Acquisition Update and Share Buyback Programme

Further to the announcement on 9 October 2023, the acquisition of Lake City HT successfully completed on 19 January 2024. The consideration paid on closing for Lake City HT was $66.5m (£52m) on a cash and debt free basis. After expected tax benefits worth approximately $7.5m, the net economic price paid was $59.0m (£46m), resulting in an acquisition multiple of less than 7.5x 2024 EBITDA.

Lake City HT, based in Warsaw, Indiana, is a leading hot isostatic pressing (HIP) and vacuum heat treatment business primarily supplying the orthopaedic implant market as well as Civil Aerospace. It will significantly increase Bodycote's customer reach in the Medical market.

Lake City HT is forecast to have achieved 2023 full year revenues of around $14m (£11m), with operating profit expected to be around $6m (£5m). The business achieved 30% revenue growth in 2023 and looking ahead is expected to continue to deliver good progress. The acquisition will be accretive to Group profit margins and EPS in 2024 and is expected to exceed Bodycote's cost of capital by 2025.

Bodycote has agreed with Stack Metallurgical Group (SMG) not to complete the acquisition of the business due to a failure to satisfy all closing conditions to the agreement.

Announcement of £60m Share Buyback Programme

In light of the lower than anticipated acquisition spend, the Group's strong balance sheet and balanced approach to capital allocation, Bodycote is pleased to announce the intention to launch a share buyback programme of up to £60m. The share buyback programme is expected to commence on 18 March 2024. Full details of the programme will be provided on 15 March 2024 at the time of the announcement of Bodycote's full year 2023 results.

Stephen Harris, Group Chief Executive of Bodycote plc, commented:

"Completion of the acquisition of Lake City HT is an exciting further step in our strategy to grow our Specialist Technologies businesses and footprint. This acquisition is an excellent fit, enhances our profitability and earnings per share in addition to allowing us to capitalise on the appealing structural growth opportunities in Medical and Aerospace markets.

The share buyback programme represents an attractive use of our capital. It highlights the strength of the Group's balance sheet, together with our commitment to a balanced and disciplined approach to capital allocation to drive growth and shareholder value."

About Lake City Heat Treating (Lake City HT)

Lake City HT, previously owned by the Davis family, operates out of a single site in Warsaw, Indiana. The site provides HIP and associated heat treatment services. The business predominantly serves the medical orthopaedic implant market but also encompasses aerospace related business.