FINANCIAL RESULTS Q4 & FY 2018

Transcription

1 FINANCIAL RESULTS Q4 & FY 2018 Daniel Harari, Chairman & CEO Jérôme Viala, Executive Vice President Paris February 13, 2019

2 Financial Results Q4 & FY 2018 Vision and Main 2018 Highlights Q Results FY 2018 Results 2019 Outlook 2

3 Vision and Main 2018 Highlights Lectra s Ambition: to Become an Indispensable Player in Industry 4.0 Second year of the roadmap for successfully completed according to plan First launch of the new Industry 4.0 offers A zero-debt company, a particularly robust balance sheet Income from operations in line with the objective 3

4 Vision and Main 2018 Highlights Negative Impact of Euro Appreciation With an average exchange rate of $1.18/ 1 in 2018, the euro strengthened by 5% against the US dollar and 2% against the yuan compared to 2017 In parallel, in a context of distrust regarding the currencies of certain emerging market countries, the Turkish lira declined by 28%, the Brazilian real by 16%, the Tunisian dinar by 12%, the Russian ruble by 11% and the Indian rupee by 9% against the euro In millions of euros CONVERSION OF 2018 RESULTS USING THE 2017 EXCHANGE RATES REVENUES INCOME FROM OPERATIONS AVERAGE $/ 1 EXCHANGE RATE , , , % 14.2% , ,05 Q1 Q2 Q3 Q converted using the 2017 exchange rates 2018 actual 2018 converted using the 2017 exchange rates 2018 actual = In % of revenues

5 Vision and Main 2018 Highlights Challenging Macroeconomic and Geopolitical Environment The entire year was marked by a "wait-and-see" attitude by companies in all Lectra market sectors, particularly in automotive, following the protectionist measures announced and put in place first by the United States and subsequently by Europe and China In addition, the economy of those emerging countries whose currency had experienced a sharp decline was negatively affected, leading some customers to put investment decisions on hold 5

6 Vision and Main 2018 Highlights Acquisition of the Company Kubix Lab in January 2018 Founded at the end of 2015, Kubix Lab developed a cutting-edge technological offer called Kubix Link, which enables fashion brands to manage from end to end, within a single application, all product information deriving mainly from multiple IT systems (ERP, PDM, PLM, etc.) By combining its offerings with those of Kubix Lab, Lectra will provide its fashion customers with a revolutionary product information management platform The acquisition had a non-material impact on the results of

7 Vision and Main 2018 Highlights Impact of the Sale of Certain Software in SaaS Mode (1/2) An example of a software license order placed in the middle of the year and invoiced 3 months later: o Perpetual license: 100 o Associated maintenance contract: 20 / year o Subscription fee in SaaS mode: 100 / 2.2 = 45 / year 1 Revenues in perpetual license mode Year 1 (3 months) (20*3/12) = 105 Year 2 (12 months) Year 3 (12 months) Year 4 (12 months) Year 5 (12 months) Cumulated revenues 100 Revenues in SaaS mode 45*3/12 = Month Revenues in perpetual license mode Revenues in SaaS mode 1 The Company applies a 2.2 coefficient to calculate the amount a yearly subscription fee in SaaS mode would represent had it been sold as a perpetual license together with a maintenance contract 7

8 Vision and Main 2018 Highlights Impact of the Sale of Certain Software in SaaS Mode (2/2) An example of a software license order placed in the middle of the year and invoiced 3 months later: In early 2018, the Company began selling some of its software on a subscription basis, using the Software-as-a-Service model; new o Perpetual license: 100 o Subscription fee in SaaS mode : 100 / 2.2 = 45 / year software offers, available since April 2018, are sold only in SaaS mode o Associated maintenance contract: 20 / eyear Revenues in perpetual license mode Revenues in SaaS mode The corresponding orders, placed primarily in H2, represented an annual subscription value of 0.9 million and revenues of 0.3 million in 2018 for orders already invoiced Cumulated revenues Year 1 Year 2 Year 3 Year 4 Year (3 months) (12 months) (12 months) (12 months) (12 months) If the SaaS sales had been made in the form of perpetual licenses, they would have accounted for total revenues of 1.5 million, with 250 their associated maintenance contracts (20*3/12) 150 = The 105 change to the SaaS model thus had a negative impact of 1.2 million on both revenues and income from operations 45*3/12 While this had a 45 low impact on 45 revenues, it 45 had a greater 45 impact on income from operations, 50 which would have increased by 14% = instead of 11% if the software sales model had not changed Month In addition, this change in model had a negative impact of 1 million on free cash flow in Revenues in perpetual license mode Revenues in SaaS mode 1 The Company applies a 2.2 coefficient to calculate the amount a yearly subscription fee in SaaS mode would represent had it been sold as a perpetual license together with a maintenance contract 8

9 Financial Results Q4 & FY 2018 Vision and Main 2018 Highlights Q Results FY 2018 Results 2019 Outlook Unless stated otherwise, comparisons are like-for-like (2018 figures restated at 2017 exchange rates). Orders for CAD/CAM and PLM software include sales in the form of perpetual licenses and sales on a subscription basis. 9

10 Q Results Slight Decline in Orders for New Systems ORDERS FOR NEW SYSTEMS, in millions of euros ORDERS BY PRODUCT LINE, Q4 18 vs. Q % % -4% 3% New CAD/CAM and PLM software licenses CAD/CAM equipment and accompanying software Training and consulting Q4 17 Q4 18 Q4 was again negatively affected by the consequences of the trade war between the United States and certain countries and regions of the world, including China and Europe: this weighed on the investment decisions of many customers in all Lectra market sectors 10

11 Q Results In millions of euros Strong Growth in Income From Operations REVENUES INCOME FROM OPERATIONS At actual exchange rates Like-for-like At actual exchange rates Like-for-like +5% +4% +17% +11% % 16.0% 14.3% 15.3% Q4 17 Q4 18 Q4 17 Q4 18 Q4 17 Q4 18 Q4 17 Q4 18 FREE CASH FLOW NET INCOME 1 $/ EXCHANGE RATE At actual exchange rates -8% Q4 18 free cash flow includes the receipt of 6.9 million relating to the 2014 French research tax credit ( 6.3 million received in Q4 17 relating to the 2013 French research tax credit) At actual exchange rates -6% Q4 17 Q4 18 Q4 17 Q4 18 Q4 17 Q Q4 17 net income included a net tax profit of 0.6 million in respect of non-recurring items 11 = In % of revenues

12 Financial Results Q4 & FY 2018 Vision and Main 2018 Highlights Q Results FY 2018 Results 2019 Outlook Unless stated otherwise, comparisons are like-for-like (2018 figures restated at 2017 exchange rates). Orders for CAD/CAM and PLM software include sales in the form of perpetual licenses and sales on a subscription basis. 12

13 FY 2018 Results Stability in Orders for New Systems The macroeconomic and geopolitical context has created a wait-and-see attitude by some customers or a freeze in their investments ORDERS FOR NEW SYSTEMS, in millions of euros Change At actual exchange rates Change Like-for-like Total % stable of which new CAD/CAM and PLM software licenses % -5% of which CAD/CAM equipment and accompanying software % +1% of which training and consulting % -1% Q1 Q2 Q3 Q Orders for CAD/CAM and PLM software include sales in SaaS mode, with an annual value of 0.9 million (this amount was negligible in 2017); equivalent orders for perpetual licenses would have come to 2 million and accounted for 13% of the total amount of software orders 13

14 FY 2018 Results Contrasted Geographical Activity AMERICAS EUROPE ASIA-PACIFIC -7% -10% +28% REST OF THE WORLD 19% 6% 8% 39% 23% % +18% Figures in millions of euros Orders for new CAD/CAM and PLM software licenses, CAD/CAM equipment and accompanying software, and training and consulting 36% 32% Europe Asia-Pacific Americas Rest of the world 14

15 FY 2018 Results Growth in Orders Concentrated in Fashion and Apparel ORDERS FOR NEW SYSTEMS, in millions of euros The very sharp decline in Automotive orders in Q1 (-54%) was mostly caught up during the year Fashion and Apparel orders, together with Furniture orders, had increased strongly in Q1(31% and 61% respectively), but then were marked by a wait-and-see attitude in Q2 and Q3 (which calmed down in Q4) 5% 11% 36% -4% -5% -4% 4% 11% 35% Europe Americas Change -8% +7% Asia-Pacific -13% Europe +7% 48% +5% 50% Americas +34% Asia-Pacific -12% Fashion and Apparel Automotive Furniture Other industries Orders for new CAD/CAM and PLM software licenses, CAD/CAM equipment and accompanying software, and training and consulting 15

16 FY 2018 Results Record Revenues and Earnings in 2018 In millions of euros REVENUES INCOME FROM OPERATIONS At actual exchange rates Like-for-like At actual exchange rates Like-for-like +2% +4% 2018 OBJECTIVE +2% +11% Growth in revenues % 10% OBJECTIVE 11.5 Growth in income from operations 7% 15% +4% 14.2% 14.2% 14.2% 15.0% +11% GROSS PROFIT At actual exchange rates Like-for-like +1% +4% NET INCOME 1 At actual exchange rates -2% $/ EXCHANGE RATE % 72.0% 72.8% 72.5% net income included a net tax profit of 0.6 million in respect of non-recurring items 16 = In % of revenues

17 FY 2018 Results Strong Increase in Recurring Revenues In millions of euros REVENUES FROM NEW SYSTEMS SALES RECURRING REVENUES At actual exchange rates Like-for-like At actual exchange rates Like-for-like 0% +2% +4% +6% Change like-for-like Change like-for-like New CAD/CAM and PLM software licenses % CAD/CAM and PLM software evolution and online services contracts % CAD/CAM equipment and accompanying software % CAD/CAM and PLM subscription contracts 0.5 na Training and consulting % CAD/CAM equipment and accompanying software maintenance and online services contracts % Consumables and parts % 17

18 FY 2018 Results Strong Impact of Currency Fluctuations on Income from Operations EVOLUTION OF INCOME FROM OPERATIONS In millions of euros na ,3 +7,2 +6, Increase in recurring revenues financed increase in fixed overhead costs and offset the Impact of currency fluctuations 2017 Income from operations Growth in recurring revenues Increase in gross profit margins Growth in revenues from new systems sales Increase in fixed overhead costs 2018 Income from operations at constant exchange rate Impact of currency fluctuations 2018 Income from operations 18

19 FY 2018 Results A Zero-Debt Company, a Particularly Robust Balance Sheet In millions of euros FREE CASH FLOW AND BALANCE SHEET -35% 33.2 Decrease in free cash flow is primarily due to the change in working capital requirement (+ 3.7 million in 18 vs million in 17) The Company is debt-free. Net cash position totaled million, after the disbursement of 7.1 million for the acquisition of the company Kubix Lab and the dividend payment of 12 million declared in respect of FY A record level, which will enable the Company to self-finance its internal and external development 31/12/17 31/12/18 31/12/17 31/12/18 Free cash flow Net cash Shareholders equity WORKING CAPITAL REQUIREMENT /12/14 31/12/15 31/12/16 31/12/17 31/12/18 Working capital requirement Working Capital Requirement after restatement of the current research tax credit receivable Working capital requirement at 31/12/18 includes the current portion ( 5.7 million) of the total receivable of 17.9 million from the French tax administration (Trésor public) corresponding to the research tax credits recognized since fiscal year 2015; the portion receivable in over one year is now carried on the balance sheet under Other noncurrent assets Lectra s business model is based on generating a high level of free cash flow and a structurally negative working capital requirement 19

20 FY 2018 Results Stock Price Falls by 19% EVOLUTION FROM JANUARY 1, 2018 TO FEBRUARY 11, 2019, in euros, closing price AT FEBRUARY 11, 2019 Share : High January 8, Market cap. Enterprise Value : 646 million : 544 million 24 CAC 40-6% EV/2018 Revenues : 1.9x EV/2018 EBIT : 13.5x PER 2018 : 22.5x Low October 30, CAD Mid & Small -18% Lectra -19% 16 Lectra CAC Mid & Small CAC 40 20

21 FY 2018 Results Strong Liquidity, Free Float Above 80% VOLUME TRADED OWNERSHIP % 17% Shares traded on Euronext and other trading platforms 1 Shares: 19.3 million 17.1 million Euronext accounted for 31% of the shares traded in 2018 (48% in 2017) Daniel Harari Free float FREE FLOAT Kabouter Management LLC (United States): >10% and <15% Allianz SE (Germany): > 5% and <10% Kempen Oranje Participaties (The Netherlands): > 5% and <10% No other shareholder above 5% 1 Excluding the disposal by André Harari of his entire stake in Lectra in June Source: Bloomberg 2 At February 12,

22 FY 2018 Results Dividend Raised to 0.40 per Share (+5.3%) Cash preserved for future targeted acquisitions DIVIDENDE FY ,40 / action 44% of consolidated net income 2.2% yield 2 Cash and cash equivalents, and net cash million 3 EVOLUTION OF THE DIVIDEND CAGR FY 2013-FY 2018 FY 2018 vs. FY 2013 Steady rising dividend per share Self-financed development +13% +82% 1 Subject to shareholder approval at the Ordinary Shareholders Meeting on April 30, Payable: May 7, Based on the December 31, 2018 closing share price 3 At December 31,

23 Financial Results Q4 & FY 2018 Vision and Main 2018 Highlights Q Results FY 2018 Results Each chapter is followed by a progress report indicated with a 2019 Outlook 23

24 A Long-Term Vision Continuing to focus on the long term, Lectra s roadmap is the first step in the company s development plans for the coming decade to become an indispensable player in Overall, the second year of the roadmap was successfully completed according to plan Industry

25 Four Major Trends Will Shape Lectra s Market Sectors and Geographic Markets MILLENNIALS DIGITALIZATION INDUSTRY 4.0 CHINA At the same time as pursuing their quest for operational excellence more crucial today than ever Lectra s customers must adapt to emerging trends set to significantly impact their future These four main trends and their impact continue to constitute the main evolutions for the environment of Lectra customers The trade war between the United States and China does not call into question the fundamental change in the Chinese economy; the country s industrialists are advancing their digitalization transformation and incorporating the principles and technologies of Industry 4.0 in their processes, as the Chinese market confirms its potential for brands from across the globe 25

26 Industry 4.0: an Unprecedented Opportunity for Lectra SHIFT FROM MASS PRODUCTION TO PROFITABLE, LARGE SCALE PERSONALIZED PRODUCTION INDUSTRY 4.0 Industry 4.0 will encourage a growing number of companies to create fully digital value chains around products Mass production Mass customization DIGITALIZATION Integration of smart solutions and services Replacement of production tools OPERATIONAL EXCELLENCE QUALITY AND EFFICIENCY Agile production Made to measure/made to Order This shift will drive all businesses to integrate modular solutions and connected, smart services, an essential condition of continuing competitiveness in the digital age A growing number of companies in developed and emerging countries alike are incorporating a digital component in their strategy 26

27 Lectra, an Indispensable Player in Industry 4.0 The company has everything required to achieve this ambition +40 YEARS OF SAVOIR- FAIRE IN ELECTRONICS +10 YEARS OF EXPERIENCE IN THE INDUSTRIAL INTERNET OF THINGS A COMBINATION OF MACHINES, SOFTWARE, SERVICES AND DATA STRONG BUSINESS EXPERTISE Real-time management of information emitted by hundreds of sensors installed in cutting solutions 3,900 Industry 4.0-compatible machines 1 are in operation worldwide The only player in its industry to propose a complete added-value offer, compatible with Industry consultants and solution experts 1 1 3,000 machines and 500 consultants and solution experts early 2017 More than ever these assets represent high barriers to entry 27

28 A Strategy Based on the Same Foundations as the Previous Roadmap CONTINUE TO FOCUS ACTIVITIES ON THREE MAIN MARKET SECTORS MAINTAIN PREMIUM POSITIONING FASHION AND APPAREL AUTOMOTIVE FURNITURE The company s historical core market in which it is a leading reference A strongly growing market in which Lectra has an unrivalled leadership A market with a strong potential in which Lectra increases market share year after year Primarily targeting 5,000 customers or prospects across the world: about 4,500 in Fashion & apparel, 200 in Automotive and 300 in Furniture These fundementals remain the pillars of the strategy 28

29 An Offer With a Broader Scope for the Industry 4.0 To enable its customers to implement the principles of Industry 4.0, Lectra decided to accelerate strongly its investment in the design and development of new offers for the Industry Start of the development of new Industry 4.0 compliant offers 2017 Test with selected pilot customers New product lines that meet customers new requirements Supplement existing software or cutting solutions Starting 2018 Progressive commercial launch Starting 2019 Enhancement of the offers The year 2018 was highlighted by the launch in selected pilot countries of innovative offers enabling Lectra s customers to implement the principles of Industry 4.0 These offers will become available progressively worldwide in 2019 and will continue to be enriched in 2019 and subsequent years 29

30 Reinforced Investments in the Design and Development of the Offer EVOLUTION OF R&D INVESTMENT In millions of euros % 30.8 Net R&D costs 1 : 21.5 million ( 19.8 million in 2017) 346 employees (20% of the Group s workforce) dedicated to the design and development of the offer at December 31, 2018 Beginning of 2018, the Company has decided to broaden the scope of R&D costs to encompass the increasingly diverse teams involved in the design and development of the offer R&D is not reported on the balance sheet: R&D spending is fully expensed and included in the overhead costs for the fiscal year 10.0% 10.9% In 2019, the Company intends to pursue its policy of substantial investments in innovation to further extend its technological leadership and its value proposition 1 After deducting the research tax credit, the corresponding portion of the competitiveness and employment tax credit applicable in France and grants accounted for in the period 30 = In % of revenues

31 The concept: Lectra Cutting Room 4.0 After four years of intensive work and development by the marketing, R&D and Industrial teams, in April 2018, Lectra launched a new revolutionary offer : the Cutting Room 4.0. Designed to satisfy Industry 4.0 needs, it enables businesses to progressively incorporate more automation and intelligence thanks to exploitation of data, Artificial Intelligence, Internet of Things and cloud The Cutting Room 4.0 is comprised of two distinct elements A digital platform in the cloud that simultaneously manages data (products, fabric, orders), connected cutting solutions and automatic operating rules based on Artificial Intelligence Lectra smart cutting solutions that connect to the digital platform and carry out its instructions while adapting them to the fabric thanks to hundreds of embedded sensors 31

32 Lectra Launches its First Cutting Room 4.0 Dedicated to Made-to-Order Production of Upholstered Furniture Embodying the Industrial Intelligence concept, this offer supports and encourages Furniture manufacturers in their digital transformation by integrating particularly innovative methods and technologies In the production world, where orders are always different and where the optimization of planning and resources is complex, even impossible, Lectra s new solution pushes the automation of each step (from ordering to offloading) to the maximum This offer was launched in Europe and in the US. It will be progressively available globally in

33 Lectra Makes History with Fashion On Demand by Lectra, Fashion s First End-to-End Personalization Offer (1/2) CUSTOMIZATION OR MADE-TO-MEASURE, BOTH OFFER MULTIPLE ADVANTAGES More and more Fashion industry players are becoming interested in on demand production, as the economic model provides numerous advantages: o o o Outshine competitors and earn customer loyalty by offering one of a kind products that make customers feel exclusive Avoid overstocking and markdowns, which are common in mass production Preserve cash, as the order is paid by the consumer before being produced While on demand production presents an attractive economic model, those Fashion companies wishing to adopt it can however be slowed down by internal obstacles, such as too rigid production processes conceived for mass production, if they don t dispose of the necessary technology to overcome them 33

34 Lectra Makes History with Fashion On Demand by Lectra, Fashion s First End-to-End Personalization Offer (2/2) Fashion On Demand by Lectra makes history within the Fashion market With 45 years of experience working with distinguished international distributors, manufacturers and brands, Lectra has developed a fully integrated turnkey offer that enables these businesses to define the product customization criteria and range for each item depending on the package (such as altering product characteristics for customization and pattern adjustments for made to measure) and launch production processes right from the get-go, without interfering with their standard workflows This revolutionary offer is founded on Industry 4.0 principles to automate the entire personalization process, from product development to final cutting stages The worldwide launch will take place progressively in

35 Virga, a New Smart and Connected Single-Ply Cutting Solution Virga plays an essential role in the launch of the Cutting Room 4.0 and Fashion On Demand by Lectra Skilled in processing data, Virga executes cut orders given automatically by the digital platform and adapts them to the characteristics of the fabric, a first in the industry o o o Virga analyses the fabric in order to take into account fabric pattern pitch and fabric faults for optimum single ply cut quality Virga transfers, in real time, data coming from its hundreds of embedded sensors to Lectra s digital platform, which analyses the data, creating three advantages: constantly evaluate the state of the cutting solution, monitor the cutting room s performance indicators, and fine-tune algorithms that optimize fabric Cutting is just as efficient for plain fabric as it is for patterned fabric 35

36 New Cloud Applications to Enrich Existing Offer Two cloud applications enrich Lectra s current software offer and bring greater value to its users Their launch represents the first of a series of cloud-based applications conceptualized for design, product development and production teams QUICK ESTIMATE QUICK NEST Quick Estimate revs up product development efficiency by calculating fabric requirements instantly from Modaris, Lectra s 2D/3D patternmaking and grading solution Quick Nest provides easy access to automatic marker making and capitalizes on cloud technology to handle heavy volumes of calculations in parallel, maximizing productivity and marker efficiency By being able to trace data, management teams gain full visibility of fabric consumption needs, which account for as much as 70 percent of the production cost of a garment, while operations teams can access consolidated data at any moment and integrate them into their approval and reporting process 36

37 Testimonials from the First Customers to Have Adopted These New Offers Belles Roches Couture & Treize Roches Couture France Vilmers Lithuania La Redoute & Chantelle France 37

38 Innovation Lab Opens its Doors Lectra extends and reinforces its innovation process with the opening of its Innovation Lab in October 2018 : this area for collaborative thinking and design, based in Bordeaux-Cestas, is dedicated to the creation of disruptive solutions Suitable for the cross-fertilization of ideas, this space also fulfills Lectra s desire for open innovation : working groups bring together customers, start-ups, research labs and internal talents to enrich and stimulate Lectra s product roadmap 38

39 Five Strategic Objectives for To accelerate revenue growth, both organic and through targeted acquisitions To accentuate Lectra s technological leadership and leverage new technologies to further enhance the value of its products and services offer To strengthen Lectra s competitive position and long-term relationships with customers Progress was made on all five strategic objectives, which will continue to guide the Company s actions in To progressively launch new software offers in SaaS mode 5. To maintain the Group s profitability and generate a high level of free cash flow in order to self-finance internal and external development 1 1 Other than potential acquisitions whose scale might require additional financing 39

40 Many Opportunities to Accelerate Growth China 1. China: as the country upgrades its manufacturing plant and expands its domestic market, supported by the Chinese government s strategic Made in China 2025 initiative Leather INDUSTRIE 4.0 Airbags 2. Leather: this is increasingly used in the automotive and furniture industries. Almost all materials are still cut by hand, but cutting processes need to be automated SaaS 3. Airbags: due to the growing number being fitted to each vehicle, and to the potential to renew installed bases for older-generation automated cutters Personalization of consumer products Digitalization of the fashion and apparel industry 4. Personalization of consumer products: the entire value chain needs to be fully automated and interconnected, requiring hefty investments in cutting-edge technology Unlike the previous year, the degraded macroeconomic and geopolitical environment in 2018 meant that not all the growth accelerators contributed to the Group s dynamic activity; but they are expected to drive revenue growth in Digitalization of the fashion and apparel industry: which implies adopting collaborative technologies to facilitate management of collections and products 40

41 Use of Available Cash Lectra s business model Generating a high level of free cash flow and a structurally negative working capital requirement Pursuit of the dividend payment policy The Company has sufficient cash to finance future targeted acquisitions Payout ratio of around 40% of net income 1 Remaining 60% used to fund Lectra s growth In the event of a major acquisition a debt equivalent to half its shareholders equity could be envisaged The aim is to achieve a steadily rising dividend per share In January 2018, the Company acquired Kubix Lab for 7.1 million 1 Excluding non-recurring items 41

42 Lectra Strengthens its Executive Committee In order to accelerate the execution of its strategy, the group has decided to review the organization of its subsidiaries, refocus efforts toward the success of its customers, and expand its Executive Committee, which remains under the chairmanship of Daniel Harari, Chairman and Chief Executive Officer Lectra's subsidiaries are newly organized into four main regions. The purpose is to better adapt the Lectra strategy to Lectra s different markets, accelerate business development and strengthen synergies within each geographical area: o Americas o Asia-Pacific o Northern & Eastern Europe, Middle East o Southern Europe & North Africa To be even closer to its customers needs and guarantee optimum use of its solutions, Lectra has created a new Customer Success organization Daniel Harari, President & CEO; 2. Javier Garcia, President Asia-Pacific; 3. Véronique Zoccoletto, Chief Transformation Officer; 4. Holger Max-Lang, President Northern & Eastern Europe, Middle East; 5. Olivier du Chesnay, Chief Financial Officer; 6. Jérôme Viala, Executive Vice President; 7. Maximilien Abadie, Chief Strategy Officer; 8. Fabio Canali, Southern Europe & North Africa; 9. Céline Choussy, Chief Marketing & Communications Officer; 10. Edouard Macquin, President Americas; 11. Laurence Jacquot, Chief Customer Success Officer 42

43 Financial Results Q4 & FY 2018 Vision and Main 2018 Highlights Q Results FY 2018 Results 2019 Outlook 43

44 2019 Outlook Internal and External Factors The Company entered 2019 with a particularly robust balance sheet and operating fundamentals, a new organization of its subsidiaries, and a strengthened Executive Committee Lectra significantly enhanced its products and services offer in 2018, with new innovative solutions to empower its customers in implementing the principles of Industry 4.0, which will be progressively rolled out worldwide in 2019 An uncertain geopolitical environment Still, the year ahead is fraught with unpredictability in light of persisting uncertainty regarding geopolitical factors and the threat of protectionism, amid growing fears of an economic slowdown These considerations could continue to weigh on businesses investment decisions Impact of exchange rates The Company has based its 2019 objectives on the exchange rates in effect at year-end 2018, notably $1.15/ 1 When converting 2018 results using the exchange rates retained for 2019, revenues are mechanically increased by 1.6 million and income from operations by 1.2 million, relative to the published results Growing impact of sales of certain software in SaaS mode The change in sales model will have a positive impact on the Company s revenues and income from operations in the medium term However, it has a negative impact on the Company s stated objectives for 2019, which are 1 to 2 percentage points lower for revenue growth, and 9 to 12 percentage points lower for income from operations 1 1 Than the comparable figures if all software were sold as perpetual licenses along with their associated maintenance contracts 44

45 2019 Outlook Financial Objectives 1 Growth in revenues +3% +7% 2 Growth in income from operations before non-recurring items -4% +4% 1 Without the impact of growing sales of software on a subscription basis Growth in revenues +5% +8% 2 Growth in income from operations before non-recurring items +5% +16% With the exchange rates retained for 2019, the growth in revenues and in income from operations before nonrecurring items, at actual exchange rates, would be 0.6 and 3 points higher, respectively, than the like-for-like figures Change like-for-like 45

46 Upcoming Financial Calendar ANNUAL SHAREHOLDERS MEETING QUARTERLY FINANCIAL RESULTS ANALYST CONFERENCE April 30, 2019 Q1 April 29, 2019 October 31, 2019 Q2 July 29, 2019 Q3 October 30, 2019 Q4 February 11,