Spirax Group plc. · LSE:SPX
Spirax — Spirax-Sarco Engineering — Investor Presentation (March 2023)
44 slides from Spirax's investor presentation, March 2023
Slide 1: Investor opportunities
Investor …delivering for customers opportunities …including our colleagues …protecting the environment In our world-leading Engineering niche Businesses our difference… …creating shareholder …building stronger value communities …collaborating with suppliers
Slide 2: Spirax-Sarco Engineering plc
Investor Opportunities 2 Spirax-Sarco Engineering plc A British multi-national engineering Group Three world-leading niche engineering Businesses Global addressable market: £12.5bn; 14% market share* Business model Performance • Direct sales model key to delivering customer value • Average revenue g
Slide 3: Group structure 2022
Investor Opportunities 3 Group structure 2022 Three world-leading niche Businesses Group pro-forma revenue 28% Thermal Energy Management £1,734m 22% 50% industrial and commercial steam electrical process heating and niche peristaltic pumps and systems temperature management associated fluid path sol
Slide 4: Steam Specialties
Investor Opportunities 4 Steam Specialties Solutions for the control and management of industrial steam systems Steam uses: heating and curing, cleaning, sterilisation, hot water Products generation, space heating and humidification Benefits of steam: high energy content, easy to control, environmen
Slide 5: Electric Thermal Solutions
Investor Opportunities 5 Electric Thermal Solutions Solutions for process heating and temperature management Uses: electric heating for mission-critical industrial processes, Products freeze protection for pipes, valves and tanks and component heating Benefits of electric solutions: easy to incorpor
Slide 6: Complementarity of steam and electric heating
Investor Opportunities 6 Complementarity of steam and electric heating Thermal Energy Management • Electricity and steam have complementary uses • The choice between heating mediums is driven by application needs or customer circumstances
Slide 7: ETS strategic market sector focus
Investor Opportunities 7 ETS strategic market sector focus Dual brand strategy leverages sector and application complementarity Electric Thermal Solutions Total Addressable Market (2022) = £3.9bn Strategic End Markets Non-strategic End Markets Advanced Health and Energy Transition Materials Various
Slide 8: Drivers of decarbonisation opportunities
Investor Opportunities 8 Drivers of decarbonisation opportunities • Governments/legislation Drivers • Stakeholder sentiment CO2 Heat contributes 40% • Energy intensity of industrial processes of global CO2 emissions Only 5% of industrial heat generated from electricity Represents 50% Industry • Infr
Slide 9: TargetZero
Investor Opportunities 9 TargetZero Steam decarbonisation solutions by Spirax-Sarco Engineering SteamVolt SteamBattery Low Voltage & Medium Voltage First Fit Boiler Solution Original Equipment Manufacturer (OEM) Boiler electric heat Thermal storage capable of generating and control technology steam
Slide 10: Watson-Marlow
Investor Opportunities 10 Watson-Marlow Solutions for the control and management of industrial fluid paths Uses: pumping and fluid control in a broad range of critical applications, from chemical dosing to Biopharm production Products Benefits of peristaltic pump technology: sterile applications (pu
Slide 11: Our direct sales business model
Investor Opportunities 11 Our direct sales business model Positioning us well to create value Customer closeness: Our direct sales business model creates a unique understanding of our customers’ needs. We build deep, long-term relationships as we help our customers solve their difficult productivity
Slide 12: Business model: direct sales, low ticket, critical items
Investor Opportunities 12 Business model: direct sales, low ticket, critical items Sales by value driver* 85% Maintenance and repair sales that maintain existing systems, supported by the end users’ opex of Group revenue is generated budgets, with a typical invoice value from annual maintenance and
Slide 13: Diverse markets and broad customer base
Investor Opportunities 13 Diverse markets and broad customer base A source of resilience 14% 23% 2% Pharmaceutical & Biotechnology c.60% of Group revenue derived from 3% Food & Beverage defensive, less cyclical, end markets 3% OEM Machinery Oil & Gas 3% 85% of Group revenue derived from 4% 2022 Chem
Slide 14: Applications in diverse industrial sectors
Investor Opportunities 14 Applications in diverse industrial sectors Pharmaceutical & Food & Beverage OEM Machinery Oil & Gas Chemical Power Generation Biotechnology Steam is used for blanching, cooking, Original Equipment Manufacturers Electrical heating products reduce fluid Steam and electricity
Slide 15: Industrial production annual growth rates
Investor Opportunities 15 Industrial production annual growth rates An important driver of growth
Slide 16: Strong and consistent drivers of growth
Investor Opportunities 16 Strong and consistent drivers of growth Organic growth drivers: Inorganic growth drivers: Internal Bolt-on or related acquisitions • Geographic expansion • New technologies • New product development • Increased geographic coverage • Self-generated sales • Expansion of addre
Slide 17: Our unique global coverage
Investor Opportunities 17 Our unique global coverage Operating Sales Indirect units* offices presence 46 Countries 21 Countries 98 Countries Key facts: • Over 10,400 employees • Over 2,100 direct sales & service engineers • Direct sales presence in 67 countries • 146 operating units* • Serving custo
Slide 18: Manufacturing footprint
Investor Opportunities 18 Manufacturing footprint 40 manufacturing units in 16 countries EMEA: Americas: UK (x4) USA (x9) France (x7) Argentina Germany (x4) Brazil (x2) Spain (x2) Mexico (x2) Italy Netherlands Asia Pacific: Denmark China (x2) Sweden Australia India Japan Steam Specialties manufactur
Slide 19: Good regional coverage
Investor Opportunities 19 Good regional coverage EMEA: 40% 2022 pro-forma sales by destination Steam 41% ETS 32% WM 42% Emerging markets: 7% Americas: 36% Asia Pacific: 24% Steam 24% ETS 56% Steam 35% ETS 12% WM 43% WM 15% Emerging markets: 6% Emerging markets: 21% Steam – Steam Specialties ETS – El
Slide 20: £12.5bn total addressable market, 14% share
Investor Opportunities 20 £12.5bn billion market size 14% market share* 14% share £3.4bn £5.2bn Steam Specialties market Steam Specialties market share 2022 total addressable market size Electric Thermal Solutions market 10% share £12.5bn Electric Thermal Solutions market share Niche pumps and assoc
Slide 21: Our Strategy
Investor Opportunities 21 Our Strategy Objective: Growth that outperforms our markets Focus: Doing better what we already do well Steam Specialties Electric Thermal Solutions Watson-Marlow • To become a global leader in industrial sustainability • Customers’ first choice for premium engineered elect
Slide 22: Six strategic themes
Investor Opportunities 22 Six strategic themes Increase direct Develop the Broaden our sales effectiveness knowledge and global presence through market skills of our expert sector focus sales and service teams 1. 2. 3. Leverage R&D Optimise supply Operate sustainably investments chain effectiveness
Slide 23: Engineering with Purpose
Investor Opportunities 23 Engineering with Purpose Strategic agenda aligned with our Purpose – creating value for all stakeholders Our Colleagues Our Communities We focus on what matters Supporting our local £2m to our colleagues wherever £492m communities and removing paid in wages, salaries and ca
Slide 24: Helping our customers on their sustainability journey
Investor Opportunities 24 Helping our customers on their sustainability journey Customer environment benefits Annual estimated customer CO2 energy and water savings from a select range of 20 product categories sold in 2022 17.7m 235m 88.4m Tonnes of CO2 GJ per year m3 per year per year of energy of
Slide 25: 2022 acquisitions
Investor Opportunities 25 2022 acquisitions Acquisition Date January 2022 September 2022 November 2022 Consulting, digital connectivity and monitoring European industrial electric heating group, the US based specialist in custom electric thermal of energy intensive processes to help industrial large
Slide 26: Track record of growth and margin expansion
Investor Opportunities 26 Track record of growth and margin expansion 30% £1,600 Sales 28% Sales from 2017 acquisitions 10 year revenue CAGR: >9% p.a. £1,400 Reported profit margin 26% Margin excluding 2017 acquisitions £1,200 24% Underlying margin increased £1,000 22% from 16.5% to >25% Sales £ mil
Slide 27: Outperforming Industrial Production growth
Investor Opportunities 27 Outperforming Industrial Production growth
Slide 28: Delivering shareholder value
Investor Opportunities 28 Delivering shareholder value 55 year track record of earnings and dividend growth EPS EPS CAGR: 12% over 10 years 377.2p DPS 152.0p DPS CAGR: 11% over 10 years * Special dividends of 25p in 2010, 100p in 2012 and 120p in 2014 Pence per share 125.6p 53.0p * * * 16.4p 7.5p 19
Slide 29: Capital allocation policy
Investor Opportunities 29 Capital allocation policy 4. Return capital to shareholders Special dividends in 2010, 2012 & 2014 Return on capital employed (ROCE) averaged >50% p.a. for the last 5 years. 3. Reduce our debt Net debt 1.5x EBITDA at 31st December 2022* Cash conversion averages over 80% for
Slide 30: Investing in future growth
Investor Opportunities 30 Investing in future growth Adjusted cash from operations 275.8 277.7 300 242.9 238.1 214.9 100% 203.8 185 200 % cash conversion 131.5 146.2 100 52.5 27.4 4.8 50% £ million - 2014 2015 2016 2017 2018 2019 2020 2021 2022 (100) (130.5) (200) 0% (235.8) (228.8) 0.35x (300) EBIT
Slide 31: Appendices
Investor Opportunities 31 Appendices
Slide 32: Financial performance
Appendix I 32 Financial performance Strong financial performance against a weakening macro-economic backdrop 2022 2021 Reported Organic⁺ • Revenue up 14%, organically Revenue £1,610.6m £1,344.5m +20% +14% Operating profit £380.2m £340.3m +12% +7% • Operating profit up 7%, organically Operating profi
Slide 33: Watson-Marlow Fluid Technology Solutions
Appendix II 33 Watson-Marlow Fluid Technology Solutions Ten brands offering customers an unrivalled breadth of services for the fluid path Low-flow peristaltic metering pumps Precision pump High-flow industrial hose Low-flow, high precision Aseptic filling (acquired in 1990) and transfer tubing pump
Slide 34: Steam and condensate loop
Appendix III 34 Steam and condensate loop Applications overview Steam generation Steam distribution and utilisation Packaged Solutions & Energy Recovery Feedwater Boiler level Bottom Start-up systems Pressure control Flow metering Steam traps Ancillaries Humidification Heat transfer Flash steam Cond
Slide 35: Single-use bioprocessing
Appendix IV 35 Single-use bioprocessing Complete single-use fluid technology expertise
Slide 36: Group competitors
Appendix V 36 Group competitors EMEA Asia Pacific Americas Steam Specialties Armstrong International (USA) Private ARI Armaturen (Germany) Private Forbes Marshall (India) Private TLV (Japan) Private Valsteam Adca (Portugal) Private Other product specialists: Emerson (US
Slide 37: Our people and Values
Appendix VI 37 Our people and Values Our Values underpin decision-making, guide our conduct and shape our culture Safety: Excellence: We approach challenges with We care about people, helping passion, aiming for excellence in them stay safe and look after all we do, to build a sustainable their own
Slide 38: Accelerating our sustainability agenda
Appendix VII 38 Accelerating our sustainability agenda
Slide 39: Our Group Inclusion Commitments
Appendix VIII 39 Our Group Inclusion Commitments Wherever we work in the world, we will make our difference for our colleague. Through our Group Inclusion Commitments, we commit to: Ensuring the best start for new Becoming an increasingly gender balanced, families by giving every colleague who ethni
Slide 40: People and communities
Engineering our difference 40 People and communities Giving support where it is needed the most… …to ensure colleagues …and our communities feel included… become stronger. We aim to provide a progressive, Our Group is united behind our supportive and inclusive culture that community engagement progr
Slide 41: Protecting our planet
Engineering our difference 41 Protecting our planet To create a more sustainable future we are… …improving customer …powering ahead to net sustainability. zero. We saved our customers 17.7 million We are executing on our net zero tonnes of CO2 through a select group roadmap and by 2022 have already
Slide 42: Steam Specialties
Engineering our difference 42 Steam Specialties >4,000 tonnes* Digital insights improve sustainability Cotopaxi and Spirax Sarco worked together with Kraft Heinz, to design and install our connected energy and sustainability platform, STRATA, at its Shanghai facility in China. The digital insights g
Slide 43: Electric Thermal Solutions
Engineering our difference 43 Electric Thermal Solutions 1,500 tonnes of CO2* Reducing CO2 emissions in oil & gas Chromalox is using its innovative Medium Voltage technology to decarbonise core oil & gas processes without impacting critical asset operations and uptime. Working in support of a major
Slide 44: Watson-Marlow
Engineering our difference 44 Watson-Marlow 97.5% discharge reduction Technology that’s good for the planet Environmental regulations governing chemical use and disposal in wastewater are increasing. At a wastewater treatment plant in Germany, our customer was able to meet the strict environmental d
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