Hms Networks Ab · OMXSTO:HMS
Hms Networks Ab — Q4 2023 Earnings Presentation
30 slides from Hms Networks Ab's earnings presentation, Jan 25, 2024
Slide 1: HMS Networks Q4 2023 presentation
HMS Networks Q4 2023 presentation Staffan Dahlström, CEO, Joakim Nideborn, CFO January 26, 2024 Hardware Meets Software™
Slide 2: Agenda
Agenda Summary and introduction Business update Acquisition of Red Lion Controls Financial results Q&A
Slide 3: Financial summary of Q4 2023 and FY 2023
Financial summary of Q4 2023 and FY 2023 Q4 summary FY 2023 • Net sales 3,025 MSEK (2,506), +21% • Net sales 760 MSEK (764), -1% • Order intake 2,303 MSEK (3,064), -25% • Order intake 426 MSEK (718), -41% • EBIT 753 MSEK (653) (Adj. 2023: 777 MSEK) • EBIT 169 MSEK (192) (Adj. Q4 2023: 193 MSEK) • EB
Slide 4: HMS Networks – Hardware Meets Software
HMS Networks – Hardware Meets Software
Slide 5: HMS Playing Field - Overall Market Segments
HMS Playing Field - Overall Market Segments Industrial Building Automation Automation Transportation & Manufacturing Power & Energy Infrastructure Ports, Marine, Power Generation, Commercial buildings, Factory Automation, Utilities, Data Centers, Power Distribution, Industrial buildings, Process Aut
Slide 6: Two main customer groups – Makers and Users
Two main customer groups – Makers and Users Makers of industrial equipment Users of automation systems
Slide 7: Different market channels for Makers and Users
Different market channels for Makers and Users Makers of industrial equipment Users of automation systems Device Machine End users & manufacturers builders System integrators 44% of revenue 25% of revenue Revenue 31% of revenue Specified as standard Project Sales Design Wins or Business model Produc
Slide 8: HMS Strategic framework until 2025
HMS Strategic framework until 2025 Organic growth M&A People Planet Organic growth M&A People Operational Efficiency Sales Excellence Planet Operational Efficiency Sales Excellence
Slide 9: HMS Strategic Targets 2025
HMS Strategic Targets 2025 Science The HMS Effect qf based feam x3 Boni targets by 2030 lu Zz 7 z= a 7H +50 O730% Customer Female managers NPS by 2025 73,14 illion LTE ae » by 2025 PEOPLE GROWTH
Slide 10: Agenda
Agenda Summary and introduction Business update Acquisition of Red Lion Controls Financial results Q&A
Slide 11: Design Wins 2023
Design Wins 2023 Design Wins +6% CAGR+6.4% 1,820 1,790 1,843 1,945 1,797 1,693 165 174 146 139 1,591 199 1,508 177 217 1,381 203 1,241 195 1,061 979 180 146 119 1,797 1,820 1,790 1,843 1,591 1,693 1,381 1,508 1,241 979 1,061 909 -49 -64 -55 -76 -134 -75 -95 -142 -93 -37 -204 2012 2013 2014 2015 2016
Slide 12: Business update – fourth quarter 2023
Business update – fourth quarter 2023 • Order intake normalization continues in the quarter in both Europe and Japan as several large customers are adjusting inventory levels • In Americas, customers’ inventory adjustments are now in essence done • Investments in Ewon – started development of the ne
Slide 13: Business update – FY 2023
Business update – FY 2023 • Normal order intake during the first half of the year – followed by a rapid normalization of “boost orders” during second half of 2023 • Continued stable inflow of new design-wins, increase of 6% compared to 2022 • HMS delivery situation has been dramatically improved thr
Slide 14: Agenda
Agenda Summary and introduction Business update Acquisition of Red Lion Controls Financial results Q&A
Slide 15: Red Lion’s solutions unlock the value of industrial data
Red Lion’s solutions unlock the value of industrial data Red Lion at a glance – a US-based company with a profitable and scalable business model supporting strong cash generation KEY OFFERING COMPANY HIGHLIGHTS APPLICATIONS Access: Industrial Gateways, Protocol § ALTERNATIVE ENERGY MANUFACTURING Con
Slide 16: Red Lion significantly strengthens HMS’ US presence
Red Lion significantly strengthens HMS’ US presence Strategic fit between Red Lion and HMS geographically • The Red Lion acquisition unlocks new ways to market in North America and builds improved local market understanding – one of the largest markets for IIoT automation solutions globally • Tangib
Slide 17: Financial aspects of the acquisition
Financial aspects of the acquisition Summary of the acquisition • December 11th 2023 HMS has entered into a binding agreement to acquire Red Lion for a cash consideration of 345 MUSD (≈3 600 MSEK), on a cash and debt free basis (Enterprise Value) • The acquisition is expected to be accretive to HMS’
Slide 18: Agenda
Agenda Summary and introduction Business update Acquisition of Red Lion Controls Financial results Q&A
Slide 19: Order intake of 426 MSEK in Q4 2023, -41%
Order intake of 426 MSEK in Q4 2023, -41% Order Intake, MSEK Analysis and conclusions • Q4 2023: 426 MSEK (718), -41% (organic -34%) 1 000 3 500 857 -41% • FY 2023: 2,303 MSEK (3,064), -25% (organic -24%) 815 3 000 800 699 718 703 669 675 682 2 500 • Book-to-bill excluding FX effects of 0.56 in Q4 6
Slide 20: Order intake 2021-2023
Order intake 2021-2023 Underlying quarterly order intake 2021-2023, MSEK 857 815 50 718 703 669 699 250 675 682 35 492 150 85 426 605 50 0 565 140 200 50 65 100 633 682 698 642 607 615 575 618 500 505 529 499 -30 -42 -150 -150 Q121 Q221 Q321 Q421 Q122 Q222 Q322 Q422 Q123 Q223 Q323 Q423 FX revaluatio
Slide 21: Order intake Q4 2022 – Q4 2023
Order intake Q4 2022 – Q4 2023 Bridge of underlying market demand Q4 2022 – Q4 2023, MSEK -41% 718 -2% 85 633 618 15 150 42 426 Order intake Q422 Boost Q422 Normalized Underlying Normalized Destocking Revaluation Reported Order OI Q422 market decline OI Q423 in Q423 backlog intake Q423
Slide 22: Net Sales 760 MSEK in Q4 2023, -1%
Net Sales 760 MSEK in Q4 2023, -1% Net Sales, MSEK Analysis and conclusions • Q4 2023: 760 MSEK (764), -1% (organic -3%) 1 000 -1% 3 500 789 3 000 • FY 2023: 3,025 MSEK (2,506), +21% (organic +15%) 800 764 773 760 703 624 2 500 • Another record year for HMS, passed 3 billion SEK in sales 571 601 600
Slide 23: The order backlog is normalizing in rapid pace
The order backlog is normalizing in rapid pace Backlog, 2021 – 2023, MSEK Backlog/Net Sales, 2021 – 2023, MSEK 3 500 0.7 0.65 0.63 0.59 3 000 0.6 0.56 2 500 0.5 0.48 0.46 0.44 0.41 2 000 0.4 0.37 -30% 0.32 1 453 1 408 1 407 1 500 0.3 0.26 1 316 1 316 0.25 1 195 1 106 0.19 1 000 864 0.2 0.17 0.17 0.1
Slide 24: Q4 2023: Sales per region
Q4 2023: Sales per region Sales per region Q4 2023, MSEK 23% 59% 18%
Slide 25: Q4 2023: EBIT 169 MSEK (22.3% margin)
Q4 2023: EBIT 169 MSEK (22.3% margin) EBIT, MSEK Analysis and conclusions • EBIT Q4: 169 MSEK (192) (Adj. Q4: 193 MSEK) Reported -12%, (Adj. 0%) • EBIT margin Q4: 22.3% (25.1) (Adj. Q4: 25.3%) 250 800 223 • EBIT FY 2023: 753 MSEK (653) (Adj. 2023: 777) 211 700 200 192 193 • EBIT margin FY 2023: 24.9
Slide 26: Q4 2023: EPS 2.36 SEK
Q4 2023: EPS 2.36 SEK EPS, SEK Analysis and conclusions Q4: Reported -27%, (Adj. -12%) • EPS of 2.36 SEK (3.25) (Adj. Q4: 2.86) 4.00 14 3.70 3.69 • Net financials of -27 MSEK (-11), mainly 13 attributable to a stronger SEK exchange rate 3.50 12 3.25 which resulted in negative revaluation effects on
Slide 27: Q4 2023: Cash flow from ops. of 119 MSEK
Q4 2023: Cash flow from ops. of 119 MSEK Cash flow, MSEK Analysis and conclusions Q4: 200 125% • Cash flow from operating activities of 119 MSEK -33% (177) 177 167 • Changes in NWC → -28 MSEK (-31) 155 100% 148 150 • Inventory buildup of 41 MSEK 132 126 118 119 • NWC in % of sales 13.9% (8.7) 75% 10
Slide 28: Q4 2023: Net Debt of 289 MSEK
Q4 2023: Net Debt of 289 MSEK Net debt and leverage, MSEK Analysis and conclusions 550 540 1.8 500 416 1.7 • Net debt / EBITDA of 0.33 (0.39) 347 299 1.6 450 84 415 390 1.5 • Net debt / Equity: 0.15 (0.19) 78 410 383 400 80 289 295 1.4 • Strong balance sheet, no interest-bearing net debt 80 350 1.3
Slide 29: Summary of 2023
Summary of 2023 • Major order intake normalization during H2 resulting in a backlog reduction of 630 MSEK for 2023 • Solid execution with organic Net Sales growth of 15% • Gross margin improvement by 2 pp to 65.0% • Adjusted EBIT of 777 MSEK and margin of 25.7% meeting the financial target • Propose
Slide 30: Questions?
Questions’? Ss aE, <A SSS