2017 Q2 Pulse Tooling Update May 2017

Transcription

1 Q2 Pulse Tooling Update May 2017

2 Survey Overview Harbour Results 2017 Q2 survey covered a quick update on the tooling industry current state. It covered an additional dive into key components of shops financial statements. Survey population includes a total of 61 respondents, split 72% mold and 28% die. 2

3 3 TOOLING BAROMETER

4 Respondent Demographics Revenue Range Shop Type Location 30% 26% 25% 21% 21% 18% 28% 15% 13% 10% 5% 72% 68% 32% 0% <$5M $5-$10M $10-$20M $20-$40M >$40M Die Mold Question: Please identify your Revenue for 2016 Question: Please identify your company s geographic location 4% of respondents from outside NA 4

5 Shops Utilizations Leveling Out or Slowing in Q2 Capacity Utilization By Shop Type 2017 Q2 Capacity Utilization 100% 95% 90% 85% 75% 65% 60% 91% 89% 87% 81% 77% 79% 79% 76% 2015 Q Q Q Q4 85% 88% 89% 83% 67% 2016 Q1 76% 2016 Q2 77% 76% 81% 2016 Q Q4 87% 84% 2017 Q1 83% 2017 Q2 100% 95% 90% 85% 75% 65% 60% 55% 50% 81% 78% 90% 95% Die Mold Question: Current capacity utilization for design/machining/assembly 5

6 Overall Shops Capacities Around Utilized Subset of Mold Market Continues to Struggle to Stay Utilized Mold Capacity Utilization Die Capacity Utilization 110% 110% 100% 100% 90% 84% 83% 83% 90% 86% 83% 84% 60% 60% 50% Design Machining Assembly 50% Design Machining Assembly High/Low Quartile Average High/Low Quartile Average Question: Current capacity utilization for design/machining/assembly 6

7 US Shops Having Harder Time Staying Full 100% US Mold Capacity Utilization 90% 75% 71% 74% 82% 77% 60% 50% 25% of shops fall under the red markers in utilization <$2.5M $2.5M-$5M $5M-$10M $10M-$20M >$20M Lower Quartile Upper Quartile Average Source: AMBA 7

8 Mold and Die Showing Very Similar P&L Statements 100% 90% 60% Profit and Loss Summary 9% 7% 16% 15% EBIT SG&A COGS 100% 90% 60% Manufacturing Costs 75% 78% 6% 7% 16% 16% Depreciation 50% 40% 30% 75% 78% 50% 40% 30% 29% 29% Subcontracting Direct Labor Materials 10% 10% 24% 26% 0% Mold Die 0% Mold Die 8

9 Future Booked Business Drops from First Quarter Quarterly Booked Business (as of Q2 2017) Mold and Die Booked Business (as of Q2 2017) 25% 15% 10% 5% 0% 22% 14% The average shop has 44% of their revenue booked, down over from first quarter % 3% 2017 Q Q Q Q2 30% 25% 15% 10% 5% 0% 28% 19% 21% 9% Average Booked Business Mold: 36% Die: 57% 7% 4% 2% 4% 2017 Q Q Q Q2 Die Mold Question: What is your shop s tooling revenue (2016); Quarterly Booked Business 9

10 Work On Hold Rises Back to Over 11% 18% 16% 14% 12% 10% 8% 6% 4% 2% 0% % 11.9% 17.9% Work On-Hold 2015 Q Q Q Q Q Q Q Q Q Q2 12.2% 13.9% The clearly cyclical nature of work on hold continues, as a significant number of shops (particularly on the mold side) are experiencing delays Question: What percent of jobs that you have been awarded are currently on hold due to reasons outside of your control? 9.3% 11.5%

11 D3 Driving Significant Delays in Suppliers 18% 16% 14% 12% 10% 8% 6% 4% 2% 0% Work On Hold by Shop Type Q1 12.8% 10.7% Die Mold While a significant number of shops are experiencing standard levels of delays, there are a subset of die and mold shops experiencing significant (+) delays due to several key programs Question: What percent of jobs that you have been awarded are currently on hold due to reasons outside of your control? 11

12 Payment Terms and Timing Peaked in First Quarter 85% Progressive Payment Terms and AR Paid On Time 75% 71% 65% 55% 45% 35% 51% 49% 51% 44% 59% 59% 56% 56% 62% 62% 62% 62% 62% 57% 57% 57% 61% 61% 68% 25% 2014 Q Q Q Q Q Q Q Q Q Q1 Percent Progressive Terms Percent of AR Paid On-Time Question: Over the past three months, approximately what percent of your: new booked business includes progressive payment terms; accounts receivables were being paid within contract terms 12

13 Sentiment Dips, Remains Positive 90% 60% 50% 40% 30% 10% 0% 56% 2015 Q1 72% 72% 68% 68% 2015 Q Q3 General Business Outlook 2015 Q Q1 73% 2016 Q2 79% While a small decrease occurred from the previous quarter, shops remain very optimistic. Sentiment 2016 Q3 79% 85% 2016 Q4 Positive Threshold Question: Over the next three months, the general outlook for your business is: 2017 Q Q2 With an increase in work on hold and decreases in utilization, booked business and payment terms, shops saw a slight decrease in optimism from the first quarter. Sentiment % of Respondents Pessimistic 0% Somewhat pessimistic 3% Neutral 14% Somewhat Optimistic 44% Very Optimistic 39% 13

14 14 PRIMARY AND SECONDARY SHOPS

15 Previous State of the Mold Supply Chain 15

16 Future State of the Mold Supply Chain 16

17 Current/Future State of the Die Supply Chain 17

18 Primary Shops Have Less Trouble Staying Full Capacity Utilization By Primary and Secondary Shops 100% 95% 90% 87% 86% 87% 86% 87% 91% 90% 95% 85% 75% 65% 78% 76% 76% 81% 78% 78% 75% 81% 78% 60% 2015 Q Q Q Q Q Q Q Q Q Q2 Primary Secondary Question: Current capacity utilization for design/machining/assembly 18

19 Primary Shops More Vulnerable to Work On Hold 35% Work On-Hold 30% 28% 25% 22% 15% 16% 16% 16% 16% 11% 15% 10% 5% 14% 10% 10% 11% 14% 14% 9% 11% 0% 2015 Q Q Q Q Q Q Q Q Q Q2 19 Primary Work on Hold Secondary Work on Hold Level Question: What percent of jobs that you have been awarded are currently on hold due to reasons outside of your control?

20 Primary Shops Less Frequently Provided Progressive Terms Progressive Payment Terms 60% 53% 52% 57% 57% 63% 63% 63% 63% 63% 50% 40% 44% 44% 45% 52% 52% 55% 55% 55% 56% 56% 52% 30% 35% 35% 33% 2014 Q Q Q Q Q Q Q Q Q Q Q Q1 Primary Secondary Question: Over the past three months, approximately what percent of your: new booked business includes progressive payment terms; accounts receivables were being paid within contract terms 20

21 140% 1 100% Primary Shops Have to Oversell Capacity Use Outsourcing To Flex to Accommodate Work Delays/Holds 60% 40% 0% 28.2% 20.3% 14.3% 14.3% 76.2% 81.4% Primary Shop Utilization, Outsourcing and Work On Hold 16.3% 14.3% 16.3% 11.3% 14.3% 15.0% 14.8% 15.0% 87.4% 90.5% 89.9% 95.4% 2016 Q Q Q Q Q Q2 Primary shops have to approach sales differently than other tool shops. They have to intentionally oversell their capacity and outsource whatever they cannot handle, since they are more susceptible to delays/work holds. Work On Hold Outsourcing Capacity Utilization Question: Current capacity utilization for design/machining/assembly 21

22 Primary Shops Leveraging SG&A For EBIT Profit and Loss Summary Manufacturing Costs 100% 90% 60% 50% 40% 30% 10% 0% 17% 7% 7% 17% 76% 75% Primary Secondary COGS SG&A EBIT 90% 60% 50% 40% 30% 10% 0% 76% 75% 4% 6% 19% 15% 28% 29% 24% 24% Primary Secondary Depreciation Subcontracting Direct Labor Materials 22

23 What Are They (or Should They Be) Doing? Primary Shops Establishing strong tooling supply base and supplier development to support them. Focusing on becoming preferred suppliers for OEMs and large T1s and developing these relationships Developing strategic sales plans to feed the beast Capacity planning to avoid lulls Driving efficiency in their shops and investing in capital Secondary Shops Developing relationships with primary shops as supply base shifts Working to take advantage of advantageous stair steps of growth, working to drive bottom line Pushing for advantageous payment terms Sales planning to focus on filling walls with best-fit work with high margins Developing niche 23

24 24 WHAT NEXT?

25 2017 Still Looks to be a Very Heavy Year for Tool Sourcing Annual OEM Launches by Type (w/o Facelift) - Tool Sourcing New Entry Redesign While New Entry and Redesigns showing a decrease in future years, the next months still show strong opportunity for tool shops. 25

26 The Addition of Facelifts Level Out Work for Some Mold Shops Annual OEM Launches by Type - Tool Sourcing New Entry Redesign Facelift 26

27 Summary Despite small dips in key indicators, sentiment remains at one of highest points in last two years. There continues to be a division between shops who are very busy and shops struggling to bring work in. Overall averages for profitability relatively healthy, but the underlying variance strengthens the growing division. Shops need to capitalize on the good times, and make sure they are prepared for the possibility of a dip. 27