Cyient Limited · NSE:CYIENT
Cyient — Q1 FY20 Earnings Presentation
53 slides from Cyient's earnings presentation, Jul 18, 2019
Slide 1: Revised Investor Presentation cover letter to exchanges
CYll:NT • 18 July 2019 The BSE limited The National Stock Exchange of India Ltd PJ Towers Exchange Plaza, Dalal Street Bandra-Kurla Complex, Bandra (E) Mumbai 400001 Mumbai-400 051 Scrip Code: 532175 Scrip Code: CYIENT Dear Sir, Sub: Revised Investor Presentation - Reg. Please find enclosed herewith
Slide 2: Investor Presentation Q1 FY20
Investor PRESENTATION Q1 FY20 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 Highlights and Business Highlights
Financial Business Highlights Update Update • Revenue • Financial Highlights • Cost Optimization Exercise • Cost optimization • Business Highlights • Significant highlights • Ind AS 116 • Awards & Recognition • M&A update • Hedge and other income • CSR Activities • Industry outlook • Income statemen
Slide 5: Highlights: Financial Highlights and Business Highlights
Financial Business Highlights Update Update • Revenue • Financial Highlights • Cost Optimization Exercise • Cost optimization • Business Highlights • Significant highlights • Ind AS 116 • Awards & Recognition • M&A update • Hedge and other income • CSR Activities • Industry outlook • Income statemen
Slide 6: Highlights for the Quarter (1/2)
Highlights for the Quarter (1/2) Revenue Financial Highlights for Quarter • Consolidated revenue at $ 156.6Mn; de- 0.8% YoY (₹ terms) growth of 5.2% QoQ and de- growth of 2.6% -2.6% YoY ($ terms) YoY Quarterly revenue at • Services revenue at $ 137.9Mn; de-growth of $156.6Mn/₹10,890Mn 6.1% QoQ (-5.7
Slide 7: Highlights for the Quarter (2/2)
Highlights for the Quarter (2/2) Business Highlights CSR Activities • Strategic Investment in Cylus (a rail • Continue to support 25 Government cybersecurity company) : The investment Schools – providing education to 15800+ strengthens our focus on digitization and underprivileged children cybersecu
Slide 8: Highlights Financial Update
Financial Business Highlights Update Update • Revenue • Financial Highlights • Cost Optimization Exercise • Cost optimization • Business Highlights • Significant highlights • Ind AS 116 • CSR Activities • M&A update • Hedge and other income • Infrastructure • Industry Outlook • Income statement upda
Slide 9: Revenue for Q1 FY20
Revenue for Q1 FY20 Revenue Q1FY19 Q2 FY19 Q3 FY19 Q4 FY19 Q1 FY20 QoQ YoY $ Mn 160.8 168.9 165.1 165.2 156.6 -5.2% -2.6% ₹ Mn 10,800 11,870 11,876 11,629 10,890 -6.4% 0.8% Services Group Geography Business Units $ Mn QoQ YoY $ Mn QoQ YoY $86.8Mn A&D 48.4 -2.8% -0.8% 60.7 0.1% 1.6% NAM -2.8% QoQ Com
Slide 10: 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: A number of levers targeting
Slide 11: Ind AS 116 - Leases
Ind AS 116 - Leases Lease accounting change • The new accounting standard Ind AS 116 Leases is effective for annual reporting beginning April 19 • Lessees were hitherto required to disclose operating lease arrangements as an off-balance sheet item and corresponding liability as a disclosure. • Ind A
Slide 12: Hedge Book for Q1 FY20
Hedge Book for Q1 FY20 Value in Respective Outstanding ForwardContracts* Currency Mn. Booked Rate (in ₹ ) for next 12 Months 30-Jun-19 31-Mar-19 30-Jun-18 134 132 96.7 125 86.2 87.6 78.6 73.3 69.1 55.7 52.8 52.6 66 66 48.4 59 28 28 27 23 23 21 13 13 10 8 8 9 USD EUR AUD GBP CAD Total (USD) INR/USD I
Slide 13: Other Income for Q1 FY20
Other Income for Q1 FY20 All Figures in ₹ Mn Q1 FY20 Q4 FY19 Q1 FY19 Other Income movement Income from Treasury • Other income is Lower by ₹507Mn Interest on Invesmtents/Deposits 113 135 116 (-64%) QoQ primarily due to lower Dividend on Mutual Funds 8 13 8 Treasury income by ₹27Mn and lower Unrealis
Slide 14: Income statement for Q1 FY20
Income statement for Q1 FY20 All Figures in ₹ Mn Q1 FY20 Q4 FY19 Q1 FY19 EBIT Movement Revenue 10,890 11,629 10,800 • Consolidated EBIT at 9.2% ; down EBIT 1,005 1,490 1,031 358 bps QoQ. Consolidated EBITDA PAT (Reported) at 13.3% down 180 bps QoQ 905 1,768 825 • One time impact of lower PAT (Normal
Slide 15: Operating margin bridge for Q1 FY20
Operating margin bridge for Q1 FY20 Particulars EBIT Q4 FY19 12.80% Depreciation 225 bps OPM (EBITDA) Q4 FY19 15.10% Lower efficiencies* -160 bps Lower SG&A absorption* -142 bps 360 bps Increased Investment spend* -58 bps Fx impact -35 bps Hike Impact -85 bps Lease reclassification (IndAS 116) 170 b
Slide 16: Cash Generation for Q1 FY20
Cash Generation for Q1 FY20 All Figures in ₹ Mn Q1 FY20 Q4 FY19 Q1 FY19 Cash Generation – Services • Cash and cash equivalents at a Operating Profit 1,403 1,513 1,273 healthy levels of ₹8,213Mn Other Income 199 985 157 • For the quarter, the cash flow Profit from Operations 1,602 2,498 1,430 convers
Slide 17: Highlights for the Quarter, Business Update
Highlights Financial Business Highlights for the Quarter Update Update • Revenue • Financial Highlights • Revenue • Cost Optimization Exercise • Cost optimization • Business Highlights • Income statement update • Significant highlights • Ind AS 116 • Awards & Recognition • Other Income & Hedge • M&A
Slide 18: Significant Developments for Q1 FY20
Significant Developments for Q1 FY20 Reorganisation of Business Units • The Company combined energy and natural resources business’ in erstwhile Industrial, Energy and Natural Resources (IENR) BU and the ‘utilities business’ in erstwhile Utilities & Geospatial (U&G) BU into a new business unit, Ener
Slide 19: Investment Pipeline & Focus Areas for Q1 FY20
Investment Pipeline & Focus Areas for Q1 FY20 M&A Corporate Investments 6 Vertical focused Medical tech, M&A strategy in key 2 Communication 0 0 1 geographic markets; Technology, IoT/M2M Pre-LOI LOI Signed/Closed large acquisitions Evaluations Signed/Closed & Advanced avionics *Pre LOI and LOI refle
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 grow by 4% The Communications industry is expected to grow by 2%-3% driven by strong commercial aircraft order backlog and defense through the year driven primarily by b
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 a growth The Rail transport industry is expected to witness a growth of of 2.5% driven by rising commodity prices, focus on grid 2.5% driven by growth in rail infr
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 witness a drop of challenges in the worldwide economic conditions, fluctuations in ~3% through the year, driven by a downturn in me
Slide 23: 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 24: 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 25: 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 26: Thank you
Thank you 25 CYIENT © 2019 CONFIDENTIAL
Slide 27: Annexure Q1 FY20
Investor PRESENTATION Annexure Q1 FY20 CYIENT © 2019 CONFIDENTIAL CYIENT © 2019 CONFIDENTIAL
Slide 28: Message from the Management
Message from the Management Commenting on the results, Mr. Krishna Bodanapu, Managing Director and Chief Executive Officer, said, “Our Q1 FY 20 results were disappointing, we recorded a revenue of $156.6 Mn lower by 5.2% QoQ and 2.6% YoY. Our services business was lower by 5.7% QoQ predominantly dri
Slide 29: Message from the Management
Message from the Management Commenting on the results, Mr. Ajay Aggarwal, President & CFO, said, “While the company has challenges in the short-term, focus and investments on the long-term initiatives continue. The introduction of our robust cost optimisation and profit improvement program has helpe
Slide 30: Business Performance & Outlook (1/3)
Business Performance & Outlook (1/3) Aerospace & Defense Aerospace & Defense business unit had a de-growth of 0.1% QoQ and growth of 1.6% YoY driven by slowdown in business across two key clients. We expect the slow down to be short term and the business to normalize towards the end of Q2. Our digit
Slide 31: Business Performance & Outlook (2/3)
Business Performance & Outlook (2/3) E&U Energy and Utilities BU is a newly formed business unit that brings together the synergy across both the segments. We expect to see growth through combine synergy as we go through the year. The BU witnessed a degrowth of 5.7% QoQ and 7.3% YoY driven by slowdo
Slide 32: Business Performance & Outlook (3/3)
Business Performance & Outlook (3/3) Portfolio The Portfolio BU witnessed a de-growth of 6.5% QoQ and 11.4% YoY driven by de-growth in the geospatial segment. The challenge in the segment is expected to continue through the year with growth in emerging clients expected to be slower than anticipated.
Slide 33: Consolidated Financial Metrics
Consolidated Financial Metrics Key Operational Metrics (₹Mn) Growth % ₹ Mn Q1 FY20 Q4 FY19 Q1 FY19 QoQ YoY Revenue 10,890 11,629 10,800 -6.4% 0.8% EBIT 1,005 1,490 1,031 -32.6% -2.6% EBIT Margin 9.2% 12.8% 9.5% -359 bps -32 bps Reported PAT 905 1,768 825 -48.8% 9.7% Normalised PAT 905 1,881 825 -51.
Slide 34: Consolidated Financial Metrics
Consolidated Financial Metrics Key Operational Metrics ($Mn) Growth % $ Mn Q1 FY20 Q4 FY19 Q1 FY19 QoQ YoY Revenue 156.6 165.2 160.8 -5.2% -2.6% EBIT 14.4 21.2 15.4 -31.8% -5.9% EBIT Margin 9.2% 12.8% 9.5% -359 bps -32 bps Reported PAT 13.0 25.1 12.3 -48.2% 5.9% Normalised PAT 13.0 26.7 12.3 -51.3%
Slide 35: Consolidated Revenue Segmentation
Consolidated Revenue Segmentation By Geography (%) Q1 FY20 Q4 FY19 Q1 FY19 Americas 55.4% 54.0% 52.5% Europe, Middle East, Africa 28.1% 24.7% 24.6% Asia Pacific (includes India) 16.4% 21.3% 23.0% By Business Unit (%)1 Q1 FY20 Q4 FY19 Q1 FY19 Aerospace and Defense 38.8% 36.7% 37.2% Transportation 11.
Slide 36: Consolidated Operations Metrics
Consolidated Operations Metrics Account Receivables (in Days) Q1 FY20 Q4 FY19 Q1 FY19 DSO Total 104 88 89 - Billed 74 61 63 - Unbilled 30 27 26 Order Intake ($ Mn)2 Q1 FY20 Q4 FY19 Q1 FY19 Cyient Services 134 185 153 DLM 21 11 17 Group OI Total 155 196 170 2 The Order Intake reported is the total va
Slide 37: Consolidated Customer & Employee Metrics
Consolidated Customer & Employee Metrics Top Clients: Revenue Contribution (%) Q1 FY20 Q4 FY19 Q1 FY19 Top 5 32.3% 31.8% 33.7% Top 10 44.1% 43.0% 46.0% No. of Million $ Clients Q1 FY20 Q4 FY19 Q1 FY19 20 Mn+ 4 4 4 10 Mn+ 12 13 11 5 Mn+ 28 29 25 1 Mn+ 86 86 66 New Customers Added 20 5 20 Employee Q1
Slide 38: Consolidated Other Financial Metrics (1/2)
Consolidated Other Financial Metrics (1/2) Other Income (₹ Mn) Q1 FY20 Q4 FY19 Q1 FY19 Income from Investments 121 148 124 Fx Gain/(Loss) - Realised 108 -6 -46 Fx Gain/(Loss) - Unrealised 24 126 30 Others 30 521 62 Total 282 789 170 Capex (₹ Mn) Q1 FY20 Q4 FY19 Q1 FY19 Capital Expenditure 235 407 39
Slide 39: Consolidated Other Financial Metrics (2/2)
Consolidated Other Financial Metrics (2/2) Outstanding Forward Contracts (Mn of respective currencies)1 Q1 FY20 Q4 FY19 Q1 FY19 USD / INR 66.1 64.3 59.1 EURO / INR 28.1 28.6 27.4 GBP / INR 7.9 8.4 8.8 AUD / INR 22.8 22.5 21.3 1 Forward contracts is taken only for services business CYIENT © 2019 CONF
Slide 40: Consolidated Income Statement
Consolidated Income Statement ₹ Mn Q1 FY20 Q4 FY19 Q1 FY19 Operating Revenue 10,890 11,629 10,800 Cost of Revenue 7,140 7,524 7,100 Direct Salary and related costs 5,143 4,989 4,835 Direct Travel 206 243 245 Sub contract and others 872 1,106 929 Delivery Management 0 244 233 Material cost 920 941 85
Slide 41: Consolidated Balance Sheet
Consolidated Balance Sheet ? Mn Q1 FY20 Q4 FY19 Q1 FY19 EQUITY AND LIABILITIES Shareholders’ funds - Share capital 550 552 565 - Reserves and surplus 24,314 25,070 23,845 Total - Shareholders' funds 24,864 25,622 24,410 Non-current liabilities - Long-term borrowings and liabilities 4,015 1,813 2,307
Slide 42: Consolidated Cash Flow Movement
Consolidated Cash Flow Movement ₹ Mn Q1 FY20 Q4 FY19 Q1 FY19 Free cash flow, after non-operating income 186 402 445 Long term investments -401 -995 -1,273 Equity 10 - 2 Borrowings 8 -75 878 Exceptional item - Cash RSU 0 - -117 Dividends -1,187 -6 - Buyback of Shares -386 -1,631 0 Cash on acquisition
Slide 43: Cyient Metrics (Excluding Design Led Manufacturing)
Cyient Metrics (Excluding Design Led Manufacturing) CYIENT © 2019 CONFIDENTIAL 17
Slide 44: Cyient Metrics (Excluding Design Led Manufacturing) (1/3)
Cyient Metrics (Excluding Design Led Manufacturing) (1/3) By Geography (%)1 Q1 FY20 Q4 FY19 Q1 FY19 Americas 58.8% 57.0% 55.3% Europe, Middle East, Africa 26.9% 26.4% 26.3% Asia Pacific (including India) 14.3% 16.7% 18.4% 1 India is included in APAC (from EMEA earlier), now restated for previous per
Slide 45: Cyient Metrics (Excluding Design Led Manufacturing) (2/3)
Cyient Metrics (Excluding Design Led Manufacturing) (2/3) Currency Mix (%) Q1 FY20 Q4 FY19 Q1 FY19 USD 57.5% 56.2% 57.1% EURO 14.4% 14.6% 12.0% GBP 8.5% 10.0% 8.4% AUD 8.4% 10.3% 13.0% Others 11.1% 8.9% 9.5% Utilization (%) Q1 FY20 Q4 FY19 Q1 FY19 Utilization NA* 77.8% 75.0% Account Receivables (in
Slide 46: Cyient Metrics (Excluding Design Led Manufacturing) (3/3)
Cyient Metrics (Excluding Design Led Manufacturing) (3/3) Top Clients: Revenue Contribution (%) Q1 FY20 Q4 FY19 Q1 FY19 Top 5 36.5% 35.7% 37.9% Top 10 49.8% 48.4% 51.8% No. of Million $ Clients Q1 FY20 Q4 FY19 Q1 FY19 20 Mn+ 4 4 4 10 Mn+ 12 13 11 5 Mn+ 24 26 25 1 Mn+ 71 70 65 New Customers Added 20
Slide 47: Cyient Metrics (Design Led Manufacturing)
Cyient Metrics (Design Led Manufacturing) CYIENT © 2019 CONFIDENTIAL 21
Slide 48: Cyient Metrics (Design Led Manufacturing) (1/3)
Cyient Metrics (Design Led Manufacturing) (1/3) Income Statement - Abridged (In ₹ Mn)1 Q1 FY20 Q4 FY19 Q1 FY19 Net Revenue 1,297 1,282 1,212 Direct Salaries & other costs 160 111 141 Material Cost 1,029 1,025 921 Gross Profit 108 146 150 SG&A 83 94 95 Depreciation & amortisation 29 24 25 EBIT -4 29
Slide 49: Cyient Metrics (Design Led Manufacturing) (2/3)
Cyient Metrics (Design Led Manufacturing) (2/3) By Business Unit (%) Q1 FY20 Q4 FY19 Q1 FY19 Aerospace and Defense 65.7% 59.2% 60.6% Transportation 0.3% 0.0% 0.0% Energy & Utilities 19.9% 0.0% 0.0% Medical 13.4% 14.3% 11.1% Communications 0.3% 3.1% 10.8% Portfolio 0.4% 15.5% 17.4% Others 0.0% 7.9% 0
Slide 50: Cyient Metrics (Design Led Manufacturing) (3/3)
Cyient Metrics (Design Led Manufacturing) (3/3) No. of Million $ Clients Q1 FY20 Q4 FY19 Q1 FY19 5 Mn+ 4 3 0 2 Mn+ 8 9 1 1 Mn+ 15 16 1 New Customers Added 0 1 1 Key Operational Metrics Q1 FY20 Q4 FY19 Q1 FY19 Headcount 645 661 645 DSO (in Days) 100 106 114 DPO (in Days) 133 106 141 Customer Advance
Slide 51: 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 52: 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 53: Thank you
Thank you 27 CYIENT © 2019 CONFIDENTIAL