Slide 1: Capital Markets Day
Capital Markets Day Zurich - January 29, 2019 © Landis+Gyr | January 29, 2019 | Capital Markets Day
Slide 2: Disclaimer
Disclaimer Forward-looking information Presentations given during the Landis+Gyr 2019 Capital Markets Day include forward-looking information and statements including statements concerning the outlook for our businesses. These statements are based on current expectations, estimates and projections a
Slide 3: Landis+Gyr management presenting today
Landis+Gyr management presenting today Richard Mora Jonathan Elmer Prasanna Venkatesan Susanne Seitz CEO1 CFO1 EVP Americas1 EVP EMEA1 20 years with Landis+Gyr 22 years with Landis+Gyr 12 years with Landis+Gyr 3 months with Landis+Gyr Over 30 years multinational Over 30 years experience in Over 30 y
Slide 4: Agenda
Agenda Start Agenda Item Lead 09:30h Landis+Gyr Markets & Strategy Update Richard Mora, CEO Voice of the Customer Mike Lowe, SRP Executive (retired) Americas Prasanna Venkatesan, EVP Americas 11:00h Coffee Break 11:15h Europe, Middle-East & Africa Susanne Seitz, EVP EMEA Asia-Pacific Steve Jeston, H
Slide 5: Landis+Gyr Markets & Strategy Update
“Capitalizing on the evolving role of smart metering at the heart of the energy industry revolution” Landis+Gyr Markets & Strategy Update Richard Mora, CEO © Landis+Gyr | January 29, 2019 | Capital Markets Day 5
Slide 6: Landis+Gyr – at a glance
Landis+Gyr – at a glance Global leader in smart metering solutions… … serving three regional segments Landis+Gyr Group: 1’738m Net Revenues in FY17 120 Years Asia-Pacific (8%) USD 138m Swiss HQ with of service to Serving Nearly USD 1b offices in 30+ customers 3’500+ of self-funded Americas1 (56%) co
Slide 7: Why customers choose Landis+Gyr
Why customers choose Landis+Gyr We offer flexible business models… …delivering multiple layers of value to utilities Most comprehensive end-to-end product, solutions End-to-end offering and services offering in the market. Flexible managed Services based business model services model, providing util
Slide 8: Industry disruption drives need for grid edge intelligence
Industry disruption drives need for grid edge intelligence Traditional “3-D” drivers of Decentralized Grid edge intelligence power grid industry disruption power grid ▪ Decarbonization, ▪ Distributed intelligence at decentralization and each endpoint (grid edge) digitalization disrupting the ▪ Near
Slide 9: Three platforms for growth with attractive addressable market sizing and dynamics
Three platforms for growth with attractive addressable market sizing and dynamics 3 | Smart infrastructure 2 | Grid edge intelligence Multi-Utility infrastructure 1 | Smart metering Distribution management before the Smart street lighting Infrastructure Smart electricity, gas and heat meters meter (
Slide 10: Landis+Gyr has established leadership in smart metering
Landis+Gyr has established leadership in smart metering 1 Smart metering and continues to strengthen and build its core business Landis+Gyr continues to strengthen core offering Software & Services Smart meters Communication networks for data aggregation and management Meter data Residential Commerc
Slide 11: Core smart metering business has geographic diversity that supports long-term growth
Core smart metering business has geographic 1 Smart metering diversity that supports long-term growth Early stage Mass deployments Replacement ▪ Regions where smart meter penetration <20% ▪ Smart meter penetration well underway ▪ 2nd wave rollouts already started moving towards ▪ Regulation for smar
Slide 12: Grid edge intelligence is a reality today, driving significant utility benefits
Grid edge intelligence is a reality today, driving 2 Grid edge intelligence significant utility benefits Emerging grid edge use cases Role of Landis+Gyr offerings Regulated Enable distributed energy Use smart meters and grid edge devices to improve distribution energy flows on the grid: home energy
Slide 13: Gridstream Connect – new IoT platform enabling flexibility, resilience and security
Gridstream® Connect – new IoT platform enabling 2 Grid edge intelligence flexibility, resilience and security at the grid edge Grid edge intelligence is key to operating a decentralized grid Key Benefits ▪ Integrated data visualization and analysis ▪ Network and device management solutions Applicati
Slide 14: Smart infrastructure offers additional avenues for expansion
Smart infrastructure offers additional 3 Smart infra- structure avenues for expansion Smart infrastructure use cases Role of Landis+Gyr Smart streetlighting solutions Continue organic growth in smart infrastructure. Explore inorganic avenues for growth through M&A and partnering Water resource usage
Slide 15: Performance against IPO guidance | FY17
Performance against IPO guidance | FY17 FY17 guidance vs. FY16 actual results FY17 (vs. FY16) actual results Net Revenues c. 3% growth ✓ USD 1’738m (+4.7% or +2.6% in constant currency) Adjusted EBITDA1 Flat in USD terms at USD 208m ✓ USD 208m ✓ Margin: 12.0% Free Cash Flow USD 60-70m ✓ USD 87.5m 1.
Slide 16: Performance v. IPO equity story | Status FY18
Performance v. IPO equity story | Status FY18 IPO Status Outlook Strong performance with robust market activity for NAM USD 1b market, 3% CAGR smart metering solutions continuing in the IOU and ▪ Landis+Gyr expects the second half Resiliency 34% market share of FY18 to be stronger than the first Pub
Slide 17: Mid-term guidance | FY21
Mid-term guidance | FY21 FY21 Guidance Group ▪ Net Revenues expected to grow based on targeted profitable smart metering opportunities ▪ Adjusted EBIDTA margins expected to increase to between 13.5% and Mid single digit annual 14.5% of Net Revenues as EMEA and AP return to profitability Net Revenues
Slide 18: Share buy back
Share buy back ▪ Announced today a share buy back program of up to CHF 100m to run over a three year cycle ▪ May be stopped at any time ▪ Landis+Gyr is undertaking this program ▪ As an opportunity to purchase our stock which we believe is currently priced below industry multiples ▪ As a means to imp
Slide 19: Voice of the Customer
Voice of the Customer Mike Lowe, SRP Executive (retired) © Landis+Gyr | January 29, 2019 | Capital Markets Day 19
Slide 20: Smart Meters
Smart Meters Michael Lowe Deputy General Manager & Chief Customer Executive Salt River Project (Retired) M. Lowe, Landis+Gyr Capital Markets Day, 29 January 2019
Slide 21: Substantial Cost Savings from Automation of Meter Reading
Substantial Cost Savings from Automation of Meter Reading Salt River Project (Tempe, Arizona, USA) Case Study: $17 million annual savings at full Reduction of 5 meter deployment of 1 million readers and 1 field meters technician for every $140,000 50,000 smart meters annual savings for each deployed
Slide 22: Smart Meters Much More than Automated Reads: Grid-Edge Intelligence
Smart Meters Much More than Automated Reads Grid - Edge Intelligence Grid - Edge enables a revolutionary level of precision in management of the grid Intelligence Smart Meters smart infrastructure in Homes and Businesses M. Lowe, Landis+Gyr Capital Markets Day, 29 January 2019 22
Slide 23: The New Eco-System
The New Eco-System Utility Communications PV Internet Renewables Distribution Operations Dynamic Systems Control Advanced metering Control Interface Distributed Generation and Storage Data Management Efficient Smart Plug-In Building End-Use Systems Hybrids Devices M. Lowe, Landis+Gyr Capital Markets
Slide 24: Grid Modernization Plan: System Performance
Grid Modernization Plan 2015 Funding Identified System Performance Fault Location Advanced SRP Isol, Sys Restore Cable Fault Distribution Storage Anticipator Management Distribution Capability Feeder Fault Current Substation Controlled Advanced Auto (DFA) Outage Locating Voltage Optimization Inverte
Slide 25: Many Benefits from AMI (1/2)
Many Benefits from AMI (1/2) • “Big data” – Daily reading of each meter results in immediate labor savings – Interval AND scalar measurements – Measurement of usage AND customer-generation – Customers who choose their bill due date are among the most satisfied with a utility’s overall billing and pa
Slide 26: Many Benefits from AMI (2/2)
Many Benefits from AMI (2/2) • Voltage measurement • Tamper detection • Outage identification • Support for “load shaping” to reduce cost and carbon-intensity of energy supply M. Lowe, Landis+Gyr Capital Markets Day, 29 January 2019 26
Slide 27: Customers Want Help To Manage Their Usage
Customers Want Help To Manage Their Usage 6.0 80 4.5 60 Wed, Feb 04 Total Cost: $3.04 Avg. Temp. (°F): 63 Average Temperature (°F) 3.0 40 Energy Cost ($/day) 1.5 20 0.0 0 Do., Jan Mi., Jan Di., Jan Mo., Feb So., Feb Sa., Feb 15 21 27 02 08 14 Total Average Temperature (°F) M. Lowe, Landis+Gyr Capita
Slide 28: Utilities No Longer Dependent on Customers to Report Power Outages
Utilities No Longer Dependent on Customers to Report Power Outages Failure points are identified and repaired more quickly Meter with power Meter without power M. Lowe, Landis+Gyr Capital Markets Day, 29 January 2019 28
Slide 29: Need for Load Shaping in a Desert Territory
Need for Load Shaping in a Desert Territory • Solar output peaks before Retail Load vs. Solar Generation system load June 18, 2016 6'500 195 4'875 146 3'250 98 1'625 49 0 0 1:00 3:00 5:00 7:00 9:00 11:00 1:00 3:00 5:00 7:00 9:00 11:00 AM AM AM AM AM AM PM PM PM PM PM PM Retail Load Central Station S
Slide 30: Load Shaping Delivered by Smart Meters
Load Shaping Delivered by Smart Meters M. Lowe, Landis+Gyr Capital Markets Day, 29 January 2019 30
Slide 31: Multiple Tariff Options on a Single Smart Meter Platform
Multiple Tariff Options on a Single Smart Meter Platform Help to Shape Load Percentage of Total Daily Usage % 6.5 5.2 3.8 2.5 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 Hour Ending TOU Tariff (3-Hour On-Peak Period) Basic Flat Tariff TOU Tariff (7-Hour On-Peak Period) M. Lowe, La
Slide 32: Tariff Options Appeal to the Unique Needs of Customers
Tariff Options Appeal to the Unique Needs of Customers Less More Income Consumption Green Credit Standing Age Prepay Basic TOU M. Lowe, Landis+Gyr Capital Markets Day, 29 January 2019 32
Slide 33: Smart Meters Much More than Automated Reads
Smart Meters Much More than Automated Reads A critical component in Interact with smart Enable new services for Improve customer the evolution of grid edge infrastructure in Homes customer convenience satisfaction intelligence and Businesses and bill control M. Lowe, Landis+Gyr Capital Markets Day,
Slide 34: Americas
Americas Prasanna Venkatesan, EVP Americas © Landis+Gyr | January 29, 2019 | Capital Markets Day 34
Slide 35: Americas continued success as we look to the future
Americas continued success as we look to the future Regional footprint ▪ Serving North, Central and South America as well as other territories such as Japan where ANSI metering standards prevail ▪ 14 utility operation centers and a regional corporate headquarters ▪ Manufacturing facilities in Mexico
Slide 36: Americas delivers top line growth while maintaining margin
Americas delivers top line growth while maintaining margin Performance ▪ Sales to external customers in the Americas region rose to a new record high of USD 972m in FY17 ▪ Strong FY18 H1 performance, the market for smart metering solutions continues to be robust in North America ▪ Adj. EBITDA margin
Slide 37: Attractive addressable markets with trend for grid edge intelligence accelerating in North America
Attractive addressable markets with trend for grid edge intelligence accelerating in North America Market evolution Market position ▪ North America North Addressable market segments 2 USD b 2.4 CAGR 17–21 Smart electric meters market share, 2017, units 1 Elster ▪ Resilient smart metering market Am
Slide 38: North America utility segmentation is diverse and drives the need for flexible offerings
North America utility segmentation is diverse and drives the need for flexible offerings “IOU” “Public Power” Investor-Owned Utility Rural Electric Cooperative Municipality, Gov’t (IOU) (REC or COOP) (Muni or PUD) Scope ▪ Large installed base: typically ▪ Smaller installed base: typically ▪ Wide ran
Slide 39: America's market evolution
America’s market evolution 1st wave use cases Revenue protection ▪ Utilities seek increased benefits in 2nd wave deployments – use Meter to cash Conservation cases now include direct & losses consumer benefits in addition to Remote meter reading operational benefits from 1st Utility operations benef
Slide 40: 2nd wave use cases driven by real utility needs today
2nd wave use cases driven by real utility needs today 2nd wave use cases Utility “X” tender requirements (2018) Regulated Enable distributed energy • Grid mapping distribution • Distributed ledgers utilities • Advance HEM interoperability • Advance DER submetering Improve grid resilience • Outage de
Slide 41: North America drives regional success
North America drives regional success Market development and utility needs ▪ 1st wave AMI rollout with remaining utilities ▪ Early adopters commence 2nd wave AMI rollout ▪ Increased investment in grid edge intelligence: distribution automation, new consumer programs, distributed energy resources, cy
Slide 42: Landis+Gyr is the North American market leader in smart metering software & managed services
Landis+Gyr is the North American market leader in smart metering software & managed services What we offer Proven track record and sustainable business Managed services ▪ Market leadership going back over 25+ years ▪ Project management ▪ Meter Read ▪ Security ▪ 14 managed services utilities, with av
Slide 43: Japan - Building value on the back of world's largest utility IoT project
Japan - Building value on the back of world’s largest utility IoT project TEPCO success story by the numbers1 Market development and utility needs Landis+Gyr deployed endpoints ▪ Japan is in the midst of a energy transition as a result of the recent deregulation 20m >500m of the electric and gas mar
Slide 44: Americas well positioned to expand our growth platforms
Americas well positioned to expand our growth platforms as markets and technology evolve Americas well positioned for success How we win ▪ Today's Landis+Gyr installed base: over 55m ▪ Gridstream Connect architecture enhancing grid edge intelligence: connected intelligent devices1 next generation so
Slide 45: EMEA
EMEA Susanne Seitz, EVP EMEA © Landis+Gyr | January 29, 2019 | Capital Markets Day 45
Slide 46: EMEA | Leading supplier with strong local presence
EMEA | Leading supplier with strong local presence Regional footprint ▪ Dedicated sales offices in 18 countries across the Region ▪ Landis+Gyr technology utilized by 1300+ utilities ▪ 150 end-to-end smart metering solutions in the field Zug (HQ) Regional highlights ▪ Positioned for growth with space
Slide 47: Cost reduction and restructuring programs drive margin recovery
Cost reduction and restructuring programs drive margin recovery Material improvement in committed backlog Performance ▪ Break-even reached as margin expansion materializes driven by operational improvements ▪ Orders in UK and France increase committed backlog, reaching USD 760m at the end of FY18 H1
Slide 48: Well positioned in growing meter market driven by mandated rollouts
Well positioned in growing meter market driven by mandated rollouts. Increasing importance of services Market evolution Market position ▪ Smart electric meters: growth EMEA USD b 1 Market share, 2017, units 1 driven by large rollouts in several smart electric Others Sagemcom EU markets meters 2.2 CA
Slide 49: Growth driven by continuing smart meter penetration
Growth driven by continuing smart meter penetration Upcoming 2nd wave rollouts create next phase of opportunity 2018 2023 Electricity smart meter penetration Installed base: 125m 86m meters to be installed Installed base: 211m (end of year 2018) Penetration: 42% 11% CAGR Penetration: 69% 2018 >80% 5
Slide 50: Selected high priority markets and our key success factors
Selected high priority markets and our key success factors Finland & Sweden France ▪ 9m endpoints ▪ Up to 35m endpoints ▪ Push for e2e solution offering: ▪ Execute the Enedis contract: meters, rollout, integration, deploy the base managed services ▪ Leverage services enabled by 2nd wave ▪ Build on m
Slide 51: UK Vision: establishing the base for a consumer energy application-driven future
UK Vision: establishing the base for a consumer energy application-driven future Market development and customer needs ▪ SMETS geared towards consumer use cases ▪ High demand for grid edge intelligence ▪ Market development delays now overcome Customer App.2 DCC1 Cust. E-meter ▪ Backbone (DCC1) opera
Slide 52: Grid edge use cases driven by retail market innovation
Grid edge use cases driven by retail market innovation ▪ Increasing focus on grid edge 1st wave use cases intelligence for 2nd wave use cases: Revenue protection ▪ Hyper-critical focus on leading E2E solution data security – particularly Meter to cash Conservation for consumer data & losses Remote m
Slide 53: Moving forward: growth coupled with execution
Moving forward: growth coupled with execution Drive long-term growth Return to profitability Product cost down ▪ Capture large share of the upcoming smart meter deployments ▪ Product cost down programs for high volume AMI products ▪ Ongoing value based engineering projects ▪ Address small and medium
Slide 54: Asia-Pacific
Asia-Pacific Steve Jeston, Head AP © Landis+Gyr | January 29, 2019 | Capital Markets Day 54
Slide 55: Asia-Pacific | Positioned for success
Asia-Pacific | Positioned for success Regional footprint ▪ Leading supplier in Asia-Pacific with longstanding tradition ▪ Presence in all major markets Regional highlights ▪ #1 in electricity and gas metering in Australia and New Zealand ▪ Metering supply agreement in place with intelliHUB / Acumen
Slide 56: Asia-Pacific revenue will grow as key markets gather pace
Asia-Pacific revenue will grow as key markets gather pace Performance ▪ Revenues remained flat in recent years, due to temporary market weakness ▪ in Australia due to introduction of Power of Choice regulatory changes ▪ In India and SEA due to slower uptake of smart metering ▪ Investments in intelli
Slide 57: Asia-Pacific growth comes from transition to smart metering
Asia-Pacific growth comes from transition to smart metering and emerging grid edge intelligence applications Market evolution Market position2 ▪ ANZ growth largely driven by the ANZ USD m 1 Market share, 2017, units shift to smart electricity metering Itron Others smart electric Secure leading to gr
Slide 58: Asia-Pacific use cases driven by market maturity
Asia-Pacific use cases driven by market maturity 1st wave use cases Revenue protection ▪ As smart metering deployments in mature countries develop we see Meter to cash Conservation & losses emerging emphasis on grid edge Remote meter reading Call center services intelligence Utility operations benef
Slide 59: ANZ | Leveraging our strong local presence
ANZ | Leveraging our strong local presence to capture additional grid edge intelligence opportunities Market development and customer needs ▪ Smart electric meter volumes in Australia driven by government-led programs to enable consumer engagement ▪ Early smart metering deployments in New Zealand ne
Slide 60: SEA | Targeted smart metering growth
SEA | Targeted smart metering growth, leveraging our reference deployment, strong brand and advanced technology offering Market development and customer needs ▪ Significant areas of growth in smart metering ▪ Large investments in energy infrastructure and significant energy reforms ▪ Customer needs
Slide 61: India | Strongly positioned to exploit market transition to smart metering
India | Strongly positioned to exploit market transition to smart metering Market development and customer needs ▪ Significant power sector reforms ▪ Utilities needs move from smart metering (e.g. reducing non-technical losses, improving revenue collection with prepayment) to grid edge intelligence
Slide 62: Moving forward: margin improvement and positioning for long-term growth
Moving forward: margin improvement and positioning for long-term growth Return to profitability Differentiation as a competitive advantage The key measures to bring Asia-Pacific region back to ▪ Leverage our leading brand and strong local presence profitability are on track and already producing fir
Slide 63: Q&A
Q&A © Landis+Gyr | January 29, 2019 | Capital Markets Day 63
Slide 64: Supply Chain & Operations
Supply Chain & Operations Bodo Zeug, EVP SCM © Landis+Gyr | January 29, 2019 | Capital Markets Day 64
Slide 65: Landis+Gyr supply chain & operations setup
Landis+Gyr supply chain & operations setup Global supply chain footprint Supply chain & operations ▪ Supply chain – inbound and outbound, planning and forecasting UK Poland ▪ Manufacturing – in-house and Germany Romania outsourcing France Greece China ▪ Procurement – supplier selection India Vietnam
Slide 66: Asset light strategy is geared to optimize cost, cash and performance
Asset light strategy is geared to optimize cost, cash and performance How to optimize Guiding principles ▪ Move to best cost countries and leverage labor arbitrage ▪ Move to best cost countries along ▪ Leverage purchasing power of top Tier 1 suppliers with our Tier 1 suppliers (e.g. Cost ▪ Keep stra
Slide 67: Flexible, modular and robust supply chain enabling outsourcing
We have a flexible, modular and robust supply chain which enables outsourcing at any stage of the production flow 1 2 3 4 Calibration & Customization Mechanical Parts PCBA (electronics) Meter assembly “box build” Sealing & Packaging 1 2 ▪ Landis+Gyr customized ▪ Landis+Gyr design and test ▪ Assembly
Slide 68: We leverage the cost structure and purchasing power of our Tier 1 EMS partners
We leverage the cost structure and purchasing power of our Tier 1 EMS partners Tier 2 EMS Tier 1 EMS Landis+Gyr Customers Final Products We ship directly from EMS to certain customers Outsourcing increases in line with asset-light strategy Standard PCBA Final Components Assembly Products Low cost ma
Slide 69: Measures to minimize the impact of the industry-wide components shortage
We have implemented measures to minimize the impact of the industry-wide components shortage for Landis+Gyr Situation at Landis+Gyr Measures to secure deliveries for FY18 H2 and beyond ▪ Seller’s market: Since 2018, global electronic Leverage EMS component shortage due to high demand in ▪ Ongoing in
Slide 70: Reliable quality delivered through our Zero Defect Initiative
Reliable quality delivered through our Zero Defect Initiative (ZDI) Description of the initiative ▪ Ongoing, continuous improvement initiative, running over multiple years ▪ Aiming to proactively address structural and systemic quality issues and reduce associated costs ▪ Key enabler of outsourcing
Slide 71: Project Lightfoot will overachieve IPO commitment
Project Lightfoot will overachieve IPO commitment, delivering USD 25m yearly run-rate savings by FY20 Description of the initiative Project status Shifting to an asset light set up: Implemented ▪ Introduction of a dual source/site using existing EMS sites ▪ Transferred production of UK smart meters
Slide 72: Systematically drives out product cost with a value-engineering team
Landis+Gyr systematically drives out product cost with a dedicated value-engineering team Product cost structure (typical meter) How Landis+Gyr drives product cost out Execution General overhead ▪ Should-cost analysis ▪ Cost down program for six volume 5-7% & profit (suppliers) ▪ e-tendering product
Slide 73: Technology & Innovation
Technology & Innovation Jyoti Mahurkar-Thombre, EVP R&D, CTO © Landis+Gyr | January 29, 2019 | Capital Markets Day 73
Slide 74: Shifting from smart metering to grid edge intelligence
Shifting from smart metering to grid edge intelligence Traditional model New model Benefits of the new model Head-end system ▪ Intelligence layer across many networks Device management metering + Future applications ▪ Application support on third party sensors Meter management (i.e. DA, and Street L
Slide 75: Gridstream Connect | Enabling smart infrastructure
Gridstream® Connect | Enabling smart infrastructure 1 2 3 Choose your network 1 Intelligent endpoints 2 Flexible communications 3 Application enablement 2nd wave use cases ▪ Advanced metrology ▪ Multi-protocol ▪ Modular software ▪ Value proposition driven by ▪ Increase edge Intelligence communicatio
Slide 76: Taking Gridstream Connect to market
Taking Gridstream® Connect to market Intelligent endpoints Flexible communications Application enablement ▪ Integration to the grid of behind the ▪ Build a bidirectional multi-tier ▪ Grid resilience meter assets: residential solar, storage, communication network ▪ Energy management EV ▪ Enable multi
Slide 77: Innovation (1/2) | Plug grid edge intelligence into the endpoint
Innovation (1/2) | Plug grid edge intelligence into the endpoint Upgradable endpoints Expansion modules Field upgradeable meter endpoint Added processing power and flexible communications ▪ Hot pluggable – no disruption of service required ▪ Connect to behind the meter assets (e.g. solar, EV, home b
Slide 78: Innovation (2/2) | Grid edge applications to enable 2nd wave use cases
Innovation (2/2) | Grid edge applications to enable 2nd wave use cases Endpoint embedded apps Crowdsourced IQ Voice augmented metering Landis+Gyr and 3rd party apps at the Grid edge distributed computation Smart assistants for energy grid edge ▪ For artificial intelligence calculations ▪ Integration
Slide 79: Continuously developing industry-standard security
Continuously developing industry-standard security Far-reaching data security Security architecture Open security posture Generation Key Provisioning PKI Management Distribution Key Management Traffic Intrusion Detection, Inspection Prevention Secured Messaging Utility Engineering Utility Endpoints
Slide 80: The DNA of Landis+Gyr research and development is software
The DNA of Landis+Gyr research and development is software Key success factors Breakdown of FY17 R&D investments By products By category Global ▪ Technical expertise where customers need it: Hardware Refresh of (26%) existing core footprint customer intimacy, responsiveness Software offering (29%) (
Slide 81: Finance
Finance Jonathan Elmer, CFO © Landis+Gyr | January 29, 2019 | Capital Markets Day 81
Slide 82: Group performance | Positive Net Revenues trend with uptick in profitability
Group performance | Positive Net Revenues trend with uptick in profitability Net Revenues development FY15 – FY17 FY17 H1 – FY18 H1 Net Revenues development in constant currency: +4.8% CAGR -1.9% FY15 – FY17 ▪ Smart metering growth in Americas and EMEA 1'738 ▪ No growth in Asia-Pacific 1'659 1'573 F
Slide 83: Americas performance | Continued Net Revenues growth with high margins
Americas performance | Continued Net Revenues growth with high margins Net Revenues development FY15 – FY17 FY17 H1 – FY18 H1 Net Revenues development in constant currency: +3.6% CAGR +5.6% FY15 – FY17 ▪ Growth as North America market continues to outpace forecasts 972 894 931 FY18 H1 ▪ Two large US
Slide 84: Utility CAPEX cycles largely uncorrelated to GDP
Utility CAPEX cycles largely uncorrelated to GDP US real GDP US investor owned utility CAPEX (USD trillion) (USD billion) 25 120 100 20 80 15 60 10 40 5 20 0 0 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 © Landis+Gyr | January 29, 2019 | Capital Markets Day Source: IMF world economic outl
Slide 85: No material impact expected from either tariffs or USMCA
No material impact expected from either tariffs or USMCA, if ratified Americas supply chain set-up ▪ Main Landis+Gyr assembly site for North America is in Reynosa, Mexico ▪ Main EMS’s for North America are located in Mexico and Vietnam ▪ Subject to ratification, the new agreement represents no chang
Slide 86: EMEA performance | Growing Net Revenues to FY17 with profitability recovery
EMEA performance | Growing Net Revenues to FY17 with profitability recovery in FY18 H1 Net Revenues development FY15 – FY17 FY17 H1 – FY18 H1 Net Revenues development in constant currency: +8.0% CAGR -11.6% FY15 – FY17 ▪ Growth in key smart metering markets: France, NL and UK 627 588 FY18 H1 538 ▪ T
Slide 87: Project Phoenix executed and generating savings as planned
Project Phoenix executed and generating savings as planned IPO commitment: USD 20m of savings by FY18 Delivered: USD 21m of savings by FY18 Adjusted Operating Expense bridges (in USD m) 1 152.9 15.8 73.0 5.0 142.0 0.9 70.0 10.3 1.1 5.4 Adj. Operating Phoenix savings Other impacts FX effects Adj. Ope
Slide 88: Clear path to sustainable, double digit, Adj. EBITDA margins in EMEA
Clear path to sustainable, double digit, Adj. EBITDA margins in EMEA Adjusted EBITDA as a % of Net Revenues Measures 1. Improved Margin Quality: +3.2% to +3.7% c. 10% Product cost downs on high volume AMI products 4. 2. Phoenix Savings: +0.6% to +0.8% Further savings of USD 5m materialised in FY18 H
Slide 89: Brexit uncertainties continue
Brexit uncertainties continue Status ▪ UK is the largest market in EMEA and 2nd largest market globally for Landis+Gyr ▪ Mass deployment of smart meters is accelerating as transition to SMETS2 kicks in ▪ Uncertainty remains over the UK’s exit from the EU ▪ A no-deal scenario is the main negative sho
Slide 90: Asia-Pacific performance | Reduction in operating expenses positions region for profitable growth
Asia-Pacific performance | Reduction in operating expenses positions region for profitable growth Net Revenues development FY15 – FY17 FY17 H1 – FY18 H1 Net Revenues development in constant currency: -2.5% CAGR -6.6% FY15 – FY17 ▪ All major markets have been slow including Australia with 142 140 138
Slide 91: Adjustments to EBITDA decreasing on lower warranty expenses
Adjustments to EBITDA decreasing on lower warranty expenses USD in millions FY18 H1 FY17 H21 FY17 H11 ▪ Significant reduction in adjustments ▪ Reported EBITDA now higher than Adjusted Reported EBITDA 114.9 100.6 40.8 EBITDA. Adjustments ▪ Exceptional warranty adjustments Restructuring ▪ No further s
Slide 92: Strong Free Cash Flow track record
Strong Free Cash Flow track record Free Cash Flow (excl. M&A) ▪ Strong historical Free Cash Flow (excl. M&A) USD in Avg FY14-FY16 FY17 FY18 H1 ▪ H1 tends to have weaker cash flow than H2 millions 82.7 87.5 14.1 ▪ Other cash flow drivers ▪ CAPEX at around c. USD 45m ▪ Operating working capital at c.
Slide 93: Leverage remains low with net debt at 0.5x Adjusted EBITDA
Leverage remains low with net debt at 0.5x Adjusted EBITDA in FY18 H1 USD in millions ▪ Net debt was reduced in FY17 based on strong cash flow 0.6x 0.2x 0.5x and no dividend payment falling in the year 127 19 ▪ Net debt increased in FY18 H1 given 110 ▪ Dividend payment 68 ▪ Investment in intelliHUB
Slide 94: Capital allocation focuses on creating shareholder value
Capital allocation focuses on creating shareholder value Invest in organic Maintain annual Potentially invest in Return capital to growth to support and dividend according to M&A targets that align shareholders develop core business 75% pay-out of to strategy Free Cash Flow In FY17 In July 2018 Like
Slide 95: Share buy back scheme enhances shareholder returns
Share buy back scheme enhances shareholder returns ▪ Share buy back program of up to CHF 100m or 8% of share capital announced today ▪ Will be run over up to 3 years ▪ May be stopped at any time ▪ Compatible with ▪ Investing for organic growth ▪ Dividend policy (which remains unchanged) ▪ Bolt-on M&
Slide 96: Reconfirming FY18 Outlook
Reconfirming FY18 Outlook ▪ Landis+Gyr expects the second half of FY18 to be stronger than the first half of FY18 ▪ Supply chain situation remains challenging ▪ Net Revenues growth for FY18 is projected at approximately +1% to +3% ▪ Forecasted Group Adjusted EBITDA is between USD 217m and USD 237m ▪
Slide 97: Positive mid-term outlook projections
Positive mid-term outlook projections Group Mid single digit annual Net Revenues growth ▪ Net Revenues expected to grow based on targeted profitable USD in millions smart metering opportunities at mid single digit annual rate ▪ Adjusted EBITDA margins expected to increase to between 12.0% 13.5% - 14
Slide 98: Mid-term (FY21) guidance
Mid-term (FY21) guidance Mid-term Guidance Mid single digit annual growth Net Revenues (relative to FY17) Adjusted EBITDA margin Adjusted EBITDA between 13.5% and 14.5% of net revenues Effective P&L tax rate1 between 18-21% Tax Rate Effective cash tax rate2 higher than P&L tax rate by 2-5% Free Cash
Slide 99: Capital Markets Day – Wrap Up
Capital Markets Day – Wrap Up Richard Mora, CEO © Landis+Gyr | January 29, 2019 | Capital Markets Day 99
Slide 100: Reasons to invest: Landis+Gyr is positioned for continued growth and improved profitability
Reasons to invest: Landis+Gyr is positioned for continued growth and improved profitability ✓ We operate in highly attractive markets, with an identified TAM of USD 12.6b growing at more than 11% CAGR through 2021 ✓ We have the right growth strategy in place, building on smart- metering to deliver g
Slide 101: Thank You!
Thank You! © Landis+Gyr | January 29, 2019 | Capital Markets Day 101
Slide 102: Q&A
Q&A © Landis+Gyr | January 29, 2019 | Capital Markets Day 102
Slide 103: Glossary
Glossary AMI Advanced metering infrastructure NB-IoT Narrowband IoT AMR Automated meter reading NCC Non-conformance-cost ANSI American National Standards Institute NOC Network operations center BOM Bill of materials ODM Original design manufacturer CAD Consumer access device OPS & SCM Operations & s
Slide 104: Dates and Contacts
Dates and Contacts Important Dates Contact Investor Relations Contact Address Release of FY18 Results: Stan March Investor Relations May 29, 2019 SVP Group Communications & Landis+Gyr Group AG Investor Relations Theilerstrasse 1 Annual General Assembly: Phone +1 678 258 1321 CH-6301 Zug June 25, 201