Smiths Group Plc · LSE:SMIN
Smiths — Investor Day (November 2022)
25 slides from Smiths's investor day presentation, Nov 10, 2022
Slide 1: Pioneers of Progress: Capital Markets Event
PIONEERS OF PROGRESS Smiths Group plc Capital Markets Event IMPROVING OUR WORLD 10 November 2022 THROUGH SMARTER ENGINEERING
Slide 2: Agenda
Agenda Progress towards our near, medium, and longer-term commitments Paul Keel, Chief Executive Officer Divisional Pat McCaffrey, President Flex-Tek deep dives Julian Fagge, President Smiths Interconnect Sustainability at Smiths John Ostergren, Chief Sustainability Officer Financial progress Clare
Slide 3: Progress towards our near, medium, and longer-term commitments
Progress towards our near, medium, and longer-term commitments Chief Executive Officer Paul Keel
Slide 4: Opening Thoughts
Opening Thoughts Our value creation thesis is unchanged: – Smiths is an intrinsically strong company capable of more – Higher performance creates greater value for all stakeholders – There is clear evidence of progress already, with further potential to come Our momentum and improving execution will
Slide 5: Smiths Value Engine
Smiths Value Engine OUR PURPOSE OUR STRENGTHS OUR PRIORITIES World-Class Engineering Growth Leading Positions in Critical Markets PIONEERS OF Execution Global PROGRESS Capabilities Improving our world through smarter Robust Financial People engineering Framework | 5 |
Slide 6: Progress since our last Capital Markets Event
Progress since our last Capital Markets Event GROWTH EXECUTION PEOPLE Q123 trading update 13.2% organic growth Strong H222 results 4.1% organic growth FY22 Capital Medical sale SES 2.0 6 Master Black Belts and Markets Event completed early launch 24 Black Belts appointed to accelerate SES FY23 Capit
Slide 7: Accelerating Growth
Accelerating Growth Organic1 revenue growth Reported revenue growth 9.4% 4.1% 3.7% 3.4% 0.3% (4.0)% (4.8)% (7.3)% H1'21 H2'21 H1'22 H2'22 H1'21 H2'21 H1'22 H2'22 1 Organic revenue growth is adjusted to exclude the effects of foreign exchange and acquisitions in the first twelve months following the
Slide 8: Agenda: Continued momentum in the near term
Agenda Continued momentum Delivery of medium- Reaching our long-term in the near term term commitments potential | 8 |
Slide 9: Strong Momentum
Strong Momentum End market growth Smiths organic sales growth vs. order growth Business Primary end End market 11% Smiths business FY22 Growth FY23 outlook markets FY23 outlook vs. FY22 Accelerating Energy 5-7% 3.7% growth Industrial ++ • Aviation Return to Order (9.4)% growth • Other ++ 4%-4.5%
Slide 10: Smiths Group high-value model supports accretive price capture
Smiths Group high-value model supports accretive price capture R&D as % sales Smiths price vs. input inflation Quartile R&D % Sales 10 bps contribution to margin in FY22 Smiths 4.2% Wage inflation Top quartile 4%-6.5% Freight Incremental inflation 2nd quartile 2.5%-3.5% price Median 2.5% Raw materia
Slide 11: Smiths Detection's return to growth impact on Group growth
Smiths Detection’s return to growth has a positive impact for Smiths Group Drivers of Smiths Detection growth Impact of Smiths Detection growth (%) on Smiths Group growth (bps) 300 Covid-related Return to 3 of 4 of Smiths Detection’s contraction in growth in FY23 segments delivered revenue FY21 and
Slide 12: SES, restructuring, and supply chain actions will deliver earnings leverage
SES, restructuring, and supply chain actions will deliver earnings leverage and de-risk uncertainty SES Additional operating excellence • SES is central to how we solve problems and deliver results • Expanding presence in priority markets; continue to manage price and supply chain • Full-time team i
Slide 13: Maintaining FY23 guidance
Maintaining FY23 guidance FY23 summary • Strong demand in most end markets, with order growth above accelerating sales levels Expect to deliver • Our high-value business model enabling 4.0-4.5% organic price capture in excess of input cost inflation revenue growth with moderate margin • Smiths Detec
Slide 14: Agenda: Delivery of medium-term commitments
Agenda Continued momentum Delivery of medium- Reaching our long-term in the near term term commitments potential | 14 |
Slide 15: Industrial technology group with multi-dimensional resilience and growth potential
Industrial technology group with multi-dimensional resilience and growth potential Balanced portfolio and end market exposure • Leading positions in long-term, attractive growth markets • Geographic diversity across both developed and developing markets • Attractive mix of OE and recurring after-mar
Slide 16: Our markets are attractive – both resilient and expanding
Our markets are attractive – both resilient and expanding Global aviation passenger volume1 (annual change) Customer % Smiths Medium term market outlook end market FY22 sales Cumulative growth (right axis) 40% 35% 180% General Industrial 42% • Strong demand continues in most end markets 30% 150% 25%
Slide 17: Portfolio balanced geographically
Portfolio balanced geographically FY22 Smiths revenue by geography Worldwide capabilities to serve global customer Rest of World Localised supply chains APAC • Sourcing, manufacture and delivery typically in same region 10% Europe 16% • Shorter cycle times, reduces raw transportation, currency and t
Slide 18: Aftermarket revenues – growing, recurring, and margin expanding
Aftermarket revenues – growing, recurring, and margin expanding Aftermarket revenue as % total Aftermarket revenue as % total 80% 70% Aftermarket margins Aftermarket margins ~ 2.5x 80% ~ 1.75x 60% OE margins OE margins 70% 50% 60% 40% 50% 40% 30% 30% 20% Consistently high 20% after-market revenue Co
Slide 19: Clear progress towards medium-term financial targets
Clear progress towards medium-term financial targets 100%+ +M&A 18-20% 15-17% +M&A 7- 10% 4–6% ORGANIC REVENUE GROWTH1 EPS GROWTH ROCE2 OPERATING PROFIT MARGIN OPERATING CASH CONVERSION2 FY2020 (1.0)% (27.4)% 12.8% 12.8% 112% FY2021 (2.2)% +19.3% 13.9% 15.5% 129% FY2022 +3.8% +17.8% 14.2% 16.3% 80%
Slide 20: Agenda: Reaching our long-term potential
Agenda Continued momentum Delivery of medium- Reaching our long-term in the near term term commitments potential | 20 |
Slide 21: Our fundamental strengths underpin achievement of our long-term potential
Our fundamental strengths underpin achievement of our long-term potential OUR STRENGTHS • 171-year track record of innovating across multiple markets World-Class • R&D investment consistently above competition; strongest NPD pipeline in years Engineering • Unmatched global service network of 2000+ s
Slide 22: Powerful megatrends propel long-term growth
Powerful megatrends propel long-term growth, which Smiths is uniquely positioned to access Energy transition Insatiable demand for data • Fundamentally an • Global data consumption engineering opportunity doubling every 4 years3 • Particular opportunity for • Transmission data rates John Crane and F
Slide 23: Agenda
Agenda Continued momentum Delivery of medium- Reaching our long-term in the near term term commitments potential | 23 |
Slide 24: Executing our strategy and delivering our commitments
Executing our strategy and delivering our commitments • Taking full advantage of the steady growth enabled by our diverse market exposure • Developing high-impact new products, including compelling green technologies • Building out priority market adjacencies Growth • Supplementing organic growth wi
Slide 25: Smiths Value Engine
Smiths Value Engine OUR PURPOSE OUR STRENGTHS OUR PRIORITIES Organic Revenue World-Class Growth 4-6% (+M&A) Engineering Growth EPS Leading Growth 7-10% (+M&A) Positions in Critical Markets Execution PIONEERS OF ROCE 15-17% PROGRESS Global Capabilities Operating Improving our world Profit Margin 18-2