Spirax Group Plc. · LSE:SPX
Spirax — FY2022 Earnings Presentation
33 slides from Spirax's earnings presentation, February 2023
Slide 1: 2022 Results
1 2022 Results …delivering for customers Year ended 31st December 2022 …including our colleagues …protecting the environment Engineering our difference… Nicholas Anderson Group Chief Executive …creating …building stronger shareholder value communities Nimesh Patel Chief Financial Officer …collaborat
Slide 2: 2022 Highlights
2 2022 Highlights Nicholas Anderson
Slide 3: 2022 performance highlights
2022 FY Results 3 2022 performance highlights Strong performance despite weakening macro backdrop • Revenues up 14% on an organic basis, driven by volume growth and price increases to protect margins • Record high Group order books demonstrating good momentum • Steam Specialties organic sales up 12%
Slide 4: 2022 operational highlights
2022 FY Results 4 2022 operational highlights Delivering self-generated organic growth and investing for the long term • Enhanced direct sales accelerates growth of self-generated solutions, now 40% of revenues • Invested in direct sales teams, new product introductions, digital solutions and manufa
Slide 5: Supporting sustainable growth
2022 FY Results 5 Supporting sustainable growth Advanced our strategic agenda to create value for all stakeholders Our Colleagues Our Community Launched progressive Group Inclusion Plan and refreshed our £1 million+ donated to 51 projects by Group Education Diversity goals to accelerate progress on
Slide 6: 2022 Financial Review
2022 FY Results 6 2022 Financial Review Nimesh Patel
Slide 7: Financial summary
2022 FY Results 7 Financial summary 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 prof
Slide 8: Sales bridge
2022 FY Results 8 Sales bridge Double-digit organic growth in all three Businesses • Currency tailwind of 4% • Positive impact from Acquisitions & Disposals of 2% • Group sales, pro-forma for 12 months impact of Acquisitions, would be over £1.7 bn • Total organic increase of 14%: Steam Specialties +
Slide 9: Profit bridge
2022 FY Results 9 Profit bridge Increased profits alongside continued revenue investments • Currency tailwind of 4% • Positive impact from Acquisitions & Disposals of 1% • Total organic increase of 7%: Steam Specialties +8% ETS +23% Watson-Marlow +3% • Central expenses reflect investment in strategi
Slide 10: Operating margin
2022 Results 10 Operating margin Similar to highest achieved in our history, excluding exceptional 2021 level • Excluding 2017 acquisitions, margin has remained consistently above 25% since 2018 • Operating margin 23.6%, down 160 bps organically • Full year impact of 2021 and on- going revenue inves
Slide 11: Cash flow
2022 FY Results 11 Cash flow Cash conversion lower due to record capital investment and inventory rebuild Cash flow (£ million) 31st December 2022 31st December 2021 • Cash conversion^ of 57%, as planned Adjusted operating profit* 380.2 340.3 Depreciation and amortisation (excluding IFRS 16) 36.0 35
Slide 12: Delivering shareholder value
2022 FY Results 12 Delivering shareholder value 55-year track record of earnings and dividend growth • EPS CAGR: 12% over 10 years • Dividend CAGR: 11% over 10 years • Record of 55 years of dividend growth • Final dividend up 12% to 109.5p; total dividend up 12% to 152.0p • Dividend cover maintained
Slide 13: Operations and outlook
2022 FY Results 13 Operations and outlook Nick Anderson
Slide 14: Industrial production annual growth rates
2022 FY Results 14 Industrial production annual growth rates An important driver of demand
Slide 15: Steam Specialties
2022 FY Results 15 Steam Specialties Acquisitions 31st Dec 2021 Exchange Organic and disposals 31st Dec 2022 Organic⁺ Reported Sales £754.9m £19.1m £95.6m (£3.6m) £866.0m +12% +15% Operating profit* £188.7m £3.5m £15.7m (£1.8m) £206.1m +8% +9% Margin 25.0% 23.8% -90 bps -120 bps ⁺ Organic measures a
Slide 16: Electric Thermal Solutions
2022 FY Results 16 Electric Thermal Solutions Acquisitions 31st Dec 2021 Exchange Organic and disposals 31st Dec 2022 Organic⁺ Reported Sales £181.3m £13.2m £27.4m £34.2m £256.1m +14% +41% Operating profit* £24.0m £1.9m £5.9m £8.1m £39.9m +23% +66% Margin 13.2% 15.6% +100 bps +240 bps ⁺ Organic meas
Slide 17: Spotlight on ETS acquisitions
2022 FY Results 17 Spotlight on ETS acquisitions Vulcanic and Durex Industries contributions to our Group • Expands ETS 2022 pro-forma sales by over 70%; ETS now 22% of Group • Increases ETS 2022 addressable market by 5% to £3.9bn • Expands ETS 2022 pro-forma market share from 6% to 10% Lead brands
Slide 18: ETS strategic market sector focus
2022 FY Results 18 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 Techno
Slide 19: Watson-Marlow
2022 FY Results 19 Watson-Marlow Acquisitions 31st Dec 2021 Exchange Organic and disposals 31st Dec 2022 Organic⁺ Reported Sales £408.3m £20.2m £68.6m (£8.6m) £488.5m +16% +20% Operating profit* £150.0m £7.6m £5.3m (£2.9m) £160.0m +3% +7% Margin 36.7% 32.8% -400 bps -390 bps ⁺ Organic measures are a
Slide 20: Engineering our difference: 2022 stakeholder case studies
2022 FY Results 20 Engineering our difference 2022 stakeholder case studies
Slide 21: Summary and Outlook
2022 FY Results 21 Summary and Outlook Strong performance in 2022; anticipate good growth in 2023 2022 Summary: Outlook for 2023: • Strong performance across all three Businesses • Anticipate mid-single-digit growth over Group 2022 despite weakening macro backdrop pro-forma sales • Volume growth ahe
Slide 22: Full Year Results
2022 FY Results 22 Full Year Results For the year ended 31st December 2022
Slide 23: Appendices
2022 FY Results 23 Appendices Engineering our difference
Slide 24: Appendix I: Case studies
2022 FY Results 24 Appendix I: Case studies Engineering our difference
Slide 25: Steam Specialties
Engineering our difference 25 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 26: Electric Thermal Solutions
Engineering our difference 26 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 27: Watson-Marlow
Engineering our difference 27 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
Slide 28: People and communities
Engineering our difference 28 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 29: Protecting our planet
Engineering our difference 29 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 30: Appendix II: Cash conversion
2022 FY Results 30 Appendix II Cash conversion (£ million) 31st December 2022 31st December 2021 Adjusted cash generated from operations 214.9 277.7_ Adjusted operating profit* 380.2 340.3_ Cash conversion 57% 82%_ * See Appendix IV for definition of adjusted profit measures
Slide 31: Appendix III: Currencies
2022 FY Results 31 Appendix III Currencies Average exchange rates 2022 2021 Change US dollar 1.24_ 1.37_ +10%_ Euro 1.17_ 1.16_ -1%_ Renminbi 8.32_ 8.85_ +6%_ Won 1,587_ 1,569_ -1%_ Brazilian real 6.41_ 7.41_ +13%_ Argentine peso 161.5_ 130.2_ -24%_
Slide 32: Appendix IV: Reconciliation of operating profit
2022 FY Results 32 Appendix IV Reconciliation of Operating profit to Adjusted operating profit The Group uses adjusted figures as key performance measures in addition to those reported under IFRS. The Group’s management believes these measures provide valuable additional information for users of the
Slide 33: Appendix V: Current guidance
2022 FY Results 33 Appendix V Current guidance (£ million) 2022 Actual 2023 Estimate Capex (as a percentage of sales) 7% c. 7% Effective Tax Rate 25.0% > 25% Net Finance Cost £9.6m c. £30m Foreign exchange impact on revenue favourable 4% favourable 1% - 2% Foreign exchange impact on adjusted operati