Delivering Innovative Solutions for our Customers. Spectris plc Half Year Results. 24 July Spectris plc

Transcription

1 Delivering Innovative Solutions for our Customers Spectris plc 2018 Half Year Results 24 July 2018

2 Agenda 2018 Highlights Financial Performance Business Update and Strategic Progress Summary and Outlook 2

3 2018 Highlights Sales of 728 million reflects a 5% LFL sales increase Good strategic progress in adding further software, services and testing capability Concept Life Sciences integration proceeding well; initial cross-selling opportunities identified Revolutionary Engineering brings additional automotive test capabilities and a US presence Acquired VI-grade, a leading global provider of vehicle simulation solutions and services Joint venture with Macquarie Capital for environmental monitoring business now established Project Uplift on track to deliver net benefit of 3 million in 2018; shared service centre validation and design study progressing well Adjusted operating profit of 70.5 million, a 15% LFL increase year-on-year Dividend per share increase of 8% 3

4 Financial Performance Clive Watson Group Finance Director 4

5 Financial Performance Adjusted Measures Change Like-for-like change (2) Reported sales ( m) % 5% Adjusted operating profit before Project Uplift costs ( m) (1) % 9% Adjusted operating margin before Project Uplift costs (%) (1) 10.6% 10.7% (0.1pp) 0.4pp Project Uplift costs ( m) (6.7) (9.3) 28% Adjusted operating profit ( m) (1) % 15% / 0.8pp Adjusted profit before tax ( m) (1) % Adjusted effective tax rate (%) (1) 18.7% 21.0% (2.3pp) Adjusted EPS (pence) (1) % DPS (pence) % Adjusted operating cash conversion (%) (1) 69% 119% (50pp) Notes (1) These adjusted performance measures represent the statutory results excluding certain items. (2) At constant exchange rates and including acquisitions and disposals on a comparable basis ( LFL ). 5

6 Reported Sales m (24.4) 700 (24.5) m USD (22.8) EUR 5.4 JPY (2.0) Other (net) (5.0) Total (24.4) m Pricing 5.1 Volume/mix 30.8 Total Contribution to yoy change 2017 Disposals 2017 organic Acquisitions Currency 2018 (3.5%) +4.5% (3.5%) +5.2% +2.5% LFL 6

7 Adjusted Operating Profit m m Pricing 5.1 Volume/mix 21.7 MLO increase (6.1) Procurement 3.1 Total 23.8 m Employee-related (10.3) Other (6.9) Total (17.2) USD EUR JPY Other Total m (1.8) (0.6) (1.6) 23.8 (17.2) (3.6) (6.7) 70 (1.6) Adjusted excluding Project Uplift costs Disposals net of acquisitions Currency Gross margin Overheads 2018 Adjusted excluding Project Uplift costs 2018 Project Uplift costs 2018 Adjusted including Project Uplift costs 10.7% Adjusted operating margin 10.6% 9.7% 7

8 Cash Flow m Adjusted operating cash flow = 48.3m ( 2017: 78.8m) Adjusted operating cash conversion = 69% ( 2017: 119%, FY 2017: 75%) (40.0) (50.5) m Receivables 30.3 Inventory (16.9) Creditors/other (11.9) Total x dep n Dividends Tax (175.0) 43.7 (25.3) Net interest/other Total m (44.5) (19.9) (4.6) (69.0) -200 (69.0) -240 (3.7) (231.5) Net debt 31 Dec 2017 EBITDA Change in working capital Capex Acquisitions Disposals Share buyback Divis/tax/ int/other Currency Net debt 30 Jun x Net debt: adjusted EBITDA 0.9x 8

9 Sales by Destination 2018 % of reported Group sales Region/country LFL change 2018 vs 2017 LFL change 2017 vs 2016 Asia 29% ROW 4% North America 32% North America +5% +1% Europe +6% +6% Germany +1% +11% UK +20% +7% Asia +6% +10% China +18% +6% Japan (3%) +11% Europe 35% Rest of the world +1% 0% Group +5% +5% 9

10 Summary Segment Performance Materials Analysis Test and Measurement In-line Instrumentation Industrial Controls Total Reported sales ( m) LFL sales change 11% 6% (3%) 4% 5% Adjusted operating profit before Project Uplift costs ( m) (1) LFL operating profit change before Project Uplift costs (1) Adjusted operating margin before Project Uplift costs (1) % (30%) 25% 30% 9% 12.2% 11.5% 7.2% 10.7% 7.9% 6.0% 17.9% 14.5% 10.6% 10.7% LFL adjusted operating margin change before Project Uplift costs (1) 1.8pp (3.6pp) 1.7pp 3.5pp 0.4pp Project Uplift cost ( m) (1.7) (2.5) (1.8) (3.4) (1.3) (1.5) (1.9) (1.9) (6.7) (9.3) Notes (1) These adjusted performance measures represent the statutory results excluding certain items. They also exclude costs relating to Project Uplift. 10

11 2018 FY Guidance :H2 phasing Acquisitions and disposals 2017 and 2018 acquisitions sales million, adjusted operating profit 8-9 million Microscan 2017 sales 33 million, adjusted operating profit 4.5 million EMS B&K equity investment treatment sales 25 million, adjusted operating profit 6.3 million Overheads costs growth similar to 2017 Core overheads increase reflecting higher depreciation and inflationary pressures Annualisation of the costs of the strategic initiatives Project Uplift costs of 11 million, net benefit 3 million; shared service centre costs of 3-4 million Foreign exchange sensitivities Net interest charge of million; underlying effective tax rate 20% Planned capex of 80 million, of which growth capex 45 million, principally Millbrook 11

12 Business Update and Strategic Progress John O Higgins Chief Executive 12

13 Sales by End-user Market 2018 % of reported Group sales Aerospace & defence 4% Academic research 6% Pulp, tissue & paper 7% Other 20% Machine building 8% Metals, minerals & mining 9% Pharma & fine chemicals 14% Automotive 13% Energy & utilities 9% Semicon, telecoms, electronics 10% End-user market LFL change 2018 LFL change 2017 Pharma & fine chemicals +11% +6% Automotive +14% +18% Semicon, telecoms & electronics +3% +12% Energy & utilities +6% +10% Metals, minerals & mining +9% +8% Machine building +1% +6% Pulp, tissue & paper 0% +3% Academic research (1%) (14%) Aerospace & defence +4% +4% 13

14 Materials Analysis Reported sales growth +17%: LFL sales +11%, acquisitions +10%, currency (4%) Strong pharma sales growth driven by investment in biologics/generics, increasing regulation Acquisition of Concept Life Sciences: key step in strategy to add services in this segment Good growth in metals, minerals and mining as investment climate continues to improve Strong growth in semiconductor/electronics continues for PMS, especially in Asia Change vs Reported Organic FX Acq. Uplift Reported Reported LFL excl. Uplift Sales ( m) (7.5) % +11% Adjusted op profit ( m) Adjusted operating margin (%) (0.7) (0.1) % +28% 10.3% 11.5% +1.2pp +1.8pp 14

15 Test and Measurement Reported sales growth +7%: LFL sales +6%, acquisitions (net of disposals) +3%, currency (2%) Strong sales growth in automotive, following expansion of testing capacity at Millbrook Phasing and investment in strategic initiatives driving increase in overheads Brüel & Kjær Sound & Vibration and HBM to merge JV with Macquarie Capital for environmental monitoring business now established Change vs Reported Reported excl. disposal Organic FX Acq. Uplift Reported Reported LFL excl. Uplift Sales ( m) (3.8) % +6% Adjusted op profit ( m) Adjusted operating margin (%) (7.1) (25%) (30%) 9.1% 9.1% 6.4% (2.7pp) (3.6pp) 15

16 In-line Instrumentation Reported sales decline (4%): LFL sales (3%), acquisitions +1%, currency (3%) Decline in sales offset by a strong recovery in gross margin and lower overheads Modest sales growth in pulp & paper; diversifying towards tissue, pulp, packaging markets Growth in energy despite tough year-on-year comparator for wind business Change vs Reported Organic FX Acq. Uplift Reported Reported LFL excl. Uplift Sales ( m) (3.8) (4.5) (4%) (3%) Adjusted op profit ( m) Adjusted operating margin (%) (0.3) % +25% 4.9% 7.0% +2.1pp +1.7pp 16

17 Industrial Controls Reported sales decline (19%): LFL sales +4%, disposal of Microscan (16%), currency (7%) Strong sales growth in Asia, especially in China Good performance at Omega reflects operational improvements & digital marketing campaigns Increasing emphasis on industrial connectivity and IIoT generating opportunities Red Lion s focus on key vertical markets drives growth in sales and access to new markets Change vs Reported Reported excl. disposal Organic FX Uplift Reported Reported LFL excl. Uplift Sales ( m) (8.6) (19%) +4% Adjusted op profit ( m) Adjusted operating margin (%) (1.7) % +30% 13.1% 12.9% 16.2% +3.1pp +3.5pp 17

18 Strategy Innovative customer solutions Increase presence in key strategic markets Deploy capital for M&A Accelerate operational excellence Expand business globally 18

19 Strategy in Action M&A adding services & software Merging BKSV and HBM Broadening our capability to provide complete solutions Cross OpCo collaboration Premium hardware providers with a strong focus on software Expanding IIoT capability Increasing collaboration to provide innovative customer solutions Asset monitoring and optimisation capability in select industrial niches 19

20 M&A Adding Services and Software VI-grade acquired in July Provides vehicle development software, hardware, simulators and services Supplying customers in the automotive, motorcycle, aerospace and rail sectors Provides real-time virtual prototype simulation: Speeding up development cycles Reducing new product design risk New operating company in Test and Measurement segment Revolutionary Engineering acquired in April Leading specialist in propulsion and driveline test systems and services Supplying customers in the automotive, transport and petrochemical industries Establishes presence for Millbrook in North America Enables customers to perform wide range of tests to optimise the performance and durability of their product Good performance since acquisition 20

21 Pharma Solutions Malvern Panalytical and Concept Life Sciences Technical Advisory Board established to drive synergy activities Joint key account management approach being initiated Focused on the pharmaceutical market Leverage customer relationships to provide a unique portfolio of equipment, services and expertise Help pharma companies reduce drug development time and costs Particle Measuring Systems Drive to increase sales of consultancy services, to both existing hardware and new customers Provides further opportunities for product sales Demand driven by regulatory compliance 21

22 Merging BKSV and HBM Brüel & Kjær Sound & Vibration and HBM to merge Premium hardware providers with a strong focus on software Providing complementary expertise across the measurement chain Common customers, particularly automotive & aerospace, and complementary platforms New company will be named HBK (Hottinger, Brüel & Kjær) Merging activities enables delivery of an integrated offering Combines sensors, data acquisition, preparation, evaluation & engineering services into one solution Bridging the gap between physical and simulation testing and measuring 22

23 Expanding IIoT Capability Enhanced IIoT-focused offerings to help customers monitor and optimise their industrial assets and processes Omega s Enterprise Gateway software provides a web-based data visualisation, monitoring, alarming and analysis service New generation of Red Lion HMI products for asset monitoring New software products to streamline and simplify data acquisition and monitoring EVIDAS, ClipX, BK Connect EMS B&K JV now established with Macquarie Capital JV to expand its environmental services offering, building on its cloud-based remote monitoring platform Spectris Advance digital solutions brand launched Combines instrumentation, connectivity and analytics capabilities with domain expertise from across the Group 23

24 Summary and Outlook Good performance driven by execution of strategic plan and good end-market demand Project Uplift on track for 3 million net benefit; shared service centre details in H2 Good strategic progress in adding further software, services and testing capability: Concept Life Sciences integration proceeding well; initial cross-selling opportunities identified Revolutionary Engineering brings additional automotive test capabilities and a US presence Acquired VI-grade, a leading global provider of vehicle simulation solutions and services Joint venture with Macquarie Capital for environmental monitoring business now established Expectations for the full year remain unchanged 24

25 Delivering Innovative Solutions for our Customers Spectris plc Appendix 25

26 Business Segments Laboratory/off-line businesses Materials Analysis Test and Measurement Process/manufacturing businesses In-line Instrumentation Industrial Controls Metals/minerals/mining Automotive Process industries Manufacturing Pharma/fine chemicals Academic research Aerospace Electronics Energy Pulp, paper & tissue Energy & utilities Process industries Energy Electronics Semiconductors Academic research Web/converting Healthcare % Group Sales 2018: 32% 33% 20% 15% 26

27 2017 Segmental Sales Materials Analysis Test and Measurement In-line Instrumentation Industrial Controls 2017 reported sales by end-user market 16% 13% 32% 7% 6% 16% 34% 26% 36% 42% 30% 16% 23% 7% 10% 20% 13% 25% 5% 23% Pharma & fine chemicals Metals, minerals & mining Academic research Semicon, telecoms & electronics Other 2017 reported sales by destination Automotive Machine building Aerospace & defence Environmental noise monitoring Academic research Energy & utilities Other Pulp, paper & tissue Energy & utilities Converting, extrusion & packaging Other Distribution Semicon, telecoms & electronics Pharma & fine chemicals Other 41% 8% 24% 27% 3% 21% 31% 7% 33% 13% 16% 2% 27% 49% 29% 69% North America Europe Asia ROW North America Europe Asia ROW North America Europe Asia ROW North America Europe Asia ROW 27

28 Disclaimer This presentation is for distribution only to authorised persons within the meaning of the Financial Services and Markets Act 2000 (as amended by the Financial Services Act 2012) and any relevant statutory instrument thereunder or to whom it would otherwise be lawful to distribute it. The information contained herein is not for publication, distribution or reproduction, in whole or in part, to persons in any jurisdiction in which such publication or distribution is unlawful. The information contained in this presentation is provided purely for information purposes regarding Spectris plc. Any reliance upon the information presented is at your own risk. This announcement includes forward-looking statements. All statements other than statements of historical fact included in this announcement, including, without limitation, those regarding the Company s financial position, business strategy, plans and objectives of management for future operations (including development plans and objectives relating to the Company s products), are forward-looking statements. Such forward-looking statements involve known and unknown risks, uncertainties and other important factors that could cause actual results to be materially different from future results, performance or achievements expressed or implied by such forward-looking statements. Such forward-looking statements are based on numerous assumptions regarding the Company s present and future business strategies and the environment in which the Company will operate in the future. You should not place undue reliance on forward-looking statements, which speak only as at the date of this announcement. The Company assumes no responsibility to update any of the forward-looking statements contained herein. Neither Spectris, its directors, employees, agents, nor its affiliated companies, makes any warranty nor assumes legal responsibility for the reliability, accuracy or completeness, or fitness for purpose of any of the information. The information shall not constitute or be deemed to constitute any offer or invitation to invest or otherwise deal in shares or other securities of Spectris plc. Recipients of this presentation are not to construe its contents, or any prior or subsequent information as investment, legal or tax advice. All information in the presentation is the property of Spectris plc. Spectris makes no representations and disclaims all warranties (whether express or implied) and shall not be liable for any direct, indirect, special, punitive or consequential damages or loss (including but not limited to lost profits or revenues) whether arising in statute, contract, tort, equity or otherwise to the fullest extent permitted by law. These terms and conditions shall be governed by and construed in accordance with English Law and the exclusive jurisdiction of the English courts. 28