TT Electronics plc · LSE:TTG
TT Electronics — H1 2016 Earnings Presentation
29 slides from TT Electronics's earnings presentation, August 2016
Slide 1: TT Electronics plc Interim Results 2016
MH: Consider changing to ‘external investor’ front cover TTElectronics TT Electronicsplc plc 2015Interim 2016 InterimResults Results August 2016 August 2016
Slide 2: H1 2016 Overview
H1 2016 Overview • Good first half performance; momentum in strategic progress • Returned the business to profitable growth • Transportation Sensing and Control in profit • Strategic focus enabling robust sales in challenging markets • Aero Stanrew integration complete and performing well • OIP comp
Slide 3: Financial Review
Financial Review Mark Hoad, Chief Financial Officer TT Electronics plc Interim Results 2016 2
Slide 4: Group Financial Performance
Group Financial Performance H1 2016 H1 2015 Change Change £m (except where stated) constant fx Revenue 277.0 263.6 5% 2% • Revenue up 2% Operating profit* 13.7 10.4 32% 24% • Operating profit up 24% Profit before tax* 11.4 9.1 25% 16% EPS* (pence) 5.1p 4.2p 21% 12% • PBT up 16%, effective tax Except
Slide 5: Group Operating Profit Bridge
Group Operating Profit Bridge Group Operating Profit Bridge (H1 2016 vs H1 2015), £m 2.4 13.7 1.6 (2.0) 0.8 1.2 11.2 (0.7) 10.4 H1 2015 FX H1 2015 Acquisitions Price-downs R&D expense OIP Vol. impact / H1 2016 like -for-like TS&C Cost reduction TT Electronics plc Interim Results 2016 4
Slide 6: Transportation Sensing and Control
Transportation Sensing and Control Financial Summary H1 H1 Change Change 2016 2015 constant fx Revenue (£m) 117.8 107.5 10% 5% Op. profit/(loss) (£m)* 1.7 (0.9) 289% 267% Operating margin* 1.4% (0.8)% 220bps 210bps * Underlying, before exceptional and one-off costs • Division returned to profit as e
Slide 7: Industrial Sensing and Control
Industrial Sensing and Control Financial Summary H1 H1 Change Change 2016 2015 constant fx Revenue (£m) 30.4 33.8 (10)% (15)% Operating profit (£m)* 5.5 6.4 (14)% (20)% Operating margin* 18.1% 18.9% (80)bps (120)bps * Underlying, before exceptional and one-off costs • 15% organic revenue reduction –
Slide 8: Advanced Components
Advanced Components Financial Summary H1 H1 Change Change 2016 2015 constant fx Revenue (£m) 56.5 49.8 13% 11% Operating profit (£m)* 4.3 3.4 26% 24% Operating margin* 7.6% 6.8% 80bps 80bps * Underlying, before exceptional and one-off costs • Revenue up 11% at constant currency – £9.0m contribution
Slide 9: IMS
IMS Financial Summary H1 H1 Change Change 2016 2015 constant fx Revenue (£m) 72.3 72.5 (0)% (2)% Operating profit (£m)* 2.2 1.5 47% 40% Operating margin* 3.0% 2.1% 90bps 90bps * Underlying, before exceptional and one-off costs • Organic revenue decline 2% – Strong domestic demand in China – Weakness
Slide 10: Free Cash Flow and Net Debt
Free Cash Flow and Net Debt Free Cash Flow H1 H1 • Ongoing discipline around capital and £m 2016 2015 development expenditure Underlying EBITDA 25.3 20.4 – 0.8x DA for H1 Net capital expenditure (8.4) (8.1) • Working capital consumption Capitalised development (0.5) (0.8) – Largely due to TS&C growt
Slide 11: Other Financial Matters / Guidance for FY 2016
Other Financial Matters / Guidance for FY 2016 • Restructuring costs – Remaining OIP P&L charge £4m; cash costs £7m in 2016, £1m in 2017-2020 – Further footprint change circa £5m; cash cost £2m in 2016 • Capital and development expenditure – Capex and devex circa 1.0x DA – Depreciation and amortisat
Slide 12: Strategy and Operations Update
Strategy and Operations Update Richard Tyson, Chief Executive Officer TT Electronics plc Interim Results 2016 11
Slide 13: Strategy Overview
Strategy Overview Our strategy is to position ourselves in structural growth markets to ensure business sustainability and drive growth and value for shareholders Engineered-electronics Positioning in automotive markets with rapidly for performance critical increasing electronic content per vehicle
Slide 14: China: Transportation Sensing and Control
China: Transportation Sensing and Control Total number of cars sold in 2015 (millions) 25.2 • Targeting growth markets: China 18.1 20.0 • China is the largest automotive market globally – Strong organic and new contract growth – Two new contract wins for truck pedals in the domestic market Europe US
Slide 15: Product Focus: Transportation Sensing and Control
Product Focus: Transportation Sensing and Control • Product areas fuelling growth: safety, emissions and power electronics alongside increased electrification of the vehicle and engine – SIMPSpad suspension technology development order for a ‘big three’ OEM in North America – Fewer parts – Improved
Slide 16: R&D Focus: Industrial Sensing and Control
R&D Focus: Industrial Sensing and Control • Increasing electronic and associated sensor content in industrial markets • Focused R&D in industry segments with increased demand for sensors – High value placed on reliability and accuracy – Photologic® V optical and position sensor developed – Used in f
Slide 17: R&D Focus: Advanced Components
R&D Focus: Advanced Components • Continue to grow a market leading position in electromagnetics and power electronic components and assemblies • Designed a new connector: Mag-Net – Forms part of a solider system for the digital battlefield enabling communication to the connected solider – Lean start
Slide 18: Collaboration: IMS
Collaboration: IMS • Collaboration with other divisions • Opportunities to collaborate with Transportation for new business opportunities • IMS in Romania now produces TT’s European printed circuit board (‘PCB’) requirements • Test equipment collaboration with Aero Stanrew • Applicable skills for in
Slide 19: Operational Efficiency
Operational Efficiency Continuing to see benefits from self-help actions Procurement R&D • Sensible actions • Focused approach to R&D • Freight savings; leading to collaboration suppliers • Second R&D conference in reducing from 54 September 2016 to 7 Lean • Three site pilots now underway; Footprint
Slide 20: Operations: Improved Efficiencies in China
Operations: Improved Efficiencies in China Continuing to see benefits from self-help actions Improved efficiencies leading to reduced cost • Efficiencies in China result in revenue growth whilst significantly reducing headcount • Lean pilot demonstrating operational improvements; halved the lead tim
Slide 21: Flashback to June 2015 Capital Markets Day
Flashback to June 2015 Capital Markets Day We are doing what we said we would do We set out a clear, realistic and straight forward plan in 2015 • Turnaround Transportation Sensing and Control • Reposition and invest in Industrial Sensing and Control, and Advanced Components • Increase the level of
Slide 22: Summary and Outlook
Summary and Outlook • Good first half performance • Strategy gaining traction; well positioned in structural growth markets • Uncertain macro-economic environment impacting some market segments • Underlying business performance and the contribution from Aero Stanrew mean we are confident of continue
Slide 23: Q&As
Q&As TT Electronics plc Interim Results 2016 22
Slide 24: Appendix
Appendix TT Electronics plc Interim Results 2016 23
Slide 25: Appendix: TT Electronics Business
Appendix: TT Electronics Business Revenue (H1 2016) Operating Profit (H1 2016) Transportation Transportation Sensing & Control 43% Sensing & Control 13% Industrial Industrial Sensing & Control 11% Sensing & Control 40% Advanced Advanced Components 20% Components 31% IMS 26% IMS 16% Revenue by market
Slide 26: Appendix: Impact of FX
Appendix: Impact of FX Transportation Industrial Sales Sensing and Sensing and Advanced £m Control Control Components IMS Group At H1 2015 rates 113.4 28.8 55.4 70.9 268.5 FX impact 4.4 1.6 1.1 1.4 8.5 As published 117.8 30.4 56.5 72.3 277.0 Operating Profit £m At H1 2015 rates 1.5 5.1 4.2 2.1 12.9
Slide 27: Appendix: Exceptional and one-off Items
Appendix: Exceptional and one-off Items Exceptional Items (P&L) H1 H1 £m 2016 2015 Restructuring costs 3.3 2.2 • Restructuring costs: Principally OIP, some costs of further footprint change Acquisition related costs 1.6 0.6 Total Exceptional Items • Acquisition costs: Amortisation of 4.9 2.8 acquisi
Slide 28: Appendix: Cash Conversion
Appendix: Cash Conversion Cash Conversion £m H1 2016 H1 2015 Underlying EBITDA 25.3 20.4 Net capital expenditure (8.4) (8.1) Capitalised development expenditure (0.5) (0.8) Working capital (8.2) (4.5) Other 1.1 0.4 Underlying Operating Cash Flow 9.3 7.4 Underlying Operating Profit 13.7 10.4 Cash Con
Slide 29: Disclaimer
Disclaimer IMPORTANT INFORMATION • 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 certain