Slide 1: 2019 Full Year Results
2019 FULL YEAR RESULTS Full Year Results 2019
Slide 2: Agenda
AGENDA Introduction David Squires CEO 2019 Full Year Results Bindi Foyle FD Markets, Strategy & Outlook David Squires CEO Full Year Results 2019
Slide 3: 2019 Highlights
2019 HIGHLIGHTS • Robust full year results despite 737 MAX challenges • Good progress with technology investments: additive, electrification • Focus on cost, efficiency and cash generation: restructuring ongoing • Portfolio review continues – Prune To Grow: disposal of three businesses – Exploring s
Slide 4: Environmental, Social & Governance
ENVIRONMENTAL, SOCIAL & GOVERNANCE Safety and Ethics, our highest priority Committed to A- leadership rating increasing levels of gender diversity and inclusivity across the company Carbon intensity reduced 33% in last 61% reduction in five years LTIIR in last five years Science-based targets set in
Slide 5: Cautionary Statement
2019 FULL YEAR RESULTS Cautionary Statement This document contains certain forward-looking statements. Such statements have been made in good faith based on information available at the time of announcing the results for the year ended 31 December 2019. These statements should therefore be treated w
Slide 6: Financial Highlights
FINANCIAL HIGHLIGHTS 2019 2018 Change constant currency Revenue £1,110.7m £1,082.1m +3% -1% (+1% ex. disposals) Adjusted Operating Profit £89.4m £91.6m -2% -6% Adjusted Operating Margin 8.0% 8.5% -50bps -50bps Adjusted Profit before Tax £78.5m £83.0m -5% Adjusted Earnings per Share 16.17p 16.08p +1%
Slide 7: 2019 at a Glance
2019 AT A GLANCE £m Aerospace(1) 1,200 Revenue 46.6 (53.5) 2019 2018 Change £m £m 1,150 34.8 1,110.7 Revenue 835.4 788.8 +5.9% 0.7 1,100 Adj OP(2) 76.4 83.7 -8.7% 1,082.1 Margin 9.1% 10.6% -150bps $1.28 (18: 1.34) 1,050 • Civil £34.7m • Military £19.1m 1,000 • Other £(5.4)m • Disposal £(1.8)
Slide 8: Adjusted and Reported Profit
ADJUSTED AND REPORTED PROFIT 2019 2018 £m £m Change Adjusted operating profit 89.4 91.6 -2% (-6% on constant currency basis) Net finance costs – borrowings, cash (8.1) (8.8) – IFRS 16 (3.5) - – retirement benefits 0.7 0.2 Adjusted profit before tax 78.5 83.0 -5% (-9% on constant currency basis) Tax
Slide 9: Restructuring
RESTRUCTURING ▪ Total adjusted charge c.£23m (2019 ▪ Aligning headcount to match £12m; 2020 £11m) capacity to sales demand profile ▪ Cash cost c.£15m (2019 £3m; 2020 ▪ Further efficiency improvements £12m) resulting in overhead cost reductions ▪ Savings of £4m delivered in 2019, mainly related to lo
Slide 10: Cash Flow and Use of Funds
CASH FLOW AND USE OF FUNDS £m Gross capex £(64.8)m 160 Disposal proceeds £0.7m 150 3.4 (64.1) 54.6 Gross capex of £64.8m includes: 140 £36.7m – USA, including Fluid Systems Metal Bellows facility expansion & additive technology investment £10.2m – Malaysia Aerospace capacity expansion, A320neo 130 £
Slide 11: Balance Sheet
BALANCE SHEET Dec Dec 2019 2018 FX Impact from Dec 2018 £m £m £m Goodwill and other intangible assets 310.0 339.6 Non current assets (17.8) Investment in JV 3.3 3.0 Working capital (4.1) Net debt 7.3 Property, plant and equipment (1) 369.3 285.6 Other long-term assets 2.2 2.9 Non current assets (bef
Slide 12: 2019 Financial Summary
2019 FINANCIAL SUMMARY Delivered strong cash performance in 2019; financial position of the Group remains robust Organic Revenue Growth Return on Revenue Margin (OP%) +1% (ex. disposals) 8.0% (-50 bps) Return on Capital Increases from cost management Employed and operational efficiencies offset by A
Slide 13: Markets, Strategy & Outlook
MARKETS, STRATEGY & OUTLOOK Full Year Results 2019
Slide 14: Our Markets
OUR MARKETS 25% Flexonics Division Aerospace Division 75% (30%) Power & Energy 14% (70%) (14%) Land Vehicles 11% (16%) 56% Civil Aerospace (52%) Other Aerospace 6% (7%) Military Aerospace 13% (11%) End markets composition based on 2019 revenue % in brackets are 2018 comparatives Full Year Results 20
Slide 15: 737 MAX
737 MAX Boeing states Boeing states assumption of assumption of Spirit announces regulatory approval regulatory approval to Boeing recommends agreement with Boeing to return to service in return to service in Q4 simulator training in to deliver 216 MAX Senior issues early Q4 2019 with 2019 with grad
Slide 16: Civil Aerospace Transition
CIVIL AEROSPACE TRANSITION Aircraft Deliveries/Production (number) Group sales 6%(1) compared to 2018 2,200 2,000 2019 was the peak transition year 1,800 Increased production of the A320neo, 767, 787, A350, A330neo, A220 and E190 /195-E2 and 1,600 Bombardier Global 7500 1,400 Decline in buil
Slide 17: Civil Aerospace (56% of Group)
CIVIL AEROSPACE (56% of Group) Airframe Var. in avg.(1) Shipset Value ($k) Deliveries x Avg.(1) Shipset Value ($m) shipset value Avg.(1) shipset 2019 Order 6/19 to 12/19 0 200 400 600 800 1000 value deliveries book 0 30 60 90 120 150 ($k) ($k) (number) 737 MAX 267 57 4,545 Production 737 MAX -83 A32
Slide 18: Military and Defence (13% of Group)
MILITARY AND DEFENCE (13% of Group) (1) Airframe Var. in avg. Avg. (1) shipset value Shipset Value ($k) 2019 Deliveries x Avg. Shipset Value ($m) shipset 6/19 to 12/19 deliveries 0 200 400 600 800 1000 1200 value ($k) 0 5 10 15 20 25 30 35 40 ($k) (number) 250 134 - F-35 (JSF) F-35 (JSF) C-130J 1,09
Slide 19: Land Vehicles (11% of Group)
LAND VEHICLES (11% of Group) North American Truck and Off-Highway (6% of Group) EU & ROW Truck and Off-Highway (2% of Group) North American Class 8 Truck Production Forecast (Thousands) 400 6% Group EU & ROW sales 12%(1) over 2018 9% 27% 350 21% 20% • Softening of truck and off-highway markets in
Slide 20: Power & Energy (14% of Group)
POWER & ENERGY (14% of Group) Units $ Oil Price and Rig Count 4000 90 3500 80 Group 2019 sales compared to 2018(1) 3000 70 2500 60 Oil & Gas (6% of Group): 2000 50 Sales 6% (£4.1m) 40 1500 30 Upstream – lower demand in N. Am. fracking market 1000 20 Downstream - increased repair and overhaul activ
Slide 21: Strategic Priorities
STRATEGIC PRIORITIES Focus on Growth Strategic Priorities Outgrow our end markets by: Growing market share, particularly with key customers Autonomous and Collaborative Business Model Focusing on innovation Focus on Growth Geographical expansion Rigorous Seeking out and exploiting adjacent o
Slide 22: Technology Developments
TECHNOLOGY DEVELOPMENTS Additive Manufacturing Electric vehicles RT2iTM • Established Advanced Additive • Series production of 70kW • RT2iTM is our composite Manufacturing Centre battery cooler commences 2020 thermoplastic aerospace ducting • Collaboration across Senior • Imminent source selection f
Slide 23: Portfolio Update
PORTFOLIO UPDATE The Group’s Prune To Grow activities in 2019 included the disposal of three more non-core businesses: • In February 2019, the Group sold its French Flexonics land vehicle business, Senior Flexonics Blois SAS (“Blois”). Blois’ main end market was European passenger vehicles • In Sept
Slide 24: Group Outlook
GROUP OUTLOOK The Board’s current expectations for 2020: • Aerospace – revenue in 2020 to be around 20% below 2019 level – weighted more to H2 than normal because of 737 MAX situation • Flexonics – revenue is expected to be lower in 2020 compared to 2019 due to cyclical end markets • Margins – impac
Slide 25: Any Questions?
ANY QUESTIONS? Full Year Results 2019
Slide 26: Appendices
APPENDICES Full Year Results 2019
Slide 27: Group Evolution
GROUP EVOLUTION Revenue (£m) Adjusted Operating Profit (£m) Adjusted Operating Margin (%) 1200 120 18 16 Total after central costs 1000 100 Total after central costs 14 800 80 12 600 60 10 8 400 40 6 200 20 4 2 0 0 0 2015 2016 2017 2018 2019 2015 2016 2017 2018 2019 2015 2016 2017 2018 2019 Aerospac
Slide 28: Trade Considerations
TRADE CONSIDERATIONS 2019 split Sales Adj. OP Employees Senior is an international manufacturing Group with 30 N. America 63% 64% 3,333 operating businesses in 13 countries UK 15% 12% 1,487 Within Europe, Senior has 11 operations across 5 Rest of Europe 10% 12% 950 countries, including the UK Re
Slide 29: IFRS 16 Leases – From 1 January 2019
IFRS 16 LEASES – FROM 1 JANUARY 2019 Opening Balance Sheet Adjustments at 1 January 2019: Right of Use Assets £96.7m Lease Liabilities/ Net Debt £96.3m Net Balance Sheet Impact Nil Working Capital and Other £0.4m Balance Sheet at 31 December 2019: Right of Use Assets £82.3m Lease Lia
Slide 30: Currency Effect
CURRENCY EFFECT Translation Impact on FULL YEAR FY 2018(1) (£m) Avg. FY Avg. FY 2018 Exchange Rates to GBP 2019(1) Revenue Adj. PBT(2) 1.34 US $ 1.28 29.8 2.8 1.13 Euro € 1.14 (1.0) (0.1) 17.50 South African Rand 18.53 (0.6) - 43.21 Thai Baht 39.76 6.0 1.0 4.85 Brazilian Real 5.06 (0.3) - 1.73 Canad
Slide 31: Earnings Per Share and Dividends
EARNINGS PER SHARE AND DIVIDENDS 2019 2018 Change Average number of shares Basic 415.0m 417.8m -2.8m Fully diluted 416.8m 423.5m -6.7m Adjusted earnings per share (1) Basic 16.17p 16.08p +0.6% Fully diluted 16.10p 15.87p +1.4% 2019 2018 Dividends (pence per share) (2) Interim 2.28p 2.19p +4.1% Final
Slide 32: Change in Net Debt
CHANGE IN NET DEBT 2019 2018 £m £m Free cash flow (page 10) 58.3 45.3 Dividends (31.2) (29.6) Proceeds on disposal of businesses net of costs and cash disposed (8.2) - Restructuring (2.9) - Loan repayment by JV - 0.5 Purchase of shares by employee benefit trust (6.3) (7.2) Net cash inflow 9.7 9.0 Ex
Slide 33: Gross Capital Expenditure
GROSS CAPITAL EXPENDITURE 2019 2018 Capex Depn (1) Capex Depn (1) £m £m £m £m Aerospace 51.2 39.5 43.3 29.0 Flexonics 13.5 14.5 12.8 12.3 Holding Companies 0.1 0.6 0.2 0.2 Total 64.8 54.6 56.3 41.5 (1) Depreciation of £42.3m (2018: £39.5m), IFRS 16 depreciation £10.2m (2018: £nil) and amortisation o
Slide 34: Usage of Credit Facilities – December 2019
USAGE OF CREDIT FACILITIES – December 2019 Usage by Currency Interest Facility Usage £ $ € Other % £m £m US Private placements: $30.0m (Sep 2028) 4.18% 22.6 22.6 - 22.6 - - €28.0m (Feb 2027) 1.51% 23.7 23.7 - - 23.7 - $60.0m (Oct 2025) 3.75% 45.2 45.2 - 45.2 - - £27.0m (Jan 2025) 2.35% 27.0 27.0 27.
Slide 35: Maturity Profile of Credit Facilities
MATURITY PROFILE OF CREDIT FACILITIES In February 2019 the Group refinanced its main UK RCF of £80m by increasing the committed facilities to £120m and extending the maturity to February 2024 Net Debt:EBITDA = 1.1x 340 320 300 Oct- £15m Net debt (excluding leases) 280 Jun - £37m Dec 19 - £146m 2
Slide 36: Covenants at Frozen GAAP
COVENANTS at FROZEN GAAP(1) Dec 2019 Jun 2019 Dec 2018 Jun 2018 Net debt - restated at average exchange rates £150.3m £171.4m £147.8m £146.6m Net interest - rolling 12 months £8.0m £8.4m £8.8m £9.0m EBITDA - rolling 12 months £135.3m(2) £138.1m(3) £133.7m £127.6m(4) Interest cover (to exceed 3.5 tim
Slide 37: Pensions
PENSIONS 2019 2018 UK USA Various IAS 19 Retirement Benefit Funded Funded Unfunded Total Total £m £m £m £m £m Scheme assets 309.6 47.3 0.8 357.7 368.7 Scheme liabilities (278.7) (52.5) (8.0) (339.2) (364.0) Scheme asset/(deficit) at opening 30.9 (5.2) (7.2) 18.5 4.7 Current service cost - (0.3) (0.5
Slide 38: Our Business Model
OUR BUSINESS MODEL Our purpose is to provide safe and innovative products for demanding thermal management and fluid conveyance applications Long-Term Sustainable What We Do How We Do It Value Design and manufacture of highly Create value for all our engineered, technology rich Our Values Our Streng
Slide 39: Strategic Priorities
STRATEGIC PRIORITIES Autonomous and Autonomous and Considered and High Performance Competitive Cost High Performance Collaborative Business Focus on Growth Collaborative Business Focus on Capital Effective Growth Talent Development Operating System Country Strategy Operating System Model Model Deplo
Slide 40: Acquisition Framework
ACQUISITION FRAMEWORK More Likely Less Likely Fluid Systems Structures New Markets Division Flexonics Large Commercial Rotorcraft Reg Jet Biz Jet VLJ Market Defence Energy Truck/ Off Highway Automotive General Industrial Medical Semi-conductor Equipment Aero Ducting Control Bellows Precision Machini
Slide 41: Senior's Locations
SENIOR’S LOCATIONS UK Rickmansworth H.O Massachusetts Crumlin Metal Bellows Lymington Canada BWT SF Canada Bird Bellows 2019 split Sales Adj. OP Thermal Wisconsin Weston EU N. America 63% 64% GA UK 15% 12% Germany Washington SF GmbH Rest of Europe 10% 12% AMT Czech Republic Rest of World 12% 12% Dam
Slide 42: Senior's Products – 2019
SENIOR’S PRODUCTS – 2019 25% Flexonics Division Other machined parts 5% (5%) Aerospace Division 75% 21% Engine structures (30%) (18%) and mountings (70%) Industrial flexible parts 9% (9%) Off-highway hydraulics (LV) 1% (3%) Fuel distribution (LV) 1% (3%) Exhaust flexes (LV) 3% (3%) Emission control
Slide 43: Senior's Customers – 2019
SENIOR’S CUSTOMERS – 2019 25% Flexonics Division Other 12% (12%) 11% Boeing (11%) Aerospace Division 75% (30%) (70%) Schlumberger 2% (2%) all 1% of Group or less Other Land Vehicle 6% 10% Spirit (9%) (10%) all 1% of Caterpillar 2% Group or less (3%) Cummins 3% (4%) 9% Rolls Royce (10%) all 1% of Gro
Slide 44: Technology Theme One: Fluid Conveyance
TECHNOLOGY THEME ONE: FLUID CONVEYANCE Aircraft Low Pressure Ducting High Pressure Ducting Aerospace Control Products Non-Aerospace Control Products Gas Turbine Engines Complex Ducts, Tubes & Pipes Bellows Seals & Controls Aerospace Controlling the flow of fluids within systems Extending the technol
Slide 45: Technology Theme Two: Structures
TECHNOLOGY THEME TWO: STRUCTURES Airframe Structures & Assemblies Airframe Structures Airframe Assemblies Helicopter Transmission Structures Hard & Soft Metal Machined Parts Engine Structures & Mountings Nacelle Rings Engine Casings Aerospace Aerofoils Precision Machined Components and Assemblies La
Slide 46: Aerospace Division
AEROSPACE DIVISION Full Year Results 2019
Slide 47: Aerospace Division: A Summary
AEROSPACE DIVISION: A SUMMARY 2019 2018(1) Change 18 Operations Revenue £835.4m £788.8m +5.9% NAFTA 9 Europe 3 Adjusted Operating Profit (2) £76.4m £83.7m -8.7% UK 4 Adjusted Operating Margin(2) 9.1% 10.6% -150bps ROW 2 Markets Customers Other 8% Boeing 15% Other 27% Military/ Defence Aerospace 18%
Slide 48: Civil Aerospace (56% of Group)
CIVIL AEROSPACE (56% of Group) Demand for new civil aircraft robust: short term softness in widebody demand Boeing, Airbus and independent forecasters predicting air traffic to grow > 4% p.a. over the next 20 years In 2038, Emerging countries will make approx. 0.95 trips per capita (up from 0.
Slide 49: Military Aerospace (13% of Group)
MILITARY AEROSPACE (13% of Group) Global defence spending expected to growth at 3% CAGR 2019-2023 and to exceed $2 trillion in 2023(1) The US continues to spend more on defence than the next 7 countries combined Senior is well placed with good content on F-35, CH-53K and T-X Trainer (1) Source
Slide 50: Flexonics Division
FLEXONICS DIVISION Full Year Results 2019
Slide 51: Flexonics Division: A Summary
FLEXONICS DIVISION: A SUMMARY 2019 2018(1) Change 11 Operations & JV NAFTA 4 Revenue £275.8m £329.3m -16.2% Europe 2 Adjusted Operating Profit(2) £26.1m £26.7m -2.2% UK 2 ROW 3 Adjusted Operating Margin(2) 9.5% 8.1% +140bps China JV 1 Markets Customers Other 17% Cummins 14% Truck & Off Highway 34% O
Slide 52: Land Vehicles (11% of Group)
LAND VEHICLES (11% of Group) Commercial vehicles grew at 4% p.a. and passenger vehicles grow at 2% p.a. through the cycle Growth in GDP and tighter emissions regulations increase demand for Senior’s land vehicle products Senior is addressing the changing landscape with innovative products Worl
Slide 53: Power & Energy (14% of Group)
POWER & ENERGY (14% of Group) Projected increases in global energy usage, tightening emission control regulations and emerging changes in power generation will drive increased demand for Senior’s power & energy products Senior supplies into oil and gas and power generation, including nuclear and
Slide 54: Index
INDEX Presentation Appendices 2019 highlights 3 Group evolution 27 Environmental, social & governance 4 Trade considerations 28 Financial highlights 6 IFRS 16 leases 29 2019 at a glance 7 Currency effect 30 Adjusted and reported profit 8 Earnings per share and dividends 31 Restructuring 9 Change in