Landis+gyr Group Ag · SIX:LAND
Landis+gyr — H1 2018 Earnings Presentation
23 slides from Landis+gyr's earnings presentation, Oct 26, 2018
Slide 1: Half-year H1 FY2018 earnings presentation
Half-year H1 FY2018 earnings presentation Richard Mora Jonathan Elmer Chief Executive Officer Chief Financial Officer © Landis+Gyr | October 26, 2018
Slide 2: Important notices
Important notices This presentation includes forward-looking information and statements including statements concerning the outlook for our businesses. These statements are based on current expectations, estimates and projections about the factors that may affect our future performance, including gl
Slide 3: Business performance – H1 September 2018
Business performance – H1 September 2018 Group: Overall Group performance for H1 September 2018: ▪ Order intake increased 10.3% (in constant currency) year over year, reaching USD 910.0 million predominantly driven by EMEA ▪ As industry wide supply chain constraints continued, net revenue developmen
Slide 4: Recent corporate developments
Recent corporate developments In North America, Public Power customers across the US signed new Landis+Gyr technology solution agreements totaling over 270,000 additional AMI endpoints planned for deployment along with a refresh of software and technology. In the UK, the transition to the next gener
Slide 5: Americas segment – Key developments in H1 FY 2018
Americas segment – Key developments in H1 FY 2018 North America Japan/Tepco ▪ Strong performance with robust market activity ▪ Most ambitious utility IoT project in the world for AMI solutions continuing in the IOU and Public ▪ Project with over 19 million meters installed in the field Power markets
Slide 6: EMEA segment – Key developments in H1 FY 2018
EMEA segment – Key developments in H1 FY 2018 Key market developments Key operational achievements UK: Cost reduction: ▪ In total over 18 million smart meters under contract, of ▪ Phased introduction of product cost downs on track which approximately 6 million have been deployed in FY 2018 ▪ Orders
Slide 7: Asia Pacific segment – Acumen / intelliHUB transaction
Asia Pacific segment – Acumen / intelliHUB transaction ▪ “Power of Choice” requires not only a data and field Contributed AUD 25 servicing capability, but also asset financing million and sold ▪ Joint Venture formed together with Pacific Equity Partners intelliHUB business to offer combined capabili
Slide 8: Update on supply chain situation
Update on supply chain situation Supply chain at Landis+Gyr ▪ Landis+Gyr uses about 15’000 different components ▪ Approx. 100 passive components (mainly capacitors, resistors and inductors) impacted due to rising demand in other industry sectors ▪ Lead time reached 40 weeks for some components ▪ Pre
Slide 9: Consolidated results – H1 September 2018
Consolidated results – H1 September 2018 USD in millions (except per share amounts) H1 FY2018 H1 FY2017 Change ▪ Order intake up by 10.3% Order Intake 910.0 821.4 10.8% ▪ Revenue down by 1.9% Change in constant currency 10.3% Committed Backlog 2’347.9 2’478.8 (5.3%) ▪ Reported EBITDA increased from
Slide 10: Net revenue year-over-year bridge – H1 September 2018
Net revenue year-over-year bridge – H1 September 2018 Net revenue year-over-year bridge: Americas EMEA USD in millions US AMI Supply chain sales offsetting constraints, a 26.5 38.3 expected decline temporary delay in 900 3.5 in Japan revenues the UK market and a 4.5 (USD -33 million) project roll of
Slide 11: Adjusted EBITDA year-over-year bridge – H1 September 2018
Adjusted EBITDA year-over-year bridge – H1 September 2018 Adjusted EBITDA y-o-y bridge: USD in millions Adjusted 120 Gross Profit 2.3* 0.6 0.8 12.1 12.6 impacted by incremental costs associated with 100 108.8 106.5 106.8 supply chain constraints Improvement 80 Deterioration Total Adjusted 60 Operati
Slide 12: Financial impact from supply chain issue
Financial impact from supply chain issue – H1 September 2018 Incremental costs from supply chain issue USD in millions Americas EMEA APAC Group USD in millions Incremental 8.0 3.7 0.4 12.1 costs incurred 3.7 0.4 12 Impact on Adjusted EBITDA 160 130 60 140 10 margin (bps) 8 8.0 ▪ Pushed out approx. U
Slide 13: Adjustments to EBITDA
Adjustments to EBITDA – H1 September 2018 USD in millions H1 FY2018 H2 FY2017* H1 FY2017* Change Adjustments H1 September 2018 Reported EBITDA 114.9 100.6 40.8 181.4% ▪ Adjustments in H1 FY2018 are negative at USD 8.1 Adjustments million driven by normalized warranty expenses. ▪ Restructuring – Cost
Slide 14: Cash flow – H1 September 2018
Cash flow – H1 September 2018 USD in millions H1 FY2018 H1 FY2017 Change Operating Working Capital Net income (loss) 59.2 5.1 1’067.4% Lower cash generation from Depreciation and amortization 47.3 48.6 (2.8%) change in OWC, net Non-cash gain on disposal of intelliHUB (15.5) - - Change in OWC, net 2.
Slide 15: Cash flow seasonality
Cash flow seasonality Historical Free Cash Flow (excl. M&A) Comments ▪ Over the period FY 2014 – FY 2017, average USD in Avg FY 2014-16: FY 2017: Free Cash Flow generation excluding M&A millions 82.7 87.5 has been approximately USD 84 million p.a. ▪ H2 has historically been much stronger in 100 term
Slide 16: Net debt
Net debt Net debt bridge ▪ Dividend payment of USD 68.4 USD in million made in July 2018 millions 0.5x 0.2x 0.5x ▪ Equity contribution of USD 18.9 140 million made to JV in Australia 120 18.9 14.1 3.3 to acquire Acumen 100 80 ▪ Net debt increased to USD 110.4 66.9 68.4 60 million in H1 FY 2018 107.3
Slide 17: Americas segment – H1 September 2018
Americas segment – H1 September 2018 USD in millions H1 FY2018 H1 FY2017 Change ▪ Excluding Japan, revenue grew by 14.0% in constant currency compared to H1 FY2017, driven Net revenue to external customers 497.5 475.2 4.7% by the US AMI market Change in constant currency 5.6% Adjusted Gross Profit 1
Slide 18: EMEA segment – H1 September 2018
EMEA segment – H1 September 2018 USD in millions H1 FY2018 H1 FY2017 Change ▪ Major reasons for revenues decline: Net revenue to external customers 291.6 320.7 (9.1%) ▪ Supply chain constraints ▪ Temporary delays in the UK as market prepares for Change in constant currency (11.6%) transition to the
Slide 19: EMEA segment restructuring – update on Project Phoenix
EMEA segment restructuring – update on Project Phoenix Adjusted operating expense bridges: USD in millions* 80 160 152.9 15.8 75 73.0 5.0 150 0.9 70.0 10.3 142.0 70 1.1 140 5.4 65 130 60 120 55 110 50 Adj. Operating Phoenix Other impacts FX effects Adj. Operating Adj. Phoenix Other impacts FX effect
Slide 20: Asia Pacific segment – H1 September 2018
Asia Pacific segment – H1 September 2018 USD in millions H1 FY2018 H1 FY2017 Change ▪ Major markets including Australia Net revenue to external customers 63.8 69.7 (8.5%) remain subdued. Revenue decline Change in constant currency (6.6%) caused by lower project sales in Southeast Asia. Adjusted Gros
Slide 21: FY 2018 Outlook
FY 2018 Outlook FY 2018 Outlook: ▪ Landis+Gyr expects the second half of FY 2018 to be stronger than the first half of FY 2018. ▪ Supply chain situation expected to remain challenging. ▪ Landis+Gyr expects FY 2018 sales growth of approximately 1 - 3%. ▪ Group Adjusted EBITDA expected to be between U
Slide 22: Key take-aways from H1 FY 2018
Key take-aways from H1 FY 2018 ▪ Order intake up 10.3% with strong contribution from EMEA ▪ Americas resilient performance with sales growth over 5% and Adjusted EBITDA margin of 20.5% despite headwinds ▪ EMEA essentially break-even as margin expansion materializes driven by operational improvements
Slide 23: Dates and contacts
Dates and contacts Important Dates Contact Investor Relations Contact Address Capital Markets Day: Stan March Investor Relations January 29, 2019 - Zurich SVP Group Communications & Landis+Gyr Group AG Investor Relations Theilerstrasse 1 Release of FY2018 Results: Phone +1 678 258 1321 CH-6301 Zug M