Diploma Plc · LSE:DPLM
Diploma — H1 2022 Earnings Presentation
30 slides from Diploma's earnings presentation, May 16, 2022
Slide 1: Consistently delivering value
DIPLOMA PLC Consistently delivering value Diploma PLC Half Year Ended 31 March 2022 16 May 2022
Slide 2: Agenda
O2 Diploma Pic Half Year 2022 Results AGENDA Le] Overview Financial Performance Ei Business Review Q&A DIPLOMA PLC
Slide 3: Overview
Overview Johnny Thomson Chief Executive Officer DIPLOMA PLC
Slide 4: Successfully executing our strategy
04 Diploma PLC Half Year 2022 Results Successfully executing our strategy * Building high quality, scalable businesses for organic growth * Revenue diversification initiatives delivering organic growth, building scale and increasing resilience * Increased operating margin: value-add model supports m
Slide 5: Results
O05 _ Dirlema pic Half Year 2022 Results Results Reported revenue growth 23% Free cash flow conversion 64% Underlying revenue growth 16% Net debt / EBITDA 1.2: Adjusted operating margin 18.4 ROATCE 17.5% A strong performance Adjusted EPS growth 22% Dividend growth 20% DIPLOMA PLC
Slide 6: Prioritising our Colleagues
06 Diploma PLC Half Year 2022 Results Prioritising our Colleagues Valuing our People * Wellbeing: prioritising physical and mental health * Engagement: excellent ongoing engagement scores and activity * Management development * Community: collaboration around social and environmental causes * Cost o
Slide 7: Financial Performance
Financial Performance Barbara Gibbes Chief Financial Officer DIPLOMA PLC
Slide 8: Financial Highlights
Diploma PLC Half Year 2022 Results Financial Highlights Strong financial performance Revenue +) £448.5m H1 2021: £365.2m Underlying growth: 16% Free cash flow ) conversion 64% H1 2021: 72% Adjusted 4) operating profit £82.5m H1 2021: £66.6m +24, Net debt/EBITDA 1) 1.2 FY 2021: 1.1x Adjusted 4s) oper
Slide 9: Revenue
O9 _ Dirlema Pic Half Year 2022 Results Revenue Half Year ended 31 March £365.2m Group Underlying Growth: 16% +28% Controls +15% 7 Seals -7% as Life Sciences +7% £448.5m Acquisitions & disposals 16% underlying growth in H1 DIPLOMA PLC
Slide 10: Adjusted operating profit
10 Diploma Pic Half Year 2022 Results Adjusted operating profit Half Year ended 31 March Value-add owt — £82.5m LJ Acauisiti Opex Other £66.6m | equisicions reinvestment Inflation Volume Pricing 18.2% = <—_———————_ 20bps margin increase > 18.4% Sustaining high margins DIPLOMA PLC
Slide 11: Income statement
11 Diploma pc Half Year 2022 Results Income statement Half Year ended 31 March H1 2022 H1 2021 £m £m Change Revenue 448.5 365.2 +23% Adjusted operating profit 82.5 66.6 +24% Adjusted operating margin (%) 18.4% 18.2% +20bps Interest expense (3.9) (3.4) Adjusted profit before tax 78.6 63.2 +24% Adjust
Slide 12: Net debt and cashflow
12. Diploma pic Half Year 2022 Results Net debt and cashflow Em (38) 1 Other (29) (20) (8) 13 | | Dividend (6) 7 Other Depreciation, M&A Inventor working tax, interest & Adjusted Capex y capital other profit after tax Free cash flow: £37.7m +10% Free cashflow conversion: 64% Net debt Net debt at at
Slide 13: M&A: disciplined portfolio development
13 Diploma pic Half Year 2022 Results M&A: disciplined portfolio development M&A year to date Strong and £100m improving returns: R&.G ROATCE +100bps Average ROATCE acquisition multiple 17. 5% 1 2021: 16.5% cd. 9. £51m © Accuscience + APharmed Group cé * Acquisitions - annualised revenues over £100m
Slide 14: Current trading and guidance
14 Diploma PLC Half Year 2022 Results Current trading and guidance Current trading ¢ Mindful of macro economic uncertainties * Actively managing supply chain, inflation and labour pressures * The second half has started well Confident in materially upgraded April guidance * Low double-digit underlyi
Slide 15: CEO Review
CEO Review Johnny Thomson Chief Executive Officer DIPLOMA PLC
Slide 16: Strategy: Building high quality, scalable businesses for organic growth
16 Diploma Pc Half Year 2022 Results Strategy: Building high quality, scalable businesses for organic growth * Drive organic growth: high growth end markets, geographic penetration, product extension * Build scale * Increase resilience Portfolio * Focus on scalable businesses Development * Acquisiti
Slide 17: Organic growth driven by business revenue diversification
17 Diploma PLC Half Year 2022 Results Organic growth driven by business revenue diversification High growth end markets Geographic penetration Product range extension Positioning to take advantage of structurally growing end markets, for example: v¥ WCW: datacentres, digital Y Seals: infrastructure,
Slide 18: Portfolio development
18 Diploma PLC Half Year 2022 Results Portfolio development Acquisitions to accelerate organic growth CHARACTERISTICS > £100m R&.G FLUID POWER GROUP Y UK value-add aftermarket distributor v Extensive UK reach v Fluid Power product range v US value-add distributor Y Electrical interconnect products Y
Slide 19: Value-add: operational execution
19 Diploma PLC Half Year 2022 Results Value-add: operational execution Sustaining our margins at scale =» Supply chain =» =» management excellence market oa — Se — Facility ne) DIPLOMA PLC
Slide 20: Controls
20 _ Dirlema Pic Half Year 2022 Results Controls $F International Controls: * Underlying growth 17% S224 Om +47% y/y * Diversifying end market and geographic revenues e. (} . Windy City Wire: 9g +28% underlying * Underlying growth 42% * Strong double-digit volume growth: continued market share gains
Slide 21: Seals
21 _ Diploma pic Half Year 2022 Results Seals £137.4m +11% y/y +15% underlying £25.8m +25% y/y Margin: 18.8% +210bps North American Seals: * Underlying growth 19% * Accelerated Aftermarket growth International Seals: * Underlying growth 8% after a resilient 2021 * Well diversified end market exposur
Slide 22: Life Sciences
22 Diploma pic Half Year 2022 Results Life Sciences uy Underlying revenue: * +2% excluding 2021 one-off COVID-related £87 1 a revenue -tm 2% y/y Canadian/Australian lockdowns affected 2022 -7% underlying * Not yet seeing catch-up in surgical backlog * Strength in diagnostics * Expect return to growt
Slide 23: Delivering Value Responsibly: Building momentum
23 _ Diploma pic Half Year 2022 Results Delivering Value Responsibly: Building momentum Our Colleagues Positive Progress in H1 v Engagement & communication * Embedding ESG in our commercial strategy y_ Learning & development * Businesses implementing improvement initiatives Health & Safety wpe wage
Slide 24: Concluding remarks
24 Diploma PLC Half Year 2022 Results Concluding remarks The Half... Good results Significant strategic progress Business revenue diversification strategy delivering double-digit underlying growth Value-add model and pricing activity sustaining strong margins The Future Tougher trading environment a
Slide 25: Appendix
Appendix ~ DIPLOMA PLC
Slide 26: Value-add servicing supports differentiation
26 _ Dirloma pic Half Year 2022 Results Value-add servicing supports differentiation Essential Products Essential Solutions Essential Values Critical to Responsive . a) customers needs CUSTORNEP GORAGS 7) Decentralised model Deep technical i) . ©) Opex budgets support Y) Customer-orientated A | Q Ra
Slide 27: Delivering Value Responsibly
27 Diploma PLe Half Year 2022 Results Delivering Value Responsibly Diversity, Equity & Inclusion Our mission is for all our colleagues to feel able to bring their full selves to work, fulfil their potential and benefit from working as part of a diverse team. Health & Safety Our mission is to keep ev
Slide 28: Sector revenue and profit
28 Diploma PLC Half Year 2022 Results Sector revenue and profit Half Year ended 31 March Revenue Underlying growth H1 2022 H1 2021 H1 2022 H1 2021 £m £m Change % % Controls 224.0 152.8 +47% +28% (1)% Seals 137.4 123.8 +11% +15% (2)% Life Sciences 87.1 88.6 (2)% (7)% +14% Group 448.5 365.2 +23% +16%
Slide 29: Balance sheet
29 Diploma PLC Half Year 2022 Results Balance sheet Half Year ended 31 March 2022 2021 £m £m Goodwill and acquisition intangible assets 612.1 564.4 Tangible and other intangible assets 39.9 47.3 Net lease liabilities (6.5) (2.9) Net working capital 153.4 122.6 Assets held for sale 2.9 - Trading capi
Slide 30: Financial KPIs
BO Diploma pic Half Year 2022 Results Financial KPls Five year trends 2021 2020 2019 2018 2017 Revenue £787.4m £538.4m £544.7m £485.1m £451.9m Total growth +46% (1)% +12% +7% +18% Underlying growth +12% (7)% +5% +7% +7% Adjusted operating margin 18.9% 16.2% 17.8% 17.5% 17.3% Working capital (% reven