Trading Update

RNS Number : 0918M

TT Electronics PLC

19 January 2021

 

19 January 2021

TT Electronics plc

Resilient trading, strong cash performance

TT Electronics plc ("TT", "the Group"), a global provider of engineered electronics for performance critical applications, publishes the following Trading Update on the Group's performance for the year ended 31 December 2020¹.

Continued improvement in trading

The improvement trends seen to the end of October have continued, with revenue in the last two months of 2020 only 4 per cent lower than the previous year on an organic² basis.

Revenue for the full year of c. £432m, was 9 per cent lower on a constant currency basis and 12 per cent lower on an organic basis.

Order intake continues to improve across the Group. Bookings for full year were at 99 per cent of revenue, and for the second half were 103 per cent of revenue. The order book remains broadly in line with this time last year.

Recognising the resilience of the Group's performance and strong cash generation, the Board has committed to repay the Coronavirus Job Retention Scheme (furlough) payments received from the UK Government. The c. £1.1m cost of the repayment has been accrued in the 2020 results.

With revenue and cost actions on track, the Board now anticipates adjusted³ profit before tax for the year in line with external expectations⁴, having taken into account the £1.1m furlough repayment.

Despite the national lockdown in the UK, and restrictions elsewhere in the world, all our facilities remain open and are delivering to customer requirements, whilst continuing to prioritise the safety of our employees.

Strong cash performance and financial position

The Group's cash generation in the second half of the year was strong, with a working capital inflow supporting the reduction in the Group's net debt at 31 December 2020 to c. £84m including IFRS 16 leases. As a result, net debt to underlying EBITDA on a bank covenant basis⁵ is expected to be c. 1.8 times.

MSCI rating

In the recent MSCI 2020 Environmental, Social and Governance ratings assessment, TT received a rating of "AA", an upgrade on the "A" received in the previous year. The 2020 rating establishes TT as a leading company in MSCI's Electronic Equipment, Instruments and Components sector index.

Margin enhancement

We continue to make good progress with the Group's extended self-help programme. The project is on schedule to deliver the expected £11-12m of run-rate benefits in 2023.

Virolens®   update

Operational trials and validation testing are continuing and applications for regulatory approvals of the Virolens® rapid COVID-19 screening device are progressing. There is a wide range of possible outcomes, but commercial interest in the device remains significant.

Torotel integration progressing well

Torotel broadens TT's power electronics capabilities in the US, adding recurring revenue streams from largely sole source positions on multi-year growth programmes. Since completion of the acquisition on 10 November 2020, activities to integrate the business into TT's Power and Connectivity division have continued at pace. Site re-branding is complete, finance and IT systems integration is well progressed, workshops have been held to identify business development opportunities, and synergy expectations remain as expected.

Resumption of dividends

As indicated with our interim results in August, our intention is to recommend a dividend at the time of the 2020 year-end results announcement.

Richard Tyson, Chief Executive Officer said:

"TT has proven to be resilient in the face of the Covid pandemic, benefitting from the actions we have taken to improve the quality of the business. Order intake over the last few months is encouraging as we look into 2021, a year in which we expect to see continued revenue recovery and good profit growth.

The structural growth trends in our end markets, and the self-help actions which are well underway give us confidence in our journey to double-digit margins, supported by strong cash generation and improving return on invested capital."

For further information please contact:
TT Electronics plc	Tel: [phone]
Richard Tyson, Chief Executive Officer Mark Hoad, Chief Financial Officer Julian Wais, Head of Investor Relations and Communications
MHP	Tel: [phone]
Tim Rowntree / Rachel Mann
1

Notes:  

1.  All figures in this trading update are unaudited. Audited amounts will be included in our full year results announcement on 10 March 2021.

2.  Organic growth is stated at constant currency and is calculated by comparing current year actual results to prior year results retranslated at current year actual exchange rates.  Organic revenue excludes the impact of acquisitions and disposals.

3.  Adjusted to exclude the impacts of significant restructuring programmes; significant one-off items including property disposals, business acquisition and divestment related activity; and the amortisation of intangible assets recognised on acquisition.

4.  Analyst expectations for adjusted profit before tax are between £20.6m and £22.5m.

5.  Net debt excluding IFRS 16 leases divided by adjusted EBITDA, allowing for the full year pro-forma effect of acquisitions and disposals and excluding the impact of IFRS 16. Calculated at average exchange rates. This measure is consistent with the basis of calculation for bank covenant purposes.

About TT Electronics

TT Electronics is a global provider of engineered electronics for performance critical applications.

The company operates in industries where there are structural growth drivers, working with market-leading customers primarily in the industrial, medical, aerospace and defence sectors. Products designed and manufactured include sensors, power management devices and connectivity solutions. TT has design and manufacturing facilities in the UK, US, Sweden and Asia.

The company has three divisions. The Power and Connectivity division designs and manufactures power application products and connectivity devices which enable the capture and wireless transfer of data. We collaborate with our customers to develop innovative solutions to optimise their electronic systems. The Global Manufacturing Solutions division provides manufacturing services and engineering solutions for our product divisions and to customers that often require a lower volume and higher mix of different products. We manufacture complex integrated product assemblies for our customers and provide engineering services including designing testing solutions and value-engineering. The Sensors and Specialist Components division works with customers to develop standard and customised solutions including sensors and power management devices. Our solutions improve the precision, speed and reliability of critical aspects of our customers' applications.

Cautionary statement

This update contains forward-looking statements. These have been made by the directors in good faith based on the information available to them up to the time of their approval of this update. The directors can give no assurance that these expectations will prove to have been correct. Due to the inherent uncertainties, including both economic and business risk factors underlying such forward-looking information, actual results may differ materially from those expressed or implied by these forward-looking statements. The directors undertake no obligation to update any forward-looking statements whether as a result of new inf ormation, future events or otherwise.

 

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