TI Fluid Systems (TIFS) H2 2023 earnings summary

Executive summary

• FY 2023 revenue grew 11.1% at constant currency; adjusted EBIT margin rose to 7.4%, up 190 bps YoY.

• BEV bookings reached €1.3bn and HEV bookings €0.8bn; 48 launches supported growth and the transition to electrification.

• Adjusted free cash flow was €140.7m, while net leverage fell to 1.5x, ahead of plan.

Financial highlights

• Revenue was €3,516m, up 11.1% at constant currency and 7.6% reported; the constant-currency increase was €351m.

• Adjusted EBIT was €259.6m, up 44.2% YoY; adjusted EBIT margin increased to 7.4% from 5.5%.

• Adjusted EBITDA was €393m, up 18%; adjusted net income was €132.8m versus €84.3m, and adjusted basic EPS was 25.76 cents versus 16.43 cents.

• Adjusted free cash flow rose 79% to €140.7m; conversion was 36% of adjusted EBITDA versus 24% in FY 2022.

• ROCE increased to 27.6% from 18.3%; total dividend was 6.83 cents per share versus 2.54 cents.

Outlook and guidance

• FY 2024 revenue is expected to be flat to low single-digit growth at constant currency; adjusted EBIT margin is expected above 7.4%.

• FY 2024 adjusted free cash flow conversion target is 30% of adjusted EBITDA; capex is expected at 3–5% of revenue.

• FY 2024 assumptions include FX impact of ~1% of revenue at current rates, interest costs of €60–65m and an effective tax rate in the low 30% range.

• FY 2026 revenue target is €3.8–4.2bn at constant currency; medium-term adjusted EBIT margin target is double-digit.

• Productivity is expected to more than offset inflation, with market volumes contributing to 2024 margin expansion.