Cyient Limited · NSE:CYIENT
Cyient — Q3 FY20 Earnings Presentation
54 slides from Cyient's earnings presentation, Jan 16, 2020
Slide 1: Cover letter to BSE and NSE on investor update
16 January 2020 The BSE Limited The. National Stock Exchange of india Ltd PJ Towers, 25" Floor, Exchange Plaza, , Dalal Street Bandra-Kurla Complex, Bandra (E) Mumbai 400001. Mumbai-400 051. Scrip Code: 532175 Scrip Code: CYIENT Dear Sir, Sub: Investor update — Reg. Please find enclosed investor upd
Slide 2: Investor Presentation Q3 FY20
Investor PRESENTATION Q3 FY20 CYIENT © 2020 CONFIDENTIAL CYIENT © 2020 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, Business Update
Financial Business Highlights Update Update • Financial Highlights • Revenue • M&A update • Business Highlights • Cost optimization • Industry outlook • Awards and Recognition • Hedge and other income • Company update • CSR Activities • Income statement update • Cash generation Annexures CYIENT © 20
Slide 5: Highlights: Financial Highlights, Business Highlights
Financial Business Highlights Update Update • Revenue • Financial Highlights • Cost Optimization Exercise • Cost optimization • Business Highlights • Significant highlights • Ind AS 116 • Awards and Recognition • M&A update • Hedge and other income • CSR Activities • Industry outlook • Income statem
Slide 6: Highlights for the Quarter (1/2)
Highlights for the Quarter (1/2) Revenue Financial Highlights for Quarter • Consolidated revenue at $155.2Mn; de- -4.6% QoQ (₹ terms) growth of 5.5% QoQ and de-growth of 6% -5.5% QoQ ($ terms) YoY Quarterly revenue at • Services revenue at $140.1Mn; de-growth $155.2Mn/₹11,060Mn of 0.2% QoQ (0.5% in
Slide 7: Highlights for the Quarter (2/3)
Highlights for the Quarter (2/3) Business Highlights for the Quarter Added a marquee Won one of the North American largest GIS Data • Actively involved in accelerating the deployment Electricity distributor Quality Programs of 5G network for a key client in Australia for systems awarded by the US •
Slide 8: Highlights for the Quarter (3/3)
Highlights for the Quarter (3/3) Awards and Recognition CSR Activities • Cyient Foundation received a ‘Platinum • Continue to support 25 Government Award‘ under Apex India CSR Excellence Schools – providing education to 18,500+ Award 2019 in the Engineering and IT underprivileged children Services S
Slide 9: Financial Update
Financial Business Highlights Update Update • Revenue M&A update • Financial Highlights • • Cost optimization Industry Outlook • Business Highlights • • Hedge and other income • CSR Activities • Income statement update • Cash generation Annexures CYIENT © 2020 CONFIDENTIAL 8
Slide 10: Revenue for Q3 FY20
Revenue for Q3 FY20 Revenue Q3 FY19 Q4 FY19 Q1 FY20 Q2 FY20 Q3 FY20 QoQ YoY $ Mn 165.1 165.2 156.6 164.2 155.2 -5.5% -6.0% ₹ Mn 11,876 11,629 10,890 11,589 11,060 -4.6% -6.9% Services Group Geography Business Units $ Mn QoQ YoY $ Mn QoQ YoY $88.1 Mn A&D 45.1 -5.2% -9.1% 53.9 -17.6% -15.4% NAM -2.9%
Slide 11: Cost Optimization Exercise
Cost Optimization Exercise • Theme: To achieve sustainable margins for Cyient’s Services Business through improvements in cost of delivery and sustained improvement in SG&A costs in line with best-in-class and other initiatives to improve profitability. • Status update: Primary wave actions nearing
Slide 12: Hedge Book for Q3 FY20
Hedge Book for Q3 FY20 Value in Respective Outstanding ForwardContracts* Currency Mn. Booked Rate (in ₹ ) for next 12 Months 31-Dec-19 30-Sep-19 31-Dec-18 134 135 129 95.4 93.6 84.2 80.0 73.2 71.4 69 69 55.7 54.7 61 51.4 50.0 26 27 29 25 24 22 14 14 11 6 7 9 USD EUR AUD GBP CAD Total (USD) INR/USD I
Slide 13: Other Income for Q3 FY20
Other Income for Q3 FY20 All Figures in ₹ Mn Q3 FY20 Q2 FY20 Q3 FY19 Other Income movement Income from Treasury • Other income is higher by ₹234Mn Interest on Invesmtents/Deposits 88 96 120 (88.5%) QoQ primarily due to Dividend on Mutual Funds 8 5 17 unrealised forex restatement gain Subtotal (A) 96
Slide 14: Income statement for Q3 FY20
Income statement for Q3 FY20 QoQ EBIT Movement All Figures in ₹ Mn Q3 FY20 Q2 FY20 Q3 FY19 • Consolidated EBIT is flat QoQ at 9.6%. Revenue 11,060 11,589 11,876 • Benefits of changes to revenue mix 110 bps, EBIT 1,063 1,110 1,470 cost optimisation 30 bps, favorable DLM margin 60 bps offset by increa
Slide 15: EBIT margin bridge for Q3 FY20
EBIT margin bridge for Q3 FY20 Particulars EBIT Q2 FY20 (Group) 9.6% Add: DLM impact 160 bps EBIT Q2 FY20 (Services) 11.2% Headwinds Increase in other direct costs -120 bps Lower bill days impact -60 bps Volume impact on SGA -20 bps Tailwinds Changes to revenue mix 110 bps Benefit from Cost optimisa
Slide 16: Cash Generation for Q3 FY20
Cash Generation for Q3 FY20 Q3 Q2 Q3 Cash Generation All Figures in ₹ Mn FY20 FY20 FY19 Services • Cash and cash equivalents at a healthy levels of ₹10,239 Mn Operating Profit 1,462 1,526 1,673 Other Income 461 333 (340) • FCF for the quarter stood at ₹1,944 Mn Profit from Operations 1,924 1,859 1,3
Slide 17: Business Update
Highlights Financial Business Highlights for the Quarter Update Update • Revenue • Financial Highlights • Revenue • RSU update • Cost optimization • Business Highlights • Income statement update • M&A update • Hedge and other income • CSR Activities • Other Income & Hedge • Industry outlook • Income
Slide 18: RSU Scheme in lieu of Variable Pay for Senior Associates
Company update - RSU Scheme in lieu of Variable Pay for Senior Associates • The scheme is designed to encourage senior associates (~100) to participate in the company’s growth with a longer term horizon • It is based on the associates’ participation in the scheme in lieu of existing variable compens
Slide 19: Investment Pipeline & Focus Areas: Q3FY20
Investment Pipeline & Focus Areas: Q3FY20 M&A Corporate Investments 3 Vertical focused Medical tech, 1 M&A strategy in key 1 Communication 0 geographic markets; 0 Technology, IoT/M2M Pre-LOI LOI Signed/Closed large acquisitions Evaluations Signed/Closed & Advanced avionics *Pre LOI and LOI reflect a
Slide 20: Industry Outlook & Business Performance (1/4)
Industry Outlook & Business Performance (1/4) Aerospace & Defense Communications The Aerospace and Defense industry is expected to The Communications industry is expected to grow by continue to grow by 4.1 %, led by growing commercial 4.4% driven by fast pace of innovations and aircraft production a
Slide 21: Industry Outlook & Business Performance (2/4)
Industry Outlook & Business Performance (2/4) Energy & Utilities Transportation The Energy and Utilities industry is expected to witness The Rail Transportation industry is expected to witness growth driven by rising commodity prices, focus on grid growth of 3.3% driven by growth in rail infrastruct
Slide 22: Industry Outlook & Business Performance (3/4)
Industry Outlook & Business Performance (3/4) Portfolio Semiconductor The industrial segment growth has been restrained due to The Semiconductor industry is expected to rebound in 2020 challenges in the worldwide economic conditions, and grow by 5.9% globally. The growth in the industry will be fluc
Slide 23: Industry Outlook & Business Performance (4/4)
Industry Outlook & Business Performance (4/4) Medical Technology and Healthcare The Medical Technology & Healthcare industry is expected to grow by 5.4% driven by North America region. Focus on investments in new generation medical devices is expected to drive growth though the industry. The Interne
Slide 24: Dividends and buyback
Company update Dividends and buyback In the last 4 years Cyient has returned ~₹7,000 million through dividends and buyback to shareholders 4,974 1999 1,999 1,667 1,465 1,182 660 FY17 FY18 FY19 FY20 YTD Total Dividend ₹ Mn Buyback ₹ Mn Insider buying YTD FY20 Promoters/Independent directors have boug
Slide 25: About Cyient
Cyient (Estd: 1991, NSE: CYIENT) is a global engineering and technology solutions company. As a Design, Build, and Maintain partner for leading organizations worldwide, Cyient takes solution ownership across the value chain to help customers focus on their core, innovate, and stay ahead of the curve
Slide 26: 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 27: Thank you
Thank you 26 CYIENT © 2020 CONFIDENTIAL
Slide 28: Annexure
Investor PRESENTATION Annexure Q3 FY20 CYIENT © 2020 CONFIDENTIAL
Slide 29: Message from the Management
Message from the Management Commenting on the results, Mr. Krishna Bodanapu, Managing Director and Chief Executive Officer, said “Q3 is generally a slow quarter and we recorded a revenue decline of 5.7% in constant currency QoQ and 5.3% YoY. The services revenue declined by 0.2% QoQ in USD predomina
Slide 30: Message from the Management
Message from the Management Commenting on the results, Mr. Ajay Aggarwal, President & CFO, said, “In the last 3 quarters, there has been significant focus on efficiencies and cost optimization program. Due to the program and this focus our cost and profit position is well set for coming year. The cu
Slide 31: Business Performance & Outlook (1/3)
Business Performance & Outlook (1/3) Aerospace & Defense Aerospace & Defense BU witnessed a decline of 17.6% QoQ & 15.4% YoY driven by continued uncertainty and weak customer spend resulting in de-growth in key client accounts. The growth momentum is expected to return over the coming quarter led by
Slide 32: Business Performance & Outlook (2/3)
Business Performance & Outlook (2/3) Communications Communications BU witnessed a growth of 12.1% QoQ and 0.4% YoY driven by growth in key accounts, momentum across geographies and new project wins. This is the second quarter of sequential growth through the BU. We expect the growth momentum to cont
Slide 33: Business Performance & Outlook (3/3)
Business Performance & Outlook (3/3) MTH Medical Technology and Healthcare BU witnessed a growth of 7.1% QoQ and 23.2% YoY driven by growth across manufacturing business while services business witnessed a moderate growth driven by key customers. The outlook for the year continues to be strong with
Slide 34: Consolidated Financial Metrics
Consolidated Financial Metrics Key Operational Metrics (₹Mn) Growth % ₹ Mn Q3 FY20 Q2 FY20 Q3 FY19 QoQ YoY Revenue 11,060 11,589 11,876 -4.6% -6.9% EBIT 1,063 1,110 1,470 -4.2% -27.7% EBIT Margin 9.6% 9.6% 12.4% 3 bps -277 bps Reported PAT 1,083 985 921 10.0% 17.6% Reported EPS (₹) 9.8 9.0 8.1 10.0%
Slide 35: Consolidated Revenue Segmentation
Consolidated Revenue Segmentation By Geography (%) Q3 FY20 Q2 FY20 Q3 FY19 Americas 56.8% 55.3% 54.1% Europe, Middle East, Africa 25.1% 26.5% 22.1% Asia Pacific (includes India) 18.1% 18.2% 23.8% By Business Unit (%)1 Q3 FY20 Q2 FY20 Q3 FY19 Aerospace and Defense 34.8% 39.9% 38.6% Transportation 10.
Slide 36: Consolidated Operations Metrics
Consolidated Operations Metrics Account Receivables (in Days) Q3 FY20 Q2 FY20 Q3 FY19 DSO Total 94 95 83 - Billed 59 64 59 - Unbilled 35 31 24 Order Intake ($ Mn)2 Q3 FY20 Q2 FY20 Q3 FY19 Cyient Services 173 143 255 DLM 8 22 19 Group OI Total 181 165 274 2 The Order Intake reported is the total valu
Slide 37: Consolidated Customer Metrics
Consolidated Customer Metrics Top Clients: Revenue Contribution (%) Q3 FY20 Q2 FY20 Q3 FY19 Top 5 33.0% 31.0% 33.2% Top 10 44.5% 41.6% 43.9% No. of Million $ Clients Q3 FY20 Q2 FY20 Q3 FY19 20 Mn+ 4 4 4 10 Mn+ 11 12 13 5 Mn+ 27 27 31 1 Mn+ 90 91 87 New Customers Added 13 20 11 CYIENT © 2020 CONFIDEN
Slide 38: Consolidated Employee Metrics
Consolidated Employee Metrics Employee Q3 FY20 Q2 FY20 Q3 FY19 Total Manpower 14,472 14,869 15,193 Technical & Pool 13,405 13,800 14,002 Non-Technical 378 380 413 Support 689 689 778 Voluntary Attrition3 19.7% 18.0% 21.2% Involuntary Attrition 5.2% 5.8% 2.3% 3 Q3 FY20 attrition has been higher compa
Slide 39: Consolidated Other Financial Metrics (1/2)
Consolidated Other Financial Metrics (1/2) Other Income (₹ Mn) Q3 FY20 Q2 FY20 Q3 FY19 Income from Investments 96 101 137 Fx Gain/(Loss) - Realised 151 174 -66 Fx Gain/(Loss) - Unrealised 184 -56 -286 Others 67 45 28 Total 498 264 -187 Capex (₹ Mn) Q3 FY20 Q2 FY20 Q3 FY19 Capital Expenditure 111 339
Slide 40: Consolidated Other Financial Metrics (2/2)
Consolidated Other Financial Metrics (2/2) Outstanding Forward Contracts (Mn of respective currencies)^ Q3 FY20 Q2 FY20 Q3 FY19 USD / INR 68.7 69.4 61.0 EURO / INR 25.9 26.7 28.9 GBP / INR 6.5 7.5 8.9 AUD / INR 24.7 24.5 22.4 ^Forward contracts are taken only for services business CYIENT © 2020 CONF
Slide 41: Consolidated Income Statement
Consolidated Income Statement ₹ Mn Q3 FY20 Q2 FY20 Q3 FY19 Operating Revenue 11,060 11,589 11,876 Cost of Revenue 7,082 7,601 7,723 Direct Salary and related costs 4,873 4,986 5,179 Direct Travel 190 192 249 Sub contract and others 1,158 964 934 Delivery Management 201 209 251 Material cost 661 1,24
Slide 42: Consolidated Balance Sheet
Consolidated Balance Sheet ₹ Mn Q3 FY20 Q2 FY20 Q3 FY19 EQUITY AND LIABILITIES Shareholders’ funds - Share capital 550 550 565 - Reserves and surplus 25,539 25,206 24,919 Total - Shareholders' funds 26,089 25,756 25,484 Non-current liabilities - Long-term borrowings and liabilities 3,591 3,730 1,986
Slide 43: Consolidated Cash Flow Movement
Consolidated Cash Flow Movement ₹ Mn Q3 FY20 Q2 FY20 Q3 FY19 Free cash flow, after non-operating income 1,944 798 1,338 Long term investments -331 -301 -50 Equity 0 7 3 Borrowings 785 -76 -97 Dividends -800 0 -809 Buyback of Shares 0 0 0 Others 0 0 -187 Net change in cash 1,598 428 198 Opening cash
Slide 44: Cyient Metrics (Excluding Design Led Manufacturing)
Cyient Metrics (Excluding Design Led Manufacturing) CYIENT © 2020 CONFIDENTIAL 17
Slide 45: Cyient Metrics (Excluding DLM) (1/3)
Cyient Metrics (Excluding Design Led Manufacturing) (1/3) By Geography (%) Q3 FY20 Q2 FY20 Q3 FY19 Americas 57.5% 60.2% 58.2% Europe, Middle East, Africa 25.5% 26.3% 24.1% Asia Pacific (including India) 16.9% 13.6% 17.7% By Business Unit (%) Q3 FY20 Q2 FY20 Q3 FY19 Aerospace and Defense 32.2% 33.9%
Slide 46: Cyient Metrics (Excluding DLM) (2/3)
Cyient Metrics (Excluding Design Led Manufacturing) (2/3) Currency Mix (%) Q3 FY20 Q2 FY20 Q3 FY19 USD 55.0% 59.8% 57.2% EURO 14.0% 13.3% 13.6% GBP 10.0% 8.1% 7.9% AUD 9.0% 8.0% 11.5% Others 12.0% 10.8% 9.9% Account Receivables (in Days) Q3 FY20 Q2 FY20 Q3 FY19 DSO Total 94 98 83 - Billed 55 61 56 -
Slide 47: Cyient Metrics (Excluding DLM) (3/3)
Cyient Metrics (Excluding Design Led Manufacturing) (3/3) Top Clients: Revenue Contribution (%) Q3 FY20 Q2 FY20 Q3 FY19 Top 5 36.6% 36.2% 38.0% Top 10 49.3% 47.3% 50.1% No. of Million $ Clients Q3 FY20 Q2 FY20 Q3 FY19 20 Mn+ 4 4 4 10 Mn+ 11 12 13 5 Mn+ 23 22 27 1 Mn+ 77 77 73 New Customers Added 13
Slide 48: Cyient Metrics (Design Led Manufacturing)
Cyient Metrics (Design Led Manufacturing) CYIENT © 2020 CONFIDENTIAL 21
Slide 49: Cyient Metrics (DLM) (1/3)
Cyient Metrics (Design Led Manufacturing) (1/3) Income Statement - Abridged (In ₹ Mn)1 Q3 FY20 Q2 FY20 Q3 FY19 Net Revenue 1,076 1,687 1,479 Direct Salaries & other costs^ 233 268 189 Material Cost^ 661 1,249 1,109 Gross Profit 182 169 180 SG&A 147 138 122 Depreciation & amortisation 34 32 23 EBIT 2
Slide 50: Cyient Metrics (DLM) (2/3)
Cyient Metrics (Design Led Manufacturing) (2/3) By Business Unit (%) Q3 FY20 Q2 FY20 Q3 FY19 Aerospace and Defense 58.5% 75.1% 68.7% Transportation 1.0% 0.0% 0.1% Energy & Utilities 14.8% 10.5% 14.7% Medical 24.4% 13.5% 14.0% Communications 1.6% 1.0% 2.1% Portfolio 0.0% 0.2% 0.4% Others -0.2% -0.3%
Slide 51: Cyient Metrics (DLM) (3/3)
Cyient Metrics (Design Led Manufacturing) (3/3) No. of Million $ Clients Q3 FY20 Q2 FY20 Q3 FY19 5 Mn+ 4 5 4 2 Mn+ 11 10 10 1 Mn+ 13 14 14 New Customers Added 0 1 0 Key Operational Metrics Q3 FY20 Q2 FY20 Q3 FY19 Headcount 618 654 661 DSO (in Days) 94 85 81 DPO (in Days) 153 131 116 Customer Advance
Slide 52: About Cyient
Cyient (Estd: 1991, NSE: CYIENT) is a global engineering and technology solutions company. As a Design, Build, and Maintain partner for leading organizations worldwide, Cyient takes solution ownership across the value chain to help customers focus on their core, innovate, and stay ahead of the curve
Slide 53: 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 54: Thank you
Thank you CYIENT © 2020 CONFIDENTIAL 27