Smiths Group PLC · LSE:SMIN
Smiths — H1 2021 Earnings Presentation
39 slides from Smiths's earnings presentation, Mar 26, 2021
Slide 1: Smiths Group plc Interim Results 2021
www.smiths.com SMITHS GROUP PLC INTERIM RESULTS 2021 26 MARCH 2021
Slide 2: Disclaimer
DISCLAIMER This presentation contains certain statements that are forward-looking statements. They appear in a number of places throughout this presentation and include statements regarding the intentions, beliefs and/or current expectations of Smiths Group plc (the “Company”) and its subsidiaries (
Slide 3: Introduction – Andy Reynolds Smith
Introduction Andy Reynolds Smith > Chief Executive 3 SMITHS GROUP PLC | INTERIM RESULTS 2021
Slide 4: Interim Results 2021
Interim Results 2021 > Opening remarks Andy Reynolds Smith > Results overview John Shipsey > Strategy & outlook Andy Reynolds Smith 4 SMITHS GROUP PLC | INTERIM RESULTS 2021
Slide 5: Demonstrating Group strength
Demonstrating Group strength > Robust performance despite disruption, improving H2 trends > Strategic, operational and financial strength > Well positioned to accelerate sustainable growth Purpose-driven: making a safer, cleaner and more efficient world 5 SMITHS GROUP PLC | INTERIM RESULTS 2021
Slide 6: Results overview – John Shipsey
Results overview John Shipsey > Chief Financial Officer 6 SMITHS GROUP PLC | INTERIM RESULTS 2021
Slide 7: A good start to the year
A good start to the year Reported H1 20211 H1 2020 change Underlying change3 > Resilient top line Smiths - Continuing Operations2 Revenue 1,150 1,240 (7)% (5)% Operating profit 166 186 (11)% (6)% > Good profit conversion Operating profit margin 14.4% 15.0% (60)bps (20)bps Smiths Medical – Discontinu
Slide 8: Leading market positions and technology underpin a resilient top line
Leading market positions and technology underpin a resilient top line Continuing Group1 revenue (5)%2 JOHN CRANE Robust performance despite FLEX-TEK > Further strong growth in Industrials > challenging market conditions particularly construction £410m (10)% £238m (1)% > Offsetting almost all the dow
Slide 9: Good profit conversion
Good profit conversion1 Continuing Group operating margin 14.6% down only (20)bps JOHN CRANE > Through-cycle margin resilience FLEX-TEK > Continued margin strength > Operating profit reflecting the lower > Strong cost controls offsetting lower volumes and adverse mix volumes 19.8% £81m 18.5% £44m Un
Slide 10: Smiths Medical – continuing to strengthen ahead of separation
Smiths Medical1 – continuing to strengthen ahead of separation > Revenue > Operating profit & margin £427m +0.2% £89m +2% 20.9% Reported operating margin - Good growth in Infusion Systems and Vital - Further profit growth driven by increased Care efficiency and effectiveness - Vascular Access impact
Slide 11: Strategic restructuring programme is on track
Strategic restructuring programme is on track (Total Group) > Better-positioned for long-term growth Total Group P&L charge Cashflow and consistent outperformance FY2020 H2 (35) (12) FY2021 H1 (4) (10) > Benefits running ahead of costs in H1, expected to be neutral for the FY (39) (22) > Full £70m a
Slide 12: Excellent operating and free cash-flow
Excellent operating and free cash-flow (Total Group) HY2021 HY2020 EBITDA1 295 323 Continuing operations £206m, Smiths Medical £89m Capex (55) (55) Change in working capital 47 (29) Other 14 13 Operating cash-flow1 301 252 129% cash conversion2 Interest1 (10) (16) Taxation1 (55) (60) Pension (19) (1
Slide 13: Further significant progress on pensions
Further significant progress on pensions > Strong funding position of two main plans > Recent triennial valuation of TI plan finalised with positive results > Pension contributions now expected to be down £(4)m in FY21 and £(12)m in FY2022 Ahead of schedule on making both UK plans self sufficient 13
Slide 14: FY2021 outlook
FY2021 outlook > Improving H2 backdrop > Restructuring benefits supporting further good profit conversion > Continued strong cash conversion > Confident of meeting market expectations for FY2021 14 SMITHS GROUP PLC | INTERIM RESULTS 2021
Slide 15: Andy Reynolds Smith
Andy Reynolds Smith > Chief Executive 15 SMITHS GROUP PLC | INTERIM RESULTS 2021
Slide 16: Delivering on our strategy
Delivering on our strategy 2016 2018 2019 2020 2021 > ROBUST PERFORMANCE OUTPERFORMING A NEW RETURN TO SUSTAINABLE DESPITE SIGNIFICANT OUR CHOSEN DIRECTION GROWTH GROWTH DISRUPTIONS MARKETS 16 SMITHS GROUP PLC | INTERIM RESULTS 2021
Slide 17: United by common purpose and characteristics
United by common purpose and characteristics SUSTAINABLY HIGH PROPORTION OF TECHNOLOGY DIGITISATION COMPETITIVE AND AFTERMARKET AND DIFFERENTIATION CAPITAL LIGHT SERVICES Innovation for a sustainable future - making a safer, cleaner and more efficient world 17 SMITHS GROUP PLC | INTERIM RESULTS 2021
Slide 18: Our businesses are leaders in their markets
Our businesses are leaders in their markets Competitive strengths - A global leader in energy and - Leading capability in design and JOHN CRANE industrial processing markets FLEX-TEK manufacture - Proprietary technology and expertise - High performance and innovative products - Broad installed base,
Slide 19: Creating value for our stakeholders in a sustainable way
Creating value for our stakeholders in a sustainable way through our shared operating model Smiths Excellence System: delivering better, faster and more cost effectively > INNOVATION & TECHNOLOGY > EXCELLENCE > PEOPLE & CULTURE - Group-wide innovation framework - Smiths Excellence System driving imp
Slide 20: Our businesses are aligned to long-term trends
Our businesses are aligned to long-term trends Return to safe mobility Increasing biological detection Clean Air M&A Digital Smiths Detection Accelerators Flex Tek & Interconnect Efficient energy usage Core organic John Process efficiency Crane Digital Clean, efficient fossil fuels Clean Air Energy
Slide 21: Group-led approach to accelerating global trends and themes
Group-led approach to accelerating global trends and themes John Crane - increased Smiths Detection – safety, Flex-Tek – safe, efficient Smiths Interconnect- Today efficiency, emission security and freedom of movement and heating of high speed, secure reductions and energy movement fluids and gases
Slide 22: Disciplined M&A
Disciplined M&A Organic growth complemented 11 DISPOSALS c.£540m proceeds + 12 ACQUISITIONS for c.£1bn = 23 TRANSACTIONS total value c.£1.5bn (FY16-FY21) by disciplined M&A > Disposal > New of [Silver] acquisition - $xxxm, Royal Metal March - $107m, 2021 2021 February > Case study Reflex Photonics –
Slide 23: Committed to separation of Smiths Medical by end of FY2021
Committed to separation of Smiths Medical by end of FY2021 > Uninterrupted focus on accelerating growth > Underlying improvement plans progressing well > Finalising separation workstreams: governance, tax, debt structure, pensions Continued focus on maximising value for stakeholders 23 SMITHS GROUP
Slide 24: A strong position to maximise growth opportunities
A strong position to maximise growth opportunities > Well positioned as markets recover > At the forefront of market growth trends > Augmented by disciplined M&A Delivering long-term sustainable value 24 SMITHS GROUP PLC | INTERIM RESULTS 2021
Slide 25: Innovation for a sustainable future
www.smiths.com INNOVATION FOR A SUSTAINABLE FUTURE – MAKING A SAFER, CLEANER AND MORE EFFICIENT WORLD
Slide 26: Questions & Answers
www.smiths.com QUESTIONS & ANSWERS
Slide 27: Appendix
smiths www.smiths.com APPENDIX
Slide 28: Supporting our customers' ESG agendas and making strong progress ourselves
Supporting our customers’ ESG agendas and making strong progress ourselves External recognitions supporting strong ESG fundamentals External recognitions Score Environmental Social Governance Mar Governance 2 FY2021 H1 vs. FY2007 Our People are our most Average tenure on the Board 2021 Environment 2
Slide 29: Income statement
Income statement1 £M HY 2021 HY 2020 Reported change Revenue 1,150 1,240 (7)% Headline2 operating profit 166 186 (11)% Amortisation of acquisition related intangible assets (27) (28) Legacy pension scheme arrangements (6) 8 Post acquisition integration costs and fair value adjustment unwind (1) (3)
Slide 30: Reported to underlying bridge – Continuing Operations
Reported to underlying bridge – Continuing Operations1 H1 2020 Foreign H1 2020 H1 2021 Restructuring Acquisitions and H1 2021 Underlying2 Reported exchange Underlying2 Underlying2 costs3 Disposals Reported Smiths - Continuing Operations1 John Crane 474 (16) 458 (48) 410 410 Detection 378 (6) 372 (23
Slide 31: Reported to underlying bridge – Discontinued Operations
Reported to underlying bridge – Discontinued Operations1 Depreciation Depreciation H1 2020 H1 2020 Foreign H1 2020 H1 2021 Restructuring H1 2021 and Underlying2 and H1 2021 Reported Reported Pro-forma1 exchange Underlying3 Underlying3 costs4 Pro-forma1 Amortisation2 Amortisation2 Smiths Medical – Di
Slide 32: Total Group - balance sheet
Total Group - balance sheet £m 1,141 188 (139) 22 1,075 Derivatives, FX and other non- (5) cash movements Net Net Debt/ Debt/ Net debt:EBITDA calculation1 EBITDA EBITDA - Net debt = £1,075m (as per above) 1.7x 1.7x - EBITDA excluding restructuring and write-downs for both continuing and discontinued
Slide 33: FX sensitivity
FX sensitivity H1 2021 H1 2020 Currency % change - For each $0.10 move, average rate average rate the annual operating profit impact is c.£17m USD 1.32 1.27 3.9% - For each €0.10 move, EUR 1.11 1.15 (3.5)% the annual operating profit impact is c.£7m - At current rates, Translation impact H1 2021 hea
Slide 34: Incentive performance measures and linkage to business strategy
Incentive performance measures and linkage to business strategy Annual Bonus (FY2021) Operating profit (40%) 1 2 3 Revenue (25%) 1 3 Operating cash conversion (25%) 2 3 Personal objectives (10%) 1 2 3 Long term incentives (FY2021 awards) EPS growth after tax (25%) 1 2 3 Organic revenue growth (25%)
Slide 35: John Crane – solutions for increased efficiency, emission reductions and energy transformation
John Crane – solutions for increased efficiency, emission reductions and energy transformation H1 R E VE N U E £410m COMPETITIVE STRENGTHS GROWTH DRIVERS COMPETITIVE (36% of Continuing Group) LANDSCAPE - A global leader in mission-critical - Long-term underlying energy demand, especially H1 HE ADL I
Slide 36: Smiths Detection – supporting safety, security and freedom of movement
Smiths Detection – supporting safety, security and freedom of movement H1 R E VE N U E £350m (30% of Continuing Group) COMPETITIVE STRENGTHS GROWTH DRIVERS COMPETITIVE LANDSCAPE - A global market leader with - Persistent and evolving terror threats - Competitors range from large H1 HE ADL I N E OP d
Slide 37: Flex-Tek – safe, efficient movement and heating of fluids and gases
Flex-Tek – solutions for the safe, efficient movement and heating of fluids and gases H1 R E VE N U E £238m (21% of Continuing Group) COMPETITIVE STRENGTHS GROWTH DRIVERS COMPETITIVE LANDSCAPE - High-performance products - Through cycle growth of the US housing - Competitors range from large H1 HE A
Slide 38: Smiths Interconnect – high-speed, secure connectivity
Smiths Interconnect - solutions for high-speed, secure connectivity in demanding applications H1 R E VE N U E £152m (13% of Continuing Group) COMPETITIVE STRENGTHS GROWTH DRIVERS COMPETITIVE LANDSCAPE - Innovative and technically - Increased connectivity in space - Competitors range from large H1 HE
Slide 39: Smiths Medical – quality medical devices and consumables
DISCONTINUED OPERATIONS Smiths Medical – quality medical devices and consumables that are vital to patient care globally H1 R E VE N U E £427m COMPETITIVE STRENGTHS GROWTH DRIVERS COMPETITIVE LANDSCAPE - A category leader in served segments - Ageing populations with increasing - Competitors range fr