TT Electronics (TTG) H1 2024 earnings summary

Executive summary

• Completed sale of three business units under Project Albert and reorganized management structure.

• Launched Project Dynamo, identifying £17m in potential cost savings and incremental margin, with £4m already actioned.

• Strong order intake up 15% year-over-year, with book-to-bill at 110%.

• Significant cost actions, including £9m headcount savings, taken to address North American de-stocking.

• Board expectations and full-year 2024 guidance remain unchanged, targeting 10% operating margin and lower leverage.

Financial highlights

• Group revenue £274.4m, down 8% at constant currency; organic revenue up 1% excluding divestment and pass-through.

• Adjusted operating profit £22.2m (down 13% year-over-year); margin at 8.1% (8.7% ex-divestment; 9.3% ex-severance and divestment).

• Earnings per share declined to 7.2p (down 18%), reflecting lower operating profit and higher interest expense.

• Free cash outflow of £7.8m in H1, driven by working capital outflow, expected to reverse in H2.

• Interim dividend increased by 5% to 2.25p per share.

Outlook and guidance

• Full-year guidance maintained: 10% operating margin and leverage at the lower end of the 1-2x range.

• Targeting 12% operating margin by 2026, over 85% cash conversion, and mid- to high-teens ROIC.

• Organic growth ex pass-through expected at 3-4%; FX headwind of 2%.

• Capex and development expenditure projected at £15-18m; modest working capital outflow anticipated.

• Effective tax rate for the year around 25%.