Landis+gyr Group Ag · SIX:LAND
Landis+gyr — Investor Day (January 2019)
18 slides from Landis+gyr's investor day presentation, Jan 29, 2019
Slide 1: Finance
Finance Jonathan Elmer, CFO © Landis+Gyr | January 29, 2019 | Capital Markets Day 1
Slide 2: 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 3: 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 4: 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 5: No material impact expected from either tariffs or USMCA, if ratified
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 6: EMEA performance | Growing Net Revenues to FY17 with profitability recovery in FY18 H1
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 7: 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 8: 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 9: 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 10: 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 11: 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 12: 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 13: Leverage remains low with net debt at 0.5x Adjusted EBITDA in FY18 H1
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 14: 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 15: 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 16: 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 17: 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 18: 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