Vtech Holdings Limited · HKEX:303
Vtech — FY2022 Earnings Presentation
40 slides from Vtech's earnings presentation, May 16, 2022
Slide 1: FY2022 Annual Results Announcement
VTech Holdings Limited FY2022 Annual Results Announcement 16 May 2022
Slide 2: Financial Review
vtech Financial Review > >> > INNOVATION BEYOND TECHNOLOGY 2
Slide 3: Financial Highlights
Financial Highlights For the year ended 31 March (US$ M) 2022 2021 Change Revenue 2,370.5 2,372.3 -0.1% Gross Profit 669.1 726.6 -7.9% Gross Profit Margin % 28.2% 30.6% -2.4% pts Operating Profit 203.8 266.2 -23.4% Operating Profit Margin % 8.6% 11.2% -2.6% pts Profit Attributable to Shareholders of
Slide 4: Revenue by Region
Revenue by Region For the year ended 31 March (US$ M) 2022 % 2021 Change North America 1,068.5 45.1 995.1 7.4% Europe 1,025.1 43.2 1,086.3 -5.6% Asia Pacific 255.0 10.8 268.4 -5.0% Other Regions 21.9 0.9 22.5 -2.7% Total 2,370.5 100.0 2,372.3 -0.1% 4
Slide 5: Working Capital
Working Capital (US$ M) 31/03/22 31/03/21 Stocks 553.3 414.0 Stocks Turnover Days 131 days 103 days Trade Debtors 325.4 270.7 Trade Debtors Turnover Days 65 days 61 days 5
Slide 6: Liquidity Position
Liquidity Position (US$ M) 31/03/22 31/03/21 Deposits and Cash 195.8 343.8 Total Borrowings - - Net Cash Position 195.8 343.8 6
Slide 7: Costs
vtech Costs > >> > INNOVATION BEYOND TECHNOLOGY 7
Slide 8: Costs
Costs • Gross profit margin of 28.2% • Decline mainly attributable to: Unprecedented increase in freight costs Higher direct labour costs and manufacturing overhead Higher materials prices • Improvement seen in 2H as the Group raised prices • Freight cost declined slightly after peak shipping
Slide 9: Operating Environment
Operating Environment • Extremely challenging in FY2022 • Continual disruption to global supply chain led to materials shortages, significant cost increases and shipment delays • Productivity impacted even further, as instability resulted in more overtime payments and hence higher overall labour cos
Slide 10: VTech's Response
VTech’s Response • Swift measures to mitigate negative impacts took effect in 2H: Close, long-standing relationships with suppliers enabled more stable supply of critical components Re-engineered products Sourced alternative shipping carriers Increased stocks of critical components Started
Slide 11: Operations Review
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Slide 12: North America
North America Revenue by Product Line (US$ million) • Revenue increased 7.4% to US$1,068.5 ELPs million, 45.1% of Group revenue 555.6 (+3.5%) • Higher sales of ELPs, TEL products and CMS • ELPs revenue rose 3.5% to US$555.6 million Higher sales in US offset decline in Canada US: Maintained posit
Slide 13: North America (continued)
North America (continued) • Standalone Products: Higher sales of both brands VTech: Sales increases from infant, toddler and preschool products, KidiZoom Cameras and Switch & Go Dinos, supported by launch of Marble Rush Offset declines in Kidi lines, Go! Go! Smart family of products and Go! Go
Slide 14: North America (continued)
North America (continued) • Platform Products: Sales declined as higher sales of LeapFrog products insufficient to offset lower sales of VTech products LeapFrog: Growth in Magic Adventures Globe and interactive reading systems offset declines in children’s educational tablets on semiconductor sh
Slide 15: North America (continued)
North America (continued) • TEL products revenue grew 1.6% to US$274.9 million, as gains in commercial phones and other telecommunication products offset lower sales of residential phones • Good increases in sales to online channels • Commercial Phones and Other Telecommunication Products: Sales i
Slide 16: North America (continued)
North America (continued) VTech strengthened position as largest baby monitor manufacturer in US and Canada First LeapFrog branded baby monitor launched to positive reception Headsets: Grew on increased orders from existing customer Snom SIP phones: Gained market share on stable product supp
Slide 17: North America (continued)
North America (continued) • CMS revenue increased 26.8% to US$238.0 million • Growth in most product categories and full year sales contribution from the plant in Mexico Professional audio: Higher sales to a customer on business acquisition Relaxation of social distancing measures lifted sales o
Slide 18: North America (continued)
North America (continued) Solid-state lighting: Sales grew as tenders and project-based activities resumed Industrial products: Sales increased on higher orders for PCBA for coin and note recognition machines Medical and health products: Sales grew on more orders for hearing aids Communicati
Slide 19: Europe
Europe • Revenue declined 5.6% to US$1,025.1 million, Revenue by Product Line (US$ million) 43.2% of Group revenue ELPs TEL • Higher sales of ELPs offset by lower sales of 375.1 93.8 (-14.2%) TEL products and CMS (+6.8%) • ELPs revenue grew 6.8% to US$375.1 million Sales picked up in 2H as new pro
Slide 20: Europe (continued)
Europe (continued) • Standalone Products: Higher sales for both brands VTech: Higher sales of infant, toddler and preschool products, KidiZoom Cameras, Kidi line products, Switch & Go Dinos and ELAs, augmented by Marble Rush launch Offset declines for Toot-Toot family of products and Toot-Toot
Slide 21: Europe (continued)
Europe (continued) • Platform Products: Lower sales for both brands, as materials shortages and logistics problems caused late availability of certain new products and low channel inventory These included new generation of LeapStart/MagiBook, KidiCom Advance 3.0, Magic Adventures Globe, KidiCom
Slide 22: Europe (continued)
Europe (continued) • TEL products revenue fell 14.2% to US$93.8 million Lower sales of residential phones and other telecommunication products offset higher sales of commercial phones • Residential Phones: Sells products on ODM basis Shortage of semiconductors resulted in shipment deferrals an
Slide 23: Europe (continued)
Europe (continued) • Commercial Phones and Other Telecommunication Products: Baby monitors, CAT-iq handsets, CareLine residential phones and IADs: Sales decreased as semiconductor shortages negatively impacted production Baby monitors: VTech branded products strengthened position in UK on new pr
Slide 24: Europe (continued)
Europe (continued) • CMS revenue fell 11.1% to US$556.2 million Hearables: Lower sales on materials shortages and reduced orders for Bluetooth headsets Professional audio: Sales increase driven by higher orders for audio mixers IoT products: Sales grew as installation of smart meters resumed i
Slide 25: Europe (continued)
Europe (continued) Home appliances: Sales increased slightly Automotive related products: Increased orders for smart electric vehicle chargers Communication products: Sales decrease on lower orders for Wi-Fi routers Added a new customer in smart energy management systems 25
Slide 26: Asia Pacific
Asia Pacific Revenue by Product Line (US$ million) • Revenue decreased 5.0% to ELPs TEL US$255.0 million, 10.8% of Group 83.9 27.7 revenue (+2.3%) (-12.6%) • Lower sales of TEL products and CMS offset higher ELPs revenue • ELPs revenue increased 2.3% to US$83.9 million, as growth in Australia and Ja
Slide 27: Asia Pacific (continued)
Asia Pacific (continued) • Australia: Sales growth on easing of lockdowns and re-opening of retail stores in 2H Remained no. 1 manufacturer in infant and toddler toys category • Japan: Growth from rising sales to a major toy retailer and good sell through of jointly developed smartwatch featuring
Slide 28: Asia Pacific (continued)
Asia Pacific (continued) • TEL products revenue decreased 12.6% to US$27.7 million, as higher sales in Australia offset by lower sales in Japan and Hong Kong Australia: Higher sales of baby monitors compensated for decline in residential phones Japan: Sales decreased on semiconductor shortage fo
Slide 29: Asia Pacific (continued)
Asia Pacific (continued) • CMS revenue declined 7.3% to US$143.4 million • Lower sales of professional audio equipment offset growth in medical and health products and communication products • Professional audio: Lower sales of DJ equipment and USB streaming microphones for online KOLs • Medical and
Slide 30: Other Regions
Other Regions Revenue by Product Line (US$ million) • Revenue fell 2.7% to US$21.9 million, 0.9% ELPs of Group revenue 10.9 (+29.8%) • Lower sales of TEL products and CMS offset growth in ELPs • ELPs revenue increased 29.8% to US$10.9 million. Higher sales in Latin America offset declines in Middle
Slide 31: Sustainability
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Slide 32: Building a Sustainable Future
Building a Sustainable Future • A Steadfast Commitment Sustainable designs for products and packaging Climate change initiatives Safe and inclusive workplace Ethical sourcing throughout supply chain • Making Progress Towards a Circular Economy Introduced green ELPs utilising plant-based pl
Slide 33: Outlook
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Slide 34: Outlook
Outlook Uncertainties in FY2023 • High inflation in US and Europe may slow consumer spending • Recent lockdowns in major cities in mainland China negatively impacting domestic consumption • Materials prices remain elevated, especially plastic materials • Supply of semiconductors and critical compone
Slide 35: Outlook
Outlook • Minimal direct effects from war in Ukraine • Cautiously optimistic to achieve overall top-line growth in FY2023 • Gross profit margin expected to be largely stable year-on-year • Much better prepared to tackle supply chain pressures 35
Slide 36: Outlook: ELPs
Outlook ELPs • Revenue forecast to post modest growth • Infant, toddler and preschool products will maintain positive momentum • Expanded Spring offerings hit the shelves on time, with good initial sell-through • LeapFrog Academy: Subscriptions expected to return to growth • Mainland China: Sales ex
Slide 37: Outlook: TEL products
Outlook TEL products • Expected to achieve higher revenue • Baby monitors: To be strengthened by expansion of LeapFrog range and new VTech branded series with AI detection features • Commercial phones: New D8 series of Snom SIP desksets, multi-cell SIP DECT mobility system, work-from-anywhere series
Slide 38: Outlook: CMS
Outlook CMS • Anticipated to return to growth • Most product categories forecast to grow • Hearables to decline further on lower demand for mobile headsets • Significant contribution from new smart energy management systems • Further growth from NPI centre in Shenzhen • Mexican facility to ramp up p
Slide 39: Q&A
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Slide 40: Thank You
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