Smiths Group Plc · LSE:SMIN
Smiths — FY2020 Earnings Presentation
36 slides from Smiths's earnings presentation, Sep 24, 2020
Slide 1: Smiths Group plc Annual Results
www.smiths.com SMITHS GROUP PLC ANNUAL RESULTS 24 SEPTEMBER 2020
Slide 2: Disclaimer
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 plc (the “Company”) and its subsidiaries (
Slide 3: Introduction
Introduction ANDY REYNOLDS SMITH CHIEF EXECUTIVE 3 SMITHS GROUP PLC | ANNUAL RESULTS 2020
Slide 4: Agenda
Agenda Opening remarks Andy Reynolds Smith FY2020 Annual Results John Shipsey FY2021 and beyond Andy Reynolds Smith 4 SMITHS GROUP PLC | ANNUAL RESULTS 2020
Slide 5: Leading now and in the future
Leading now and in the future A robust FY2020 – strong operationally, financially and strategically Leading now – managing well through the uncertainty, executing the strategic restructuring programme and further portfolio upgrading Leading in the future – strengthened position for consistent market
Slide 6: Annual Results 2020
Annual Results 2020 JOHN SHIPSEY CHIEF FINANCIAL OFFICER 6 SMITHS GROUP PLC | ANNUAL RESULTS 2020
Slide 7: Demonstrating strong financial fundamentals
Demonstrating strong financial fundamentals Top line resilience, active management, standout cash generation and continued financial strength Full year results; only H2 impacted by COVID Restructuring costs and write-downs recorded as headline Smiths Medical classified as discontinued operations 7 S
Slide 8: A robust performance
A robust performance FY 20201 FY 20191 Reported change Smiths - Continuing Operations2 Revenue 2,548 2,498 +2% (1)% underlying3, H2 (4)% Operating profit 382 427 excl. restructuring costs and write-downs4 (13)% underlying3 Operating profit 327 427 (23)% Smiths Medical - Discontinued Operations2 Reve
Slide 9: Good top line performance
Good top line performance1 JOHN CRANE SMITHS DETECTION FLEX-TEK SMITHS INTERCONNECT £955m +2% £806m 0% £478m (6)% £309m (5)% H1: +6% | H2: (2)% H1: +4% | H2: (3)% H1: +3% | H2: (13)% H1: (7)% | H2: (3)% Robust performance underpinned by strong Strong order book provided good Downturn in commercial a
Slide 10: Operating profit bridge
Operating profit bridge1 Operating profit - £m 2 9 ( 31 ) 427 ( 24 ) ( 56 ) 327 (13)% underlying Margin 15% (23)% reported FY2019 FX ACQUISITIONS & DISPOSALS 2 RESTRUCTURING COSTS WRITE-DOWNS UNDERLYING FY2020 1 Headline excludes non operating items as defined in note 3 of the accounts. Underlying m
Slide 11: Underpinning future performance
Underpinning future performance FY2020 To emerge stronger from the crisis and Strategic restructuring FY2021 TOTAL better-positioned for long-term growth programme Continuing Smiths Total Operations Medical Group and consistent outperformance Restructuring costs (31) (4) (35) (30) (65) (income state
Slide 12: Resilient operating profit and margin despite H2 disruptions
Resilient operating profit and margin despite H2 disruptions1 JOHN CRANE SMITHS DETECTION FLEX-TEK SMITHS INTERCONNECT £187m Includes £(18)m of restructuring (6)% £82m Includes £(31)m of restructuring costs (12)% £83m (14)% £26m Includes £(5)m of restructuring (35)% costs and write-downs and write-d
Slide 13: Smiths Medical
Smiths Medical1 Revenue Operating profit & margin - COVID-19 related growth Volume growth offset by: £918m in Infusion Systems and Vital Care (ventilators and £184m - Ventilator Challenge UK +4% tracheostomy tubes) (3)% - One-off costs - Vascular Access decline due to fewer elective - COVID-19 costs
Slide 14: Strong operating and free cash-flow (Total Group)
Strong operating and free cash-flow (Total Group) FY2020 FY2019 EBITDA1 610 666 Continuing operations £426m, Smiths Medical £184m Capex (109) (114) Change in working capital 53 (104) Other 21 26 Operating cash-flow1 575 474 123% cash conversion with IFRS16 and restructuring costs Interest1 (50) (58)
Slide 15: Financial strength
Financial strength Pension plans are well-funded, well-hedged and largely de-risked £1bn of liquidity headroom Net debt/EBITDA at 1.7x (1.9x1 including restructuring and write-downs) Well placed to navigate the current environment 1 EBITDA of £610m for continuing and discontinued operations. Please
Slide 16: Latest trend & outlook
Latest trend & outlook Guidance remains withdrawn First and second half considerations Stabilisation of latest revenue trends Phasing of the restructuring programme Resilience by design 16 SMITHS GROUP PLC | ANNUAL RESULTS 2020
Slide 17: ANDY REYNOLDS SMITH CHIEF EXECUTIVE
ANDY REYNOLDS SMITH CHIEF EXECUTIVE 17 SMITHS GROUP PLC | ANNUAL RESULTS 2020
Slide 18: Putting our people and customers first
Putting our people and customers first Safety of our people Smiths Excellence System supporting very strong business continuity throughout the pandemic Exceptional customer service Supporting the fight against COVID-19 18 SMITHS GROUP PLC | ANNUAL RESULTS 2020
Slide 19: Strong position to navigate uncertainty
Strong position to navigate uncertainty Flex-Tek John Crane Smiths Detection - Industrial segment improving - Robust performance despite - Strong Aviation order book - Continued slowdown in commercial disruptions provided good momentum in FY20 aerospace - H2 impact on OE but aftermarket - Other Secu
Slide 20: Executing the strategic restructuring programme
Executing the strategic restructuring programme Pulls together existing initiatives across the Group Further improving efficiency and speed Accelerating progress towards 18-20% target margin range Ensuring we are better positioned for long-term growth and outperformance Continued focus on optimising
Slide 21: Smiths Medical
Smiths Medical Uninterrupted focus supporting accelerated growth Significant agreement with U.S. government for syringe and needle production to support COVID-19 vaccine efforts Underlying improvement plans progressing well Separation delayed - strategic intent unchanged Two stronger companies 21 SM
Slide 22: Continued portfolio strengthening
Continued portfolio strengthening TRANSACTIONS Organic growth complemented by disciplined M&A 11 DISPOSALS c.£535m proceeds 10 ACQUISITIONS for c.£965m = 21 total value c.£1.5bn (FY16-FY20) Smiths Detection - PathSensors Smiths Medical – Smiths Interconnect – Reflex Access Scientific Photonics - Aug
Slide 23: Designed to outperform
Designed to outperform Resilient characteristics: Well positioned in long-term, attractive growth markets Technology differentiation A culture of innovation, entrepreneurship and relentless execution Increasing digitisation High proportion of Continued portfolio optimisation aftermarket services Sus
Slide 24: Leading now and in the future
Leading now and in the future A robust FY2020 – demonstrating our resilience by design Leading now – managing well through the uncertainty, but not complacent, continued focus on optimising performance Leading in the future – strengthened position for consistent market outperformance 24 SMITHS GROUP
Slide 25: Making a safer, more efficient and better connected world
www.smiths.com MAKING A SAFER, MORE EFFICIENT AND BETTER CONNECTED WORLD
Slide 26: Questions & Answers
www.smiths.com QUESTIONS & ANSWERS
Slide 27: Appendix
sm it h S www.smiths.com APPENDIX
Slide 28: ESG external accreditations & metrics
ESG external accreditations & metrics External recognitions supporting strong ESG fundamentals External recognitions Score Environmental Social Governance Governance 1 FY2007 to FY2020 reductions Our People are our most important Average tenure on the Board c.4.3 Aug Environment 2 • Greenhouse Gas (
Slide 29: Income statement
Income statement1 £M FY 2020 FY 2019 Reported change Revenue 2,548 2,498 +2% Headline2 operating profit 327 427 (23)% Amortisation of acquisition related intangible assets (57) (42) Legacy pension scheme arrangements 7 (30) Post acquisition integration costs and fair value adjustment unwind (4) (23)
Slide 30: Organic growth - R&D investment
Organic growth - R&D investment1 Cash costs Income statement costs (expensed and amortised) £93m £89m FY 2020 £119m 4.7% of revenue FY 2019 £111m 4.5%of revenue FY 2020 FY 2019 John Crane Smiths Detection Flex-Tek Smiths Interconnect Central 1 Continuing operations 30 SMITHS GROUP PLC | ANNUAL RESUL
Slide 31: Total Group - balance sheet
Total Group - balance sheet Derivatives, FX (148) 1,300 273 and other non- £m cash movements 1,197 45 (126) 48 1,141 (36) Net Net Debt/ Debt/ EBITDA Net debt:EBITDA calculation1 EBITDA 1.8x - Net debt = £1,141m (as per above) 1.7x - EBITDA excluding restructuring and write- downs for both continuing
Slide 32: John Crane - Mission-critical solutions for global energy and process industries
John Crane - Mission-critical solutions for global energy and process industries R EVENUE £955m COMPETITIVE STRENGTHS GROWTH DRIVERS COMPETITIVE (37% of Continuing Group) LANDSCAPE - A global leader in mission-critical - Long-term underlying energy demand, especially in H EADL INE O P technology for
Slide 33: Smiths Detection - Detection and screening technologies
Smiths Detection - Detection and screening technologies for the identification of safety and security threats R EVENUE £806m COMPETITIVE STRENGTHS GROWTH DRIVERS COMPETITIVE LANDSCAPE (32% of Continuing Group) - A global market leader with - Persistent and evolving terror threats - Competitors range
Slide 34: Flex-Tek - Innovative components to heat and move fluids and gases
Flex-Tek - Innovative components to heat and move fluids and gases R EVENUE £478m COMPETITIVE STRENGTHS GROWTH DRIVERS COMPETITIVE LANDSCAPE (19% of Continuing Group) - High-performance products - Through cycle growth of the US housing - Competitors range from large H EADL INE O P - Leading capabili
Slide 35: Smiths Interconnect - Solutions for high-speed, secure connectivity
Smiths Interconnect - Solutions for high-speed, secure connectivity in demanding applications R EVENUE £309m COMPETITIVE STRENGTHS GROWTH DRIVERS COMPETITIVE LANDSCAPE (12% of Continuing Group) - Innovative and technically differentiated - Increased connectivity in space - Competitors range from lar
Slide 36: Smiths Medical - High-quality, cost-effective medical devices
DISCONTINUED OPERATIONS Smiths Medical - High-quality, cost-effective medical devices and consumables that are vital to patient care globally R EVENUE £918m COMPETITIVE STRENGTHS GROWTH DRIVERS COMPETITIVE LANDSCAPE - A category leader in served segments - Ageing populations with increasing - Compet