Hill & Smith H1 2025 Earnings Report

Hill & Smith EPS Results

• Actual EPS: GBX 63.90
• Consensus EPS: N/A
• Beat/Miss: N/A
• One Year Ago EPS: N/A

Hill & Smith Revenue Results

• Actual Revenue: N/A
• Expected Revenue: N/A
• Beat/Miss: N/A
• YoY Revenue Growth: N/A

Hill & Smith Announcement Details

• Quarter: H1 2025
• Date: 8/13/2025
• Time: Before Market Opens
• Conference Call Date: Wednesday, August 13, 2025
• Conference Call Time: 5:00AM ET

Our purpose is to create sustainable infrastructure and safe transport through innovation. Hill & Smith (LON:HILS) is an international group with leading positions in the supply of infrastructure products and galvanizing services to global markets. Through a focus on leading positions in niche markets we aim to consistently deliver strong returns and shareholder value. Supplying to, and located in, global markets the Group serves customers from facilities in Australia, India, Sweden, the UK and the USA, building a presence in international markets, where countries are upgrading or improving their infrastructure as their economies grow. A key feature of the Group’s chosen markets is the influence of heightened levels of regulation and health and safety considerations on development and growth. All of our products are designed to strict specifications and tested according to applicable standards.

Hill & Smith H1 2025 Earnings Call Transcript

Key Takeaways

• Positive Sentiment: Constants currency revenue grew 4% with record US order books driving operating margins up 80bps to 17%.
• Positive Sentiment: Delivered strong 85% cash conversion and increased return on invested capital by 320bps to 25.7%.
• Positive Sentiment: Maintained disciplined capital allocation with divestment of non-core losses, active bolt-on M&A pipeline, and announced €100m share buyback.
• Negative Sentiment: UK and India engineered solutions revenue fell 5% at constant currency, as delayed road investment and subdued UK markets pressure earnings.
• Neutral Sentiment: Full-year expectations remain unchanged, with continued positive US trading offset by UK headwinds and modest off-grid solar demand.

Presentation

[Rutger Helbing, CEO & Director at Hill & Smith]

good morning, and welcome to the half year results presentation for Hillen Smith. First of all, let me, for those who don't already know him, introduce Marc Els, who is joining me today. Marc is our Group Financial Controller and is acting as Interim CFO since Hannah's departure. Marc will continue to do so until Chris McClisch will join us as CFO in October. I will start today with the highlights of the period and then Mark will talk in more detail on the financial performance.

[Rutger Helbing, CEO & Director at Hill & Smith]

After that, I will update on the strategic progress, share a case study on our U. S. Galvanizing business and review performance against financial framework in the first half. I will finish with our capital allocation framework, investment case and the outlook. So let me start with the first half highlights.

[Rutger Helbing, CEO & Director at Hill & Smith]

First of all, we've seen positive trading with constant currency revenue growth of 411% in terms of profit. Strong performance was driven by continued strong infrastructure demand in The U. S, where we have record order books. U. K.

[Rutger Helbing, CEO & Director at Hill & Smith]

Markets continue to be challenging, in particular, in the road end market. In that context, it's pleasing that we've seen further operating margin expansion to 17%. Our second half outlook remains positive, and therefore, our full year expectations remain unchanged. Cash performance was strong with 85% cash conversion and return on invested capital increased by three twenty basis points to 25.7, reflecting growth in the larger U. S.

[Rutger Helbing, CEO & Director at Hill & Smith]

Platform businesses. All of this translated to an EPS increase of 10% and we declared an interim dividend of €0.18 up 9%. An important part of our strategy is to continually evaluate our portfolio and to deliver inorganic growth through bolt on acquisitions for our growth platforms. To deliver that, we have an active pipeline and there are multiple ongoing discussions. Portfolio evolution also means to review our current portfolio and the fit with our operating company and financial framework.

[Rutger Helbing, CEO & Director at Hill & Smith]

This has resulted in the divestment of two non core loss making businesses in the first quarter of this year. Our approach to capital allocation remains clear and unchanged with continued prioritization of investments in organic and inorganic growth and to provide a growing dividend. However, having assessed the capital requirements to deliver those, the Board is confident that given the strong balance sheet and cash generation, we have the capacity to make an additional return of capital to shareholders and remain comfortably within our target leverage range of one to 2x. Therefore, today, we've announced a buyback of 100,000,000 over the next eighteen months. And with that, I would like to hand over to Marc.

[Mark Else, Interim CFO at Hill & Smith]

Thanks, Rutger, and good morning, everyone. I'm pleased to report that the group has delivered another positive set of results for the first half of the year. Revenue was £431,600,000 up 4% at constant currency and 2% on an organic constant currency basis, reflecting good performances in our U. S. Engineered Solutions and Galvanizing Services divisions.

[Mark Else, Interim CFO at Hill & Smith]

Operating profit of 73,500,000.0 was up 11% at constant currency, with operating margins increasing by 80 basis points to 17%, reflecting good growth in our higher margin U. S. Platform businesses, better profitability in The UK and the positive impact from noncore divestments in the first half. Underlying profit before tax was 9% higher at £69,000,000 And with an effective tax rate of 25.5%, earnings per share increased by 10% to 63.9p. Given the positive trading performance and our continued confidence in the group's prospects, we've declared an interim dividend of 18p per share, an increase of 9%.

[Mark Else, Interim CFO at Hill & Smith]

Turning now to the group overview. As the charts at the top illustrate, the group continues to have strong positions in structurally growing U. S. Infrastructure markets with our higher margin U. S.

[Mark Else, Interim CFO at Hill & Smith]

Portfolio generating 61% of revenue and 76% of operating profit in the period. Looking at the contribution from the divisions, U. S. Engineered Solutions delivered another strong performance, generating around half of the group's revenue and profit, with continued demand across our larger platform businesses and the positive contribution from prior year acquisitions. Galvanizing Services generated around onethree of group profit on onefour of the revenue, reflecting the higher margins that the division continues to deliver.

[Mark Else, Interim CFO at Hill & Smith]

Whilst revenue in U. K. And India Engineered Solutions fell slightly, highlighting the ongoing challenges in our U. K. Markets, the share of profit was similar to 2024, reflecting an improvement in operating margins during the period.

[Mark Else, Interim CFO at Hill & Smith]

Moving on now to our divisional performance, starting with U. S. Engineered Solutions. The division delivered a strong performance with 10% revenue and 13% profit growth on a constant currency basis, reflecting continued demand across our larger platform businesses and the positive contribution from recent acquisitions. As a result, operating margins increased by 40 basis points to 17.9%.

[Mark Else, Interim CFO at Hill & Smith]

Our largest business, the Creative Composites Group, saw strong demand for its composite solutions across a range of end markets, again delivering revenue and profit ahead of the prior year. V and S Utilities, our electrical transmission and distribution business, delivered a good performance and enters the second half with a record order book following strong order intake during the period. Several capacity expansion projects at our existing facilities are underway, and we continue to see transmission and distribution as an attractive growth market across the medium to longer term. The Patterson Group, our engineered supports business, delivered further growth against a strong comparator, driven by robust demand across a range of sectors. The expansion of our main site in Wagaman, Louisiana, is progressing well and will bring additional capacity towards the end of the year.

[Mark Else, Interim CFO at Hill & Smith]

Our road traffic safety product business saw improved profitability as a result of better product mix with a stronger performance in higher margin temporary barrier rentals and crash attenuators and further adjustments to the cost base. The outlook for these core product lines is encouraging, with demand supported by federal and state investment to upgrade road infrastructure. In off grid solar lighting, we continued to see subdued activity in the first half with ongoing soft demand from our largest customers as they continue to review their capital spending plans. We strengthened our commercial team during the period and continued to focus on broadening the product offering and further diversifying the customer base. Overall prospects for our U.

[Mark Else, Interim CFO at Hill & Smith]

S. Engineered Solutions businesses remain good. We expect market growth to be supported by investment to modernize the electric grid and multiyear federal and state funding to upgrade infrastructure alongside private investment to onshore vital components. Revenue in our U. K.

[Mark Else, Interim CFO at Hill & Smith]

And India Engineered Solutions businesses was similar to the prior year on an organic basis and down 5% at constant currency, reflecting ongoing challenges in our U. K. Markets and the effect of the noncore disposals in Q1. However, operating profit was 19% ahead of the prior period at constant currency, reflecting the improved portfolio mix, project activity and operational efficiencies. As a result, operating margins improved by 190 basis points to 9.6%.

[Mark Else, Interim CFO at Hill & Smith]

As expected, both revenue and profit in our UK roads operations were lower than the same period last year. Activity on major road schemes remains limited, driven by delays to the release of Road Investment Strategy three, which is now expected in the first half of next year. We expect the challenges in UK roads to continue in the short term and have taken action to align the cost base accordingly. Activity across our other UK businesses was generally subdued, although we saw good demand for data center projects, particularly in our high security fencing business, where the order book opportunity pipeline is strong and present significant short- to medium term prospects. Output in our Indian engineered supports business was impacted by the timing of projects in the first half, resulting in lower revenue and profit against a strong comparator.

[Mark Else, Interim CFO at Hill & Smith]

However, wider market activity levels remain healthy, and we expect an improved performance in the second half. As previously reported, we divested our subscale Australian roads business in January 2025 and sold parking facilities, a small loss making UK security business at the February, both further improving the quality of the portfolio. And lastly, Galvanizing Services. The division delivered a good first half performance driven by volume growth in both The U. S.

[Mark Else, Interim CFO at Hill & Smith]

And UK, with revenue up 6% and operating profit up 4% on a constant currency basis. Operating margins reduced slightly to 24.5%, but remained well within our expected range for the division. Our U. S. Business delivered another strong performance with 6% organic revenue growth and record operating profit.

[Mark Else, Interim CFO at Hill & Smith]

The growth reflects a 6% increase in volumes with good demand from a balanced mix of end markets. Margins were slightly lower than the prior year due to product mix but remain high, with customers valuing the excellent quality and service provided by our local teams. We expect another good performance in the second half, and the medium to longer term remains positive with ongoing U. S. Infrastructure investment expected to support further volume growth.

[Mark Else, Interim CFO at Hill & Smith]

In The UK, revenue was 4% ahead of the prior year, reflecting a 12 increase in volumes, partially offset by lower pricing in certain end markets. The volume growth was ahead of the wider market, reflecting improved productivity and an enhanced customer focus across our business. Second half outlook for U. K. Galvanizing remains positive.

[Mark Else, Interim CFO at Hill & Smith]

And finally, for me on cash generation. The group continues to be highly cash generative with a very strong balance sheet and significant funding capacity. First half cash conversion was 85%, ahead of the group target of 80%. This included a working capital outflow of £11,800,000 typical of seasonal trading patterns and capital expenditure of €12,000,000 representing a multiple of 1.1x depreciation and amortization. In 2025, we're planning to invest a total of around €40,000,000 on capital projects, with key investments including capacity expansion in our transmission and distribution business, the completion of the engineered supports facility upgrade in Louisiana and several ERP developments to support future growth.

[Mark Else, Interim CFO at Hill & Smith]

We continue to maintain substantial liquidity headroom and leverage capacity, providing significant flexibility in our allocation of capital. Net debt at the end of the period was £55,300,000 including lease liabilities of EUR 42,700,000.0, with the ratio of covenant net debt to EBITDA reducing to 0.1x and borrowing facility headroom increasing to EUR $295,000,000. We also delivered further increases in returns, with return on invested capital for the period at 25.7%, a three twenty basis point improvement, reflecting the faster growth in our larger U. S. Platform businesses, which are typically lower in capital intensity.

[Mark Else, Interim CFO at Hill & Smith]

And I'll now pass you back to Rutger to provide you with an update on the strategy and the outlook.

[Rutger Helbing, CEO & Director at Hill & Smith]

All right. Thank you, Marc. I'm pleased about our strategic progress in the first half. We introduced in March to you our refreshed operating company framework and enhanced focus on priority end markets. And this has now been fully embedded in our annual strategy update process as well as providing strong guidance for our M and A pipeline.

[Rutger Helbing, CEO & Director at Hill & Smith]

Our operating companies are now focusing on alignment with the framework in terms of the market dynamics they are exposed to, how their business model can deliver increased differentiation and the management and culture needed to underpin delivery of their strategies. In terms of our priority end markets, as a reminder, we identified 14 end markets across infrastructure and the built environment that we currently are exposed to. These markets are all to different degrees impacted by megatrends and therefore varying degrees of growth expectation and cyclicality. And based on that, we have categorized the end markets into four distinct groups. First of all, the high growth emerging markets, which includes data centers, renewables and gigafactories.

[Rutger Helbing, CEO & Director at Hill & Smith]

We then have the resilient growth anchors, including electrical transmission and distribution and water infrastructure. We then have the stable growth markets, including transport products, transport infrastructure and public construction. And lastly, the more cyclically sensitive markets, which include industrial, residential and commercial construction. In March, I shared how for the group revenue splits across those four groups. At the time, I said that there is a significant difference in the split between The U.

[Rutger Helbing, CEO & Director at Hill & Smith]

S. And The U. K. And India. On the next slide, I will share that with you as well as the current group picture.

[Rutger Helbing, CEO & Director at Hill & Smith]

First of all, it's important to note that the shift between the four distinct groups will evolve over time with continued focus from our operating companies on higher growth markets. It is encouraging to see that at a group level, revenue from the high and resilient growth categories increased from 23% to 32%. This was mostly driven by an increased contribution from resilient growth markets in The U. S, where its share increased by nine percentage points. And this reflects the strong organic and inorganic growth we've seen in our T and D and water infrastructure markets across our large and platform businesses.

[Rutger Helbing, CEO & Director at Hill & Smith]

In The U. S, the high and resilient categories now almost represent half of revenue and the more cyclical markets only around 20%. We expect there will always be some exposure to those markets as, for example, our galvanizing business benefits from a broader spread. Historically, however, we have more significant exposure to these markets in The U. K.

[Rutger Helbing, CEO & Director at Hill & Smith]

And India. And the more cyclical sensitive markets in this region are still significant at 45. It is however good to see that in the first half, share of the high growth markets increased by three percentage points driven by strong data center demand. Having shared with you the progress on our focus on priority end markets, let me now move on how the operating company and financial framework can be applied in practice. And for that, I will use our U.

[Rutger Helbing, CEO & Director at Hill & Smith]

S. Galvanizing business as an example. As a headline, I would say this business is closely aligned with our operating company and financial framework. In terms of the market dynamics, we see growing exposure to priority end markets, market leading positions in the markets we operate in and a good opportunity for bolt on acquisitions to drive further geographic expansion. The business model is built around a strong customer focus and differentiation through quality and customer relevant industry leading services.

[Rutger Helbing, CEO & Director at Hill & Smith]

All of this enables the business to generate returns on invested capital well above the group target of 22% plus. Management and culture underpin delivery of the results with strong entrepreneurial management that has many years of cumulative experience. And in terms of the financial framework, there's a strong track record, consistently delivering numbers ahead of our financial targets, both through organic and inorganic growth. And let me share two examples of that. First of all, an example of organic growth with the greenfield investment in Owego, New York State, which opened in January 2020.

[Rutger Helbing, CEO & Director at Hill & Smith]

With the greenfield investment, it's important to have baseload volumes provided through launching customers, In this case, through several key existing customers. Now five years later, this plan delivers operating margins ahead of the galvanizing services divisional margin and return on invested capital significantly above the group cost of capital. In terms of inorganic investment, we acquired Corns Galvanizing in March 2023 for $11,000,000 The plant further strengthened our geographic position in the Northeast And with further capacity investment and our operating experience, the business has delivered 30% compound revenue growth between 2022 and 2024 and increased operating margins by over 500 basis points, both well ahead of the acquisition expectations. So with a strong fit with our framework and with a positive market outlook, we continue to see growth potential for galvanizing services through share gains in its current markets, but also through geographical expansion both via potential new build facilities and through acquisitions. So let me now move on to our performance against our financial framework.

[Rutger Helbing, CEO & Director at Hill & Smith]

In the first half, we continued to deliver margin expansion and are delivering ahead of our framework in terms of return on invested capital and cash conversion. We're also well below our leverage target and I will come back to that in the next slide on capital allocation. Total revenue growth in the half was the same as organic growth, reflecting that we did not acquire business in the period. But as mentioned, we do have an active pipeline with multiple ongoing discussions. Organic revenue growth at 2% was below our target of between 57% across the cycle.

[Rutger Helbing, CEO & Director at Hill & Smith]

Our U. S. Growth platform businesses delivered organic growth within the targeted range, but this was partially offset by the challenging U. K. Environment as well as in our off grid solar business in The U.

[Rutger Helbing, CEO & Director at Hill & Smith]

S. So let me now move on to an update on our capital allocation framework. Our approach to capital allocation remains clear and unchanged and provides significant flexibility for growth and returns. Our first priority is to invest in organic growth where we focus on higher growth and higher return markets. This year, we expect to invest about £14,000,000 in capital projects, for example, in increased capacity for our transmission and distribution and engineered support businesses in The U.

[Rutger Helbing, CEO & Director at Hill & Smith]

S. Secondly, we remain focused on enhancing our growth platform businesses through bolt on M and A, utilizing our operating company and financial framework to prioritize and where we target to invest on average between 50,000,000 to £70,000,000 a year. We have an active pipeline with multiple ongoing discussions and the resources to integrate acquisitions in parallel. We want to provide a growing dividend to our shareholders and we declared a 9% increase in our interim dividend in the first half. And lastly, we are committed to return surplus surplus capital if leverage is expected to remain low for a sustained period of time.

[Rutger Helbing, CEO & Director at Hill & Smith]

As mentioned in the highlights, having assessed the capital requirements for the business to fund organic growth, execute on acquisitions and provide a growing dividend, the Board is confident that given the strength of the group balance sheet and cash generation, we also have the capacity to make an additional return of capital to shareholders and remain comfortable and within our target leverage of one to two times. And as a result, the company has today announced a buyback of £100,000,000 over the next eighteen months. Before I conclude with the outlook, let me summarize again what I think is an attractive and strong investment case. The Hill and Smith investment case is underpinned by our purpose, operating company framework and end market focus. We focus on priority end markets, those with the most attractive growth prospects, with particularly noteworthy exposure to infrastructure spend both in The U.

[Rutger Helbing, CEO & Director at Hill & Smith]

K. And The U. S. As governments and private companies seek to upgrade the quality of national infrastructure to support economic growth. It's then about the market leadership in the niches in which we operate, allowing us to enjoy high barriers to entry and therefore strong operating margins.

[Rutger Helbing, CEO & Director at Hill & Smith]

We do not want to be competing against commoditized players. Sustainability is core to our business model in terms of how we operate and the products we manufacture. Critically, then it's about an autonomous business model, which encourages and supports an entrepreneurial culture at the operating company level. Our head office is there to ensure we have the right KPIs and controls, but is also there to support setting the ambition of each operating company and as a result, help ensure our businesses to deliver to their full potential. And finally, it's about ensuring we maintain a strong balance sheet capable of supporting organic growth while also allowing us to deliver on our M and A strategy.

[Rutger Helbing, CEO & Director at Hill & Smith]

We see significant opportunities to use M and A to help us expand into new customers and end markets and into new technologies. Effective delivery of this M and A strategy is about ensuring that our regional organizations, supported by the group M and A team and our operating company MDs, source opportunities, build a relationship with owners, supported by best in class execution and post acquisition integration. So let me now finish with the outlook. We expect trading in our larger U. S.

[Rutger Helbing, CEO & Director at Hill & Smith]

Platform businesses to remain positive in the second half underpinned by federal, state and private investments to upgrade infrastructure, onshore manufacturing and support technology change. The second half revenue outlook for our U. K. Businesses is likely to remain challenging given the broader economic conditions, budgetary pressures and lack of road investment schemes. Overall, we expect that the group's positive first half trading will continue in the second half and anticipate that full year 2025 underlying operating profit will be in line with market expectations.

[Rutger Helbing, CEO & Director at Hill & Smith]

In the medium to longer term, the group is well positioned in infrastructure and build environment end markets with attractive structural growth drivers. This strong position, together with our M and A strategy and the benefits of our agile operating model, provide confidence that the group will continue to make good progress in line with our strategic and financial framework. So to wrap up, I'm pleased we've seen a positive first half financial performance and we're making good strategic progress, including in terms of the M and A pipeline with multiple discussions ongoing. In addition to that, we've announced a £100,000,000 share buyback, providing additional return to shareholders within our capital allocation framework, reflecting the group's strong balance sheet. And with that, let us move on to Q and A.

[Robert Chantry, Head - UK Company Research at Berenberg]

Hi, Rob Chanti from Berenberg. Thanks for the presentation. So just three questions for me. Obviously, background here is great, great first half and delivery, etcetera. So on the medium term M and A target, said 50,000,000 to 70,000,000 You've clearly had a lot of time to think about whether that's the right level and seemingly it is.

[Robert Chantry, Head - UK Company Research at Berenberg]

So how is that number given your strategic end markets not £100 £150.200000000 pounds there's not enough stuff to buy? Secondly, operating framework. So it's pretty clear, there's some great drivers in the business. There's also some stuff that doesn't fit. It's cyclical, it's lower margin.

[Robert Chantry, Head - UK Company Research at Berenberg]

You can get margins up as we've seen in The UK in The first half. But should we expect a period of more portfolio churn as you rotate out of those businesses? I suppose, thirdly, again, going back to your strategic drivers, it's on Page nine, you've got 7% of the business in semiconductors, data centers, another 25% T and D, water. South Balfour Beatty this morning actually talking about the strongest transmission distribution pipeline ever in The UK. There's a huge water investment framework that all the firms are talking about.

[Robert Chantry, Head - UK Company Research at Berenberg]

And it's if you look at UK and India, it's a very small part of the portfolio. So why is the kind of the strategy not being a bit more proactive trying to benefit from The U. K. T and D infrastructure opportunities given that the scale of what can be done? Thanks.

[Rutger Helbing, CEO & Director at Hill & Smith]

All right. All good questions. So I'll probably take all three of them. Please ask some financial questions as well because then Mark will have but anyway on M and A, I think we're focusing on sort of bolt on acquisitions in where we currently are or maybe adjacencies in some of the more attractive markets. We think that this is the right level given what we've proven we can do in terms of integration.

[Rutger Helbing, CEO & Director at Hill & Smith]

It's on average 50,000,000 to €70,000,000 so I'm not saying that if the activity is a little bit bigger, might be a little bit more at some stage, but we feel comfortable with this at this stage for our business. If you look at the operating framework and the more cyclical businesses, clearly, The U. K, we have a higher exposure to that. We look at those businesses, are they do they fit within our operating company framework? And we've got some businesses like our infrastructure business in The U.

[Rutger Helbing, CEO & Director at Hill & Smith]

K. Where we've got a very strong market share and basically a strong business, but is operating in a very tough environment. But we will we expect that, that will come back. So that's a good business. But as we've said and we've proven, we'll continually look at our portfolio.

[Rutger Helbing, CEO & Director at Hill & Smith]

And if we feel that a business structurally doesn't fit with us, then we'll take the consequence of that. And the last is a really good and interesting question. And we clearly have looked at we're very strong in T and D in The U. S. And we see that as and we've seen in the first half strong growth there.

[Rutger Helbing, CEO & Director at Hill & Smith]

We recognize there is a strong opportunity in The U. K. As well, but we don't have a business that operates in that market basically at the moment. And then you also have to so then you could look at, okay, was an acquisition there? You could look at it, would that be interesting?

[Rutger Helbing, CEO & Director at Hill & Smith]

And then you look at what are the sort of the what I would call the profit pools in the different parts. And The U. K, the market is more concentrated in terms of the electricity companies, the Tier one contractors that operate in there. And if you compare that to The U. S, it's much more fragmented.

[Rutger Helbing, CEO & Director at Hill & Smith]

So there's much bigger opportunity for us to create value for our customers and therefore, the margins and the profit pools are more attractive in The U. S. But we recognize this is also a good market in The UK. But at this stage we don't have a significant product offering.

[Harry Philips, Industrials Analyst at Peel Hunt]

Harry Phillips, Peel Hunt. Sorry, three as well from me. Just looking at the guidance sort of you say in the statement, obviously, in line with expectations and broadly even in the sort of guidance slide you've got in the pack. And I'm just curious as to if you think about U. S.

[Harry Philips, Industrials Analyst at Peel Hunt]

Should grow second half gathering momentum, Galve should get better in the second half. Therefore, to sort of keep it broadly even, it means U. K. Has got to be a bit more subdued, which the sort of commentary doesn't totally point to that. So just curious as to is this just Hill and Smith conservatism?

[Harry Philips, Industrials Analyst at Peel Hunt]

Or is it sort of is there something we should be aware of? The second is just looking at The U. K. Galv mix. I mean, obviously, volume is up 12%, but revenue up 4%.

[Harry Philips, Industrials Analyst at Peel Hunt]

So clearly, a bit of a mix there. Can you sustain that level of growth? I mean is that sort of you've gone and got market share back clearly. Have you used price to do that and therefore, there's a sort of that growth tails off and sort of flattens out? Just sort of a little thought about that.

[Harry Philips, Industrials Analyst at Peel Hunt]

And then maybe one for Mark finally. The sort of buyback schedule for modeling purposes, I appreciate the real world is different. Is it best to assume a sort of even flow over the eighteen months as a sort of model standpoint, please?

[Rutger Helbing, CEO & Director at Hill & Smith]

Do you want to do the guidance for

[Mark Else, Interim CFO at Hill & Smith]

Yes, I'm happy to pick up on all three of those. So I think you're right in terms of the perception of the market. The U. S. Is strong in most areas.

[Mark Else, Interim CFO at Hill & Smith]

We called out a couple of parts of the business that are a little bit softer. We've talked about off grid solar. We've talked about the roads business in the statement. But overall, good. I think galvanizing has had a strong first half.

[Mark Else, Interim CFO at Hill & Smith]

Worth noting that in The UK, comps were a little bit easier in the first half than the second half. So that 12% volume growth that we saw in the first half in The UK, I don't think we will repeat that in the second half because the comps are a little bit tighter there. But we do see good momentum in The U. S. Businesses.

[Mark Else, Interim CFO at Hill & Smith]

That UK roads market is difficult. And we said here, we expect to see any recovery or rebound in the second half. So I think overall, it feels about right that guidance is where it is right now. You also have to recognize there's an FX headwind in the second half compared to last year, certainly if rates stay around the rate that they are today. So I think when you put all those factors together, overall, guidance is about right where it needs to be.

[Mark Else, Interim CFO at Hill & Smith]

Sort of answered the second question as part of that really, or not UK galvanizing is sustainable. Yes, they've done well. They've taken market share. A lot of that is about internal management action. We had a new management team in that business roughly eighteen months ago, and they've done well.

[Mark Else, Interim CFO at Hill & Smith]

They've focused on customer service, focused on productivity in the business, all those kind of measures. As I say, they were on relatively easier comps for the first half, but I think they will continue to do well in the second half. I don't think they've necessarily chased high volume, low price work. Galvanizing tends to ebb and flow a little bit in terms of product mix over time, I think we've seen a bit of that in the first half of the year. But certainly, our strategy is not to sort of go for vanity on volumes and not the profitability thereon.

[Mark Else, Interim CFO at Hill & Smith]

And in terms of the buyback, yes, for modeling purposes, roughly, we assume we'll be broadly even over that eighteen month period. So that's maybe $25,000,000 or so in this year and the rest mostly in next year and a little bit into the early part of 2027. But for modeling, I would say, yes, an even flow is the way to do it.

[David Farrell, SVP - UK Industrials Equity Research at Jefferies]

Thanks. David Farrell from Jefferies. A few questions from me. Kind of expanding a little bit from Rob's question, but thinking kind of slightly more broader within Europe. It looked like revenue in Europe was up 44% year on year.

[David Farrell, SVP - UK Industrials Equity Research at Jefferies]

We've obviously got various countries looking to spend quite a lot on infrastructure over the next five years. What are the opportunities to export products out of The UK and into that European market?

[Rutger Helbing, CEO & Director at Hill & Smith]

Okay.

[David Farrell, SVP - UK Industrials Equity Research at Jefferies]

You do at a time.

[Rutger Helbing, CEO & Director at Hill & Smith]

You do one at a time. We were writing down, but that's fine. So the interesting thing is that if we talk about growth in data centers in The U. K, actually quite a significant part of that goes into Europe. So we are we've got a really good position with some of the big guys in data center in that security fencing.

[Rutger Helbing, CEO & Director at Hill & Smith]

So we are benefiting from that. I think if you think about acquisitions, we are clearly very S.-U. K. Focused business.

[Rutger Helbing, CEO & Director at Hill & Smith]

We see opportunities mainly in The U. S, but galvanizing in The U. K. Potentially. And maybe if there's a good opportunity in T and D in The U.

[Rutger Helbing, CEO & Director at Hill & Smith]

K, we wouldn't say no to it. But I think in the first instance, those are the two markets that we focus on and we feel probably culturally moving into another territory will mean another acquisition then. And that's it has to go through a couple of more hurdle rates, I think, than those that in The U. S. Or potentially in The U. K.

[David Farrell, SVP - UK Industrials Equity Research at Jefferies]

Okay. I was interested to read that The U. S. Off grid solar business, you talk about it being cautiously optimistic for the second half of the year. Can you just go into a bit more detail about kind of what's driving that?

[David Farrell, SVP - UK Industrials Equity Research at Jefferies]

Clearly, you're trying to expand the product base and the customer base, but is there anything firm in the order book that supports improvement? I

[Rutger Helbing, CEO & Director at Hill & Smith]

think we're pretty sort of in the second half pretty prudent still. We are broadening the business in terms of customers and products, but the reality is that, that's taking or that takes time. And so we're still pretty prudent in, I think, in the second half. We are clearly doing this for the more longer term but don't see a significant uptick in the second half.

[David Farrell, SVP - UK Industrials Equity Research at Jefferies]

Okay. And then just kind of final question coming back to kind of M and A thinking about kind of the refreshed company model end market exposure. Is there any reason why that might have impacted the cadence of M and A over the last kind of twelve months? They've got different hurdles to go through now than they would have done twelve months ago?

[Rutger Helbing, CEO & Director at Hill & Smith]

No, I don't think so because if you look at the ones we did last year, they fit perfectly in that model because they're right in the hotspot in terms of the end markets, T and D and water. So I think the model helps us to prioritize. So I think it's helpful, but you can sort of back use it for the ones that we did last year. I mean these things, you know we're talking to family companies and all of that. We try to stay out of processes.

[Rutger Helbing, CEO & Director at Hill & Smith]

It's not as predictable when it happens but I think the key message here should be is look, we are committed to this. Still want to do it and we feel comfortable we can do it with the buyback as well. Okay, thanks.

[Richard Paige, Equity Research Analyst at Deutsche Numis]

Good morning. Thank you. It's Richard Page from Deutsche Numis. Just a couple for me, Talking of these focused markets, could you just answer the question on what you've done to incentivize management teams and how you drive that? Are you actively pushing away business in the lower areas as well or how we do that?

[Richard Paige, Equity Research Analyst at Deutsche Numis]

And then just secondly, on The UK and India engineered solutions business, quite a lot of moving parts, quite difficult to model from a range of margin perspective. How should we think about that business in terms of no tailwind from the market, what the potential is given the margin accretion you've had in the first half and where you've got that too? And then also what how we should think about it from a market tailwind perspective as well, please?

[Rutger Helbing, CEO & Director at Hill & Smith]

So I'll take the first one and maybe you'll have a start at the second one and we'll see where we get to. I think it's important to say that it will evolve over time in terms of the priority end markets, right? So this is not something that happens directly. So the way I talked about it that we've used it in our sort of annual strategy update, we looked at the businesses, what is your current, let's say, footprint and what's your ambition for we do sort of five years out, what's your ambition in five years out. So that's how we use it to really look at, okay, what can you do?

[Rutger Helbing, CEO & Director at Hill & Smith]

And some of the businesses, they have less opportunity in that and that's also accepted, right? So we need to look at it business for business, but we don't specifically incentivize, but we try to see in the business what can you do to move more there. And because they're higher growth markets, we then try to push them for higher plans for the next five years. So that's how it works. And we'll use that update if we go next year to our budget, then we'll of course have a bit of a look what was your ambition and how much can you do.

[Rutger Helbing, CEO & Director at Hill & Smith]

And that's really where the incentive sort of kicks in on an annual basis.

[Mark Else, Interim CFO at Hill & Smith]

I think on UK and India margins, you've seen growth in the first half. We're up to just under 10%. I think in the longer term, that division can get into double figures without a significant uptick in UK activity, particularly in the roads market. For example, we've called out India having a bit of a softer first half. If that performs in the second half the way we expect, that will push the margin a little bit as well.

[Mark Else, Interim CFO at Hill & Smith]

So I think sort of your low double figures, your 10, 11s, that business is capable of doing that. I think if it's then going to push more towards the group targets and into the mid teens, it will need some recovery in some of those UK markets. Now the potential is there. You have to remember, for example, our UK roads business, certainly elements of that business are higher margin operations. You take the temporary barrier rentals, for example, that's a higher margin part of the business.

[Mark Else, Interim CFO at Hill & Smith]

There were very few road schemes around at the moment. If more schemes come back on the road and we still have a good share of what's there. What's there right now is limited, but we still have a good position in that market. If and when those schemes come back on the road, we expect to benefit from that and that will drive margin as well. So it's low double figures without anything.

[Mark Else, Interim CFO at Hill & Smith]

It's heading towards the mid teens if we can get some tailwinds in The UK.

[Rutger Helbing, CEO & Director at Hill & Smith]

And there's just to add to that, there's a little bit so if we look at the data center growth, that is higher margin as well. So in this sort of the security fencing part, we manage to get a bigger share within that business of the data center, then that in itself will improve margins as well. It's a couple of things in there that can help get it to more closer to the group target.

[Richard Paige, Equity Research Analyst at Deutsche Numis]

Thank you.

[David Farrell, SVP - UK Industrials Equity Research at Jefferies]

Thanks. Sorry. Just a quick follow-up on UK Road. You obviously talked about risk three coming in, in the 2026. Realistically for you guys, how long does that take then to filter through to actually an upturn in activity levels?

[Mark Else, Interim CFO at Hill & Smith]

It won't be immediate. So what tends to happen with those road investment strategies is there's an outline of what they expect to do over that period of time. But in terms of individual schemes, there is a period where they need to go through design, they need to go through programming, they need to go through sourcing. So I certainly wouldn't expect anything significant in the 2026 in terms of our activity. We might start to see that come in towards the 2026, but I think the largest share of that would likely to be into the following year.

[Mark Else, Interim CFO at Hill & Smith]

It just takes time for those schemes to get out on the road.

[Rutger Helbing, CEO & Director at Hill & Smith]

No more questions? Yes? Okay, then I get the sign that we can wrap up now. But thank you for being here. If you've got any further questions, we'll stay around here.

[Rutger Helbing, CEO & Director at Hill & Smith]

But thank you for joining us today, and that's it. Thank you.

Participants

Executives

• Rutger Helbing, CEO & Director
• Mark Else, Interim CFO

Analysts

• Robert Chantry, Head - UK Company Research at Berenberg
• Harry Philips, Industrials Analyst at Peel Hunt
• David Farrell, SVP - UK Industrials Equity Research at Jefferies
• Richard Paige, Equity Research Analyst at Deutsche Numis