Cyient Limited · NSE:CYIENT
Cyient — Q4 FY19 Earnings Presentation
59 slides from Cyient's earnings presentation, Apr 25, 2019
Slide 1: Exchange filing cover letter
CYll::NT • 25 April 2019 BSE Limited The National Stock Exchange of India Ltd PJ Towers Exchange Plaza, Bandra-Kurla Complex 25th Floor, Dalal Street Bandra (E) Mumbai - 400 001 Mumba i - 400 051 Scrip Code: 532175 Scrip Code: CYIENT Dear Sir, Sub: Investor update - Reg. Please find herewith enclose
Slide 2: Investor Presentation Q4 FY19 & FY19
Investor PRESENTATION Q4 FY19 & FY19 CYIENT © 2019 CONFIDENTIAL CYIENT © 2019 CONFIDENTIAL
Slide 3: Confidentiality Statement
Confidentiality Statement The information shared herein is strictly confidential, proprietary and unique to the company. It is only made and shared for the purpose and extent it is intended for and no other. Usage or sharing of the said information in any form, directly or indirectly and in any mann
Slide 4: Highlights Financial Update
Financial Business Highlights Update Update • Financial Highlights • Revenue • Significant highlights • Business Highlights • Income statement update • M&A update • Awards & Recognition • Other Income & Hedge • Industry outlook • CSR Activities • Cash generation • Guidance vs. Performance • Future o
Slide 5: Highlights Financial Update
Financial Business Highlights Update Update • Financial Highlights • Revenue • Significant highlights • Business Highlights • Income statement update • M&A update • Awards & Recognition • Other Income & Hedge • Industry outlook • CSR Activities • Cash generation • Future outlook Annexures CYIENT © 2
Slide 6: Highlights for the Quarter (1/3)
Highlights for the Quarter (1/3) Revenue Financial Highlights for Quarter • Services revenue at $ 146.9Mn; growth 9.5% YoY (₹ terms) 0.3% YoY ($ terms) of 1.7% QoQ (1.4% in CC), 2.9% YoY Quarterly revenue at • Highest ever services operating margin $165.2Mn/₹11,629Mn at 16.4% for last 20 quarters, g
Slide 7: Highlights for the Quarter (2/3)
Highlights for the Quarter (2/3) A&D, Transportation NAM & APAC YoY Business Highlights for the Quarter & I&ENR services YoY Revenue growth of • Rolled out a portfolio of services and Revenue growth of solutions for 5G deployment ~ 5%, ~ 9% & • Selected by UK power portal networks to ~ 2% & ~ 23% ~
Slide 8: Highlights for the Quarter (3/3)
Highlights for the Quarter (3/3) Awards & Recognition CSR Activities • Positioned as an established and expansive • Received “CSR Leadership” Award from ET player in Zinnov Zones’ ER&D services Now in Community Development category report 2018 • Continue to support 25 Government • Recognized as a “M
Slide 9: Highlights for the Year
Highlights for the Year CC Revenue +10.1% Financial Highlights for Year • Group revenue at $660Mn; growth of 8.7%, 17.9% YoY (₹ terms) 10.1% in CC terms 8.7% YoY ($ terms) • Services revenue at $580 Mn; growth of 6.3% Yearly revenue at $660.0Mn/₹46,175Mn (7.6% in CC) • DLM revenue at $79.7Mn; growth
Slide 10: Highlights Financial Update
Financial Business Highlights Update Update • Financial Highlights • Revenue • Significant highlights • Business Highlights • Income statement update • M&A update • CSR Activities • Cash generation • Industry outlook • Infrastructure • Hedge and other income • Future outlook • Awards and Operations
Slide 11: Revenue for Q4 FY19
Revenue for Q4 FY19 Revenue Q4FY18 Q1FY19 Q2 FY19 Q3 FY19 Q4 FY19 QoQ YoY $ Mn 164.6 160.8 168.9 165.1 165.2 0.04% 0.3% ₹ Mn 10,618 10,800 11,870 11,876 11,629 -2.1% 9.5% Services Group Geography Business Units $ Mn QoQ YoY $ Mn QoQ YoY $82.0 A&D 49.8 0.4% 4.6% 60.7 -5.0% -0.4% NAM -8.2% QoQ Comms 3
Slide 12: Revenue for FY19
Revenue for FY19 Revenue FY15 FY16 FY17 FY18 FY19 YoY • Six out of seven $ Mn 446.9 472.1 537.9 607.4 660.0 8.7% BUs have grown ₹ Mn 27,359 30,956 36,065 39,175 46,175 17.9% on a full year basis in services Services Group Geography Business Units $ Mn YoY $ Mn YoY $343.5 • For services in NAM A&D 19
Slide 13: Profit Walk – Reported to Normalised
Profit Walk – Reported to Normalised ₹ Mn Q4 FY19 Q3 FY19 Q4 FY18 FY19 FY18 Reported PAT 1,768 921 1,184 4,785 4,054 One offs Divestment in IASI 210 RSU Fair valuation 32 32 One off employees cost 77 77 Insights LLC dissolution 35 35 Normalised PAT 1,881 921 1,215 4,898 4,296 Reported EPS (₹) 15.7 8
Slide 14: Other Income for Q4 FY19 & FY19
Other Income for Q4 FY19 & FY19 All Figures in ₹ Mn Q4 FY19 Q3 FY19 Q4 FY18 FY19 FY18 For the quarter - Income from Treasury • Increase in realised gains by ₹60Mn Interest on Invesmtents/Deposits 135 120 104 487 402 and unrealised gains of ₹412Mn. Dividend on Mutual Funds 13 17 14 52 42 • QoQ Other
Slide 15: Income statement for Q4 FY19
Income statement for Q4 FY19 All Figures in ₹ Mn Q4 FY19 Q3 FY19 Q4 FY18 Operating profit Movement • Consolidated operating margin at 15.1% ; up 33 bps Revenue 11,629 11,876 10,618 QoQ Operating Profit 1,751 1,749 1,492 • Service margin at 16.4% ; expansion of 16 bps QoQ aided by incremental bill da
Slide 16: Income statement for FY19
Income statement for FY19 All Figures in ₹ Mn FY19 FY18 Operating profit Movement Revenue 46,175 39,175 • Operating profit growth at 17.3% for the year • Consolidated operating margin at 14.0% Operating Profit 6,443 5,492 • Service margin at 15.3% ; lower by 11 bps YoY primarily PAT (Reported) 4,785
Slide 17: Operating margin bridge for Q4 FY19 & FY19
Operating margin bridge for Q4 FY19 & FY19 Particulars Particulars OPM Q3 FY19 (Group) 14.7% OPM FY18 (Group) 14.0% Add: DLM Impact 153 bps Add: DLM Impact 141 bps OPM FY18 (excluding DLM) 15.4% OPM Q3 FY19 (excluding DLM) 16.3% Headwinds Headwinds Hike impact -165 bps Fx impact -46 bps NBA spend -5
Slide 18: Hedge Book for Q4 FY19
Hedge Book for Q4 FY19 Value in Respective Outstanding ForwardContracts* Currency Mn. Booked Rate (in ₹ ) for next 12 Months 132 129 31-Mar-19 31-Dec-18 31-Mar-18 128 96.9 90.4 86.6 77.8 72.8 69.2 64 61 61 53.0 55.7 49.1 51.5 29 29 26 22 22 20 9 9 12 11 9 8 USD EUR AUD GBP CAD Total (USD) INR/USD IN
Slide 19: Cash Generation for Q4 FY19 & FY19
Cash Generation for Q4 FY19 & FY19 All Figures in ₹ Mn Q4 FY19 Q3 FY19 Q4 FY18 FY19 FY18 • Cash and cash equivalents at a healthy Services levels of ₹9,983 Mn Operating Profit 1,513 1,673 1,383 5,925 5,371 Other Income 985 (340) 406 1,323 1,378 • In Q4, the cash flow conversion stood at Profit from
Slide 20: Highlights Financial Update
Highlights Financial Business Highlights for the Quarter Update Update • Financial Highlights • Revenue • Significant highlights • Business Highlights • Income statement update • M&A update • Awards & Recognition • Other Income & Hedge • Industry outlook • CSR Activities • Cash generation • Future o
Slide 21: Significant Developments for Q4 FY19
Significant Developments for Q4 FY19 Buyback of equity shares • On February 1, 2019, Board of Directors approved buyback by Cyient Limited of its fully paid-up equity shares of Rs. 5 per share at a price not exceeding ₹700 per equity share and for an aggregate amount of ₹2,000Mn from shareholders of
Slide 22: Investment Pipeline & Focus Areas for Q4 FY19
Investment Pipeline & Focus Areas for Q4 FY19 M&A # Corporate Investments and JV 4 Vertical focused M&A ^ Medical tech, 2 # 2 2 strategy in key Communication 0 geographic markets; Technology, IoT/M2M Ongoing Ongoing Closed/ large acquisitions Ongoing Closed/ & Advanced avionics Pre-LOI’s* LOI’s* Sig
Slide 23: Industry Outlook & Business Performance (1/4)
Industry Outlook & Business Performance (1/4) Aerospace & Defense Communications The Aerospace and Defense industry is expected to continue its The communications industry is expected to grow by 2%-3% growth trajectory driven by growing commercial aircraft production through the year driven primaril
Slide 24: Industry Outlook & Business Performance (2/4)
Industry Outlook & Business Performance (2/4) Energy & Utilities Transportation The oil & gas industry continues to recover from the last few The Rail transport industry is expected to witness a strong years of weak prices, enforced capital discipline, portfolio growth with largest growth in the are
Slide 25: Industry Outlook & Business Performance (3/4)
Industry Outlook & Business Performance (3/4) Industrial & Geospatial Semiconductor The industrial segment growth has been restrained due to The semiconductor industry is expected to witness a drop of challenges in the worldwide economic conditions, fluctuations in ~3% through the year, driven by a
Slide 26: Industry Outlook & Business Performance (4/4)
Industry Outlook & Business Performance (4/4) Medical Technology and Healthcare The medical device industry is poised for steady growth, with the industry expected to grow at a rate of ~5% during the year. Digital technologies such as RPA, cloud, artificial intelligence (AI), and robotics, to intern
Slide 27: A Recap - Outlook for FY19
A Recap - Outlook for FY19 Outlook @ beginning of FY19 Outlook @ end of Q3 FY19 Revenue Growth Revenue Growth Actuals • Double digit growth in services business • 8.5% to 9.5% growth in the Services business 7.6% • Legacy DLM business expected to grow by in constant currency ~20% • Legacy DLM busine
Slide 28: Outlook for FY20
Outlook for FY20 Revenue Growth • High single digit growth for Services in constant currency • DLM business expected to grow by ~ 15% in constant currency EBIT • Double digit growth in Earnings Before Interest and Tax Others • ETR likely to be in the range of 22.5% - 23.5% • Other income is expected
Slide 29: About Cyient
Cyient (Estd: 1991, NSE: CYIENT) provides engineering, manufacturing, geospatial, digital, networks, and operations management solutions to global industry leaders. Cyient leverages the power of digital technology and advanced analytics capabilities, along with domain knowledge and technical experti
Slide 30: Disclaimer
Disclaimer All the references to Cyient’s financial results in this update pertain to the company’s consolidated operations comprising: Wholly-owned and step down subsidiaries: Cyient Europe Limited; Cyient Inc.; Cyient GmbH; Cyient Australia Pty Ltd; Cyient Singapore Private Limited; Cyient KK; Cyi
Slide 31: Thank you
Thank you 30 CYIENT © 2019 CONFIDENTIAL
Slide 32: Annexure
Investor PRESENTATION Annexure Q4 FY19 & FY19 CYIENT © 2019 CONFIDENTIAL CYIENT © 2019 CONFIDENTIAL
Slide 33: Message from the Management
Message from the Management Commenting on the results, Mr. Krishna Bodanapu, Managing Director and Chief Executive Officer, said, “Our performance was lower than the initial expectations both on revenue and margin. Our revenue for the quarter stood at $165.2 Mn which was a 3.3% growth YoY and 0.3% d
Slide 34: Message from the Management
Message from the Management Commenting on the results, Mr. Ajay Aggarwal, President & CFO, said, “I am pleased to share that for FY19, we saw a strong and a well-rounded performance with earnings growth of 14% (Normalised EPS at ₹ 43.4) and operating profit growth of 17.3%. The revenue stood at $660
Slide 35: Business Performance & Outlook (1/4)
Business Performance & Outlook (1/4) Aerospace & Defense Aerospace & Defense (A&D) BU witnessed a growth of 0.4% QoQ and 5.4% YoY in constant currency. There was marginal growth in services business led by key accounts. The shortfall was primarily from the DLM and analytics business and workload cha
Slide 36: Business Performance & Outlook (2/4)
Business Performance & Outlook (2/4) Transportation Transportation BU witnessed a growth of 3.5% QoQ and 14.8% YoY in constant currency driven by momentum in key accounts and new project wins. The BU continues to make significant progress in identifying opportunities and launching new solution offer
Slide 37: Business Performance & Outlook (3/4)
Business Performance & Outlook (3/4) Semiconductor, IoT & Analytics Semiconductor BU witnessed a growth of 22.5% QoQ and 47.8% YoY in constant currency terms. Our key Accounts continued to see moderate growth while new clients contributed to additional growth. Our Turnkey ASIC business saw significa
Slide 38: Business Performance & Outlook (4/4)
Business Performance & Outlook (4/4) Design Led Manufacturing DLM BU de-growth of 11.9% QoQ and 10.0% YoY in constant currency terms. The QoQ growth was impacted by change & seasonality in order intake in India Israel business. Our planned exit from a major customer due to low margins also impacted
Slide 39: Consolidated Financial Metrics
Consolidated Financial Metrics Key Operational Metrics (₹Mn) Growth % Growth % ₹ Mn Q4 FY19 Q3 FY19 Q4 FY18 FY19 FY18 QoQ YoY YoY Revenue 11,629 11,876 10,618 -2.1% 9.5% 46,175 39,175 17.9% Operating Profit 1,751 1,749 1,492 0.1% 17.4% 6,443 5,492 17.3% Operating Margin 15.1% 14.7% 14.1% 33 bps 101
Slide 40: Consolidated Financial Metrics
Consolidated Financial Metrics Key Operational Metrics ($Mn) Growth % Growth % $ Mn Q4 FY19 Q3 FY19 Q4 FY18 FY19 FY18 QoQ YoY YoY Revenue 165.2 165.1 164.6 0.0% 0.3% 660.0 607 8.7% Operating Profit 25.0 24.4 23.1 2.4% 7.8% 92.1 85.0 8.3% Operating Margin 15.1% 14.7% 14.1% 37 bps 105 bps 14.0% 14.0%
Slide 41: Consolidated Revenue Segmentation
Consolidated Revenue Segmentation By Geography (%) Q4 FY19 Q3 FY19 Q4 FY18 FY19 FY18 Americas 49.6% 54.1% 49.0% 52.0% 50.9% Europe, Middle East, Africa 22.6% 22.1% 28.3% 23.3% 32.8% Asia Pacific (includes India) 27.8% 23.8% 22.7% 24.7% 16.3% By Business Unit (%)1 Q4 FY19 Q3 FY19 Q4 FY18 FY19 FY18 Ae
Slide 42: Consolidated Operations Metrics
Consolidated Operations Metrics 1 Utilization (%) Q4 FY19 Q3 FY19 Q4 FY18 FY19 FY18 Utilization 77.8% 78.1% 76.7% 77.2% 76.4% 1 Utilization is computed only for services business Account Receivables (in Days) Q4 FY19 Q3 FY19 Q4 FY18 FY19 FY18 DSO Total 88 83 81 88 81 - Billed 61 60 58 61 58 - Unbill
Slide 43: Consolidated Customer & Employee Metrics
Consolidated Customer & Employee Metrics Top Clients: Revenue Contribution (%) Q4 FY19 Q3 FY19 Q4 FY18 FY19 FY18 Top 5 31.8% 33.2% 33.8% 37.1% 36.3% Top 10 43.0% 43.9% 45.4% 49.7% 48.4% No. of Million $ Clients Q4 FY19 Q3 FY19 Q4 FY18 FY19 FY18 20 Mn+ 4 4 4 4 4 10 Mn+ 13 13 12 13 12 5 Mn+ 29 31 26 2
Slide 44: Consolidated Other Financial Metrics (1/2)
Consolidated Other Financial Metrics (1/2) Other Income (₹ Mn) Q4 FY19 Q3 FY19 Q4 FY18 FY19 FY18 Income from Investments 148 137 118 539 444 Fx Gain/(Loss) - Realised -6 -66 46 -180 555 Fx Gain/(Loss) - Unrealised 126 -286 73 107 101 Others 521 28 171 873 339 Total 789 -187 408 1,340 1,439 Capex (₹
Slide 45: Consolidated Other Financial Metrics (2/2)
Consolidated Other Financial Metrics (2/2) 1 Outstanding Forward Contracts (Mn of respective currencies) Q4 FY19 Q3 FY19 Q4 FY18 USD / INR 64.3 61.0 61.0 EURO / INR 28.6 28.9 26.0 GBP / INR 8.4 8.9 8.7 AUD / INR 22.5 22.4 20.4 1 Forward contracts is taken only for services business CYIENT © 2019 CON
Slide 46: Consolidated Income Statement
Consolidated Income Statement ₹ Mn Q4 FY19 Q3 FY19 Q4 FY18 FY19 FY18 Operating Revenue 11,629 11,876 10,618 46,175 39,175 Cost of Revenue 7,524 7,723 6,919 30,127 25,387 Direct Salary and related costs 4,989 5,179 4,527 20,039 17,442 Direct Travel 243 249 223 1,002 857 Sub contract and others 1,106
Slide 47: Consolidated Balance Sheet
Consolidated Balance Sheet ₹ Mn Q4 FY19 Q3 FY19 Q4 FY18 EQUITY AND LIABILITIES Shareholders’ funds - Share capital 552 565 563 - Reserves and surplus 25,070 24,919 22,879 Total - Shareholders' funds 25,622 25,484 23,442 Non-current liabilities - Long-term borrowings and liabilities 1,813 1,986 1,009
Slide 48: Consolidated Cash Flow Movement
Consolidated Cash Flow Movement ₹ Mn Q4 FY19 Q3 FY19 Q4 FY18 FY19 FY18 Free cash flow, after non-operating income 402 1,338 502 3,770 2,706 Long term investments (995) (50) (479) (2,561) (753) Equity 0 3 3 21 9 Borrowings (75) (97) 650 801 518 Exceptional item - Cash RSU 0 - 0 (117) 0 Dividends (6)
Slide 49: Cyient Metrics (Excluding Design Led Manufacturing)
Cyient Metrics (Excluding Design Led Manufacturing) CYIENT © 2019 CONFIDENTIAL 18
Slide 50: Cyient Metrics (Excluding DLM) (1/3)
Cyient Metrics (Excluding Design Led Manufacturing) (1/3) By Geography (%)1 Q4 FY19 Q3 FY19 Q4 FY18 FY19 FY18 Americas 52.0% 58.2% 53.3% 55.4% 54.6% Europe, Middle East, Africa 24.0% 24.1% 29.2% 25.2% 27.6% Asia Pacific (including India) 24.0% 17.7% 17.5% 19.4% 17.8% 1 India is included in APAC (fro
Slide 51: Cyient Metrics (Excluding DLM) (2/3)
Cyient Metrics (Excluding Design Led Manufacturing) (2/3) Currency Mix (%) Q4 FY19 Q3 FY19 Q4 FY18 FY19 FY18 USD 56.2% 57.2% 55.4% 56.5% 55.8% EURO 14.6% 13.6% 12.3% 13.8% 12.2% GBP 10.0% 7.9% 10.1% 8.4% 10.1% AUD 10.3% 11.5% 12.9% 11.7% 13.2% Others 8.9% 9.9% 9.4% 9.7% 8.7% Utilization (%) Q4 FY19
Slide 52: Cyient Metrics (Excluding DLM) (3/3)
Cyient Metrics (Excluding Design Led Manufacturing) (3/3) Top Clients: Revenue Contribution (%) Q4 FY19 Q3 FY19 Q4 FY18 FY19 FY18 Top 5 35.7% 38.0% 38.9% 37.1% 40.4% Top 10 48.4% 50.1% 52.4% 49.7% 53.8% No. of Million $ Clients Q4 FY19 Q3 FY19 Q4 FY18 FY19 FY18 20 Mn+ 4 4 4 4 4 10 Mn+ 13 13 12 13 12
Slide 53: Cyient Metrics (Design Led Manufacturing)
Cyient Metrics (Design Led Manufacturing) CYIENT © 2019 CONFIDENTIAL 22
Slide 54: Cyient Metrics (Design Led Manufacturing) (1/3)
Cyient Metrics (Design Led Manufacturing) (1/3) Income Statement - Abridged (In ₹ Mn)1 Q4 FY19 Q3 FY19 Q4 FY18 FY19 FY18 Net Revenue 1,282 1,479 1,418 5,583 3,946 Direct Salaries & other costs 111 125 114 557 233 Material Cost 1,025 1,174 1,116 4,369 3,328 Gross Profit 146 180 188 657 385 SG&A 94 12
Slide 55: Cyient Metrics (Design Led Manufacturing) (2/3)
Cyient Metrics (Design Led Manufacturing) (2/3) By Business Unit (%) Q4 FY19 Q3 FY19 Q4 FY18 FY19 FY18 Aerospace and Defense 59.2% 68.7% 57.0% 63.5% 35.5% Industrial 15.5% 15.3% 19.9% 16.2% 23.5% Medical 14.3% 14.0% 12.5% 13.0% 12.4% Communication 3.1% 2.1% 9.8% 5.5% 27.8% Others 7.9% 0.0% 0.6% 1.8%
Slide 56: Cyient Metrics (Design Led Manufacturing) (3/3)
Cyient Metrics (Design Led Manufacturing) (3/3) Key Operational Metrics Q4 FY19 Q3 FY19 Q4 FY18 FY19 FY18 Headcount 661 661 637 661 637 DSO (in Days) 106 81 92 106 92 DPO (in Days) 106 116 97 106 97 Customer Advance (in Days) 46 98 28 46 28 Inventory (in Days) 135 146 137 135 137 Total Cash (₹ Milli
Slide 57: About Cyient
Cyient (Estd: 1991, NSE: CYIENT) provides engineering, manufacturing, geospatial, digital, networks, and operations management solutions to global industry leaders. Cyient leverages the power of digital technology and advanced analytics capabilities, along with domain knowledge and technical experti
Slide 58: Disclaimer
Disclaimer This document contains certain forward-looking statements on our future prospects. Although Cyient believes that expectations contained in these statements are reasonable, their nature involves a number of risks and uncertainties that may lead to different results. These forward-looking s
Slide 59: Thank you
Thank you 28 CYIENT © 2018 CONFIDENTIAL