Morgan Advanced Materials Plc · LSE:MGAM

Morgan Advanced Materials — Investor Day (April 2024)

49 slides from Morgan Advanced Materials's investor day presentation, Apr 24, 2024

1. Slide 1: Accelerating Growth – Capital Markets Update

   Capital Markets Update Accelerating Growth Morgan Advanced Materials 24 April 2024

2. Slide 2: Welcome

   © Morgan Advanced Materials 24 April 2024 2 Welcome Ian Marchant, Non-Executive Chairman Capital Markets Update 2024

3. Slide 3: Agenda

   © Morgan Advanced Materials 24 April 2024 3 Agenda 1. GROWTH, Pete Raby, CEO Richard Armitage, CFO INVESTMENT AND RETURNS 2. OUR MARKET FASTER GROWING MARKETS – CORE GROWTH – SEMICONDUCTOR OPPORTUNITY AEROSPACE, FIRE PROTECTION AND INDIA POSITIONS Wendy Pryce Lewis, Performance Carbon John Righini,

4. Slide 4: Growth, Investment and Returns

   © Morgan Advanced Materials 24 April 2024 4 Growth, Investment and Returns Pete Raby, CEO and Richard Armitage, CFO Capital Markets Update 2024

5. Slide 5: What we do

   © Morgan Advanced Materials 24 April 2024 5 What we do We are the global manufacturer of advanced carbon and ceramic materials for complex and technologically demanding applications We create value through our long-term, trusted, relationships with customers and an extensive understanding of their n

6. Slide 6: Our investment proposition is stronger

   © Morgan Advanced Materials 24 April 2024 6 Our investment proposition is stronger 1. 2. 3. 4. Organic Simplification Margin Capital growth progression allocation Our organic growth We have simplified Margins are well The balance sheet is will be towards the the Group to improve underpinned and will

7. Slide 7: High Growth Markets approaching 50% of revenue

   © Morgan Advanced Materials 24 April 2024 7 1. Organic growth Faster High Growth Growing Markets approaching Markets 50% of revenue 21% Semiconductors, 10-15% Healthcare, Clean CAGR Energy and Clean Transportation 55% 2-4% Global Industrial, Metals, Oil and 24% CAGR Aerospace, Gas, Energy 5-8% Trans

8. Slide 8: Growth accelerating in semiconductors

   © Morgan Advanced Materials 24 April 2024 8 1. Organic growth CAGR Growth accelerating 20% in semiconductors Semiconductor revenues are 50% wide band gap SiC 15% power electronics and 50% conventional processors 17% and devices 15% There are robust drivers for semiconductor demand: • The energy tran

9. Slide 9: Core growth well underpinned

   © Morgan Advanced Materials 24 April 2024 9 1. Organic growth 2023-2027 CAGR Core growth well underpinned We expect Core to grow at or above the top Aerospace, Defence, Fire 5% 8% of our guided 2-4% growth range driven by four Protection, India Core markets representing around one third of our Core

10. Slide 10: Business simplification & cost savings

    © Morgan Advanced Materials 24 April 2024 10 2. Simplification Business simplification & cost savings Commercial & operational benefits: Technical Ceramics Technical Ceramics c.10% • More efficient leadership structure, combining Seals and Bearings c.90% equivalent assets and processes Electrical Ca

11. Slide 11: Efficient capital investment driving margin and strong returns

    © Morgan Advanced Materials 24 April 2024 11 3. Margin progression Efficient capital investment driving margin and strong returns • Investment of £100m in Semiconductor 120 capacity over 3 years, incremental investment 100 at existing sites giving minimum 25% ROI 80 • Other capacity investment in Fa

12. Slide 12: Confidence in continued margin progress through target range

    © Morgan Advanced Materials 24 April 2024 12 3. Margin progression Confidence in continued margin progress through target range • Semiconductor growth adding a minimum £80m of revenue and £25m of profit Upper end of +60bps margin range • Other growth c.50% capex backed +70bps +120bps • Simplificatio

13. Slide 13: Capital allocation: M&A

    © Morgan Advanced Materials 24 April 2024 13 4. Capital allocation M&A In depth strategic analysis refining our extensive pipeline list from 187 potential targets to 6 in discussion Potential targets A disciplined approach to selection: • Component manufacturers • Access to faster growing markets 18

14. Slide 14: Capital allocation prioritises growth and returns

    © Morgan Advanced Materials 24 April 2024 14 4. Capital allocation Capital allocation prioritises growth and returns 1. Strong balance sheet Removal of pension burden creates flexibility 2. Organic investment Investment focused on growth and efficiency improvement Progressive dividend growth targeti

15. Slide 15: Upgraded financial framework

    © Morgan Advanced Materials 24 April 2024 15 Upgraded financial framework Delivering significant EPS growth Clear through-cycle financial framework Organic revenue growth 4-7% organic revenue growth (increased from 3-6%) + Continuing profit growth 12.5% to 15% adjusted operating profit margin + Accr

16. Slide 16: Our market positions and growth

    © Morgan Advanced Materials 24 April 2024 16 Our market positions and growth Capital Markets Update 2024

17. Slide 17: Semiconductor opportunity

    © Morgan Advanced Materials 24 April 2024 17 Faster Growing Markets Semiconductor opportunity Wendy Pryce Lewis, Performance Carbon Capital Markets Update 2024

18. Slide 18: Introduction

    © Morgan Advanced Materials 24 April 2024 18 Introduction Semiconductors We make highly We have driven Investing £100m to is a fast-growing technically qualifications and grow capacity, in line industry with differentiated new business over with market growth, exposure to several products to meet th

19. Slide 19: A new phase of the digital revolution accelerating growth in Semiconductors

    © Morgan Advanced Materials 24 April 2024 19 A new phase of the digital revolution accelerating growth in Semiconductors c.£4bn • Our world is becoming more digitally-enabled, Total graphite + interconnected, and ceramics market, intelligent, powered 2027 by clean electricity • Our materials are at

20. Slide 20: Two attractive growth markets for Morgan's consumable products

    © Morgan Advanced Materials 24 April 2024 20 Two attractive growth markets where Morgan’s consumable products enable production of advanced wafers and chips 1. Silicon Semiconductor 2. Wide Band Gap (WBG) Semiconductor SiC & GaN 11% • Growing macrotrends in digitisation, connectivity and Artificial

21. Slide 21: WBG power devices gaining share in growing markets

    © Morgan Advanced Materials 24 April 2024 21 WBG power devices gaining >6x 20-26% >30% WBG power CAGR in end use WBG share in share in growing device market growth in last 4 years markets, e.g. energy storage, data centres power device market end markets SiC SiC Power conversion efficiency is the Ga

22. Slide 22: Our extensive portfolio is used across the semiconductor value chain

    © Morgan Advanced Materials 24 April 2024 22 Our extensive Semiconductor technology portfolio is used SiC GaN Si across the Morgan Advanced Material G Graphite Solutions C CVD-SiC A Alumina B Brazed metal alloys P Purified source powders value chain CG Coated Graphite We make components with advance

23. Slide 23: Value we bring our customers

    © Morgan Advanced Materials 24 April 2024 23 Value we bring our customers Two examples SiC Crystal growth process Epitaxial deposition Morgan’s bespoke products bring consistency and stability Morgan’s custom machined products enable improved to improve crystal reproducibility and quality consumable

24. Slide 24: How we create value in semiconductors

    © Morgan Advanced Materials 24 April 2024 24 How we create value in semiconductors Enabling customers to improve yield Distinctive capabilities Value creation levers • From control of microstructure and purity • Diverse product offering and strong product pipeline • Reliable, consistent-in-applicati

25. Slide 25: Key takeaways – Semiconductor

    © Morgan Advanced Materials 24 April 2024 25 Key takeaways – Semiconductor • CAPEX to double capacity overall, supported by long-term supply agreements and partnerships with SiC industry leaders and research partners £100m • Our efforts advance our world from digitisation to AI and EV to green Capex

26. Slide 26: Core Growth: Aerospace

    © Morgan Advanced Materials 24 April 2024 26 Core Growth Aerospace John Righini, Technical Ceramics Capital Markets Update 2024

27. Slide 27: Aerospace is a significant and growing market opportunity

    © Morgan Advanced Materials 24 April 2024 27 Aerospace is a significant and growing market opportunity Long-term structural demand drivers in Aerospace 7.9% • We supply a wide range of highly World Economic Growth differentiated products in the aviation and space markets Market CAGR 2023-27 • We add

28. Slide 28: How we create value in Aerospace

    © Morgan Advanced Materials 24 April 2024 28 How we create value in Aerospace Our differentiated process, engineered-to-order Engage with customer to gain insight on challenges & 1. Customers bring us their toughest material challenges KPIs Monitor for Apply Material 2. We work together with them to

29. Slide 29: Replacement demand supports resilience

    © Morgan Advanced Materials 24 April 2024 29 Replacement demand supports resilience Innovative solutions generate durable returns and long-term customer relationships Demand annuity stream example Segment Aerospace Platform Civil Aircraft Engine Different generations 10+ Production years 49 Demand S

30. Slide 30: Value we bring our customers

    © Morgan Advanced Materials 24 April 2024 30 Value we bring our customers Feed throughs for temperature monitoring Brazed ceramic metal assemblies Our Aero Engine Solutions play a key role in improved engine efficiency & reliability 1. High thermal resistance for extended lifetime enables reliable m

31. Slide 31: Value we bring to our customers

    © Morgan Advanced Materials 24 April 2024 31 Value we bring to our customers Ceramic cores for casting advanced engine components Industry leading ceramics enable efficient production of leading edge designs Ceramic core 1. Enabling the manufacturing of increasingly complex core features that improv

32. Slide 32: Key takeaways – Aerospace

    © Morgan Advanced Materials 24 April 2024 32 Key takeaways – Aerospace We expect the We’re well Our technologies are Our products are aerospace market to positioned to grow integral to our consumables driving grow strongly in the with the market and customers’ product repeatable annuity next four ye

33. Slide 33: Core Growth: Fire Protection

    © Morgan Advanced Materials 24 April 2024 33 Core Growth Fire Protection Damien Caby, Thermal Products Capital Markets Update 2024

34. Slide 34: Fire Protection market is large and growing driven by urbanisation and regulation

    © Morgan Advanced Materials 24 April 2024 34 Fire Protection market is large and growing driven by urbanisation and regulation c.£1bn • There is an increasing requirement globally to protect life and critical infrastructure as population Addressable densities of urban areas continue to grow market •

35. Slide 35: Tightening regulatory environment driving growth

    © Morgan Advanced Materials 24 April 2024 35 Tightening regulatory environment driving growth ents q urem i c e re r m a n it io ns e r fo co nd t er p est Str i c e r t ro a d d b an Today External and internal fire 2021 Europe 1990 w/ hot gas extraction w/ max. deformation Ductwork test EN 1366-8

36. Slide 36: How we create value in Fire Protection

    © Morgan Advanced Materials 24 April 2024 36 How we create value in Fire Protection Solutions for safety and regulatory critical challenges in selected high growth, high demand market areas Distinctive capabilities Value creation levers • Complete portfolio underpinned by proprietary • Go-to-partner

37. Slide 37: Value we bring our customers

    © Morgan Advanced Materials 24 April 2024 37 Value we bring our customers Passive fire protection of smoke ducts • Third-party certified performance according to local building code in target geographies • Extended local ecosystems - Training of fire protection industry professionals on how to meet

38. Slide 38: Value we bring our customers

    © Morgan Advanced Materials 24 April 2024 38 Value we bring our customers Fire protection for lithium ion EV batteries • Early into the market based on our customer relationships - Ceramic paper for pack-level protection – cut to design and conditioned for fast and easy assembly - New line in China

39. Slide 39: Key takeaways – Fire Protection

    © Morgan Advanced Materials 24 April 2024 39 Key takeaways – Fire Protection Market is large and Certification to We work closely Our differentiated growing driven by stringent standards with an ecosystem materials, customer regulatory change provide high barriers in each market to positioning and t

40. Slide 40: Core Growth: India

    © Morgan Advanced Materials 24 April 2024 40 Core Growth India Damien Caby, Thermal Products Capital Markets Update 2024

41. Slide 41: Huge market opportunity in India driven by capacity and building safety investment

    © Morgan Advanced Materials 24 April 2024 41 Huge market opportunity in India driven by large investments in capacity and building safety £200m Strong growth of manufacturing and infrastructure • Significant large petrochemical capacity in construction Addressable market to be built by 2028 • Prefer

42. Slide 42: How we create value in India

    © Morgan Advanced Materials 24 April 2024 42 How we create value in India Supporting the rapid development of India’s industry and infrastructure with life and energy saving thermal solutions Distinctive capabilities Value creation levers • Complete portfolio of insulating materials used • Insulatio

43. Slide 43: Value we bring our customers

    © Morgan Advanced Materials 24 April 2024 43 Value we bring our customers Fuel consumption and safety Service Life and safety of an ethylene cracker of hot metal ladles • Challenge: Petrochemical • Challenge: Leading Indian steel operator concerned about safety maker found cracks in ladle shell and

44. Slide 44: Key takeaways – India

    © Morgan Advanced Materials 24 April 2024 44 Key takeaways – India We have a leading Our compliance We are adding We are well-placed position in a with international capacity in response to grow rapidly in growing country standards and to high demand and the coming years extensive local bringing pro

45. Slide 45: Key Takeaways

    © Morgan Advanced Materials 24 April 2024 45 Key Takeaways Pete Raby, CEO Capital Markets Update 2024

46. Slide 46: Our investment proposition is stronger

    © Morgan Advanced Materials 24 April 2024 46 Our investment proposition is stronger 1. 2. 3. 4. Organic Simplification Margin Capital growth progression allocation Our organic growth We have simplified Margins are well The balance sheet is will be towards the the Group to improve underpinned and str

47. Slide 47: Q&A

    © Morgan Advanced Materials 24 April 2024 47 Q&A Capital Markets Update 2024

48. Slide 48: Contact

    © Morgan Advanced Materials 24 April 2024 48 Contact ir@morganplc.com +44 (0)1753 837 000 morganadvancedmaterials.com Capital Markets Update 2024

49. Slide 49: Cautionary statement

    © Morgan Advanced Materials 24 April 2024 49 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. Thi

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