Slide 1: Annual Results 2022
Slide 2: Introduction
Introduction Stephen Harris Group Chief Executive
Slide 3: Strong growth; good prospects
Strong growth; good prospects ▪ Overview ▪ Financial Review ▪ Business Review ▪ Summary and Outlook 3
Slide 4: Financial highlights
Financial highlights Results ▪ Revenues up 20.8% to £743.6m (17.3% at constant currency) ▪ 10.1% underlying revenue growth, excluding energy related surcharges ▪ Headline operating profit up 19%1 to £112.2m ▪ Strong balance sheet with net debt (excl. lease liabilities) of £33m Dividends ▪ Final ordi
Slide 5: Key achievements
Key achievements ▪ Strong growth in revenues and profit ▪ Price increases fully recovered labour and general cost inflation ▪ Nil margin surcharges completely recovered energy cost inflation in H2 (shortfall of £5m in H1) ▪ Headline operating margin of 15.1%; 16.1% excluding the dilution effect of e
Slide 6: Managing inflation
Managing inflation ▪ Energy1 prices are now falling, and surcharges are being reduced - surcharges are updated between 1 and 3 months in arrears ▪ Contractual indexation normally lags cost impact by 6 to 12 months, but multiple customers have already accepted exceptional price increases outside of t
Slide 7: Financial Review
Financial Review Dominique Yates Chief Financial Officer
Slide 8: 2022 Results summary
2022 Results summary £m 2022 2021 Growth Growth constant currency Revenue 743.6 615.8 17.3% 20.8% Headline operating profit 112.2 94.8 19% 18% Headline operating margin 15.1% 15.4% Headline profit before tax 105.5 88.4 20% 19% Table requires an update Headline tax rate 22.3% 22.3% Free cash flow 84.
Slide 9: Revenue bridge
Revenue bridge £m ▪ Price increases added 5% to revenue ▪ Energy surcharges added 7% revenue growth ▪ Acquisition is European HIP business bought in December 2021 FY 2021 Price Volume Acquisition FY 2022 Surcharges FY 2022 Foreign FY 2022 increases and mix before constant exchange surcharges currenc
Slide 10: Headline operating profit bridge
Headline operating profit bridge £m ▪ Price increases recovered labour and general cost inflation ▪ £5m H1 energy surcharge shortfall ▪ Nil margin surcharges completely recovered energy cost inflation in H2 ▪ Restructuring benefit delivered as expected (£30m annualised cost savings vs 2019) FY 2021
Slide 11: Headline operating margin
Headline operating margin 20% ▪ Headline operating margin 15.1% 19% 18% ▪ Surcharges have zero margin 17% ▪ Margin excluding surcharges was 16% 16.1% 15% ▪ Volume growth and unwind of 14% surcharges will drive margins above 20% in due course 13% 12% 11% 10% 2019 2020 2021 2022 Margin excluding surch
Slide 12: AGI and ADE summary
AGI and ADE summary The AGI Business Comprised of over 100 facilities focused on Automotive & General Industrial customers ▪ Profits above pre-COVID levels £m FY FY Growth Growth despite significantly lower 2022 2021 Organic constant excluding currency revenue surcharges automotive volumes Revenue 4
Slide 13: Free cash flow
Free cash flow £m 220 FY 2022 ▪ DSO slightly improved Headline EBITDA = £190m 200 FY 2021 ▪ Unusually high working capital 180 Headline EBITDA = £169m outflow reflects higher receivables Maintenance 160 Depreciation & capex from surcharges other Maintenance 140 Depreciation & capex ▪ This will impro
Slide 14: Uses of free cash
Uses of free cash Expansionary Ordinary dividends Acquisitions Supplemental capital expenditure distributions as appropriate Strong balance sheet provides good optionality 14
Slide 15: Balance sheet and taxation
Balance sheet and taxation Balance sheet ▪ Net debt1 £33m after paying £39m of dividends ▪ IFRS16 lease liabilities of £66m ▪ Facility headroom of £186m at 31 December 2022 ▪ £251m credit facility matures in May 2027 Taxation ▪ Headline tax rate of 22.3%, in line with guidance 15 1 Excluding lease l
Slide 16: Business Review
Business Review Stephen Harris Group Chief Executive
Slide 17: Committed to a sustainable future
Committed to a sustainable future On track to Supporting customers’ sustainability efforts reduce Scope 1 and Scope 2 ▪ Science Based Targets initiative (SBTi) target commits emissions by to an absolute reduction of 28% in emissions by 2030 28% by 2030 13% Senior reduction in ▪ Investing in new proj
Slide 18: Total global CO2e emissions – five-year trend
Total global CO2e emissions – five-year trend Total Global CO2e Emissions (ktCO2e) 350.2 ▪ Decrease of 6% year-on-year in 317.4 301.8 CO2e emissions 271.9 255.4 2018 2019 2020 2021 2022 Carbon Intensity Ratio (tonne CO2e/£m sales normalised1 - excluding surcharges) ▪ Decrease of 14% year-on-year in
Slide 19: A real world example of Scope 4 carbon avoidance
A real world example of Scope 4 carbon avoidance (Carbonitriding in this case – other processes have different CO2e contributions) ▪ Bodycote aggregates multiple customers’ demand driving Equipment -3% higher utilisation 8% CO2e contribution ▪ Bodycote’s technology, load management and process optim
Slide 20: Specialist Technologies outperform
Specialist Technologies outperform YoY Growth (excl surcharges)1 16.0% 14.0% 12.0% 10.0% 8.0% 6.0% 4.0% 2.0% 0.0% Specialist Technologies Classical Heat Treatment ▪ Superior organic growth in Specialist Technologies driven both by existing customers’ growth and new customer adoption ▪ The HIP acquis
Slide 21: Specialist Technologies
Specialist Technologies YoY Growth1 : 14% Revenue: £228m (31% of total revenue) YoY Growth1 excl. surcharges: 10% £m Revenue2 YoY Growth1 excluding surcharges 250 15% £114m 200 £67m 10 150 100 5 50 £47m 0 0 2019 2020 2021 2022 Revenue Automotive Aerospace General Industrial (incl Energy) & Defence ▪
Slide 22: Emerging Markets
Emerging Markets YoY Growth1 : 24% Revenue: £93m (13% of total revenue) YoY Growth1 excl. surcharges: 16% £m Revenue2 YoY Growth2 excluding surcharges 100 30% £48m 80 £22m 20 60 40 10 20 £23m 0 0 2019 2020 2021 2022 Revenue ▪ 13% volume growth in H2 driven by Automotive recovery in Eastern Europe ▪
Slide 23: Aerospace & Defence
Aerospace & Defence YoY Growth1 : 18% Revenue: £186m (25% of total revenue) YoY Growth1 excl. surcharges: 13% £m Revenue2 Revenue by geography 250 Rest of World 200 United Kingdom 150 100 50 France 0 North America 2019 2020 2021 2022 ▪ Grew civil aerospace revenue2 by 19% (excluding surcharges) ▪ St
Slide 24: Automotive
Automotive YoY Growth1 : 7% Revenue: £184m (25% of total revenue) YoY Growth1 excl. surcharges: -1% £m Revenue2 Revenue by geography 250 Emerging 200 Markets North America 150 100 50 0 2019 2020 2021 2022 ▪ Supply chain problems easing Western Europe ▪ Pent-up demand for new vehicles remains, howeve
Slide 25: General Industrial
General Industrial YoY Growth1 : 20% Revenue: £373m (50% of total revenue) YoY Growth1 excl. surcharges: 12% £m Revenue2 Revenue by segment 500 Industrial Other Machinery 400 300 Renewables Agriculture 200 IGT 100 Construction 0 2019 2020 2021 2022 Oil & Gas Consumer ▪ Growth well above industrial p
Slide 26: Expansionary capex driving growth
Expansionary capex driving growth Focused on Specialist Technologies, Emerging Markets, Civil Aerospace and Electric Vehicles Key 2022 projects benefiting 2023 onwards ▪ New HIP1 facility on East Coast, US, serving additive manufacturing ▪ Major HIP expansion in the Midwest, US ▪ Capacity expansions
Slide 27: Summary
Summary ▪ Headline operating profit1 up 19% ▪ Inflation impact being successfully managed across the business ▪ Automotive market was impacted by supply chain constraints, now easing. Strong end market demand ▪ General Industrial revenues driven well above background industrial production ▪ Higher g
Slide 28: Outlook
Outlook While there are near term macroeconomic uncertainties, we expect underlying volume to continue to grow ahead of the background markets, and margins are expected to expand as surcharges moderate. Beyond 2023, we expect robust growth, leading to further margin expansion. Civil Aerospace will b
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Slide 30: Specialist Technologies
Specialist Hot Isostatic Pressing (HIP) Services Improves component integrity and strength by Technologies application of extreme pressure and heat HIP PF inc. Powdermet® Additive manufacturing of often complex components A selection of highly in conjunction with HIP differentiated, early- Specialty
Slide 31: Classical Heat Treatment
Classical Heat It provides wear resistance, strength or toughness depending on the application. Surface hardness can Treatment be controlled by diffusing elements such as carbon and nitrogen into the metal during the heating stages of the process. Classical Heat Treatment is an indispensable set of
Slide 32: 2022 Statutory income statement
2022 Statutory income statement £m 2022 2021 Revenue 743.6 615.8 Headline operating profit 112.2 94.8 Amortisation of acquired intangible assets (9.3) (10.3) Acquisition costs (0.9) (0.7) Exceptional items - - Operating profit 102.0 83.8 Net finance charge (6.7) (6.3) Profit/(loss) before taxation 9
Slide 33: 2022 Cash flow
1 2022 Cash flow £m 2022 2021 Headline operating profit 112.2 94.8 Depreciation and amortisation 74.9 73.4 Other, including impairment and profit on disposal of PPE 3.0 0.3 Headline EBITDA 190.1 168.5 Net maintenance capital expenditure (52.2) (43.1) Net working capital movement (25.3) (3.4) Headlin
Slide 34: Net finance charge/facilities
Net finance charge/facilities £m 2022 2021 Interest on loans and bank overdrafts (2.3) (1.3) Interest charges (1.9) (2.0) Financing and bank charges (2.9) (3.3) Total finance charge (7.1) (6.6) Interest received 0.4 0.3 Net finance charge (6.7) (6.3) ▪ Committed facility headroom of £186m at 31 Dece
Slide 35: 2022 Sales and operating profit by currency
2022 Sales and operating profit by currency GBP1 3% GBP 7% ▪ Operating profit translation decrease of £0.3m Other 25% Other 17% ▪ Average full year exchange rates: £1: €1.17 Other 23% and £1: $1.24 ▪ Every cent change in the euro is worth c.£0.5m of annual operating profit EUR 49% EUR 39% EUR 34% EU
Slide 36: Financial information
Financial information Shares in issue 2022 2021 Weighted average 190.7m 190.7m Exchange rates 2022 2021 EUR Average (P&L) 1.17 1.16 Closing (B/S) 1.13 1.19 USD Average (P&L) 1.24 1.37 Closing (B/S) 1.20 1.35 SEK Average (P&L) 12.47 11.80 Closing (B/S) 12.54 12.24 36
Slide 37: Definitions
Definitions Term Definition Headline Operating Profit Operating profit before acquisition costs, exceptional items and amortisation of acquired intangibles Headline Profit Before Tax Profit before tax, acquisition costs, exceptional items and amortisation of acquired intangibles Earnings before inte