Slide 1: Full Year 2020 Results
FULL YEAR 2020 RESULTS 10 March 2021 We solve electronic challenges for a sustainable world TT ELECTRONICS: FULL YEAR 2020 RESULTS 1
Slide 2: Substantial strategic progress and growing business momentum
SUBSTANTIAL STRATEGIC PROGRESS AND GROWING BUSINESS MOMENTUM Entered 2020 with momentum, principal impact from COVID-19 in Q2 Significant steps to improve the quality of the business £60 million investment in 2 acquisitions (Torotel and Covina) and R&D Acquisitions performing well and bringi
Slide 3: TT response to COVID-19 guided by our strong values
TT RESPONSE TO COVID-19 GUIDED BY OUR STRONG VALUES Successfully navigated challenges of 2020 Best practice from operations in China deployed worldwide Significant increase in employee engagement; TT now among top global companies No site based COVID-19 transmissions Wellbeing, mental heal
Slide 4: A responsible business
A RESPONSIBLE BUSINESS Our priorities and goals Our progress Third party recognition Zero Harm with year on year 5 lost time accidents during the year Recognised as a 2 star great reduction in incidents place to work Engage our employees and become Exceeded our target; recognised by our a 1 star
Slide 5: Portfolio transformation: sustainability driving growth and margin
PORTFOLIO TRANSFORMATION: SUSTAINABILITY DRIVING GROWTH AND MARGIN END MARKET EXPOSURES Transformation out of traditional automotive and Increased exposure to structural growth markets, providing general industrial markets solutions for a cleaner, smarter and healthier world 2015 2020 Customer i
Slide 6: Strong track record of delivery
STRONG TRACK RECORD OF DELIVERY IMPROVING ORGANIC REVENUE GROWTH OPERATING PROFIT AND MARGIN NEARLY DOUBLED % £m % 8 60 10 40 5 -2 20 2015 2016 2017 2018 2019 2020 0 0 -12 2015 2016 2017 2018 2019 2020 HIGH CASH CONVERSION SUPPORTING REINVESTMENT IMPROVING RETURN ON INVESTED CAPITAL % % 150 12 100 8
Slide 7: Financial Review
FINANCIAL REVIEW MARK HOAD, CFO TT ELECTRONICS: FULL YEAR 2020 RESULTS 7
Slide 8: Group financial performance
GROUP FINANCIAL PERFORMANCE Change Primary COVID-19 impact Q2, improving H2, £m (except where stated) 2020 2019¹ constant fx strong Q4 recovery Revenue 431.8 478.2 (9) % 12% organic revenue reduction Operating profit* 27.5 38.1 (27)% 2019 restated – non-cash timing error on Operating profit ma
Slide 9: Power and Connectivity
POWER AND CONNECTIVITY Change 2020 2019 Change constant fx Revenue (£m) 125.1 138.2 (9)% (9)% Adjusted operating profit (£m) 10.3 16.5 (38)% (37)% Adjusted operating margin 8.2% 11.9% (370)bps (370)bps 17% organic revenue decline – lower commercial aero and industrial demand, defence market demand
Slide 10: Global Manufacturing Solutions
GLOBAL MANUFACTURING SOLUTIONS Change 2020 20191 Change constant fx Revenue (£m) 197.5 213.2 (7)% (7)% Adjusted operating profit (£m) 15.0 13.5 11% 11% Adjusted operating margin 7.6% 6.3% 130bps 120bps ¹ Restated 7% organic reduction in revenue, 4% in H2 – ramp up of defence related contracts Op
Slide 11: Sensors and Specialist Components
SENSORS AND SPECIALIST COMPONENTS Change 2020 2019 Change constant fx Revenue (£m) 109.2 126.8 (14)% (14)% Underlying operating profit (£m) 9.4 15.3 (39)% (38)% Underlying operating margin 8.6% 12.1% (350)bps (340)bps Revenue decreased by 14% organically – impact across end markets This division
Slide 12: Strong free cash flow generation
STRONG FREE CASH FLOW GENERATION £m Improving the quality of TT through acquisition of Covina and Torotel £49m spend £20m equity placing Increased pro-forma leverage to 1.8x Strong free cash flow generation – up 48% Capex discipline £3.6m working capital inflow 130% operating cash co
Slide 13: Financial guidance for FY 2021
FINANCIAL GUIDANCE FOR FY 2021 Adjusting items cash spend Pension £9m on self-help programme UK deficit contributions £5.5m, increasing £0.2m p.a. £1m on pensions projects UK scheme now fully funded on a self-sufficiency basis £2m on Torotel integration GMP conversion, liability manageme
Slide 14: Expanded self-help programme progressing well
EXPANDED SELF-HELP PROGRAMME PROGRESSING WELL Programme scope £m 2020 2021 2022 Total 3 main site closures Net headcount reductions c.500 FTEs Cash cost Relocation/end-of-life lower margin product lines Restructuring (2) (9) 1 (10) Progressing to plan Capex (2) (6) - (8) 70% of headcount red
Slide 15: Drivers of margin enhancement towards 10%+
DRIVERS OF MARGIN ENHANCEMENT TOWARDS 10%+ Acquisitions Growth Self-help Covid-19 recovery 2020 2023 Clear path to 10%+ margins Recovery from COVID-19 impact Self-help– £11-12m run rate benefit by 2023 from site closures and overhead reduction Operational leverage on growth – 3-5% p.a. market
Slide 16: H2 recovery, strong cash generation and positive outlook
H2 RECOVERY, STRONG CASH GENERATION AND POSITIVE OUTLOOK Improving trends in H2 and strong Q4 recovery Operating profit and margins protected through cost action Strong free cash flow of £14.4 million, aided by £3.6 million working capital inflow Improving quality of the business through acq
Slide 17: Delivering Sustainable Growth
DELIVERING SUSTAINABLE GROWTH RICHARD TYSON, CEO TT ELECTRONICS: FULL YEAR 2020 RESULTS 17
Slide 18: Megatrends driving sustainable growth, accelerated by COVID-19
MEGATRENDS DRIVING SUSTAINABLE GROWTH – ACCELERATED BY COVID-19 TT’S SOLUTIONS UN SUSTAINABLE MEGATRENDS DEVELOPMENT GOALS IMPROVE ENERGY EFFICIENCY Climate change and Aircraft electrification resource scarcity Electric and hybrid electric vehicles CLEANER Smart energy infrastructure ENSURE AC
Slide 19: Combining capabilities across TT to drive key account growth
COMBINING CAPABILITIES ACROSS TT TO DRIVE KEY ACCOUNT GROWTH CLEANER Next generation avionics and space power modules Customer account c.5x larger than in 2018 at c.£9m Moving up the value chain – investing in capabilities in partnership with customer for designed-in solutions Cross Selling
Slide 20: Moving up the value-chain and leveraging relationships
MOVING UP THE VALUE-CHAIN AND LEVERAGING RELATIONSHIPS SMARTER Automation products including digital security Moving up the value-chain – from sensors to assemblies Growth from cross selling between divisions Designed-in repeat revenues from customer partnership for R&D Supported 6 new pro
Slide 21: Acquisitions extending capabilities and driving growth
ACQUISITIONS EXTENDING CAPABILITIES AND DRIVING GROWTH HEALTHIER Extending TT’s capabilities through acquisition – Precision Inc offered differentiated technology with higher margins Developing smaller implantable devices for improved patient outcomes Benefiting from TT’s scale, capabilities a
Slide 22: Good exposure to structural growth markets
GOOD EXPOSURE TO STRUCTURAL GROWTH MARKETS % of TT Medium term Market revenue Sustainability drivers growth rate (2020) Demographic and social Healthcare 25% +5-7% change Climate change and Aerospace & Defence 22% +3-4% resource scarcity Automation & Technological change; 37% +4-6% Electrification t
Slide 23: Driving growth through customer intimacy
DRIVING GROWTH THROUGH CUSTOMER INTIMACY - DESIGNED-IN, HIGHER-VALUE PARTNERSHIPS Improved business development approach → greater customer intimacy TT and customer engineering teams collaborating; trusted for technical expertise Investing in the right capabilities, in the right markets, with
Slide 24: An M&A platform that extends our capabilities and creates value
AN M&A PLATFORM THAT EXTENDS OUR CAPABILITIES AND CREATES VALUE How we create value through M&A Strategic and financial value from acquisition of Torotel Rationale Rationale Extension of technical capabilities Creates scale in North America Power Solutions business Leveraging customer access
Slide 25: Outlook
OUTLOOK Strong start to 2021 with record order book Exposed to global megatrends - long term structural markets driving growth R&D investment, recent acquisitions Self-help programme progressing well; contributing to margin improvement Dividend resumed Growth and self-help actions give u
Slide 26: TT investment case: delivering growth and creating value
TT INVESTMENT CASE: DELIVERING GROWTH AND CREATING VALUE Megatrends driving A high quality, IP rich Strong cash generation to revenue growth and business, with cleaner, invest in IP and value- demand for products that smarter and healthier enhancing acquisitions contribute to a more solutions sustai
Slide 27: Appendix
APPENDIX TT ELECTRONICS: FULL YEAR 2020 RESULTS 27
Slide 28: Our divisions
OUR DIVISIONS PICTURE TO FOLLOW Power and Connectivity Global Manufacturing Solutions Sensors and Specialist Components Revenue: £125.1m Revenue: £197.5m Revenue: £109.2m Operating profit: £10.3m Operating profit: £15.0m Operating profit: £9.4m Operating profit margin: 8.2% Operating profit margin:
Slide 29: An experienced executive leadership team
AN EXPERIENCED EXECUTIVE LEADERSHIP TEAM Richard Tyson Mark Hoad Charlie Peppiatt Chief Executive Officer Chief Financial Officer Divisional EVP Cobham BBA Aviation Stadium Group TRW RMC Group Laird Connectivity Michael Leahan Sarah Hamilton-Hanna Lynton Boardman Divisional EVP EVP, Human Resources
Slide 30: Capital allocation priorities
CAPITAL ALLOCATION PRIORITIES Our objective is to maintain a strong financial position and provide flexibility for growth Maximise organic investment including R&D to 1 support growth 2 Maintain our progressive dividend policy Free cash flow priorities Continue to support our strategy with targeted,
Slide 31: The TT Electronics business
THE TT ELECTRONICS BUSINESS Revenue (2020) Underlying operating profit (2020) Power and Connectivity 29% Power and Connectivity 37% Global Manufacturing Solutions 46% Global Manufacturing Solutions 55% Sensors and Specialist Components 25% Sensors and Specialist Components 34% Central costs (26)% Re
Slide 32: Revenue by market and geography by division
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 (%) Distribution sales Healthcare 13% Distribution sales Healthcare 42% Distribution sales Healthcare 6% c
Slide 33: Summary income statement
SUMMARY INCOME STATEMENT Continuing operations (£m) 2020 2019 Revenue 431.8 478.2 Adjusted operating profit 27.5 38.1 Adjusted net finance cost (3.7) (3.7) Adjusted profit before taxation 23.8 34.4 Adjusting items (20.9) (21.2) Profit before taxation 2.9 13.2 Taxation (1.6) (0.8) Profit after taxati
Slide 34: 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) 2020 125.1 197.5 109.2 - 431.8 2019 at 2020 rates 138.1 212.1 126.6 - 476.8 FX impact (0.1) (1.1) (0.2) - (1.4) 2019
Slide 35: Income statement – adjusting items
INCOME STATEMENT – ADJUSTING ITEMS £m 2020 2019 Restructuring and other items Restructuring (14.8) (12.2) Property disposal 1.2 - Pension and past service charge (0.9) (1.0) (14.5) (13.2) Acquisition related costs Release of warranty and claims provision relating to Transportation business 1.0 - div
Slide 36: Cash conversion
CASH CONVERSION £m 2020 2019 Adjusted operating profit 27.5 38.1 Depreciation and amortisation 17.0 18.0 Net capital expenditure (9.9) (14.3) Capitalised development expenditure (3.3) (3.9) Working capital 3.6 (1.2) Other 0.9 2.5 Operating cash flow after capex. 35.8 39.2 Operating profit 27.5 38.1
Slide 37: Movement in net debt
MOVEMENT IN NET DEBT £m 2020 2019 Operating cash flow after capex 35.8 39.2 Net interest and tax (3.8) (7.7) Lease liability repayments (4.1) (4.0) Restructuring and acquisition related costs (8.1) (9.2) Pensions (5.4) (8.6) Free cash flow 14.4 9.7 Dividends - (10.9) Acquisitions and disposals (45.7
Slide 38: 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