2017 FULL-YEAR RESULTS 27 March 2018

Transcription

1 2017 FULL-YEAR RESULTS 27 March 2018

2 LIMITATION OF LIABILITY Forward-looking statement (Safe Harbour) This presentation contains forward-looking statements (made pursuant to the safe harbour provisions of the Private Securities Litigation Reform Act of 1995), which, by their nature, involve a degree of risk and uncertainty. Forward-looking statements represent the company s judgement regarding future events, and are based on currently available information. Consequently the company cannot guarantee their accuracy and their completeness. Actual results may differ materially from those the company anticipated due to a number of uncertainties, many of which the company is not aware of. For additional factors that may cause the company s actual results to differ materially from expectations and underlying assumptions, please refer to the reports filed by the company with the Autorité des Marchés Financiers (French financial markets authority - AMF).

3 AGENDA 2017 BUSINESS REVIEW 2017 FINANCIAL REVIEW A NEWLY APPOINTED CEO 3

4 2017 IN A NUTSHELL Organic revenue decrease: (2.2)% SME Solutions: further decrease in Mail Solutions, in line with expectations Neopost Shipping: double-digit growth ENTERPRISE DIGITAL SOLUTIONS Enterprise Digital Solutions: disappointing stable revenues Solid financial performance EBIT margin* at 18.2% Strong net income increase Solid cash flow generation Sound financial structure Net debt decrease Improved leverage * EBIT margin = current operating income before acquisition-related expense/total sales 4

5 FY 2017 SALES Change in sales (in million) 1, (25) +0.2% (25) (2.2)% 1,112 (2.1)% (4.1)% 2016 Scope effect* Organic growth Currency effect 2017 Disappointing top line performance and strong negative currency impact * Scope effect on FY 2017 sales: acquisition of icon Systemhaus + 5.6m and divestment of DMTI Spatial - 2.9m 5

6 FOCUS ON Q4 SALES PERFORMANCE Organic change versus the same period in M 2017 Q FY 2017 ENTERPRISE DIGITAL SOLUTIONS EDS +4.7% (12.2)% (0.3)% Neopost Shipping +11.4% +9.0% +10.7% SME Solutions (2.8)% (3.5)% (3.0)% Total Group (1.4)% (4.4)% (2.2)% No large deals signed in Q at EDS Expected recovery did not occur despite strong pipeline at the end of Q3 In addition, challenging base of comparison : 3 large deals signed in Q at GMC Software for 6m 6

7 FY 2017 SALES BREAKDOWN FY 2017 SALES PER REGION ORGANIC CHANGE FY 2017 SALES PER TYPE OF REVENUE ORGANIC CHANGE FY 2017 SALES PER ACTIVITY ORGANIC CHANGE Europe (4.7)% Equipment & license sales (5.1)% Communication & Shipping Solutions +3,5% 48% 8% Rest of the world +4.4% 32% 28% 44% 68% 72% North America (0.7)% Recurring revenue (0.9)% Mail Solutions (4.3)% North America virtually stable and resilient recurring revenues 7

8 THE THREE NEOPOST DIVISIONS ENTERPRISE DIGITAL SOLUTIONS Customers Industry Verticals & Print Services Providers (PSP) Retailers, E-retailers & carriers Small & Medium sized Enterprises Solutions Customer communications management and data quality solutions Automated packing, multicarrier shipping software, track and trace and delivery solutions Mail and digital based communication solutions, shipping solutions and graphic activities Software Hardware Franking machine Folder inserters 8

9 ENTERPRISE DIGITAL SOLUTIONS IN 2017 ENTERPRISE DIGITAL SOLUTIONS Limited growth at GMC Software: Decline in licence sales due to the absence of large deals signed at GMC in 2017 contrary to 2016 and 2015 Small-sized deals signed in 2017 lead to an increase in the installed base of customers Growth in recurring revenues: maintenance and professional services Poor performance of icon Systemhaus: Conversion of IBM customers not possible so far Decline in Data Quality: Re-engineering of the offer at Human Inference Satori performance is related to mail volume to a certain extent Total sales: 136m Organic change versus 2016: (0.3)% Sales by product line Sales by type of revenue 29% License sales GMC Software +3.2% Data Quality (6.2)% icon Systemhaus (11.0)% Projected low-single digit organic growth in % Recurring revenue 9

10 NEOPOST SHIPPING IN 2017 Total sales: 57m Organic change versus 2016: +10.7% Sales by product line Packcity s deployment accelerated Strong success in Japan => 2,600 parcel lockers installed at mid March 2018 Packcity +97.7% CVP % CVP machines placed in 2017 versus 6 in 2016 Shipping software Temando: preparation of the launch of Magento shipping module in Spring 2018 Sales by type of revenue 34% License & equipment sales Software (3.7)% Expected double digit organic growth in % Recurring revenue 10

11 SME SOLUTIONS IN 2017 Further decline in line with expectations in Mail Solutions: Limited decline in North America (1.4)% Stronger decline in Europe (7.3)% Total sales: 941m Organic change versus 2016: (3.0)% Sales by product line Mail Solutions (4.3)% Decline in Graphics: Related to the loss of a large maintenance contract in Australia Digital communication and shipping solutions: Acceleration of growth versus 2016 Strong performance of digital communication software (Inspire, OMS, Neotouch) Digital Communication & Shipping +17.5% Sales by type of revenue 32% Equipment sales Graphics (6.0)% 68% Recurring revenue Further organic decline expected in

12 AGENDA 2017 BUSINESS REVIEW 2017 FINANCIAL REVIEW A NEWLY APPOINTED CEO 12

13 CURRENT OPERATING INCOME In million FY 2016 FY 2017 Sales 1,159 1,112 Gross margin % of sales 74.7% 74.9% EBITDA % of sales 25.5% 25.6% Current operating income (before acquisition-related expense) % of sales 18.6% 18.2% Gross margin and EBITDA margin improvement Average rates /$ FY 2017 = 1.14 and FY 2016 = 1.10 ; / FY 2017 = 0.88 and FY 2016 =

14 DETAILED PROFITABILITY BY DIVISION FY 2016 FY 2017 EDS Shipping 2 SME solutions Elim. 3 Innovation Total EDS Shipping 2 SME solutions Elim. 3 Innovation Total In million and in % of sales ENTERPRISE DIGITAL SOLUTIONS ENTERPRISE DIGITAL SOLUTIONS Total sales (22) 0 1, (22) 0 1,112 Current EBIT 1 21 (11) (8) (13) (8) 202 Current EBIT 1 margin 15.6% (21.6)% 21.6% - n/a 18.6% 11.6% (21.8)% 21.9% - n/a 18.2% EDS s EBIT decrease vs due to lower license sales Shipping s EBIT in line with % excluding Temando & CVP-500 SME s EBIT improvement due to success of cost reduction program Web based platform and apps Average rates /$ FY 2017 = 1.14 and FY 2016 = 1.10 ; / FY 2017 = 0.88 and FY 2016 = Before acquisition-related expense 2 Shipping includes the CVP Intercompany sales 14

15 COST REDUCTION PROGRAM AT SME LEVEL OPEX reduction net OPEX reduction 57m Digitalized go-to-market Simplified existing portfolio of products and solutions Dematerialized support and maintenance Shared services between operating companies m 23m 13m FY 2014 FY 2015 FY 2016 FY 2017 Cost reduction in line with the objective of at least 50m 15

16 NET INCOME In million FY 2016 FY 2017 Current operating income (before acquisition-related expense) Acquisition-related expense (13) (11) Current operating income Optimization expenses (15) (13) Divestments & other (7) (11) incl. DMTI Operating income Cost of debt (30) (32) Currency gains and losses and other (1) (2) Net financial income/(expense) (31) (34) Taxes (37) (1) Income from associated companies 1 2 Minority interest 4 1 Net attributable income Net margin as a % of sales 10.2% 12.0% EPS 3.17* 3.62* Fully diluted EPS 2.97* 3.35* o/w carrying costs: 1m US tax reform & gain on dividend tax Strong impact of US tax reform on net income Average rates /$ FY 2017 = 1.14 and FY 2016 = 1.10 ; / FY 2017 = 0.88 and FY 2016 = 0.83 *As per IFRS treatments, the calculation takes into account the dividends paid to ODIRNANE s holders 16

17 CASH FLOW GENERATION FY 2016 FY 2017 In million EBITDA Other items (20) (26) Cash flow* Change in WCR (9) 20 Change in lease receivables Incl. decrease in accounts receivable Interest and income tax paid (52) (54) Cash flow from operations Capital expenditure (82) (99) Cash flow after CAPEX Acquisitions (24) (23) Cash flow after CAPEX & acquisitions Incl. Packcity capex for 26m Incl. acquisition of minority interests of Temando Strong cash flow generation * Before net cost of debt and tax Average rates /$ FY 2017 = 1.14 and FY 2016 = 1.10 ; / FY 2017 = 0.88 and FY 2016 =

18 FINANCIAL STRUCTURE In million 31/01/ /01/2018 Financial debt Cash and marketable securities (96) (193) Net financial debt Shareholders equity 1,139 1,169 Decrease of leasing portfolio & currency impact Net debt / shareholders' equity 67% 58% Net debt / EBITDA ratio Financial structure to be compared with: Leasing portfolio Leasing portfolio s default rate ~1% ~1% Rental future cash flows* Leverage ratio reduced to 2.4x Closing rates /$ FY 2017 = 1.25 and FY 2016 = 1.08 ; / FY 2017 = 0.88 and FY 2016 = 0.86 *estimate made by using a discount rate of 15% 18

19 DEBT MATURITY AT 31 JANUARY Gross debt: 868m (1) Bond 3,50% (Private Placement) Bond 2,50% 300 Revolving Credit Facility Undrawn Schuldschein 200 USPP USD 90 million 100 USPP USD 61 million No major refinancing deadline before 2021 (1) Does not include the 265m ODIRNANE which is classified in equity 19

20 SHAREHOLDER RETURN 2017 dividend confirmed at 1.70* per share Interim dividend paid in February 2018: 0.8 Final dividend to be paid in August 2018: 0.9 A yield of 8.0%** A total payment of 59m In FY 2015 FY 2016 FY 2017 Earning per share Dividend per share *The dividend will be submitted for approval by the Annual General Meeting of shareholders ** Based on 23 March 2018 share price:

21 INDICATIONS FOR 2018 Organic top line decrease Enterprise Digital Solutions: low-single digit growth Neopost Shipping: double-digit growth SME Solutions: Mail Solutions & Graphics: -4% to -6% Digital communication & Shipping solutions: double-digit growth EBIT Around 18% on the basis of maintained level of investments High level of operating cash flow 21

22 AGENDA 2017 BUSINESS REVIEW 2017 FINANCIAL REVIEW A NEWLY APPOINTED CEO 22

23 A NEWLY APPOINTED CEO Geoffrey Godet Joined Neopost as CEO on 1 February years old, French and American citizen, HEC graduate Over 15 years experience in the USA and globally 13 years experience as CEO Broad experience in implementing digital transformation strategies Split of the Chairman and CEO functions Separation effective from 1 February 2018 Denis Thiery remains Chairman of the Board 23

24 ENTERPRISE DIGITAL SOLUTIONS ENTERPRISE DIGITAL SOLUTIONS ENTERPRISE DIGITAL SOLUTIONS ENTERPRISE DIGITAL SOLUTIONS ENTERPRISE DIGITAL SOLUTIONS ENTERPRISE DIGITAL SOLUTIONS OPERATIONAL ROADSHOW Neopost UK Neopost France Neopost Shipping Loughton Neopost USA Quadient (HI) Neopost Germany Drachten Switzerland, Nordics & Germany icon Systemhaus 20 sites 2 factories out of 3 3 R&D centers out of key people 2 key partners 20 products demo Quadient (GMC) Quadient (Satori) Quadient Neopost Japan Packcity Temando Quadient Neopost Australia 24

25 NEXT STEPS COMPLETE OPERATIONAL ROADSHOW WORK ON GROUP STRATEGY TO BE PRESENTED DURING AN INVESTOR DAY BEFORE THE END OF FISCAL YEAR 25

26 APPENDICES 26

27 FY 2017 SALES BY DIVISION FY 2017 sales FY 2017 organic growth EDS Shipping* SME Solutions Elim. Total EDS Shipping* SME Solutions Elim. Total ENTERPRISE DIGITAL SOLUTIONS ENTERPRISE DIGITAL SOLUTIONS In million Mail Solutions (4.3)% (4.3)% Communication & Shipping Solutions (22) 307-0,3% +10.7% +5.5% +9.4% +3.5% Total (22) ,3% +10.7% (3.0)% +9.4% (2.2)% No large deals signed in 2017 at GMC Software Double-digit growth driven by Packcity & CVP-500 Organic growth excluding Graphics: +17.5% Average rates /$ FY 2017 = 1.14 and FY 2016 = 1.10 ; / FY 2017 = 0.88 and FY 2016 = 0.83 * Including sales of the automated packing system CVP-500 for 7.6 million 27

28 ENTERPRISE DIGITAL SOLUTIONS Royal Neighbors of America enhanced profitability with Quadient Situation Founded in 1895 by nine women, Royal Neighbors of America is one of the largest women-led life insurers in the U.S. Among the first insurers to extend insurance protection to women and children, Royal Neighbors has grown to become a philanthropic organization with more than 200,000 members. Royal Neighbors mails between 400,000 and 500,000 customer communications to its members annually. Neopost s Solutions The organization was interested in streamlining its operational processes so that it could maintain its existing staffing level as its mail volumes increased, while optimizing the ability to qualify for bulk mail postal discounts. After reviewing several possible solutions, Royal Neighbors chose to integrate the mail sorting capabilities of Satori Ignite in a GMC Inspire workflow for a complete endto-end solution. Outcome Quadient settled an automated, user controlled workflow that saves time and the equivalent of one full time employee. Royal Neighbors saved more than $50,000 in postage and an additional $5,000 per year due to less returned mail. Royal Neighbors has now the ability to produce up to 5,000 more transactional documents per month than before. 28

29 Yamato Transport & Neopost shipping joint venture for Packcity deployment Situation Yamato Transport, is Japan's largest door-to-door delivery service company with 1,7bn parcels delivered per year representing a 47% market share. It needed to address three issues: e- commerce boom, workforce shortage, and high-density delivery locations. In addition, they committed with the Japanese Government to pollute less and to respect employee working hours. Neopost s Solutions Yamato decided to create a Joint- Venture with Neopost to deploy a parcel locker network of more than 5,000 lockers in Japan by They valued the capacity of Neopost to integrate other carriers and manage simultaneously multiple business models thus recognizing Neopost s leadership in the industry. This service is named PUDO in Japan. Outcome 2,600 parcel lockers or 70,000 boxes have been installed mid March These installations are partly subsidized by the Japanese Government and are now used by Yamato and Sagawa. Following these first successes, both partners are targeting other services: Parcel Shipments, Returns, Click & Collect, etc. 29

30 MDPH 05: optimize sorting and grouping to reduce answering time Situation The House for Handicaped people in the Alps (MDPH 05), handles 25,000 files. They receive more than 10,000 new demands per year. Each demand involves numerous document requests and coordination with various administrations and public services. Each file is duplicated in each services involved. MDPH 05 handled all these tasks manually. Neopost s Solutions MDPH 05 has selected Neopost after a competitive process. Neopost OMS-500 software and the folder/inserter have been chosen for their easiness to implement and to use. Neopost offers a unique solution to share information with users and public services to better coordinate and answer demands more quickly. Outcome The users files are now automatically sorted, grouped by categories, printed and archived for future use. Overall, MHDP 05 was able to free its employees from manual tedious tasks therefore giving them more time to better serves their service users and respond more quickly to new demands. 30

31 ENTERPRISE DIGITAL SOLUTIONS COMPETITIVE LANDSCAPE ENTERPRISE DIGITAL SOLUTIONS GMC Software named a leader for fourth consecutive time in Gartner magic quadrant 2015 Ranking 2017 Ranking 31

32 NEOPOST SHIPPING COMPETITIVE ENVIRONMENT Multiple local competitors in each business line Automated Packing solutions Multi-carrier shipping software Parcel lockers A niche market made of a few small players delivering 1D reduction systems and CMC machinery as key competitor on 3D reduction 1D reduction Like Neopost Shipping, Metapack is operating in a few key markets (US, UK, FR, DE and ES) In Europe, there are multiple local players in key markets (US, UK, FR, DE). In the USA, there are ten s of competitors, the largest being Pitney Bowes, Stamps.com (incl. Endicia, shipstation and shipworks) and Kewill USA Interger/Inpost is the main global competitor of Packcity offering for implementing networks. Amazon is a new competitor for location and dedicated network. Locker manufacturers are Cleveron, TZ, SWIP BOX, By box. Allover the world there are multiple small local suppliers (Asia and East Europe) 3D reduction Europe 32

33 CONSOLIDATED BALANCE SHEET (1/2) Assets (in millions) 31/01/ /01/2018 Goodwill 1,121 1,062 Intangible fixed assets Tangible fixed assets Non-current financial assets Other non-current receivables 3 4 Leasing & financing receivables Deferred tax assets 17 5 Inventories Trade receivables Other current assets Financial securities Current financial instruments 0 0 Assets discontinuing activities 2 - TOTAL 2,886 2,783 33

34 CONSOLIDATED BALANCE SHEET (2/2) Liabilities (in millions) 31/01/ /01/2018 Shareholders equity 1,139 1,169 Non-current provisions Non-current financial debt Current financial debt Other non-current debt Deferred tax liabilities Non-current financial instruments 0 0 Prepaid income Other current liabilities Current financial instruments 1 0 TOTAL 2,886 2,783 34

35 COVENANTS US Private Placements Covenants Neopost level as at 31 January 2018 Leverage max Minimum equity of 525m 1,169m Revolving Credit Facility and the 3.50% bond Covenants on leasing operations Neopost level as at 31 January 2018 Maximum drawing: 90% of outstanding leasing portfolio Intercompany net leasing debt standing at 76% of outstanding leasing portfolio Covenants on non leasing operations Neopost level as at 31 January 2018 Maximum leverage of 3.0* excluding leasing entities 0.7 (EBITDA excl. leasing: 190m) Minimum equity: 600m 1,169m Default Rate < 5% 1% Minimum interest cover**: All covenants easily met Increased debt flexility *Net debt excluding leasing/ebitda excluding leasing **EBITDA/net cost of debt 35

36 36 INVESTOR RELATIONS TEAM