Spirax Group Plc. · LSE:SPX
Spirax — H1 2022 Earnings Presentation
28 slides from Spirax's earnings presentation, July 2022
Slide 1: 2022 Half Year Results
2022 Half Year Results 2022 Half Year Results Six months ended 30th June 2022 Nicholas Anderson Group Chief Executive Nimesh Patel Chief Financial Officer
Slide 2: Agenda
2022 Half Year Results Agenda Half Year 2022 Highlights Nicholas Anderson Half Year 2022 Financial Review Nimesh Patel Operations and Outlook Nicholas Anderson 2
Slide 3: HY 2022 performance highlights
2022 Half Year Results HY 2022 performance highlights • Outstanding efforts by all colleagues to meet exceptional customer demand • Strong demand growth despite challenging environment and softening IP • Order books at record levels in all three Businesses • Active price management offsets inflation
Slide 4: HY 2022 operational highlights
2022 Half Year Results HY 2022 operational highlights • Successfully managed continued supply chain disruptions • Suspended trading with and within Russia; divested operations to local management • Continued revenue investments in H1, including accelerating our Digital initiatives • Expanded manufac
Slide 5: Vulcanic acquisition strengthens ETS
2022 Half Year Results Vulcanic acquisition strengthens ETS About Vulcanic: • Strategic fit with ETS expands platform to drive • Bespoke industrial electric heating solutions further sales growth and margin improvements • Largest supplier in Europe • Strong complementarity with Chromalox • Operates
Slide 6: Our ESG journey in H1 2022
2022 Half Year Results Our ESG journey in H1 2022 • Ten Inclusion Commitments being embedded globally • Joined UN Women’s Empowerment Principles; UN LGBTI Standards of Conduct for Business • Donated £284,000 to Ukraine Appeal; Group Education Fund made initial awards of £230,000 • Invested in new gl
Slide 7: Agenda
2022 Half Year Results Agenda Half Year 2022 Highlights Nicholas Anderson Half Year 2022 Financial Review Nimesh Patel Operations and Outlook Nicholas Anderson 7
Slide 8: Financial summary
2022 Half Year Results Financial summary Strong first half performance despite macroeconomic headwinds • Revenue up 15%, organically 30th June 2022 30th June 2021 Reported Organic⁺ Revenue £750.1m £643.7m +17% +15% • Operating profit up 9%, organically Operating profit* £178.8m £162.9m +10% +9% • Op
Slide 9: Sales bridge
2022 Half Year Results Sales bridge Strong organic growth across all850three Businesses driven by higher volumes and price increases • Currency tailwind of 2% 750 50.7 12.3 36.8 • Total organic increase of 15%: 650 11.3 (4.7) Steam Specialties +10% ETS +13% 550 Watson-Marlow +26% 750.1 • Expect typi
Slide 10: Profit bridge
2022 Half Year Results Profit bridge Benefits of operational gearing from higher volumes balanced by revenue investments for growth 200 • Currency tailwind of 2% 200 14.9 (3.7) 150 3.5 (1.8) 2.0 1.0 • Total organic increase of 9%: Steam Specialties +2% 150 100 ETS +9% Watson-Marlow +21% 100 178.8 50
Slide 11: Operating margin
2022 Half Year Results Operating margin Normalisation of margin in line with previous guidance • Operating margin 23.8%, 23.8% down 150bps organically, in line with guidance 25% • Full year impact of 2021 revenue investments 20% • Active price management 15% offsetting inflationary pressure • Antici
Slide 12: Cash flow
2022 Half Year Results Cash flow Investing for growth • Cash conversion^ of 44%, Cash flow (£ million) Adjusted operating profit* 30th June 2022 178.8 30th June 2021 162.9 guidance unchanged for full year Depreciation and amortisation (excluding IFRS 16) 17.0 17.8 • Working capital reflects higher D
Slide 13: Agenda
2022 Half Year Results Agenda Half Year 2022 Highlights Nicholas Anderson Half Year 2022 Financial Review Nimesh Patel Operations and Outlook Nicholas Anderson 13
Slide 14: Global Industrial Production output by quarter
2022 Half Year Results Global Industrial Production output by quarter IP Index Q4 2019 = 100 115.0 Forecast 110.8 109.9 110.0 108.9 107.8 106.4 107.9 106.6 104.4 106.9 105.0 103.1 105.1 Index - Q4 2019 = 100 102.6 104.0 100.9 102.5 100.0 100.0 97.6 95.2 Y-o-Y Global IP growth 95.0 Forecast 2020 2021
Slide 15: Steam Specialties
2022 Half Year Results Steam Specialties Acquisitions & 30th June 2021 Exchange Organic disposals 30th June 2022 Organic⁺ Reported Sales £361.9m £3.3m £36.8m £(1.4)m £400.6m +10% +11% Operating profit* £89.8m £0.9m £2.0m £(0.6)m £92.1m +2% +3% Margin* 24.8% 23.0% -180bps -180bps ⁺ Organic measures a
Slide 16: Electric Thermal Solutions
2022 Half Year Results Electric Thermal Solutions Acquisitions & 30th June 2021 Exchange Organic disposals 30th June 2022 Organic⁺ Reported Sales £88.9m £3.5m £12.3m - £104.7m +13% +18% Operating profit* £11.2m £0.6m £1.0m - £12.8m +9% +14% Margin* 12.6% 12.2% -60bps -40bps ⁺ Organic measures are at
Slide 17: Watson-Marlow
2022 Half Year Results Watson-Marlow Acquisitions & 30th June 2021 Exchange Organic disposals 30th June 2022 Organic⁺ Reported Sales £192.9m £4.5m £50.7m £(3.3)m £244.8m +26% +27% Operating profit* £71.3m £2.0m £14.9m £(1.2)m £87.0m +21% +22% Margin* 37.0% 35.5% -170bps -150bps ⁺ Organic measures ar
Slide 18: Engineering with Purpose: Customer case studies
2022 Half Year Results Engineering with Purpose Customer case studies 18
Slide 19: Summary and outlook
2022 Half Year Results Summary and outlook • Revenue up 17% to £750m; organic sales up 15% • Operating profit up 10% to £179m; up 9% organically • Operating margin 23.8%; down 150bps due to revenue investments • Vulcanic acquisition strengthens ETS and decarbonisation platform • Strong business perf
Slide 20: 2022 Half Year Results
2022 Half Year Results 2022 Half Year Results For the six months ended 30th June 2022 20
Slide 21: Appendices
2022 Half Year Results 2 1 Appendices
Slide 22: Appendix I - Case study: Spirax Sarco Argentina – Distillery
2022 Half Year Results 2 2 Appendix I - Case study: Spirax Sarco Argentina – Distillery Increasing production output without a major factory expansion When production output reaches capacity and major factory expansion is not an option finding a way to shorten production times in order to increase o
Slide 23: Appendix II - Case study: Chromalox USA
2022 Half Year Results 2 3 Appendix II - Case study: Chromalox USA Reliable temperature management of space launch system Ensuring the reliability of a space launch system is critical for guaranteeing the safety of an aircraft’s astronauts. Any risks of explosions need to be eliminated prior to igni
Slide 24: Appendix III - Case study: Watson-Marlow China
2022 Half Year Results 2 4 Appendix III - Case study: Watson-Marlow China Optimum fluid-handling performance for lithium-ion battery materials With many developed countries encouraging their populations to swich to electric vehicles, global battery demand is rising rapidly, with some projections pre
Slide 25: Appendix IV: Cash conversion
2022 Half Year Results Appendix IV Cash conversion 30th June 2022 (£m) 30th June 2021 (£m) Adjusted cash generated from operations 78.4 139.1 Adjusted Operating Profit* 178.8 162.9 Cash conversion 44% 85% * See Appendix VI for definition of adjusted profit measures. 25
Slide 26: Appendix V: Currencies
2022 Half Year Results Appendix V Currencies Average exchange rates 30th June 2022 30th June 2021 % 2021 % US dollar 1.30 1.38 +6% 1.37 +5% Euro 1.19 1.15 -3% 1.16 -3% RMB 8.40 8.96 +6% 8.85 +5% Won 1,593 1,546 -3% 1,569 -2% Brazilian real 6.63 7.42 +11% 7.41 +11% Argentine peso 145.55 125.98 -16% 1
Slide 27: Appendix VI: 2022 note on first half profit measures
2022 Half Year Results Appendix VI 2022 note on first half profit measures The Group uses adjusted figures as key performance measures in addition to those reported under IFRS. The Group’s management believes these measures provide valuable additional information for users of the financial statement
Slide 28: Appendix VII: Current full year guidance
2022 Half Year Results Appendix VII Current full year guidance 2021 Actual 2022 Estimate Capex (as a percentage of sales) 5% c. 7% Effective Tax Rate 25.1% c. 26% Net Finance Cost* £6.4m c. £7.0m Net impact of acquisitions and disposals on revenue* - adverse < 1% Net impact of acquisitions and dispo