Spirax Group Plc. · LSE:SPX
Spirax — FY2021 Earnings Presentation
30 slides from Spirax's earnings presentation, February 2022
Slide 1: 2021 Results
2021 Results 1 2021 Results Year ended 31st December 2021 Nicholas Anderson Group Chief Executive Nimesh Patel Chief Financial Officer
Slide 2: Agenda
2021 Results Agenda 2021 Highlights Nicholas Anderson 2021 Financial Review Nimesh Patel Operations and Outlook Nicholas Anderson 2
Slide 3: 2021 operational highlights
2021 Results 2021 operational highlights • Our colleagues delivered outstanding outcomes for all stakeholders in support of our Purpose • Continued strengthening Health & Safety culture and performance • Strong progress implementing our Group Strategy • Refreshed Sustainability Strategy, launched In
Slide 4: 2021 performance highlights
2021 Results 2021 performance highlights • Record revenues driven by strong strategy execution, IP recovery and BioPharm growth • Exceptional profit margin, driven by strong sales without impact of full-year revenue investments • Record order books across all three businesses • Steam Specialties sal
Slide 5: 2021 ESG highlights
2021 Results 2021 ESG highlights • Sustainability Strategy roadmap sets improvement targets across all stakeholders • Committed to net zero scope 1 & 2 by 2030; scope 3 by 2050 • Signed up to Race to Zero and Business Ambition 1.5oC • Partnered with World Land Trust to deliver biodiversity offset of
Slide 6: Agenda
2021 Results Agenda 2021 Highlights Nicholas Anderson 2021 Financial Review Nimesh Patel Operations and Outlook Nicholas Anderson 6
Slide 7: Financial Performance
2021 Results Financial Performance Strong growth and record profitability • Revenue up 17% organically 2021 2020 Reported Organic⁺ Revenue £1,344.5m £1,193.4m +13% +17% • Operating profit up 31% organically Operating profit* £340.3m £270.4m +26% +31% • Record operating profit margin of Operating pro
Slide 8: Sales bridge
2021 Results Sales bridge Growth across all three Businesses • Currency headwind of 3% 98.3 1,300 • Total organic increase of 17%: 11.2 1,250 82.6 Steam Specialties +12% 1,200 41.0 ETS +7% 1,344.5 Watson-Marlow +32% 1,150 Sales £m 1,100 1,193.4 1,050 1,000 2020 FX Steam ETS WM 2021 Specialties 8
Slide 9: Profit bridge
2021 Results Profit bridge Increased sales and operational gearing supporting profit growth • Currency headwind of 4% 46.9 6.6 340 • Total organic increase of 31%: 320 Steam Specialties +27% 40.1 0.6 300 ETS +3% 280 Watson-Marlow +46% 11.1 Profit* £m 340.3 260 • Central expenses reflect increased re
Slide 10: Operating margin
2021 Results Operating margin Record operating margin of 25.3% • Excluding 2017 acquisitions, 27.4% margin increased to above 27% 27% 24.6% 25.2% 25.1% 25.1% • Operating margin 25.3%, up 280 bps organically 24% • Organic margin movement: 21% Steam Specialties +290 bps 25.3% 18% 23.8% 23.6% 22.5% 22.
Slide 11: Cash flow
2021 Results Cash flow Cash flow (£ million) 31st December 2021 31st December 2020 • Continued strong cash generation˄ Adjusted operating profit* 340.3 270.4 with cash conversion of 82% Depreciation and amortisation (excluding IFRS 16) 35.7 36.7 Depreciation of leased assets 11.4 12.1 • 2021 closing
Slide 12: Dividend growth
2021 Results Dividend growth • 54 years of dividend progress with 200.0 a CAGR of 11% 180.0 160.0 • Final dividend up 15% to 97.5p 140.0 Pence per share • Total dividend up 15% to 136.0p 120.0 • Dividend cover of 2.5 times 100.0 80.0 60.0 40.0 20.0 0.0 2011 2012 2013 2014 2015 2016 2017 2018 2019 20
Slide 13: Agenda
2021 Results Agenda 2021 Highlights Nicholas Anderson 2021 Financial Review Nimesh Patel Operations and Outlook Nicholas Anderson 13
Slide 14: Industrial production growth rates
Investor Opportunities Industrial production growth rates An important driver of growth IP Index Q4 2019 = 100 115.0 Forecast 110.8 109.9 110.0 108.9 109.4 107.8 108.2 107.2 106.4 105.6 104.4 105.0 103.8 103.1 Index - Q4 2019 = 100 102.6 100.9 100.0 102.5 100.0 97.6 95.2 Y-o-Y Global IP growth 95.0
Slide 15: Steam Specialties
2021 Results Steam Specialties Acquisitions 31st Dec 2020 Exchange Organic and disposals 31st Dec 2021 Organic⁺ Reported Sales £694.1m (£21.8m) £82.6m - £754.9m +12% +9% Operating profit* £154.3m (£5.7m) £40.1m - £188.7m +27% +22% Margin* 22.2% 25.0% +290 bps +280 bps ⁺ Organic measures are at const
Slide 16: Electric Thermal Solutions
2021 Results Electric Thermal Solutions Acquisitions 31st Dec 2020 Exchange Organic and disposals 31st Dec 2021 Organic⁺ Reported Sales £178.0m (£7.9m) £11.2m - £181.3m +7% +2% Operating profit* £24.6m (£1.2m) £0.6m - £24.0m +3% -2% Margin* 13.8% 13.2% -60 bps -60 bps ⁺ Organic measures are at const
Slide 17: Watson-Marlow
2021 Results Watson-Marlow Acquisitions 31st Dec 2020 Exchange Organic and disposals 31st Dec 2021 Organic⁺ Reported Sales £321.3m (£11.3m) £98.3m - £408.3m +32% +27% Operating profit* £107.3m (£4.2m) £46.9m - £150.0m +46% +40% Margin* 33.4% 36.7% +340 bps +330 bps ⁺ Organic measures are at constant
Slide 18: Our commitment to Sustainability and Inclusion
2021 Results Our commitment to Sustainability and Inclusion Launched: June 2021 Launched: November 2021 • Six key initiatives including net zero and biodiversity • Announced ten Inclusion Commitments including support for new • Significant progress in 2021: parents and caregivers, pregnancy loss, do
Slide 19: Engineering with Purpose
2021 Results Engineering with Purpose 2021 customer case studies 19
Slide 20: Summary and outlook
2021 Results Summary and outlook • Revenue up 13%, Operating profit up 26%; organically up 17% and 31% • Operating margin 25.3%; driven by strong sales without impact of full-year revenue investments • Record revenue and capital investments to support organic growth, sustainability, capacity expansi
Slide 21: Full Year Results
2021 Results Full Year Results For the year ended 31st December 2021 21
Slide 22: Appendices
2021 Results 2 2 Appendices
Slide 23: Appendix I - Case study: Spirax Sarco Europe
2021 Results 2 3 Appendix I - Case study: Spirax Sarco Europe Zero downtime for steam trap maintenance at diversified manufacturer Our strategic account management team at Steam Specialties gathers important insights into the impact of global mega trends, such as sustainability and digital, through
Slide 24: Appendix II - Case study: Chromalox USA
2021 Results 2 4 Appendix II - Case study: Chromalox USA Supporting McGill University to reduce its energy footprint Decarbonising industrial processes is key to a more sustainable future. Through technical innovation, we are playing our part. Achieving carbon neutrality on a campus the size of a sm
Slide 25: Appendix III - Case study: Watson-Marlow France
2021 Results 2 5 Appendix III - Case study: Watson-Marlow France A more efficient, safer and sustainable water purification plant Developed through voice of customer activity, the new Watson-Marlow Qdos CWT chemical metering pump combines the consumable life of the diaphragm pump with the accuracy,
Slide 26: Appendix IV - Our ESG journey in 2021
2021 Results Appendix IV Our ESG journey in 2021 Environment Social Governance • First Group Leadership Conference • Group Inclusion Plan launch to leadership community with ten commitments • Joined Business • First anniversary of Women’s Network • Established Group Education Fund with an initial £1
Slide 27: Appendix V - Cash conversion
2021 Results Appendix V Cash conversion Pounds (£) million 2021 2020 Adjusted cash generated from operations 277.7 275.8 Adjusted Operating Profit* 340.3 270.4 Cash conversion 82% 102% * See Appendix V for definition of adjusted profit measures 27
Slide 28: Appendix VI - Currencies
2021 Results Appendix VI Currencies Average exchange rates 2021 2020 Change Bank of England index 81.4 78.3 -4% US$ 1.37 1.29 -6% Euro 1.16 1.13 -3% RMB 8.85 8.93 +1% Won 1,569 1,524 -3% Brazilian Real 7.41 6.67 -11% Argentine Peso 130.24 91.65 -42% 28
Slide 29: Appendix VII - 2021 note on profit measures
2021 Results Appendix VII 2021 note on profit measures Pounds (£) million 2021 2020 The Group uses adjusted figures as key performance measures in addition Amortisation of acquisition-related intangible assets (21.4) (26.6) to those reported under IFRS. The Reversal of acquisition related fair value
Slide 30: Appendix VIII - Current guidance
2021 Results Appendix VIII Current guidance 2021 Actual 2022 Estimate Capex (as a percentage of sales) 5% 6% to 7% Effective Tax Rate 25.1% c. 26% Net Finance Cost £6.4m c.£7.0m Net impact of acquisitions and disposals on revenue - - Net impact of acquisitions and disposals on adjusted operating pro