Smiths Group (Smiths Group) Operating Income : $582 Mil (TTM As of Jan. 2024)

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What is Smiths Group Operating Income?

Smiths Group's Operating Income for the six months ended in Jan. 2024 was $313 Mil. Its Operating Income for the trailing twelve months (TTM) ended in Jan. 2024 was $582 Mil.

Operating Margin % is calculated as Operating Income divided by its Revenue. Smiths Group's Operating Income for the six months ended in Jan. 2024 was $313 Mil. Smiths Group's Revenue for the six months ended in Jan. 2024 was $1,915 Mil. Therefore, Smiths Group's Operating Margin % for the quarter that ended in Jan. 2024 was 16.32%.

Warning Sign:

Smiths Group PLC operating margin has been in a 5-year decline. The average rate of decline per year is -8%.

Smiths Group's 5-Year average Growth Rate for Operating Margin % was -8.00% per year.

Operating Income or EBIT is linked to Return on Capital for both regular definition and Joel Greenblatt's definition. Smiths Group's annualized ROC % for the quarter that ended in Jan. 2024 was 9.37%. Smiths Group's annualized ROC (Joel Greenblatt) % for the quarter that ended in Jan. 2024 was 46.98%.

Smiths Group Operating Income Historical Data

The historical data trend for Smiths Group's Operating Income can be seen below:

* For Operating Data section: All numbers are indicated by the unit behind each term and all currency related amount are in USD.
* For other sections: All numbers are in millions except for per share data, ratio, and percentage. All currency related amount are indicated in the company's associated stock exchange currency.

* Premium members only.

Smiths Group Operating Income Chart

Smiths Group Annual Data

Trend

Jul14

Jul15

Jul16

Jul17

Jul18

Jul19

Jul20

Jul21

Jul22

Jul23

Operating Income

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479.45

343.08

432.32

182.25

579.90

Smiths Group Semi-Annual Data
	Jul14	Jan15	Jul15	Jan16	Jul16	Jan17	Jul17	Jan18	Jul18	Jan19	Jul19	Jan20	Jul20	Jan21	Jul21	Jan22	Jul22	Jan23	Jul23	Jan24
Operating Income	Get a 7-Day Free Trial															256.10	-44.37	294.98	269.33	312.58

Smiths Group Operating Income Calculation

Operating Income, is the profit a company earned through operations. All expenses, including cash expenses such as cost of goods sold (COGS), research & development, wages, and non-cash expenses, such as depreciation, depletion and amortization, have been deducted from the sales.

Operating Income for the trailing twelve months (TTM) ended in Jan. 2024 adds up the semi-annually data reported by the company within the most recent 12 months, which was $582 Mil.

Smiths Group (OTCPK:SMGZY) Operating Income Explanation

1. Operating Income or EBIT is linked to Return on Capital for both regular definition and Joel Greenblatt's definition.

Smiths Group's annualized ROC % for the quarter that ended in Jan. 2024 is calculated as:

	ROC % (Q: Jan. 2024 )
=	NOPAT	/	Average Invested Capital
=	Operating Income * ( 1 - Tax Rate % )	/	( (Invested Capital (Q: Jul. 2023 )	+	Invested Capital (Q: Jan. 2024 ))	/ count )
=	625.158 * ( 1 - 35.09% )	/	( (4680.412	+	3977.128)	/ 2 )
=	405.7900578	/	4328.77
=	9.37 %

where

	Invested Capital		(Q: Jul. 2023 )
=	Total Assets	-	Accounts Payable & Accrued Expense	-	Excess Cash
=	Total Assets	-	Accounts Payable & Accrued Expense	-	( Cash, Cash Equivalents, Marketable Securities	-	max(0, Total Current Liabilities	-	Total Current Assets	+	Cash, Cash Equivalents, Marketable Securities	))
=	5612.113	-	564.433	-	( 367.268	-	max(0, 1157.216	-	2250	+	367.268	))
=	4680.412

	Invested Capital		(Q: Jan. 2024 )
=	Total Assets	-	Accounts Payable & Accrued Expense	-	Excess Cash
=	Total Assets	-	Accounts Payable & Accrued Expense	-	( Cash, Cash Equivalents, Marketable Securities	-	max(0, Total Current Liabilities	-	Total Current Assets	+	Cash, Cash Equivalents, Marketable Securities	))
=	5165.184	-	959.339	-	( 228.717	-	max(0, 1104.193	-	2109.276	+	228.717	))
=	3977.128

Note: The Operating Income data used here is two times the semi-annual (Jan. 2024) data.

2. Joel Greenblatt's definition of Return on Capital:

Smiths Group's annualized ROC (Joel Greenblatt) % for the quarter that ended in Jan. 2024 is calculated as:

	ROC (Joel Greenblatt) %		(Q: Jan. 2024 )
=	EBIT	/	Average of (Net fixed Assets	+	Net Working Capital)
=	EBIT	/	Average of (Property, Plant and Equipment	+	Net Working Capital)
			Q: Jul. 2023		Q: Jan. 2024
=	EBIT	/	( ( (Property, Plant and Equipment + Net Working Capital)	+	(Property, Plant and Equipment + Net Working Capital) )	/	count )
=	518.424	/	( ( (453.608 + max(454.898, 0))	+	(471.41 + max(827.192, 0)) )	/	2 )
=	518.424	/	( ( 908.506	+	1298.602 )	/	2 )
=	518.424	/	1103.554
=	46.98 %

where Working Capital is:

	Working Capital		(Q: Jul. 2023 )
=	(Accounts Receivable	+	Total Inventories	+	Other Current Assets)	-	(Accounts Payable & Accrued Expense	+	Defer. Rev.	+	Other Current Liabilities)
=	(637.887	+	820.876	+	115.98)	-	(564.433	+	0	+	555.412)
=	454.898

	Working Capital		(Q: Jan. 2024 )
=	(Accounts Receivable	+	Total Inventories	+	Other Current Assets)	-	(Accounts Payable & Accrued Expense	+	Defer. Rev.	+	Other Current Liabilities)
=	(987.294	+	824.651	+	68.614)	-	(959.339	+	0	+	94.028)
=	827.192

When net working capital is negative, 0 is used.

Note: The EBIT data used here is two times the semi-annual (Jan. 2024) EBIT data.

3. Operating Income is also linked to Operating Margin %:

Smiths Group's Operating Margin % for the quarter that ended in Jan. 2024 is calculated as:

Operating Margin %	=	Operating Income (Q: Jan. 2024 )	/	Revenue (Q: Jan. 2024 )
	=	312.579	/	1914.867
	=	16.32 %

4. Please click Growth Rate Calculation Example (GuruFocus) to see how GuruFocus calculates Wal-Mart Stores Inc (WMT)'s revenue growth rate. You can apply the same method to get the Operating Income growth rate using Operating Income per share data.

Be Aware

Compared with a company's EBITDA margin, Operating Margin can be manipulated by adjusting the rate of depreciation, depletion and amortization (DDA).

If a company is facing competition, its Operating Margin may decline. Often the Operating Margin declines well before the company's revenue or even profit decline. Therefore, Operating Margin is a very important indicator of whether the company is facing problems.

For instance, by 2012, Nokia (NOK)'s problems were well known and its stock had lost more than 90% of its market value since 2007. But Nokia's Operating Margin had already been in decline since 2002, although its earnings per share were still rising. Investors who paid attention to Operating Margin would have avoided this huge loss. The same can be said for Research-in-Motion (RIMM).

Therefore, Operating Margin is a very important screening filter for GuruFocus. GuruFocus's Buffett-Munger screener requires that the profit margin is either consistent or expanding. The Model Portfolio of the Buffett-Munger screener has outperformed the market every year since inception in 2009.

Smiths Group Operating Income Related Terms

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Smiths Group (Smiths Group) Business Description

Industry

GURUFOCUS.COM » STOCK LIST » Industrials » Industrial Products » Smiths Group PLC (OTCPK:SMGZY) » Definitions » Operating Income

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Traded in Other Exchanges

SMGKF:USA SMINl:UK SMIN:UK QS2A:Germany

Address

11-12 St James’s Square, 4th Floor, London, GBR, SW1Y 4LB

Website

https://www.smiths.com

With its start as a London jeweler in the 19th century, Smiths Group has for most of its history operated as a company operating disparate but economically attractive businesses. Thematically, it runs businesses that manufacture niche products in security- or safety-sensitive industries. Today, the business is split across four divisions: mechanical seals, weapons detection, electrical connectors, and specialized hoses. The end customers for these products include airports, NASA, government security or defense departments, and hospitals.