BBA Aviation www.bbaaviation.com BBA Aviation 2018 Final Results
BBA Aviation 2018 Final Results 2018 – Strategic progress 1. Outperforming today - Signature continues to outperform the US B&GA market + 210bps - Market share gains 2. Strong Free Cash Flow generation >$250m 3. Investment for tomorrow - Commercial technology investments for 2019 deployment - People and culture - Acquisition and licence growth – EPIC, Firstmark and licences Strong platform for sustainable growth 1
BBA Aviation BBA Aviation 2018 Final Results www.bbaaviation.com Performance Review David Crook Group Finance Director 2
BBA Aviation 2018 Final Results Underlying total operating profit growth of 4% Signature (85% of continuing OP 1 ): Operating profit 1 ($m) 2018 2017 Change - Signature FBO revenue outperforming a soft market by 210 bps Signature 320.6 329.4 (2.7)% Ontic (15% of continuing OP 1 ): Ontic 59.3 55.2 7.4% - $6m contribution from new licence acquisitions and Firstmark offsetting non repeat of cyclical military Middle East (ERO) (0.7) (2.4) 71% orders Total continuing central costs (39.0) (45.7) 14.7% - Strong order book and pipeline of licence opportunities Group continuing 340.2 336.5 1.1% Discontinued operations Discontinued 35.0 23.9 46.4% - Strong performance at ERO with 45% increase in operating profit Group total 375.2 360.4 4.1% - Suspension of depreciation and amortisation of $5.2m included for the seven months from June 2018 Total basic adjusted EPS Total basic adjusted EPS 23.3 24.0 (2.9)% - down 2.9% to 23.3c Dividend per share 14.07c 13.40c 5.0% Dividend increased 5% to 14.07c per share Note 1: Underlying operating profit (pre exceptional and other items) 3
BBA Aviation 2018 Final Results Signature: revenue up 29% (85% of continuing OP 1 ) Organic revenue growth of Revenue Bridge ($m) 2.7% (constant currency 50.5 2,127.6 292.5 and fuel prices) (2.6) - - - Signature FBO up 3.0%, 138.2 1,787.2 TECHNICAir down 3.4% 6.0 1,643.0 - FAA US B&GA movements growth of 0.9% Organic operating profit 2017 FX Fuel 2017 Like Acqui- FBO TECHNICAir 2018 decline of 2.9% for Like sitions - Impact of IT investments $14m - Challenging maintenance Operating Profit 1 ($m) market, TECHNICAir down $3.8m - Customer mix and bad debt 7.0 impacting FBO drop through 2.9 0.8 330.2 329.4 320.6 (3.8) (1.7) - Investment returns (14.0) - Divisional ROIC 11.8% (FY 2017: 12.2%). 2017 FX Fuel 2017 Like EPIC EPIC FBO TECHNICAir IT 2018 for Like Trade Acquis- ition costs Note 1: Underlying operating profit (pre exceptional and other items) 4
BBA Aviation 2018 Final Results Ontic: revenue up 3% (15% of continuing OP 1 ) - New licences and Firstmark contributed $12.3m of Ontic Revenue Bridge ($m) revenue - Organic revenue decline of 3.7% due to non repeat of cyclical military orders 12.3 216.0 2.7 211.5 208.8 (7.8) Operating profit 1 up 7% - Includes $6.0m contribution from new Ontic licences - Organic operating profit down largely due to 2017 contribution from B52 parts and C130 radar units not 2017 FX 2017 like Acquisitions Organic 2018 repeated in 2018 for like - Underlying operating margin of 27.5%, up 110 bps Investment returns Ontic Operating Profit 1 ($m) - ROIC 15.6% (FY 2017: 16.8%) Order book remains strong with good visibility through 2019 and beyond 6.0 59.3 55.2 0.9 56.1 (2.8) 2017 FX 2017like Acquisitions Organic 2018 for like Note 1: Underlying operating profit (pre exceptional and other items) 5
BBA Aviation 2018 Final Results Discontinued ERO: revenue up 4% Revenue Bridge ($m) - Improved underlying operating profit $35.0m, up 45.2% 18.5 533.6 - Includes $5.2m benefit from suspension of 1.8 515.1 513.3 depreciation and amortisation for the seven months from June 2018 - Excludes the $10.7m of support costs for ERO 2017 FX 2017 like Organic 2018 Reconciliation of pre and post discontinued operations reporting for like Operating profit ($m) 2018 2017 Operating Profit 1 ($m) ERO pre discontinued ops 18.4 10.1 35.0 10.7 Add back: Middle East loss 0.7 2.4 24.3 24.1 0.2 Add back: support costs 10.7 11.6 Add back: Depreciation & 5.2 - amortisation suspension ERO discontinued ops 35.0 24.1 2017 FX 2017 like Organic 2018 for like Note 1: Underlying operating profit (pre exceptional and other items) 6
BBA Aviation 2018 Final Results Central costs - Underlying central costs down 17% to $28.3m ($m) 2018 2017 Change - Reduction reflects 2017 comparative impacted by - One-time costs in our captive insurance company for hurricane damage - Remaining ASIG support costs (now Underlying central (28.3) (34.1) (17.0)% removed) costs - Total central costs - includes $10.7m of support costs relating to the discontinued ERO business ERO support costs (10.7) (11.6) (7.8)% Total continuing (39.0) (45.7) (14.7)% central costs Note 1: Underlying operating profit (pre exceptional and other items) 7
BBA Aviation 2018 Final Results Underlying Income Statement ($m) 2018 2017 Change Total Group operating profit 1 375.2 360.4 4.1% Net interest (67.2) (62.1) 8.2% Profit before tax 308.0 298.3 3.3% Profit after tax 240.5 246.3 (2.4)% 23.3c 24.0c (2.9)% Total basic adjusted EPS Total dividend per share 14.07c 13.40c 5.0% Note 1: Underlying operating profit (pre exceptional and other items) 8
BBA Aviation 2018 Final Results Exceptional and other items - largely non-cash Continuing - Amortisation of acquired intangibles: $88.8m (non-cash) - Restructuring expenses of $8.9m (corporate and closure of ERO in the Middle East) - Previously noted impairment of $14.1m primarily relating to Sloulin Field FBO (non- cash) - One-off past service pension cost with regard to GMP equalisation within the UK plan of $11.1m Discontinued - ERO disposal process costs of $5.9m - Completion costs of ERO footprint rationalisation in Dallas of $1.1m 9
BBA Aviation 2018 Final Results Continuing strong cash generation Continuing businesses $m Continuing Discontinued 2018 2017 - Strong cash generative business Underlying EBITDA pre 428.4 38.7 467.1 459.5 support costs - Working capital inflow in Signature ERO support costs (10.7) - (10.7) (11.6) - Capex investments at FBOs Underlying EBITDA 1 417.7 38.7 456.4 447.9 including Miami and Nashville Working capital movement 22.0 (48.2) (26.2) (46.3) - Cash tax rate remains substantially lower than underlying effective tax Capex (75.8) (16.1) (91.9) (80.3) rate Net Interest paid (57.4) (0.9) (58.3) (57.3) - Leverage 2.8x on a covenant basis Tax paid (27.1) - (27.1) (41.8) Exceptionals (12.5) (7.0) (19.5) (12.7) Discontinued business Other items (8.3) (0.3) (8.6) 11.1 - Working capital outflow driven Free cash flow 258.6 (33.8) 224.8 220.6 largely by parts availability from OEMs Net debt (1,331.3) (0.9) (1,332.2) (1,167.1) Net debt to EBITDA, covenant 2.8x 2.6x Net debt to EBITDA, reported 2.9x 2.6x Note 1: Underlying operating profit before depreciation and amortisation 10
BBA Aviation 2018 Final Results Guidance FY19 Central costs - ~$27m Group central costs in FY19 - ~$12m ERO annual support costs in FY19 - ERO support costs to be eliminated post disposal/TSA period Capital expenditure (continuing group) - FY19 capex $115-125m Tax - Underlying effective tax rate c21%, cash tax rate c14% Interest (excl. IFRS 16) - Interest expense $75m - Cash interest $75m Note 1: Underlying operating profit (pre exceptional and other items) 11
BBA Aviation 2018 Final Results IFRS 16 IFRS 16 does not impact our Strong free cash flows Business prospects Ability to deliver our strategy Debt covenants Progressive dividend policy But it will significantly impact our published financial statements 12
BBA Aviation 2018 Final Results IFRS 16 – Impact on financials Metric Increase/decrease No Impact Free cash flow (FY 2019) - - Revenue (FY 2019) - - Metric Increase/decrease Impact Operating profit (FY 2019) Increase c12% EBITDA (FY 2019) Increase c30% Interest (FY 2019) Increase c100% Profit before tax (FY 2019) Decrease c10% Adjusted EPS (FY 2019) Decrease c10% Total assets (1 Jan 2019) Increase c25% Total liabilities (1 Jan 2019) Increase c50% Operating cashflow (FY 2019) Increase c35% Net debt (1 Jan 2019) Increase c85% 13
BBA Aviation BBA Aviation 2018 Final Results www.bbaaviation.com BBA Aviation Mark Johnstone Group Chief Executive Officer 14
BBA Aviation 2018 Final Results BBA Aviation – Strong platform for sustainable growth US B&GA market 1 Implementation of our growth strategy – Signature and Ontic 2 Outlook 3 15
BBA Aviation 2018 Final Results Signature Market Drivers Corporate profits GDP Macro Economic Drivers 5,000 5,000 R² = 0.857 R² = 0.773 4,500 4,500 Business jet hours flown (annual, in 1000s) 4,000 4,000 Business jet hours flown (annual, in 1000s) 3,500 3,500 3,000 3,000 Macro Economic Drivers 2,500 2,500 2,000 2,000 1,500 1,500 Operational 1,000 Aircraft 1,000 Utilisation Installed Fleet 500 500 - - - 500 1,000 1,500 2,000 - 10,000 20,000 30,000 GDP (billions, USD) Corporate profits (billions, USD) Source: St Louis Federal Economic Research & GAMA 2018 Annual Report Source: US Bureau of Economic Analysis & GAMA 2018 Annual Report 16
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