Bodycote Plc · LSE:BOY
Bodycote — FY2017 Earnings Presentation
32 slides from Bodycote's earnings presentation, Mar 6, 2018
Slide 1: 2017 Full Year Results
Slide 2: Introduction
Introduction Stephen Harris Group Chief Executive 2
Slide 3: Agenda
Agenda Highlights Financial review Business review Summary and Outlook 3
Slide 4: Highlights
Highlights Results Highlights 14.9% growth in revenue (9.6% constant currency) 24% growth in Headline Operating Profit Return on sales improved to 18.0% (2016:16.6%) Free cash flow of £83m Business Development Classical Heat Treatment - Operational improvements continued - Further investme
Slide 5: Financial review
Financial review Dominique Yates Chief Financial Officer 5
Slide 6: 2017 Results summary
2017 Results summary Constant Actual £m 2017 2016 currency growth growth rates Revenue 690.2 600.6 9.6% 14.9% Headline operating profit 123.9 99.6 18% 24% Headline operating margin 18.0% 16.6% Headline profit before tax 121.5 97.0 19% 25% Headline tax rate 22.9% 27.5% Net cash 39.6 1.1 Headline EPS
Slide 7: Headline operating profit bridge
Headline operating profit bridge £m 3.0 -8.4 2.4 6.3 123.9 19.8 117.6 99.6 1.2 2 2016 Price minus Sales volume New facilities Acquisitions Share-based 2017 Foreign 2017 cost increases and mix 1 in 2016 payments 3 Constant exchange currency 1 Includes central costs 2 New facilities 2014 - 2017 7 3 Ad
Slide 8: Divisional summary: ADE
Divisional summary ADE Constant Actual £m 2017 2016 currency growth growth rates Revenue 273.1 250.9 4.7% 8.8% Headline operating profit 64.2 55.6 11% 15% Headline operating margin 23.5% 22.2% Revenue growth accelerated from 2.1%1 in H1 to 7.2%1 in H2 - North American onshore oil & gas market reco
Slide 9: Divisional summary: AGI
Divisional summary AGI Constant Actual £m 2017 2016 currency growth growth rates Revenue 417.1 349.7 13.1% 19.3% Headline operating profit 74.2 58.5 20% 27% Headline operating margin 17.8% 16.7% Acquisitions made in 2016 contributed 5.0%1 to revenue growth The five acquired sites have been integ
Slide 10: 2017 Sales and operating profit by currency
2017 Sales and operating profit by currency Headline Revenue operating Operating profit translation benefit of £6m profit 120% GBP1 Average full year exchange rates 100% 8% £1: €1.15, and £1: $1.30 Other 80% Other 19% Every cent change in the Euro is worth 19% c.£0.5m of annual operating profi
Slide 11: Cash flow
Cash flow £m 2017 2016 200 Headline EBITDA = £191m Headline EBITDA = £156m 180 160 Depreciation Capex 140 Depreciation Capex 120 Tax, Interest & 100 Working Other Restructuring Tax, Interest & Capital 80 Other Headline Restructuring 60 Operating Headline Profit £83m Operating 40 free Profit £61m cas
Slide 12: Taxation and balance sheet
Taxation and balance sheet Taxation Headline tax rate 22.9% (2016: 27.5%), benefiting from impact on 2017 from announced lower US tax rates Impact of US tax changes on Group tax result for 2018 subject to implementation guidance from the US Treasury and IRS; tax rate should be no greater than pr
Slide 13: Capital allocation priorities
Capital allocation priorities 1 2 Investment for growth 3 Enhancing ordinary dividends 4 Acquisitions Supplemental distributions 13 as appropriate
Slide 14: 2014 - 2017 capital allocation
2014 - 2017 capital allocation £m £164m invested to support 580 future business growth 509 -131 480 £225m cash returned to 378 -125 shareholders since 2014 380 280 -39 -120 180 -105 80 -11 -20 Free cash flow Maintenance Free cash flow Expansionary Acquisitions Ordinary Special dividend Decrease in n
Slide 15: Business review
Business review Stephen Harris Group Chief Executive 15
Slide 16: Aerospace & defence
Aerospace & defence Revenue: £161m Constant currency growth: 2.3% Revenue, £m At constant currency 180 160 140 120 100 80 60 40 20 0 2014 2015 2016 2017 Civil aviation revenues up 5.6%1 - Continued strong growth in UK, new facilities required in 2018 - North American revenues picking up Defence
Slide 17: Energy
Energy Revenue: £56m Constant currency growth: 4.4% Revenue, £m At constant currency 60 50 40 30 20 10 0 H1 H2 H1 H2 H1 H2 H1 H2 2014 2014 2015 2015 2016 2016 2017 2017 Significant sequential recovery in onshore North America oil & gas Subsea revenues down, but RFQs increasing Large frame IGT
Slide 18: Automotive
Automotive Revenue: £205m Constant currency growth: 14.1% Revenue, £m At constant currency 250 200 150 100 50 0 2014 2015 2016 2017 Car & light truck revenues up 14.2%1 - 2016 acquisitions contributed 3.9%1 to revenue growth in 2017 - Investments in LPC technology contributed strongly Heavy truc
Slide 19: General industrial
General industrial Revenue: £268m Constant currency growth: 10.4% Revenue, £m At constant currency 300 250 200 150 100 50 0 2014 2015 2016 2017 Broad-based growth across all geographies Good contribution from S3P 2016 acquisitions contributed 4.3%1 to revenue growth Underlying business still
Slide 20: Classical Heat Treatment
Classical Heat Treatment A group of mature processes which are essential for treating all metal components. These tightly controlled processes condition the material properties including both the core properties and the surface characteristics. Annealing Carburising Hardening & tempering Nitriding M
Slide 21: Specialist Technologies
Specialist Technologies A set of differentiated processes giving customers the ability to produce unique high value adding products. HIP Services S3P (Specialty Stainless Steel Processes) HIP Product Fabrication (incl. Powdermet®) Low Pressure Carburising Surface Technology CiD (Corr-i-Dur®) Bodycot
Slide 22: Specialist Technologies
Specialist Technologies Constant Actual £m 2017 2016 currency growth growth rates Revenue 157.6 143.9 4.5% 9.5% Double-digit revenue growth across our S3P, LPC and CiD technologies Overall growth was held back by: - Impact of oil & gas on HIP PF and Surface Technology - HIP Services unplanned ou
Slide 23: New facilities since 2014
New facilities since 2014 Revenue, £m At constant currency 40 Investment of £37m across 35 these 10 newly built facilities 30 Typically revenues build over a 25 3 to 5 year period 20 15 10 5 0 2014 2015 2016 2017 2014: 3 sites 2015: +1 site (4 sites in total) 2016: +4 sites (8 sites in total) 20
Slide 24: Summary and Outlook
Summary and Outlook 2017 has once again demonstrated the quality of Bodycote’s business. Strong growth was achieved through contributions from contract wins on automotive and aerospace programmes, excellent growth in Emerging Markets (where our investments are yielding good returns), and broad-based
Slide 25: Appendix
Slide 26: Specialist Technologies
Specialist Technologies HIP Services Improves component integrity and strength by application of extreme pressure & heat Powdermet® Additive manufacturing of often complex components in conjunction with HIP Specialty Stainless Improves the strength, hardness and wear resistance of stainless St
Slide 27: Definitions
Definitions Term Definition Headline Operating Profit Operating profit before exceptional costs and amortisation of acquired intangibles Headline Profit Before Tax Profit before tax, exceptional costs and amortisation of acquired intangibles Headline Operating Cash Flow Cash generated by operations,
Slide 28: 2017 Statutory income statement
2017 Statutory income statement £m 2017 2016 Revenue 690.2 600.6 Headline operating profit 123.9 99.6 Amortisation of acquired intangible fixed assets (4.5) (4.5) Acquisition costs - (0.6) Operating profit 119.4 94.5 Net finance costs (2.4) (2.6) Profit before tax 117.0 91.9 Headline earnings per sh
Slide 29: 2017 Cash flow
2017 Cash flow £m 2017 2016 Headline operating profit 123.9 99.6 Add back: Depreciation and amortisation 59.8 55.2 Impairment of fixed assets 0.4 5.1 Share-based payments 7.8 0.5 Profit on disposal of fixed assets (0.7) (4.5) Net capex to depreciation Headline EBITDA 191.2 155.9 ratio 1.3 times Net
Slide 30: Net finance charge/facilities
Net finance charge/facilities £m 2017 2016 Net interest payable - 0.2 Financing and bank charges 2.0 2.1 Pension finance charge 0.4 0.3 Net finance charge 2.4 2.6 Committed facility headroom of £230m at 31 December 2017, £nil drawn The remaining life of the facility is 4.3 years Closing net ca
Slide 31: Financial information
Financial information Shares in issue 2017 2016 Weighted average 190.3m 190.2m Exchange rates 2017 2016 EUR Average (P&L) 1.15 1.23 Closing (B/S) 1.13 1.17 USD Average (P&L) 1.30 1.35 Closing (B/S) 1.35 1.24 SEK Average (P&L) 11.04 11.59 Closing (B/S) 11.07 11.23 Analysis by currency, 2017 Operating
Slide 32: Divisional summary – 2017 H1 v H2
Divisional summary – 2017 H1 v H2 Total ADE Divisions H1 H2 ADE Revenue 136.1 137.0 273.1 Headline operating profit 30.7 33.5 64.2 Margin 22.6% 24.5% 23.5% Total AGI Divisions H1 H2 AGI Revenue 209.6 207.5 417.1 Headline operating profit 36.9 37.3 74.2 Margin 17.6% 18.0% 17.8% 32