Diploma (DPLM.F) Trading Update Transcript

Summary of Diploma (DPLM.F) Trading Update - July 17, 2025 Company Overview - Company: Diploma (DPLM.F) - Industry: Aerospace, Defense, Energy, Life Sciences, Data Centers Key Performance Highlights - Quarterly Performance: Strong performance in Q3, contributing to a long-term track record of sustainable quality compounding [3][4] - Organic Growth: Upgraded organic growth forecast from 8% to 10% for the full year; year-to-date organic growth at 10% [3][4] - Reported Revenue: Year-to-date reported revenue growth of 12%, with 4% attributed to acquisitions, partially offset by foreign exchange effects [4] - Operating Margins: Operating margins remain strong, in line with full-year guidance of 22% [4] Acquisitions - Recent Acquisitions: - Acquired Parkinson for £11 million, a sealing solutions business to enhance existing operations in Denmark [5] - Acquired Alpha Laboratories for £28 million, entering high-growth IVD markets in the UK [5][6] - Growth Expectations: Expected high single-digit growth rates for both acquired businesses, contributing positively to future organic growth [11] - Synergies: Anticipated revenue synergies and cost efficiencies from the integration of acquired businesses into existing operations [12] Market Dynamics - End Market Support: Strong support in key markets such as aerospace, defense, and energy; positive trends observed in data centers [3][25] - Industrial Market Trends: Improvement noted in the US industrial markets, particularly in aftermarket sales; ongoing recovery in North American steel sector [20][34] - Challenges in UK Market: The UK industrial market remains challenging, particularly for seals, with ongoing efforts to improve the RNG business [34] Specific Business Performance - Windy City Wire: Performing well, particularly in data centers and digital antenna systems; consistent growth observed [24] - Peerless: Strong performance in aerospace, with continued revenue growth and high margins [36] - Diksa: Transitioning to professional management, with growth rates improving to mid-single digits [15] Additional Insights - Acquisition Pipeline: Long-term acquisition pipeline remains robust, with recent improvements in deal flow observed [20] - Copper Price Volatility: Current volatility in copper prices is being managed through pricing models, with expectations of pass-through costs [38][39] Conclusion - Outlook: Confidence in delivering sustainable quality compounding for the long term, with a positive view on future growth opportunities and market conditions [6][20]