Slide 1: TT Electronics plc 2016 Preliminary Results
TT Electronics plc 2016 Preliminary Results March 2017
Slide 2: 2016: Performance ahead of expectations
2016: Performance ahead of expectations • Good strategic progress and strong financial performance • Continued customer focus driving new contract wins; strong sales performance in Asia • Operational efficiency improvements supporting excellent profit growth • Aero Stanrew continues to perform well
Slide 3: Financial review
Financial review Mark Hoad, Chief Financial Officer TT Electronics plc preliminary results 2016 2
Slide 4: Financial headlines
Financial headlines • Robust organic revenue performance, returned to organic revenue growth in H2 • Underlying operating profit up 26%, underlying EPS up by 19% at constant currency • Good underlying cash conversion at 87%, further enhanced by £12.3 million from sale of properties • Return on inves
Slide 5: Group financial performance
Group financial performance 2016 2015 Change Change £m (except where stated) constant fx Revenue 569.9 509.9 12% 3% • Revenue up 3% Operating profit* 31.3 21.7 44% 26% • Operating profit up 26% Profit before tax* 26.9 19.2 40% 20% • Increased interest expense, EPS* (pence) 12.0p 8.8p 36% 19% EPS up
Slide 6: Group operating profit bridge (2016 vs 2015)
Group operating profit bridge (2016 vs 2015) 1.7 (0.6) 31.3 6.8 3.4 (4.9) 3.2 24.9 21.7 2015 FX 2015 Acquisitions TS&C Productivity, OIP R&D expense 2016 constant currency price-downs volume TT Electronics plc preliminary results 2016 5
Slide 7: Transportation Sensing and Control
Transportation Sensing and Control Financial Summary 2016 2015 Change Change constant fx Revenue (£m) 237.2 205.8 15% 4% Op. profit/(loss) (£m)* 3.2 (1.4) 329% 500% Operating margin* 1.3% (0.7)% 200bps 170bps * Underlying, before exceptional and one-off costs • Division returned to profitable growth
Slide 8: Industrial Sensing and Control
Industrial Sensing and Control Financial Summary 2016 2015 Change Change constant fx Revenue (£m) 64.4 61.0 6% (4)% Operating profit (£m)* 11.9 11.4 4% (8)% Operating margin* 18.5% 18.7% (20)bps (60)Bps * Underlying, before exceptional and one-off costs • Organic revenues down by 4% • Challenging No
Slide 9: Advanced Components
Advanced Components Financial Summary 2016 2015 Change Change constant fx Revenue (£m) 121.3 95.3 27% 21% Operating profit (£m)* 10.3 6.0 72% 66% Operating margin* 8.5% 6.3% 220bps 230bps * Underlying, before exceptional and one-off costs • 230 basis point margin improvement • Revenue up 21% at cons
Slide 10: IMS
IMS Financial Summary 2016 2015 Change Change constant fx Revenue (£m) 147.0 147.8 (1)% (6)% Operating profit (£m)* 5.9 5.7 4% (11)% Operating margin* 4.0% 3.9% 10bps (20)bps * Underlying, before exceptional and one-off costs • Revenues down 6% on organic basis • Growth in Asia remained strong; cont
Slide 11: Free cash flow and net debt
Free cash flow and net debt Free Cash Flow • Good cash conversion with £m 2016 2015 improvement in H2 as planned Underlying EBITDA 54.9 42.0 • Net capital expenditure and capitalised Net capital expenditure (20.8) (16.8) development at 0.9x DA Capitalised development (1.5) (1.3) expenditure • Workin
Slide 12: Other financial matters / guidance for 2017
Other financial matters / guidance for 2017 • Restructuring costs – 2017 cash cost circa £4m; P&L charge circa £3m • Capital and development expenditure – Capex and devex circa 1.0 – 1.1x DA • Working capital – Broadly neutral • Interest charge – Lower fee amortisation, lower pension interest • Tax
Slide 13: Strategy review and outlook
Strategy review and outlook Richard Tyson, Chief Executive Officer TT Electronics plc preliminary results 2016 12
Slide 14: Building momentum
Building momentum Position ourselves in structural growth markets where there is increasing electronic content… where we have a competitive advantage or where we can differentiate ourselves using our industry expertise and focused R&D… to ensure our business is sustainable in the long term… and deli
Slide 15: Transportation
Transportation 48% Group revenue by market Market growth from increasing electronic content in rail, truck and automotive; market trend towards electric, hybrid electric and autonomous vehicles Emission and fuel Focus includes: Power electronics Safety efficiency TT Electronics plc preliminary resul
Slide 16: Industrial
Industrial 27% Group revenue by market Market growth from electronics future proofing next generation technology including ‘smarter home’, ‘factory 4.0’ and higher specification consumer products Smart energy Focus includes: Automation Instrumentation meters TT Electronics plc preliminary results 20
Slide 17: Aerospace and defence
Aerospace and defence 13% Group revenue by market Market growth from the more electric aircraft; demand for electrical components with reduced size, weight and power consumption Focus includes: Fuel systems Engine controls Cockpit avionics TT Electronics plc preliminary results 2016 16
Slide 18: Medical
Medical 12% Group revenue by market Market growth from increased demand for more sophisticated diagnostic, imaging and monitoring equipment; constant drive towards improved patient safety Diagnostic Focus includes: In-home care Life critical devices equipment TT Electronics plc preliminary results 2
Slide 19: Momentum in our strategy
Momentum in our strategy Customer focus Targeted R&D Continuous operational improvement TT Electronics plc preliminary results 2016 18
Slide 20: Fuelling long term growth: customer focus
Fuelling long term growth: customer focus • Collaboration increases revenue opportunities as ‘One TT’ • Increased sales to a consumer electrical equipment supplier by over 50% in two years • Increased sales in Asia by 12% at constant currency • Growth from metro rail and medical customers • Strong c
Slide 21: Fuelling long term growth: targeted R&D
Fuelling long term growth: targeted R&D • £22.6 million spent on R&D • Shift from fixing legacy issues to more new product development • Clear prioritisation for efficient R&D spend • 29 new products launched • Team in Carrollton launched first major platform product launch in seven years • Launched
Slide 22: Fuelling long term growth: continuous operational improvement
Fuelling long term growth: continuous operational improvement • Remaining focused on operational efficiency improvements; £6.8m in productivity and volume • Lean programmes driving stock turns and lead time improvements • Continued sensible steps to improve our procurement; savings over 40% identifi
Slide 23: Summary and outlook
Summary and outlook • Good strategic progress and strong financial performance • Continued customer focus driving new contract wins; strong sales performance in Asia • Operational efficiency improvements supporting excellent profit growth • Aero Stanrew continues to perform well and successfully int
Slide 24: Q&As
Q&As TT Electronics plc preliminary results 2016 23
Slide 25: Appendices
Appendices TT Electronics plc preliminary results 2016 24
Slide 26: Appendix: TT Electronics business
Appendix: TT Electronics business Revenue (FY 2016) Operating Profit (FY 2016) Transportation Transportation Sensing & Control 42% Sensing & Control 10% Industrial Industrial Sensing & Control 11% Sensing & Control 38% Advanced Advanced Components 21% Components 33% IMS 26% IMS 19% Revenue by market
Slide 27: Appendix: Impact of FX
Appendix: Impact of FX Transportation Industrial Sensing and Sensing Advanced Sales (£m) Control and Control Components IMS Group 2016 237.2 64.4 121.3 147.0 569.9 2015 at 2016 rates 228.4 67.4 100.3 156.8 552.9 FX impact 22.6 6.4 5.0 9.0 43.0 2015 as published 205.8 61.0 95.3 147.8 509.9 Operating
Slide 28: Appendix: Cash conversion
Appendix: Cash conversion Cash Conversion (£m) 2016 2015 Underlying EBITDA 54.9 42.0 Net capital expenditure (20.7) (16.8) Capitalised development expenditure (1.5) (1.3) Working capital (7.1) 4.6 Other 1.7 1.0 Underlying Operating Cash Flow 27.3 29.5 Underlying operating profit (£m) 31.3 21.7 Cash
Slide 29: Exceptional items
Exceptional items Exceptional Items (P&L) • Restructuring costs: £4.2m of planned £m 2016 2015 restructuring costs offset by largely linked Restructuring costs 0.1 (2.9) property gains Acquisition related costs (3.8) (0.8) • Acquisition costs: Amortisation of acquisition intangibles, Aero Stanrew As
Slide 30: 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