Bodycote Plc · LSE:BOY
Bodycote — FY2011 Earnings Presentation
31 slides from Bodycote's earnings presentation, Feb 23, 2012
Slide 1: 2011 Full Year Results
2011 Full Year Results 23 February 2012
Slide 2: Introduction
Introduction Stephen Harris Chief Executive Plasma nitriding Low temperature surface treatment for high hardness, wear resistance and enhanced fatigue properties. 2011 Full Year Results
Slide 3: Agenda
Agenda Highlights Stephen Harris Financial Review David Landless Business Review Stephen Harris 2011 Full Year Results
Slide 4: Highlights
Highlights Sales growth across all market sectors Benefitting from growth initiatives Strong financial performance − Profit − Margin − Cash flow − ROCE Net debt eliminated Final dividend 7.3p, total of 10.9p for the year – up 25% in 2011 2011 Full Year Results
Slide 5: Financial Review
Financial Review David Landless Finance Director Corr-I-Dur® The diffusion of nitrogen into the surface of special alloy steels to improve surface hardness and fatigue resistance, without component distortion. 2011 Full Year Results
Slide 6: 2011 Summary
2011 Summary £m 2011 margin 2010 margin increase Revenue 570.7 499.8 14% Headline: EBITDA1 142.3 24.9% 104.4 20.9% 36% Operating profit2 85.5 15.0% 52.1 10.4% 64% Profit before taxation 2 80.9 46.1 75% Exceptional: Goodwill write-down 3 (4.2) - Headline operating cash flow4 96.0 77.3 Net cash / (deb
Slide 7: Divisional Summary
Divisional Summary ADE Divisions £m 2011 2010 increase* Revenue 233.5 202.1 17% Headline Operating Profit1 51.1 33.9 53% Margin 21.9% 16.8% ROCE 2 23.3% 14.7% AGI Divisions £m 2011 2010 increase* Revenue 337.2 297.7 12% Headline Operating Profit1 44.7 25.6 72% Margin 13.3% 8.6% ROCE 2 15.6% 8.8% 1.
Slide 8: Operating Profit Bridge
Operating Profit Bridge (£m) 31.9 -6.3 -2.5 -2.1 -0.3 85.5 12.7 52.1 2011 Full Year Results
Slide 9: Cash Flow
Cash Flow £m 2011 2010 Headline Operating Profit 85.5 52.1 Add back: Depreciation and Amortisation 51.4 48.1 Share-Based Payments 5.4 4.2 Headline EBITDA1 142.3 104.4 Net Capital Expenditure (44.5) (35.8) Working Capital (1.8) 8.7 Capex to depreciation: 2011: 0.9x 2010: 0.8x Headline Operating Cash
Slide 10: Long term perspective – Total group results
Long term perspective – Total group results 50 50 40 Headline EPS 40 Free cash flow per share pence pence 30 30 20 20 10 10 0 0 2005 2006 2007 2008 2009 2010 2011 2002 2003 2004 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 Note: Free cash flow excluding proceeds and costs relating 2011 Full Yea
Slide 11: Business Review
Business Review Stephen Harris Chief Executive Bi-metallic materials (HIP PF) Diffusion bonding of solid to solid or solid to powder material, to produce a bi-metallic component with premium material properties on selected surfaces by encapsulation and hot isostatic pressing. 2011 Full Year Results
Slide 12: Daily Sales Trend – Group
Daily Sales Trend – Group Constant Exchange Rates (£m) 1.5 2011 2010 - Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 2011 Full Year Results
Slide 13: General Industrial
General Industrial Revenues: £238m – up 18% End markets 2011 Future Heavy machinery Economy General capital goods dependent in short Supply chain stock build term Technology driven change Bodycote Technology change benefits Market share gains Proprietary processes - S3P growing very strongly 2
Slide 14: Automotive
Automotive Revenues: £147m – up 10% End markets 2011 Future European car production Economy US car production dependent in short Heavy trucks term Technology driven change Bodycote* Car and light truck sales - USA up 7%, Europe up 5% Heavy trucks very strong Technology change benefits 2011 Ful
Slide 15: Aerospace & Defence
Aerospace & Defence Revenues: £114m – up 12% End markets 2011 Future Commercial new build Spares requirement Defence Supply chain stock build Bodycote Sales for Boeing & Airbus platforms increasing strongly Aftermarket sales growing in line with increasing traffic Strong HIP Services growth 20
Slide 16: Energy
Energy Revenues: £72m – up 16% End markets 2011 Future Oil & Gas production Oil & Gas exploration Power generation Supply chain stock build Bodycote Global Oil & Gas revenue growth US IGT improving, European IGT yet to recover HIP PF growing very strongly 2011 Full Year Results
Slide 17: Four Year Perspective
Four Year Perspective Sales* (£m) 617 571 435 501 08 09 10 11 2011 Full Year Results *Continuing operations only at 2011 rates at 2011 currency rates
Slide 18: Four Year Perspective
Four Year Perspective Headline Operating Profit (£m)* Margin 86 15% 79 13% 10% 52 7 2% 08 09 10 11 08 09 10 11 ROCE Average Headcount 7,503 6,020 5,603 5,532 16.9% 12.1% 10.1% 1.5% 08 09 10 11 08 09 10 11 * At 2011 currency rates 2011 Full Year Results
Slide 19: 2011 – growth drivers
2011 – growth drivers Proprietary Technologies 40% 35% Emerging markets Sales 30% (ex Brazil) Growth YOY 25% 20% 15% 10% Secular growth 5% Markets(1) All other(2) 0% 0 100 200 300 400 500 Sales £m (1) Aerospace / Defence / Energy ex. Proprietary Technologies 2011 Full Year Results (2) Automotive and
Slide 20: Investment – last three years
Investment – last three years Organic Investment Surplus capacity following recession Capex less than depreciation - £5.7m below in 2011 Capex concentrated in high growth areas: − Selected technologies − Emerging markets − Aerospace 2011 Full Year Results
Slide 21: Investment - looking forward
Investment - looking forward Organic Investment Increased capex for capacity – particularly in high growth areas Expected spend – depreciation plus circa £10m ROCE hurdle for expansion capital significantly in excess of WACC Acquisitions Focus on return on investment Balance between − Imme
Slide 22: Summary
Summary 2011 14% increase in revenue Results Strong gains from “growth drivers” £85.5m headline operating profit 15% margin 16.9% ROCE Free cash flow £71m – now debt free 25% increase in full year dividend Ahead Long cycle markets set for strong growth Sales growth moderating in sh
Slide 23: Outlook
Outlook “The macroeconomic environment may continue to be challenging, but with nearly half of the Group’s activity in areas that have long term growth drivers that are less likely to be impacted by economic headwinds we believe there is a good prospect that the business will continue to move forwar
Slide 24: Bodycote
Bodycote
Slide 25: 2011 Statutory Income Statement
2011 Statutory Income Statement £m 2011 2010 Revenue 570.7 499.8 Headline operating profit 1 85.5 52.1 Amortisation of acquired intangible fixed assets (0.9) (0.9) Impairment charge (4.2) - Operating profit 80.4 51.2 Net finance costs (4.6) (6.0) Profit before taxation 75.8 45.2 Headline earnings pe
Slide 26: Pensions – net deficit
Pensions – net deficit £m 2011 2010 UK Funded 1.8 0.6 Other Western Europe Funded 0.7 0.7 Other Western Europe Unfunded 9.9 9.5 Western Europe Total 12.4 10.8 North America Funded 0.9 0.5 Emerging Markets Unfunded 0.2 0.3 Total retirement benefit obligations 13.5 11.6 2011 Full Year Results
Slide 27: Financial Information
Financial Information Average shares in issue 2011: 185.8m (2010: 185.5m) Exchange rates: Currency Description 2011 2010 Euro Average (P&L) 1.15 1.17 Closing (B/S) 1.19 1.16 US Dollar Average (P&L) 1.60 1.55 Closing (B/S) 1.54 1.54 SEK Average (P&L) 10.34 11.17 Closing (B/S) 10.65 10.41 Net de
Slide 28: Refinancing
Refinancing Revolving Credit Facility (RCF) refinancing completed 27 July 2011 £125m RCF (replaces £110m and $20m RCFs) Five year term to 31 August 2016 Margin reduced by 100 basis points Financial covenants unchanged Other terms more favourable Existing €125m RCF maturing 31 July 2013 r
Slide 29: Net Debt / Finance Charge
Net Debt / Finance Charge £m 2011 Opening balance (51.3) Movement in net cash / (debt) due to: Free cash flow 70.5 Dividends paid (17.4) Currency & Other (2.0) Closing balance 0.1 £m 2011 2010 Net interest payable 1.2 1.9 Financing costs 2.0 2.3 Other charges 0.7 0.9 Pension finance charge 0.7 0.9 N
Slide 30: Divisional summary - H1 vs. H2
Divisional summary - H1 vs. H2 ADE Divisions £m H1 H2 Total Revenue 115.9 117.6 233.5 Headline Operating Profit1 25.2 25.9 51.1 Margin 21.7% 22.0% 21.9% AGI Divisions £m H1 H2 Total Revenue 172.3 164.9 337.2 Headline Operating Profit1 22.9 21.8 44.7 Margin 13.3% 13.2% 13.3% 1. Headline operating pro
Slide 31: Bodycote
Bodycote