Hill & Smith (LON:HILS) reported full-year 2025 results that management said were driven by strong performance in the U.S., while the U.K. backdrop remained challenging. In the presentation, the company also highlighted a new CFO appointment, a major capacity investment plan in the U.S., two agreed acquisitions, and progress on its share buyback program.
Leadership update and 2025 financial headline figures
The company introduced Chris McLeish, who joined as CFO in October 2025, and thanked Mark Else for serving as interim CFO during the transition.
Underlying operating margin rose 60 basis points to 17.4%, which management attributed to an improved portfolio mix and further margin expansion within galvanizing services. Return on invested capital increased 190 basis points to 26.7%.
Underlying earnings per share grew 8% to £1.322. The board recommended a final dividend of £0.35, taking the total dividend to £0.53, also up 8% year-over-year.
Regional mix shifts toward the U.S.
Management emphasized the continuing growth and increasing weight of U.S. operations. In the company’s geographic breakdown, U.S. businesses increased their share of group revenue and profits to 63% and 79%, respectively.
By division, U.S. Engineered Solutions increased its revenue share by two percentage points to 48%, and Galvanizing Services represented 24%. U.K. & India Engineered Solutions declined to 28% of group revenue.
Divisional performance: strength in U.S. platforms and galvanizing; pressure in U.K. engineered solutions
U.S. Engineered Solutions delivered what management described as a very strong year. Revenue grew 6% OCC, accelerating to 8% in the second half and exceeding the targeted range cited on the call. The company highlighted:
- Composites growth driven by demand for utility poles, particularly in the second half.
- Strong growth at V&S Utilities in power transmission and distribution amid a positive demand backdrop.
- Improving performance in engineered supports, benefiting from new capacity following the expansion at the Waggaman, Louisiana site.
- Road safety improvements in attenuators and road barriers, supported by a new management team.
The division also faced weakness in off-grid solar. Management said it combined that business with the message boards business of Hill & Smith Inc. to create a unified product platform with a single manufacturing base at National Signal’s La Mirada, California site. Overall, the U.S. Engineered Solutions margin increased 20 basis points to 18.0%, reflecting cost investment to support growth and a year-on-year reduction in margin at National Signal.
Galvanizing Services posted 10% OCC revenue growth and 13% OCC profit growth, accelerating in the second half. Management said early-year performance was impacted by adverse weather, but second-half OCC revenue growth reached 14%. The U.S. business benefited from “very positive demand tailwinds,” while the U.K. business grew volumes, revenues, and profits despite muted broader infrastructure and industrial construction markets. Management pointed to improved operational efficiency and commercial execution in both regions and said the outlook remained positive.
U.K. & India Engineered Solutions declined, with revenue down 6% OCC and profit down 17% OCC. Management said businesses exposed to U.K. transport, residential construction, and general infrastructure saw progressively weaker demand through the year. Transport infrastructure—over 40% of divisional revenue—was affected by reduced investment in U.K. roads as the market awaits clarity on Road Investment Strategy 3 (RIS3). The building products business also experienced reduced volumes. Management highlighted stronger areas including perimeter security and industrial flooring, and said the India engineered supports business delivered profit in line with the prior year with improvement through 2025. The company said it is assessing measures to strengthen U.K. operations and expects to provide an update at the half-year.
Cash generation, balance sheet position, and reporting currency change
Hill & Smith reported cash conversion of 91%, ahead of its framework target of at least 80%, citing working capital management and disciplined capital expenditure. Net debt ended the year at £51 million, representing covenant leverage of 0.1x after stripping out lease impacts. The company said it had nearly £350 million of committed borrowing facilities available at year-end.
The company also announced a change in reporting currency to reflect increasing U.S. exposure. Starting with the six months to 30 June 2026, Hill & Smith will report in U.S. dollars. From the 2026 interim, dividends will be declared in U.S. dollars, though shareholders will continue to receive sterling payments unless they elect otherwise.
Capital allocation: organic investment, M&A, and shareholder returns
Management reiterated a disciplined capital allocation framework with priorities including organic investment, acquisitions, a growing dividend, and returning surplus capital. The company highlighted several near-term actions:
- £35 million of committed organic investment over the next two years to expand network capacity in U.S. “growth platforms,” including utilities and galvanizing.
- An agreed acquisition of Freeburg Industrial Fabrication in the U.S. for a headline consideration of $36 million for 80% of equity, with additional consideration of up to $50 million for the remaining 20% linked to future profit targets.
- An agreed acquisition of Hentec Fabrication in Ireland for €7.3 million.
- A £100 million share buyback launched in August 2025; management said around £32 million had been completed as of the close of business on the Monday referenced in the presentation.
On Freeburg, management described the business as a designer and manufacturer of custom metal enclosures and engineered solutions, with exposure to data centers, power generation, and other infrastructure. The company said Freeburg is building a new facility in Arizona, expected to be operational in H2 2026, which was described as roughly doubling the footprint of the business and positioning it to serve regional data center activity.
In Q&A, management provided additional detail on the Freeburg structure, noting an initial enterprise value of $45 million for the first 80%, and referenced $5.3 million of EBIT as a basis for an ~8.5x multiple on that tranche. On the earn-out, management said that reaching the maximum additional consideration would imply a materially higher profit level versus last year’s results, characterizing it as ambitious but aligned with multi-year demand visibility.
Management also discussed end-market exposure shifts. It said revenue from the group’s “high and resilient growth markets” increased from 23% in 2024 to 34% in 2025, with U.S. gains tied to transmission and distribution and water infrastructure, as well as a growing presence in data centers. In the U.K., management said perimeter security and access flooring are pivoting toward global data center construction, with data center-related revenue rising to 9% from 5% the prior year.
Looking ahead, management said it expects positive momentum in the U.S. to continue into 2026, underpinned by infrastructure investment and technology-driven demand. It remained cautious on the pace of recovery in the U.K., anticipating lower project activity and limited near-term benefit from RIS3 clarity, with any upside more likely in 2027 and beyond. The company also said it is monitoring broader risks tied to geopolitical developments and potential impacts on trade and cost inflation, while noting it has no operating footprint in the Middle East.
About Hill & Smith (LON:HILS)
Our purpose is to create sustainable infrastructure and safe transport through innovation.
Hill & Smith PLC 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.
