Smiths

Manufacturing
Written By Candy Cowan

Smiths is a global engineering company making travel safer, supporting sustainable energy transition, efficiently heating or cooling our homes, and helping our world stay connected.

Smiths has operations in more than 50 countries.

Employees: 14,600

Revenue: £2.56B for FY2022

HQ Location: London, United Kingdom

What they do:

Smiths is an engineering group with four main divisions

All of their divisions share four common characteristics:

  • World-class engineering businesses

  • Playing leading roles in critical markets

  • Global capabilities

  • With a robust financial framework of high levels of recurring revenues, high margins and low capital intensity

John Crane: Provides mission critical flow control solutions for increased efficiency, emission reduction and energy transformation.

Their customers are in the energy industry, in down and mid-stream activities of energy and power generations companies.

61% of revenue is derived from the energy sector (downstream and midstream oil & gas and power generation, including renewable and sustainable energy sources.) 39% is from other process industries including chemicals, life sciences, mining, water treatment, and pulp & paper. 70% of John Crane revenue is from aftermarket sales. John Crane represents 35% of Group revenue.

Smiths Detection: Detection and screening technologies for safety, security and the efficient movement of people and products.

Their customers are in the aviation industry, airports and governments. They also sell into other security systems including ports and borders, court houses, prisons, shopping malls and train stations.

51% of Smiths Detection’s sales are derived from aftermarket service. Smiths Detection represents 26% of Group revenue.

Flex-Tek: High-performance engineered components and solutions that support the safe and efficient movement of fluids and gases.

Their customers are in the construction, aerospace and industrial engineering industries.

83% of Flex-Tek’s revenue is derived from Industrials and 17% from the Aerospace sector. Flex-Tek represents 26% of Group revenue.

Smiths Interconnect: High-speed, secure connectivity in critical applications.

Their customers are in the Semiconductor space working for a broad range of chip manufacturers, in the connector space a range of healthcare, industrial, transport and aerospace customers; in the Fibre optics and radio frequency products into space, defence and aerospace customers.

Smiths Interconnect represents 13% of Group revenue.

  • Smiths’ business model leverages their world-class engineering, leading positions in critical markets, and global capabilities to help their customers solve their toughest problems.

Their Strategic Priorities:

Growth

  • Strong execution to maximise underlying market expansion

  • Improved new product development and commercialisation

  • Extending our reach to build out priority adjacencies

  • Supplementing organic growth with disciplined M&A

  • Developing green technology solutions for our customers

Execution

  • Smiths Excellence System 2.0 advancing us from learning to doing

  • Creating a faster and consistent operating rhythm throughout Smiths

  • Continuous improvement to deliver value for customers

  • Executing against our environmental commitments

People

  • Progress begins and ends with our people

  • Safety and wellbeing always at the forefront, in everything we do

  • Inspiring and empowering our people

  • Embedding an inclusive and diverse workplace

  • Expanding on our already strong ESG culture

Financial and Business Goals

Outlook for 2023

Raising FY2023 guidance to at least 8% organic revenue growth, with moderate margin improvement

  • Strong order book and trading trends support upgraded guidance

  • New product strategy working well; pipeline strong and recent launches ramping well

  • Impact of SES visible in results; will continue to ramp in H2 and beyond

  • Savings projects improving speed and operating leverage

Things to know right now

Smiths Interconnect completes Platstronics acquisition

Plastronics’ technology, products, and capabilities complement and strengthen Smiths Interconnect’s existing portfolio of products and support the company’s ambition to be the partner of choice for semiconductor test customers around the world.

The acquisition brings growth opportunities for both semiconductor test and connectors. It also provides cross selling opportunities in both Asia and the US by leveraging the combined sales and manufacturing footprint of the companies.

Their Competitors

  • Flowserve

  • EagleBurgmann

  • AES

  • Rapiscan

  • Leidos

  • Parker-Hannifin

  • Eaton

  • Amphenol,

  • Cobham

Their financial calendar

Q1: August-October - Earnings 9th November 2022

Q2: November-January - Earnings 24th March 2023

Q3: February-April - Earnings 19th May 2023

Q4: May-July - Earnings 23rd September 2023

Next Earnings Report:

19th May

Positives from the last earnings report:

  • Organic revenue +13.5%1

  • Reported revenue +25.6%, EPS2 + 52.1%

  • A seventh consecutive quarter of growth, equally balanced between volume and price

  • Growth across all divisions, geographic regions, and major customer end markets

  • 200bps of growth from new product launches with a +13.5% increase in R&D to support future as well as current growth

  • Headline operating profit growth of +27.4% with margin up +20bps to 16.1%

  • +£5m operating profit contribution from SES, scaling to +£12m for FY.

  • Operating cash conversion of 63% reflecting continued investment to secure supply and support sustainable growth

  • Inspiring & empowering their People by advancing their inclusive and high-performing culture

  • Increased investment in talent development with the relaunch of their Accelerate leadership training program

  • Actively investing in numerous diversity, equity & inclusion, and employee engagement initiatives

  • Per segment

    • John Crane

Smith Detection

Flex-Tek

Smiths Interconnect

Candy Cowan
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