Bodycote Plc · LSE:BOY
Bodycote — FY2006 Earnings Presentation
27 slides from Bodycote's earnings presentation, March 2007
Slide 1: 2006 Preliminary Results
2006 PRELIMINARY RESULTS Bodycote
Slide 2: Highlights
Highlights z Revenue £559m +19% z Headline Operating Profit (1) £80m +18% z ROCE (1) 10.8% +9% z Testing Sales Growth £58m +67% z 17 bolt - on Acquisitions (Forecast 2007 Sales) £94m z Outsourcing - 149 new arrangements +£8m 1 pre impairment of goodwill, amortisation/impairment of acquired intangibl
Slide 3: Preliminary Results
Preliminary Results e 2006 2005 Change £m £m % Revenue 558.6 470.9 +19 EBITDA (1) 125.1 109.1 +15 Headline Operating Profit (1) 79.7 67.8 +18 Headline Profit before Tax (2) 70.0 58.8 +19 Headline EPS (3) 17.3p 14.6p +18 Dividend/Share 7.0p 6.4p +9 1 pre impairment of goodwill, amortisation/impairmen
Slide 4: Profit Bridge – Heat Treatment
Profit Bridge – Heat Treatment In £m + 4.1 + 0.8 - 4.0 + 10.1 - 3.0 - 2.7 + 0.2 50.3 44.8 Sales Other cost OP 2005 Selling price Acquisitions Pay rises Energy Other OP 2006 volumes increases Operating 2006 Profit is Preliminary stated pre impairment of goodwill, amortisation/impairment of acquired i
Slide 5: Profit Bridge - HIP
Profit Bridge - HIP In £m + 2.7 - 0.4 12.8 - 0.2 - 0.1 + 0.2 - 0.1 + 1.2 9.5 Sales Other cost OP 2005 Selling price Pay rises Energy Other Currency OP 2006 volumes increases Operating 2006 Profit is Preliminary stated pre impairment of goodwill, amortisation/impairment of acquired intangibles, inter
Slide 6: Profit Bridge - Testing
Profit Bridge - Testing In £m + 6.1 -0.9 - 1.1 21.3 - 1.0 - 0.2 + 1.7 + 0.4 16.3 Sales Other cost OP 2005 Selling price Acquisitions Pay rises Infractucture Other OP 2006 volumes increases Operating 2006 Profit is Preliminary stated pre impairment of goodwill, amortisation/impairment of acquired int
Slide 7: Sales and Operating Profit - By Region
Sales and Operating Profit - By Region 2005 2006 EMEA Americas Asia Pacific £m Sales £m £m £m £m 349.2 Heat Treatment 375.0 255.9 119.1 0.0 35.2 Hot Isostatic Pressing 38.9 16.9 22.0 384.4 Thermal Processing 413.9 272.8 141.1 0.0 Testing METM * 100.7 64.7 34.8 1.2 Testing HSE ** 44.0 19.3 24.7 86.5
Slide 8: YoY Change in sales / 2006 operating margins
YoY Change in sales / 2006 operating margins YoY Change in sales TOTAL % Organic% EMEA % Organic% Americas % Organic% Asia Pacific % Heat Treatment 7 5 8 5 6 3 Hot Isostatic Pressing 11 11 9 9 12 12 Thermal Processing 8 5 8 6 6 5 Testing METM 57 8 62 8 44 7 0 Testing HSE 96 5 57 5 145 6 Testing 67 7
Slide 9: Sales By Market
Sales By Market 2006 2005 % % Sector Automotive - Cars & Light Truck 20 21 - Heavy Truck & Bus 5 6 Aerospace/Defence 20 19 Construction, Agricultural, Railways & Marine 16 16 Tooling 8 9 Health Science & Environmental 8 7 Oil & Gas 7 7 Power Generation 5 5 Consumer Products 5 3 Electronics & Telecom
Slide 10: Profit Reconciliation
Profit Reconciliation 2006 2005 Change £m £m % Headline Profit before Tax (1) 70.0 58.8 +19 Goodwill/Intangibles/Impairment/Amortn. (7.0) (6.0) +17 Ionbond Impairment (8.3) - Major facilities closure costs (5.0) - USPP make whole (3.1) - Profit before Tax 46.6 52.8 -12 Tax (2.7) (11.9) -77 Profit af
Slide 11: Summary Cash Flow and Financial Ratios
Summary Cash Flow and Financial Ratios 2006 2005 £m £m EBITDA1 125.1 109.1 Non-cash movements 1.5 (2.0) Working Capital Movement (9.0) (3.0) Net CAPEX (55.4) (44.1) Interest (12.8) (9.5) Tax (8.4) (8.3) Free Cash Flow 41.0 42.1 Net Debt/EBITDA 1.3x 1.0x Interest cover 7.0x 9.1x Gearing 36% 25% Free
Slide 12: Balance Sheet
Balance Sheet 2006 2005 £m £m Goodwill 201.9 154.2 Tangible and Intangible Fixed Assets 458.8 446.6 Investments 1.2 9.2 Trading Working Capital 40.7 29.2 Other Net Assets (87.8) (97.1) Net Assets before Borrowings 614.8 542.1 Shareholders' Funds 449.5 432.1 Minority Interests 4.4 1.4 Net Borrowings
Slide 13: Heat Treatment
Heat Treatment Revenue (₤m) 380 375.0 • Energy cost increases recovered 360 349.2 340 • Leveraging customer base 319.4 320.9 328.7 320 300 • Outsourcing 280 2002 2003 2004 2005 2006 • Technology roll-out Operating Profit (₤m) 55 50.3 50 • Manufacturing growth markets 44.8 45 38.6 38.8 40 • ROCE impr
Slide 14: Hot Isostatic Pressing
Hot Isostatic Pressing Revenue (₤m) 40 38.9 • Volume growth/operational gearing 35.2 35 32.1 • Densal continues to grow 30 28.5 27.6 • Additional capacity being added 25 2002 2003 2004 2005 2006 Operating Profit (₤m) • ROCE > 20% 14 12.8 12 10 9.5 • Aerospace/Power Generation 8 7.1 demand robust 6 4
Slide 15: Testing
Testing Revenue (₤m) 144.7 140 • Revenue now at £170m annualised 120 100 86.5 • Margin 15% 80 65.6 61.2 56.6 60 40 • Integrating acquisitions 20 0 • ROCE remains strong, 20% 2002 2003 2004 2005 2006 Operating Profit (₤m) • Organic growth 25 21.3 20 16.3 • Outsourcing wins 15 12.4 10.9 11.4 10 • Acqu
Slide 16: Strategy
Strategy • Increase importance of Testing • Expand the Group into developing manufacturing geographies • Intensify outsourcing initiatives 2006 Preliminary results 16 16 2006 Preliminary results
Slide 17: Strategy Implementation
Strategy Implementation • Deliver ROCE in MID-TEENS % • Thermal Processing and Testing Strategic Business Units to be equivalent size within five years • Network presence in EMEA, Americas and Asia Pacific to be balanced • Grow sales c.15% pa - ORGANIC - OUTSOURCING - ACQUISITIONS 2006 Preliminary r
Slide 18: Current Trading and Prospects
Current Trading and Prospects • 07 started marginally ahead of expectations and significantly ahead of year 2006 - Europe strong, Americas steady • Aerospace, power generation, oil, gas & health sciences markets continue to grow • Automotive gaining share • Energy costs moderating • Outsourcing init
Slide 19: Appendix
2006 PRELIMINARY RESULTS Appendix
Slide 20: Operational Locations
Operational Locations Heat Treatment HIP Testing Total USA 39 4 16 59 France 31 1 0 32 UK 19 3 38 60 Germany 17 1 1 19 Sweden 12 1 11 24 Brazil 7 0 0 7 Czech Republic 6 0 1 7 Poland 6 0 0 6 Turkey 6 0 0 6 Netherlands 5 0 2 7 Finland 5 0 2 7 Italy 4 0 2 6 Austria 3 0 0 3 Canada 2 0 20 22 Switzerland
Slide 21: Analysis Of Organic/Acquisition Growth
Analysis Of Organic/Acquisition Growth HT HIP Testing Head Office Total Sales £m £m £m £m £m 2005 349.2 35.2 86.5 470.9 Organic 16.3 4.0 5.7 26.0 Acquisition 10.6 51.0 61.6 Currency (1.1) (0.3) 1.5 0.1 2006 375.0 38.9 144.7 558.6 Operating Profit (1) 2005 44.8 9.5 16.3 (2.8) 67.8 Organic 4.7 3.4 (1.
Slide 22: Profit Bridge – Group
Profit Bridge – Group In £m + 6.8 - 5.5 - 3.2 + 7.2 - 3.9 - 1.0 - 1.0 - 0.5 79.7 + 13.0 + 0.1 - 0.1 67.8 Sales Other cost OP 2005 Selling price Acquisitions Pay rises Energy Infractucture BIP Asia Mngt Other Currency OP 2006 volumes increases Operating 2006 Profit is Preliminary stated pre impairmen
Slide 23: Profit Bridge – Head Office
Profit Bridge – Head Office In £m OP 2005 BIP Asia Mngt Acquisitions Pay rises Other OP 2006 - 2.8 - 1.0 - 0.5 - 0.1 - 0.2 - 0.1 - 4.7 Operating 2006 Profit is Preliminary stated pre impairment of goodwill, amortisation/impairment of acquired intangibles, interest and tax on associates, major facili
Slide 24: Acquisitions, Capital Expenditure & Depreciation
Acquisitions, Capital Expenditure & Depreciation 86 £ million Acquisitions Capital Expenditure Depreciation 54 55 46 44 45 43 44 41 38 34 32 10 10 3 2002 2003 2004 2005 2006 2006 Preliminary results Capex/Dep 1.3x 0.8x 0.8x 1.1x 1.2x 24 24 2006 Preliminary results
Slide 25: Impact Of Exchange Rates
Impact Of Exchange Rates Sales Operating Profit 1 £m £m 2006 As Reported 558.6 79.7 2006 Using 2005 Rates 558.5 79.8 Impact (0.1) 0.1 1 pre impairment of goodwill, amortisation/impairment of acquired intangibles, interest and tax on associates, major facility closure costs, impairment of investment
Slide 26: Financial Highlights
Financial Highlights Sales Operating Profit 1 1 EBITDA 79.7 600 558.6 80 125.1 130 67.8 472.4 109.0 500 440.1 448.4 457.2 97.2 60 53.1 92.4 87.4 400 49.4 41.7 80 £m £m 300 40 £m 200 20 30 100 0 0 2002 2003 2004 2005 2006 2002 2003 2004 2005 2006 2002 2003 2004 2005 2006 -20 2 3 4 Group Profit Before
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