Tt Electronics Regulatory News (TTG)

12 November 2020

TT Electronics plc

In-line Trading Update

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 in the four-month period ended 24 October 2020.

Improving revenue

Momentum in the Group's trading performance has continued as expected, with the trends in like-for-like revenue improving in the four months to October. Revenue in the period was 11 per cent lower than the previous year on a constant currency basis and 12 per cent lower on an organic1 basis. This compares to a 17 per cent organic reduction in the second quarter of 2020.

The trends previously seen in TT's end-markets have continued. Order intake has shown signs of recovery with bookings for the four months running at 104 per cent of revenue and, as a result, the Group's order book has now almost recovered to where it was this time last year. The recovery dynamics in organic revenue and order intake have come from across the Group.

Notwithstanding the second wave of the pandemic globally, all of our facilities remain open and are delivering to customer requirements, whilst continuing to prioritise the safety of our employees.

Margin enhancement

We are making good progress with the Group's extended self-help programme, which commenced in the second quarter, with initial headcount reductions completed and transfer activity on schedule to support the site closure timeline. The project is on schedule to deliver the expected £11-12 million of run-rate benefits in 2023.

Virolens® update

In September we announced that TT had been appointed exclusive manufacturing partner for the commercial launch of Virolens®, a rapid COVID-19 screening device. There remains a wide range of possible outcomes but Virolens® is proceeding through regulatory approvals and devices have been shipped to initial launch customers for operational trials in a number of different jurisdictions.

We have also been working to prepare for volume production of Virolens® devices and testing cartridges at our facility in Hartlepool, UK.

Torotel acquisition completed

On 10 November the Group completed the acquisition of Torotel for an enterprise value of $43.4 million. Torotel is a Kansas, US-based designer and manufacturer of high-reliability power and electro-magnetic assemblies and components designed for harsh environments, primarily for defence markets. The acquisition broadens TT's power electronics capabilities in the US, further increasing its scale in this important market. It adds recurring revenue streams from largely sole source positions on multi-year growth programmes and brings attractive cross-selling opportunities. Work is now underway to integrate Torotel into TT's Power and Connectivity division.

Richard Tyson, Chief Executive Officer said:

"We are pleased that trading momentum has continued to recover during recent months, with organic revenue trends improving across the Group. We are also continuing to manage the impact of COVID-19 on our people, customers and other stakeholders with all of our facilities open and fully operational.

I am also pleased we have completed the acquisition of Torotel, which is a strong strategic fit for TT, increasing both our scale and capabilities in the important US defence market.

We are continuing our journey to double-digit margins and expect to see further improvement in trading this year."

Notes: 

1. 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.

2. TT will announce its full year results on 10 March 2021.

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 information, future events or otherwise.