Lectra SA · EURONEXT:LSS
Lectra SA — FY2019 Earnings Presentation
61 slides from Lectra SA's earnings presentation, Feb 12, 2020
Slide 1: Financial Results Q4 & FY 2019, Strategic Roadmap 2020-2022
FINANCIAL RESULTS Q4 & FY 2019 STRATEGIC ROADMAP FOR 2020-2022 Daniel Harari, Chairman & CEO Jérôme Viala, Executive Vice President Maximilien Abadie, Chief Strategy Officer Paris – February 12, 2020
Slide 2: Financial Results Q4 & FY 2019 agenda
FINANCIAL RESULTS Q4 & FY 2019 n Vision and 2019 main highlights n Q4 2019 results n FY 2019 results n Lectra 4.0 strategy: reminder n Assessment of the 2017-2019 strategic roadmap n Strategic roadmap for 2020-2022 n 2020 outlook 2 Lectra - Financial results Q4 & FY 2019
Slide 3: Vision and 2019 main highlights
Vision and 2019 main highlights First successes of the A record level of Earnings in line with new offers for free cash flow revised objectives Industry 4.0 3 Lectra - Financial results Q4 & FY 2019
Slide 4: Challenging macroeconomic and geopolitical environment
Vision and 2019 main highlights CHALLENGING MACROECONOMIC AND GEOPOLITICAL ENVIRONMENT n In a context of uncertainty and apprehension, the entire year was marked by a very strong "wait-and-see" attitude by many companies, particularly in the fashion and automotive markets. n This adverse climate is
Slide 5: Positive impact of currency changes
Vision and 2019 main highlights POSITIVE IMPACT OF CURRENCY CHANGES n With an average exchange rate of $1.12/€1, Conversion of 2019 results using the 2018 exchange rates the US dollar was up 6% in 2019 compared In millions of euros to the same period in 2018, while the yuan strengthened by 1% agains
Slide 6: Acquisition of the company Retviews
Vision and 2019 main highlights ACQUISITION OF THE COMPANY RETVIEWS n On July 15, 2019, Lectra acquired 100% of the capital and voting rights of Retviews: 70% acquired immediately for €8m and the remainder in three installments in July 2020, 2021 and 2022, for the amounts of about 0.9x, 0.7x and 0.5
Slide 7: Agenda: Q4 2019 results
FINANCIAL RESULTS Q4 & FY 2019 n Vision and 2019 main highlights n Q4 2019 results n FY 2019 results n Lectra 4.0 strategy: reminder n Assessment of the 2017-2019 strategic roadmap n Strategic roadmap for 2020-2022 n 2020 outlook Detailed comparisons between 2019 and 2018 are based on 2018 exchange
Slide 8: Decrease in orders for new systems
Q4 2019 results DECREASE IN ORDERS FOR NEW SYSTEMS Orders for new systems Orders by product line In millions of euros Q4 19 vs. Q4 18 -9% -13% 32.5 30.0 2% Equipment and accompanying software 7% New CAD/CAM and PLM software licenses Training and consulting Q4 18 Q4 19 n The environment continued to
Slide 9: Revenues and income from operations in line with revised estimates
Q4 2019 results REVENUES AND INCOME FROM OPERATIONS IN LINE WITH REVISED ESTIMATES In millions of euros Revenues Income from operations $/€1 exchange rate At actual exchange rates Like-for-like At actual exchange rates Like-for-like -1% -2% -7% -10% 1.14 75.0 74.2 75.0 73.4 12.0 12.0 11.2 10.8 1.11
Slide 10: Agenda: FY 2019 results
FINANCIAL RESULTS Q4 & FY 2019 n Vision and 2019 main highlights n Q4 2019 results n FY 2019 results n Lectra 4.0 strategy: reminder n Assessment of the 2017-2019 strategic roadmap n Strategic roadmap for 2020-2022 n 2020 outlook Detailed comparisons between 2019 and 2018 are based on 2018 exchange
Slide 11: Orders for new systems on the decline
FY 2019 results ORDERS FOR NEW SYSTEMS ON THE DECLINE Orders for new systems In millions of euros 33.4 2018 2019 Change Change 32.5 At actual Like-for-like 30.0 exchange 28.2 27.4 27.6 28.0 26.5 rates Total 121.7 111.9 -8% -10% of which new CAD/CAM and 15.8 16.9 +7% +6% PLM software licenses of whic
Slide 12: Contrasted geographical activity
FY 2019 results CONTRASTED GEOGRAPHICAL ACTIVITY AMERICAS EUROPE ASIA-PACIFIC n Orders declined by 13% in China and increased by 9% -6% in the rest of Asia-Pacific. +1% -39% 44.0 41.5 40.5 38.6 27.9 17.7 2018 2019 2018 2019 2018 2019 REST OF THE WORLD 8% 9% +10% 37% 16% 23% 38% 8.9 9.7 2018 2019 201
Slide 13: Strong decline in orders in automotive, strong increase in furniture
FY 2019 results STRONG DECLINE IN ORDERS IN AUTOMOTIVE, STRONG INCREASE IN FURNITURE Orders for new systems In millions of euros 121.7 4% -18% 111.9 11% 4% Change +18% 14% § Europe -33% 35% -24% 29% § Americas -51% § Asia-Pacific -8% China -17%, rest of Asia-Pacific +1% § Europe -2% -6% 53% -40% 50%
Slide 14: Income from operations in line with revised objectives
FY 2019 results INCOME FROM OPERATIONS IN LINE WITH REVISED OBJECTIVES In millions of euros Revenues Income from operations At actual exchange rates Like-for-like At actual exchange rates Like-for-like -1% -3% 2019 REVISED OBJECTIVE +2% -6% 2019 REVISED OBJECTIVE 11.5 282.6 280.0 282.6 Revenues 40.2
Slide 15: Increase in recurring revenues
FY 2019 results INCREASE IN RECURRING REVENUES Revenues from software licenses, equipment and non-recurring Recurring revenues services In millions of euros In millions of euros At actual exchange rates Like-for-like At actual exchange rates Like-for-like -10% -12% +6% +4% 169.8 166.8 159.8 159.8 12
Slide 16: Resilient income from operations
FY 2019 results RESILIENT INCOME FROM OPERATIONS Evolution of income from operations In millions of euros +1.9 -0.1 n While commercial activity was highly +5.8 impacted by the difficult macroeconomic +6,2 -1.5 environment, the Company's business model proved its overall strength. +7,2 +7,2 +3.0 40.9
Slide 17: Greater impact of sales of software on a subscription basis
FY 2019 results GREATER IMPACT OF SALES OF SOFTWARE ON A SUBSCRIPTION BASIS n The change to the SaaS model, which is 2019 restated results at the heart of Lectra’s strategy, will If the SaaS sales in 2019 had been made in the form of perpetual licenses with their associated maintenance contracts con
Slide 18: Very strong growth in free cash flow
FY 2019 results VERY STRONG GROWTH IN FREE CASH FLOW Free cash flow and working capital requirement In millions of euros +67% 0.0 36.2 -11.0 -10.0 n This substantial increase is attributable to tight 21.6 control over working capital requirement, which -20.7 decreased by €10.6m in 2019, following an
Slide 19: A business model that once again proves its strength
FY 2019 results A BUSINESS MODEL THAT ONCE AGAIN PROVES ITS STRENGTH Record profitability levels Remarkable free cash flow performance In millions of euros, 2019 Operating margin Security ratio 14.6% 90.5% 36.2 14.3% 86.1% 14.2% 14.2% 29.3 83.1% 83.9% 83.9% 13.4% 15 16 17 18 19 15 16 17 18 19 Net in
Slide 20: A particularly robust balance sheet
FY 2019 results A PARTICULARLY ROBUST BALANCE SHEET Balance sheet In millions of euros 183.0 n The Group is debt-free. 170.4 120.6 n Net cash position reached a record level (after the dividend 102.2 payment of €12.8m declared in respect of FY 2018 and the disbursement of €8m for the acquisition of
Slide 21: Increase in share price
FY 2019 results INCREASE IN SHARE PRICE Evolution from January 1, 2019 to February 7, 2020 In euros, closing price 28 26 High AT FEBRUARY 7, 2020 January 15, 2020 €24.30 24 CAC 40 n Share price: €21.80 +27% n Market cap.: €700m 22 Lectra +20% n Enterprise Value: €579m 20 CAD Mid & Small n EV/2019 re
Slide 22: Unchanged dividend
FY 2019 results UNCHANGED DIVIDEND 1 FY 2019 DIVIDEND €0.40 / share 44% of net income 2 1.8% yield EVOLUTION OF THE DIVIDEND CAGR FY 2019 vs. FY 2014-FY 2019 FY 2014 +10% +60% 1 Subject to approval by the shareholders at the Combined Shareholders’ Meeting of April 30, 2020. Payable: May 8, 2020 2 Ba
Slide 23: Agenda: Lectra 4.0 strategy reminder
FINANCIAL RESULTS Q4 & FY 2019 n Vision and 2019 main highlights n Q4 2019 results n FY 2019 results n Lectra 4.0 strategy: reminder n Assessment of the 2017-2019 strategic roadmap n Strategic roadmap for 2020-2022 n 2020 outlook 23 Lectra - Financial results Q4 & FY 2019
Slide 24: A long-term vision
Lectra 4.0 strategy: reminder A LONG-TERM VISION Continuing its focus on the long-term, the Lectra 4.0 strategy, launched in 2017, aims to position Lectra as a key Industry 4.0 player in its market sectors between now and 2030. 24 Lectra - Financial results Q4 & FY 2019
Slide 25: New consumers, new behaviors
Lectra 4.0 strategy: reminder NEW CONSUMERS, NEW BEHAVIORS expectations Higher … and more explicit of brands… values Simplicity throughout the CSR Transparency Immediacy buyer’s journey (Corporate Social Responsibility) Now, or now Personalization Experience Ethical commitment over possession Exclus
Slide 26: Markets are undergoing profound changes
Lectra 4.0 strategy: reminder MARKETS ARE UNDERGOING PROFOUND CHANGES Fashion Automotive Furniture Fashion brands and manufacturers Automotive suppliers, under pressure Furniture industry players are forced to must rethink the in-store and digital from carmakers and faced with difficult adapt withou
Slide 27: Industry 4.0 is transforming industrial processes
Lectra 4.0 strategy: reminder INDUSTRY 4.0 IS TRANSFORMING Factories are at the heart INDUSTRIAL PROCESSES of the value chain driving a new digitalized product lifecycle that will benefit consumers Cloud, big data, Internet of Things, artificial intelligence… Mechanization, steam, Mass production, E
Slide 28: Six key steps to exploit the full potential of Industry 4.0
Lectra 4.0 strategy: reminder SIX KEY STEPS TO EXPLOIT THE FULL POTENTIAL OF THE INDUSTRY 4.0 How can an autonomous response be achieved? Self-optimising What will happen? Being prepared Why is it happening? Value Understanding What is happening? source: FIR e. V. at RWTH Aachen University Seeing PR
Slide 29: Lectra 4.0: a strategy to address the challenges of Industry 4.0
Lectra 4.0 strategy: reminder LECTRA 4.0: A STRATEGY TO ADDRESS THE CHALLENGES OF THE INDUSTRY 4.0 Premium positioning Focus on three strategic Customers at the New 4.0 services market sectors heart of the activities High value-added solutions Fashion, automotive, and A commitment from Lectra teams
Slide 30: Lectra already has the fundamentals necessary for Industry 4.0
Lectra 4.0 strategy: reminder LECTRA ALREADY HAS THE FUNDAMENTALS NECESSARY FOR INDUSTRY 4.0 13 years of experience Combination of equipment, Strong business-line in IoT software, services and data expertise Close to 4,500 cutting machines, The sole player in its industry to integrate the 540 consul
Slide 31: Agenda: Assessment of 2017-2019 roadmap
FINANCIAL RESULTS Q4 & FY 2019 n Vision and 2019 main highlights n Q4 2019 results n FY 2019 results n Lectra 4.0 strategy: reminder n Assessment of the 2017-2019 strategic roadmap n Strategic roadmap for 2020-2022 n 2020 outlook 31 Lectra - Financial results Q4 & FY 2019
Slide 32: Strategic objectives accomplished overall
Assessment of the 2017-2019 strategic roadmap STRATEGIC OBJECTIVES ACCOMPLISHED OVERALL Objectives Assessment Accelerate revenue growth, both organic and n A record level of recurring revenues through targeted acquisitions n Acquisition of two high-tech startups Accentuate technological leadership a
Slide 33: Two strategic acquisitions with strong potential
Assessment of the 2017-2019 strategic roadmap TWO STRATEGIC ACQUISITIONS WITH STRONG-POTENTIAL n Considerably reinforced offer n 25 customers at the end of 2019 n Expansion of commercial availability to Europe and n Offer approved by prestigious customers, from fast fashion Americas in 2019 to premi
Slide 34: Sustained investments in R&D
Assessment of the 2017-2019 strategic roadmap SUSTAINED INVESTMENTS IN R&D Evolution of R&D investment R&D teams In millions of euros 368 27.7 30.8 31.8 + 36% + + = €90 m 270 End-2016 End-2019 11.4% n Strengthened expertise in the key technologies for 10.9% Industry 4.0. 10.0% n Transformed methods
Slide 35: Major technological advances in three years
Assessment of the 2017-2019 strategic roadmap MAJOR TECHNOLOGICAL ADVANCES IN THREE YEARS New offers for Industry 4.0 New versions or product line extensions of flagship offers 35 Lectra - Financial results Q4 & FY 2019
Slide 36: Heterogeneous impact of growth accelerators
Assessment of the 2017-2019 strategic roadmap HETEROGENEOUS IMPACT OF GROWTH ACCELERATORS Substantial growth in 2017 China Sharp slowdown starting in Q4 2018: trade war with the United States and significant decrease in the Chinese automotive market Leather Airbags INDUSTRY 4.0 Strong growth in furn
Slide 37: Successful initial evolution towards SaaS mode
Assessment of the 2017-2019 strategic roadmap SUCCESSFUL INITIAL EVOLUTION TOWARDS SAAS MODE Software sales policy CAD/CAM and PLM software orders New 3% 13% 24% software SaaS Existing CAD and PLM software Perpetual 97% 87% 76% licenses 2017 2018 2019 Embedded software for Perpetual licenses SaaS cu
Slide 38: Financial structure stronger than ever before
Assessment of the 2017-2019 strategic roadmap FINANCIAL STRUCTURE STRONGER THAN EVER BEFORE Recurring revenues Security ratio Cumulated free cash flow Net cash Shareholder’s equity +15% +6.6pts +41% +59% +38% 169.8 90.5% 91.0 183.0 147.1 83.9% 120.6 64.4 132.6 75.7 16 19 16 19 14-16 17-19 31/12/16 3
Slide 39: The first stage in Lectra's evolution successfully completed
Assessment of the 2017-2019 strategic roadmap THE FIRST STAGE IN LECTRA'S EVOLUTION SUCCESSFULLY COMPLETED Except for the delay in achieving growth in orders in 2018 and 2019, Lectra executed its 2017-2019 roadmap in line with its expectations. Strategic objectives Major technological advances accom
Slide 40: Agenda: Strategic roadmap for 2020-2022
FINANCIAL RESULTS Q4 & FY 2019 n Vision and 2019 main highlights n Q4 2019 results n FY 2019 results n Lectra 4.0 strategy: reminder n Assessment of the 2017-2019 strategic roadmap n Strategic roadmap for 2020-2022 n 2020 outlook 40 Lectra - Financial results Q4 & FY 2019
Slide 41: Acceleration towards Industry 4.0
Strategic roadmap for 2020-2022 ACCELERATION TOWARDS INDUSTRY 4.0 The objective of Lectra through its 2020-2022 strategic roadmap is to capture the full potential of its new offers for Industry 4.0, while delivering sustainable, profitable business growth. 41 Lectra - Financial results Q4 & FY 2019
Slide 42: Four strategic priorities
Strategic roadmap for 2020-2022 FOUR STRATEGIC PRIORITIES 1 Accelerate organic 2 Strengthen customer growth relations Extend the offers for Develop new areas for Industry 4.0 growth 3 4 42 Lectra - Financial results Q4 & FY 2019
Slide 43: Reinforce prospection and sales of new product lines (1/2)
Strategic roadmap for 2020-2022 Accelerate organic growth REINFORCE PROSPECTION AND SALES OF NEW PRODUCT LINES TO EXISTING CUSTOMERS (1/2) More More customers X products Gained Increased Greater market share share of wallet profitability 43 Lectra - Financial results Q4 & FY 2019
Slide 44: Reinforce prospection and sales of new product lines (2/2)
Strategic roadmap for 2020-2022 Accelerate organic growth REINFORCE PROSPECTION AND SALES OF NEW PRODUCT LINES TO EXISTING CUSTOMERS (2/2) More More customers products Reinforce prospecting actions Extend the range of products used Use digital more for marketing actions in Accelerate the replacement
Slide 45: Seize every market opportunity
Strategic roadmap for 2020-2022 Accelerate organic growth SEIZE EVERY MARKET OPPORTUNITY The Group will strive to seize every opportunity in its markets, including: Transformation of the Automation of leather cutting Rise in airbag production Chinese ecosystem in automotive and furniture n Deep stru
Slide 46: Improve customer performance
Strategic roadmap for 2020-2022 Strengthen customer relations IMPROVE CUSTOMER PERFORMANCE More More Better use of customers X products X solutions Gained Increased Greater Increased market share share of wallet profitability value perceived by customers and Lectra Decreased risk of churn1 1 Churn r
Slide 47: Deploy customer success progressively
Strategic roadmap for 2020-2022 Strengthen customer relations DEPLOY CUSTOMER SUCCESS PROGRESSIVELY Objective: optimize customers' performance through the use of Lectra solutions. Customer Success Customer Care + n Proactive n Reactive n Increased product value n Solve problems for the customer n Sh
Slide 48: Constantly ensure customer satisfaction
Strategic roadmap for 2020-2022 Strengthen customer relations CONSTANTLY ENSURE CUSTOMER SATISFACTION n Increase the number of surveys throughout the customer journey 86% 71% n Reinforce customer relations thanks to digital tools n Accelerate the implementation of recovery actions linked to customer
Slide 49: Bring more value to the offers for Industry 4.0
Strategic roadmap for 2020-2022 Extend the offers for Industry 4.0 BRING MORE VALUE TO THE OFFERS FOR INDUSTRY 4.0 Lectra will pursue the development of these offers by creating new functionalities and expanding their scope New product lines To enable its customers to implement the principles of Ind
Slide 50: Pursue the policy of investment in R&D
Strategic roadmap for 2020-2022 Extend the offers for Industry 4.0 PURSUE THE POLICY OF INVESTMENT IN R&D 11 to 12% of revenues devoted to R&D investment over the strategic roadmap period. These investments will enhance the value of existing offers and lead to the creation of new offers for Industry
Slide 51: Transform internal processes to support rollout of SaaS offers
Strategic roadmap for 2020-2022 Extend the offers for Industry 4.0 TRANSFORM INTERNAL PROCESSES TO SUPPORT THE ROLLOUT OF SAAS OFFERS Perpetual license SaaS Long and complex “project” selling “Progressive” selling Reactive relationship limited interactions with users VS Proactive relationship indivi
Slide 52: Promote more open innovation
Strategic roadmap for 2020-2022 Develop new areas for growth PROMOTE MORE OPEN INNOVATION The Innovation Lab, located in Lectra’s technological campus in Bordeaux-Cestas, will become the driving force behind this new policy Research laboratories, partners, start-ups 52 Lectra - Financial results Q4
Slide 53: Intensify targeted acquisitions
Strategic roadmap for 2020-2022 Develop new areas for growth INTENSIFY TARGETED ACQUISITIONS Objectives of external growth Complete range of Incorporate Increase market share products technological “brick” Strategic Tactic Lectra mainly targets companies whose value is between €10m and €60m 53 Lectr
Slide 54: Favor the acquisition of start-ups
Strategic roadmap for 2020-2022 Develop new areas for growth FAVOR THE ACQUISITION OF START-UPS What Lectra bring What Lectra can can acquire to the new teams Extension Brand Prestigious of the product portfolio Market share image customer base / New customers Expert teams Global Technology in every
Slide 55: Ensure sustainable, profitable growth
Strategic roadmap for 2020-2022 ENSURE SUSTAINABLE, PROFITABLE GROWTH Recurring revenues Objective + 20% Software sold in SaaS mode CAD/CAM and PLM €13m in 2022 software, equipment and +4% accompanying software /year maintenance contracts Consumables +5% and parts /year 2016 2017 2018 2019 2020 2021
Slide 56: Pursue investments while ensuring profitability
Strategic roadmap for 2020-2022 PURSUE INVESTMENTS WHILE ENSURING PROFITABILITY 90% Evolution of the security ratio 92% Objective 90% maintain at more than 88% The Group will use the growth in margin generated by recurring revenues to finance its development: 86% n Innovation n Customer Success 84%
Slide 57: Create value for shareholders
Strategic roadmap for 2020-2022 CREATE VALUE FOR SHAREHOLDERS Objective Dividends The Group has set itself the objective of maintaining its 40-50% dividend payment policy. Free cash flow = Net income Lectra will use its available cash to finance future targeted over the 2020-2022 period Acquisitions
Slide 58: Agenda: 2020 outlook
FINANCIAL RESULTS Q4 & FY 2019 n Vision and 2019 main highlights n Q4 2019 results n FY 2019 results n Lectra 4.0 strategy: reminder n Assessment of the 2017-2019 strategic roadmap n Strategic roadmap for 2020-2022 n 2020 outlook 58 Lectra - Financial results Q4 & FY 2019
Slide 59: Internal and external factors weighing on the 2020 outlook (1/2)
2020 outlook INTERNAL AND EXTERNAL FACTORS WEIGHING ON THE 2020 OUTLOOK (1/2) Impact of the sale of software on a subscription basis Positive impact on revenues and income from operations in the medium term On results for 2020: - 1 to 2 percentage points on revenues and operating margin1 1 Compared
Slide 60: Internal and external factors weighing on the 2020 outlook (2/2)
2020 outlook INTERNAL AND EXTERNAL FACTORS WEIGHING ON THE 2020 OUTLOOK (2/2) Therefore, until visibility improves, the Company Uncertain macroeconomic and geopolitical environment, coronavirus epidemic has decided, at this stage, not to formulate estimates for the year. The year ahead is still frau
Slide 61: Upcoming financial calendar
UPCOMING FINANCIAL CALENDAR Annual Shareholders’ Quarterly financial Analyst conference Meeting results April 30, 2020 October 29, 2020 Q1 April 29, 2020 Q2 July 27, 2020 Q3 October 28, 2020 Q4 February 10, 2021 61 Lectra - Financial results Q4 & FY 2019