Diploma Plc · LSE:DPLM
Diploma — H1 2023 Earnings Presentation
29 slides from Diploma's earnings presentation, May 15, 2023
Slide 1: Half year ended 31 March 2023
Half year ended 31 March 2023 15 May 2023
Slide 2: Agenda
2 Diploma PLC Half Year 2023 Results AGENDA 1 Overview 2 Financial Performance 3 Business Review 4 Q&A
Slide 3: Overview
Overview Johnny Thomson Chief Executive Officer
Slide 4: Strong first half, upgrading full year guidance
4 Diploma PLC Half Year 2023 Results Strong first half, upgrading full year guidance • Another strong performance, building on our long term compounding track record • Revenue diversification driving continued strong volume-led organic revenue growth in H1 • Focused portfolio development: eight high
Slide 5: Strong results
5 Diploma PLC Half Year 2023 Results Strong results Organic Revenue growth Adjusted operating Adjusted EPS growth revenue growth profit margin 10% 30% 18.8% 26% Model: Model: Model: H1 2022: Model: 5% 10%+ 17%+ 18.4% 15% Free cash flow Net debt / EBITDA ROATCE Dividend per share conversion (DPS) gro
Slide 6: Track record of compounding
6 Diploma PLC Half Year 2023 Results Track record of compounding Reported revenue (£m) Adjusted EPS (pence) 2019-22 2019-22 CAGR: 23% CAGR: 19% 2007-18 2007-18 CAGR: 12% CAGR: 14% 1,013 107.5 36.1 38.2 14.0 16.4 14.8 18.9 27.9 33.1 34.8 41.9 49.8 56.4 64.3 56.4 85.2 141 172 160 184 231 260 286 306 3
Slide 7: Colleagues and culture
7 Diploma PLC Half Year 2023 Results Colleagues and culture Brilliant colleagues • Excellent levels of employee engagement (79%) • Constant focus on wellbeing: mental health, flexibility, community activity • Promoting a more diverse and inclusive environment: leadership Apprenticeship gender divers
Slide 8: Financial Performance
Financial Performance Chris Davies Chief Financial Officer
Slide 9: Revenue
9 Diploma PLC Half Year 2023 Results Revenue Half Year ended 31 March +8% £582.8m Organic Growth: 10% +12% FX +4% +8% Acquisitions +13% Life Seals Sciences £448.5m Controls H1 H1 2022 30% reported revenue growth 2023 Revenue diversification driving very strong organic growth
Slide 10: Adjusted operating profit
10 Diploma PLC Half Year 2023 Results Adjusted operating profit Half Year ended 31 March Value-add Margin formula £109.7m FX £82.5m Opex Acquisitions Inflation Scale + reinvestment Pricing Performance H1 H1 2022 33% reported operating profit growth 2023 18.4% 18.8% Value-add driving strong operating
Slide 11: Income statement
11 Diploma PLC Half Year 2023 Results Income statement Half Year ended 31 March H1 2023 H1 2022 £m £m Change Revenue 582.8 448.5 +30% Adjusted operating profit 109.7 82.5 +33% Adjusted operating margin (%) 18.8% 18.4% Interest expense (11.0) (3.9) Adjusted profit before tax 98.7 78.6 +26% Adjusted e
Slide 12: Net debt and cash flow
12 Diploma PLC Half Year 2023 Results Net debt and cash flow Half Year ended 31 March (49) 25 233 Free cash flow (76) Other conversion 75 Dividends 70% H1 2022: (23) 64% (10) Net M&A Working Adjusted Capex capital profit after Leverage tax 0.7x Placing FY HY 2022 2023 Net debt Net debt £329m £154m H
Slide 13: Financial Capacity
13 Diploma PLC Half Year 2023 Results Financial Capacity Half Year ended 31 March Current Facilities • Facility maturities extended to December 2025 Type Currency Amount GBP equivalent Term Loan USD $110.5m £89.3m • Reviewing longer-term financing structure Term Loan USD $66.0m £53.3m • Pension in s
Slide 14: Disciplined portfolio development
14 Diploma PLC Half Year 2023 Results Disciplined portfolio development Strong track record Year-to-date Total investment since FY19 Acquired TIE for £76m £840m • Entry to strategically important Industrial Automation end market in the US Average organic growth • Strong organic growth potential at a
Slide 15: Increasing full year guidance
15 Diploma PLC Half Year 2023 Results Increasing full year guidance CURRENT TRADING UPGRADED FY 2023 GUIDANCE • Double digit revenue growth: Positive start to H2 ‒ Organic growth: c.7% ‒ Acquisitions: c.7% Resilient, diversified • Operating margin at top of guided range, c.19% business • Free cash f
Slide 16: CEO Review
CEO Review Johnny Thomson Chief Executive Officer
Slide 17: Building high quality, scalable businesses for sustainable organic growth
17 Diploma PLC Half Year 2023 Results Building high quality, scalable businesses for sustainable organic growth • Revenue diversification to drive organic growth GROW Growing end Geographic Product segments expansion extension • Targeted acquisitions to accelerate organic growth • Develop businesses
Slide 18: Controls
18 Diploma PLC Half Year 2023 Results Controls H1 2023 H1 2022 Change * % of Group revenue Revenue £278.8m £224.0m +24% Organic growth +13% +28% 48% Adjusted operating profit £64.3m £47.0m +37% Adjusted operating margin 23.1% 21.0% +210bps Sector revenue mix* H1 2023 highlights • WCW organic +10%: s
Slide 19: Acquisition of TIE
19 Diploma PLC Half Year 2023 Results Acquisition of TIE Differentiated, value-add proposition • Very strong aftermarket capability • Deep technical expertise, speed to market • Circular economy: refurb & lifecycle support Exciting Industrial Automation end market • Attractive end segment • Onshorin
Slide 20: Seals
20 Diploma PLC Half Year 2023 Results Seals H1 2023 H1 2022 Change * % of Group revenue Revenue £198.4m £137.4m +44% Organic growth +8% +15% 34% Adjusted operating profit £35.7m £25.8m +38% Adjusted operating margin 18.0% 18.8% -80bps Sector revenue mix* H1 2023 highlights • International Seals +12%
Slide 21: Life Sciences
21 Diploma PLC Half Year 2023 Results Life Sciences H1 2023 H1 2022 Change * % of Group revenue Revenue £105.6m £87.1m +21% Organic growth +4% -7% 18% Adjusted operating profit £20.9m £19.6m +7% Adjusted operating margin 19.8% 22.5% -270bps Sector revenue mix* H1 2023 highlights • 4% organic growth
Slide 22: Acquisitions to accelerate organic growth
22 Diploma PLC Half Year 2023 Results Acquisitions to accelerate organic growth Active medium term pipeline Spread across Strategic and all Strict financial c.50 active structured Sectors/core criteria opportunities approach geographies Average size of Aligned to our High-quality, c.£20m, c.£1bn org
Slide 23: Delivering Value Responsibly (DVR)
23 Diploma PLC Half Year 2023 Results Delivering Value Responsibly (DVR) Building momentum • Performance plans in place and delivering improvements • Net zero plans submitted to SBTi (2045 across full value chain) • Huge positive impact opportunity • New Sustainability Director Significant commercia
Slide 24: Concluding remarks
24 Diploma PLC Half Year 2023 Results Concluding remarks • Strong performance across all our metrics. • Upgraded guidance for the year, demonstrating our resilience. • Massive potential for organic growth. • Great acquisitions delivering, with an active medium term pipeline. • Scaling the Businesses
Slide 25: Appendix
Appendix
Slide 26: Fifteen year track record
26 Diploma PLC Half Year 2023 Results Fifteen year track record Organic growth Reported revenue (£m) 15 year average: 5.7% 15 year CAGR: 14% 1,013 17% 15% 787 12% 11% 8% 8% 545 538 7% 7% 485 6% 452 5% 383 4% 1% 3% 334 FY09 FY20 306 286 260 FY08 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19 FY21
Slide 27: Sector revenue and profit
27 Diploma PLC Half Year 2023 Results Sector revenue and profit Revenue Organic growth H1 2023 H1 2022 H1 2023 H1 2022 £m £m Change % % Controls 278.8 224.0 +24% +13% +28% Seals 198.4 137.4 +44% +8% +15% Life Sciences 105.6 87.1 +21% +4% (7)% Group 582.8 448.5 +30% +10% +16% Adjusted operating profi
Slide 28: Balance sheet
28 Diploma PLC Half Year 2023 Results Balance sheet As at 31 March H1 2023 H1 2022 £m £m Goodwill and acquisition intangible assets 826.1 612.1 Tangible and other intangible assets 53.4 39.9 Net lease liabilities (7.0) (6.5) Net working capital 195.5 153.4 Assets held for sale - 2.9 Trading capital
Slide 29: Financial KPIs
29 Diploma PLC Half Year 2023 Results Financial KPIs 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