Interim Results Presentation for 6 months ended 30 September 2019 2 - - PowerPoint PPT Presentation

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Interim Results Presentation for 6 months ended 30 September 2019 2 - - PowerPoint PPT Presentation

Dec 01, 2023 261 likes •419 views

Interim Results Presentation for 6 months ended 30 September 2019 2 Introduction Tricorn develops and manufactures tube solutions for an international OEM customer base Over recent years the Group has extended its manufacturing

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SLIDE 1

Interim Results Presentation for 6 months ended 30 September 2019

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SLIDE 2

Introduction

  • Tricorn develops and manufactures tube solutions for an

international OEM customer base

  • Over recent years the Group has extended its manufacturing

footprint and invested in extending its capabilities enabling it to grow its customer base and win new business

  • Operational base spans three key geographic regions (USA, UK

and China)

  • At the start of the financial year the Group consolidated its

brands with Franklin Tubular Products and the newly announced expansion at Rabun Gap operating as Tricorn USA and Malvern Tubular Components and Maxpower Automotive as Tricorn UK. The joint venture in China remains as Minguang-Tricorn Tubular Products

  • Reporting is now on a geographic segment basis

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SLIDE 3

Ke Key Points for six months ended 30 September 2019 2019

  • Revenue down 7.3% on corresponding period
  • Profitability adversely impacted by lower revenue and short term

impact on US margins

  • China JV performed in line with expectations and dividend

declared and paid shortly after period end

  • Strong pipeline of new opportunities

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UK USA Corporate

  • Demand slowed significantly during the 2nd quarter
  • Impact of lower volume partially offset by efficiency gains
  • Malvern site successfully transitioned to the same IT

system as the West Bromwich site

  • Expansion announced at Rabun Gap, Georgia
  • Above, operational ahead of plan and generating new opportunities
  • Short term impact on US margins from additional US import tariffs

All references to EBITDA, profit before tax and EPS are before intangible asset amortisation and share based payment charges.

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SLIDE 4

Financial Review – Profit & Loss

Operational Summary

  • US expansion operational ahead of plan
  • Impact from tariffs and adverse sales mix in

the US Profit & Loss

  • Revenue down 7.3%
  • Group looked to maintain operational

efficiency through targeted internal projects to improve productivity and reduce costs

  • Strong gross margins and EBTIDA return
  • Operational gearing at 30.6% (2018: 29.5%)
  • EBITDA and profit before tax down on last

half year

  • EPS at 0.77p (2018: 1.45p)

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*All references to EBITDA, profit before tax and EPS are before intangible asset amortisation and share based payment charges ** Where relevant, comparative figures for 2018 have been restated for the effects of IFRS 16 Leases

£m Sept 19 Sept 18 Revenue 10.581 11.415 Gross margin 37.6% 38.5% EBITDA 0.944 1.130 EBITDA Return % 8.9% 9.9% Profit Before Tax 0.280 0.530 EPS 0.77p 1.45p Dividend

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SLIDE 5

Financial Review – Cash Flow & Balance Sheet

£m Sept 19 Sept 18 Cash generated by operations 0.512 0.506 EBITDA 0.944 1.130 Cash generation/EBITDA ratio 0.54:1 0.45:1 Capital expenditure 0.433 0.327 Capex/depreciation ratio 0.88 0.76 Net borrowing 3.469 3.093 Gearing % 46.2% 45.4% Cashflow Highlights

  • Cash generated by operations at £0.512m, in line

with last year

  • Cash generation/EBITDA ratio at 0.54:1 impacted

by first half weighting on annual payments and adverse working capital movements, particularly around inventories

  • Continued investment up on last year, mainly on

expenditure associated with the paint facility and start up at Rabun Gap, US Balance Sheet Highlights

  • Net assets up to £7.499m (2018: £6.807m) on

the back of profit generation in the last 12 months

  • Net working capital increased to £4.379m (2018:

£4.012m) on the back of higher inventory levels

  • Net borrowing increased to £3.469m, driven by

investment in Rabun Gap, US and inventory

  • The Group operates without any covenants on its

borrowings

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*All references to EBITDA, profit before tax and EPS are before intangible asset amortisation and share based payment charges ** Where relevant, comparative figures for 2018 have been restated for the effects of IFRS 16 Leases

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SLIDE 6

488 (3,469)

31 March 2019 net borrowing Underlying

  • perating

profit

Financial Review - change in net funds

(3,112)

30 Sept 2019 net borrowing

(175)

Depreciation

£000’s (433)

Capital expenditure

332

Net movement in working capital Finance charges

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Cash generated by operations £512k

(308)

Payment of lease liabilities

(197)

Other net movements

(64)

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SLIDE 7

Business Review

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SLIDE 8

Products and Applications

Products

  • Fluid Transfer Tubes
  • Hydraulic
  • Oil
  • Air
  • Fuel
  • Coolant
  • Structural Assemblies
  • Grab rails
  • Guards
  • Oil gauges

Applications

  • Actuator control
  • Low pressure fuel lines
  • Exhaust gas recirculation
  • Oil transfer tubes
  • Coolant tubes
  • Leak off rails
  • Braking systems
  • Gearbox lubrication
  • Seat adjusters
  • Oil level checking

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SLIDE 9

Customers and End Markets

Blue Chip Original Equipment Manufacturers

  • Engines
  • Construction vehicles
  • Transmission systems
  • Power generators
  • Electric vehicles
  • Seats
  • Radiators

End Markets

  • On Highway Vehicles
  • Mining
  • Construction
  • Agriculture
  • Energy
  • Oil and gas
  • Marine

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SLIDE 10

Gr Growth h Pr Priorities

  • Focus on large blue chip OEM

customers

  • Building long term collaborative

relationships

  • Differentiated offering
  • Engaged from early design

through to full production

  • Recurring revenue
  • Capitalise on significant growth
  • pportunities
  • Alert, agile and responsive to

growth opportunities

  • Investing in capability and

capacity

  • Drive for operational excellence
  • Best in class
  • Enhanced competitiveness
  • Employee engagement

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SLIDE 11

From Reg egional to In Inter ernational

  • March 2012-announced £1m

investment in China manufacturing facility

  • March 2013-acquisition of US tube

manufacturing business for £1.95m in cash

  • July 2013-announced formation of

joint venture in China; invested £0.39m in cash for 51% stake

  • June 2016-completed consolidation
  • f China activities. Tricorn owns

63% of enlarged joint venture

  • May 2019-announced 2nd facility in

the USA at Rabun Gap GA

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SLIDE 12

Winning new business and extending capabilities

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  • Dec. 2014

Announced 5 year Long Term Agreement expected to generate circa £10m of revenue over the period and investment of around £0.25m in additional manufacturing capability

  • Nov. 2016

Announced new business award by Volvo Group Truck Operations expected to generate additional revenue of $3.5m over a 4 year period Also announced a Long Term Supply Agreement with another key strategic customer. The agreement, initially for 5 years, is expected to generate around $9.6m of revenue from current products

  • Sep. 2017

Announced 7 year Long Term Agreement with London Electric Vehicle Company expected to generate £5m of revenues over the period

May 2019

Announced US expansion with the purchase of a fully installed painting line for $0.05m and 5 year lease on 47,000 square feet facility 11

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Business Review - Performance

  • Demand slowed significantly through the 2nd quarter
  • Weaker market conditions
  • Some destocking
  • Impact of lower revenue partially offset by efficiency gains
  • Malvern facility successfully transitioned to the same IT system as West Bromwich

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  • Demand broadly in line with Board’s expectations
  • Short term pressure on margins
  • Import tariff
  • Adverse sales mix
  • US expansion announced and operational ahead of plan

£’000 UK USA H1 2019 Central adjustments H1 2018 Central adjustments H1 2019 Group H1 2018 Group H1 2019 H1 2018 H1 2019 H1 2018 Revenue 6,170 6,975 4,552 4,440 (141) 10,581 11,415 PBT 134 384 87 192 59 (23) 280 553

USA UK

  • Joint Venture

– Performed in line with Board’s expectations – Dividend declared and received shortly after period end

Revenue Down £805k PBT Down £250k Revenue Up £112k

PBT Down £105k

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SLIDE 14

Outlook

  • USA demand remained broadly in line with Board’s expectations
  • UK demand slowed significantly in Q2
  • Profitability adversely impacted by lower revenue and, in the USA, short

term pressure on margins due to import tariff on goods sourced from China

  • China JV performed in line with Board’s expectations - dividend declared and

received shortly after period end

  • New paint plant in the USA performed well, was operational ahead of plan

and generating new opportunities

  • Healthy pipeline of new opportunities across the Group
  • For the balance of the year we expect demand to remain low in the UK and

to weaken in the USA

  • Continue to focus on managing the cost base and working capital to align

with these lower volumes whilst capitalising on the many new business

  • pportunities

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