Slide 1: Half Year Results 2023
HALF YEAR RESULTS 2023 HALF YEAR 2023 RESULTS © TT Electronics 1
Slide 2: Priorities for 2023
PRIORITIES FOR 2023 Orderbook execution Margin progression P&C recovery Positive free cash generation Leverage reduction HALF YEAR 2023 RESULTS © TT Electronics 2
Slide 3: Delivering improved margins & cash generation
DELIVERING IMPROVED MARGINS & CASH GENERATION INCREASED CONFIDENCE IN FULL YEAR OUTLOOK ▪ Order intake remains good, normalising as expected ▪ 15 new significant contract wins in the half delivering over £150m of potential lifetime revenues ▪ Order book covers 2023 anticipated revenues with good vis
Slide 4: Power & Connectivity back to growth
POWER & CONNECTIVITY BACK TO GROWTH Organic revenue growth Adjusted operating • Commercial aerospace recovery will underpin margin growth over the next 3-5 years 1 15% 14% • Favourable market backdrop for defence spend – 12% recent BAE Tempest award 10% 10% • Healthcare outlook continues to be stron
Slide 5: Higher growth and creating value
HIGHER 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 10%+ operatin
Slide 6: Financial Review – Mark Hoad, CFO
FINANCIAL REVIEW MARK HOAD, CFO HALF YEAR 2023 RESULTS © TT Electronics 6
Slide 7: Group financial performance
GROUP FINANCIAL PERFORMANCE £m (except where stated) Change HY 23 HY 22 ▪ 12% organic revenue growth – good underlying growth and return constant fx to normal H1/H2 weighting Revenue 309.1 269.2 12% ▪ Operating profit up 34% on constant currency basis Operating profit* 25.6 18.3 34% ▪ Adjusted opera
Slide 8: Power & Connectivity
POWER & CONNECTIVITY Change ▪ 13% organic revenue increase HY 23 HY 22 Change constant fx ▪ Significant margin recovery vs H1 2022 and continued Revenue (£m) 79.9 68.8 16% 13% improvement since H2 2022 ▪ Ferranti move into new facility expected to complete in H2 Adjusted operating profit (£m) 5.9 2.
Slide 9: Global Manufacturing Solutions
GLOBAL MANUFACTURING SOLUTIONS Change ▪ 12% organic revenue growth, reflecting more normal HY 23 HY 22 Change constant fx H1/H2 weighting - includes c. £12m of pass-through Revenue (£m) 153.8 135.3 14% 12% revenues ▪ Order book covers revenues for balance of year, and good 13.8 9.4 47% 44% visibilit
Slide 10: Sensors and Specialist Components
SENSORS AND SPECIALIST COMPONENTS Change ▪ Revenue grew by 11% organically reflecting healthy order HY 23 HY 22 Change constant fx book Revenue (£m) 75.4 65.1 16% 11% ▪ Machinery breakdown in June impacting H1 profit ▪ Broadly covered for balance of 2023 revenues; order book Adjusted operating profi
Slide 11: Free cash flow at an inflection point
FREE CASH FLOW AT AN INFLECTION POINT ▪ Return to healthy levels of operating cash flow – cash conversion 74% ▪ Continuing to invest to support customers and business improvement ▪ Capex spend to enhance GMS capacity and drive future efficiency ▪ H1 working capital outflow reflecting normal seasonal
Slide 12: Accomplishments last 12 months
ACCOMPLISHMENTS LAST 12 MONTHS Returns Enhanced Debt facilities extended Margins up 140 basis points RCF matures 2027 ROIC up 310 bps to 12.0% Complemented by PP debt Cash Flow Inflecting Pension de-risked £17m of free cash generation Buy-in completed with L&G Leverage reduced 0.6x to 1.8x Scheme su
Slide 13: Richard Tyson, CEO
RICHARD TYSON, CEO HALF YEAR 2023 RESULTS © TT Electronics 13
Slide 14: Priorities for 2023
PRIORITIES FOR 2023 Priority H1 Progress Orderbook execution ✓ Revenue growth of 12% Margin progression ✓ Ex pass-through improved to 8.6%, more to come in H2 P&C recovery ✓ On track and recent wins support continued progress Positive FCF generation ✓ Returned to positive free cashflow following inv
Slide 15: TT Electronics: the transformation
TT ELECTRONICS THE TRANSFORMATION SHIFT IN END MARKET EXPOSURES 2015 H1 23 Medical (13%) Healthcare (26%) Aerospace & Defence (12%) Aerospace & Defence (16%) Industrial (30%) Automation & Electrification (37%) Transportation (45%) Distribution sales channel (21%) HALF YEAR 2023 RESULTS © TT Electron
Slide 16: TT Electronics: the transformation
TT ELECTRONICS THE TRANSFORMATION Organic revenue growth ex pass-through revenues Group adjusted operating margin ex pass-through revenues 8.6% 11% 7.8% 6% 4.3% -3% 2015 2018 H1 2023 2015 2018 H1 2023 Return on invested capital Employee survey response rate & engagement 1* 3* OTW 85% 91% 11.2% 12.0%
Slide 17: Cleaner Smarter Healthier
BUILDING A SUSTAINABLE BUSINESS Our technologies enable our customers to meet their sustainability objectives CLEANER SMARTER HEALTHIER Sustainability drives our revenue growth and how we run our business Environmental Social Governance Net Zero target by 2035 for Scope 1&2 Employee engagement 2023
Slide 18: Growth: maximising the opportunity in our target end markets
GROWTH : MAXIMISING THE OPPORTUNITY IN OUR TARGET END MARKETS Healthcare Aerospace and Defence Automation and Electrification Surgical navigation & Implantables Defence Automation • 2 major manufacturing wins with a top tier • Technology development win for BAE Tempest • AMI win in Kuantan to suppor
Slide 19: Robust order book giving good visibility
ROBUST ORDER BOOK GIVING GOOD VISIBILITY ▪ Order intake normalising with delivery of strong H1 revenue ▪ 15 significant contract wins in the first half, delivering over £150m of potential lifetime revenues ▪ Order book provides visibility for balance of 2023 revenues with cover building for 2024 ▪ V
Slide 20: Positive outlook
POSITIVE OUTLOOK Good momentum in structural growth markets Order intake good whilst normalising as expected, visibility remains materially ahead of pre-Covid levels Further margin improvement targeted in H2; 10% milestone within reach Positive FCF generation Increased confidence in delivering our e
Slide 21: Thank you
THANK YOU HALF YEAR 2023 RESULTS © TT Electronics 21
Slide 22: Financial guidance for 2023
FINANCIAL GUIDANCE FOR 2023 Adjusting items cash spend Pension ▪ £1m on pensions ▪ No further deficit contributions ▪ £2m on M&A integration ▪ Assess buy-out of UK scheme during 2023 Tax Capital and development expenditure ▪ Effective rate for year increasing to c.25% due ▪ Capex and devex circa £22
Slide 23: Capital allocation priorities
CAPITAL ALLOCATION PRIORITIES Our objective is to maintain a strong financial position and provide flexibility for growth Free cash flow priorities Maximise organic investment including R&D to 1 support growth 2 Maintain our progressive dividend policy Continue to support our strategy with targeted,
Slide 24: The TT Electronics business
THE TT ELECTRONICS BUSINESS Revenue (H1 2023) Underlying operating profit (H1 2023) Revenue by market (H1 2023) Revenue by geography (H1 2023) Power & Connectivity 26% Power & Connectivity 23% Healthcare 26% UK 23% Global Manufacturing Solutions 50% Global Manufacturing Solutions 54% Aerospace & Def
Slide 25: H1 revenue by market and geography by division
H1 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 16% Healthcare 43% Healthcare 1% Automation & Automation & Automation & electrification
Slide 26: Summary income statement
SUMMARY INCOME STATEMENT (£m) H1 2023 H1 2022 Revenue 309.1 269.2 Adjusted operating profit 25.6 18.3 Net finance cost (4.9) (3.3) Adjusted profit before taxation 20.7 15.0 Adjusting items (4.7) (9.4) Profit before taxation 16.0 5.6 Taxation (4.1) (1.5) Profit after taxation 11.9 4.1 HALF YEAR 2023
Slide 27: 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) HY 2023 79.9 153.8 75.4 - 309.1 HY 2022 at HY 2023 rates 71.0 137.5 68.1 - 276.6 FX impact 2.2 2.2 3.0 - 7.4 HY 2022 a
Slide 28: Income statement – adjusting items
INCOME STATEMENT – ADJUSTING ITEMS £m H1 2023 H1 2022 Operating profit 20.9 8.9 Adjusted to exclude: Restructuring and other items INCOME STATEMENT – ADJ USTING ITEMS Restructuring (0.3) (4.5) Pension related items (0.9) (1.0) (1.2) (5.5) Acquisition related costs Amortisation of intangible assets a
Slide 29: Cash conversion
CASH CONVERSION £m H1 2023 H1 2022 Adjusted operating profit 25.6 18.3 Depreciation and amortisation 8.6 7.9 Net capital expenditure (9.3) (5.0) Capitalised development expenditure (0.9) (1.0) Working capital (6.9) (33.0) Other 1.9 2.8 Operating cash flow after capex1 19.0 (10.0) Cash conversion 74%
Slide 30: Movement in net debt
MOVEMENT IN NET DEBT £m H1 2023 H1 2022 Operating cash flow after capex 19.0 (10.0) Net interest and tax (8.8) (4.6) Lease repayments (2.3) (1.9) Restructuring and acquisition related costs (1.0) (7.0) Free cash flow 6.9 (23.5) Dividends (7.5) (6.7) Lease payments 2.3 1.9 Acquisitions - (8.3) Equity
Slide 31: 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