Tt Electronics Plc · LSE:TTG
Tt Electronics — H1 2014 Earnings Presentation
29 slides from Tt Electronics's earnings presentation, August 2014
Slide 1: 2014 Half Year Presentation
2014 Half Year Presentation August 2014
Slide 2: Agenda
Agenda Introduction Richard Tyson First Half Review Shatish Dasani Summary and Conclusions Richard Tyson 1 © TT Electronics plc
Slide 3: Initial observations
Initial observations • Global manufacturing and customer service company • Technology focus with some leadership positions • Blue chip, international client base • Potential for further operational improvement • Opportunities for organic and inorganic business development • Strong balance sheet to s
Slide 4: Agenda
Agenda Introduction Richard Tyson First Half Review Shatish Dasani Summary and Conclusions Richard Tyson 3 © TT Electronics plc
Slide 5: Highlights
Highlights • Positive trading performance with revenue growth of 4.1% at constant currency • Order momentum in the first half was positive, providing confidence for the second half • Continued investment in the Sensing and Control division to support future growth, including acquisition of Roxspur •
Slide 6: Financial summary: Key Financials
Financial summary Key Financials Change at HY 2014 HY 2013 constant Continuing operations £m £m Change currency Revenue 261.1 261.0 - 4.1% Operating profit1 12.9 12.7 1.6% 10.2% Operating profit margin1 4.9% 4.9% - +30bps Profit before tax1 12.3 11.5 7.0% 15.7% Earnings per share (pence)1 5.9 5.5 7.
Slide 7: Impact of FX
Impact of FX Sensing and Sales (£m) Control IMS Components Group As published 143.6 69.4 48.1 261.1 FX impact 6.0 3.0 1.6 10.6 At 2013 rates 149.6 72.4 49.7 271.7 Operating Profit (£m) As published 6.6 2.6 3.7 12.9 FX impact 0.7 0.2 0.2 1.1 At 2013 rates 7.3 2.8 3.9 14.0 Operating Profit Margin As p
Slide 8: Operating profit bridge
Financial summary Operating profit bridge (£m) 16 2.6 (1.4) 14 (2.5) 2.6 12.9 12.7 (1.1) 12 10 8 6 4 2 0 Operating profit Foreign Sales Inflation on SG&A Increased R&D Other changes Operating profit 2013 exchange change spend in S&C 2014 7 © TT Electronics plc
Slide 9: Operational Improvement Plan
Financial summary Operational Improvement Plan • Sales office closures in Japan, France Exceptional Projected and Italy completed on schedule by cost annual benefit June 2014. Benefits of £1.3m pa £m £m coming through in second half Sales offices 2.4 1.3 North American 2.5 0.7 • Transfer of manufact
Slide 10: Operational Improvement Plan: European restructuring
Financial summary Operational Improvement Plan: European restructuring • Proposed transfer of Werne manufacturing announced in January 2014; consultation commenced • Investment in Romanian facility continues ahead of transfer • Customer discussions are progressing; Romania site has obtained approval
Slide 11: Exceptional Items
Financial summary Exceptional Items HY 2014 HY 2013 £m £m Operational Improvement Plan 10.2 - Other restructuring costs 2.5 2.4 Costs related to closure of Boone, USA, plant - 0.2 Negative goodwill on business acquisition - (0.4) M&A costs - 0.4 Total continuing operations 12.7 2.6 10 © TT Electroni
Slide 12: Group cash flow
Financial summary Group cash flow (£m) 40 30 20 12.9 10 0 (10) (20) (33.5) 11.1 (30) (19.4) (5.4) (6.0) (1.0) (1.7) 1.5 (40) (0.5) (42.0) (50) Operating Working Depreciation Capital Exceptional Pension fund Tax & Acquisitions Dividends Other Net Cash profit capital amortisation investment costs paym
Slide 13: Working capital movement
Financial summary Working capital movement Cash flow (£m) Turns/days HY 2014 HY 2013 FY 2013 HY 2014 HY 2013 FY 2013 Inventory (3.9) (7.7) (13.8) 5.3 turns 5.4 5.7 Receivables (9.0) (11.8) (7.2) 45 days 48 40 Payables (20.6) (1.4) 11.6 46 days 54 63 Total (33.5) (20.9) (9.4) • Significant supplier p
Slide 14: Divisional review: Sensing and Control
Divisional review Sensing and Control • Revenue growth due to Financial Summary – Growth at key OEMs HY 2014 HY 2013 – Higher volumes in control products for £m £m Change increased electronic systems in vehicles Revenue 143.6 141.5 5.7%2 • Continued investment in business – Incremental £2.5m investm
Slide 15: Roxspur Measurement & Control acquisition
Roxspur Measurement & Control acquisition • Acquisition closed 14 July – Initial consideration of £7.5m, with up to an additional £2.5m deferred to 2016 – Sales of £8.2m and operating profit of £0.9m for 12 months to 30 June 2014 – Immediately earnings enhancing • Portfolio of sensors for industrial
Slide 16: Divisional review: Components
Divisional review Components • Operating profit increase due to Financial Summary – Exit of Smithfield, US facility by HY 2014 HY 2013 Resistors resulting in one-off last £m £m Change time buy orders Revenue 48.1 51.1 (2.7)%2 – Exit of US connectors business Operating profit 3.7 1.0 290%2 – Improved
Slide 17: Divisional review: Integrated Manufacturing Services (IMS)
Divisional review Integrated Manufacturing Services (IMS) • Good underlying revenue growth Financial Summary • Operating profit affected by HY 2014 HY 2013 improvement projects £m £m Change – Expansion of Romanian facility Revenue 69.4 68.4 5.8%2 Operating profit 2.6 2.8 0.0%2 – Exit of Tonypandy fa
Slide 18: Agenda
Agenda Introduction Richard Tyson First Half Review Shatish Dasani Summary and Conclusions Richard Tyson 17 © TT Electronics plc
Slide 19: Summary and conclusions
Summary and conclusions • Positive progress in revenue, profit and EPS • Encouraging order momentum • Significant investments in new product development • Substantial OIP potential but big, complex and challenging • Roxspur acquisition is a positive step • Priorities six weeks in: – Business familia
Slide 20: Q&As
Q&As 19 © TT Electronics plc
Slide 21: Appendices
Appendices 20 © TT Electronics plc
Slide 22: Background on Richard Tyson
Background on Richard Tyson • Previously President of Cobham Aerospace and Security (circa £700m) • Led 4,500 people across 40 locations worldwide • Provided end-to-end avionics and communication equipment for land, sea and air applications • Acquired and integrated seven companies in the last five
Slide 23: Our business today
Our business today Revenue (HY 2014) Operating Profit (HY 2014) Sensing and Control Sensing and Control 55% 51% IMS IMS 27% 20% Components Components 18% 29% Revenue by market (HY 2014) Revenue by region (HY 2014) Passenger Car Transportation, Rest of Europe 41% Non Pass. Car 51% 9% United Kingdom I
Slide 24: Earnings per share
Earnings per share HY 2014 HY 2013 £m £m Profit before tax and exceptional items 12.3 11.5 Tax (3.0) (2.8) Underlying earnings 9.3 8.7 Average number of shares (million) 158.2 157.2 Headline earnings per share (pence) 5.9 5.5 Basic loss per share (pence) Continuing operations (2.1) 4.1 Total (2.1) 3
Slide 25: Dividends
Dividends 2013 2012 Change Interim 1.6p 1.5p Final 3.8p 3.5p 5.4p 5.0p 8% Underlying EPS cover 2.6x 2.4x Payout of underlying earnings 38% 42% • Interim dividend of 1.7 pence for 2014, an increase of 6.2% • Board pursuing a progressive dividend policy whilst maintaining a cover level of at least 2 t
Slide 26: Strong balance sheet
Strong balance sheet HY 2014 Dec 2013 £m £m Fixed assets 91.1 88.6 Goodwill and other intangibles 82.3 82.0 Net trade working capital 81.4 49.6 Retirement benefit obligations (15.8) (20.5) Other (33.2) (23.3) Capital employed 205.8 176.4 Net cash (14.9) 26.9 Net assets 190.9 203.3 Return on average
Slide 27: Financial summary: Pensions
Financial summary Pensions HY 2014 FY 2013 HY 2013 IAS 19 valuation £m £m £m Fair value of assets 397.1 394.1 391.5 Liabilities (412.9) (414.6) (419.4) Deficit (15.8) (20.5) (27.9) • UK defined benefit scheme closed to future accrual in 2010 • Triennial valuation at 5 April 2013 showed a deficit of
Slide 28: Taxation – Continuing operations
Taxation – Continuing operations HY 2014 HY 2013 £m £m Tax charge Underlying 3.0 2.8 Exceptional items (0.1) (0.3) 2.9 2.5 Effective tax rate Underlying for full year 23.8% 24.1% • Further progress in reducing effective rate due to optimising the Group’s tax position and managing tax risks • Cash ta
Slide 29: Disclaimer
Disclaimer IMPORTANT INFORMATION • 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 certain