Diploma Plc · LSE:DPLM
Diploma — FY2022 Earnings Presentation
32 slides from Diploma's earnings presentation, Nov 21, 2022
Slide 1: Diploma Delivers: Full year results for the year ended 30 September 2022
Slide 2: Agenda
O2 Diploma pic Full Year 2022 Results AGENDA Le] Overview Financial performance Ei Strategy update DIPLOMA PLC
Slide 3: Overview
Overview
Slide 4: An excellent year
04 Diploma PLC Full Year 2022 Results An excellent year * Very strong performance building on track record of consistent compounding long-term delivery * Building high quality, scalable businesses for sustainable organic growth ° Revenue diversification initiatives delivering organic growth * Succes
Slide 5: Very strong results
05 _ Diploma pic Full Year 2022 Results Very strong results Organic Revenue growth Adjusted operating Adjusted EPS revenue growth profit margin growth 15% 29% 5% 10%+ 18.9% 26% 17%+ Double digit Free cash flow Net debt / EBITDA conversion ROATCE Dividend cover 90% 1.4 17.3% 2.0x Model: Model: Model:
Slide 6: Track record of compounding growth
06 Diploma PLC Full Year 2022 Results Track record of compounding growth 2019-22 CAGR: 19% Reported revenue (£m) Adjusted EPS (pence) 2019-22 “]cAGR: 23%)” 2007-18 2007-18 * CAGR: 12% > CAGR: 14% 15 year revenue CAGR: 14% 15 year EPS CAGR: 15% DIPLOMA PLC
Slide 7: Delivering Value Responsibly
7 Diploma plc Full Year 2022 Results Delivering Value Responsibly Diversity, Equity & Inclusion (Our mission is for all our colleaques to feel able to bring their full selves to work, fulfll their potential and benefit from working as part of a diverse team. Supply Chain Our mission is to ensure an
Slide 8: Financial Performance
Financial Performance DIPLOMA PLC
Slide 9: Revenue
O09 _ Diploma pic Full Year 2022 Results Revenue Year ended 30 September Organic Growth: 15% +14% -4% +24% | | Life Seals Sciences £787.4m Controls FY +5% £1,012.8m a | Acquisitions FY Ae 3 << eee 29% reported revenue growth ——————_>__ Bp) Revenue diversification driving very strong organic growth D
Slide 10: Adjusted operating profit
10 _ Diploma pic Full Year 2022 Results Adjusted operating profit Year ended 30 September fe Volue-add | add Margin formula £191.2m [| £148.7m [ Volume + veinennent Acquisitions Pricing Performance — —_ 29% reported operating profit growth ——————> 18.9% 18.9% Consistently high margins DIPLOMA PLC
Slide 11: Income statement
11 Diploma PLC Full Year 2022 Results Income statement Year ended 30 September 2022 2021 £m £m Change Revenue 1,012.8 787.4 +29% Adjusted operating profit 191.2 148.7 +29% Adjusted operating margin (%) 18.9% 18.9% Interest expense (11.6) (6.8) Adjusted profit before tax 179.6 141.9 +27% Adjusted eff
Slide 12: Net debt and cash flow
12 Diploma PLC Full Year 2022 Results Net debt and cash flow Year ended 30 September (56) (4) Free cash flow £m | Other £120m (78 Dividend +11% yoy ividen Free cash flow conversion 90% (29) Net debt/EBITDA (5) Net mara Ye Working 1. 4, Adjusted Capex capital profit after tax Net debt Net debt £181m
Slide 13: Current trading and guidance
13 Diploma pic Full Year 2022 Results Current trading and guidance RESILIENCE FY2023 OUTLOOK Revenue diversification * Double digit revenue growth: — Organic growth: mid-single digit (H1 weighted) — Acquisitions: +6% Value-add: > sustainable margin * Strong, resilient operating margin: 18-19% * FX b
Slide 14: Strategy & performance update
Strategy & performance update
Slide 15: Building high quality, scalable businesses for sustainable organic growth
15 Diploma PLC Full Year 2022 Results Building high quality, scalable businesses for sustainable organic growth 1. Revenue diversification to drive organic growth - cue Organic growth 2. Targeted acquisitions ox to accelerate organic growth - Revenue growth 10% + 3. Scale the businesses to execute v
Slide 16: Organic growth driven by revenue diversification
16 Diploma PLC Full Year 2022 Results Organic growth driven by “al revenue diversification High growth Geographic Product range end segments penetration extension Positioning in structurally Penetrating core Expanding addressable growing end markets developed economies markets * ee aed ‘i a= * Diagn
Slide 17: Acquisitions accelerating organic growth
17 Diploma plc Full Year 2022 Results Acquisitions accelerating organic growth High growth Geographic Product range end segments penetration extension LJR LJR> Electronics £21m Silicone rcone Solutions £3m R&G Fluid Power R&G £101m FLUID POWER GROUP 4 R&G bolt-ons £9m: _@ee ACT ANTICORROSION £7m Acc
Slide 18: Acquisitions delivering strong returns
18 _ Diploma plc Full Year 2022 Results Acquisitions delivering strong returns Small bolt-ons Six since May Operating profit ROATCE (Sm) Ave multiple Yr 1 ROATCE 5x 20% Larger deals hn WINDY CITY WIRE CABLE & TECHNOLOGY PRODUCTS, LLC Yr 2 ROATCE High-teens 2019 2020 2021 2022 2020 2021 2022 2023 ROA
Slide 19: Scaling our value-added businesses and the Group
19 _ Diploma pic Full Year 2022 Results Scale Scaling our value-added businesses Scaling the Group ity Evolving Business Target Operating Models Core Competencies Capabilities Evolving the Group structures, capability and culture Diploma Identity Frameworks Best Practice and Networks DIPLOMA PLC
Slide 20: Controls
20 Diploma PLC Full Year 2022 Results Controls * % of Group revenue Sector revenue mix” @ Windy City Wire 50% © Wire &Cable(UK) 9% @ Interconnect 22% @ Fasteners 10% Adhesives 3% Fluid Controls 6% * Pro forma revenues adjusted for acquisitions and disposals completed during the year FY 2022 FY 2021
Slide 21: Seals
21 Diploma pic Full Year 2022 Results Seals % of Group revenue* Sector revenue mix” @ International Seals 47% @ NA Aftermarket 23% e@ US OEM 18% US MRO 12% * Pro forma revenues adjusted for acquisitions and disposals completed during the year FY 2022 FY 2021 Change Revenue £331.4m £263.7m +26% Organ
Slide 22: Life Sciences
22 _ Diploma pic Full Year 2022 Results Life Sciences % of Group revenue* Sector revenue mix” @ Canada 43% @ Europe 36% © Australia 21% * Pro forma revenues adjusted for acquisitions and disposals completed during the year FY 2022 FY 2021 Change Revenue £188.6m £180.4m +5% Organic growth -4% +14% Ad
Slide 23: DVR: targets to drive continuous improvement
23 _ Diploma pic Full Year 2022 Results DVR: targets to drive continuous improvement Colleague Engagement Vision all colleagues highly engaged 2030 target Maintain Colleague Engagement Index 70%+ Health & Safety Vision no one harmed at work 2030 target Reduction in Lost Time Incidents 5% pa Diversit
Slide 24: Concluding remarks
24 _ Diploma ple Full Year 2022 Results Concluding remarks ° Very strong results ° Track record of compounding value creation * Building high-quality, scalable businesses for sustainable organic growth DVR embedding in our strategy and culture Resilient business model * Positive outlook Well-positio
Slide 25: Appendix
Appendix
Slide 26: Value-add servicing supports differentiation
26 _ Diploma pic Full Year 2022 Results Value-add servicing supports differentiation Essential Products Essential Solutions Essential Values Critical to Responsive . © customers needs customer service © Decentralised model Deep technical i) . ©) Opex budgets support Y) Customer-orientated Added valu
Slide 27: Ten year track record
27 _ Diploma plc Full Year 2022 Results Ten year track record Organic growth 10 year average: 5.5% FY1I3. FY14 FYIS FY16 FY17 FY18 FY19 Fy21 FY22 Adjusted EPS (pence) 10 year CAGR: 13% FY13, FY14 FY1I5 FY16 FYI7 FY19 FY20 FY21 FY22 Reported revenue (£m) 10 year CAGR: 15% FY13, FY14 FY1I5 FY16 FY17 F
Slide 28: Sector revenue and profit
28 Diploma PLC Full Year 2022 Results Sector revenue and profit Revenue Organic growth 2022 2021 2022 2021 £m £m Change % % Controls 492.8 343.3 +44% +24% +16% Seals 331.4 263.7 +26% +14% +7% Life Sciences 188.6 180.4 +5% (4)% +14% Group 1,012.8 787.4 +29% +15% +12% Adjusted operating profit Adjuste
Slide 29: Balance sheet
29 Diploma PLC Full Year 2022 Results Balance sheet As at 30 September 2022 2021 £m £m Goodwill and acquisition intangible assets 827.3 605.6 Tangible and other intangible assets 53.7 38.8 Net lease liabilities (6.7) (3.4) Net working capital 184.2 120.6 Assets held for sale = 11.3 Trading capital e
Slide 30: M&A: disciplined portfolio development
30 Diploma PLC Full Year 2022 Results M&A: disciplined portfolio development No. of acquisitions Acquisition spend H1 H2 FY H1 H2 FY Controls 1 1 2 £21m £3m £24m Seals - 4 4 - £112m £112m Life Sciences - 1 1 - £51m £51m 1 6 7 £21m £166m £187m * Acquisitions - annualised revenues of ca. £124m * Two s
Slide 31: Financing
31 Diploma PLC Full Year 2022 Results Financing Type Currency Amount GBP equivalent Interest rate exposure Term loan USD £173.3m Fixed at ca. 3%* Floating Floating Gross debt drawn at 30.9.22 £370.6m Cash & cash equivalents £(41.7)m Net debt £328.9m * Good liquidity: available headroom £204m * Appro
Slide 32: Financial KPIs
BQ Diploma pic Full Year 2022 Results Financial KPls Five year trends 2022 2021 2020 2019 2018 Revenue £1,012.8m £787.4m £538.4m £544.7m £485.1m Total growth +29% +46% -1% +12% +7% Organic growth +15% +12% -7% +5% +7% Adjusted operating margin 18.9% 18.9% 16.2% 17.8% 17.5% Working capital (% revenue