IMI (IMI) Q3 2024 TU earnings summary

Executive summary

• Third quarter performance met expectations, with organic revenue up 1% and EPS guidance reaffirmed at 120-126 pence, reflecting an 11% CAGR since 2019 and around 10% adjusted organic operating profit growth.

• Process automation stood out with 14% orders growth, a book-to-bill ratio of 1.15 over the last 12 months, and a 9% organic revenue increase in Q3.

• Margins improved across both Automation and Life Technology platforms, supported by strong aftermarket business and efficiency gains.

• Acquisition of TWTG Group B.V. for €25m completed, enhancing IoT, digital, and aftermarket capabilities in process automation.

• Leadership transition announced: Luke Grant to become CFO in July, succeeding Dan Shook.

Financial highlights

• EPS guidance for the year maintained at 120-126 pence, with mid-point implying 11% CAGR since 2019 and around 10% adjusted organic operating profit growth.

• Organic growth in Q3 was 1%, with full-year organic growth expected around 4%.

• Statutory revenue in Q3 was 3% lower year-over-year due to adverse foreign currency movements.

• Free cash flow projected to reach approximately £300 million next year.

• Complexity reduction initiatives on track to deliver £15m incremental benefits in 2024 and £7m in 2025.

Outlook and guidance

• Guidance for the year reaffirmed, with strong Q4 expected due to process automation shipment phasing.

• Double-digit EPS growth targeted over the next strategic period, driven by organic growth, margin expansion, and disciplined M&A.

• Exchange rates as of 1 November 2024 projected to negatively impact revenue and adjusted operating profit by ~3% for the full year.

• Free cash flow to be deployed for acquisitions or returned to shareholders via buybacks if suitable M&A is unavailable.

• Preliminary results for the year ending 31 December 2024 to be announced on 28 February 2025.