TT Electronics plc · LSE:TTG
TT Electronics — Investor Day (April 2012)
86 slides from TT Electronics's investor day presentation, April 2012
Slide 1: Capital Markets Day
Capital Markets Day April 2012
Slide 2: Introduction
Introduction ¢ Focused electronics group * Providing innovative solutions for growth markets ¢ Deep customer relationships and a global footprint * Strong committed team ¢ Roadmap in place to deliver margin targets April 2012: Capital Markets Day ©2012 TT electronics ple 1
Slide 3: Group structure — focus on performance critical electronics
Group structure — focus on performance critical electronics Shared customers Similar markets Related technologies Joint facilities Components, Sensors and IMS accounted for 86% of Group revenue in 2011 April 2012: Capital Markets Day ©2012 TT electronicsplc 2
Slide 4: Group revenue and margin mix 2009-2011
446 556 591 23% 6% 34% 6% 11% 12% 8% 2009 2010 2011 2% 1.4% 4.5% 5.8% 8% 17% 12% 19% 42% 2009 2010 2011
Slide 5: Reported sales by geography and customer destination
TT reported sales Mix of sales by by geography customer destination**
Slide 6: Vision and business model
Vision and business model Drivers To be the preferred and most trusted provider of performance | critical technology solutions to | world leading manufacturers, | embedding innovation in \ everything we do. \ Strategy Execution April 2012: Capital Markets Day ©2012 TTelectronicsple 5
Slide 7: Drivers
Drivers Demand in target markets driven by common factors Performance Regulation Growth and prosperity * Sophisticated products incorporating more complex electronic systems * Requirements for greater functionality, efficiency and power * New technology being rapidly adopted and deployed * Emissions
Slide 8: Strategy
Strategy Clear strategy to create va ue for all stakeholders Focus Innovation Globalisation * Higher growth markets * Partnering with leading manufacturers * Delivering high value critical technology solutions for challenging applications * Positioned to support our customers worldwide April 2012: C
Slide 9: Execution
ig lectronics Execution In 9g higher growth customer through mark intimacy innovation emerging markets * Successful execution of the strategy requires different skills and culture * Leaders recruited with international experience who are comfortable working in teams across functions and geographies
Slide 10: Summary of major investments
Summary of major investments Costs Benefits Components closure of Boone (USA) with transfer of production to Mexico * Exceptional £5.5m (2011/12) * Operating £0.8m (2011/12) * Capex £1.9m (2011/12) * £2.5m p.a. from 2013 * Proceeds from property sale * Establish low cost centre in Americas Component
Slide 11: Portfolio management
• • • 2011 Portfolio Volume Productivity 2014 management
Slide 12: Evolution of the Group
Evolution of the Group Organisation structure Portfolio focus Target markets Operating Profit margin % 2008 2011 2014 Many individual business with a wide range of products and markets Four divisions with clear strategies and global organisational structures Global electronics group April 2012: Capi
Slide 13: Acquisitions
Acquisitions Group well positioned to accelerate growth through acquisitions * Strong management in place * Existing businesses integrated; global functions in place with capacity to integrate targets and realise value Clear focus Components and Sensors * Markets: Transportation, industrial, energy,
Slide 14: TT electronicsple
April 2012: Capital Markets Day ©2012 TT electronicsple 13
Slide 15: Components Division
Components Division Billal Hammoud
Slide 16: Components revenue and margin mix
191 235 243 37% 29% 8% 22% 4% 2009 2010 2011 3.1% 4.6% 6.1% 1% 1% 18% 15% 26% 39% 2009 2010 2011
Slide 17: 2011 performance compared to peers
2011 performance compared to peers Revenue & growt h @ £243m 2011 EBIT People + Transformation plan = * Sales excellence @ Yageo @ Fairchild Koa @ Vishay * Operational excellence * Portfolio leadership €13% £322m > EBIT growth Strong performance, profitable space April 2012: Capital Markets Day ©201
Slide 18: Organisation strength
Organisation strength Billal Hammoud Chief Executive Gareth Mycock Bob Taber 7 VP/GM Passive Comp. VP/GM Opto & Variable $l Harvey Preston VP/GM Connectors David Winter VP Sales ii Mant o) —< Forming a best in class team through promotion and recruitment April 2012: Capital Markets Day ©2012 TT elec
Slide 19: Components business model
Components business model Core technology IRopto — Thick film — Thin film Powersemi Intelligence =Wirewound _ Interconnect rf P? %& @ Il @ a 4 2% *, ery, @ Key drivers Application focus Key drivers * Performance Power management * Performance * Regulation Signal conditioning * Regulation . Detection
Slide 20: Clear application focus
Circuit protection Detection Safety & equipment reliability Signal conditioning management Supporting electrification Ensuring functionality Clear application focus April 2012: Capital Markets Day ©2012 TT electronicsple 19°
Slide 21: ... in focus industries
... in focus industries Power management 42% of sales Signal conditioning 26% of sales Detection 20% of sales Circuit protection 12% of sales Supporting electrification * Enables shift from mechanical to electrical systems * Allows efficient power conversion Ensuring functionality * System performan
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Slide 23: Customer specific projects
industry industry Customer specific projects April 2012: Capital Markets Day Lack of efficiency - each project requires engineering investment Minimal leverage created — scale — cross vertical Customer specific view prevents holistic understanding of customer needs ©2012 TTelectronicsple 22
Slide 24: New product introduction — new approach
New product introduction — new approach Transport- ation April 2012: Capital Markets Day Work with leading customers in each industry * Understanding customer needs and willingness to pay * Projects maximize R&D efficiency * Leverage created — scale — cross vertical Next generation platforms ©2012 T
Slide 25: New product example: intelligent optical switch
New product example Intelligent optical switch Start of production: 2013 | ' Typical Applications Opportunity description * Focus areas: Medical diagnostics/patient monitoring, Industrial controls, Energy smart meters * Size: ~£500m available market * Differentiation: Lower power, smaller form facto
Slide 26: New product example: signal conditioning resistor
New product example Signal conditioning resistor Start of production: 2013 ag Opportunity description Typical Applications * Focus areas: Medical diagnostics/patient monitoring, Industrial controls, Transportation electrical systems, Energy oil and gas * Size: ~£125m available market * Differentiati
Slide 27: Channel alignment
Channel alignment Distribution accounts * Rep / distribution * 1,000s of customers * Average annual revenue in £10,000s * 10% of distribution revenue goes to key accounts who leverage distribution as a fulfillment channel April 2012: Capital Markets Day Global reach, optimal cost to serve Key accoun
Slide 28: New business opportunities (NBO's)
New business opportunities (NBO’s) Millions of Pounds 400 5 350 5 300 5 250 1________284 4 1 2011 revenue 200 5 150 - 100 - 50 ~ 0 T 2010 2011 Ratio of NBO / sales Europe 25 5 20 + 15 4 10 4 05 4 0.0 4 2010 2011 Americas 25 5 20 15 5 1.0 4 05 4 0.0 + 2010 2011 Asia 25 4 20 4 15 4 1.0 4 05 4 0.0 4 20
Slide 29: Portfolio management
• • • • • • 2011 Portfolio Volume Productivity 2014 management
Slide 30: TT electronicsple
April 2012: Capital Markets Day ©2012 TT electronicsple 29
Slide 31: IMS Division
Tf electronics IMS Division John Molloy
Slide 32: IMS revenue and margin mix
75 92 100 3% 2% 9% 25% 49% 12% 2009 2010 2011 3.2% 4.4% 5.1% 19% 39% 35% 7% 2009 2010 2011
Slide 33: Contract manufacturing and IMS target markets
• • Total Contract IMS division Manufacturing (CM) target markets
Slide 34: • • • 2007 2008 2009 2010 2011 2012 2013 2014 2015
• • • 2007 2008 2009 2010 2011 2012 2013 2014 2015
Slide 35: Market segment and IMS division positioning
Market segment and IMS division positioning Low mix / high volume High mix / low volume Consumer, PC's, servers, handsets Medical, aerospace, defence, industrial | EEE Oey > * Standard service model agreements * Product life cycles up to 20 years * Dedicated factories or lines * Regional and global
Slide 36: Value proposition
Value proposition Diverse technology Industry approvals Global operations, End to end product First class production | | Flexible solutions to and certifications manufacturing, sales, | | lifecycle support technology and test | meet our customers’ across all sites and support from design to capabili
Slide 37: Quality, global footprint, product lifecycle and agility
Qualit . - Complete product Diverse Juality Global foo! it - Agility y Qualit Global footprin — ay Agility Accreditations Aerospace & defence —» NADCAP (China) * First among peers to secure some of the toughest industry specific standards — IRIS (rail) * SC21 Bronze Award — NADCAP (aerospace) * AS.
Slide 38: Global footprint
Global footprint Global manufacturing and supply chain team Global brand and sales structure IMS division facilities * Regional services / global benefits * Supporting multiple end global markets * Regional aftermarket support @ Existing @ Future - Eastern Europe Supporting customers as they transit
Slide 39: Complete product lifecycle
Complete product lifecycle suaity |] Globalfotpr Product lifecycle Concept Design \) New product \ Production )) End Of life )) pervice & // introduction // / // repair Unique services Collaborative design Product life management — techno anufacturing of pro Global service and repair centres Engagem
Slide 40: Complete product lifecycle: product life management
Complete product lifecycle os Souainon Product life management — technology r Component obsolescence major market challenge * Specifically for LVHM long lifecycle customers * Aerospace, defence, medical and industrial * ROHS and other regulatory requirements Enhanced visibility into end of life (EOL
Slide 41: Diverse technology capability
Diverse technology capability Technology to support long life cycle products * Legacy PTH technology * Leading edge SMT packages Technology prc Best in class capabilities April 2012: Capital Markets Day ©2012 TTelectronicsple 40
Slide 42: What TT customers say
‘Tf :electronics What TT customers say: * Ability to provide end to end solutions * Flexibility, meeting customer's product requirements ¢ The combination of locally supported relationship with a global footprint April 2012: Capital Markets Day Agility col Nour Utstode. ludégrated.” ©2012 TT electro
Slide 43: Medical - market overview
Medical - market overview Medical market by segment Medical market by supplier Billions of Pounds AGRO Billions of Pounds CAGR% 50 - (2010-15) | sq | (2010-15) Total 8% Total 8% 40 - 40 + Diagnostics 9% b05 OEM 4% 30 - 30 . 20 - 20 ~ 24.0 Therapeutic 6% 10 + _ 10 4 Outsourced — y 50g Monitoring 6% t
Slide 44: Medical - IMS progress in market
Medical - IMS progress in market Progress * Developed strong position in attractive medical segments: analytics, imaging, sterilization, radiosurgical, laboratory equipment * Achieved sales growth of ¢.25% in 2011 Key win with major medical customer * Helped major player in temperature storage syste
Slide 45: Aerospace and defence - market overview
Aerospace and defence - market overview Aerospace & defence market by segment Billions of Pounds CAGR% 2010-1 50 - (2010-15) Total 6% 40 | Flight 7% navigation 30 - Weapons 6% Inflight 9% entertainment 20 - c3* 8% 10 - Other 0, transportation 3% 0 2010 2015 Aerospace & defence market by supplier Bil
Slide 46: Aerospace and defence — IMS progress in market
Aerospace and defence — IMS progress in market Progress * Continuing to build strong position in attractive segments: — sensing technologies — training systems — communications — datalinks * Achieved aerospace and defence sales growth of c.6% in 2011 April 2012: Capital Markets Day u Key win with ma
Slide 47: Portfolio management
• • • • 2011 Portfolio Volume Productivity 2014 management
Slide 48: TTelectronicsplc
April 2012: Capital Markets Day ©2012 TTelectronicsplc 47
Slide 49: Sensors Division
Sensors Division Pat Murray
Slide 50: Our value
LTT ielectronics Our value We provide innovative electronic sensor solutions, for critical applications, in environmentally challenging applications for the transportation and industrial markets Our products will work first time and every time and can be supplied anywhere in the world & HE af Succes
Slide 51: Sensors revenue and margin mix
105 144 167 3% 16% 81% 2009 2010 2011 2.7% 5.3% 3% 5% 88% 1% 3% (3.7)% 2009 2010 2011
Slide 52: Global leaders
Global leaders Pat Murray Divisional Chief Executive Michael Finger Thomas Rinschede Frank Jassner VP Global VP Global VP Global Ops. hea Sales & Marketing Os R&D & China Mant o) SS Reinhold Luke John Sawford VP Global VP Global Strategic = —-—— Quality Pgrms & Americas Strong leaders with a global
Slide 53: Product portfolio
Product portfolio Speed sensor Temperature sensor Pressure sensor 4 , 2 << y nN J ry * Motor management * Liquids: coolant and fuel * Liquids: coolant and fuel * Gear wheels ° Air, exhaust gas ° Air, exhaust gas Accelerator pedal Position sensor Dashboard controls * Floor mounted, hanging * Chassis,
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Slide 55: Strategy for growth: summary
Strategy for growth: summary Leverage our automotive experience to develop the next generation sensor solutions for selected Transportation and Industrial applications These markets are adopting automotive standards and best practices Automotive experience * Generates new technology and volume * Pro
Slide 56: Our markets: transportation
electronics Our markets: transportation Powertrain Drivers TT proposition Target Applications * Emissions *Our products are smaller, higher *£640m opportunity standards/legislation performance and more reliable *6% growth rate *Fuel economy — «They work first time every time and are environmental de
Slide 57: Our markets: industrial
Our markets: industrial Engines Drivers TT proposition Sensors Target Applications * Emissions/legislation *Proven automotive technology, adapted ‘ ; *£117m opportunity for application; fast time to market *Power/size, efficiency *8% growth rate *We have economies of scale and application knowledge,
Slide 58: Innovation
Innovation: Helping our customers compete and improving our margins Some key examples of our implementation
Slide 59: Passenger car: gear detection
Passenger car: gear detection Audi () Vorsprung durch Technik Challenge from Audi Existing solutions * Detect the neutral position and each gear * Existing solutions in the market are either: position independently, used for: —external solutions that lack precision ~rear light function —solutions wi
Slide 60: Passenger car: gear detection
lectronics Passenger car: gear detection wt OP) Our response and solution audi CY Vorsprung durch Technik \ One sensor measures linear x, linear y and rotational change ... New algorithm embedded in aTT custom ASIC in partnership with Melexis ... giving a unique signal that identifies each gear posi
Slide 61: Passenger car: gear detection
Passenger car: gear detection Our response * A compact (44mm) sensor with integrated software and precision electronics fitted to the Audi engine * Based on new tri-axis hall technology * New algorithm, embedded in a custom ASIC supported by our partner Melexis * Unique solution with proprietary IP
Slide 62: Truck market: exhaust gas systems
Truck market: exhaust gas systems Market opportunity Sensors in exhaust gas systems * Truck emissions legislation (EURO 6 and US Tier 4) is driving adoption of EGR * Represents a £250m SAM for Sensors division, growing at 9% p.a. * Opportunities for wide range of temperature, pressure and quality se
Slide 63: Truck market: exhaust gas systems
Truck market: exhaust gas systems => 7 Challenge from DAF Existing solutions * Customer trying to measure exhaust gas temperatures accurately at temp of 750°C * Existing suppliers have issues with short life * Customer needs fast response and accurate measurement * Consultation highlights that if th
Slide 64: Truck market: exhaust gas systems
Truck market: exhaust gas systems =» JAN SSS SS Our response Temperature sensor for truck EGR system Range: from -40°C to 900°C Response: <5 seconds @ 235°C step change Accuracy: < 1% between 180°C and 500°C Design: one piece housing integral connector Temperature sensor based Truck exhaust with on
Slide 65: Globalisation
Globalisation: * Working beside our existing customers in emerging regions ¢ Using this reference to gain new local customers * Improving our margins
Slide 66: Our global reach
Our global reach Centres of excellence in Europe SS] LA“ = SS Ei * Full R&D and manufacturing solutions * Werne and Klingenberg, Germany —position sensors —speed sensors —pressure sensors —temperature sensors -electronic pedals * Cambridge, UK —new technology development Werne Klingenberg Germany Ge
Slide 67: Original plan
Original plan Phase 1 Basic low cost manufacturing to support European customers Phase 2 Win transplant business for German OEM facilities in China and from local OEMs hase 3 Commence volume manufacture o local transportation OEM business April 2012: Capital Markets Day ©2012 TT electronicsple 66
Slide 68: China: strategy and milestones
China: strategy and milestones — = ; Milestones ahead of plan - a Phase 1 | 2010 y * All UK production transferred to China * Global structure and strategy in place Phase 2 2011 * Key leaders move to China * Nominated for first VW China project * Local wins with JAC, Chery and Geely 2012 * Daimler M
Slide 69: Chinese OEM customer relationships
OEM OEM Units Units (k) (k) Share Share OEM Units (k) Share SAIC-GM 1,092 9.1% Foton 670 15.5% SAIC-VW 1,032 8.6% Dongfeng 638 14.7% BIAC HY 748 6.2% FAW 394 9.1% FAW-VW 708 5.9% JAC 255 5.9% Chery 709 5.9% Brilliance 229 5.3% Dongfeng Nissan 703 5.9% Sino-truck 219 5.1% FAW Toyota 517 4.3% Changan
Slide 70: Productivity: Total Business Excellence
Productivity: Total Business Excellence ¢ New way for our business to continuously improve ¢ Uses 6 Sigma and Lean tools * Operational Excellence, People Excellence, Commercial Excellence and Innovation Excellence * Standardise on key processes globally ¢ Eliminate waste * Improve our margins * Beth
Slide 71: Operational excellence
Operational excellence Savings from five black belt projects Monitoring phase projects (5) * Optimisation PQ 35 pedal Reduction COPQ HTF Optimisation printing room Audi gear detection COPQ avoidance € thousands 1,000 5 DMAIC 750 + 500 ME Monthly 250 4 0 4 em Accumulated March11 Junel1 9 Sept11 = Dec
Slide 72: Portfolio management
• • • • • 2011 Portfolio Volume Productivity 2015 management
Slide 73: TT electronicsple
April 2012: Capital Markets Day ©2012 TT electronicsple 72
Slide 74: Summary
: electronics Summary * Focused on providing critical technology to markets with strong fundamental growth drivers * Investing to improve the Group's competitive position: talent; product innovation; geographic footprint; customers * Execution focus provides confidence that we will meet the Group ma
Slide 75: Vision and business model
Vision and business model Drivers To be the preferred and most trusted provider of performance | critical technology solutions to | world leading manufacturers, | embedding innovation in \ everything we do. \ Strategy Execution April 2012: Capital Markets Day ©2012 TT electronicsple 74
Slide 76: Back up material
Back up material * Group * Components April 2012: Capital Markets Day ©2012 TTelectronicsple 75
Slide 77: Markets (1 of 3)
Markets (1 of 3) Transportation Drivers Underlying market TT addressable market" Industrial * Rising incomes and economic growth, particularly in emerging regions * Improvements in performance, efficiency and safety required by regulators and consumers Drivers * Global vehicle production is forecast
Slide 78: Markets (2 of 3)
Markets (2 of 3) Energy Drivers Underlying market TT addressable market" 4 Medical * Increasing consumption * Drive for greener generation and more efficient distribution and utilisation Drivers + Solar PV installations are forecast to grow by 14% p.a. between 2011 and 2016 globally! * By 2020, LED
Slide 79: Markets (3 of 3)
Markets (3 of 3) Defence Drivers Underlying market TT addressable market* a * Reduction in defence spending overall * Focus on smaller, more agile forces supported by technology Aerospace Drivers * US Military spending on UAV's forecast to grow 12% p.a. with the US planning on increasing the number
Slide 80: Back up material
Back up material * Group * Components April 2012: Capital Markets Day ©2012 TTelectronicsple 79
Slide 81: Application focus
Application focus Power management Detection * Emissions controls * Electronic power steering m ° Electronic systems * Medical equipment controls 4 * Energy recovery * Industrial input monitoring TT offering TT offering * Power modules and Discrete Semiconductors * Integrated solutions: Thermal mana
Slide 82: Focus industry - aerospace
Focus industry - aerospace Aerospace Growth drivers Aero Engine Controls * Increasing use of electronics to reduce weight, increase control and improve efficiency. * Avionics and associated systems forecast to grow 10%p.a. from $916M to $1.3B between 2010 and 2017 for TTe components* Key areas of fo
Slide 83: Focus industry - medical
Focus industry - medical Medical Growth drivers Mindray * Need for faster, lower power, higher precision and more intelligent electronic components. * Diagnostics, patient monitoring, therapy forecasted to grow 9% p.a. from $1.2B to $2.2B between 2010 and 2017 for TTe components * Key areas of focus
Slide 84: Core technology
“electronics Core technology Power management Signal conditioning Detection Circuit protection Infrared optical technology Software systems Connectors and backshells IR opto * Reflective and emissive switches * Packaged solutions with conditioning Thick film * Precision resistors and inductors * Net
Slide 85: Organisational strength — second level leadership
Organisational strength — second level leadership Proportion of new employees by function 60% 50% 7 40% A A 0, 30% ik 20% - 7 A 10% 0% 1 1 1 HR Product Marketing Engineering Operations Sales Application management engineering Forming a best in class team through promotion and recruitment April 2012:
Slide 86: New facilities
New facilities Romania Mexicali expansion Mexicali new building April 2012: Capital Markets Day 2012 Trelectronicsple 85