Earnings call transcript: IMI Q3 2025 sees organic revenue growth, stock dips

IMI PLC reported a robust 12% growth in organic revenue for the third quarter of 2025, with year-to-date growth standing at 5%. Despite these gains, the company’s stock price saw a decline of 0.86%, dropping 15 points to close at 1,734. According to InvestingPro data, IMI is currently trading near its 52-week high of $29.23, with a strong 37.9% return over the past year. The company provided a full-year earnings per share (EPS) projection between 129 and 136 pence, with margins expected to reach 20% for the year. InvestingPro analysis suggests IMI is slightly undervalued based on its Fair Value assessment.

Key Takeaways

• Organic revenue increased by 12% in Q3 compared to the previous year.
• The company maintains its full-year EPS guidance between 129-136 pence.
• IMI is investing in cybersecurity, impacting EPS by £0.015.
• Stock price fell by 0.86%, closing at 1,734, near its 52-week low.

Company Performance

IMI’s performance in Q3 2025 was marked by significant growth in organic revenue, driven largely by strong results in process automation and aftermarket orders, which grew 7% organically year-to-date. The company’s climate control segment also showed consistent growth, expanding by 4-5%. Despite these positive trends, the stock price reacted negatively, possibly due to broader market conditions or investor concerns about future challenges.

Financial Highlights

• Organic Revenue Growth: 12% in Q3
• Year-to-Date Revenue Growth: 5%
• Full-Year EPS Guidance: 129-136 pence
• Expected Margin for 2025: 20%
• Long-Term Margin Target: 22%

Outlook & Guidance

Looking ahead, IMI projects mid-single-digit organic growth for the next year, with a tax rate expected to increase to over 26%. The company is optimistic about its acquisition pipeline and has indicated potential for share buybacks if leverage remains low. The long-term margin target is set at 22% over a five-year period, with a focus on value engineering and new product development.

Executive Commentary

Roy Twight, CEO of IMI, highlighted the company’s strong performance, stating, "Organic revenue was 12% higher than the same period last year." He also expressed confidence in the company’s future prospects, noting, "The acquisition pipeline does look better than it has looked for a while." These comments underscore the company’s strategic focus on growth and innovation.

Risks and Challenges

• Increased Tax Rate: Expected to rise to over 26%, potentially impacting net income.
• Industrial Automation Struggles: Continued difficulties in this sector could affect future growth.
• Cybersecurity Investments: While crucial, these investments have a short-term impact on EPS.
• Market Volatility: Recent stock price decline suggests uncertainty among investors.
• Supply Chain Disruptions: Potential risks from global supply chain challenges.

IMI’s Q3 2025 earnings call painted a picture of a company with strong revenue growth and strategic initiatives, though facing challenges that have impacted investor sentiment. The company’s focus on innovation and potential acquisitions could drive future growth, but market conditions and operational hurdles remain key considerations. With IMI’s earnings report due tomorrow, InvestingPro subscribers can access comprehensive analysis and the latest Fair Value estimates to make informed investment decisions. IMI is among the 1,400+ companies covered by Pro Research Reports, offering investors clear, actionable intelligence beyond standard financial data.

Full transcript - IMI PLC (IMI) Q3 2025:

Nadia, Call Coordinator, IMI: Everyone, and welcome to the IMI Q3 interim statement. My name is Nadia, and I’ll be coordinating the call today. If you would like to ask a question at the end of the presentation, please press star followed by one on your telephone keypad. I will now hand over to your host, Roy Twight, CEO, to begin. Roy, please go ahead.

Roy Twight, CEO, IMI: Good morning, everybody, and welcome to IMI’s third quarter trading update. I am joined here today by Luke, our CFO. It was another excellent performance from our team in the third quarter. Organic revenue was 12% higher than the same period last year and is now 5% higher year to date, demonstrating the continued success of our growth strategy and the strength of our One IMI operating model. We delivered an outstanding performance in process automation, supported by rising global energy demand and our focus on high-margin aftermarket orders, which are now up 7% organically year to date and were up 1% against a strong performance in the third quarter last year. The climate control, industrial automation, and life science and fluid control market sectors all performed well.

There is strong momentum across the business and we remain on track to deliver our fourth consecutive year of mid-single-digit organic revenue growth. I am therefore pleased to reconfirm guidance. We continue to expect that full-year EPS will be between 129 pence and 136 pence. With that, I’m going to hand back to the operator who will manage the Q&A session. Thank you.

Nadia, Call Coordinator, IMI: Thank you. If you would like to ask a question, please press star followed by one on your telephone keypad. If you would like to remove your question, please press star followed by two. When preparing to ask your question, please ensure your phone is unmuted locally. The first question goes to Christian Hinderaker of Goldman Sachs. Christian, please go ahead.

Christian Hinderaker, Analyst, Goldman Sachs: Morning, Roy. Morning, Luke. I want to start on the process automation growth rate. I think you’ve called out what the year-to-date number was, but what was the quarterly figure? Just how do we think about the quantum of the shipment catch-up that you’ve flagged, both with respect to process but maybe elsewhere as well? Thank you.

Roy Twight, CEO, IMI: Yeah. Hi, Christian. Good morning to you. In terms of process automation, obviously, the sales grew 26% in the quarter. That was shipment phasing. Christian, okay? We still see process automation high single-digit, maybe slightly higher, maybe 9-10% for this year in terms of shipments. No change to that. What we have done is de-risk the final quarter, which obviously, if you do the maths, we expect to be flattish in terms of shipments versus last year. If you remember, last year, we had an absolutely fantastic Q4 in terms of shipments, and December in particular was massive. What we have done is de-risk that. I am really pleased with the team. Obviously, to be able to ship 26% more is excellent in terms of execution.

That really has been a long journey in terms of our investment in the factories, our investment in supply chains, and obviously the team. On the order side, in Q3, we were flat in the quarter versus last year, which was a very tough comparison. I mean, from memory, last year, aftermarket orders in the third quarter were up 10%, and new construction was up 20%. It was a huge third quarter. I’m pleased we’re flat. The difference really was mainly those big hydrogen orders that we won with Vivo in Q3 last year, which we said we’re never going to repeat, right? Because the grants that were given by governments and local governments were not repeated this year in hydrogen to that extent. We were flat in terms of orders.

Year to date, I think the important number that we put in the release is that total orders outside of the multi-year marine order, which we called out last year, are up 5% organically year to date. We see, obviously, Christian, we do see good support from combined cycle gas. Energy in general across process automation, obviously on the back of what is happening with the energy demands for electrification and for data centers and AI. We see good demand there. I think we see good demand in nuclear aftermarket at the moment for the sort of upgrades to the existing plants, the life extensions to the existing plants. In time, we expect to see good demand on new construction in nuclear, but that will obviously be a few years out. That is not something that is going to happen quickly.

In general, process automation, I would say, yeah, in good shape. We had a good look, Luke and I, at the pipelines with Jackie and Robbie and the team, and the pipelines of opportunity for aftermarket and new construction, and they look good. Yeah, I would say in terms of shipments, we are about where we thought we would be. Maybe the year-end will be slightly better than we thought at the half-year for process automation. In terms of orders, again, pretty much bang on where we thought. That would lead, Christian, into what I would call good growth for next year, not at the high single-digit level. I do not think we will be quite that good next year, but around the mid-single-digit level for process automation in terms of shipments.

Luke, CFO, IMI: Yeah. Maybe just the second question you asked, Christian, was on shipment catch-ups in the quarter. The group overall, as you know, grew 12% organically, and we think about 2-3% of that was shipment catch-ups. Quite a bit of that was in the life science and fluid control sector, some in industrial automation, and then a little bit in process automation, but only a relatively small impact from a percentage growth perspective in both process and industrial automation. There was a reasonable amount of catch-up in life science and fluid control in the quarter.

Christian Hinderaker, Analyst, Goldman Sachs: Very helpful. Thank you. Can I just squeeze one on IA?

Luke, CFO, IMI: Sorry, Luke. Go ahead.

Christian Hinderaker, Analyst, Goldman Sachs: Yeah.

Luke, CFO, IMI: I was just going to say we do think the catch-up’s about done now.

Christian Hinderaker, Analyst, Goldman Sachs: Okay. Can I just squeeze one on IA? I guess just interested in any commentary around regional developments and I guess the sort of underlying backdrop there. Obviously, data’s been a bit mixed.

Roy Twight, CEO, IMI: Yeah. No, we had a good look at this. And broadly, all regions are broadly flat, Christian. I think industrial automation markets generally are still struggling a bit. We have not yet seen the recovery we are hoping for. I think I said previously that sort of 60-day moving average was up, which it was. Now it is about flat in industrial automation. So still not yet seeing that investment. We all know it will come. It is just a question of when. And we have all seen these cycles before. But across the regions, Christian, it is broadly flat.

Christian Hinderaker, Analyst, Goldman Sachs: Thank you very much.

Roy Twight, CEO, IMI: Thank you.

Luke, CFO, IMI: Thank you.

Nadia, Call Coordinator, IMI: Thank you. The next question goes to Lashanthan Mahendra Raja of JP Morgan. Please go ahead.

Lashanthan Mahendra Raja, Analyst, JP Morgan: Morning. Morning, guys. Thanks for taking my questions. I’ve got three, I think. The first is on process automation and orders. And I guess OE in the quarter, I appreciate there’s that sort of, I think, GBP 9 million comp in Q3. I think excluding that, were sort of new construction orders up 10% in Q3, just wanted to sense-check my maths there. And if so, what are the key end markets driving that? I know you sort of called out power already, just interested to hear what’s driving that sort of OE growth there. The second question is on next year, if possible. I know it’s early, but I don’t know if you’ve got any initial thoughts. I know you’ve sort of touched on process already, but across some of the other end markets as well. And then also margin-wise, I think we need to think about.

The third question is just on transport and the strategic review. Just any update you can give there. I appreciate the backdrop is probably tougher now than maybe we thought it was going to be six, seven, eight months ago. Just if that’s impacted your thinking in any way.

Roy Twight, CEO, IMI: Yeah. Three good questions, Lash. Yeah. On process automation orders, I think your maths is about right. Orders in the third quarter were just over GBP 90 million. Yeah, the hydrogen orders that you, I think you’re referring to, the comp on that is about GBP 10 million. Yeah, you’re right. If you did, and you’ll be careful what we strip out, I think, but if you did take out those sort of hydrogen orders from the grounds from last year, yeah, you’d be looking at about 10% growth in the quarter on new construction. I still think, Lash, in my mind, the sort of 5%. It’s very much a year-to-date business. Process automation, as you know, it’s a longer cycle. I still think that sort of total orders are 5% up organically year to date. If you.

Strip out the marine order that we called out last year, I still think that’s a pretty good guide. As I said, we do see good opportunity pipelines in both combined cycle gas and in gas generally, LNG, and so on. Your second question then was about next year. Obviously, we have not completed the budget reviews yet. We have sort of done some pre-budget reviews. We saw one of the peers call out yesterday sort of 4% organic growth for next year in overall terms across the piece. I would not disagree with that. Again, I think mid-single-digit growth for next year looks to me at the moment about right, subject to sort of current market conditions carrying on. I think on top of that, our tax rate, unfortunately, will be going up next year. This year, we have benefited from settling some old tax cases.

Next year, our tax rate will be going up to just over 26%. That is worth getting into your models. The other thing, clearly, we are already investing more in cyber. Having been through the cyber incident at the beginning of this year and seeing what else is happening, obviously, around the piece in the industrials, but more broadly in retail and automotive, we are upping our game already. Luke talked a bit about it on the last call, investing in the team, investing in the best systems, investing in training broadly across IMI. In all of this, it will probably cost us about GBP 0.015 of EPS incremental next year. Again, it is an investment I absolutely believe we need, having been through that attack earlier this year.

Your last question on transport, yes, tough market. Particularly U.S., that is a regional effect where some of our customers have literally shut down for a week or more because of the lack of demand. Transport market tough. The transport strategic review made very good progress in the quarter, I have to say. We got a really strong team. As you know, we brought in some ex-passenger car people last year. They have come up with a pragmatic but ambitious plan, which was presented to the board, accepted by the board. It is a five-year plan, obviously in line with all of our plans. I talked a little bit about on the last call. Obviously, it is predicated on value engineering, new products of better margins, and exiting, frankly, some of the lower margin business. They have also built on that.

There’s more continuous improvement, lean, and cost-effectiveness that’s gone into the plan as well. That’s sort of a fourth leg of that plan. The fifth leg is all about working capital and particularly stock turns. They’ve made good progress this year, and we can see good runway for next year as well. They’re very focused on improving the return on capital of that business. Indeed, by the end of the five years, getting the return on capital employed of transport to be pretty close to the IMI average. Yeah, it’s a good plan. Last year, very focused. Clearly, as you said, externally, truck market’s not great, and we’re very much focused on the internal plan, getting our heads down to deliver those improvements. Does that cover all your points, Lash?

Lashanthan Mahendra Raja, Analyst, JP Morgan: Yeah. No, that was really helpful. Thank you very much.

Roy Twight, CEO, IMI: Brilliant. Thanks, Lash.

Nadia, Call Coordinator, IMI: The next question goes to Colin Grant of Davy. Colin, please go ahead.

Colin Grant, Analyst, Davy: Yeah. Hi, everyone. Good morning. Just a question on two things, really. Just firstly on margin development. Is there anything you can give us in terms of what you’re expecting margins to do in the current year, 2025? I mean, you’ve got very strong growth coming through here, and you’re getting it in your higher margin areas. Just any kind of view on the accretion that you might get at a margin would be helpful. Secondly, just if you could give us an update on any thoughts looking into 2026 around potential share buybacks that you might look to try and do next year, given the strength of your balance sheet. Thanks very much.

Roy Twight, CEO, IMI: Yeah. Great. Thanks, Colin. I’ll let Luke talk about share buybacks in a moment for next year. Just a couple of points for me. Margins, as I said, where consensus is for this year is our base case, looks about right. That would mean margins of about 20% for this year, which obviously I’m very pleased with the team, Colin, because we started at 14%, and we’ve made year-on-year progress towards that original target. As we go forward over time, I would expect over the sort of five-year period, as I’ve said before, for those margins to tick up. If you take roughly a 30% drop through, because we are going to continue to fully invest in the business, growth is our number one priority. We will continue to fully invest in the business.

We still expect to do around, on average, obviously, it will not be every year, around a 30% drop through over that five-year period. That will take margins closer to sort of 22% over that period. Before I let Luke share buybacks, I will just say the acquisition pipeline does look better than it has looked for a while. Of course, these things are very binary, and we are very, very disciplined about how we use shareholder money. As you know, we are looking for returns above the cost of capital within three years. We are looking to be not too diluted to IMI’s sort of 13% over a five-year period. We are very strict about that. I would say, Colin, that the muscles that we have built, particularly around aftermarket growth, have innovation.

Around the way we go to market, commercial excellence, the use of data, and obviously our operational footprint, which I would really say was truly world-class. The way we can improve companies in that way means that we are more confident of generating those returns. With that, I’ll let Luke talk about share buybacks.

Luke, CFO, IMI: Yeah. Good morning, Colin. Looking at the year-three cash flow, I think we feel really good about the work we’ve been doing, particularly on working capital this year, and particularly the inventory reduction work we’re doing. There is nice cash generation coming through there. We have always said we’ll look at our leverage and operate roughly between a one- to two-times range. At the half-year, it was 1.4 times. Subsequent to the half-year, we completed the share buyback, paid the dividends. As we now approach the end of the year, we said we’ll deleverage to around 1.1 times come the end of this year. As we get into next year, we’ll look ahead. If we sustainably think we’ll have leverage below our times, we’ll definitely look at initiating a share buyback.

I’d sort of echo the same as Roy, that we continue to have M&A as part of our strategy and look at that as well.

Colin Grant, Analyst, Davy: Great. Thanks very much.

Luke, CFO, IMI: Thanks, Colin.

Nadia, Call Coordinator, IMI: Thank you. The next question goes to Jonathan Hern of Barclays. Jonathan, please go ahead.

Jonathan Hern, Analyst, Barclays: Hey, guys. Good morning. Just three questions, please. Just going to focus on some of the other subsections. First is just in terms of climate control, obviously 5% growth. If we kind of look to Q4, there is a really tough comp, probably the toughest comp of the year. Do you think that business can still grow at sort of 5% in Q4? If you can just give us a little bit more info about that sort of exposure to data centers and what you are seeing. I think we had GBP 14 million orders of that last time you spoke about it. Where are we sitting on that? Second question was just on sort of life science and fluid control. Obviously, big spike up in growth, 30%. Can you just sort of break that out?

How much of that is underlying and where is that coming from, and how much of that is catch-up? The third question was just coming back to process, but just focusing on that sort of nuclear opportunity there. I mean, look, there is a lot of talk out there about what that market can ultimately be. Can you just sort of give us some more information about where you see it, where you are winning, what type of growth rates you expect? Just some sort of more color on that nuclear opportunity going forward for you in process, please. Thank you.

Roy Twight, CEO, IMI: As usual, Jonathan, you managed to find three new questions after everybody else. That’s great. Climate 5%. Climate has been growing at 5% pretty much year in, year out for the last five years, something like that, Jonathan. It really is driven by overall requirement for energy saving principally in Europe, right? It has had great growth track record. It does have a very difficult comparator in Q4. I’m not sure if we’ll quite grow that fast. In the overall year, we’ll be around that 4-5% level for climate. Very pleased with their performance. As you said, data centers is becoming an increasing part. It’s only 2-3%. That’s come from nothing over the last few years, obviously, for data centers. The pipeline is strong. As I said on the last call, we will follow several years after.

Those initial investment decisions on those data centers. That is good for the future because that means with all that data center investment that has been announced, that gives us a very good pipeline. Life sciences, yeah. I mean, 13%. I’ll let Luke talk in a minute about what was catch-up. Clearly, the catch-up side was on the fluid control side, and we flagged that at the half-year. I still think life sciences in overall term will be about flat for the year, about flat for the fourth quarter. We are not seeing that inflection point yet. Certainly, though, the mood music is better.

At some point next year, I’m not going to call first or second half at this point, Jonathan, but at some point next year, I would expect it to start to return to, let’s say, low single-digit growth before eventually kicking up to more of that mid-single, even higher growth that we saw historically. On nuclear, yeah. I mean, nuclear new construction, as I said earlier, is not going to happen quickly. These are long, long-cycle projects. It’s very good news for IMI. I mean, this year, as you know, we won a big project in the U.K. already. I think nuclear, in terms of nuclear new construction and aftermarket put together, will probably be 7% or 8% of our orders this year, so ticking up nicely. Per reactor, we can get up to GBP 20 million worth of content around the valves and the strainers.

On an SMR as well, that could be up to GBP 20 million worth of content as well. Again, longer term, but bodes well for the future as that starts to really kick in. Aftermarket will be up in nuclear again this year, and that’s the extension to the nuclear reactors that’s already happening. I expect to see more of that, Jonathan. That aftermarket is just about the best aftermarket we have in terms of the capture rate. Obviously, a lot of it’s regulatory, and in terms of the margins, because everybody competes very hard on new construction, as you probably remember, but then aftermarket can be an annuity for decades after that, a very good recurring revenue stream. Does that capture your questions? Apart from, I’ll just let Luke talk about.

Luke, CFO, IMI: Yes.

Roy Twight, CEO, IMI: What was catch-up?

Luke, CFO, IMI: On the life science and fluid control, organic growth at 13% growth in the quarter, 3-4% of that was underlying growth, and then the rest was catch-up. As Roy said, the most important thing is it’s now brought us to where we thought we would be, which is 1% year-to-date growth and then around about flat for the year.

Jonathan Hern, Analyst, Barclays: Great, guys. That’s very helpful. Can I just have one just very quick follow-up just on that sort of aftermarket within process? Can you sort of tell us where that sits in terms of percentage of the division? I know it’s been growing, but where are we kind of in that sort of AMOE mix? And where do you think you can go to in process?

Roy Twight, CEO, IMI: Yeah. Yeah. So Jonathan, it’s about 60%. I think last year it was 59%. So it’s in that sort of 60% aftermarket, 40% OE. Clearly, I want both segments to grow as fast as possible, right? That will be my absolute dream, which means the mix wouldn’t change. Naturally, I think what’s changed over the last couple of years is the power requirement globally has obviously stepped up. And that’s very good for our combined cycle gas, good for LNG, good for our gas business in general. Let’s see how the next sort of few years sort of form out. We have said at the capital markets day back a few years ago now that we expect aftermarket to grow more like 5-7%.

New construction in the longer term probably a bit slower than that, which will mean the mix will tick up, which will mean obviously the margins will tick up. Roughly, our gross margins are two and a half times in the aftermarket what they are in new construction. So as that mix does tick up over time, Jonathan, that’s obviously very healthy for us.

Jonathan Hern, Analyst, Barclays: That’s great, guys. Thank you very much for that.

Roy Twight, CEO, IMI: Thanks, Jonathan.

Nadia, Call Coordinator, IMI: Thank you. The next question goes to Mark Davies-Jones of Stifel. Mark, please go ahead.

Colin Grant, Analyst, Davy: Thanks very much. Morning, both. We’re getting down to some gory detail here. On process, I just wanted to ask quickly on the non-power gen related markets and whether you’re seeing any softening in the sort of refining petrochem end of the world, given where current oil prices are. That was the first one. On IA, obviously it hasn’t really turned yet, but looking into next year, are you starting to hear any more positive noises out of particularly Germany, given the sort of stimulus plans coming through there? Is that likely to feed through to you, or is that still fairly distant?

Roy Twight, CEO, IMI: Yeah. Good question, Mark. Yeah, you’re absolutely right. On process, it’s downstream where orders are lower. Yeah, absolutely right. I think everybody’s seeing that, and we’re certainly seeing that. In IA, I would say it’s early days yet, Mark. When you look at a normal IA cycle, I’d say we’re overdue an uplift. I mean, certainly with the investment going into Germany at some point, I mean, Germany is 12% of IMI’s total sales. The biggest part of that is into the sort of industrial production economy, which is obviously both IA and the fluid control part of fluid control and life sciences. Very close behind that, we’ve got climate control with what we do in HVAC. Germany is very important to IMI. At some point, I’m pretty sure there will be a lift. Now, when exactly that is, is difficult to call, I would say, Mark.

Colin Grant, Analyst, Davy: Okay. Understood.

Nadia, Call Coordinator, IMI: Thank you. The next question goes to Stefan Klepp of BNP Paribas. Stefan, please go ahead. Stefan, your line is open. Moving on to the next question from Richard Page of Deutsche Bank. Richard, please go ahead.

Richard Page, Analyst, Deutsche Bank: Thank you. Yeah, morning, all. As Mark said, down to the nitty-gritty, but could you just remind us on gas combined cycle, what the size of your opportunity there, and ultimately how quickly aftermarket flows from new construction there? And then secondly, just a point of clarity on the European, sorry, on the climate control data center work, is all of that exclusively European customers, please?

Roy Twight, CEO, IMI: Yeah, good questions. I’ll let Luke talk about data centers in climate in a minute. In terms of gas combined cycle, well, in terms of, let’s call it conventional power, which is mainly gas combined cycle, that’s about 25% of process automation. 5% is new construction at the moment, and 20% is aftermarket. Yeah, that’s a significant tailwind. I’m sure you’ve seen what’s happened to our customers in that segment. Their order books are very, very full. That’s building for us, and we’re getting nice high hit rates as well. Very encouraged about that. In terms of data centers, do you want to talk a little bit about data centers in climate?

Luke, CFO, IMI: Yeah, definitely. We continue to see lots of opportunity there with our cooling products going in there, and that’s fully global exposure. Of the orders we’ve had year to date, about half is Europe, 40% is in North America, and then about 10% in Asia Pacific. I think we’ve got a pretty good geographic spread and exposure of opportunities there.

Jonathan Hern, Analyst, Barclays: Thank you.

Roy Twight, CEO, IMI: Thanks, Richard.

Nadia, Call Coordinator, IMI: Thank you. The next question goes to Mark Fielding of RBC. Mark, please go ahead.

Mark Fielding, Analyst, RBC: Yeah, hi. Actually, I’m going to be not original and ask a new question, but actually circle back to one right at the start in terms of just getting a little bit more sense around this phasing in process automation. I was trying to think about clever ways to ask it. I think the simplest one is, in terms of us understanding how good Q3 was and what that means in Q4, how do you think the sequential progression will be Q4 and Q3 in the revenues in process automation?

Roy Twight, CEO, IMI: Yeah, very good. Yeah. You’re right, Mark, because I think what you’ve cottoned onto is that last year the comparator in Q3 was weaker, and the comparator in Q4 was a lot harder, right? If we look at overall shipments in Q3 this year, we shipped about just over $230 million, right, Luke?

Luke, CFO, IMI: Yeah.

Roy Twight, CEO, IMI: In Q4, we are going to be shipping just over $300 million. That is the plan, right? That will be very similar, as I said earlier, to the level that we shipped last year, Mark. You are right. We still have a lot of work to do, and the teams know that. That probably puts it better in context than I did, Mark. Thank you for that.

Mark Fielding, Analyst, RBC: Very helpful. Thanks.

Luke, CFO, IMI: Cheers.

Nadia, Call Coordinator, IMI: Thank you. As a reminder, if you would like to ask a question, please press star followed by one on your telephone keypad. We have a question from Stefan Klepp of BNP Paribas. Stefan, please go ahead.

Luke, CFO, IMI: Can you hear me now, guys? Hello?

Roy Twight, CEO, IMI: Yes.

Luke, CFO, IMI: It’s a very, very bad line, though. Oh, I’m very sorry. I’ll speak a bit louder through the help. Just follow-ups, sorry for that. On transport, you sounded very positive on the internal catch-up plan. Are you ruling out that you divest the division? Secondly, on the acquisition side of things, I think you have for a long time not been that positive on acquisitions. What are you looking at at the moment size-wise? Because the last big acquisition was TWTG, and that was a tiny one. What is basically in your funnel there at the moment?

Roy Twight, CEO, IMI: Excellent. I think I heard you right. Transport, I think you were asking about the balance between the internal efforts and what we might be doing externally. As I said earlier, Stefan, the real focus is on internal progress with a great team at the moment. Clearly, the external market, with what’s happening, particularly in the U.S., is not in great shape. We will always, as we always do as we run through our strategic review process, look at both across the business at what value we can generate over a reasonable time period versus what value we can attract externally. Right now, as I said, the focus is on internal improvement, I think for obvious reasons. It is a great internal improvement plan, I have to say, from the team.

I think your second question is, what sort of size of acquisitions do we look at? There is really no change there to what we have always said. We would look at bolt-ons up to a value of about GBP 500 million in terms of the acquisition cost. What is really important for us is that one plus one equals a lot more than two. As I said earlier, the muscles that we have around aftermarket generation, around things like innovation, around our commercial excellence, the broad, the global teams that we have that can really expand businesses, that when we really look at that, and we are quite harsh in our judgment, which is why we are only doing an acquisition every year or so.

That when we do that, that the returns, we understand the returns on day one, and that we understand the returns at the end of year three, and they have to be above our cost of capital. At the end of the five-year period, that we’re not too diluted to our overall IMI return on invested capital. We really look at that, and we make sure that we can look ourselves in the faces. We are paid in our long-term investment plan on our all-in return on invested capital, right? We are incentivized to make sure that we create shareholder value. It is, I can tell you, top of our minds. The acquisition pipeline, as I said, Stefan, does look better than it’s looked for a while. There’s a few interesting ones in there.

I’m sorry I couldn’t hear your question in detail because of the line, but hopefully that covered what you asked.

Nadia, Call Coordinator, IMI: Thank you. Moving on to the final question. From Harry Phillips of Peel Hunt. Harry, please go ahead.

Richard Page, Analyst, Deutsche Bank: Yeah. Good morning, everyone. Again, sorry, two questions for myself. And again, sort of given some of the other questions around nerdy detail, that sort of got up my competitive streak. So another nerdy detail one. Just wondering around the LNG opportunity and what scale that is within the business. Then secondly, I just missed the data center percentage of climate earlier on. I know you’ve just given us a job split, but I missed the original one as I say data percentage of total climate at the current time, please.

Roy Twight, CEO, IMI: Yeah. Data center climate, 2-3%, Harry. That’s a nice, easy one. In terms of LNG, LNG is around 10%. When you look at aftermarket and new construction combined, it’s about 10% of process automation, Harry. As you said, the pipeline of opportunities, the projects as we go sort of into next year and the next few years looks very strong to us, yeah.

Richard Page, Analyst, Deutsche Bank: Fantastic. Thanks very much, Steve.

Roy Twight, CEO, IMI: Thank you, Harry.

Nadia, Call Coordinator, IMI: Thank you. We have no further questions. I’ll hand back to Roy for any closing comments.

Roy Twight, CEO, IMI: Yeah. I am obviously just going to use this as a big thank you. A lot of people across IMI listen to this. I want to thank them for an excellent—and I do not use that word often—but an excellent operational performance, excellent execution in the third quarter, an excellent recovery from cyber and everything else that has happened geopolitically this year. In particular, I want to thank, obviously, the execs, Jackie and the operations team. I think it was a really outstanding performance. We look forward to closing out the year from here. Thanks very much, everybody, for listening. Thank you.

Nadia, Call Coordinator, IMI: Thank you. This now concludes today’s call. Thank you all for joining. You may now disconnect your lines.

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