Hill & Smith (HILS) H1 2024 earnings summary

Executive summary

• Delivered strong H1 2024 results with revenue up 2% and underlying operating profit up 12% at constant currency, driven by robust US infrastructure demand and three strategic acquisitions, while UK revenue declined due to lower volume and price.

• Operating margin expanded by 130bps to 16.2%, with cash conversion at 83% and ROIC rising to 22.5%.

• EPS increased 9% to 58.3p; interim dividend up 10% to 16.5p per share, reflecting confidence in outlook.

• US businesses generated 77% of group profits, offsetting a challenging UK market.

• Three acquisitions completed: Capital Steel, FM Stainless, and Trident Industries, supporting growth and diversification.

Financial highlights

• Revenue reached £422.7m, up 2% at constant currency, with underlying operating profit up 12% to £68.4m and profit before tax up 10% to £63.2m.

• Operating margin improved to 16.2% (+130bps year-over-year).

• EPS up 9% to 58.3p; interim dividend up 10% to 16.5p.

• Free cash flow £38.7m; cash conversion at 83%; net debt to EBITDA at 0.4x.

• Return on invested capital increased to 22.5%.

Outlook and guidance

• FY24 underlying operating profit expected in line with upgraded market expectations, before Trident acquisition benefits.

• US demand expected to remain strong in H2, with improved organic revenue growth and a more robust performance from the US off-grid solar business.

• UK outlook remains challenging, with focus on cost control and international expansion; some recovery anticipated in 2025.

• Capex guidance c.£30m; effective tax rate c.25.5%; cash conversion c.80%+.

• Group well-positioned for medium-term growth in structurally attractive infrastructure markets.