The Weir Group PLC

Hello, everyone, and thanks for joining us today. The Weir Group PLC Q1 IMS. My name is Sammy, and I'll be coordinating your call today. During today's presentation, you can register a question by pressing star followed by one on your telephone keypad. If you change your mind, please press star followed by two on your telephone keypad to remove yourself from the question queue. And I'll hand over to your host, John Stanton, Chief Executive Officer to begin. Please go ahead, John.

Thanks, Stanley. And good morning, everyone. And thank you for joining us today for our first quarter 2026 trading update. As usual, I'm joined by our CFO, Brian Puffer. And after my remarks, we'll be pleased to take your questions. First, I'll talk about the Q1 statement and then come back to today's other news at the end. So starting with the external environment, demand fundamentals in mining remain positive. underpinned by structural growth in critical metals such as copper, iron ore, and gold. Our customers continue to prioritize productivity, de-bottlenecking, and expansion projects at existing sites, alongside investment in technologies that improve sustainability and reduce total cost of ownership. Demand for large equipment projects is picking up pace. In the quarter, we picked a 20 million pounds order for GeoPumps in India, further evidence of our market-leading slurry transportation solutions, and the pipeline of larger expansion opportunities is really encouraging. Adding to our larger wins, we've booked a number of smaller strategic orders in the quarter. We continue to see market share gains in our core warm and pump and ESCO GET brands, and the pipeline of opportunities for our newer technologies is very encouraging. Excitingly, in software solutions, Micromine is starting to see incremental growth generated by needs from the broader WIR network, with a license sale of a major Tier 1 customer, and we saw the first international orders for FasterMine resulting from our initiatives to grow outside of Brazil. Our business is executing well, with the integration and performance of recent acquisitions all well on track, and against the backdrop of growing geopolitical tensions, particularly in the Middle East, a strong operational platform is delivering for our customers with limited impact to our global supply chains. Turning to results for the group where we have good visibility on the order book and are on track to meet our full year guidance. In the quarter, overall orders increased by 4% year-on-year on a constant currency basis. This reflects good momentum in underlying trading and contributions from recent acquisitions, offset by phasing of orders compared to last year, and some temporary mine disruptions, all of which we expect to reverse over the balance of the year. Group original equipment orders grew by 1% year-on-year, and this included very strong demand for ESCO's highly engineered mining attachments and several nice medium-sized order wins in minerals, but no larger orders over £25 million this quarter. Group aftermarket orders grew by 4% year-on-year, supported by positive activity levels in copper, gold and iron ore within minerals, strong levels of demand in ESCO across both mining and infrastructure GED, and good growth in micromine and pasta mine. Overall, our book-to-bill ratio increased to 1.14 in the quarter following normal seasonality. Turning to minerals, where original equipment orders declined by 3% year-on-year on a constant currency basis. Underlying demands of de-bottlenecking and brownfield expansion projects remains positive, and the larger expansion project pipeline is developing strongly, especially for copper in South America. We therefore expect to see strong OE growth for the full year, with Q1 trends really just driven by phasing and timing of orders. We continue to gain market share through our technology leadership. During the quarter, we completed four mill pump circuit trials, three of which were successfully converted to Warman pumps. And this reinforces our strong competitive position and the value our customers place on performance, reliability, and total cost of ownership. In aftermarket, minerals oil has increased by 1% year on year. Growth is supported by solid oil production levels in copper and gold, as well as the ongoing integration of tannery, with the sales team now fully aligned to the broader minerals organization. This momentum was partially offset by a number of temporary mine site disruptions in APAC and Africa, as well as the booking of several larger HPTR spare orders for newly installed machines in Q1 2025, which typically are more lumpy as wear rates diverge. Overall, we remain encouraged by the underlying trends in minerals, particularly the long-term opportunity driven by our growing installed base, and continued focus on productivity-enhancing technologies. Turning to ESCO, performance in the quarter was strong. Original equipment orders increased by 49% year-on-year, reflecting exceptional demand for mining buckets across strategic mining regions globally, including North America, South America, and Africa. In Australia, we received our first orders for the innovative production master, which we presented at the Capital Markets event last December. In aftermarket, orders increased by 11% year-on-year. This was driven by continued momentum in mining and infrastructure, GET, up 7%, and good growth in our newly acquired software businesses. This was partially offset by the phasing of dredge orders, which were exceptionally high in Q1 last year and have been disproportionately impacted by events in the Middle East. We continue to gain market share, achieving 19 net major DIGO conversions in the quarter, as we execute on our strategy for growth in lower share geographic markets. Turning to strategic progress, where in the quarter we announced the completion of our acquisition of the remaining share in ESCO's Chilean joint venture ESL, strengthening ESCO's ability to serve customers across South America and bringing more foundry capacity in-house. Integration of Essel is progressing well, with key customers transitioned and orders up year on year as we deliver on the go-direct strategy. And we remain very excited about the potential to significantly grow market share in Chile. We're also making good progress integrating our other 2025 acquisitions, and all businesses are performing in line with our expectations or better. 2026 is the year in which we will deliver the full run rate savings for performance excellence. And in the first quarter, we began to realize savings from capacity optimization projects completed in 2025, bringing cumulative savings to £66 million. Further savings from lean and WBF activities put us firmly on track to deliver our upgraded target of £90 million of cumulative savings in 2026. Turning to net debt, where our refinancing and acquisition activities in 2025 leave us with a very attractive debt profile with long dates of maturities. We're on track to return toward our normal operating range of 0.5 to 1.5 times net debt to EBITDA by the end of 2026, in line with our capital allocation policy. For the full year, we expect net interest expense of £90 million, which through 2028 we expect to reduce towards 70 million pounds given our strong cash-generative business model. Turning to Outlook, where we see customers increasingly investing in expansion and debottlenecking projects as supply deficits in critical metals emerge. Overall market activity levels remain very positive, and activity around larger projects is also picking up pace. As I mentioned earlier, we are encouraged by the visibility in the order book and the pipeline of opportunities Over the year, we expect to see good growth in organic orders and a strong contribution from last year's acquisitions. For the full year, we reiterate our guidance for growth in constant currency revenue and operating profit, operating margin expansion of 50 basis points, and delivery of free operating cash conversion of between 90% and 100%. And in 2025, we expect a weighting in revenue and profit to the second half. We expect cash conversion to follow normal seasonal patterns with a steady build in inventory through the first half, followed by collections towards the end of the year. We remain focused on disciplined execution despite several challenges facing the mining industry, not least rising uncertainty as to potential impacts from the conflict in the Middle East, which we continue to watch closely. So, summarizing the key takeaways from today, we made good strategic progress in the first quarter, closing ESOL, and integrating micromine, first-to-mine, and ternary at pace. We expect good growth in orders over the full year, assuming broader contagion from the Middle East is limited. And given all of the above, we remain on track to deliver our full-year 2026 guidance for growth in revenue, profit, and margin. Now, before we move on to questions, I'd just like to say a few words on the announcement today that after 16 years at WEA, And nearly a decade as CEO, I'll be stepping down on the 1st of August, and Andrew Nielsen, President of Minerals, will succeed me as the new CEO. It has been an absolute honor to lead this remarkable company. A decade ago, we were an industrial pumps conglomerate with businesses of different qualities and characteristics, prone to industry cycles, and limited in its capacity to rather considerable events. With thoughtful portfolio transformation, focused on building a resilient balance sheet, delivering best-in-class margins, and investing in world-class software solutions, we're clearly positioned to benefit from the transformational technological change as our customers scale up and clean up their operations. With our strong platform across engineered hardware and software solutions in place, it's time for both Weir and me to begin our next chapters. Andrew and I both joined Weir in 2010, about a month or so apart, So he's been on the journey all the way, and I am delighted that he is to be my successor. Having led both Esco and Minerals, Andrew is an experienced and hugely talented leader, and I'm confident that he will continue to take WEA from strength to strength. He and I will work closely together over the coming months to ensure a smooth transition, and I'll see you at the end of July when I will present our half-year results. That concludes my remarks, and Brian and I will be happy to take your questions you may have. So back to you, operator.

Thank you very much. To ask a question, please press star followed by one on your telephone keypad now. If you change your mind, please press star followed by two. When preparing to ask your question, please ensure your device is unmuted locally. Our first question comes from Jonathan Hearn from Barclays. Your line is open, Jonathan. Please go ahead.