Imi Plc · LSE:IMI
Imi — H1 2023 Earnings Presentation
30 slides from Imi's earnings presentation, July 2023
Slide 1: 2023 Interim Results
2023 Interim Results Roy Twite – Chief Executive Daniel Shook – Finance Director
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 Interim Results
2023 Interim Results Roy Twite – Chief Executive Daniel Shook – Finance Director
Slide 4: Strategic execution delivering sustainable growth
Strategic execution delivering sustainable growth • 7% organic sales growth, 12% sales growth, 17% adjusted profit before tax growth • Adjusted operating margin 140bps higher than H1 2022 • Complexity reduction programme delivering £8m benefits • Operating cash flow significantly higher due to good
Slide 5: Positioning IMI for accelerated growth
Positioning IMI for accelerated growth Process Industrial Climate Life Science & Transport Automation Automation Control Fluid Control Formerly: IMI Critical IMI Precision IMI Hydronic IMI Precision (PFOEM) IMI Precision Automation Life Technology Aligned to applications and customers Leveraging eng
Slide 6: Better World sectors with sustainable growth characteristics
Better World sectors with sustainable growth characteristics Process Industrial Climate Life Science & Transport Sector Automation Automation Control Fluid Control Percent of 2022 sales 35% 22% 17% 15% 11% Labour productivity Energy efficiency Energy security Demographics Emissions reduction & short
Slide 7: Strategic pillars underpin financial framework
Strategic pillars underpin financial framework Financial framework through-cycle Our Purpose Breakthrough Engineering for a better world Organic growth NEW 5% Strategic Pillars Adjusted operating margin 20% Customer satisfaction Cash conversion NEW 90% Market-led innovation Return on invested capita
Slide 8: Business review
Business review Daniel Shook – Finance Director 8
Slide 9: Delivering excellent first half performance
Delivering excellent first half performance Revenue Adjusted operating profit Adjusted operating margin £1,084m +12% £193m +21% 17.8% +140bps 2022 H1: £972m 2022 H1: £160m 2022 H1: 16.4% Adjusted basic EPS Cash conversion Interim dividend 54.0p +15% 75% +10% 2022 H1: 47.1p 2022 H1: 49% 2023 H1: 9.1p
Slide 10: Strong organic revenue and profit growth
Strong organic revenue and profit growth Revenue (£m) Adjusted operating profit (£m) 21 66 5 11 7 35 1,084 193 160 972 H1 2022 FX Acquisitions / Organic H1 2023 H1 2022 FX Acquisitions / Organic H1 2023 Disposal* Disposal* * Acquisition of Bahr (June 2022) CorSolutions (October 2022) and Heatmiser (
Slide 11: Delivering growth across key sectors
Delivering growth across key sectors 2023 H1 2022 H1 Growth • Strong order intake and continued Sector Sales Sales Adjusted Organic* organic growth in Process Automation Process Automation £366m £312m 17% 15% Industrial Automation £243m £226m 8% 2% • Industrial Automation delivered good Climate Cont
Slide 12: Better World strategy delivering growth
Better World strategy delivering growth £m 2023 H1 2022 H1 Growth Organic* • Group revenue growth of 12% and Revenue 1,084 972 12% 7% adjusted operating profit growth of 21% Adjusted operating costs (891.2) (812.2) • Organic revenue growth of 7% and Adjusted operating profit 192.8 159.8 21% 13% orga
Slide 13: Maintaining continued cash discipline
Maintaining continued cash discipline £m 2023 H1 2022 H1 • Adjusted operating cash flow significantly Adjusted operating profit 193 160 higher than prior period, cash conversion Depreciation & amortisation 31 28 at 75% Lease depreciation 15 14 Adjusted EBITDA 239 202 • Inventory growth reflects sign
Slide 14: Step change in free cash flow generation
Step change in free cash flow generation Annual free cash flow generated (£m) • Normalisation of working capital • Restructuring benefits of £42m and 300+ non-repeat of costs • Continued growth in attractive sectors 158 2022 Working capital Rationalisation Growth Potential * Free cash flow is cash f
Slide 15: Disciplined approach to capital allocation
Disciplined approach to capital allocation Priorities Capital deployed (£m) 600 13.2% ROIC Organic growth £200m share buyback completed in 2021 500 R&D, Growth Hub, Capex 12.7% ROIC 400 M&A 300 11.4% ROIC Better World acquisitions 200 12.3% ROIC Returned to shareholders 100 Dividends and share buyba
Slide 16: Complexity reduction continues to deliver benefits
Complexity reduction continues to deliver benefits £m Restructuring charge 2023 H1 2023 FY 2024 FY 2025 FY • Restructuring benefits of £8m delivered in the first half Profit and loss charge (24) (43) (39) (5) Cash impact (23) (35) (32) (5) • £20m benefits expected in 2023 £m 2023 H1 2023 FY 2024 FY
Slide 17: Group outlook
Group outlook • Following the strong first half results, based on current market conditions, we expect 2023 full year adjusted EPS to be in the range of 112p to 117p • Divisional guidance remains unchanged 17
Slide 18: Strategy update
Strategy update Roy Twite – Chief Executive 18
Slide 19: Better World strategy compounding profitable growth
Better World strategy compounding profitable growth Adjusted EPS (pence) 112 - 117 -2% CAGR +13% CAGR 105.5 92.0 79.7 78.0 73.2 73.2 62.2 65.3 59.8 Better World Strategy launched 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023e* * 2023 guidance range 19
Slide 20: Creating value through a disciplined approach to M&A
Creating value through a disciplined approach to M&A EV: £69m IMI PBM operating profit contribution (£m) September 2019 2023e ROIC* +100% > 10% Delivered returns above On track to deliver WACC by year 3 returns in line with Group ROIC by year five 2019 2020 2021 2022 2023e* Year 1 Year 2 Year 3 Year
Slide 21: Sustainability: Unlocking the Hydrogen economy
Sustainability: Unlocking the Hydrogen economy Hydrogen Electrolysis Hydrogen Refuelling Stations Case Study: Case Study: Control valves supporting the balance High pressure control components for of plant for < 5MW electrolysers Hydrogen refuelling stations Hydrogen Production Hydrogen Infrastructu
Slide 22: Minimising our environmental impact
Minimising our environmental impact • Improving our carbon footprint IMI Process Automation Orange County, USA • Scope 1 & 2 intensity improved by 8% since 2022, 26% since 2019 • Scope 1 & 2 net zero by 2040 • Scope 3 net zero by 2050 • Reducing water usage • Water intensity improved by 5% since 202
Slide 23: Empowering people to create a Better World
Empowering people to create a Better World • Employee engagement remains high • Gender balance • 44% Female Board • 43% Female Exec • 25% Women in Management target • New leadership and development initiatives Pride Celebrations – Birmingham, UK Responsible business underpins everything we do 23
Slide 24: Key messages
Key messages • Purpose-led • Business aligned • Full year adjusted strategy continues to Better World EPS range from to deliver results growth trends 112p to 117p 24
Slide 25: IMI
IMI SA Breakthrough Engineering for a better world. 25
Slide 26: Appendices
Appendices IMI
Slide 27: Revenue, profit and margin growth in all divisions
Revenue, profit and margin growth in all divisions Adjusted Organic £m 2023 H1 2022 H1 growth (%) growth (%)* Revenue IMI Precision Engineering 517 485 7% 2% IMI Critical Engineering 366 312 17% 15% IMI Hydronic Engineering 201 175 15% 5% Total 1,084 972 12% 7% Operating Profit IMI Precision Enginee
Slide 28: Strong first half performance in all divisions
Strong first half performance in all divisions 2023 H1 Acquisition / 2022 H1 IMI Precision Engineering £m Adjusted Disposal FX Organic Adjusted Revenue 517 5 19 8 485 Organic growth* 2% 7% Operating profit 101.4 0.5 3.6 9.1 88.2 Operating margin 19.6% 18.2% 2023 H1 2022 H1 IMI Critical Engineering £
Slide 29: Complexity reduction continues to deliver benefits
Complexity reduction continues to deliver benefits 2023 H1 2023 FY 2024 FY 2025 FY £m Restructuring charge IMI Precision Engineering (19) (37) (2) – IMI Critical Engineering (5) (6) (37) (5) IMI Hydronic Engineering – – – – Total charge (24) (43) (39) (5) Cash impact (23) (35) (32) (5) 2023 H1 2023
Slide 30: Foreign exchange
Foreign exchange 2023 H1 2022 H1 Change Ready Reckoner for translation Average rates impact of movement in FX rates Euro 1.14 1.19 -4% on 2023 FY performance US Dollar 1.23 1.30 -5% Sensitivity to +/- Adjusted Revenue Jun-23 Dec-22 Change 1 cent move in: operating profit Closing rates Euro +/- £6.3m