Slide 1: Full Year Results: 2023 – A Year of Delivery
FULL YEAR RESULTS 2023 – A Year of Delivery © TT Electronics 1
Slide 2: Agenda for Today
AGENDA FOR TODAY ▪ 2023 results - a year of strong delivery ▪ First impressions ▪ Opportunity to unlock further value ▪ Q&A FULL YEAR 2023 RESULTS © TT © TT Electronics 2 Electronics
Slide 3: Mark Hoad, CFO
MARK HOAD, CFO FULL YEAR 2023 RESULTS © TT Electronics 3
Slide 4: Delivering Against Our Priorities in 2023
DELIVERING AGAINST OUR PRIORITIES IN 2023 Priority 2023 achievements Positive FCF generation FCF of £23.9m with cash conversion of 92% Leverage reduction Down to 1.7x1, further reduction anticipated in 2024 Margin progression Ex pass-through improved to 8.9% P&C recovery Substantial profit improveme
Slide 5: Strong Financial Performance
STRONG FINANCIAL PERFORMANCE £m (except where stated) Change 2023 2022 Change constant fx Revenue 613.9 617.0 (1)% 1% ▪ Adjusted operating margin of 8.6% Operating profit* 52.8 47.1 12% 16% (8.9% ex pass-through) – up 110 Operating profit margin* 8.6% 7.6% 100bps 110bps basis points Profit before ta
Slide 6: Power & Connectivity
POWER & CONNECTIVITY ▪ FY revenue up 10% at constant currency. Adjusted Change operating profit up 83% 2023 2022 Change constant fx ▪ Benefits of growth and operational efficiency Revenue (£m) 169.7 154.2 10% 10% improvements driving 330bps margin improvement ▪ Investment in new facility for Ferrant
Slide 7: Global Manufacturing Solutions
GLOBAL MANUFACTURING SOLUTIONS ▪ Pass-through revenues starting to unwind - £10.4m Change reduction in year. Revenue down 1% organically ex pass- 2023 2022 Change constant fx through Revenue (£m) 299.2 323.0 (7)% (4)% ▪ Operating profit up 16% delivering 160 bps margin improvement through pricing an
Slide 8: Sensors and Specialist Components
SENSORS AND SPECIALIST COMPONENTS ▪ Revenue increased by 4% organically Change 2023 2022 Change constant fx ▪ 13% reduction in adjusted operating profit reflects one -off HVAC breakdown in Plano – system review Revenue (£m) 145.0 139.8 4% 4% completed ▪ Order intake normalising, distributor inventor
Slide 9: Strong Free Cash Flow Generation, Leverage Reducing
STRONG FREE CASH FLOW GENERATION LEVERAGE REDUCING ▪ Cash conversion of 92% ▪ Material step-up in free cash flow delivered ▪ Capex spend includes establishment of new Manchester (Ferranti) facility and creation of GMS capability within existing Mexicali facility ▪ Strong H2 working capital improveme
Slide 10: Business Unit Divestment: Project Albert
BUSINESS UNIT DIVESTMENT PROJECT ALBERT ▪ Exit from Cardiff & Hartlepool, UK & associated Dongguan, China facilities principally focused on industrial customers ▪ Remaining manufacturing businesses have higher quality customer base, delivering differentiated complex products, with better visibility
Slide 11: Pension Schemes Materially De-risked
PENSION SCHEMES MATERIALLY DE-RISKED ▪ Buy-in of c. £360m pension liabilities completed in November 2022 with Legal & General ▪ Scheme trustee working through final data cleanse ahead of moving to buy-out ▪ Expect to move to buyout late 2024/early 2025 then will proceed with scheme wind-up ▪ Increas
Slide 12: Financial Guidance for 2024
FINANCIAL GUIDANCE FOR 2024 Revenue Capital and development expenditure ▪ Divestment -8% inorganic ▪ Capex and devex circa £18-20m ▪ FX headwind -2% Working capital ▪ Reduction in pass-through -2% ▪ Modest working capital outflow ▪ Organic growth ex pass-through +3-4% Adjusting items cash spend Adju
Slide 13: Peter France, CEO
PETER FRANCE, CEO © TT Electronics 13
Slide 14: First Impressions: Strong Platform, Opportunity to Unlock Further Value
FIRST IMPRESSIONS STRONG PLATFORM STRUCTURAL GROWTH MARKETS DIFFERENTIATED PRODUCTS AND TECHNOLOGY ORDER BOOK VISIBILITY GLOBAL BLUE-CHIP CUSTOMERS BROAD GEOGRAPHIC FOOTPRINT AND QUALITY PEOPLE OPPORTUNITY TO UNLOCK FURTHER VALUE FULL YEAR 2023 RESULTS © TT Electronics 14
Slide 15: Opportunities to Unlock Further Value
OPPORTUNITIES TO UNLOCK FURTHER VALUE Self help Efficiency Growth Innovation measures Cost discipline and Enhanced commercial Better leveraging our improving operational focus delivering organic manufacturing and execution and sales growth across engineering expertise effectiveness verticals in iden
Slide 16: Delivering Against Our Priorities in 2023 and 2024
DELIVERING AGAINST OUR PRIORITIES IN 2023 Priority 2023 2024 Positive FCF generation ✓ Leverage reduction ✓ Margin progression ✓ P&C recovery ✓ Orderbook execution ✓ Portfolio simplification- Project Albert ✓ 1 Net debt/adjusted EBITDA FULL YEAR 2023 RESULTS © TT Electronics 16
Slide 17: Margin Improvement to 10% in 2024, Actions Already Underway
MARGIN IMPROVEMENT TO 10% IN 2024 ACTIONS ALREADY UNDERWAY 10% adjusted operating margin ▪ Pass-through materially reducing from FY23 and expected to have fully unwound during FY24 ▪ Targeting completion of divestment end of Q1 8.6% ▪ Efficiency actions already underway & HVAC issues resolved ▪ Grow
Slide 18: Positive Outlook for 2024
POSITIVE OUTLOOK FOR 2024 ▪ Mindful of wider macro environment but TT is well-aligned with global megatrends, driving demand from high-growth markets ▪ Strength and level of visibility in our order book underpin our confidence for the FY ▪ Operational improvement initiatives are underway ▪ On track
Slide 19: Thank You
THANK YOU FULL YEAR 2023 RESULTS © TT Electronics 19
Slide 20: Building a Sustainable Business
BUILDING A SUSTAINABLE BUSINESS CLEANER SMARTER HEALTHIER TT developed a custom, high- Ultra lightweight, high TT developed physically smaller voltage optoisolator for a solar voltage DC-DC converters current sensors with improved environmental performance and panel inverter system for use on electr
Slide 21: The TT Electronics Business
THE TT ELECTRONICS BUSINESS Revenue (2023) Underlying operating profit (2023) Revenue by market (2023) Revenue by geography (2023) Power & Connectivity 28% Power & Connectivity 27% Healthcare 24% UK 23% Global Manufacturing Solutions 49% Global Manufacturing Solutions 52% Aerospace & Defence 20% Res
Slide 22: 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 (%) Healthcare 15% Healthcare 1% Healthcare 40% Automation & Automation & Electrification 32% Electrificat
Slide 23: Summary Income Statement
SUMMARY INCOME STATEMENT £m 2023 2022 Revenue 613.9 617.0 Adjusted operating profit 52.8 47.1 Net finance cost (9.8) (6.7) Adjusted profit before taxation 43.0 40.4 Adjusting items (44.1) (50.5) Profit before taxation (1.1) (10.1) Taxation (5.7) (3.1) Profit after taxation (6.8) (13.2) FULL YEAR 202
Slide 24: 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) 2023 169.7 299.2 145.0 - 613.9 2022 at 2023 rates 153.8 312.1 139.8 - 605.7 FX impact (0.4) (10.9) - - (11.3) 2022 as
Slide 25: Income Statement – Adjusting Items
INCOME STATEMENT – ADJUSTING ITEMS £m 2023 2022 Operating profit 8.7 (3.4) Adjusted to exclude: Restructuring and other items Restructuring 2.0 6.4 INCOME STATEMENT – ADJ USTING ITEMS Pension restructuring costs 1.9 2.0 Pension enhanced value transfer - 11.8 Other costs 0.2 - Asset impairments Goodw
Slide 26: Cash Conversion
CASH CONVERSION £m 2023 2022 Adjusted operating profit 52.8 47.1 Depreciation and amortisation 16.5 16.1 Net capital expenditure (22.4) (11.7) Capitalised development expenditure (1.6) (2.3) Working capital (0.5) (38.8) Other 4.0 5.3 Operating cash flow after capex 48.8 15.7 Operating profit 52.8 47
Slide 27: Leverage Calculation
LEVERAGE CALCULATION £m 2023 2022 Adjusted operating profit 52.8 47.1 Depreciation and amortisation 16.5 16.1 Adjustment for IFRS 16 (5.3) (5.1) Covenant EBITDA 64.0 58.1 Net debt excluding leases (105.4) (115.3) FX 0.4 0.1 Other committed funds (1.6) - Covenant Net Debt (106.6) (115.2) Leverage 1.7
Slide 28: Movement in Net Debt
MOVEMENT IN NET DEBT £m 2023 2022 Operating cash flow after capex 48.8 15.7 Net interest and tax (19.7) (13.4) Lease liability repayments (4.4) (4.3) Acquisition, restructuring and disposal related costs (4.0) (11.1) Pensions 3.2 - Free cash flow 23.9 (13.1) Dividends (11.3) (10.2) Acquisitions and
Slide 29: 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