TT Electronics plc · LSE:TTG
TT Electronics — Investor Day (June 2013)
78 slides from TT Electronics's investor day presentation, Jun 13, 2013
Slide 1: TT electronics: Accelerating Performance
TT electronics Accelerating Performance Capital Markets Day 2013 ©2013 TT electronics plc 0
Slide 2: Agenda
Agenda Introduction Geraint Anderson, Group Chief Executive Sensing and Control Pat Murray, Divisional Chief Executive, Sensing and Control Aero Engine Controls Annette Rothwell, Vice President Supply Chain Break Sensing and Control (Operations) Said Karbassi, Operations VP, Sensing and Control Acce
Slide 3: Value Creation
Value Creation Revenue £499.6m Revenue c.£500m* Margin 1.3% Margin 6.2% Net Debt £113.2m Net Cash £46.7m Secure Power Investment for & General growth; drive Industrial sold; shareholder balance sheet value strengthened *Includes ACW pro-forma revenue Capital Markets Day 2013 ©2013 TT electronics plc
Slide 4: Sensing and Control
Sensing and Control Sensor: Controller: Converts physical Processes inputs and variable into an sends instruction to electronic signal system Intelligence Software and Integrated Circuits Harsh Environment Packaging Integration “Sensing and Control” Capital Markets Day 2013 ©2013 TT electronics plc
Slide 5: Accelerating Performance
Accelerating Performance Innovation – Optimising R&D – Solutions approach – New product pipeline Unique Offering Growth Productivity – Increased penetration Customer Sensing and Operational – Best cost manufacturing – High growth markets Intimacy Control excellence – Sourcing efficiency – Balanced b
Slide 6: Sensing and Control - Pat Murray
Sensing and Control Pat Murray Capital Markets Day 2013 ©2013 TT electronics plc 5
Slide 7: Accelerating Performance
Accelerating Performance Innovation – Optimising R&D – Solutions approach – New product pipeline Unique Offering Growth Productivity – Increased penetration Customer Sensing and Operational – Best cost manufacturing – High growth markets Intimacy Control excellence – Sourcing efficiency – Balanced b
Slide 8: What is Sensing and Control?
What is Sensing and Control? Sensing Control Converts physical variable into an electronic signal Processes inputs and instructs system – Position – Solid state signal/ – Speed power regulation – Temperature with custom – Pressure software & ASICs Integration and Intelligence Customer Systems – Powe
Slide 9: We provide the best value solutions for critical applications
“We provide the best value solutions for critical sensing and control applications” Trust us to: – Innovate to deliver the right solution – Deliver programme requirements – Supply products that work first time every time – Provide global support by the best people Helping our customers win Capital M
Slide 10: Sensing and Control Growth Levers
Sensing and Control Growth Levers – Great technology creating new markets Creating New – Increasing customer share Markets – £100m pipeline, 25 NPI launches – Sensors, controls, software, hardware New Products Roadmap for Growth Accelerating – Strong market demand for our products Markets – Good pos
Slide 11: Profile: Markets and Regions
Profile Markets Regions Defence & Aerospace Medical Americas 0% 0% Industrial 2% 3% Asia 12% 13% 9% Trucks, Off Road & Sensing Sensing Industrial 12% and and Engines Control Control 70% 79% Automotive Passenger Car Europe Focused where the growth is – markets, regions, customers Capital Markets Day
Slide 12: Drivers
Drivers Demand in target markets driven by common factors Performance Regulation Growth and prosperity – Sophisticated products – Emissions legislation and – Rising living standards and incorporating more complex requirements for greater increasing disposable electronic systems economy income, parti
Slide 13: Key Markets Served
Key Markets Served Growth Drivers Applications Passenger car – Emissions standards – Powertrain – Fuel economy / environmental – Exhaust system – Performance, safety, comfort – Chassis and steering Truck – Emissions standards – Powertrain – Fuel economy / environmental – Exhaust system – Performance
Slide 14: Regulation – Engine Performance
Regulation – Engine Performance Improved Miles per Gallon (US) Performance 60 55 50 45 China 40 EU 35 Japan 30 US 25 20 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 SRI & Sustainability Report Bank of America Merrill Lynch Requirements for greater efficiency Capital Markets Day 2013 ©2013 TT el
Slide 15: Regulation - Emissions
Regulation - Emissions 0.2 2000 EU China Japan US Patriculate Matter (g/km) 0.15 0.1 2000 2004 2000 2007 2003 0.05 2010 2008 2008 2010 2015 0 1 0.75 0.5 0.25 0 “Zero” NOx (g/km) Powertrain 2020 – The Future Emissions Drives Electric Roland Berger Strategy Consultants More stringent environmental reg
Slide 16: Light Vehicle Opportunity
Light Vehicle Opportunity $16 Light vehicle unit growth 120 $14 – 5% CAGR (‘10-’16) 100 Light Vehicles Sales (m Units) $12 Light Vehicles Powertrain sensors Sensor Sales ($B) $10 80 – 6% CAGR (‘10-’16) $8 Powertrain 60 Safety & control sensors $6 – 14% CAGR (‘10-’16) 40 $4 Safety & Control Alternati
Slide 17: Transportation
Transportation Braking & Suspension – Small car: 10 - 20 sensors & control points 6-8 sensors & control points - ABS speed – Premium car: 100+ sensors & control points - Smart chassis height & position - Brake fluid level and pressure Steering & Throttle 4-6 sensors & control points - Electronic pow
Slide 18: Industrial Automation
Industrial Automation – Modern conveyor systems: 15-35 sensors & control points CNC Machine 25-40 sensors & control points: – Air compressors: 10-50 sensors & control points - Cutter position – CNC machines: 25-40 sensors & control points - Water/oil/air pressure - Tool wear module Compressor Convey
Slide 19: Industrial: Electrically actuated valves
Industrial: Electrically actuated valves Market opportunity – Electric motors account for 45% of world electricity consumption. 19% of electric motor demand is used for pumping1 – Market will double in size from 2012 to 20172 – Drive for improved efficiency and enhanced levels of control 4-5 sensing
Slide 20: Middle class in Asia is expanding
Middle class in Asia is expanding in emerging markets 3,000 2,500 China Airline Traffic1 (BRPKs) – Leverage brand, reduce time to market 2,000 1,500 – Invest in design centre and operations 1,000 – Increase sales coverage – 23 sales people 500 0 2005 2010 2015 2020 2025 2030 – Rising income creates
Slide 21: Expert local sales capabilities – managed globally
Expert local sales capabilities – managed globally North America Europe Asia Werne Japan Weybridge Suzhou Dallas Singapore – 9 direct technical Manesar sales people – 19 direct technical – 16 direct technical – 13 Rep firms sales people sales people – Global distribution: – Global distribution: – Gl
Slide 22: Accelerating Performance
Accelerating Performance Innovation – Optimising R&D – Solutions approach – New product pipeline Unique Offering Growth Productivity – Increased penetration Customer Sensing and Operational – Best cost manufacturing – High growth markets Intimacy Control excellence – Sourcing efficiency – Balanced b
Slide 23: Expert local R&D capabilities – managed globally
Expert local R&D capabilities – managed globally North America Europe Asia Werne Klingenberg Salzburg Cambridge Fullerton Suzhou Dallas Bangalore – 22 engineers – 114 engineers – 12 engineers: China – Multi disciplines – Multi disciplines – 27 engineers: India – Aerospace, defence, – Aerospace, defe
Slide 24: Developing skilled engineering team
Developing skilled engineering team Operating since Jan 2013 Bangalore, India has a skilled engineering team Capability – Mechanical Engineering Services and Embedded systems capability – Design concept to manufacture – Tooling feasibility studies along with an eco system of partners for manufacturi
Slide 25: Example Projects
Example Projects 1. Dynamic response analysis of oil level 2. Frequency response analysis of tumble flap sensor sensor Problem statement Problem statement – Failure with fracture around the sensor housing – Simulation of welds to avoid leakage at the inside o-ring due to relative motion between slee
Slide 26: Agricultural Equipment
Agricultural Equipment Customer Challenge Sensing and Control Solution – A partner for sensors and controls who can Solutions for position, speed, pressure and supply automotive level solutions that can temperature: be used in harsh agricultural environment: – Automotive building blocks, – transmiss
Slide 27: Sensing and Control Solution
Sensing and Control Solution Consolidate global needs – Axle – Engine control modules – Chassis position – Cabin pedal – Cabin controls – Transmission – Exhaust sensors – Linkage position – Cabin shifters Auto building blocks, packaged for Agri aggressive application Capital Markets Day 2013 ©2013 T
Slide 28: E-mobility: Electric motorcycle
E-mobility: Electric motorcycle Customer Challenge Sensing and Control Solution – Converting powertrain from petrol to – Optimal combination of electric motor and electric motor control unit for 100% traction – Acceleration similar in feel to standard – Fully integrated module: engine with no degrad
Slide 29: Highly integrated solution
Sensing and Control Solution Thermal Management Sensors Fully Integrated, Intelligent Device Speed Current Accelerometer Power Semiconductors ASICs/Driver Highly integrated solution Capital Markets Day 2013 ©2013 TT electronics plc 28
Slide 30: ATM Cash Dispenser: critical application
ATM Cash Dispenser Machine: Currency note validation Customer Challenge Sensing and Control Solution – Inaccurate detection of note position – Accurate note position detection – Sometimes two notes stick together and – Edge detection optical sensor are dispensed instead of only one – Encoder feedbac
Slide 31: Sensing and Control Solution
Sensing and Control Solution Sensors Sensors – “Note Signature” – Encoder Output – Note Edge Limits Multi sensor solution Capital Markets Day 2013 ©2013 TT electronics plc 30
Slide 32: Platform Approach To Technology: Speed Sensor
Platform Approach To Technology: Speed Sensor Start of production 2013 10m units p.a. by 2016 Core Technology Core Building Block Product Variants Global Applications – Gear box – Direct overmould, – Speed sensor – Engines – Cam shaft lead frame, no pcb module – Transmissions – Crank shaft Benefit:
Slide 33: Technology Roadmap
Technology Roadmap Greater Resilience to Harsh Environments Key Value Miniaturisation enhancing Form and Function Drivers Improved Energy Efficiency Increased Power Density Expanded Application Range 2014-2015 2016-2017 2018-2020 Optical CMOS Light Quality Fluid Quality Sensing Position / Speed SIMS
Slide 34: Building on strengths to create differentiation
Building on strengths to create differentiation Value Integration Growth fuelled by taking more value Capital Markets Day 2013 ©2013 TT electronics plc 33
Slide 35: Sensing and Control Growth Levers
Sensing and Control Growth Levers – Great technology creating new markets Creating New – Increasing customer share Markets – £100m pipeline, 25 NPI launches – Sensors, controls, software, hardware New Products Roadmap for Growth Accelerating – Strong market demand for our products Markets – Good pos
Slide 36: Q&A
Q&A Capital Markets Day 2013 ©2013 TT electronics plc 35
Slide 37: Sensing and Control - Said Karbassi
Sensing and Control Said Karbassi Capital Markets Day 2013 ©2013 TT electronics plc 36
Slide 38: Accelerating Performance
Accelerating Performance Innovation – Optimising R&D – Solutions approach – New product pipeline Unique Offering Growth Productivity – Increased penetration Customer Sensing and Operational – Best cost manufacturing – High growth markets Intimacy Control excellence – Sourcing efficiency – Balanced b
Slide 39: Sensing and Control Productivity Levers
Sensing and Control Productivity Levers Common Common processes and systems driving efficiencies in processes, admin and functional areas functional optimisation New product Best cost operations capability in all regions, new product manufacturing in best cost regions manufacturing in Roadmap for Pr
Slide 40: Integrated Global Manufacturing
Integrated Global Manufacturing Klingenberg, Germany Salzburg, Austria Werne, Germany Fullerton, USA Timisoara, Romania Manesar, India Mexicali, Mexico Suzhou, China Juarez, Mexico Best Cost Manufacturing Grow best cost manufacturing operations Capital Markets Day 2013 ©2013 TT electronics plc 39
Slide 41: Best Cost Manufacturing Initiatives
Best Cost Manufacturing Initiatives – Integrated supply chain optimisation with Labour Profile Headcount % (2012) significant acceleration of content from India China best cost manufacturing plants Romania 3% 6% – Expansion of infrastructure, process and 5% functional capability in Romania, China, I
Slide 42: Boone, USA Closure
Boone, USA Closure – Closed Boone, USA facility in 2012 and transferred products to Mexico – 135,000 sq. ft. facility closed in 2012 Boone, USA – 138 positions in Boone, USA re- Mexicali, Mexico located with majority of positions moving to Mexico – Delivering in excess of £2.0m of savings p.a. start
Slide 43: Product Transfers to Romania
Product Transfers to Romania Klingenberg, Germany Salzburg, Austria – Transferred 14 production lines from Germany and Austria to Romania Werne, Germany – Product transfers occurred in late 2012 and early 2013 Timisoara, Romania – Annual savings impact: £1.8m Best cost manufacturing initiatives a ke
Slide 44: Romania
Romania Romania Site activity begins Q4-2011 Product moves from Salzburg start Q1- 2012 Product moves from Werne Q3-2012 and Klingenberg start Gaining scale and acceleration 14 Production lines in Romania supporting various Q1-2013 customers. ISO TS 16949 accreditation achieved Additional 10,000 sq.
Slide 45: Romania: Key Customer Production Lines
Romania: Key Customer Production Lines Product: LED assembly Product: Power module End Customer: VW, Audi End Customer: BMW Control product lines Capital Markets Day 2013 ©2013 TT electronics plc 44
Slide 46: Romania: Key Customer Production Lines
Romania: Key Customer Production Lines Product: Speed Sensor Product: Truck Level Sensor End Customer: Scania End Customer: Volvo Sensor product lines Capital Markets Day 2013 ©2013 TT electronics plc 45
Slide 47: Romania: Existing Facilities
Romania: Existing Facilities 2 1 – Building 1: 5,000 sq.m. Q4-2011 – Significant additional capacity for expansion up to 30,000 sq.m. – Building 2: 10,000 sq.m. Q2-2013 Campus with space for growth Capital Markets Day 2013 ©2013 TT electronics plc 46
Slide 48: TT Business Excellence
TT Business Excellence TTBE is our philosophy that drives Total Business Improvement Recognises the importance of people in business performance Foundational Tools: – Six Sigma – Lean – Design For Six Sigma A common approach to: – Create toolkit for problem solving – Establish common processes – Eli
Slide 49: Six Sigma Black Belt Projects
Six Sigma Black Belt Projects Black Belt projects targetting €1m p.a. 1000 Accumulated €’000 500 Projection Target benefit 0 2013 Black Belt projects resulting in margin improvement Capital Markets Day 2013 ©2013 TT electronics plc 48
Slide 50: Black Belt Project: Pedal quality improvement
Black Belt Project: Pedal quality improvement – Cost of poor quality: €73,000/month – Reduce cost of poor quality 600 D M A I C Phase Monitoring Phase – Improve operating equipment efficiency – 2012 savings €330K 400 – Identified 14 root causes and 44 possible €’000 solutions 200 – Selected high imp
Slide 51: Managing material spend
Managing material spend – Expand sourcing in emerging regions 2012 Sensing and Control material spend: £146m – Common approach, improve process efficiency and leverage of larger spend – Common parts and suppliers on all S&C Best 44% Higher new products cost cost 56% – Value engineering focused on ma
Slide 52: Procurement initiatives
Procurement initiatives 12 major initiatives targeting over £3.7 million of material savings 5000 4000 3000 £’000 Accumulated 2000 Projection Target Benefit 1000 0 Jan 2013 Delivering results Capital Markets Day 2013 ©2013 TT electronics plc 51
Slide 53: Material cost reduction
Material cost reduction – German supplier of lead-frame. Circa €2.4m p.a. supplier spend – Qualified a supplier in China to deliver the lead-frame and in house welding – Result: €400k p.a. savings starting in 2013 – Additional benefit of supplier carrying inventory Material productivity resulting in
Slide 54: Functional Productivity
Functional Productivity – Apply TT Business Excellence tools (Lean, Standardisation, Kaizen) to administrative/functional processes – Drive common processes in all areas – Common ERP systems – Best cost manufacturing initiatives as enabler – Maintain fixed cost while growing sales Disciplined approa
Slide 55: Sensing and Control Productivity Levers
Sensing and Control Productivity Levers Common Common processes, systems driving efficiencies in processes, admin and functional areas functional optimisation New products Best cost operations capability in all regions, new product manufacturing in best cost regions manufacturing in Roadmap for Prod
Slide 56: Q&A
Q&A Capital Markets Day 2013 ©2013 TT electronics plc 55
Slide 57: Accelerating Financial Performance
Accelerating Financial Performance Shatish Dasani Capital Markets Day 2013 ©2013 TT electronics plc 56
Slide 58: Accelerating Performance
Accelerating Performance Innovation – Optimising R&D – Solutions approach – New product pipeline Unique Offering Growth Productivity – Increased penetration Customer Sensing and Operational – Best cost manufacturing – High growth markets Intimacy Control excellence – Sourcing efficiency – Balanced b
Slide 59: Revised segments
Revised segments Sensors New Chapel Variable Resistors Power & Hybrid Optoelectronics Resistors IMS Ground Transportation Magnetics Connectors Sensing and Control Components IMS Capital Markets Day 2013 ©2013 TT electronics plc 58
Slide 60: Revised segmental information – 2012
Revised segmental information – 2012 £m S&C Components IMS Group Sales 259.6 109.6 107.7 476.9 Operating Profit 16.6 5.9 6.2 28.7 Margin (%) 6.4% 5.4% 5.8% 6.0% Note: 2012 comparatives restated for pension administration costs of £0.7m as per IAS19 (revised) Capital Markets Day 2013 ©2013 TT electro
Slide 61: Balance Sheet Strength
Balance Sheet Strength – Net cash at December 2012 was £46.7m – Completed acquisition of 49% minority interest in Indian JV for £8.2m in February 2013 – Investments being made in line with our plans to position business for future growth, including expansion of Romania facility – Agreed completion a
Slide 62: Operating profit margin bridge
Operating profit margin bridge 9 1.0% 8-10% 8 0.7% 7 0.5% 6.0% 6 5 4 3 2 1 0 2012 Volume Portfolio Productivity 2015 Management Capital Markets Day 2013 ©2013 TT electronics plc 61
Slide 63: Key drivers for margin improvement: Volume
Key drivers for margin improvement Volume: c50 bps improvement – Demand driven by need for greater performance, higher regulation and increasing prosperity in emerging markets – Higher penetration of sensors and controls in all applications – S&C enables TT to take more value by offering an integrat
Slide 64: Key drivers for margin improvement: Portfolio
Key drivers for margin improvement Portfolio management: c70 bps improvement – Targeting growth in higher margin segments such as industrial and other transportation – Platform approach to technology enables leveraging of development spend – Strengthening new product pipeline with ability to drive u
Slide 65: Key drivers for margin improvement: Productivity
Key drivers for margin improvement Productivity: c100 bps improvement – Production transfer to best-cost facilities – Realising benefits of factory expansion in China, Romania, India and Mexico – Driving improvements in all parts of business through TT Business Excellence offsetting inflationary pre
Slide 66: Operational Improvement Programme – S&C
Operational Improvement Programme – S&C – Significant opportunity to improve operational efficiency of business and accelerate productivity – Direct cost within S&C in higher cost regions represents 51% by headcount and over 80% in terms of cost – Anticipated costs of OIP is c£30m, to be spent over
Slide 67: Q&A
Q&A Capital Markets Day 2013 ©2013 TT electronics plc 66
Slide 68: Summary - Geraint Anderson
Summary Geraint Anderson Capital Markets Day 2013 ©2013 TT electronics plc 67
Slide 69: TT electronics – Focused on Sensing and Control
TT electronics Revenue by market (2012) Other – Focused on Sensing and Control 5% Medical 7% 41% Passenger Car – Innovative solutions Other 9% Transportation – Deep customer relationships 12% Defence and 26% Aerospace – Global footprint Industrial Revenue by region (2012) ROW 2% Asia Rest of 13% Eur
Slide 70: Business profile – Components division
Business profile – Components division Revenue by business (2012) Revenue by market (2012) Magnetics Transportation 8% Fixed Resistors 19% Industrial Connectors 20% 37% 50% 22% 33% Power and Hybrid Defence and aerospace 8% Telecom and computer Medical 3% Financial performance (2012) Revenue by regio
Slide 71: Components Update
Components Update – Significant expansion of Mexicali facility – Achieved DSCC approval for Test Laboratory (Corpus Christi, USA) – New facility installed at our Corpus Christi location for the development of Thin Film products – Released over fifty new products in 2012 – Magnetic business awarded d
Slide 72: Business profile – IMS division
Business profile – IMS division IMS division facilities Revenue by market (2012) Telecom and 3% Transportation Computer Defence and 7% Aerospace 14% Industrial 52% Medical 24% Existing Future – Romania Closing – Malaysia (Q4 FY2013) (End of June 2013) Financial performance (2012) Revenue by region (
Slide 73: IMS – major accomplishments in 2012
IMS – major accomplishments in 2012 – Over $30m of new business shipped in 2012 – Expanded our aerospace / defence business by 164%, 13 key customer wins – First in China – Nadcap PCBA & Cable – Acquisition of ACW Technology – Awarded major programme from AVIAGE in China – Awarded Meggitt Supplier E
Slide 74: Accelerating Performance
Accelerating Performance Innovation – Optimising R&D – Solutions approach – New product pipeline Unique Offering Growth Productivity – Increased penetration Customer Sensing and Operational – Best cost manufacturing – High growth markets Intimacy Control excellence – Sourcing efficiency – Balanced b
Slide 75: Significant progress over the last four years provides foundation
Significant progress over the last four years provides foundation Accelerating growth, innovation and productivity across Sensing and Control Capital Markets Day 2013 ©2013 TT electronics plc 74
Slide 76: TT electronics Q&A
TT electronics Q&A Capital Markets Day 2013 ©2013 TT electronics plc 75
Slide 77: Revised segmental information – H1 2012
Revised segmental information – H1 2012 APPENDIX £m S&C Components IMS Group Sales 135.3 58.1 53.8 247.2 Operating Profit 8.1 3.0 2.8 13.9 Margin (%) 6.0% 5.2% 5.2% 5.6% Note: 2012 comparatives restated for pension administration costs of £0.4m as per IAS19 (revised) Capital Markets Day 2013 ©2013 T
Slide 78: Revised segmental information – 2011
Revised segmental information – 2011 APPENDIX £m S&C Components IMS Group Sales 272.3 130.9 106.4 509.6 Operating Profit 16.2 7.5 5.0 28.7 Margin (%) 5.9% 5.7% 4.7% 5.6% Capital Markets Day 2013 ©2013 TT electronics plc 77