Hello, and welcome to the Spectris First Quarter Results Conference Call. My name is Alex, and I'll be coordinating the call today. If you'd like to ask a question at the end of the presentation, please press star followed by one on your telephone keypad. And I'll hand it over to your host, Andrew Heath, CEO, to begin. Please go ahead. Good morning, everyone, and thank you for joining the call. I'm Andrew Heath, Chief Executive of Spectris, and with me this morning is Derek Harding, our CFO. We have made a solid start to the year, and we are reiterating our guidance. The first quarter has been another productive period for Spectris, during which we have successfully implemented the initial rollout of our new ERP system, launched a number of exciting new market-leading products, completed the sale of Red Lion Controls, which marks the end of our portfolio rationalization program. We completed the first tranche of our latest buyback program, and we progressed a number of acquisition opportunities. As we said at our full-year results in February, coming into the year, we expected revenue to be down in Q1 against an exceptionally strong first quarter in 2023. While we guided for Q1 to be lower on a like-for-like basis, soft conditions in some of our end markets have been more prolonged than anticipated, and notably in China. Notwithstanding this, overall customer demand has remained robust, with our order book 3% higher than at the year-end, with a book-to-bill above one, which provides good levels of cover within the upper half of our expected range of four-five months. We have order pipelines looking healthy. In Spectris Scientific, like-for-like sales were 6% lower against a very strong first quarter last year. That was driven by pharma and academia, and on a regional basis, we saw growth in North America, and the rest of the world was more than offset with lower sales in Asia, especially in China. Both Primary and Advanced Materials, the demand pipeline remains positive, although we have seen softer conditions in batteries this year, which reflects the EV trend that we've all seen, but that is being offset by growth in chemicals and coatings. In pharma and life science, overall demand remains broadly flat, but is lower in academia. As expected, that's against a very strong call last year. With the recent release of government stimulus in China, we now expect to see demand progressively recovering through the year. And in semicon, we continue to expect demand to return to solid growth in the second half. In Spectris Dynamics, like-for-like sales were 10% lower, again, against a very strong first quarter in 2023, driven by machine manufacturing and automotive, and again, on a regional basis, China. We continue to see strong demand in aerospace and defense and good growth in automotive, particularly in virtual test, software, and simulation, offset by continued weakness in machine manufacturing. As I mentioned at the start, we have had a very productive quarter across the group. I am very pleased to announce that we've had a successful rollout in the first phase of our new ERP implementation. More than half is now up and running on the new system right across its global operations, having gone live earlier in April. The new system will significantly enhance how we operate, will drive major improvements in efficiency, and also our ability to scale efficiently as well. As such, it represents a key component of continued margin expansion towards our 20%+ target. Our strong balance sheet, further strengthened by the proceeds from the sale of Red Lion Controls, continues to provide capital allocation optionality, fueling investments in organic growth through high levels of R&D, but also importantly, compounding growth through targeted M&A. During the period, we launched a number of new products, including two of particular significance in Spectris Scientific. The Mastersizer 3000+ range builds on the pedigree of our best-selling, market-leading laser diffraction instrument and represents a revolutionary step in particle sizing, as it incorporates artificial intelligence-driven solutions for data evaluation. We also launched the Revontium, which is a compact X-ray fluorescence analyzer, which provides a step change in elemental analysis. It combines the performance of larger floor-standing equivalents with the versatility of a tabletop instrument while providing the same data quality at lower cost in certain applications. Both products are getting exceptionally strong reviews from customers, which is fantastic. Our increased investment in R&D will continue to drive an accelerated cadence of new product launches across both divisions throughout 2024 and beyond. In M&A, we have seen an increase in activity levels in 2024, and we're encouraged by the strength of the acquisition pipeline, which allows us to compound growth, hopefully further into the future. Now turning to the outlook for the full year. While conditions in some of our end markets were softer than expected in the first quarter, we still continue to expect a bit of progress this year as markets improve, and that's going to be weighted towards the second half. As a higher quality, more resilient business, facing off to attractive structural growth markets, we are extremely well placed to deliver continued organic growth, expanding operating margins towards our 20%+ target and compounding growth through M&A. The work we have done during the quarter would not have been possible without the hard work and dedication of all of our people across the world. I'd just like to take this opportunity to thank them all for their continued support. With that, Derek and I would be very happy to take your questions. Thank you. As a reminder, if you'd like to ask a question, press star followed by one on your telephone keypad. If you'd like to remove that question, press star followed by two.... Our first question for today comes from Andrew Douglas of Stifel. Your line is now open. Please go ahead. Good morning, gents, and thanks for the call. Just a few questions, please. Can I just focus on Spectris Scientific and the wording in the statement? You say that 6% like-for-like decline is driven by pharma and life sciences and academia. Yet you say that pharma and life sciences is globally flat. That implies academia is really tough. Is that right, or am I misreading the, I guess, the numbers in the statement? So yeah, so thank you for your question, Andy. I think it, you slightly misread it. So what we're saying is that in Q1, on the revenue side, sales in pharma, life sciences, academia were down, but if you look at the order demand for pharma and life sciences was flat in the first quarter. Right. Okay. Okay. So yeah, the flat is the orders. Fine. Okay. Yeah. Can you also talk about two more things, please? You're not giving any guidance for a first half, second half split, and that kind of thing, and I understand that. Is it fair to say that your previous guidance on the second quarter being flat to slightly down organically is still fair? Yeah, that's, that's, that's absolutely correct. So, you know, as we said at the full year results, Andy, that, you know, we were still aiming for flat first half revenue, but, you know, that could be, you know, slightly down and, you know, frankly, that's still the case. I mean, you know, we've had a slightly softer first quarter, as we said. Sure. You know, we are seeing things picking up. You know, the order intake in April was positive. The orders for the year are slightly up year-over-year. Yeah. So, you know, we still have that as our objective, but clearly, you know, if we've come, you know, we are now in a, you know, a much more normal market environment, where we have to book and ship more, you know, orders within the period. And so we are more reliant on that as we have been historically. You know, we've come after the... You know, the last two years have been abnormal in terms of the order visibility we've had. We've made that quite clear over the last two years. Yeah. As a consequence, there is a bit more dependence on that book and ship in the period, but, you know, we're still going for the same guidance we gave for the full year results. Yeah, get that flat in the first half, meaning the bigger growth in the second quarter, so that's soon. And then last for me, and then I go back to the queue. You talked about semiconductors recovering in the second half. Do you guys have any visibility on that, or is that driven by what customers are saying and view of the world, or is there a bit more granularity behind that expectation? So clearly, it's underpinned by some market expectations. I mean, you know, the sales of semiconductors are picking up this year. I think they're up double digits over last year. Certainly, customers in the industry at large are talking about, you know, recovering through this year. As we've been talking about, I mean, some of our instruments are very long lead time, so and they're early in the cycle. So we have seen over the last sort of two quarters, a pickup in inquiries and orders for those longer lead time, you know, early products, which is always a prelude into sort of a recovery coming in semiconductor. So that gives us confidence in sort of an H2 pickup. Okay. So I'll go back to the queue, and maybe later. Thank you. Thank you very much. Thank you. Our next question comes from Stephan Klepp of HSBC. Your line is now open. Please go ahead. Yeah, morning, gents. Stephan here. I would like to go back to Q2 and wanted a little bit more color because I think it was not clear really for me. So what are you seeing in terms of sales growth and for the first month and going into the rest of the second quarter? So, Stephan, we're not going to talk month by month, to be clear. As I said to Mr. Douglas, you know, our order momentum is positive. The full year results, but orders being up in January, February. March was slightly down, but that was as a consequence of a very tough comps for orders, to be quite honest, orders in April were positive, and for the full year to date, you know, we're back in positive growth territory. So we, you know, we're seeing momentum, and therefore, as I said to Andy Douglas's response, you know, our view of the first half is that we will see sales pick up in Q2. We are still gunning for getting to a flat first half sales performance, but that still could be slightly down, you know, just depending on the amount of book we ship in the period. Okay, thank you. And then, I think the end market picture is relatively mixed still, and particularly China. I mean, China was 17%-18%. Are things clearing there as well? Are things looking up as well in China at the moment? China is a bit of a mixed bag, if I'm honest. So, you know, on the positive side, I mean, actually sort of pharma, semi worlds, the demand there has been picking up. However, machine manufacturing, that serves the Asian side of the market, is still quite depressed. And the sort of electric vehicle battery development that we were seeing last year was very strong, has come off. As a consequence, I think it was just sort of an oversupply overcapacity in EVs at the moment. I think you will see that as a temporary phenomenon, but, you know, we are seeing it currently. And then, of course, academia, as we said, was significantly up, and that was against a very tough comp last year. You know, the academia in China was heavily supported in 2023 by government stimulus money. That was absent in Q1. Two-three weeks ago, the Chinese government announced further stimulus for academic research, and it's, you know, completely overlaps with a lot of the sort of structural growth market that we're targeting around pharma, semi, around advanced materials, battery materials. And as a consequence, you know, we expect now to see, you know, orders coming back in that academia space in China. So, you know, there's some encouraging signs there. Okay, thank you. One last one. You talked about the Mastersizer as a new product launch. The flat results that you saw in pharma and life science, is that related to it? Is it a pre-buying effect, or is that not really impacting the demand pattern of the past with the new product now coming up to the market? Yeah. No, it's not, it's not impacting the market pattern. I mean, we, we launched it, what? About two months ago. It's getting very strong reviews from customers. Mastersizer, as you know, is one of the largest selling products for Malvern Panalytical. So, you know, for us, this is a, an important next generation product that will continue, you know, its leading position in the market and generate further sales. And, you know, we anticipate, given its, increased fidelity of its measurements, the AI incorporated to provide greater insights into the instrument, you know, that should stimulate, you know, some incremental sales this year as well. Okay, super. Thank you so much, James. Thank you. Our next question comes from Alexander Virgo of Bank of America. Your line is now open. Please go ahead. Yeah. Hi, yeah, Andrew, thanks very much for taking the call. I wondered if you could just talk a little bit about the weighting first half, second half. Appreciate the guidance for the full year remains unchanged, but just I guess pacing on EBIT might be helpful for people to understand. Because it feels to me like if you're a little bit lighter than expected in Q1, even if we do get a bit of a bounce back in Q2, my guess is that margins in the first half might be a little bit lighter of where we might have originally thought. So I wonder if you could just give us a little bit of help on that, please. Yeah, I'll certainly let me try and answer that for you. I mean, I'm not gonna give you a specific H1/H2 split, mainly because we're not at the end of H1. But I mean, as you guys will know, our cost base is relatively fixed through the year, and given the volumes are typically higher and heavier in the second half, we always see more profit margin being made in H2 versus H1 anyway. So, you know, when you look at our full year profit, it's always annually more H2 weighted point one. Yeah, I mean, we said at the end of February that we knew we'd have a soft Q1, and we hoped we would get back to flat or maybe to slightly below flat for H1, and that remains. So there is still a path over the next couple of weeks. We've got another sort of eight-nine weeks left in Q2 for H1 to deliver. And we're focusing hard on making sure that we bring that back. And then that momentum carries through into the second half. It, you know, it's fine margin, so I'm not gonna guide to a specific H1 position at the moment. If we can get back to flat given the first quarter, that'd be great. If we're slightly under, so be it, and we'll have that momentum into the second half. Okay, great. Thank you. Thank you. Our next question comes from Mark Davies Jones from Jefferies. Your line is now open, please go ahead. Thank you. Morning, Andrew, morning, Derek. Could you talk a little bit more about auto? You've mentioned batteries, and I guess no surprise, some softness there, but you said Virtual Test is quite good. Clearly production has been under some pressure in terms of unit volume, but on the R&D related side, have you seen any sign of that, that kind of pressure on the industry impacting appetite for spending? Or is it actually the other way as the European OEMs are under pressure from the Chinese? Thanks for the question, Mark. So as we said, so the sales in auto were down in Q1, so, you know, I think we are seeing a bit of softness coming through in terms of, you know, the overall volumes being down. But as we said, you know, many times before, we, you know, we don't provide anything to actually go into the vehicle, so we're not tied to the production process per se, very much the R&D side of auto. That being said, of course, you know, if production volumes are down, profits will crash down, then you'll be able to, you know, you do see a bit of a pullback in the CapEx and R&D spend. So, you know, we did see some sort of flow back of that into the sort of Q1 sales. That was, again, a very tough comp again. From the orders side, I mean, orders were up in Europe and up in China in Q1. And that was very much driven by, as I said, Virtual Test software and our simulation offerings. I mean, we are seeing very strong demand around those tools really as, you know, customers are, you know, the adoption rate is picking up, as they recognize that they can reduce the time to market, you know, which can cut time to market to the prototyping stage using our tools and keep getting the cost of that out. You know, we are seeing, you know, very good demands coming through on our whole Virtual Test piece that you saw, we showed back in June last year. Brilliant, thank you. And just on the ERP side, you say you've done Malvern Panalytical. Can you remind us what the scheduling is for the rest of the business? ... Yeah, so Malvern Panalytical was going as the biggest individual go-live because it was already on all the integrated systems. So that went live in April. And then we will be rolling out the Dynamics division, sort of three phases over the remainder of this year, Mark, and then that leads us into PMS and Servomex in next year. So we'll continue to roll out sort of a more fragmented stage rollout over the course of this year. Okay, great. Thank you very much. Thank you. As a reminder, if you'd like to ask a question, press star followed by one on your telephone keypad. Our next question comes from Jonathan Hurn of Barclays. Your line is now open. Please go ahead. Good morning, guys. Just a few questions from me. Firstly, just on life sciences. Can you sort of break down or give us a little bit more color on the orders trends that you were seeing there? Essentially, you know, splitting out between what's coming through in biopharma versus what you're seeing in areas like aseptic manufacturing and small molecules. That'd be first question, please. Yeah. So, so on the, life sciences, I mean, I think, you know, what, what we're seeing is that on the sort of drug discovery and development side, the, the demand there is still reasonably subdued for instruments. Clearly a lot of instruments were bought, during the pandemic, and post the, post the pandemic in terms of, investments for, vaccine, antiviral, mRNA research, et cetera. So I think that the market, to some extent, maybe got a little saturated in terms of, instruments, so demand on that side is decreased. But what we are seeing is on the sort of more manufacturing QC and sort of aseptic movement side of life sciences, we are seeing very strong demand there because there's more, there are more drugs coming to market and being approved, which is driving demand in terms of you know, clean room, clean manufacturing facilities. So that's helping us to sort of get our orders pretty much to black in Q1, in that combined part of the life sciences part of the business. Okay. That's very clear. Thank you. And the second one is just on obviously dynamics and profitability and the outlook for the year. Obviously, volumes are down a lot in Q1, but if we sort of put the volume to one side, are there still sort of self-help benefits to come through in the margin for dynamics in 2024? I'm thinking along the lines that obviously you put in a new sort of divisional structure in last year, but there's still benefits of that to come through Spectris, are there still sort of benefits from that as well? Yeah, great summary, Jonathan. I mean, absolutely. You know, I mean, number one, we, you know, we anticipated that 2024 would be, you know, softer for all the, all of our businesses. So, you know, we took steps across the whole group in terms of making sure that we exited 2023, that our cost base was in the right place. So, you know, we took steps through last year, we spoke about. Specifically in Dynamics, they reorganized, put in the sector model, stripped out a significant number of headcount, particularly to the higher cost positions last year as a consequence of doing that. You know, we continued to drive SBS hard. We delivered over GBP 10 million of P&L benefits last year through SBS. You know, that, you know, that as a target absolutely remains in place for this year and the future years. And, you know, clearly, we've also, you know, as we implement the ERP system, you know, that then allows us to drive greater efficiency and clearly, we'll get those starting to flow in Malvern Panalytical first, and then that will flow into Dynamics, you know, through when that's complete towards the, you know, back end of this year. So in terms of the longer term improvements around efficiency from the ERP implementation, kicking in really into 25 and through into 2026, you know, given the successful launch we've had in Malvern Panalytical, we're even more confident to be able to get those. Okay. That's very clear. And then last one, just staying on the margin, obviously, in terms of that volume on Q1 versus Q4, there's a big step down, but obviously on the back of that, there was probably quite a lot of sort of overhead under absorption. But just on that, I mean, have you taken some short-term steps within sort of the first quarter to maybe offset that under absorption that came through within the business? Look, going into my previous answer, Jonathan, really, I mean, you know, we, we knew and, you know, that, that Q1 was always going to be a softer quarter, particularly because we had a very strong Q1 in 2023. And as such, you know, we took steps last year to make sure, you know, our, our cost base was in the right place as we entered into January of 2024. That's clear. Thank you very much, guys. Okay. Thank you. At this time, we currently have no further questions, so I'll hand back to Andrew Heath for any further remarks. Well, thank you, everybody, and thank you for your questions. So let me just quickly summarize. You know, we've made a solid start to the year, and we are reiterating our guidance. And to be clear, you know, we would have preferred stronger sales in Q1, but as we guided the full year results, you know, we fully expected revenue to be down against an exceptionally strong comp, as we talked about. But we should remember that our sales for the first three months of this year are actually up 17% compared to the first quarter of 2022. So, you know, we, you know, we have strong growth, strong momentum in the business. Our strategy is working, and this company has the capability to further grow and outperform. We have strong businesses facing off to attractive growth markets, and we're investing to reinforce growth. We've successfully launched our new ERP system, and in 2024, we'll actually have a record number of new product launches off the back of increased elevated R&D investment over the last few years. And as we talked about, we also have an exciting pipeline of potential M&A opportunities. So as we've said, we fully expect to make progress again in 2024 as our markets improve. And with that, thank you very much for joining, and I look forward to catching up with you over the coming weeks. Thank you very much. Thank you for joining today's call. You may now disconnect your lines.