Hill & Smith Plc · LSE:HILS
Hill & Smith — Investor Day (December 2019)
112 slides from Hill & Smith's investor day presentation, Dec 10, 2019
Slide 1: Capital Markets Day
Capital Markets Day 10 December 2019 Delivering intelligent protection solutions Stock Code HILS
Slide 2: Safety briefing
Safety briefing CMD 10 December 2019 • Please turn your mobile phone off • No Fire Drills are scheduled today • FIRE EXIT - down the stairs and through the main entrance. Follow the green exit signs to leave the building and go to the assembly point indicated on the map Assembly Point 2
Slide 3: Agenda
Agenda CMD 10 December 2019 09:30 Introductions Derek Muir Group CEO Group overview Roads & Security overview Andrew Beaney MD Roads & Security US Composites overview Shane Weyant CEO Creative Composites Group, USA 10:40 Coffee break 11:00 US Galvanizing overview Brian Miller CEO V&S Galvanizing, US
Slide 4: Group overview
Group overview CMD 10 December 2019 An international group with leading positions in global niche infrastructure markets, principally in the UK and USA Our mission is to deliver sustainable profitable growth through the supply of Infrastructure Products and Galvanizing Services 4
Slide 5: At a glance
At a glance CMD 10 December 2019 Company Profile 2018 Breakdown (%) Headquarters Solihull, UK By Revenue By Operating Profit 2018 Revenue £637.9m Market Cap £1.05bn Roads Roads Galvanizing 33% 30% 30% Galvanizing Countries of Operation 7 47% Utilities Utilities Number of Sites 80 37% 23% Total Emplo
Slide 6: Our strategy
Our strategy CMD 10 December 2019 • Entrepreneurial culture Agile and entrepreneurial culture in business units Decentralised management structure Close to local market conditions; responsive to opportunities • Portfolio Management Active portfolio management to drive higher returns Outcome
Slide 7: Where we operate
Where we operate CMD 10 December 2019 AUSTRALIA: office in Queensland for the NORWAY: a division of ATA, the road safety USA: our V&S galvanizing and utilities plants are development of our wire rope and safety barrier and signage business. situated on the East Coast along with the Bergen barrier pr
Slide 8: Current Group structure
Current Group structure CMD 10 December 2019 Hill & Smith Holdings PLC ROADS UTILITIES GALVANIZING Pipe UK USA RoW UK USA UK USA France Supports 8
Slide 9: Group structure 2020
Group structure 2020 CMD 10 December 2019 Hill & Smith Holdings PLC ROADS & SECURITY UTILITIES GALVANIZING Pipe UK USA RoW UK USA UK USA France Supports ROADS SECURITY Barkers Fencing Revenue Technocover c.£35m 9
Slide 10: Roads & Security overview
CMD 10 December 2019 Roads & Security overview Andrew Beaney 10
Slide 11: HS Roads & Security overview
HS Roads & Security overview CMD 10 December 2019 Revenue* Operating from 27 locations 40% in attractive growth markets Roads & Security Rest of Group with Operating Profit* market leading products and 30% exceptional service *Proforma 11
Slide 12: HS Roads & Security – where we operate
HS Roads & Security – where we operate CMD 10 December 2019 8 Sweden 1 Norway 10 UK 1 France 5 USA 1 Middle East 1 Australia 12
Slide 13: HS Roads
HS Roads CMD 10 December 2019 ROADS FY18 Revenue £208.5m Strategic Business Development UK USA RoW H&S Ltd Asset VRS Mallatite VMS Varley & H&S Inc ATA Conimast H&S Pty Group Gulliver WAPCO Barrier Temporary Lighting Barrier Lighting Zoneguard barrier columns Strategic Zoneguard columns Bridge Brife
Slide 14: Market Leader
The supplier of choice CMD 10 December 2019 Entrepreneurial Innovative Market Leader Expert Partnership 14
Slide 15: UK Government Road Investment Strategy 2 (RIS2)
UK Government Road Investment Strategy 2 (RIS2) CMD 10 December 2019 Regional Delivery Partnership £8.7bn Smart Motorway Alliance £4.5bn • North • Midlands to be awarded • South 15
Slide 16: Regional Delivery Partnership in RIS2
Regional Delivery Partnership in RIS2 CMD 10 December 2019 More focus on junction improvement schemes More grade separated interchanges More structures/structural modifications Higher complexity Greater containment HS Roads More solutions Higher margin 16
Slide 17: Smart motorways
Smart motorways CMD 10 December 2019 Potential schemes for RIS2 M3 J9 - J14 Smart motorways network M6 J21a - J26 M25 J10 - J16 M40 J16 M42 J3 - J4 M56 J6 – J8 M60 J1 - J14 and J24 - J27 A1(M) J6 - J8 M1 J19 - J23a and J35a - J39 M5 J8 - J4a M42 J4a - J3 M53 J5 - J11 17
Slide 18: HS Roads Product Portfolio
CMD 10 December 2019 HS Roads Product Portfolio 18
Slide 19: HS Roads UK: M4 Smart Motorway construction
HS Roads UK CMD 10 December 2019 M4 Smart Motorway construction 19
Slide 20: HS Roads UK
HS Roads UK CMD 10 December 2019 UK Temporary Barrier Market – 620km Asset VRS 20 Other competitors 100 100 400 Asset VRS Rental Fleet • 2018: 340km; c.80% average utilisation • 2019: 400km; investment to meet demand • RIS1 carry over – maintains momentum • RIS2 starts April 2020 • Expect increased
Slide 21: HS Roads UK: Pre-cast Concrete - Rebloc
HS Roads UK CMD 10 December 2019 Pre-cast Concrete - Rebloc Highways England committed to: • replacing central reserve steel barrier with concrete • whilst achieving zero harm to the workforce Rebloc solution: • removes wet trades from site • speeds up installation • achieves lower through-life cost
Slide 22: HS Roads UK
HS Roads UK CMD 10 December 2019 Product Portfolio • Vehicle restraint systems • Flexbeam • Non proprietary barriers • Brifen Wire Rope • Attenuators • End terminals Market Size c.£35m Share c.65% Drivers for Growth • RIS2 • Area maintenance programmes • International infrastructure spend • Local au
Slide 23: HS Roads UK
HS Roads UK CMD 10 December 2019 Product Portfolio • Variable message signs • Strategic • Urban • Rail Market Size c.£50m Share c.35% Drivers for Growth • Smart motorways • HS2 • Replacement programme • Local authority investment in driver information programmes 23
Slide 24: HS Roads UK
HS Roads UK CMD 10 December 2019 Product Portfolio • Street furniture • Street lighting • Traffic products • Passive safety poles • Traffic signs • Electric vehicle (EV) charging points Market Size c. £50m Share c.40% Drivers for Growth • Need for passive safety systems • Regional investment plans •
Slide 25: HS Roads UK
HS Roads UK CMD 10 December 2019 Product Portfolio Varley & Gulliver Ltd • Edge protection • Bridge parapets • Passive sign poles Market Size c.£20m Share c.50% Drivers for Growth • Parapet replacement programmes • Manual for Assessing Safety Hardware (MASH) implementations • Higher levels of contai
Slide 26: HS Roads UK
HS Roads UK CMD 10 December 2019 Product Portfolio • Bridges • Culverts • Concrete arches / retaining walls Market Size c.£30m Share c.15% Drivers for Growth • RIS2 – Greenfield projects • HS2 • Housing developments 26
Slide 27: HS Roads UK
HS Roads UK CMD 10 December 2019 Product Portfolio • Industrial / off highway barriers • Vehicle restraint systems • Cladding and facades • Car park construction • Topdeck modular car parks Market Size c.£50m Share c.15% Drivers for Growth • Refurbishment of ageing multi-storey car parks • Need for
Slide 28: HS Roads USA
HS Roads USA CMD 10 December 2019 DIVERSE & BROAD PRODUCT PORTFOLIO WORK ZONE SAFETY ITS SMART WORK ZONE ROADSIDE SAFETY 28
Slide 29: HS Roads USA
HS Roads USA CMD 10 December 2019 Zoneguard® is the most widely used temporary steel barrier in the USA. It is MASH compliant and offers several benefits over traditional concrete barrier systems: • 750 linear feet per truckload • 20+ year life span • Reduced anchoring • Less installation time Tempo
Slide 30: HS Roads USA: Zoneguard market penetration
HS Roads USA CMD 10 December 2019 Zoneguard® market penetration 30
Slide 31: HS Roads USA: Drivers for growth
HS Roads USA CMD 10 December 2019 Drivers for growth Regulations From 1 January 2020, all temporary barrier manufactured must be MASH compliant. Some states are promoting the reduced carbon footprint of portable steel barrier. Partnerships We plan to develop and leverage existing regional partnershi
Slide 32: HS Roads USA Smart Cushion
HS Roads USA CMD 10 December 2019 Smart Cushion® The Smart Cushion® crash attenuator is a revolutionary speed-dependent product that varies stopping resistance during an impact. Benefits include: • Quick and easy installation and reset reducing workers’ exposure to traffic • Low life cycle costs • P
Slide 33: HS Security
HS Security CMD 10 December 2019 33
Slide 34: HS Security
HS Security CMD 10 December 2019 Proforma Revenue £85m Bristorm Barkers ATG Access Technocover Hardstaff Parking Facilities Wire Rope Stronguard HVM Kiosks National Barrier Asset Gates Bollards Fencing Bollards Secure Covers Concrete Blocks Barriers Gates Gates Blockers Grills / Cabinets Zoneguard B
Slide 35: Superior products – innovative solutions
Superior products – innovative solutions CMD 10 December 2019 Identify a need Design a solution 35
Slide 36: Superior products – innovative solutions
Superior products – innovative solutions CMD 10 December 2019 Test to a recognised standard Deliver Work in partnership with our customer to deliver a cost effective solution 36
Slide 37: Hostile Vehicle Mitigation – market size
Hostile Vehicle Mitigation – market size CMD 10 December 2019 Threat to critical Major international events infrastructure Current national threat level: World Cup Expo Airports Olympics Railway SUBSTANTIAL World Leader Summits Financial Centres Data Centres Energy and Industry High threat levels Co
Slide 38: Data Centre market
Data Centre market CMD 10 December 2019 Notable growth segment Driven by data storage demand from Streaming TV Storing photos and data Social Media Online purchasing 132 hyperscale data centres currently in development 38
Slide 39: Data Centre market
Data Centre market CMD 10 December 2019 New space to meet increasing demand All require a secure 30% 70% HVM perimeter Provided by hyperscalers in Provided by large data centre operators solution their own buildings who lease the space to the hyperscalers Perimeter security packages c.£1m per Data C
Slide 40: London bridges – protecting the public from terrorist threats
London bridges – protecting the public from terrorist threats CMD 10 December 2019 Emergency Response June 2017: 8 people killed on London Bridge Chief Coroner’s report urged Britain’s Security Services to review protective security equipment and infrastructure which can be installed in response to
Slide 41: Protecting London’s bridges
Protecting London’s bridges CMD 10 December 2019 “Our preferred plan for Westminster Bridge proposes using heritage-style bollards that create segregated space for cyclists across the bridge, and enough space for all other bridge users, including buses and pedestrians.” 41
Slide 42: HS Security Product Portfolio
HS Security CMD 10 December 2019 HS Security Product Portfolio 42
Slide 43: HS Security products
HS Security products CMD 10 December 2019 Acquired February 2019 Acquisition cost: £22.5m Revenue £21.1m* Automatic crash tested bollards & barriers Fixed, impact tested bollards Shallow mount bollard, City of London *12 months to 31 Oct 2018 43
Slide 44: HS Security products
HS Security products CMD 10 December 2019 StronGuard™ MA Developed to meet the ASTM F2781-15 Standard which is required by Ministry of Interior for Saudi Arabia High StronGuard™ RCS StronGuard™ MA Commission for Industrial Security (HCIS). StronGuard™ V-Guard Mesh National Rail Operating Centre 44
Slide 45: HS Security products
HS Security products CMD 10 December 2019 Below ground Above ground Building hardening protection protection Sectors • Water • Power • Rail • Industrial • Data Centres 45
Slide 46: HS Security products
HS Security products CMD 10 December 2019 Acquired September 2019 Single and Double Turnstiles Acquisition cost: £12.4m Revenue £10.8m* Automatic Barriers Bi Folding Trackless Speed Gates Rising Kerbs Cantilever Sliding Gates *12 months to 30 Nov 2018 46
Slide 47: HS Security products: Wire Rope Perimeter Security
HS Security products CMD 10 December 2019 Wire Rope Perimeter Security 47
Slide 48: HS Security products: Events and Temporary Security
HS Security products CMD 10 December 2019 Events and Temporary Security National Barrier Asset (NBA): 3-year term to 2022 • State Opening of Parliament • London security • NATO Summit • Seasonal events • Royal events 48
Slide 49: Case study: Concept solution for Saudi Aramco
Case study CMD 10 December 2019 Middle East : Concept solution for Saudi Aramco Combines three security products Protection against theft in numerous desert solar powered pumping stations 49
Slide 50: Roads & Security - Key takeaways
Roads & Security - Key takeaways CMD 10 December 2019 • Diverse set of market leading products • Unique service offering; much more than just a product supplier • Opportunity to combine products into a complete solution and enhance margins • RIS2 in UK underpins medium term growth • US Roads growth
Slide 51: Group structure 2020
Group structure 2020 CMD 10 December 2019 Hill & Smith Holdings PLC ROADS & SECURITY UTILITIES GALVANIZING Pipe UK USA RoW UK USA UK USA France Supports ROADS SECURITY 51
Slide 52: HS Utilities
HS Utilities CMD 10 December 2019 HS UTILITIES GROUP 2018 Revenue £239.0m UK USA Pipe Supports Lionweld Group Creative Composites Group Carpenter & Paterson USA Bergen Pipe Supports India Birtley Group V&S Utilities 52
Slide 53: US Composites overview
CMD 10 December 2019 US Composites overview Shane Weyant 53
Slide 54: Major benefits of composites
Major benefits of composites CMD 10 December 2019 • Corrosion resistant - will not rust, spall or rot • Lightweight - 80% lighter than steel • High strength - greater tensile strength than most grade steels • High dielectric strength - reduction in electrocution hazards • Lower environmental impact
Slide 55: Creative Composites Group (CCG) overview
Creative Composites Group (CCG) overview CMD 10 December 2019 Market Positioning The Creative Composites Group is a leading provider of engineered composite solutions that are lightweight, corrosion-resistant and Creative Pultrusions $39.2m long-lasting, through various manufacturing Composite Advan
Slide 56: Where we operate
Where we operate CMD 10 December 2019 COMPANY EMPLOYEES LOCATION ACCREDITATIONS Creative Pultrusions 165 Alum Bank, PA ISO 9001:2015 / NSF Composite Advantage 97 Dayton, OH Kenway Composites 50 Augusta, ME FRPI / ACMA CCT Tower Tech 49 Oklahoma City, OK CTI / OSHPD TOTAL (actual Sept 2019) 361 56
Slide 57: Addressable market
Addressable market CMD 10 December 2019 Addressable Market 2018 Revenue Markets Market Share ($m) ($m) Custom / OEM 1000 3% 26 Bridges 300 2% 5 (Vehicle & Pedestrian) Cooling Tower 250 6% 15 Waterfront Protection 220 4% 8 Standard Structurals & Flooring 200 3% 5 Utility Products 180 2% 4 Mass Transi
Slide 58: Manufacturing processes – we do both
Manufacturing processes – we do both CMD 10 December 2019 GALVANIZING – V&S Benefits of Infusion Growth in infrastructure spend Product substitution from paint (e.g. trailer chassis) • Batch process Increased footprint – New York site increases capacity • Low to medium quantities Acquisiti
Slide 59: Manufacturing processes - Infusion
Manufacturing processes - Infusion CMD 10 December 2019 1. Clean and prep tooling 6. Pull a full vacuum on the cavity and check for leaks 2. Lay-up fiberglass skins into the tooling 7. Open resin inlet and allow resin to flow throughout 3. Install core materials into the tooling the part encapsulati
Slide 60: Manufacturing processes - Pultrusion
Manufacturing processes - Pultrusion CMD 10 December 2019 1. Resin and glass fiber reinforcements are 2. The resin is initiated by the thermal combined and formed into the shape of decomposition process. The initiator is the die on a continuous process. heated until a chemical bond dissociation prod
Slide 61: Manufacturing processes - Pultrusion
Manufacturing processes - Pultrusion CMD 10 December 2019 61
Slide 62: Growth opportunities
Growth opportunities CMD 10 December 2019 •GALVANIZING – V&S Market expected to grow 8-10% over next 5 years through greater Growth in infrastructure spend product awareness and acceptance Product substitution from paint (e.g. trailer chassis) Increased footprint – New York site increases ca
Slide 63: Load & Resistance Factor Design (LRFD) of Pultruded FRP Structures
Load & Resistance Factor Design (LRFD) of Pultruded FRP Structures CMD 10 December 2019 GALVANIZING – V&S Growth in infrastructure spend Product substitution from paint (e.g. trailer chassis) Like the steel, aluminum, wood and concrete Increased footprint – New York site increases capacity i
Slide 64: Products – Infusion / Molded
Products – Infusion / Molded CMD 10 December 2019 Custom Fabrication Wind Blade Repair Indoor Sky Chemical Storage Diving Tunnels Tanks Contract Manufacturing Pedestrian Bridges & Waterfront Vehicle Bridges Infrastructure Fender Protection Systems Military Camels 64
Slide 65: Products – Pultrusion
Products – Pultrusion CMD 10 December 2019 Structurals & Decking Rail Platforms Access Structures Sheet Pile System Utility Poles & Crossarms Custom Profiles Utility Poles Cooling Towers 65
Slide 66: Customer case study
Customer case study CMD 10 December 2019 66
Slide 67: Customer case study
Customer case study CMD 10 December 2019 Tower Tech has supplied over 75 towers to Midwest Cooling Tower Services, a national Cooling Tower Repair, Service and Rental Company. We are currently in a 3-year Supply Agreement for $3m revenue annually to provide a minimum of an additional 75 rental tower
Slide 68: Customer case study
Customer case study CMD 10 December 2019 State Route 28 Shared Use Path Lake Tahoe, Nevada Overview: One million annual visitors use 11 miles of two-lane, mountainside road to view Lake Tahoe. Nevada DoT created a safe, shared-use path using 32 prefabricated FRP bridges on steep hillsides that could
Slide 69: US Composites - Key takeaways
US Composites - Key takeaways CMD 10 December 2019 • A proven leadership team • Strong customer relationships • Market innovation & technical leadership • Expanding product range • Significant growth potential (market growth, substitution and market share) • Available manufacturing capacity to manag
Slide 70: Agenda
Agenda CMD 10 December 2019 09:30 Introductions Derek Muir Group CEO Group overview Roads & Security overview Andrew Beaney MD Roads & Security US Composites overview Shane Weyant CEO Creative Composites Group, USA 10:40 Coffee break 11:00 US Galvanizing overview Brian Miller CEO V&S Galvanizing, US
Slide 71: Group structure 2020
Group structure 2020 CMD 10 December 2019 Hill & Smith Holdings PLC ROADS & SECURITY UTILITIES GALVANIZING Pipe UK USA RoW UK USA UK USA France Supports ROADS SECURITY 71
Slide 72: HS Galvanizing
HS Galvanizing CMD 10 December 2019 HS GALVANIZING GROUP 2018 Revenue £190.4m UK USA FRANCE 10 plants 8 plants 10 plants Joseph Ash Group V&S Galvanizing France Galva 72
Slide 73: US Galvanizing overview
CMD 10 December 2019 US Galvanizing overview Brian Miller 73
Slide 74: V&S Galvanizing overview
V&S Galvanizing overview CMD 10 December 2019 Revenue trend V&S Galvanizing provides corrosion protection services in the form of hot dip galvanizing and other coatings for products used in a wide range of infrastructure and other industrial applications 74
Slide 75: 3rd largest galvanizing group in the US
3rd largest galvanizing group in the US CMD 10 December 2019 8 5 2 4 3 1 6 7 75
Slide 76: V & S Galvanizing
V & S Galvanizing CMD 10 December 2019 Key to V&S plant location map Plant location Acquired Newly Built Employees Senior Management Tenure 1 V&S Columbus 1986 2013 75 18 years 2 V&S Detroit 1992 36 6 years 3 V&S Amboy 1999 55 8 years 4 V&S Lebanon 2002 40 17 years 5 V&S Taunton 2003 24 3 years 6 V&
Slide 77: V&S Galvanizing process
V&S Galvanizing process CMD 10 December 2019 Our process typically begins with educating our customers on design prior to galvanizing. Whether it be an onsite seminar or ongoing consultation services, we work hard at every step to ensure materials are correctly prepared prior to galvanizing to guara
Slide 78: Main benefits of hot-dip galvanizing
Main benefits of hot-dip galvanizing CMD 10 December 2019 Now specified as a matter of choice: • Durability – abrasion resistance • Longevity/Sustainability – often used in harsh environments • Availability – versatile and readily available • Aesthetics – industrial look • Lowest initial corrosion p
Slide 79: US galvanizing market
US galvanizing market CMD 10 December 2019 • Domestic steel produced in USA: 95.3m US tons (per American Institute of Iron & Steel) • Steel in USA market with potential to be galvanized: 14.3m US tons* • Hot-dip galvanized steel production in USA in 2018: 4.5m US tons* • 2018: V&S galvanized 189,000
Slide 80: Bridge & Highway: Chicago Ave. Bridge
Bridge & Highway CMD 10 December 2019 Chicago Ave. Bridge 80
Slide 81: OEM/Truck Trailer
OEM/Truck Trailer CMD 10 December 2019 81
Slide 82: Infrastructure: The Pyramid Residential Building & One Vanderbilt, NYC
Infrastructure CMD 10 December 2019 The Pyramid Residential Building & One Vanderbilt, NYC 82
Slide 83: Agriculture: Tyson Silos
Agriculture CMD 10 December 2019 Tyson Silos 83
Slide 84: Utility: Five Bay Structure
Utility CMD 10 December 2019 Five Bay Structure 84
Slide 85: Military / Aircraft Hangar
Military / Aircraft Hangar CMD 10 December 2019 Fort Indiantown Gap 85
Slide 86: Recreation: Lightning Rod, Dollywood
Recreation CMD 10 December 2019 Lightning Rod, Dollywood 86
Slide 87: Artistic: Sculptor Andy Scott “The Bear”
Artistic CMD 10 December 2019 Sculptor Andy Scott “The Bear” 87
Slide 88: Why V&S Galvanizing is a market leader
Why V&S Galvanizing is a market leader CMD 10 December 2019 Quality - Ability to provide hot-dip galvanizing services for projects large and small without compromising quality - Specialization in duplex coatings (Colorzinq®) - Modern facilities with experienced management Service - Communication and
Slide 89: US galvanizing growth
US galvanizing growth CMD 10 December 2019 • Infrastructure spend continues to grow across a wide range of US markets • Substitution for paint and other coatings is increasing, due to both cost and environmental factors • Markets are increasingly focussed on sustainability and full life cycle cost;
Slide 90: Growing market segments: Bridge & Highway Temporary Bridge
Growing market segments CMD 10 December 2019 Bridge & Highway Temporary Bridge 90
Slide 91: Growing market segments: Energy development
Growing market segments CMD 10 December 2019 Energy development LNG, cracker plants 91
Slide 92: Growing market segments: Utility Infrastructure
Growing market segments CMD 10 December 2019 Utility Infrastructure Electrical Substation 92
Slide 93: Growing market segments: Bridge & Highway Permanent Bridge
Growing market segments CMD 10 December 2019 Bridge & Highway Permanent Bridge 93
Slide 94: Growing market segments: OEM Truck Trailer Industry
Growing market segments CMD 10 December 2019 OEM Truck Trailer Industry 94
Slide 95: US Galvanizing - Key takeaways
US Galvanizing - Key takeaways CMD 10 December 2019 • A proven leadership team • Technical excellence • Strong customer relationships based on quality and service • Sustainability of product is driving increased specification • Strong returns profile • Significant growth potential (both organic and
Slide 96: Financial framework
CMD 10 December 2019 Financial framework Hannah Nichols 96
Slide 97: Financial framework
Financial framework CMD 10 December 2019 An organic and acquisitive growth strategy that maintains a strong margin and cash performance Strong cash Capital Progressive generation & allocation to Acquisitions earnings and sustainable higher growth to enhance dividend financial and return growth growt
Slide 98: Financial targets
Financial targets CMD 10 December 2019 3% - 5% Organic revenue growth 12% -15% Operating margins 20% Return on invested capital 90% underlying cash conversion Cash Net debt: EBITDA 1.5 – 2 times 98
Slide 99: Revenue growth
Revenue growth CMD 10 December 2019 Market-leading positions in niche infrastructure markets 5 year organic revenue growth trend • Target organic revenue growth range 3% - 5% • Continuous product innovation driving new opportunities • Geographical expansion of routes to market • Acquisitions focused
Slide 100: Operating margin
Operating margin CMD 10 December 2019 Group businesses focused and targeted on margin expansion • Group target operating margin 5 year operating margin trend range 12% -15% • Divisional margin targets to reflect dynamics of respective end markets • Agile businesses well placed to respond to margin e
Slide 101: Return on invested capital (ROIC)
Return on invested capital (ROIC) CMD 10 December 2019 Effective deployment of capital to support growth ambition 5 year Return on Invested Capital trend • Group ROIC target 20% • Working capital investment commensurate with business growth profile • Discipline in capital allocation to higher return
Slide 102: Cash utilisation
Cash utilisation CMD 10 December 2019 Track record of strong cash generation Cumulative cash flow 2009 -2018 (£m) • 90% cash conversion target • Net debt/EBITDA target 1.5 to 2 times • Strong cash flow and balance sheet create capacity for investment in high return markets • Debt facilities provide
Slide 103: M&A strategy
M&A strategy CMD 10 December 2019 A disciplined approach with focus on value creation Historical M&A activity • Average acquisition multiple 6 x EBITDA with typical deal sizes of £10-20m • Experienced Group M&A team support businesses to identify value enhancing opportunities • Acquisition pipeline
Slide 104: Earnings and Dividend
Earnings and Dividend CMD 10 December 2019 Earnings per share (p) CAGR 12% 75.9 77.8 65.9 • Strategy delivering sustainable long-term growth in 51.7 45.0 earnings 38.3 39.0 38.8 40.4 34.5 26.1 32.2 • Efficient conversion of profit to cash enables 21.3 17.9 progressive dividend policy 2005 2006 2007
Slide 105: Group structure 2020
Group structure 2020 CMD 10 December 2019 Hill & Smith Holdings PLC ROADS & SECURITY UTILITIES GALVANIZING Pipe UK USA RoW UK USA UK USA France Supports ROADS SECURITY 105
Slide 106: Key growth opportunities
Key growth opportunities CMD 10 December 2019 • ROADS & SECURITY Road Investment Strategy 2 - £25.3bn Ageing US infrastructure – FAST Act Collaborative security partnerships Growth markets in Europe and Middle East Strong product development programme • UTILITIES – Creative Composites Grou
Slide 107: Q&A
CMD 10 December 2019 Q&A 107
Slide 108: Capital Markets Day
Capital Markets Day 10 December 2019 Delivering intelligent protection solutions Stock Code HILS
Slide 109: Glossary
Glossary CMD 10 December 2019 DOT Department of Transportation (USA) DfT Department for Transport (UK) EV Electric Vehicle FAST Act Fixing America’s Surface Transportation Act (USA) FRP Fibre Reinforced Plastic HVM Hostile Vehicle Mitigation JV Joint Venture LRFD Load & Resistance Factor Design MASH
Slide 110: Speaker biographies
Speaker biographies CMD 10 December 2019 Derek Muir Hannah Nichols Andrew Beaney Group CEO Group CFO MD, Roads & Security Group 6 January 1988 16 September 2019 1 August 2019 Derek joined the company in 1988 Hannah joined the company after A new senior management role and was appointed to the Board
Slide 111: Speaker biographies
Speaker biographies CMD 10 December 2019 Shane Weyant Brian Miller CEO, Creative Composites Group CEO, Voigt & Schweitzer LLC Shane has been with Creative Pultrusions Inc Brian has been with Voigt & Schweitzer LLC since 1989 when he started as a Regional since 1993 when he started as Finance Sales M
Slide 112: Disclaimer
Disclaimer CMD 10 December 2019 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