Slide 1: Capital Markets Event
CAPITAL MARKETS EVENT April 2024 CAPITAL MARKETS EVENT © TT Electronics 1
Slide 2: Introduction
INTRODUCTION CAPITAL MARKETS EVENT © TT Electronics 2
Slide 3: Agenda
AGENDA 01 How we create value for our stakeholders Our focus on Efficiency, Growth and 02 Innovation Peter France, CEO Mark Hoad, CFO 03 Medium term financial goals Michael Leahan Stewart Partridge 04 Q&A EVP Commercial EVP Operations 05 Product showcase and refreshments Matt Yeates Katelyn DeVan SV
Slide 4: TT Electronics Key Messages for Today
TT ELECTRONICS KEY MESSAGES FOR TODAY Compelling business fundamentals provide a strong platform for above market growth Clear visibility to 10% % margins in 2024 Laser focus on execution, unlocking value and improving returns Project Dynamo: Substantial self- help potential from commercial and oper
Slide 5: Strategic Focus
STRATEGIC FOCUS Focusing on efficiency to boost productivity and reduce costs Enhancing collaboration and commercial focus, facilitated by moving to a function-led regional Unlocking value structure through disciplined Promoting innovation, design, engineering and manufacturing expertise execution D
Slide 6: Our Medium-Term Financial Goals
OUR MEDIUM-TERM FINANCIAL GOALS Committed to deliver exceptional value for shareholders % GROWTH MARGINS1 CASH ROIC GENERATION Ahead of end 12% in FY 2026 85%+ cash Mid to high market growth of conversion teens ROIC2 4-6% Strong FCF generation 1. Adjusted operating margin 2. Pre-tax return on invest
Slide 7: How We Create Value for Our Stakeholders
OUR VALUE OFFERING HOW WE CREATE VALUE FOR OUR STAKEHOLDERS CAPITAL MARKETS EVENT © TT Electronics 7
Slide 8: TT Electronics: Our Purpose
TT ELECTRONICS: OUR PURPOSE To engineer and manufacture electronic solutions enabling a safer, healthier and more sustainable world CAPITAL MARKETS EVENT © TT Electronics 8
Slide 9: Our Core Areas of Expertise
OUR CORE AREAS OF EXPERTISE ENGINEERING MANUFACTURING We design custom technology solutions Our global manufacturing capability that enable smaller, lighter, and more provides solutions for customers in highly energy efficient products used in regulated markets, from new product performance critical
Slide 10: Positioned in Structural Growth Markets
POSITIONED IN STRUCTURAL GROWTH MARKETS AEROSPACE & AUTOMATION & HEALTHCARE DEFENCE ELECTRIFICATION Market growth rates: FY23 Market growth rates: FY23 FY23 Market growth rates: Revenue Revenue Revenue 6 - 8% CAGR 20% 4 - 5% CAGR 36% 5 - 6% CAGR 24% Growing ageing population driving Increasing elect
Slide 11: Strong Visibility and Barriers to Entry
STRONG VISIBILITY AND BARRIERS TO ENTRY Our focus Complex & Necessary • Deep domain knowledge Strong barriers Characterised by: to entry & high • Customer intimacy Market switching costs • Market regulation expertise regulation /product • Lower volume specification • Customisation Project Albert Div
Slide 12: TT Capabilities Applicable Across Our End Markets
TT CAPABILITIES APPLICABLE ACROSS OUR END MARKETS AEROSPACE AUTOMATION & HEALTHCARE ELECTRIFICATION PRODUCTS & & DEFENCE CAPABILITY Sensors for integration in OEM Optoelectronics AEROSPACE & DEFENSE equipment Resistors Power and signal control & conditioning Magnetics Electromagnetic components PCBA
Slide 13: Video Showcasing Our Capabilities
VIDEO SHOWCASING OUR CAPABILITIES CAPITAL MARKETS EVENT Value Offering Project Dynamo Financial Metrics © TT Electronics 13
Slide 14: Strong Order Book with Recurring Revenues
STRONG ORDER BOOK WITH RECURRING REVENUES… Months of Revenue Visibility 14 12 10 Revenue Annual 8 6 Recurring order book, including major New programmes (Long term, multi-year award, 4 contract orders placed on a rolling horizon) win POs 2 0 2018 2019 2020 2021 2022 2023 2024 2030+ • Increasing visi
Slide 15: Long Term Customer Collaboration Through Lifecycle
LONG TERM CUSTOMER COLLABORATION THROUGH LIFECYCLE FY23 Revenue 20% FY23 Revenue 24% FY23 Revenue 36% CAPITAL MARKETS EVENT Value Offering Project Dynamo Financial Metrics © TT Electronics 15
Slide 16: Blue Chip Customers Long Term Relationships
BLUE CHIP CUSTOMERS LONG TERM RELATIONSHIPS Healthcare Aerospace & Defence Automation & Electrification Distribution sales channel CAPITAL MARKETS EVENT Value Offering Project Dynamo Financial Metrics © TT Electronics 16
Slide 17: Global Presence Regional Customer Proximity
GLOBAL PRESENCE REGIONAL CUSTOMER PROXIMITY • Broad footprint across North America, UK and Asia • Increases resilience and offers proximity to customer end markets • Recent expansion of manufacturing capabilities in Mexico and Malaysia enhances customer choice Manufacturing Manufacturing Head Office
Slide 18: People & Culture – A Genuine Competitive Advantage
PEOPLE & CULTURE – A GENUINE COMPETITIVE ADVANTAGE PASSION Employee Survey Response EXPERTISE Long-serving team members with deep TT Electronics 91% knowledge of our customers & processes Engineering partnerships with leading Big Company Average 64% edge academic institutions Year-on-year 2023 Blue-
Slide 19: Our Commitment to a Sustainable World
OUR COMMITMENT TO A SUSTAINABLE WORLD CLEANER SMARTER HEALTHIER Our commitments enable our growth & customers to meet Complex assembly for remote power Customised potentiometers for High reliability & performance double their sustainability 5G high-bandwidth technology used sided chip-resistors for
Slide 20: Vertically Integrated Manufacturing Video
VERTICALLY INTEGRATED MANUFACTURING VIDEO CAPITAL MARKETS EVENT Value Offering Project Dynamo Financial Metrics © TT Electronics 20
Slide 21: CAPITAL MARKETS EVENT © TT Electronics
CAPITAL MARKETS EVENT © TT Electronics 21
Slide 22: Three Focused Pillars Unlocking Value
THREE FOCUSED PILLARS UNLOCKING VALUE Efficiency Growth Innovation Increase margins from Enhance commercial Further leveraging our improving operational focus delivering organic manufacturing and execution and sales growth across engineering expertise to effectiveness verticals in identified bring m
Slide 23: Organisational Change: Moving from Divisions to Function-Led Structure
ORGANISATIONAL CHANGE MOVING FROM DIVISIONS TO FUNCTION-LED STRUCTURE ACROSS 3 REGIONS DIVISION STRUCTURE P&C GMS S&SC c.£150m c.£255m c.£145m Divisional Functions Divisional Functions Divisional Functions CAPITAL MARKETS EVENT Value offering Project Dynamo Financial goals 2023 Revenue proforma ex A
Slide 24: Organisational Change: Function Structure Across 3 Regions
ORGANISATIONAL CHANGE MOVING FROM DIVISIONS TO FUNCTION-LED STRUCTURE ACROSS 3 REGIONS FUNCTION STRUCTURE Commercial, operations, innovation, HR, finance & legal functions North America Europe Asia c.£230m c.£120m c.£200m CAPITAL MARKETS EVENT Value offering Project Dynamo Financial goals 2023 Reven
Slide 25: Organisational Change Enabling Improved Performance
ORGANISATIONAL CHANGE ENABLING IMPROVED PERFORMANCE FUNCTIONAL LEVERAGE Duplication of Consistent best Better talent FOR functional practice development EFFICIENCY resource deployment eliminated CAPITAL MARKETS EVENT Value offering Project Dynamo Financial goals © TT Electronics 25
Slide 26: Organisational Change Enabling Improved Performance
ORGANISATIONAL CHANGE ENABLING IMPROVED PERFORMANCE CUSTOMER ALIGNED Consistent Improves Resource ACCOUNT approach to engagement efficient MANAGEMENT customers for new business from one - TT opportunity collaboration CAPITAL MARKETS EVENT Value offering Project Dynamo Financial goals © TT Electronic
Slide 27: Organisational Change Enabling Improved Performance
ORGANISATIONAL CHANGE ENABLING IMPROVED PERFORMANCE INCREASE ASSET Constraints Capex Centre of Make vs buy UTILISATION removed from efficiency Excellence improvements sites aligned improvements approach to divisions CAPITAL MARKETS EVENT Value offering Project Dynamo Financial goals © TT Electronics
Slide 28: Organisational Change Enabling Improved Performance
ORGANISATIONAL CHANGE ENABLING IMPROVED PERFORMANCE SALES OPPORTUNITIES Maximise sales Increase vertical Leverage WITHIN with existing sales opportunity inter-company REGIONS customers potential CAPITAL MARKETS EVENT Value offering Project Dynamo Financial goals © TT Electronics 28
Slide 29: Organisational Change: Divisions to Function-Led Structure Across 3 Regions
ORGANISATIONAL CHANGE MOVING FROM DIVISIONS TO FUNCTION-LED STRUCTURE ACROSS 3 REGIONS DIVISION STRUCTURE FUNCTION STRUCTURE Commercial, operations, innovation, HR, P&C GMS S&SC finance & legal functions c.£150m c.£255m c.£145m North Europe Asia America Divisional Divisional Divisional c.£120m c.£20
Slide 30: Efficiency to Unlock Value
EFFICIENCY TO UNLOCK VALUE Efficiency Management actions Cost Discipline SG&A savings already identified of £5-6m • Headcount & travel costs reduced by regional structure • Pension admin’ costs removed post scheme wind-up • • Discretionary spend savings • Improved operational efficiencies • Factory
Slide 31: Growth Opportunities to Unlock Value
GROWTH OPPORTUNITIES TO UNLOCK VALUE Growth Management actions Service excellence • Operational improvements focused on customer Commercial discipline • Strengthen commercial processes • • Greater focus on pricing discipline • Sales organisation • • Earlier technical engagement • Improved regional &
Slide 32: Innovation to Unlock Value
INNOVATION TO UNLOCK VALUE Innovation Management actions New Product Development • Functional leadership • Engineering resource development • Build a technology roadmap • Vertical Integration • • Optimise solutions with TT content • Customer collaboration • • Early technical engagement across the po
Slide 33: Mark Hoad, CFO
MARK HOAD, CFO CAPITAL MARKETS EVENT © TT Electronics 33
Slide 34: Momentum in Financial Performance
MOMENTUM IN FINANCIAL PERFORMANCE Margin Inflection point ROIC improved to Leverage improvement reached in cash 12.0% reducing – will underway generation create capital allocation optionality CAPITAL MARKETS EVENT Value offering Project Dynamo Financial goals © TT Electronics 34
Slide 35: Margin Improvement to 10% in 2024
MARGIN IMPROVEMENT TO 10% IN 2024 10% adjusted • Pass-through operating +20 - 30 reduced in FY23, margin bps +50 bps further reduction in +40 - 50 FY24, gone by FY25 bps • Divestment +20bps completed 31 March 8.6% 2024 • Efficiency actions already underway & HVAC issues resolved • Growth supported b
Slide 36: Clear Path to 12% Margin in 2026
CLEAR PATH TO 12% MARGIN in 2026 +70 - 100 12% bps net • Several levers to drive margin improvement from +60 - 80 bps here: +20-30 +20bps bps • Unwind of pass-through in 10% 2024 & FY Albert effect • SG&A reduction - identified • Factory efficiency & growth Self-help • Innovation additive over mediu
Slide 37: Strong Cash Conversion of 85%+
STRONG CASH CONVERSION OF 85%+ Cash flow item Comment % of Operating Profit Operating profit 100% Capex c. 1.0x-1.2x depreciation, opportunity Capex – depreciation -10% to 0% through greater asset sharing 20-25% of revenue growth consumed in working Working capital -10% to 0% capital, some structura
Slide 38: Capital Allocation to Drive Growth and Returns
CAPITAL ALLOCATION TO DRIVE GROWTH AND RETURNS Free cash flow priorities: Focused organic Maintain progressive Disciplined use of investment including dividend policy surplus capital R&D to support • Targeted, growth complementary M&A from 2025 and beyond • Return excess capital to shareholders via
Slide 39: Our Medium-Term Financial Goals
OUR MEDIUM-TERM FINANCIAL GOALS Committed to excellent outcomes for shareholders % GROWTH MARGINS1 CASH ROIC GENERATION Ahead of end 12% in FY 2026 85%+ cash Mid to high market growth of conversion teens ROIC2 4-6% Strong FCF generation 1. Adjusted operating margin 2. Pre-tax return on invested capi
Slide 40: Key Takeaways
KEY TAKEAWAYS PETER FRANCE CAPITAL MARKETS EVENT © TT Electronics 40
Slide 41: TT Electronics Key Messages for Today
TT ELECTRONICS KEY MESSAGES FOR TODAY Compelling business fundamentals provide a strong platform for above market growth Clear visibility to 10% % margins in 2024 Laser focus on execution, unlocking value and improving returns Project Dynamo: Substantial self- help potential from commercial and oper
Slide 42: Product Showcase
PRODUCT SHOWCASE 1 2 3 THE PROCESS: • 3 smaller groups take 10 minutes at each of Healthcare Aerospace & Automation & these 3 stations Defence Electrification • A chance to ask questions and appreciate the application of TT engineering and manufacturing capabilities Matt Yeates Stewart Partridge CAP
Slide 43: Q&A
Q&A CAPITAL MARKETS EVENT © TT Electronics 43
Slide 44: TT Attendees Today
TT ATTENDEES TODAY Peter France Mark Hoad Michael Leahan Stewart Partridge Clare Nicholls Ian Buckley Chief Executive Officer Chief Financial Officer EVP Commercial EVP Operations EVP Human Resources Group General Counsel Kirsty Smith Matt Yeates Katelyn DeVan Kate Moy Jennifer Chase Group Tax & SVP
Slide 45: 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