Slide 1: 2022 Preliminary Results
2022 Preliminary Results 8 March 2023 for the year ended 31 December 2022
Slide 2: Highlights
HIGHLIGHTS Record 2022 trading performance • 14% organic constant currency (OCC) revenue and profit growth • US businesses represented 64% of Group profit • Highlights resilience of our attractive end markets and continued portfolio evolution Significant progress on portfolio management • £66m deplo
Slide 3: 2022 Results
2022 RESULTS Reported Constant Currency Organic Constant 2022 2021 +/- +/- Currency +/- CONTINUING OPERATIONS Revenue £732.1m £625.2m +17% +12% +14% Operating profit £97.1m £77.3m +26% +17% +14% Operating margin 13.3% 12.4% +90 bps Profit before tax £87.9m £71.2m +23% Earnings per share 85.4p 70.0p
Slide 4: Galvanizing
GALVANIZING Constant Operating 2022 CONTINUING OPERATIONS 2022 2021 Currency +/- OCC +/- £m Revenue Profit Revenue £m OCC +/- Revenue (£m) 180.7 141.8 +20% +20% 2021 141.8 33.4 UK 81.9 +17% Operating profit (£m) 44.0 33.4 +23% +23% FX 8.2 2.4 US 98.8 +23% Operating margin 24.3% 23.6% M&A 0.8 - Total
Slide 5: US Galvanizing
US GALVANIZING CASE STUDY V&S Galvanizing STRATEGICALLY LOCATED • Hot-dip galvanizing: a proven steel corrosion protection solution used PLANTS in a wide range of infrastructure and industrial applications • Nine strategically located plants • Local market leader with focus on customer service and q
Slide 6: Engineered Solutions
ENGINEERED SOLUTIONS Constant Operating 2022 CONTINUING OPERATIONS 2022 2021 Currency +/- OCC +/- £m Revenue Profit Revenue £m OCC +/- Revenue (£m) 289.9 223.7 +21% +21% 2021 223.7 26.0 UK 93.4 +21% Operating profit (£m) 35.0 26.0 +24% +24% FX 15.9 2.2 US 187.7 +23% Operating margin 12.1% 11.6% Orga
Slide 7: Roads & Security
ROADS & SECURITY Constant Operating 2022 CONTINUING OPERATIONS 2022 2021 currency +/- OCC +/- £m Revenue Profit Revenue £m OCC +/- Revenue (£m) 261.5 259.7 -1% +5% 2021 259.7 17.9 UK 121.1 +3% Operating profit (£m) 18.1 17.9 -4% -17% FX 5.4 1.0 US 69.2 +10% Operating margin 6.9% 6.9% M&A (17.6) 2.5
Slide 8: Cash Generation and Financial Position
CASH GENERATION AND FINANCIAL POSITION £m 2022 2021 Improved H2 cash conversion at 93% Total Group* operating profit 103.9 86.0 • Working capital outflow reflects increased inventory due to Depreciation and amortisation 30.0 32.6 cost input inflation and tactical stock holding Underlying EBITDA 133.
Slide 9: Our ESG Focus Areas
OUR ESG FOCUS AREAS PROGRESS UPDATE ESG is a structural growth driver for our business PROTECTING THE WORLD UN SDGs Our commitment to Net Zero ESG FOCUS AREAS: • Scope 3 baseline activity progressing well 1. Greenhouse gas emissions and energy efficiency • On track to submit SBTi targets ahead of de
Slide 10: Financial Framework
FINANCIAL FRAMEWORK FOR PERFORMANCE THROUGH THE CYCLE 5 -7% ORGANIC REVENUE GROWTH 10%+ TOTAL REVENUE GROWTH 15% OPERATING PROFIT MARGIN 18%+ RETURN ON INVESTED CAPITAL 80%+ UNDERLYING CASH CONVERSION* 1 -2x COVENANT LEVERAGE 10 2022 PRELIMINARY RESULTS * Including capital expenditure
Slide 11: Group Overview
GROUP OVERVIEW INCREASING IMPORTANCE OF US END MARKETS By geography 4% 2% US 34% OPERATING REVENUE £732.1m 48% UK PROFIT 48% £97.1m Rest of World 64% By division 19% 25% 36% Galvanizing 45% OPERATING REVENUE £732.1m Engineered PROFIT Solutions £97.1m Roads & 36% 39% Security CONTINUING O
Slide 12: US Infrastructure Bill
US INFRASTRUCTURE BILL ACCELERATING END MARKET DEMAND Infrastructure Investment and Jobs Act (IIJA) A once-in-a-generation bipartisan infrastructure bill • $1.2 trillion with $550 billion of new federal spending to be allocated to that… will transform our transportation system with the most signific
Slide 13: National Signal
NATIONAL SIGNAL Why did we acquire National Signal? • The market leader in solar lighting towers in USA • Fast-growing market driven by transition to zero carbon economy and reduced noise pollution • Next 12-18 months earnings underpinned by order backlog • Significant growth potential – capacity, c
Slide 14: Enduro Composites
ENDURO COMPOSITES Why did we acquire Enduro Composites? • A market leader in the design and manufacture of composite products and solutions • Strong market growth drivers driven by infrastructure investment • Product portfolio complementary to existing composites business • Provides access to the US
Slide 15: Korns Galvanizing
KORNS GALVANIZING Why did we acquire Korns Galvanizing? • Expands our capacity in the northeastern US galvanizing market • Complementary customer base spread across a wide range of infrastructure related end markets • Spin galvanizing capability broadens the services offered to our existing customer
Slide 16: Outlook
OUTLOOK Short term • Confident that Group will make further progress in 2023, despite the macroeconomic headwinds: o Well positioned in a range of infrastructure markets with attractive, structural growth drivers o Evolution of geographic mix with a stronger weighting towards US end markets o Benefi
Slide 17: Appendices
APPENDICES ? VIN ZINN aK Rahim ell STE samt
Slide 18: Our Purpose and Strategy
OUR PURPOSE AND STRATEGY WHY? WHERE? HOW? ORGANIC GROWTH WHAT? 1 MACRO DRIVERS • Autonomous operating model • Increasing population • Agility/proximity to market Creating • Urbanisation • Climate change • Premium on talent • Innovation • Increasing health and safety sustainable regulations PORTFOLIO
Slide 19: Modelling Guidance
2023 MODELLING GUIDANCE Capex Interest2 £35m- £40m c.£10m • maintenance spend c.£20m Cash Conversion H1/H2 weighting c.80% Profit modestly H2 weighted Effective tax rate1 Translation impact of c.24-25% FX rate movements +/- FY FY 1 cent move in: Revenue Operating profit US$ +/- £2.5m +/- £0.6m Note
Slide 20: Portfolio Management: Acquisition Heat Map
PORTFOLIO MANAGEMENT ACQUISITION HEAT MAP 20 2022 PRELIMINARY RESULTS
Slide 21: Disposal of France Galva SA
PORTFOLIO MANAGEMENT DISPOSAL OF FRANCE GALVA SA Transaction overview • Disposal of our French galvanizing and lighting column operations (France Galva SA) in October 2022 • Net equity sale price of £62m • Joint purchasers: ZINQ France SAS and Sofigalva (related party) Rationale • Forecast growth ra
Slide 22: Disposal of France Galva: Financial Impact
DISPOSAL OF FRANCE GALVA FINANCIAL IMPACT 2022 2021 Total Group Change Continuing France Total Continuing France Total Constant Operations Galva * Group Operations Galva Group Reported Currency OCC Revenue £732.1m £68.7m £800.8m £625.2m £79.8m £705.0m +14% +9% +11% Operating profit £97.1m £6.8m £103
Slide 23: Capital Allocation and Dividends
CAPITAL ALLOCATION AND DIVIDENDS Effective deployment of capital to support growth ambitions 2022 ROIC: 19.2% (continuing operations) Organic Growth Acquisitions Progressive Dividend • Focus on higher • Aligned with our purpose • Focus on maintaining return, higher growth sustainable and markets • F
Slide 24: Divisional Analysis
DIVISIONAL ANALYSIS CONTINUING OPERATIONS £m 2022 Organic M&A FX 2021 Galvanizing Revenue 180.7 29.9 0.8 8.2 141.8 Underlying operating profit 44.0 8.2 - 2.4 33.4 Margin 24.3% 23.6% Engineered Solutions Revenue 289.9 50.3 - 15.9 223.7 Underlying operating profit 35.0 6.8 - 2.2 26.0 Margin 12.1% 11.6
Slide 25: Return on Invested Capital
RETURN ON INVESTED CAPITAL CONTINUING OPERATIONS Group 2022 2021 ROIC is defined as underlying operating profit for the last 12 months, divided by average invested capital. Operating profit (£m) 97.1 77.3 Invested capital is defined as the sum of intangible assets, Average invested capital (£m) 506.
Slide 26: Non-Underlying Items
NON-UNDERLYING ITEMS £m 2022 2021 Business reorganisation costs (2.9) (4.5) Costs relating to acquisitions and disposals (3.5) (2.0) Amortisation of acquisition intangibles (6.2) (6.1) Impairment of goodwill/other assets (6.4) (16.0) Loss on disposal of subsidiaries (1.4) (0.4) (20.4) (29.0) Continu
Slide 27: Debt Facilities
DEBT FACILITIES AVAILABILITY AND USAGE Principal debt facilities £m Net debt Facility • Refinancing of revolving credit facility completed in November 2022: £250m facility Committed 107.4 309.0 • Maturity H2 2026 with one-year extension option On demand - 11.5 • Senior notes: $70m unsecured notes ma
Slide 28: Disclaimer
DISCLAIMER Cautionary statement This presentation contains forward looking statements which are made in good faith based on the information available at the time of its publication. It is believed that the expectations reflected in these statements are reasonable, but they may be affected by a numbe
Slide 29: WN AWN
WN AWN NS \ Hill & Smith PLC