Morgan Advanced Materials Plc · LSE:MGAM
Morgan Advanced Materials — H1 2022 Earnings Presentation
32 slides from Morgan Advanced Materials's earnings presentation, Jul 29, 2022
Slide 1: 2022 Half-year results presentation
2022 Half-year results presentation 29 July 2022 1
Slide 2: Agenda
Agenda • Introduction and summary – Pete Raby • 2022 Interim results – Richard Armitage • Operational and strategic update – Pete Raby © Morgan Advanced Materials 2
Slide 3: Key highlights
Key highlights • The safety of our people remains our priority and we maintain controls in the parts of our business that continue to be impacted by COVID-19 to keep our employees safe • Organic constant-currency revenue growth of 11.2% with 15%1 from our faster growing markets and 11% from our core
Slide 4: 2022 Interim results
2022 Interim results Richard Armitage © Morgan Advanced Materials 4
Slide 5: Group performance
Group performance % change from 1H 2021 £m 1H 2022 1H 2021 At organic constant- As reported currency Revenue 530.2 461.2 15.0% 11.2% Group adjusted operating profit1 72.5 59.1 22.7% 16.6% Group adjusted operating profit margin % 1 13.7% 12.8% ROIC % 22.2% 15.4% Cash generated from continuing operati
Slide 6: Group adjusted operating profit bridge
Group adjusted operating profit bridge £m 80 • Strong revenue growth drops through to support margin expansion 75 • Delivery of the restructuring programme benefits as planned 70 • Pricing and continuous improvement 65 efficiency actions continue to offset cost inflation 60 • Reversal of prior year
Slide 7: Cash flow summary
Cash flow summary • Working capital outflow including increased inventory of £18.8m driven by business growth and supply chain management • Free cash outflow of £1.0m including increased capex of £13.9m • Net debt (excluding lease liabilities) of £76.3m • Net debt to EBITDA (excluding leasing) 0.5x
Slide 8: FY22 financial framework
FY22 financial framework Effective tax rate 26-28% Net finance charge: Interest charge (c. £6.5m) IAS 19 pensions net interest charge (c. £1.2m) c. £10m IFRS 16 lease interest (c. £2.3m) Defined benefit pension scheme contributions c. £20.4m Foreign currency impacts see slide 30 Capital expenditure
Slide 9: Operational and strategic update
Operational and strategic update Pete Raby © Morgan Advanced Materials 9
Slide 10: Broad based growth across major market segments
Broad based growth across major market segments Year-on-year organic % change at constant-currency % of Group revenue Industrial 14% 1 44% • Continued recovery in the major industrial geographies Transportation 5% 17% • Growth in the aerospace segment partially offset by decline in automotive Chemic
Slide 11: Thermal Ceramics performance summary
Thermal Ceramics performance summary % change from 1H 2021 £m 1H 2022 1H 2021 At organic As reported constant-currency Revenue 200.5 174.7 14.8% 11.1% 1 Adjusted operating profit 22.7 21.2 7.1% 1.3% Margin % 11.3% 12.1% Performance commentary • Strong growth with continued recovery in industrial mar
Slide 12: Molten Metal Systems performance summary
Molten Metal Systems performance summary % change from 1H 2021 £m 1H 2022 1H 2021 At organic As reported constant-currency Revenue 28.1 22.8 23.2% 20.6% 1 Adjusted operating profit 4.2 2.5 68.0% 61.5% Margin % 14.9% 11.0% Performance commentary • Revenue growth from strong demand in the aluminium se
Slide 13: Electrical Carbon performance summary
Electrical Carbon performance summary % change from 1H 2021 £m 1H 2022 1H 2021 At organic As reported constant-currency Revenue 91.3 82.3 10.9% 8.4% 1 Adjusted operating profit 18.9 15.6 21.2% 19.6% Margin % 20.7% 19.0% Performance commentary • Strong growth in the semiconductor and wind market segm
Slide 14: Seals and Bearings performance summary
Seals and Bearings performance summary % change from 1H 2021 £m 1H 2022 1H 2021 At organic As reported constant-currency Revenue 71.8 64.3 11.7% 7.8% 1 Adjusted operating profit 10.9 10.7 1.9% (5.2%) Margin % 15.2% 16.6% Performance commentary • Growth in the petrochemical and aerospace market segme
Slide 15: Technical Ceramics performance summary
Technical Ceramics performance summary % change from 1H 2021 £m 1H 2022 1H 2021 At organic As reported constant-currency Revenue 138.5 117.1 18.3% 13.3% 1 Adjusted operating profit 18.8 12.1 55.4% 45.7% Margin % 13.6% 10.3% Performance commentary • Growth in the industrial, semiconductor, healthcare
Slide 16: Strong growth in our faster growing segments
Strong growth in our faster growing segments Year-on-year organic % change at constant-currency % of Group revenue • We are investing in business, and new Faster product, development and new 1 growing 21% 15% capacity in our four faster growing markets segments Core markets 11% 79% • These investmen
Slide 17: Environment, Social and Governance (ESG)
Environment, Social and Governance (ESG) Our purpose is to use advanced materials to make the world more sustainable and to improve the quality of life. Our aspiration Our 2030 goals2 PROTECT THE • A CO2e net zero business by 20501 • 50% reduction in scope 1 and scope 2 ENVIRONMENT CO2e emissions3 •
Slide 18: CO2e emissions
CO2e emissions 11% reduction in absolute CO2e emissions on the Absolute CO2e (Scope 1 and 2)1 prior year driven by improvements in: • Green energy procurement: transitions to 343 renewable and other carbon free energy 319 sources 277 • Behavioural changes: changes in our 230 '000 metric tonnes behav
Slide 19: Water, safety and diversity
Water, safety and diversity Water usage Water usage in stressed areas 2500 160 140 2000 120 100 '000 m3 '000 m3 1500 80 1000 60 40 500 20 0 0 2015 2019 2020 2021 1H21 1H22 2030 Goal 2015 2019 2020 2021 1H21 1H22 2030 Goal Baseline Baseline Lost time accident rate % Female leadership population1 0.5
Slide 20: Summary
Summary • Organic constant-currency revenue growth of 11.2% with 15%1 from our faster growing markets and 11% from our core markets • Adjusted operating profit margin was 13.7%, up by 90 bps, reflecting the drop through on organic growth and the benefits from our restructuring programme • Pricing an
Slide 21: Appendix
Appendix © Morgan Advanced Materials 21
Slide 22: Our strategy for growth
Our strategy for growth We have a strategy to ensure we are the leaders in our field, with the customer and materials insight to apply our capabilities quickly and effectively We apply these skills to a portfolio of businesses where: • Our technical expertise and differentiation is valued • We can o
Slide 23: End-market mix (as a % of revenue)
End-market mix (as a % of revenue) Main markets by GBU Thermal Ceramics Industrial, Chemical and petrochemical, Metals, Automotive Other industrial MMS Metals Aluminium (automotive), Copper (construction), Precious metals Consumer goods / building and Electrical Carbon construction Rail, Industrial
Slide 24: Segmental performance
Segmental performance Revenue Adjusted operating profit1 Margin £m £m % 1H 2022 1H 2021 1H 2022 1H 2021 1H 2022 1H 2021 Thermal Ceramics 200.5 174.7 22.7 21.2 11.3% 12.1% Molten Metal Systems 28.1 22.8 4.2 2.5 14.9% 11.0% Electrical Carbon 91.3 82.3 18.9 15.6 20.7% 19.0% Seals and Bearings 71.8 64.3
Slide 25: Group restructuring and efficiency programme
Emerging stronger: Group restructuring and efficiency programme The Group has delivered its restructuring and efficiency programme, which has simplified Morgan’s structure and driven efficiency in operations The programme was completed last year. The current year’s expected benefits of £23 million r
Slide 26: Reported statutory figures
Reported statutory figures Six months ended 30 June 2022 Six months ended 30 June 2021 Results before Results before £m Specific adjusting Specific adjusting specific adjusting Total specific adjusting Total items items items items Revenue 530.2 - 530.2 461.2 - 461.2 Operating costs before amortisat
Slide 27: Pensions update
Pensions update Deficit movement since 31 December 2021 £m Deficit at 31 December 2021 (103) Contributions (net of service costs) 9 Net IAS 19 interest costs (1) Actuarial loss on liabilities (8) Remeasurement gain on assets 31 Currency adjustment (2) Deficit at 30 June 2022 (74) £m 30 June 2022 31
Slide 28: Net leverage
Net leverage We have made significant progress in reducing leverage in recent years. Net debt1 Defined benefit pensions deficit £m £m 250 1.8 300 1.6 1.6 250 200 1.4 1.2 1.2 1.2 200 150 1.0 1.0 242 0.8 150 0.8 271 100 181 180 218 157 0.5 0.5 0.6 100 190 176 157 50 101 0.3 0.4 128 76 50 103 65 0.2 74
Slide 29: Strong balance sheet and available liquidity
Strong balance sheet and available liquidity Facilities maturity profile £m Headroom on banking covenants • Net debt to EBITDA excluding the impact of IFRS 16: 0.5x (FY2021: 0.3x) Significant liquidity • £190m undrawn RCF plus available net cash and cash equivalents of £120.5m Average cost of fixed
Slide 30: Foreign currency impacts
Foreign currency impacts The principal exchange rates used in the translation of the results of overseas subsidiaries were as follows: 1H 2022 1H 2021 Closing Average Closing Average GBP to: rate rate rate rate USD 1.22 1.30 1.38 1.39 Euro 1.16 1.19 1.17 1.15 For illustrative purposes, the table bel
Slide 31: Adjusted earnings per share
Adjusted earnings per share £m 1H 2022 1H 2021 Profit for the period attributable to shareholders of the Company 42.9 37.6 Profit from discontinued operations - - Profit from continuing operations 42.9 37.6 Specific adjusting items - (3.7) Amortisation of intangible assets 2.3 2.6 Tax effect of the
Slide 32: MMorgan
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