Spectris (SXS) Q4 2024 earnings summary

Executive summary

• 2024 saw subdued demand and a 7% like-for-like sales decline, but Q4 delivered 6% order growth, signaling early recovery and performance in line with expectations.

• Strategic actions included three high-quality acquisitions (Micromeritics, SciAps, Piezocryst), record new product launches, and a £50m Profit Improvement Programme.

• Completed portfolio rationalisation with the disposal of Red Lion Controls, generating £210.7m pre-tax profit and over £1bn returned to shareholders since 2019.

• Profit finished slightly ahead of revised guidance, with cash conversion at 88% and a focus on operational excellence, cash generation, and leverage reduction.

• The group is now focused on two divisions, with a simplified and refocused portfolio.

Financial highlights

• Adjusted operating profit was £202.6m (down 20% LFL), with a margin of 15.6%; statutory operating profit was £97.6m.

• Revenue was £1,298.7m, down 10% reported and 7% LFL; gross margin declined to 55.1%.

• Adjusted EPS was 148.1p (down 26%); dividend per share increased 5% to 83.2p, marking 35 years of growth.

• Net debt at year-end was £549m, with leverage at 2.3x EBITDA; cash conversion remained strong at 88%.

• £210.7m gain on Red Lion Controls disposal; restructuring, M&A, and software costs totaled £79.5m.

Outlook and guidance

• 2025 expected to deliver significant profit growth, with adjusted operating profit in line with market expectations.

• Profit Improvement Programme to deliver £50m in benefits over 2025-2026 (£30m in 2025, £20m in 2026).

• Margins targeted to reach at least 20% by 2027; medium-term organic sales growth of 6-7% and ROGCE in mid-teens.

• Focus on cash generation, deleveraging, and integrating acquisitions.

• Recovery evidence needed, with cautious macro outlook and market stabilization.