INVESTOR OPPORTUNITIES IN OUR WORLD‐LEADING NICHE BUSINESSES Watson‐Marlow Steam Specialties Electric Thermal Solutions 0 Investor opportunities March 2020 Engineering every day
A British multi‐national engineering group Three world‐leading niche engineering businesses Global addressable market: £9.0bn; 14% market share Performance Business model • Average revenue growth: 7% per annum • Direct sales model key to delivering (excluding 2017 acquisitions) customer value • Revenue growth tracks 2x Global Industrial • Large diversity of customers, Production growth rate geographies, markets and products • Good operating profit margins: 22.8% (2019) • Robust balance sheet; strong cash generation • 85% of sales from maintenance and repair budgets (35% self‐generated) • Return on capital employed: 54.2% (2019) • 52 year dividend progress: 11% CAGR • Sales presence in 66 countries; manufacturing in 14 countries • Special dividends in 2010, 2012 and 2014 1 Investor opportunities March 2020 Engineering every day
Group structure Three world‐leading niche businesses 2019 Group Revenue 61% 24% Thermal Energy Management £1,242m 15% Steam Specialties : Electric Thermal Solutions: Watson‐Marlow: electrical process heating niche peristaltic pumps industrial and commercial and temperature and associated fluid steam systems Steam Specialties management solutions path technologies EMEA Asia Pacific Americas Electric Thermal Solutions www.spiraxsarco.com www.chromalox.com www.gestra.com www.wmftg.com Watson‐Marlow www.thermocoax.com 2 Investor opportunities March 2020 Engineering every day
Steam Specialties Solutions for the control and management of industrial steam systems Steam uses : heating and curing, cleaning, sterilisation, hot water generation, space heating and humidification Products Benefits of steam : high energy content, easy to control, environmentally safe, clean and sterile Products : steam traps, control valves, condensate recovery pumps, strainers, separators, flow meters, boiler controls and pre‐fabricated engineered packages Packages Delivering : improved process efficiency and product quality; reduced CO₂ emissions, energy and water use, waste and maintenance downtime; compliance Pre‐fabricated engineered packages for heat transfer & recovery and clean steam generation with industry standards A one‐stop shop for plant‐wide applications of industrial and commercial steam systems 3 Investor opportunities March 2020 Engineering every day
Electric Thermal Solutions Solutions for process heating and temperature management Uses : electric heating for mission‐critical industrial processes, freeze protection for pipes, valves and tanks, and component Products heating Benefits of electric solutions : easy to incorporate, install and maintain; high temperatures; controllable; no emissions at point of use Products : Industrial Heaters & Systems; Heat Tracing; Component Technologies; Mineral insulated cable Packages Delivering : efficient thermal energy management and control solutions for improved industrial processes Pre‐fabricated engineered packages for process heating and temperature management Advanced thermal technologies engineered for the world’s toughest industrial heating applications 4 Investor opportunities March 2020 Engineering every day
Complementarity of steam and electric heating Thermal Energy Management: electricity and steam have complementary uses. The choice between heating mediums is driven by application needs or customer circumstances. 5 Investor opportunities March 2020 Engineering every day
Watson‐Marlow Solutions for the control and management of industrial fluid paths Uses : pumping and fluid control in a broad range of critical applications, from chemical dosing to Biopharm production Products Benefits of peristaltic pump technology : sterile applications (pump does not touch fluid), dirty applications (fluid does not touch pump), sustainable, low‐shear, low maintenance and accurate Products : speciality positive displacement pumps, automated filling machines, tubing, hoses and fluid path components Peristaltic Delivering : accurate, safe, efficient, • Principle: rollers squeeze tubing for gentle pumping action sterile, low maintenance solutions for the • Contamination free: no moving parts in contact with fluid fluid path • Low maintenance: fewer wearing parts • Accuracy: precise dosing and metering Business built around unique pumping and niche fluid path technologies 6 Investor opportunities March 2020 Engineering every day
Our direct sales business model Positioning us well to create value Customer needs: We help our customers to solve their difficult productivity and process challenges, improve their operational sustainability and comply with increasingly stringent health, safety and environmental requirements. Customer closeness: Our direct sales business model creates a unique understanding of our customers’ needs and enables us to build deep, long‐term relationships as we help our customers solve their difficult productivity, control and energy efficiency problems, and improve their operational performance and sustainability. Applied engineering: It is not our products alone that provide value to our customers ‐ it is the application of our extensive knowledge of systems design, operations and maintenance. Wide product range: The breadth of our product offering is unmatched by our competitors and our one‐stop shop approach simplifies the procurement process for our customers who are increasingly seeking partnerships with competent full‐service suppliers. Regional manufacturing: Local availability of a wide range of products is critical to our business model and enhances top line revenue growth. We have strategically located our manufacturing plants across the world, in Europe, North America, Latin America and Asia. 7 Investor opportunities March 2020 Engineering every day
Customer capex vs opex spend Sales by value driver* Maintenance and 85% repair sales that maintain existing systems , supported by the end users’ opex of Group revenue is generated budgets, with a typical from annual maintenance and invoice value of around £1k operational budgets 15% Small project sales that improve existing systems , Self‐generated sales supported by the end users’ opex budgets, with a Our sales and service typical invoice value of engineers are highly skilled in 50% £10k‐£50k both product applications and systems understanding. Large project sales that 35% We self‐generate sales as we build new systems , identify our customers’ supported by the end users’ capex budgets, with unrecognised needs and a typical invoice value of solve their difficult process over £100k challenges. * Based on internal estimates 8 Investor opportunities March 2020 Engineering every day
Diverse markets and broad customer base A source of resilience 50% of Group Food revenue derived Beverage from defensive, less 1% 14% Pharmaceutical & Biotechnology 17% cyclical, end 1% OEM machinery 2% markets Oil & Gas 3% 85% of Group 3% Chemical Group Sales 3% Power Generation revenue derived 3% Healthcare from annual 2019 4% 18% Buildings maintenance and Mining & Precious Metal Processing operating budgets, 5% Water & Wastewater rather than large 6% Pulp & Paper projects from capex 13% 7% budgets Rubber & Plastic Semiconductor Other Where there is little visibility of end user industry sector (primarily in sales via distributors), sales have been allocated across industries on a pro‐rata basis. In 2019 Based on internal estimates these “unknown” sales accounted for 20% of total revenue. OEM sales to identifiable industries have been allocated to those industries. Sales to OEM customers accounted for 20% of Group revenue in 2019. Revenue by industry sector includes full year sales for Thermocoax, acquired in May 2019. 9 Investor opportunities March 2020 Engineering every day
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