, GROWTH & PORTFOLIO CHANGE • Self-help: £13-14m run rate benefit by 2023 from site closures and overhead reduction • Growth: Operational leverage on market growth of 3–5% p.a. • Acquisitions of higher margin business such as Torotel an
Slide 19: Global Manufacturing Solutions: A Higher Quality Business
GLOBAL MANUFACTURING SOLUTIONS A HIGHER QUALITY BUSINESS ▪ Business and margins transformed ▪ Improved market exposure focus, particularly on healthcare ▪ Targeted move to customers who value our strategic partnership and are winners in their own growth markets ▪ Shift from PCBA to High Level Assemb
Slide 20: Positive Outlook
POSITIVE OUTLOOK ▪ Started 2022 with a record order book ▪ Levers to navigate ongoing supply chain and cost issues ▪ Continued growth and margin improvement ▪ Mindful of geopolitical uncertainty ▪ Good customer wins and strength in target markets, with commercial aerospace recovery still to come FUL
Slide 21: Thank You
THANK YOU FULL YEAR 2021 RESULTS © TT Electronics 21
Slide 22: Financial Guidance for 2022
FINANCIAL GUIDANCE FOR 2022 Adjusting items cash spend Pension ▪ £4m on self-help programme ▪ UK deficit contributions £5.7m, increasing £0.2m p.a. ▪ £2m on Ferranti integration ▪ UK scheme fully funded on a self-sufficiency basis Capital and development expenditure ▪ Further liability management pr
Slide 23: Delivering Growth and Creating Value
DELIVERING GROWTH AND CREATING VALUE Megatrends driving revenue growth A high quality, IP rich business, Strong cash generation to invest in IP and demand for products that with cleaner, smarter and and value-enhancing acquisitions contribute to a more sustainable world healthier solutions 90%+ cash
Slide 24: Our Divisions
OUR DIVISIONS PICTURE TO FOLLOW Power and Connectivity Global Manufacturing Solutions Sensors and Specialist Components Revenue: £140.2m Revenue: £220.1m Revenue: £115.9m Operating profit: £7.8m Operating profit: £18.3m Operating profit: £16.4m Operating profit margin: 5.6% Operating profit margin:
Slide 25: The TT Electronics Business
THE TT ELECTRONICS BUSINESS Revenue (2021) Underlying operating profit (2021) Revenue by market (2021) Revenue by geography (2021) Power & Connectivity 30% Power & Connectivity 22% Healthcare 25% UK 21% Global Manufacturing Solutions 46% Global Manufacturing Solutions 53% Aerospace & Defence 18% Res
Slide 26: Revenue by Market and Geography by Division
REVENUE BY MARKET AND GEOGRAPHY BY DIVISION Power and Connectivity Global Manufacturing Solutions Sensors and Specialist Components Revenue by market (%) Revenue by market (%) Revenue by market (%) Healthcare 11% Healthcare 47% Healthcare 1% Automation and Automation & Automation & electrification 3
Slide 27: Summary Income Statement
SUMMARY INCOME STATEMENT £m 2021 2020 Revenue 476.2 431.8 Adjusted operating profit 34.8 27.5 Net finance cost (3.3) (3.7) Adjusted profit before taxation 31.5 23.8 Adjusting items (15.5) (20.9) Profit before taxation 16.0 2.9 Taxation (3.2) (1.6) Profit after taxation 12.8 1.3 FULL YEAR 2021 RESULT
Slide 28: Summary of Revenue and Operating Profit by Division, Impact of FX
SUMMARY OF REVENUE AND OPERATING PROFIT BY DIVISION IMPACT OF FX Global Sensors and Power and Manufacturing Specialist Connectivity Solutions Components Corporate Group Revenue (£m) 2021 140.2 220.1 115.9 - 476.2 2020 at 2021 rates 121.7 193.4 104.0 - 419.1 FX impact (3.4) (4.1) (5.2) - (12.7) 2020
Slide 29: Income Statement – Adjusting Items
INCOME STATEMENT – ADJUSTING ITEMS £m 2021 20201 Operating profit 19.3 6.6 Adjusted to exclude: Restructuring and other items INCOME STATEMENT – ADJ USTING ITEMS Restructuring 9.8 14.8 Property disposals (1.7) (1.2) Pension and past service charge/(credit) (0.3) 0.9 7.8 14.5 Acquisition related cost
Slide 30: Cash Conversion
CASH CONVERSION £m 2021 2020 Adjusted operating profit 34.8 27.5 Depreciation and amortisation 16.1 17.0 Net capital expenditure (14.9) (9.9) Capitalised development expenditure (1.9) (3.3) Working capital (14.7) 3.6 Other 3.3 0.9 Operating cash flow after capex1 22.7 35.8 Operating profit 34.8 27.5
Slide 31: Movement in Net Debt
MOVEMENT IN NET DEBT £m 2021 2020 Operating cash flow after capex1 22.7 35.8 Net interest and tax (8.7) (3.8) Lease liability repayments (3.9) (4.1) Restructuring and acquisition related costs1,2 (5.9) (8.1) Pensions (5.5) (5.4) Free cash flow (1.3) 14.4 Dividends (11.4) - Acquisitions and disposals
Slide 32: Cautionary Statement
CAUTIONARY STATEMENT For the purposes of the following disclaimers, references to this ‘document’ shall be deemed to include references to the presenters speeches, the question and answer session and any other related verbal or written communications. This document contains forward-looking statement