Smiths Group Plc · LSE:SMIN
Smiths — H1 2020 Earnings Presentation
31 slides from Smiths's earnings presentation, Apr 6, 2020
Slide 1: SMITHS GROUP PLC Interim Results
SMITHS GROUP PLC Interim Results 2020 1 www.smiths.com SMITHS GROUP PLC Interim Results 6 April 2020
Slide 2: Disclaimer
SMITHS GROUP PLC Interim Results 2020 2 Disclaimer This presentation contains certain statements that are forward-looking statements. They appear in a number of places throughout this presentation and include statements regarding the intentions, beliefs and/or current expectations of Smiths Group pl
Slide 3: Introduction
SMITHS GROUP PLC Interim Results 2020 3 Introduction ANDY REYNOLDS SMITH CHIEF EXECUTIVE
Slide 4: Agenda
SMITHS GROUP PLC Interim Results 2020 4 Agenda Opening remarks & COVID-19 Andy Reynolds Smith FY20 Interim Results John Shipsey Smiths: strong and resilient Andy Reynolds Smith
Slide 5: Opening remarks
SMITHS GROUP PLC Interim Results 2020 5 Opening remarks Good set of results Smiths strong and resilient Well positioned for long term growth
Slide 6: COVID-19: what we can see today
SMITHS GROUP PLC Interim Results 2020 6 COVID-19: what we can see today Safety of our people Managing disruption to maintain supply and service Increasing disruption with demand reduction MAXIMISING BUSINESS CONTINUITY
Slide 7: Prepared for uncertainty
SMITHS GROUP PLC Interim Results 2020 7 Prepared for uncertainty John Crane - c.50% Oil & Gas - negligible upstream exposure - c.70% aftermarket and service - Critical facilities and products Detection - Passenger airports closing or running at reduced rate - c. 50% aftermarket - Governmental and re
Slide 8: Smiths Medical
SMITHS GROUP PLC Interim Results 2020 8 Smiths Medical Sustaining growth and improvement Separation delayed due to uncertainty; strategic intent unchanged Playing a critical role in the global fight to combat COVID-19 FURTHER GOOD PROGRESS
Slide 9: Interim Results 2020
SMITHS GROUP PLC Interim Results 2020 9 Interim Results 2020 JOHN SHIPSEY CHIEF FINANCIAL OFFICER
Slide 10: Further good growth and cash
SMITHS GROUP PLC Interim Results 2020 10 Further good growth and cash1 H1 2020 H1 20192 Reported change Continuing Operations3 Revenue 1,240 1,143 +8% +3% underlying Operating profit 186 175 +6% +1% underlying Profit before tax 160 146 +10% Operating cash 202 109 +85% Cash conversion 109% Discontinu
Slide 11: H1 revenue by Division
SMITHS GROUP PLC Interim Results 2020 11 H1 revenue by Division1 JOHN CRANE SMITHS DETECTION FLEX-TEK SMITHS INTERCONNECT +6% +4% +3% (7)% £474m £378m £248m £140m Continued good growth led by OE Good growth led by OE Continued growth led by Aerospace Decline primarily driven Energy +c.11% Aviation +
Slide 12: H1 operating profit by Division
SMITHS GROUP PLC Interim Results 2020 12 H1 operating profit by Division1 JOHN CRANE SMITHS DETECTION FLEX-TEK SMITHS INTERCONNECT OP £101m +4% OP £57m +4% OP £46m +9% OP £9m (50)% Margin 21.3% Margin 15.0% Margin 18.4% Margin 6.5% - Volume growth - Positive volume growth - Continued strong - Lower
Slide 13: Smiths Medical sustaining growth
SMITHS GROUP PLC Interim Results 2020 13 Smiths Medical sustaining growth1 £434m +1% Continuing momentum Revenue - Infusion systems (3)% - Vascular access +3% - Vital Care +2% - Continued strong gross margin Operating £94m +1% Profit - Restructuring and one- off costs 1 Headline excludes non operati
Slide 14: Strong operating and free cash-flow
SMITHS GROUP PLC Interim Results 2020 14 Strong operating and free cash-flow £m H1 2020 H1 2019 Operating profit1 186 175 Capex net of depreciation and amortisation (10) (3) CONTINUING Change in working capital (2) (73) OPERATIONS Other 28 10 OPERATING CASH-FLOW1 202 109 109% cash conversion OPERATI
Slide 15: Strong well-managed balance sheet
SMITHS GROUP PLC Interim Results 2020 15 Strong well-managed balance sheet Pension Net debt Liquidity Two UK plans: - Net debt of £1.3bn (including - Cash generative business - £134m of leases) track record of ~100% cash • Accounting surplus of - Net debt: EBITDA 1.8x1 conversion £486m; overall full
Slide 16: Smiths – a strong and resilient company
SMITHS GROUP PLC Interim Results 2020 16 Smiths – a strong and resilient company ANDY REYNOLDS SMITH CHIEF EXECUTIVE
Slide 17: Well-positioned to navigate short-term challenges
SMITHS GROUP PLC Interim Results 2020 17 Well-positioned to navigate short-term challenges Critical nature of our products and services Flexible and resilient operating model Financially strong Actions to cut costs and preserve cash PROUD OF OUR PEOPLE
Slide 18: Designed to outperform
SMITHS GROUP PLC Interim Results 2020 18 Designed to outperform Well-positioned in long term, attractive growth markets Highly-differentiated, market-leading products and services Organic growth complemented by disciplined M&A World-class operational excellence A culture of innovation, entrepreneurs
Slide 19: Questions & Answers
www.smiths.com QUESTIONS & ANSWERS
Slide 20: Appendix
sm ths www.smiths.com APPENDIX
Slide 21: Good revenue growth
SMITHS GROUP PLC Interim Results 2020 21 Good revenue growth1,2 Revenue - £m 56 1,240 15 6 25 ( 10 ) 1,143 5 +6% +4% +3% (7)% +3% underlying +8% reported H1 2019 FX JOHN CRANE SMITHS FLEX-TEK SMITHS INTERCONNECT ACQUISITIONS & H1 2020 DETECTION DISPOSALS 3 1 Headline excludes non operating items as
Slide 22: Operating profit growth complemented by acquisition
SMITHS GROUP PLC Interim Results 2020 22 Operating profit growth complemented by acquisition1,2 Operating profit - £m (9) 9 186 2 3 1 4 175 1 +1% underlying +6% reported Operating Operating margin margin 15.3% 15.0% H1 2019 FX JOHN CRANE SMITHS FLEX-TEK SMITHS CENTRAL COSTS ACQUISITIONS & H1 2020 DE
Slide 23: Income statement
SMITHS GROUP PLC Interim Results 2020 23 Income statement1 £m H1 2020 H1 2019 Reported change # Revenue 1,240 1,143 +8% Headline2 operating profit 186 Z 175 +6% Amortisation of acquisition related intangible assets (28) (16) Legacy pension scheme arrangements 8 (29) Post acquisition integration cost
Slide 24: Organic growth: R&D investment
SMITHS GROUP PLC Interim Results 2020 24 Organic growth: R&D investment1 Cash costs Income statement costs (expensed and amortised) H1 2020 £62m £46m £45m 5.0% of revenue H1 2019 £55m 4.8% of revenue H1 2020 H1 2019 John Crane Smiths Detection Flex-Tek Smiths Interconnect Central 1 Continuing operat
Slide 25: Total Group - Strong balance sheet
SMITHS GROUP PLC Interim Results 2020 25 Total Group - Strong balance sheet £m (148) 1,300 92 (33) 1,270 (126) (11) 1,197 45 132 (24) Net Net Debt/ Net debt:EBITDA calculation1 Debt/ EBITDA EBITDA 1.8x - Net debt = £1,270 (as per above) 1.8x - EBITDA: 12 months rolling (H1 2020 + H2 2019) for both c
Slide 26: ESG external accreditations & metrics
SMITHS GROUP PLC Interim Results 2020 26 ESG external accreditations & metrics External recognitions supporting strong ESG fundamentals External recognitions Score Environmental Social Governance1 FY2007 to HY2020 reductions Our People are our most Average tenure on the Governance 1 • Greenhou
Slide 27: John Crane: Mission-critical solutions for global energy and process industries
SMITHS GROUP PLC Interim Results 2020 27 JOHN CRANE: Mission-critical solutions for global energy and process industries Revenue £474m COMPETITIVE STRENGTHS GROWTH DRIVERS COMPETITIVE (38% of Continuing Group) LANDSCAPE • A strong presence in flow control for • Oil & gas markets recovering driven by
Slide 28: Smiths Detection: Global leader in detection of security threats
SMITHS GROUP PLC Interim Results 2020 28 SMITHS DETECTION: A global leader in the detection and identification of security threats and contraband Revenue £378m COMPETITIVE STRENGTHS GROWTH DRIVERS COMPETITIVE (30% of Continuing Group) LANDSCAPE • A global leader with differentiated • Persistent and
Slide 29: Flex-Tek: Innovative components to heat and move fluids and gases
SMITHS GROUP PLC Interim Results 2020 29 FLEX-TEK: Innovative components to heat and move fluids and gases Revenue £248m COMPETITIVE STRENGTHS GROWTH DRIVERS COMPETITIVE (20% of Continuing Group) LANDSCAPE • High-performance products • Steady growth of US housing Headline OP • Leading capability in
Slide 30: Smiths Interconnect: High-speed, secure connectivity solutions
SMITHS GROUP PLC Interim Results 2020 30 SMITHS INTERCONNECT: Solutions for high-speed, secure connectivity in demanding applications Revenue £140m COMPETITIVE STRENGTHS GROWTH DRIVERS COMPETITIVE (11% of Continuing Group) LANDSCAPE • Innovative and technically • Increased connectivity Headline OP d
Slide 31: Smiths Medical: Medical devices and consumables
SMITHS GROUP PLC Interim Results 2020 31 DISCONTINUED OPERATIONS SMITHS MEDICAL: High-quality, cost-effective medical devices and consumables that are vital to patient care globally Revenue £434m COMPETITIVE STRENGTHS GROWTH DRIVERS COMPETITIVE LANDSCAPE • Category leader in our chosen markets • Age