Vtech Holdings Limited · HKEX:303
Vtech — H1 FY2022 Earnings Presentation
34 slides from Vtech's earnings presentation, Nov 15, 2021
Slide 1: VTech Holdings Limited 2021/2022 Interim Results Announcement
VTech Holdings Limited 2021/2022 Interim Results Announcement 15 November 2021
Slide 2: Financial Review
vtech Financial Review >> > >> > INNOVATION BEYOND TECHNOLOGY 2
Slide 3: Financial Highlights
Financial Highlights For the six months ended 30 September (US$ million) 2021 2020 Change Revenue 1,114.8 1,123.6 -0.8% Gross Profit 304.9 357.0 -14.6% Gross Profit Margin % 27.4% 31.8% -4.4% pts Operating Profit 90.8 142.6 -36.3% Operating Profit Margin % 8.1% 12.7% -4.6% pts Profit Attributable to
Slide 4: Revenue by Region
Revenue by Region For the six months ended 30 September (US$ million) 2021 % 2020 Change North America 497.9 44.6 492.9 1.0% Europe 485.8 43.6 487.5 -0.3% Asia Pacific 119.0 10.7 130.2 -8.6% Other Regions 12.1 1.1 13.0 -6.9% Total 1,114.8 100.0 1,123.6 -0.8% 4
Slide 5: Working Capital
Working Capital (US$ million) 30/09/21 31/03/21 30/09/20 Stocks 599.4 414.0 436.1 Stocks Turnover Days 141 days 103 days 120 days Trade Debtors 507.9 270.7 521.7 Trade Debtors Turnover Days 66 days 61 days 60 days 5
Slide 6: Liquidity Position
Liquidity Position (US$ million) 30/09/21 31/03/21 30/09/20 Deposits and Cash 52.2 343.8 137.1 Total Borrowings (26.4) ‒ ‒ Net Cash Position 25.8 343.8 137.1 6
Slide 7: Operations Review
vtech Operations Review >> > >> > INNOVATION BEYOND TECHNOLOGY 7
Slide 8: Costs
Costs • Gross profit margin decreased from 31.8% to 27.4% • Decline in gross profit margin was attributable to: Higher materials prices, especially of electronic components and plastic materials Drastic increase in freight costs arising from container shortages Higher direct labour costs and m
Slide 9: North America
North America Revenue by Product Line (US$ million) • Revenue increased by 1.0% to US$497.9 million, ELPs 44.6% of Group revenue 255.0 (-8.3%) • Higher sales of TEL products and CMS offset lower sales of ELPs • ELPs revenue declined by 8.3% to US$255.0 million Production and shipment delays result
Slide 10: North America (continued)
North America (continued) • Standalone Products: Lower sales of both brands VTech: Growth in KidiZoom camera and Switch & Go Dinos ranges offset by declines in Go! Go! Smart family of products, Go! Go! Cory Carson vehicles and playsets, preschool products and Kidi line Sales of infant and todd
Slide 11: North America (continued)
North America (continued) • Platform Products: Sales decreases for both brands VTech: Higher sales of Touch & Learn Activity Desk insufficient to offset lower sales of KidiBuzz and KidiZoom Smartwatches New KidiBuzz 3 and KidiZoom Smartwatch DX3 did not reach retail shelves until September L
Slide 12: North America (continued)
North America (continued) • TEL products revenue rose by 0.8% to US$131.3 million, as higher sales of commercial phones and other telecommunication products offset lower sales of residential phones • Commercial Phones: Benefited from gradual resumption of business activities Higher sales of Snom
Slide 13: North America (continued)
North America (continued) • Other Telecommunication Products: Boosted by rising sales of baby monitors, with additional placements in key retailers, expanded online presence and launch of new models VTech strengthened position as no.1 baby monitor brand in the US and Canada • Residential Phones:
Slide 14: North America (continued)
North America (continued) • CMS revenue increased by 31.9% to US$111.6 million • Lifting of COVID-19 restrictions led to a surge in demand for certain types of professional audio equipment, industrial products, solid-state lighting and medical and health products Professional Audio Equipment: Sale
Slide 15: North America (continued)
North America (continued) Industrial Products: Benefited from resumption of business activities, boosting orders for PCBA for coin and note recognition machines. Orders for industrial printers recovered as market returned to normal Solid-state Lighting: Sales rebounded as project-based demand re
Slide 16: Europe
Europe • Revenue down 0.3% to US$485.8 million, 43.6% of Revenue by Product Line (US$ million) Group revenue ELPs • Higher sales of CMS offset by lower ELPs and 151.1 (-4.1%) TEL products revenues • ELPs revenue fell 4.1% to US$151.1 million Lower sales of both standalone and platform products P
Slide 17: Europe (continued)
Europe (continued) • Standalone Products: LeapFrog: Higher sales, with growth led by infant, toddler and preschool products, augmented by launch of LeapLand Adventures VTech: Higher sales of Switch & Go Dinos offset by declines in other categories New Marble Rush line hit shelves in all major
Slide 18: Europe (continued)
Europe (continued) • Platform Products: Sales declines for both VTech and LeapFrog brands Material supply and logistics problems saw some new products only reach shelves after September, delaying their sales contributions VTech: Higher sales of children’s educational tablets offset by lower sa
Slide 19: Europe (continued)
Europe (continued) • TEL products revenue decreased by 9.1% to US$47.7 million Lower sales of residential phones offset growth in commercial phones and other telecommunication products • Residential Phones: Sells products in the region on ODM basis Shortage of semiconductors led to deferral of
Slide 20: Europe (continued)
Europe (continued) • Commercial Phones and Other Telecommunication Products: Benefited from resumption of business activities, leading to rising sales of Snom business phones and recovery in hotel phones CAT-iq Handsets: Sales increased as orders from an existing customer grew Baby Monitors: S
Slide 21: Europe (continued)
Europe (continued) • CMS revenue increased 3.5% to US$287.0 million Sales of home appliances, IoT products, medical and health products, communication products and automotive related products rose, offsetting declines in professional audio equipment and hearables Home Appliances: Demand recovere
Slide 22: Europe (continued)
Europe (continued) Medical and Health Products: Grew on increasing orders for health and beauty products and hearing aids Communication Products: Benefited from higher orders for Wi-Fi routers Automotive Related Products: Sales supported by increasing orders for smart electric vehicle chargers
Slide 23: Asia Pacific
Asia Pacific • Revenue decreased by 8.6% to US$119.0 Revenue by Product Line (US$ million) million, 10.7% of Group revenue ELPs 39.2 • Lower sales of ELPs, TEL products and (-3.0%) CMS • ELPs revenue fell 3.0% to US$39.2 million, with lower sales in Australia and mainland China • Australia: Lower sa
Slide 24: Asia Pacific (continued)
Asia Pacific (continued) • TEL products revenue decreased by 15.8% to US$13.3 million as lower sales in Japan and Hong Kong offset growth in Australia Japan: Sales lower as orders for residential phones from an existing customer declined Hong Kong: Lower sales of IADs resulted in overall decreas
Slide 25: Asia Pacific (continued)
Asia Pacific (continued) • CMS revenue decreased by 10.1% to US$66.5 million • Lower sales of professional audio equipment offset increases in medical and health products Professional Audio Equipment: Lower sales of DJ equipment, as production at Malaysia factory impacted by COVID-19 Movement Cont
Slide 26: Other Regions
Other Regions Revenue by Product Line (US$ million) • Revenue down 6.9% to US$12.1 million, ELPs 1.1% of Group revenue 5.8 (-1.7%) • Lower sales of all three product lines • ELPs revenue declined by 1.7% to US$5.8 million. Higher sales in Latin America offset by lower sales in Middle East and Africa
Slide 27: Outlook
vtech Outlook >> > >> > INNOVATION BEYOND TECHNOLOGY 27
Slide 28: Outlook
Outlook • FY2022 revenue to be lower than FY2021 Robust order book amid strong demand for products As channel inventory improves and new products reach shelves, ELPs and TEL products sales to pick up in 2H CMS revenue to decline year-on-year due to global material shortages • Gross profit marg
Slide 29: Outlook
Outlook • To mitigate negative impacts of material supply and logistics issues: Re-engineer products to lower cost and accommodate alternative parts Sign long-term contracts with material suppliers to secure stable supply Source alternative shipping carriers to secure containers Increase sto
Slide 30: Outlook: ELPs
Outlook ELPs • Full year revenue to increase slightly Sales in North America and Europe gaining momentum as entire range of new products begins to sell through and channel inventory improves New Go! Go! Cory Carson content to be launched globally throughout Autumn and Winter LeapFrog Academy s
Slide 31: Outlook: TEL products
Outlook TEL products • Full year revenue hard to predict due to material shortages, but 2H revenue to improve on new product launches Good performance of baby monitors and recovery in commercial phones expected to continue New product launches: Full range of LeapFrog branded baby monitors, smart
Slide 32: Outlook: CMS
Outlook CMS • Full year revenue to decline year-on-year despite solid order book and large backlog Strong 2H FY2021 performance hard to repeat due to material shortages Recommending alternative components to customers and providing material suppliers high visibility on demand forecasts DJ equi
Slide 33: Q&A
vtech Q&A >> > >> > INNOVATION BEYOND TECHNOLOGY 33
Slide 34: Thank You
vtech Thank You >> > >> > INNOVATION BEYOND TECHNOLOGY 34