Bodycote Plc · LSE:BOY
Bodycote — H1 2023 Earnings Presentation
33 slides from Bodycote's earnings presentation, Jul 27, 2023
Slide 1: Interim Results 2023
Interim Results 2023 27 July 2023 Bodycote
Slide 2: Stephen Harris, Group Chief Executive
Stephen Harris Group Chief Executive
Slide 3: Introduction
Introduction Overview Financial Review Business Review Summary Outlook 3
Slide 4: Strong first half performance, modestly ahead of expectations
Strong first half performance, modestly ahead of expectations Results Revenue up 17.2% to £420.1m (13.8% at constant currency) 8.0% underlying revenue growth1 excluding energy-related surcharges Headline operating profit 23%1 higher at £62.8m Operating margin excluding energy surcharges of 1
Slide 5: Progressing our strategic priorities
Progressing our strategic priorities Focused on Specialist Technologies, Emerging Markets, Civil Aerospace and electric vehicles In H1, we delivered good progress in our strategic focus areas: Our ongoing investments in Specialist Technologies delivered 13%1 growth with adoption and market penet
Slide 6: Surcharges and pricing update
Surcharges and pricing update Surcharges Implemented since Q1 2022 to cover the high levels of gas and electricity inflation Protects the Group from energy inflation effects, though dilutes margin Surcharge levels have reduced from their peak as energy prices have fallen Surcharges fully rec
Slide 7: Headline operating margin
Headline operating margin 19% Headline operating margin 18% excluding surcharges 16.5%, up 180 bps year-on-year 17% 16% Headline operating margin 15.0%, up 90 bps year-on-year 15% Volume growth and unwind of 14% surcharges will drive margin above 13% 20% over the medium term 12% 11% 10% H1 '19
Slide 8: Financial Review, Ben Fidler
Financial Review Ben Fidler Chief Financial Officer
Slide 9: H1 2023 results summary
H1 2023 results summary H1 H1 Growth Growth £m 2023 2022 constant currency . Revenue 420.1 358.5 13.8% 17.2% Headline operating margin 15.0% 14.1% +90 bps Headline operating profit 62.8 50.5 23% 24% Revenue excluding surcharges 380.7 342.5 8.0% 11.2% Headline operating margin excl. surcharges 16.5%
Slide 10: Revenue bridge
Revenue bridge £m 450 12 22 400 27 39 Underlying revenue 38 growth of 8.0% 350 16 Surcharges reducing but still added £22m to year-on-year 300 revenue growth 381 370 343 FX benefited H1, at current 250 rates expected to be a headwind in H2 (£15-£20m) 200 H1 2022 H1 2022 Price, Volume,volume mi
Slide 11: Headline operating profit bridge
Headline operating profit bridge £m 80 Non-recurrence of the H1 70 11.7 2022 surcharge shortfall 0.8 - - 60 5.0 (5.2) Good profit contribution from - higher underlying revenues 50 and improved efficiencies 40 Bonus and share based 30 62.0 62.8 accruals returned to more 50.5 normal levels 20
Slide 12: AGI and ADE summary
AGI and ADE summary The AGI Business Comprised of over 100 facilities focused on Automotive & General Industrial customers 5% revenue growth excluding Growth Growth surcharges led by good growth in H1 H1 constant excluding Automotive; more modest growth in £m 2023 2022 currency surcharges General
Slide 13: Cash flow
Cash flow1 £m 120 H1 2023 H1 2022 Improved free cash flow conversion of 90% (£56.2m), up from 63% (£31.8m) Headline EBITDA = £99m 100 Driven by higher profitability and Headline EBITDA = £87m improved working capital control, Maintenance 80 Depreciation & capex with lower DSO other Maintenance D
Slide 14: Uses of free cash
Uses of free cash Expansionary Ordinary dividends Acquisitions Supplemental capital expenditure distributions as appropriate Strong balance sheet provides good optionality 14
Slide 15: Business Review, Stephen Harris
Business Review Stephen Harris Group Chief Executive
Slide 16: Specialist Technologies
Specialist Technologies A selection of highly differentiated, early-stage processes with high margins, significant market opportunities, low carbon intensity and good growth prospects. Bodycote is either the clear market leader or one of the top players among a small number of competitors. 15 See fu
Slide 17: Specialist Technologies outperform
Specialist Technologies outperform YoY Growth1 14% 12% 10% 8% 6% 4% 2% 0% Specialist Technologies Classical Heat Treatment Superior organic growth in Specialist Technologies continues to be driven both by existing customers’ growth and new customer adoption Increased Sales and Marketing efforts
Slide 18: Specialist Technologies
Specialist Technologies YoY Growth1 : 16% Revenue: £130m (31% of total revenue) YoY Growth1 excl. surcharges: 13% £m Revenue1 YoY Growth1 excluding surcharges 140 20% +17% 120 15% Revenue Growth 100 80 10% +9% 60 +7% 40 5% 20 £25m £37m £68m 0 0 H1 19 H2 19 H1 20 H2 20 H1 21 H2 21 H1 22 H2 22 H1 23 A
Slide 19: Emerging Markets
Emerging Markets YoY Growth1 : 16% Revenue: £53m (13% of total revenue) YoY Growth1 excl. surcharges: 10% £m Revenue excluding surcharges by geography Revenue1 60 50 China 40 30 20 10 Eastern Europe 0 H1 19 H2 19 H1 20 H2 20 H1 21 H2 21 H1 22 H2 22 H1 23 Surcharges Mexico Growth continues to be dr
Slide 20: Aerospace & Defence
Aerospace & Defence YoY Growth1 : 15% Revenue: £105m (25% of total revenue) YoY Growth1 excl. surcharges: 9% £m Revenue excluding surcharges by geography 120 Revenue1 Rest of World 100 80 United Kingdom 60 40 20 0 North America H1 19 H2 19 H1 20 H2 20 H1 21 H2 21 H1 22 H2 22 H1 23 France Surcharges
Slide 21: Automotive
Automotive YoY Growth1 : 14% Revenue: £105m (25% of total revenue) YoY Growth1 excl. surcharges: 8% £m Revenue excluding surcharges by geography 120 Revenue1 100 Emerging 80 North America Markets 60 40 20 0 H1 19 H2 19 H1 20 H2 20 H1 21 H2 21 H1 22 H2 22 H1 23 Surcharges Strong growth in Eastern E
Slide 22: General Industrial
General Industrial YoY Growth1 : 13% Revenue: £210m (50% of total revenue) YoY Growth1 excl. surcharges: 8% £m Revenue excluding surcharges by segment Revenue1 250 Oil & Gas 200 Other IGT 150 Renewables 100 Electronics Medical 50 0 Consumer H1 19 H2 19 H1 20 H2 20 H1 21 H2 21 H1 22 H2 22 H1 23 Surch
Slide 23: Key Achievements
Key Achievements Strong first half performance, modestly ahead of expectations Energy surcharges recovered energy cost inflation Price increases successfully implemented, covering labour and other cost inflation 8% revenue growth1 achieved in H1 led by: Specialist Technologies up 13% Eme
Slide 24: Summary & Outlook
Summary & Outlook We have delivered a strong performance in the first half, which was modestly ahead of our expectations and with broad-based growth across most of our end markets. In particular, we achieved good progress in our strategic focus areas of Specialist Technologies, Emerging Markets, Civ
Slide 25: Bodycote
Bodycote
Slide 26: Specialist Technologies
Specialist Hot Isostatic Pressing (HIP) Services Improves component integrity and strength by Technologies application of extreme pressure and heat HIP PF inc. Powdermet® Additive manufacturing of often complex components A selection of highly in conjunction with HIP differentiated, early- Specialty
Slide 27: Classical Heat Treatment
Classical Heat It provides wear resistance, strength or toughness depending on the application. Surface hardness can Treatment be controlled by diffusing elements such as carbon and nitrogen into the metal during the heating stages of the process. Classical Heat Treatment is an indispensable set of
Slide 28: H1 2023 Statutory income statement
H1 2023 Statutory income statement £m H1 2023 H1 2022 Revenue 420.1 358.5 Headline operating profit 62.8 50.5 Amortisation of acquired intangible assets (4.1) (4.8) Acquisition costs - (0.7) Operating profit 58.7 45.0 Net finance charge (3.5) (3.4) Profit before taxation 55.2 41.6 Earnings per share
Slide 29: H1 2023 Cash flow
H1 2023 Cash flow 1 £m H1 2023 H1 2022 Headline operating profit 62.8 50.5 Depreciation and amortisation 37.2 36.6 Other, including impairment and profit on disposal of PPE (1.0) (0.5) Headline EBITDA 99.0 86.6 Net maintenance capital expenditure (28.4) (24.5) Net working capital movement (8.5) (18.
Slide 30: H1 2023 Sales and operating profit by currency
H1 2023 Sales and operating profit1 by currency GBP1 3% Average exchange rates: £1: €1.14 and £1: Other 17% $1.23 Every cent change in the euro is worth c.£0.3m of annual headline operating profit Every cent change in the US dollar is worth c.£0.1m of annual headline operating profit EUR 39% E
Slide 31: Financial information
Financial information H1 H1 Shares in issue 2023 2022 Weighted average 190.6m 190.7m Exchange rates H1 2023 H1 2022 EUR Average (P&L) 1.14 1.19 Closing (B/S) 1.16 1.16 USD Average (P&L) 1.23 1.30 Closing (B/S) 1.27 1.22 SEK Average (P&L) 12.96 12.42 Closing (B/S) 13.71 12.45 31
Slide 32: Net finance charge, balance sheet, taxation
Net finance charge, balance sheet, taxation Net finance charge £m H1 2023 H1 2022 Interest on loans and bank overdrafts (1.5) (0.8) Lease and other interest charges (1.4) (1.5) Finance and bank charges (1.1) (1.2) Total finance charge (4.0) (3.5) Interest received 0.5 0.1 Net finance charge (3.5) (3
Slide 33: Definitions
Definitions Term Definition Headline operating profit Operating profit before acquisition costs, exceptional items and amortisation of acquired intangibles Headline profit before tax Profit before tax, acquisition costs, exceptional items and amortisation of acquired intangibles Earnings before inte