Imi Plc · LSE:IMI
Imi — FY2023 Earnings Presentation
27 slides from Imi's earnings presentation, February 2024
Slide 1: 2023 Preliminary Results
Breakthrough engineering for a better world 2023 Preliminary Results Roy Twite – Chief Executive Officer Daniel Shook – Chief Financial Officer
Slide 2: Cautionary statement
Cautionary statement By attending (whether in person, by telephone or webcast) this presentation or by reading the presentation slides, you agree to be bound by the limitations and conditions set out in this Cautionary statement. This presentation is for your information only and contains forward-lo
Slide 3: 2023 Preliminary Results
Breakthrough engineering for a better world 2023 Preliminary Results Roy Twite – Chief Executive Officer Daniel Shook – Chief Financial Officer
Slide 4: Accelerating organic growth, delivering record profits
Accelerating organic growth, delivering record profits • 6% organic sales growth, 7% sales growth, 12% adjusted profit before tax growth • Adjusted operating margin up 90bps to 18.7%, approaching 20% target • Complexity reduction programme delivered £20m benefits, concluding in 2024 • Operating cash
Slide 5: IMI business platforms fully aligned to purpose-led strategy
IMI business platforms fully aligned to purpose-led strategy Process Automation Industrial Automation Climate Control Life Science & Fluid Control Transport Formerly: IMI Critical IMI Precision IMI Hydronic IMI Precision (PFOEM) IMI Precision Automation Life Technology Aligned to applications and cu
Slide 6: Better World sectors with sustainable growth characteristics
Better World sectors with sustainable growth characteristics Process Industrial Climate Life Science & Transport Automation Automation Control Fluid Control Sector Percent of 2023 sales 37% 25% 18% 12% 8% Labour productivity & Energy efficiency & Energy security Demographics Emissions reduction shor
Slide 7: Strategic pillars underpin financial framework
Strategic pillars underpin financial framework Our Purpose Financial framework through-cycle Breakthrough engineering for a better world Organic growth 5% Adjusted operating margin Strategic Pillars 20% Customer satisfaction Cash conversion > 90% Market-led innovation Return on invested capital > 12
Slide 8: Business review
Business review Daniel Shook – Chief Financial Officer 8
Slide 9: Delivering strong financial performance in 2023
Delivering strong financial performance in 2023 Revenue Adjusted operating profit Adjusted operating margin £2,196m +7% £411m +13% 18.7% +90bps 2022: £2,049m 2022: £364m 2022: 17.8% Adjusted basic EPS Cash conversion Dividend per share 116.8p +11% 89% +10% 2022: 105.5p 2022: 80% 2023: 28.3p (2022: 2
Slide 10: Strong organic revenue and profit growth
Strong organic revenue and profit growth Revenue (£m) Adjusted operating profit (£m) +7% +13% 18.7% 37 121 17.8% 1 9 411 3 2,196 23 364 2,049 2022 FX Acquisitions / Organic 2023 2022 FX Acquisitions / Organic 2023 Disposal* Disposal* 10 * Acquisition of Bahr (June 2022), CorSolutions (October 2022)
Slide 11: Clear pathway to our 20% margin target
Clear pathway to our 20% margin target Adjusted operating margin % • £22m future restructuring benefits from 20% through-cycle Growth complexity reduction Complexity reduction • Continued focus on growth in high margin sectors and aftermarket 18.7% 14.2% 2019 2023 Target 11
Slide 12: Better World strategy delivering growth
Better World strategy delivering growth £m 2023 2022 Growth Organic* Revenue 2,196 2,049 +7% +6% • Group revenue growth of 7% and adjusted operating profit growth of 13% Adjusted operating costs (1,785.4) (1,685.2) Adjusted operating profit 410.6 363.8 +13% +10% • Organic revenue growth of 6% and or
Slide 13: Delivering revenue and order growth
Delivering revenue and order growth Automation Revenue 2023 2022 Growth Organic* Process Automation £807m £713m +13% +14% • Strong order intake and continued Industrial Automation £543m £535m +1% 0% organic growth in Process Automation Total Revenue £1,350m £1,248m +8% +8% Adjusted Operating Profit
Slide 14: Strong cash delivery
Strong cash delivery £m 2023 2022 Adjusted operating profit 411 364 • Adjusted operating cash flow Depreciation & amortisation 63 61 significantly higher, cash conversion at Lease depreciation 29 32 89% Adjusted EBITDA 503 457 • Inventory growth reflects significant Inventory (32) (47) increase in P
Slide 15: Complexity reduction continues to deliver benefits
Complexity reduction continues to deliver benefits £m 2023 2024 2025 Restructuring charge • Restructuring benefits of £20m delivered Automation (31) (27) - in 2023 Life Technology (17) (12) - • Programme accelerated and investment Total charge (48) (39) - to complete in 2024 Cash impact (40) (27) (5
Slide 16: Significant progress towards £300m+ free cash flow
Significant progress towards £300m+ free cash flow Annual free cash flow generated (£m) • Significant increase in free cash flow in 2023 as working capital outflow normalised 300+ • Delivery of £300m+ supported by future complexity reduction benefits of £22m, non-repeat of costs and continued 234 gr
Slide 17: Disciplined approach to capital allocation
Disciplined approach to capital allocation Our Priorities Capital deployed (£m) 600 Organic growth £200m share buyback R&D, Growth Hub, Capex 500 completed in 2021 400 M&A 300 Better World acquisitions 200 100 Returned to shareholders Dividends and share buybacks 0 2019 2020 2021 2022 2023 Net debt
Slide 18: Outlook: continued progress in 2024
Outlook: continued progress in 2024 Adjusted EPS (p) • Based on current market conditions, we expect full year adjusted EPS to be between 120p – 126p 120p – 126p • Strong revenue growth in Automation, Life Technology broadly flat • Continued margin progression • Interest reducing to £17m 116.8p • Ta
Slide 19: Strategy update
Strategy update Roy Twite – Chief Executive Officer 19
Slide 20: Better World strategy compounding profitable growth
Better World strategy compounding profitable growth Adjusted EPS (pence) +12% CAGR 116.8 105.5 92.0 79.7 73.2 Better World Strategy launched 2019 2020 2021 2022 2023 20
Slide 21: Improving quality and resilience of IMI portfolio
Improving quality and resilience of IMI portfolio 2014 2023 Increased aftermarket content North North America America 2014 2023 Rest 19% Rest 30% 27% of World 31% of World c.35% c.45% £1.7bn £2.2bn Growth market exposure 50% 43% Europe Europe Automation Life Sciences -1% 14.2% +3% 18.7% Smart Buildi
Slide 22: Organic investment and M&A delivering growth
Organic investment and M&A delivering growth Doubled hydrogen orders Heatmiser growth synergies Successful Adaptas integration Delivered £15m orders in 2023 Performance in line with business case Strong pipeline of synergy orders VIVO Electrolyser gaining traction Launched in Germany and France Shar
Slide 23: Minimising our environmental impact
Minimising our environmental impact • Improving our carbon footprint • Scope 1 & 2 intensity improved by 5% since 2022, 29% since 2019 • Scope 1 & 2 net zero by 2040, Scope 3 net zero by 2050 • Submitted near term and net zero targets to the SBTi for validation • Reducing water usage • Water intensi
Slide 24: Empowering people to create a better world
Empowering people to create a better world • Employee engagement remains high Our new values • Gender balance • 44% Female Board Always care • 50% Female Exec • 25% Women in Management target • New leadership and development initiatives Be curious • New values launched Create impact Responsible busi
Slide 25: Key messages
Key messages • Purpose-led • Business aligned • 2024 full year adjusted strategy continues to better world EPS expected to be to deliver results growth trends between 120p – 126p 25
Slide 26: Appendix
Appendix 26
Slide 27: Foreign exchange
Foreign exchange 2023 2022 Change Ready reckoner for translation Average rates impact of movement in FX rates on Euro 1.15 1.17 -2% 2024 FY performance US Dollar 1.24 1.24 - Sensitivity to +/- Adjusted Revenue Dec-23 Dec-22 Change 1 cent move in: operating profit Closing rates Euro +/- £7.0m +/- £1.