REG - Spectris PLC - Q3 Trading Statement

SpectrisAnnouncement

31/10/2024 07:00

For best results when printing this announcement, please click on link below:
https://newsfile.refinitiv.com/getnewsfile/v1/story?guid=urn:newsml:reuters.com:20241031:nRSe3131Ka&default-theme=true

RNS Number : 3131K  Spectris PLC  31 October 2024

THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION

Spectris - Third quarter 2024 trading update

 

31 October 2024 - Spectris plc (SXS: LSE), the expert in providing insight
through precision measurement, provides a trading update for the three-month
period ended 30 September 2024 ('the period').

 

Accelerating action to drive profitability and to capitalise on market
recovery

·      While our third quarter performance indicates markets have
stabilised, the recovery anticipated at the time of our half year results is
taking longer to materialise

·      Third quarter orders and sales consistent with the first half:

o  Like-for-like (LFL) orders 6% lower in the quarter (6% lower on a
year-to-date basis)

o  LFL sales 10% lower in the quarter (10% lower on a year-to-date basis)

·      ERP back on track - progressive recovery of sales rephased from
H1 expected to be completed by year-end

·      Increasing and accelerating actions to reduce cost base and drive
profitability in addition to synergy realisation and benefits from ERP
implementation

·      Acquisitions represent a meaningful growth driver in 2025, with
integration planning for Micromeritics and SciAps progressing well and
acquisition of Piezocryst expected to complete around the end of the year

·      Guidance and full year outlook:

o  We now expect to deliver adjusted operating profit for the Group for the
full year, including the contribution from the two completed acquisitions, of
around £200 million

o  Restructuring programme to deliver around £50 million run rate benefits,
with associated costs of between £15 million and £20 million in 2024 with
further restructuring and integration-related costs of £20 million to £25
million in 2025

 

Andrew Heath, Chief Executive, said:

 

"During the third quarter the headwinds that we described at the half year -
most notably continued softness in China, pharma and academia - have
persisted and, from what we can see today, are likely to continue into the
early part of 2025. Against this backdrop, we have increased and accelerated
cost reduction activities to improve the Group's productivity and drive
profitability. This decisive action on cost, and a strong focus on executing
our strategy, means the Group is well placed to benefit as our end markets
recover.

 

Over recent years we have significantly improved the quality of the Spectris
portfolio, which today comprises market leading premium precision measurement
businesses, aligned behind a common purpose, and capable of delivering
through-cycle growth and margin expansion. The high-quality acquisitions we
have made this year have strengthened our platform significantly, and the
enhancements to our customer propositions, and confidence in synergy delivery
is structurally increasing our ability to deliver against our medium-term
financial targets."

 

Sales by geography and division - LFL growth Q3 2024 vs Q3 2023

 

                      By division                     By region
 Spectris Scientific  -8%          North America      -9%
 Spectris Dynamics    -13%         Europe             -12%
                                   Asia               -10%
                                   Rest of the World  0%
 Total sales          -10%                            -10%

 

Group reported sales decreased by 13% (£46.4 million) to £302.7 million (Q3
2023: £349.1 million).  LFL sales were down 10%, with lower sales across all
regions, with the impact of foreign currency exchange and disposals net of
acquisitions reducing sales by 2% and 1% respectively.

 

·    In Spectris Scientific, order intake in the quarter was slightly up
on a LFL basis, with good demand in both semiconductor and materials partially
offset by continued softness in academia and batteries.  Demand in
pharma/life sciences was broadly in line with the comparative period.  Sales
in the period were 8% lower on a LFL basis largely driven by semiconductor and
materials against strong comparators.

 

Year-to-date, broadly flat demand in materials and semiconductor has been more
than offset by the softness in academia; on a regional basis, flat demand in
North America was outweighed by slightly lower demand in Europe and softness
in Asia, notably China.

·   In Spectris Dynamics, orders were down on a LFL basis in the period,
largely driven by weaker order intake in automotive reflecting the broader,
recent pull back in demand across the sector.  LFL sales in the quarter were
13% lower with good growth in A&D more than offset by lower sales in
machine manufacturing and automotive.  LFL sales were lower in all regions
except Asia, against a strong comparator.

 

Year-to-date, continuing good demand in A&D and flat demand in auto and
machine manufacturing has been more than offset by a number of other end
markets, including academia; regionally, overall softer demand in the division
has been driven by North America.

 

Quarterly Group sales

 

             2023                        2024
             Q1     Q2     Q3     Q4     Q1     Q2     Q3
 £ million   354.3  348.2  349.1  397.6  309.4  280.3  302.7
 LFL growth  24%    15%    11%    -3%    -8%    -12%   -10%

 

Strategy update

In August, we completed the acquisitions of Micromeritics and SciAps in
Spectris Scientific for combined headline consideration of £642 million and
integration planning is progressing well.  In September, we announced the
acquisition of Piezocryst in Spectris Dynamics, a leading provider of
piezoelectric sensors, for €133.5 million (£112 million) which we expect to
complete around the end of the year.

 

We are pleased with the performance of our new ERP system in Malvern
Panalytical, with the revenue rephased from the first half being progressively
recovered and expected to be completed by the year-end.  In September, we
completed the first phase of the implementation of the new system in Spectris
Dynamics applying the learnings from the initial implementation.

 

Restructuring programme

Our actions to reduce the cost base comprise three core elements: (1) general
cost and efficiency measures in addition to those announced at the half year;
(2) the realisation of cost synergies associated with the acquisitions
announced in 2024; and (3) crystallisation of the benefits associated with the
implementation of our new ERP system.  The programme is expected to deliver
approximately £50 million of full run rate benefits, of which £30 million is
expected in 2025 with the remaining £20 million in 2026.

 

Capital allocation and balance sheet

Shortly after the period end, we completed the second £50 million tranche of
our £150 million share buyback programme.  We expect to start the final
tranche in the new year.  Net debt was £393 million at the end of September
2024. In the event the Piezocryst acquisition completes before the end of the
year, Group leverage, as measured by net debt:EBITDA, is expected to be around
the upper end of our target range of 1x to 2x.

 

Conference call

A conference call for analysts and investors will be hosted by Andrew Heath,
Chief Executive, and

Angela Noon, Chief Financial Officer, at 8.00am today to discuss this
statement.  To access the call, please dial +44 (0) 20 3936 2999, toll free
+44 (0) 800 358 1035 - Participant code: 437574.  Or for replay, please dial
+44 (0) 20 3936 3001 - Participant code: 940415.

 

On 10 December, Spectris will be holding a virtual presentation for investors
and analysts on our Servomex business.

 

Spectris will publish its full-year results for 2024 on Friday, 28 February
2025.

 

END

 

For and on behalf of Spectris plc

LEI Number: 213800Z4CO2CZO3M3T10

 

Contacts:

Spectris plc

Mathew Wootton

Investor Relations Director

+44 7500 078 880

 

Teneo

Martin Robinson/Giles Kernick

+44 20 7353 4200

 

This Announcement contains inside information for the purposes of article 7 of
the Market Abuse Regulation (EU) 596/2014 which is part of UK law by virtue
of the European Union (withdrawal) Act 2018. The person responsible for
arranging for the release of this Announcement on behalf of the Company is
Rebecca Dunn, Company Secretary.

 

About Spectris

Spectris combines precision with purpose, delivering progress for a more
sustainable world. We provide critical insights to our customers through
premium precision measurement solutions combined with technical expertise and
deep domain knowledge. Precision is at the heart of what we do - our leading,
high-tech instruments and software equip our customers to solve some of their
greatest challenges to make the world cleaner, healthier and more productive.
We are focused on two key divisions - Spectris Scientific and Spectris
Dynamics, which are placed in technology-driven end markets, with strong
fundamentals and attractive growth trajectories. We have leading market
positions in premium segments and employ 7,600 people located in more than 30
countries, all united behind our purpose to deliver value beyond measure for
all our stakeholders. For more information, visit www.spectris.com
(http://www.spectris.com) .

This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact
rns@lseg.com (mailto:rns@lseg.com)
 or visit
www.rns.com (http://www.rns.com/)
.

RNS may use your IP address to confirm compliance with the terms and conditions, to analyse how you engage with the information contained in this communication, and to share such analysis on an anonymised basis with others as part of our commercial services. For further information about how RNS and the London Stock Exchange use the personal data you provide us, please see our
Privacy Policy (https://www.lseg.com/privacy-and-cookie-policy)
.   END  TSTQKKBKKBDBPKN