Slide 1: TT Electronics Half Year 2020 Results
We solve electronic challenges for a sustainable world TT Electronics Half Year 2020 Results 6 August 2020 © TT Electronics 1
Slide 2: Resilient performance and well positioned
Resilient performance and well positioned Richard Tyson, CEO © TT Electronics 2
Slide 3: Resilient H1 performance and good medium-term prospects
Resilient H1 performance and good medium-term prospects • Strategic actions resulted in TT entering pandemic well placed • Market impact and customer requirements becoming clearer • Revenue improving and order visibility stabilised • Managing costs and preserving cash • Progressing with expanded sel
Slide 4: A decisive response to COVID – protected employees and mitigated business impacts
A decisive response to COVID – protected employees and mitigated business impacts Employees and communities the priority Effective operational & customer performance • Work-place controls, flexible rotas, WFH • Early experiences in China – applied • Shielded employees supported lessons worldwide • L
Slide 5: Business in good shape
Business in good shape • Revenue expected to improve with order visibility stabilised and capacity improving • Cost reductions and self-help programme - savings start in H2 • GMS in good shape; P&C recovery in defence and medical markets; S&SC to perform in line with economic activity, improvement t
Slide 6: Market dynamics in H1 2020
Market dynamics in H1 2020 % H1 20 Market revenue • Original Equipment Manufacturers making significant production Aerospace 22% cuts – H2 the new production floor and defence • Defence budgets and spending protected through crisis with spending in important US market still increasing • Strong deman
Slide 7: Sustainability continues to be the major long-term driver of market growth
Sustainability continues to be the major long-term driver of market growth …. Our Purpose: We solve electronics challenges for a sustainable world Our sustainability commitments: Cleaner Smarter Improved wellbeing Example applications: • Aircraft electrification • Factory automation and • Laboratory
Slide 8: … with potential for acceleration of longer-term market trends
… with potential for acceleration of longer-term market trends % H1 20 Market revenue • Gradual recovery in commercial production over several years Aerospace 22% • Defence budgets linked to geo-political events; spending and defence expected to remain strong for next few years • Electronics, reduce
Slide 9: Improving the quality of TT
Improving the quality of TT • Positive long term market drivers intact Organicrevenue Organic revenue • R&D investment: delivers future revenue from new products drop-through drop-through • Investment in business development and customer cross-selling • Significant 2020 self-help programme Lower cos
Slide 10: Financial review
Financial review Mark Hoad, CFO © TT Electronics 10
Slide 11: Group financial performance
Group financial performance • Organic revenue 14% lower – actions to HY 2020 HY 2019 Change Change mitigate profit and margin impact £m (except where stated) constant fx Revenue 210.0 238.2 (12)% (12) % • Operational leverage limited to 26% Operating profit* 11.4 19.2 (41)% (41)% • Effective tax rat
Slide 12: A decisive response to COVID – mitigated profit impact and retained financial flexibility
A decisive response to COVID – mitigated profit impact and retained financial flexibility Implemented significant cost reductions Additional strong controls over cash • Discretionary spend stopped • Capex limited to essential spend • Hiring freeze and travel ban • Focus on working capital management
Slide 13: Power and Connectivity
Power and Connectivity Change HY 2020 HY 2019 Change constant fx Revenue by market (%) Revenue (£m) 60.0 67.6 (11)% (12)% Aerospace and Other 14% defence 43% Underlying operating profit (£m) 4.4 7.2 (39)% (40)% Underlying operating margin 7.3% 10.7% (340)bps (340)bps Industrial 31% Medical 12% • Org
Slide 14: Global Manufacturing Solutions
Global Manufacturing Solutions Change HY 2020 HY 2019 Change constant fx Revenue by market (%) Revenue (£m) 95.5 106.5 (10)% (10)% Aerospace and Other 6% defence 14% Underlying operating profit (£m) 6.5 8.0 (19)% (18)% Underlying operating margin 6.8% 7.5% (70)bps (60)bps Industrial 38% Medical 42%
Slide 15: Sensors and Specialist Components
Sensors and Specialist Components Change HY 2020 HY 2019 Change constant fx Revenue by market (%) Revenue (£m) 54.5 64.1 (15)% (16)% Aerospace and Other 11% defence 13% Underlying operating profit (£m) 3.8 7.5 (49)% (51)% Underlying operating margin 7.0% 11.7% (470)bps (480)bps Industrial 70% Medica
Slide 16: Free cash flow and net debt
Free cash flow and net debt £m 0 Net debt/EBITDA gearing ratio 1.6x (20) 61% operating cash conversion (40) 20.1 (60) (9.4) (4.5) (69.1) (4.7) (3.0) (1.8) (80) (1.9) Free cash outflow £5.2m (14.6) (0.1) (89.0) (100) Opening net EBITDA Net working Net capex & Restructuring Net interest Lease Pensions
Slide 17: Expanded self-help programme now underway for further efficiency improvements
Expanded self-help programme now underway for further efficiency improvements • Three primary facility closures – £m 2020 2021 2022 Total Lutterworth, Barbados, Corpus Christi Cash cost • Additional headcount reductions - Restructuring 5 5 1 11 Barnstaple, Cardiff, Hartlepool, Kuantan Capex 3 4 - 7
Slide 18: Summary
Summary Richard Tyson, CEO © TT Electronics 18
Slide 19: Summary
Summary • Good H1 execution and resilient performance • Expanded self-help programme underway • Recent acquisitions performing well and improving pipeline of opportunities • Robust balance sheet • Trading stabilised and H2 improvement expected but pandemic evolution uncertain, leading to range of fu
Slide 20: Appendix
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Slide 21: Appendix: Accounting estimates for FY 2020
Appendix: Accounting estimates for FY 2020 Restructuring and acquisition costs cash spend Pension • £5m on newly announced efficiency programme • UK deficit contributions £5.3m, increasing £0.2m p.a. • £2m on pensions and completion of 2019 self-help M&A actions • Covina acquisition $18.7m (£14.2m)
Slide 22: Appendix: Summary income statement
Appendix: Summary income statement Continuing operations (£m) HY 2020 HY 2019 Revenue 210.0 238.2 Underlying operating profit 11.4 19.2 Underlying net finance cost` (1.9) (1.8) Underlying profit before taxation 9.5 17.4 Adjusting items (14.3) (12.3) (Loss)/Profit before taxation (4.8) 5.1 Taxation 0
Slide 23: Appendix: Summary of revenue and operating profit by Division - impact of FX
Appendix: Summary of revenue and operating profit by Division - impact of FX Global Sensors and Power and Manufacturing Specialist Revenue (£m) Connectivity Solutions Components Corporate Group HY 2020 60.0 95.5 54.5 - 210.0 HY 2019 at 2020 rates 68.0 106.1 65.1 - 239.2 FX impact 0.4 (0.4) 1.0 - 1.0
Slide 24: Appendix: Income statement – adjusting items
Appendix: Income statement – adjusting items £m HY 2020 HY 2019 Restructuring and other items Restructuring (11.4) (7.8) Pension and past service charge - (0.4) (11.4) (8.2) Acquisition related costs Release of warranty and claims provision relating to Transportation 1.0 - business divestment Amorti
Slide 25: Appendix: The TT Electronics business
Appendix: The TT Electronics business Revenue (HY 20) Underlying operating profit (HY 20) Power and Connectivity 29% Power and Connectivity 39% Global Manufacturing Solutions 45% Global Manufacturing Solutions 57% Sensors and Specialist Components 26% Sensors and Specialist Components 33% Central co
Slide 26: Appendix: Cash conversion
Appendix: Cash conversion Cash conversion (£m) HY 2020 HY 2019 Underlying operating profit 11.4 19.2 Depreciation and amortisation 8.7 9.0 Net capital expenditure (3.0) (7.4) Capitalised development expenditure (1.5) (1.9) Working capital (9.4) (15.1) Other 0.8 1.6 Operating cash flow after capex. 7
Slide 27: Appendix: Movement in net debt
Appendix: Movement in net debt £m HY 2020 HY 2019 Operating cash flow after capex. 7.0 5.4 Net interest and tax (3.0) (3.4) Lease liability repayments (1.8) (2.0) Exceptional items (4.7) (3.2) Pensions (2.7) (6.0) Free cash flow (5.2) (9.2) Dividends - (7.4) Acquisitions and disposals (14.6) (2.3) O
Slide 28: Appendix: Capital allocation priorities
Appendix: Capital allocation priorities • Our objective is to maintain a strong financial position and provide flexibility for growth 1. Maximise organic investment including R&D to support growth 2. Maintain our progressive dividend policy Free cash flow priorities 3. Continue to support our strate
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