Lectra SA · EURONEXT:LSS
Lectra SA — FY2014 Earnings Presentation
45 slides from Lectra SA's earnings presentation, Feb 12, 2015
Slide 1: Analyst Conference, Paris, February 12, 2015
ANALYST CONFERENCE Paris, February 12, 2015 André Harari, Chairman of the Board of Directors Daniel Harari, Chief Executive Officer Jérôme Viala, Chief Financial Officer
Slide 2: Analyst Conference agenda
Analyst Conference – Paris, February 12, 2015 Financial Results for Q4 2014 Financial Results for FY 2014 2013–2016 Roadmap: Second Progress Report Market Changes More Favorable to Lectra’s Value Proposition 2015 Outlook Detailed comparisons between 2014 and 2013 are based on 2013 exchange rates (“l
Slide 3: Sharp Rise in Orders for New Systems
Sharp Rise in Orders for New Systems Orders for new systems Orders for new systems in Q4 2014 (in millions of euros) amounted to €26.8 million +26% 26.8 A rise of €5.3 million (+26% like-for-like, +31% at actual exchange rates) compared with Q4 2013 New software licenses: +27%; CAD/CAM equipment
Slide 4: Increase in Revenues, Sharp Rise in Income from Operations and Net Income
Increase in Revenues, Sharp Rise in Income from Operations before Non-Recurring Items and Net Income Q4 2014 Q4 2014 Q4 2013 Change €M Change % In millions of euros Actual At Q4 2013 Actual Like-for-like Like-for-like exchange rates Revenues 57.4 55.7 53.0 +2.6 +5% New systems 24.6 23.7 23.1 +0.6 +3
Slide 5: Analyst Conference agenda
Analyst Conference – Paris, February 12, 2015 Financial Results for Q4 2014 Financial Results for FY 2014 2013–2016 Roadmap: Second Progress Report Market Changes More Favorable to Lectra’s Value Proposition 2015 Outlook Detailed comparisons between 2014 and 2013 are based on 2013 exchange rates (“l
Slide 6: Growth in Orders for New Systems, Improved Product Mix
Growth in Orders for New Systems, Improved Product Mix 2013 2014 Change Orders for new systems Actual Actual 2013 / 2014 (in millions of euros) Like-for-like Total 84.1 94.3 +13% Of which New software licenses 19.4 22.4 +16% CAD/CAM equipment 53.4 57.0 +7% Training and consulting 9.2 12.8 +39% 30 25
Slide 7: Strong Rebound in Europe, Sharp Rise in China and Asia-Pacific
Strong Rebound in Europe, Sharp Rise in China and Continued Development in Asia-Pacific A highly contrasted situation Europe (42% of total orders): +39%, with growth exceeding 50% in the Germany and Eastern Europe region, Italy and France 46% 46% 54% 54% Asia-Pacific (32%): +25%, with China +45%
Slide 8: Growth in Revenues, Sharp Increase in Order Backlog
Growth in Revenues, Sharp Increase in Order Backlog Increase in revenues Revenues from new systems sales (42% of total +€9.2 million (+5%) revenues): €88.6 million (+5%) +5% New software licenses: €21.8 million (+9%) CAD/CAM equipment: €54.3 million (–1%) 84.9 88.6 Training & consulting: €10.4
Slide 9: Income from Operations and Net Income Above Minimum Objective
Income from Operations and Net Income Above the Company’s Minimum Objective 2014 2014 2013 Change €M Change % In millions of euros Actual At 2013 Actual Like-for-like Like-for-like exchange rates Revenues 211.3 212.2 203.0 +9.2 +5% New systems 88.6 88.8 84.9 +3.9 +5% Recurring revenues 122.8 123.5 1
Slide 10: Recurring Revenues Finance Increase in Transformation Costs
The Increase in Recurring Revenues Finances the Increase in Costs Related to the Transformation Plan In millions of euros, at actual exchange rates +4.1 Increase in recurring revenues +2.3 +2.6 Increase in revenues from new systems sales 19.8 17.5 +1.5 Improvement in gross profit margins Increase in
Slide 11: Acceleration of R&D Investments
Acceleration of R&D Investments R&D investments 2014 R&D costs increased by 14% to €21.7 million and In millions of euros represented 10.2% of revenues (€19.1 million and 9.4% in 2013) 21.7 19.1 Net R&D costs, after deducting the French research tax credit and 18.2 the portion of the competitivene
Slide 12: Subsidiary Opened in South Korea
Subsidiary Opened in South Korea In April 2014 the company formed a new subsidiary, Lectra Korea, in South Korea, in order to accelerate its development in Asia After China, South Korea is one of the spearheads of Lectra’s expansion in Asia, especially in the automotive industry and in the fashion
Slide 13: Free Cash Flow Reflects Pertinence of Lectra's Business Model
Free Cash Flow Continues to Reflect the Pertinence of Lectra’s 30,0 Business Model 30,0 In millions of euros, before non-recurring items 2014 free cash flow: €19.0 million 21.7 20,7 21,721,7 Cash flow provided by operating activities: €25.8 million 20,7 (including a €7.9 million decrease in the wo
Slide 14: A Zero-Debt Company, Shareholders' Equity and Net Cash Bolstered
A Zero-Debt Company, Shareholders’ Equity and Net Cash Position Bolstered Once More At December 31, 2014 In millions of euros, at December 31 90 Shareholders’ equity: €94.1 million 80 €83.8 million at December 31, 2013 70 Cash and cash equivalents: 60 €43.5 million 50 €29.5 million at December 3
Slide 15: Structurally Negative Working Capital Requirement
A Structurally Negative Working Capital Requirement, a Key Feature of Lectra’s Business Model In millions of euros, at December 31 Working capital requirement at December 31, 2014 amounted to 20 €0.1 million 15 It includes a receivable of €23 million on the French tax administration (Trésor public
Slide 16: Dividend Raised to €0.25 per Share
Dividend Raised to €0.25 per Share The Board of Directors will propose to the annual Ordinary Shareholders’ Meeting of April 30, 2015 to increase the dividend to €0.25 per share in respect of fiscal 2014 As recommended by the Board of Directors, the company had declared a dividend of €0.22 per sha
Slide 17: New Increase in the Share Price
New Increase in the Share Price, After a Rise of 75% in 2013 Evolution from January 1, 2014 to February 10, 2015 Share price (in euros, daily closing price and index) February 10, 2015: €10.16 11,0 11.0 Lectra: +23% 2014 10,0 10.0 □ High (December 18): €9.45 CAC Mid & Small: +20% □ Low (October
Slide 18: Analyst Conference agenda
Analyst Conference – Paris, February 12, 2015 Financial Results for Q4 2014 Financial Results for FY 2014 2013–2016 Roadmap: Second Progress Report Each chapter is followed by a progress report, coming after last year’s report, mentioned by Market Changes More Favorable to Lectra’s Value Proposition
Slide 19: Strategic Roadmap for 2013–2016
Strategic Roadmap for 2013–2016 Formulated at the end of 2009 with a view to emerging strengthened from the crisis, to prepare for the new post-crisis challenges and seize resulting opportunities, the Lectra 3.0 strategy has fully demonstrated its efficiency, the strength of the business model and L
Slide 20: Building for the Future in the New Post-Crisis Economic Order
Building for The Future in the New Post-Crisis Economic Order The roadmap was initially built on the following assumptions Eight economies (Brazil, Russia, India, China, South Korea, Indonesia, Mexico and Turkey) are expected to account for half of global growth in the present decade □ Following C
Slide 21: China, Automotive and PLM for Fashion Are Growth Accelerators
China, the automotive market and PLM for fashion and apparel will be the three growth accelerators for 2015 and 2016 The contributions to growth in Lectra’s activity of each of the five growth accelerators appear today to vary widely China alone is expected to represent a third of potential growth
Slide 22: Deliberately Cautious Macroeconomic Assumptions
Deliberately Cautious Macroeconomic Assumptions The roadmap was framed at the end of 2012 based on macroeconomic conditions which would be as weak as in 2012 during the roadmap period, while allowing for an upturn in business confidence In its February 11, 2014 report, the company stated that the
Slide 23: Clear and Ambitious Financial Goals
Clear and Ambitious Financial Goals The main goals contained in the 2013-2016 strategic roadmap are Revenue growth of 33% or greater over the period 2013-2016 A 15% operating margin (before non-recurring items) in 2016 More than doubling income from operations (before non-recurring items) and
Slide 24: Zero Debt, Internally Funded Development, Sustainable Dividend Policy
A Zero Debt Company, Fully Internally Funded Development, Sustainable Dividend-Payment Policy The company’s annual free cash flow should continue to exceed net income*, enabling it to pursue its policy of paying dividends to shareholders while financing its future development Its goal is to be fre
Slide 25: Company Transformation Plan and Investments for the Future
Far-Reaching Company Transformation Plan and Investments for the Future This three-point plan will cover the period to 2015, comprising A major recruitment plan devoted to strengthening sales and marketing teams The addition of 40 software R&D engineers in Bordeaux–Cestas, bringing the total R&D
Slide 26: The Plan Leads to an Extensive Renewal of Teams
The Plan Leads to an Extensive Renewal of Teams 2011–2014 Workforce by function 2011 2011 (%) 2014 2014 (%) Evolution Sales, marketing 214 16% 287 19% x1.3 Services 451 34% 456 31% R&D 218 16% 260 18% x1.2 Purchasing, production, logistics 154 12% 157 11% Administration 301 22% 309 21% Total 1,338 1
Slide 27: Strengthening in 2015 of the Sales Teams' Transformation Plan
Strengthening in 2015 of the Sales Teams’ Transformation Plan The main focus of the far-reaching overhaul and strengthening of Lectra’s sales teams have been the Corporate functions, North America, China, and the Germany and Eastern Europe region Recruitment generally was behind schedule at the en
Slide 28: Acceleration in Marketing Investments Strengthening Lectra's Image
Acceleration in Marketing Investments is Strengthening Lectra’s Image Click to see online content Customer stories Brochures, White papers, Press releases Videos Analyst Conference – Paris, February 12, 2015 28
Slide 29: A new lectra.com
A new lectra.com Analyst Conference – Paris, February 12, 2015 29
Slide 30: A Unique Offer for Collection Creation and Management
A Unique Offer for Collection Creation and Management Considered as the industry standard, Modaris is a pattern- Unique in the market to integrate making and grading software fashion-specific software for solution for the fashion industry. design, development, and The V7 version now integrates 3D pr
Slide 31: A Unique Offer for the Cutting Room
A Unique Offer for the Cutting Room Redesigned in detail, the new range of Vector fabric cutters, equipped with 120 sensors to 3D to 2D design optimize real-time cutting, software for Automotive and Furniture establishes new industry standards Lectra’s powerful The most advanced leather algorithms c
Slide 32: Services to Offer Customers a Competitive Advantage
Services to Offer Customers a Competitive Advantage Professional Services Support & Assistance Smart Services Perfect knowledge of Lectra’s CAD/CAM equipment maintenance Lectra’s pioneering Smart Services technology solutions, combined with and on-line support subscription were launched in 2007. Upd
Slide 33: Analyst Conference agenda
Analyst Conference – Paris, February 12, 2015 Financial Results for Q4 2014 Financial Results for FY 2014 2013–2016 Roadmap: Second Progress Report Market Changes More Favorable to Lectra’s Value Proposition 2015 Outlook Analyst Conference – Paris, February 12, 2015 33
Slide 34: Manufacturing Competitiveness: a New World Order
Manufacturing Competitiveness: a New World Order A study by the Boston Consulting Group (BCG)—The Shifting Economics of Global Manufacturing—describes major shifts in global industrial competitiveness since 2004 In the last 10 years, China’s competitive advantage, particularly over the United Stat
Slide 35: Evolution of Currency Parities Reinforcing This New Order
The Evolution of Currency Parities Is Reinforcing This New Order… The global balance of production costs would reduce over time if exchange rates remain at the same levels as February 1, 2015 According to the BCG, companies will have “to reassess their plant networks by taking into account all cos
Slide 36: Strong Rise in Commodity Prices
…As is the Strong Rise in Commodity Prices As a result of steadily rising demand, volumes are increasing and production times are accelerating The rising price of hides thus demands a rational use of the material: the precision of marker-making has become even more crucial in the whole manufacturi
Slide 37: Fashion and Apparel: Keeping Pace With the Market
Fashion and apparel: Keeping Pace With the Market Sales of clothes and shoes The fashion and apparel market is (in billions of dollars) continuing its strong growth 2,400 2,250 Global sales should reach $2.4 trillion in 2018, a 2,120 rise of $500 billion (+26%) in four years 1,870 1,990 China ha
Slide 38: Fashion and Apparel: Lectra Combines Expertise, Technology and Services
Fashion and apparel: Lectra Combines Expertise, Technology and Services Lectra’s expert knowledge and advanced technology, along with its specialized support, help fashion and apparel companies transform. Its extended offer covers the whole product lifecycle from design, development, collection mana
Slide 39: Automotive: Seizing Opportunities
Automotive: Seizing Opportunities Production of light vehicles Automobile suppliers are faced with a (in millions) mixed market that has a very strong 102.0 104.0 potential 99.7 93.5 96.7 Global production of light vehicles will exceed 90 90.1 million in 2015 and reach 104 million in 2020 84.7 87.
Slide 40: Automotive: Lectra's Leadership is Today Undisputed
Automotive: Lectra's Leadership is Today Undisputed Lectra’s expertise, acquired by working with the world’s largest automotive suppliers, extends from the design to the production of car seats and vehicle interiors in fabric and leather, and airbags. Integrating industry best practices, Lectra comb
Slide 41: Analyst Conference agenda
Analyst Conference – Paris, February 12, 2015 Financial Results for Q4 2014 Financial Results for FY 2014 2013–2016 Roadmap: Second Progress Report Market Changes More Favorable to Lectra’s Value Proposition 2015 Outlook Analyst Conference – Paris, February 12, 2015 41
Slide 42: 2015 Outlook
2015 Outlook The company entered 2015 with even more solid operating fundamentals than in 2014 and an even stronger balance sheet Furthermore, Lectra sales teams in place should progressively gain momentum As for the past two years, 2015 looks unpredictable Persistent macroeconomic, geopolitical
Slide 43: Key Financial Metrics
Key Financial Metrics The 2015 action plan relies on the following financial metrics Keeping gross profit margins on the different product lines at the same levels as in the second half of 2014, the product mix reflecting the growing importance of new software licenses, training and consulting A
Slide 44: Acceleration in Growth of Revenues and Income from Operations
Acceleration in the Growth of Revenues and Income from Operations The company’s objective is to reach Total revenues of around €240 million (+14%; +11% like-for-like) Income from operations before non-recurring items of around €29 million (+47%; +30% like-for-like) Operating margin before non-
Slide 45: Upcoming Financial Calendar
Upcoming Financial Calendar Q1 2015 Financial Results April 29, 2015 Annual Shareholders’ Meeting April 30, 2015 Q2 2015 Financial Results July 30, 2015 Q3 2015 Financial Results October 29, 2015 Analyst Conference October 30, 2015 FY 2015 Financial Results February 11, 2016 Analyst Conference Febru