Smiths Group PLC · LSE:SMIN
Smiths — Investor Day (June 2011)
38 slides from Smiths's investor day presentation, Jun 28, 2011
Slide 1: Smiths Interconnect Investor Day, New York
Smiths Interconnect New York June 28, 2011 www.smiths-medical.com Smiths Detection Investor© Day, New 2011 by York Smiths – June Medical: 2011 Data Proprietary | 1
Slide 2: Forward-looking statements
This document contains certain statements that are forward-looking statements. They appear in a number of places throughout this document and include statements regarding our intentions, beliefs or current expectations and those of our officers, directors and employees concerning, amongst other thin
Slide 3: Ralph Phillips, President, Smiths Interconnect
Ralph Phillips President, Smiths Interconnect Smiths Interconnect Investor Day, New York – June 2011 | 3
Slide 4: Introduction
Introduction Smiths Interconnect Investor Day, New York – June 2011 | 4
Slide 5: Smiths Interconnect
Smiths Interconnect A recognised leader in technically differentiated electronic components and sub-systems providing signal, power and microwave solutions Our products connect, protect and control critical systems for the global wireless telecommunications, aerospace, defence, space, medical, rail,
Slide 6: Smiths Interconnect: an attractive investment case
Smiths Interconnect: an attractive investment case Leading edge technologies and strong positions in attractive niche markets Underlying growth characteristics in diverse end markets Strong track record of creating value Organic growth through consistent investment in research and development Margin
Slide 7: Smiths Interconnect: Overview
Smiths Interconnect: Overview Financial performance 2010 Sales £340 m Trading profit £62 m Margin 18.2% Sales growth since 2005 (£m) Profit growth since 2005 (£m) Total CAGR = 14.5%; Organic CAGR = 10.1% Total CAGR = 12.8%; Organic CAGR = 8.5% Smiths Interconnect Investor Day, New York – June 2011 |
Slide 8: Built through a successful phased acquisition programme
Built through a successful phased acquisition programme 2010 Acquired Interconnect Devices, Inc. 2010 2009 Acquired Shenzhen Dowin Lightning Technologies, Channel Microwave 2008 Acquired Triasx, Allrizon Communications 2007 Divestment of Times Microwave 2006 Acquired Lorch Microwave 2005 Acquired Fa
Slide 9: Evolution of Smiths Interconnect
Evolution of Smiths Interconnect From individual companies to technology focused cohesive business units Connectors Protection 45% High reliability interconnect 12% Innovative power and signal solutions integrity solutions Microwave Telecoms Microwave Defence 20% 24% Network optimisation RF and micr
Slide 10: Products and capabilities: Connectors
Products and capabilities: Connectors Supplier of specialist electro-mechanical and optical connector technologies for multiple end market applications requiring high quality, rugged and high reliability solutions High reliability connectors • Two piece connectors utilising hyperboloid contact techn
Slide 11: Products and capabilities: Microwave Defence
Products and capabilities: Microwave Defence North American centric supplier of specialist microwave and millimetre wave system, sub-system and component solutions Antenna Systems • Range of high reliability ground and airborne antenna systems addressing multiple market segments including SATCOM, ra
Slide 12: Products and capabilities: Microwave Telecoms
Products and capabilities: Microwave Telecoms Global provider of specialised system critical products and solutions that enable optimal performance of wireless networks Radio link antennas • The air interface to allow cell towers to communicate to each other • Industry best lead-times and technology
Slide 13: Products and capabilities: Protection
Products and capabilities: Protection Provider of power and RF protection solutions for communications and other critical electronic systems Surge protection • AC, DC, RF, and data signal and power protection • Innovative patented technology • Industry leading engineering expertise • Regulatory stan
Slide 14: Markets: providing specialist electronics products
Markets: providing specialist electronics products Commodity Specialist Specialist Market Characteristics Electronic Components Market > £ 100bn Defence • Engineered solutions Serviced Addressable Market ~ £8 bn Aerospace Space • Technical differentiation Telecom • Highly regulated Medical Mass Tran
Slide 15: Sales by market and geography
Sales by market and geography RoW Medical, Rail, 6% Emerging Test & Automation Markets 31% 14% Military & EU North 19% America Aerospace 61% Wireless 44% Telecoms 25% • Well balanced presence in multiple and • North America is largest geographic market diverse end markets reflecting physical locatio
Slide 16: Competitive landscape
Competitive landscape Operating in specialist sectors within generally fragmented markets Connectors Microwave Protection Technologies High Spring High speed Components Sub-Systems RF Power/ reliability probes and filtered Signal Competitor examples High quality business choosing where to play in co
Slide 17: Strategy for value creation
Strategy for value creation • Focusing on higher growth sectors Investing for growth • New product development and innovation • Leveraging sales resources • Geographic expansion • M&A • Organisational development Driving efficiencies • Increasing low cost manufacturing capacity • Leveraging sourcing
Slide 18: Shaun Caraccio, Vice President, Business Development & Strategy
Shaun Caraccio Vice President, Business Development & Strategy Smiths Interconnect Investor Day, New York – June 2011 | 18
Slide 19: Investing for growth
Investing for growth Smiths Interconnect Investor Day, New York – June 2011 | 19
Slide 20: Market growth drivers
Market growth drivers Mil/Aero market Telecoms market • Situational awareness • High data rate applications • Smart weapons • Technology refresh rates • Connectivity and mobility • Connectivity and mobility • Force protection • Globalisation "information is power" "everything, everywhere, anytime" O
Slide 21: Focusing on higher growth sectors: Military
Focusing on higher growth sectors: Military Despite macro level pressures, defence budget priorities remain aligned with Interconnect capabilities Western defence budgets under pressure Certain sectors will expand through 2016 - helicopters, UAVs, missile defence & C4ISR Projected increases in inter
Slide 22: Focusing on higher growth sectors: Wireless Telecoms
Focusing on higher growth sectors: Wireless Telecoms Wireless sector entering next growth phase • New, faster networks needed to support mobile Mobile Data Traffic Consumption broadband applications • Network optimisation and microwave radio links for backhaul increasingly critical • Developing geog
Slide 23: Focusing on higher growth sectors: Aerospace / Semiconductor Test
Focusing on higher growth sectors: Aerospace / Semiconductor Test Aerospace • Strong backlogs driving planned production rate increases in 2011 and 2012 at both Boeing and Airbus • In-flight connectivity gaining momentum and demanding higher bandwidth Semiconductor Test • Over 50% of semiconductor c
Slide 24: Investment in new product development
Investment in new product development Technology and innovation is a fundamental pillar of the Interconnect business model Increasing R&D Spend (GBP) • Focused on : 30 6% - Maintaining culture of innovation & customer intimacy 20 4% - Value Optimisation or “doing the right projects” • process to dir
Slide 25: Examples of innovative products
Examples of innovative products Ku Stream Broadband Antenna System • Connectivity on-the-move for high data rate applications - live TV, internet, videoconferencing, sensor data • Multiple markets: commercial and military • Performance requirement (speed): just like at office or home • First to mark
Slide 26: Leveraging sales resources
Leveraging sales resources Opportunity to leverage technology and resources across multiple markets Connectors Microwave Protection Technologies High Spring High speed Components Sub-Systems RF Power/ reliability probes and filtered Signal Markets Defence Mil/Aero Civil Aerospace Space Telecoms Netw
Slide 27: Sales and marketing effectiveness
Sales and marketing effectiveness Investing to build effective global sales channels • Focused on : - Leveraging routes to market, customer relationships and program positions • sales channel optimizations (direct, distributors and 3rd party representatives) • utilising common CRM (customer relation
Slide 28: Examples of leveraging sales resources
Examples of leveraging sales resources Globalising Portable PIM Solutions • Wireless telecom networks are sensitive to interference caused by anomalies in the physical structure • Acquired a pioneering Australian company with first-to-market technology, but limited market access • Leveraged existing
Slide 29: Geographic expansion
Geographic expansion Interconnect addresses a mixture of global and local markets requiring a worldwide presence but often with locally specific solutions • We are focused on : Developing from US/Europe centric to truly - Developing global presence global business • 25% of manufacturing capacity and
Slide 30: M&A track record and opportunities
M&A track record and opportunities Track record: creating value • Excellent record of selecting targets, acquiring, integrating and creating value • Significantly exceeding expectations and return on investment criteria IDI • Large acquisition of complementary technologies and manufacturing operatio
Slide 31: Driving efficiencies
Driving efficiencies Smiths Interconnect Investor Day, New York – June 2011 | 31
Slide 32: Organizational development
Organizational development Ongoing process to rationalise business units based on commonalities in technologies, markets, sales channels and customers - streamlining management and back office infrastructure - enabling more flexibility and effective use of global sales and engineering resources - co
Slide 33: Increasing low cost manufacturing capacity
Increasing low cost manufacturing capacity Globally competitive manufacturing centers regionally located • Interconnect has invested in developing multiple low cost manufacturing sites serving both Average Employee Cost regional and global markets - Mexico: mainly for Americas markets - Tunisia: mai
Slide 34: Operational performance
Operational performance Driving margin by leveraging sourcing opportunities Sourcing Savings Leveraging scale • Combining purchasing agreements • Utilizing Smiths scale when appropriate • Reducing logistics costs and facility management fees Maximizing internal content • Utilizing Interconnect compa
Slide 35: Conclusion
Conclusion Smiths Interconnect Investor Day, New York – June 2011 | 35
Slide 36: Value creation opportunities
Value creation opportunities Strong track record Positioned for future value creation Fundamental business strengths driving growth strategies Entrepreneurial culture Innovation Optimised resources and scale Organic growth Acquisitive opportunities • New programmes and products • Excellent track rec
Slide 37: Smiths Interconnect: an attractive investment case
Smiths Interconnect: an attractive investment case Leading edge technologies and strong positions in attractive niche markets Underlying growth characteristics in diverse end markets Strong track record of creating value Organic growth through consistent investment in research and development Margin
Slide 38: Questions and answers
Questions and answers www.smiths-medical.com Smiths Detection Investor ©Day, 2011New by Smiths – June YorkMedical: 2011 | Data Proprietary 38