Presentation Q4 2017/18. October, 2018

Transcription

1 Presentation Q4 2017/18 October, 2018

2 YEAR-END REPORT 2017/18 Dustin at a glance 255,000 hardware and software products sold online Net sales Software and services ~12% Hardware ~88% Hardware Clients Software OS Services Servers SaaS Offline ~20% Online ~80% Financing Cloud solutions Refers to financial year 2017/18 Refers to integrated operations financial year 2017/18 Dustin (B2B) Dustin Home (B2C) SEK million 10,000 8,000 6,000 4,000 2,000 0,000 across the Nordics to B2B customers Adjusted EBITA and margin Denmark ~16% Netherlands* Norway ~2% ~16% Finland ~16% Sweden ~50% % net sales 94% 6% Customers Offering Avg. order SMB Full assortment SEK 7,000 Public/Large Replienishment IT SEK 11,000 B2C IT products SEK 2, million orders SEK million ,0% 5,5% 5,0% 4,5% 4,0% Refers to financial year 2017/18 *Consolidated as of July 4, Refers to financial year 2017/18 2

3 YEAR-END REPORT 2017/18 Q4 17/18 High operational activity in the quarter Operational Highlights New framework agreement in Denmark Danish government, municipalities and regions. Annual value estimated at around DKK 500 million New agreement in Norway Cloud-based services (back-up and storage) with public service company NRK. Acquired DAV Partner in Sweden Acquired ITaito in Finland Acquired Vincere Groep One of the leading Managed Services companies within SMB in the Netherlands Dustin s addressable market increases from SEK 162 to SEK 262 billion. Operational Highlights after the end of the fourth quarter New organisation announced To create greater clarity within segments and further increase scalability of support functions Preferential rights issue To continue existing growth strategy in existing markets in the Nordic region and the Netherlands Extraordinary General Meeting Approval of announced rights issue 3

4 YEAR-END REPORT 2017/18 Strong rationale for the acquisition of Vincere Groep Substantial increase of the addressable market Growth from approximately 162 BSEK to 262 BSEK Increased share of recurring revenues High share of recurring Managed Services contracts A perfect platform for expansion and consolidation Ample consolidation opportunities in the Dutch market Low customer dependency Largest customers accounts for less than 5% of total sales Highly experienced and driven management team Similar corporate values as Dustin High customer satisfaction Loyal client base ensuring low customer churn Very attractive financial profile Substantial earning contribution already in 2018/19 Highly interesting growth components E.g. further consolidation and launch of Dustin online platform 4

5 MSEK YEAR-END REPORT 2017/18 Q4 17/18 Higher service content strengthening profitability Financial Highlights Net sales grew by 11.6% to 2,524 (2,262) MSEK Organic growth of -4.7% in constant currency, of which SMB 8.0%, LCP -13.4% and B2C 1.1% Gross profit of 417 (325) MSEK Gross margin of 16.5% (14.3%) Adjusted EBITA of 119 (92) MSEK Adjusted EBITA margin of 4.7% (4.1%) Items affecting comparability of 3.6 (-0.8) MSEK Earnings per share increased to 0.91 (0.64) SEK Net sales and adjusted EBITA margin 3,000 10% 2,524 2,500 2,262 8% 2,000 6% 1, % 4.1% 4% 1,000 Adjusted EBITA margin Cash flow from operating activities of 59 (-14) MSEK 0,500 2% Net debt of 1,731 (998) MSEK Net debt/adjusted EBITDA up to 3.3x (2.3x) in the past 12-month period 0, / /18 0% The Board proposes a total dividend of SEK 239 (213) MSEK Net sales Adjusted EBITA margin 5

6 MSEK YEAR-END REPORT 2017/18 Financial Development SMB Solid growth in the SMB segment Net sales growth in SMB of 38.9% y/y Organic growth of 8.0% in constant currency Segment result increased 45.5% to 132 (91) MSEK Segment margin improved to 11.4% (10.9%) Acquisitions and strong online performance Acquired and consolidated ITaito (June 1), DAV Partner (July 2) and Vincere Groep (July 4) Robust sales performance, primarily in Sweden and Denmark Favorable product mix drives margin improvement A general improvement in the product mix in comparable units as well as completed acquisitions drives margin development Positive margin contribution from higher private label product sales The customer base for SaaS configurations grew to 1,227 active customers (980), corresponding to 53,988 users (30,150) Net sales and segment margin MSEK % 1, % 2016/ /18 Net sales Q4 2017/18 Segment margin Q4 2016/17 Organic growth 20% 15% 10% 5% 0% Segment margin Q4 y/y growth Net sales 1, % 38.9% Segment result % Segment margin 11.4% 10.9% 6

7 MSEK YEAR-END REPORT 2017/18 Financial Development LCP Selective approach towards lower margin contracts Net sales growth in LCP of -5,1% y/y Organic growth of -13.4% in constant currency Segment result slightly lower at 74 (76) MSEK Segment margin improved to 6.0% (5.9%) Selective approach to lower margin volume transactions More selective in lower margin volume transactions under certain framework agreements for the public sector, particularly in Finland, Denmark and Norway Robust sales performance in the Large Corporate customer group in all markets, with a reported total growth of slightly more than 26% Deliveries within Danish framework agreement starts in the first quarter and is expected to generate a positive effect on growth going forward Slightly improved margins Margin improved slightly, mainly as a result of a more favorable sales balance between the large corporate and public sector customer groups Net sales and segment margin MSEK ,296 1, % 6.0% 2016/ /18 Net sales Q4 2017/18 Segment margin Q4 2016/17 Organic growth 20% 15% 10% 5% 0% Segment margin Q4 y/y growth Net sales 1,230 1, % -5.1% Segment result % Segment margin 6.0% 5.9% 7

8 MSEK YEAR-END REPORT 2017/18 Financial Development B2C Stable growth focus on margin Net sales and segment margin Net sales growth in B2C of 3.3% y/y % Organic growth of 1.1% in constant currency Segment result slightly lower at 7.2 (8.1) MSEK Segment margin at 5.2% (6.0%) Complement segment representing around 6% of total sales Positive sales development in Denmark and Norway Strong sales in the mobile phones and infrastructure product categories ,2% 6,0% 2016/ /18 Net sales Segment margin 10% 8% 6% 4% 2% 0% Segment margin Continued focus on margin Pricing discipline and flexible cost base Valuable segment to understand market trends and to get access to consumer assortment MSEK Q4 2017/18 Q4 2016/17 Organic growth Q4 y/y growth Net sales % 3.3% Segment result % Segment margin 5.2% 6.0% 8

9 YEAR-END REPORT 2017/18 Net Working Capital Continued low net working capital Net working capital was -192 MSEK (118) Account payables still high due to temporary favorable credit terms from distributors. The effect was slightly higher than in prior periods, mainly due to higher share or purchases from these distributors Account receivables higher than last year, primarily as a result of higher sales volumes ,5% 1,3% Net Working Capital 0,9% -0,2% -0,9% -0,1% -0,4% -1,8% Inventory level slightly higher, due to higher sales volumes and increasing share of Dustin private label products x NWC Average LTM NWC as % of LTM sales 9

10 YEAR-END REPORT 2017/18 Cash flow and capex Improved operating cash flow Cash flow for the quarter was -121 (-24) MSEK Cash flow from operating activities, before changes in working capital, increased to 97 (79) MSEK, mainly due to higher profits Changes in working capital was positive by 55 MSEK versus last year, mainly as a result of higher account payables Cash flow from investing activities decreased due to completed acquisitions during the quarter Cash flow from financing activities improved by 559 MSEK, affected by a new bank agreement and repayment of previous financing Cash Flow Continued low levels of capex Total capex at 0.9% (0.2%) of net sales Capex related to IT development (integrated IT-platform and other long term strategic IT-systems) of SEK 5.1 (3.1) million Other capex of SEK 17.1 (2.3) million, of which the majority refers to computer purchases for internal use Q4 16/17 Operating activities Changes in working capital -729 Investing activities Financing activities Q4 17/18 10

11 YEAR-END REPORT 2017/18 Leverage above target range Higher net debt in relation to adjusted EBITDA Net debt increased to 1,731 (998) MSEK Net debt/adjusted EBITDA up to 3.3x (2.3x) at the end of 2017/18 Above target of a net debt/adjusted EBITDA of 2-3x Acquisitions of Norriq ICS, Core Services, JML System, DAV Partner, ITaito and Vincere Groep in 2017/18 Leverage limits execution of current acquisition strategy Future cash flow generation will be enough to reach target range in 2018/19 Limited execution of current acquisition strategy Retained dividend, no change in dividend policy Net debt and Net debt/adjusted EBITDA 1, x x 3.3x 2016/ /18 Net debt Net debt/adjusted EBITDA 11

12 YEAR-END REPORT 2017/18 Rationale for the rights issue Proven growth story Average net sales growth (CAGR) of 13.6 percent (2012/ /18) of which organic growth corresponded to 8.6 percent Maintain current acquisition strategy Flexibility and ability to maintain the current acquisition strategy within the existing markets in the Nordics and the Netherlands Increased transaction activity Increased transaction activity in all markets. Driven by strong company performances combined with several successful transactions Inflow of potential acquisition candidates Current large inflow of potential acquisition candidates in all existing markets. Dustin now seen as natural industrial partner/buyer for entrepreneurs and financial sellers Drive market consolidation Ability to respond to increased market activity and continue to be active and a driving part in the current market consolidation Further strengthen position Further strengthen position as the leading IT partner online in the Nordic region Continued margin expansion Broaden offering of more advanced services and solutions to further strengthen margins Increase customer loyalty and share of recurring revenues Higher share of services and solutions increases proportion of recurring revenues and strengthens customer loyalty 12

13 YEAR-END REPORT 2017/18 Terms for the rights issue 7 old shares provides subscription rights to subscribe for 1 new share For each share held in Dustin one (1) subscription right is obtained Seven (7) subscription rights entitle to subscription of one (1) new share Discount to TERP of 23.7% 1) Subscription price: SEK 63 per new share Issue proceeds of c. SEK 695 million before the deduction of transaction costs Dustin s number of shares increase by c. 11,032,357 to c. 88,258,859 issued shares Overview of terms for the rights issue # of shares pre-issue Million shares 77.2 Pre-issue share price at closing on 4 Oct, 2018 SEK 85.4 Terms 1:7 (1 new for 7 old) # of new shares issued Million 11.0 Subscription price SEK 63 Theoretical ex-rights price (TERP) 1) SEK 82.6 Discount to TERP 1) % 23.7% Theoretical value of subscription right 1) SEK 2.80 Total issue size MSEK # of shares post-issue Million shares 88.3 New shares as % of total # shares post-issue 12.5% 1) Based on Dustin s closing share price as of 4 Oct,

14 YEAR-END REPORT 2017/18 Rights issue timetable DATE EVENT 17 Oct Record date for the rights issue 18 Oct Prospectus published 19 Oct 7 Nov Subscription period 19 Oct 9 Nov Trading in subscription rights (ends 5 Nov) and paid subscribed shares (BTA) 9 Nov Outcome of rights issue announced by press release 13 Nov Settlement date for subscription without preferential rights OCTOBER 2018 M T W T F S S v v v v v NOVEMBER 2018 M T W T F S S v v v v v Nov First day of trading with new shares 14

15 YEAR-END REPORT 2017/18 Summary FY 2017/18 Solid growth and positive margin trend Net sales increased by 10.7% to SEK 10,300 (9,306) million Organic net sales growth of 2.0% in constant currency Robust growth in SMB and B2C, while volume volatility within LCP burdens total growth Gross margin at 15.9% (14.8%) Positively affected by a more favorable product mix primarily from completed acquisitions Adjusted EBITA margin of 4.9% (4.6%) Positively impacted by a higher gross margin and a more favorable mix between segments. Earnings per share increased 27% to SEK 3.99 (3.14) The Board proposes a total dividend of SEK 239 (213) million, corresponding to SEK 3.10 (2.80) per share before consideration of proposed rights issue High operational activity during the year, acquired Norriq ICS, Core Services, JML-System, DAV Partner, ITaito and Vincere Groep 15

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17 CORPORATE PRESENTATION Dustin at a glance 255,000 hardware and software products sold online Net sales Software and services ~12% Hardware ~88% Hardware Clients Software OS Services Servers SaaS Offline ~20% Online ~80% Financing Cloud solutions Refers to financial year 2017/18 Refers to integrated operations financial year 2017/18 Dustin (B2B) Dustin Home (B2C) SEK million 10,000 8,000 6,000 4,000 2,000 0,000 across the Nordics to B2B customers Adjusted EBITA and margin Denmark ~16% Netherlands* Norway ~2% ~16% Finland ~16% Sweden ~50% % net sales 94% 6% Customers Offering Avg. order SMB Full assortment SEK 7,000 Public/Large Replienishment IT SEK 11,000 B2C IT products SEK 2, million orders SEK million ,0% 5,5% 5,0% 4,5% 4,0% Refers to financial year 2017/18 *Consolidated as of July 4, Refers to financial year 2017/18 17

18 CORPORATE PRESENTATION High growth position in a large market Large and fragmented addressable market Key trends driving Dustin s underlying growth Channel shift from offline to online Growth pockets within advanced products and services Higher growth for smaller companies *Compound Annual Growth Rate Note: Market data based on calendar year. The addressable market refers to hardware sales to the B2B segment and selected parts of software and services to the customer group small and medium enterprises. Source: Dustin estimates based on market data from IDC and market analysis from a senior advisor. 18

19 CORPORATE PRESENTATION Dustin has a strong position in the value chain ~2,800 brands 1) Dustin s customer base 2) Hardware Distributors Public/ Large corporations ~5k customers Software SMB ~100k customers Consumers ~350k customers Value proposition to OEMs and distributors High barriers to entry Value proposition to customers Distribution to customers that are difficult to serve >100k loyal B2B customers Unique partner for campaigns / product launches Significant scale Long term experience Market leading brand Wide product and service offering High IT knowledge Fast and reliable delivery A LARGE NUMBER OF SUPPLIERS...NEED AGGREGATOR TO INTERACT WITH... A LARGE NUMBER OF CUSTOMERS 1) Purchased from ~390 suppliers (OEMs or distributors). 2) Defined as customers that have made at least one purchase during last 18 months. For consumers, the unique identifier is account number rather than personal identification number. 19

20 SG&A as % of net sales (2013) Low Degree of value added service High CORPORATE PRESENTATION Unique position combining cost efficiency with high service level ERP implementation Strategic IT consultancy Atea Illustrative Integrated solutions Advania On-site services Product-near services High IT knowledge Fast delivery Small IT infrastructure and service companies Small and medium sized businesses Wide offering of ~255k IT products Strong brand name Non-IT related consumer products Verkkokauppa Komplett Dustin s focus areas Low Cost efficiency High Non SMB related services Scale High online share Efficient execution Central functions 1) Refer to the financial year ended 31 August Source: Annual reports. industry analysis and management analysis % 21% 13% 11% 11% 1) Caperio Atea Verkkokauppa Komplett Dustin

21 Higher gross margin CORPORATE PRESENTATION Multi-channel approach to drive growth and margins Product Customer needs portfolio Basic Medium Advanced Three tiered Customer needs sales model Basic Medium Advanced Stand-alone services and solutions Cloud solutions MPS 1) CONSULTATIVE SALES Offline ~25% of net sales Advanced products Server SaaS Financing OUTBOUND SALES Online ~75% of net sales Basic products Clients Software ONLINE SALES 21

22 CORPORATE PRESENTATION Financial targets Financial targets Historical performance Net sales growth Dustin s target is to achieve average annual organic net sales growth amounting to 8 percent over an economic cycle In addition, Dustin targets to grow through acquisitions 8% organic growth Average per year over a cycle Period: 2013/ /18 Average: ~8% organic growth per year Profitability Dustin s target is to increase adjusted EBITA margin over time and in the medium term achieve 5 6 percent adjusted EBITA margin 5 6% Adj. EBITA margin Period: 2017/18 Actual: 4.9% Capital structure Dustin s capital structure shall provide a high degree of financial flexibility and allow for acquisitions Dustin targets to have a net debt, over time, amounting to a multiple of 2 3 times adjusted EBITDA for the last twelve months x Net debt to adj. EBITDA Period: 2017/18 Actual: 3.3x adjusted EBITDA Dividend policy Dustin s target is to pay a dividend corresponding to more than 70 percent of net profit The dividend shall take into account acquisitions, the company s financial position, cash flow and future growth opportunities >70% Pay-out ratio Period: 2017/18 Actual: Total dividend of SEK 239 million, corresponding to 78% of reported net profit. 22

23 CORPORATE PRESENTATION Continue leveraging dynamic market trends and new service offerings 2017/18 Pan-Nordic footprint with one common platform supporting product and service offerings Nordic governance structure with highly skilled central online team and local sales organization Around 250 sales specialists addressing more than 10,000 customers with a wide portfolio of IT-solutions Cloud portal securing growth in SaaS and managed services Product split Services & Solutions Basic products Advanced products LCP Segment split B2C SMB Net sales SEK 10.3 bn EBITA margin 4.9% Number of FTEs 1,152 CAGR: ~10% Based on financial target of 8% organic growth over a cycle Bolt-on acquisitions in existing markets in the Nordics and the Netherlands Leverage integrated platform infrastructure and customer offerings in all geographies Realize sales synergies of newly acquired offerings and expanding customer base Accelerate sales of managed services towards SMB to increase recurring revenues and margin expansion Continue consolidation of specialized VAR market through M&A 2021/22 One-stop shop for SMBs in all Nordic countries and the Netherlands Fully integrated online experience for product and service sales Large Corporates to reach more than 50% sales share within LCP segment More than 4 bn SEK in advanced products and services sales driven by acquisitions and organic growth More than 1 bn SEK in recurring revenues Product split Services & Solutions Basic products Advanced products LCP Segment split B2C SMB Net sales SEK ~15* bn EBITA margin 5-6%* Source: Dustin. *based on financial targets 23

24 CORPORATE PRESENTATION Well defined levers will contribute to the margin journey Margin journey potential FY21/ % % ~6% % % 4.6% Adjusted EBITA margin 16/17 Increased share of SMB Private label Value accretive M&A Managed services Adjusted EBITA margin 21/22 Increased share of SMB Private label Value accretive M&A Managed services SMB growing faster than LCP due to our cost efficient online platform to serve SMB customers and a continued focus on SMB offerings Targeting 25% of sales in each of the selected categories to reach annual private label sales of 400 MSEK within 3 years with an incremental EBITA margin of around 10 percentage points on average Target to raise share of advanced products and services and recurring revenue by adding 3-5 bolt-on acquisitions annually Supporting customer journey by driving both margin and loyalty Scalable platform aggregating a wide portfolio of SaaS to the B2B market Target to reach 10,000 customers adding 300 MSEK in sales within 3 years enabling 20-50% gross margin on incremental SaaS sales and attached services Source: Dustin, November

25 CORPORATE PRESENTATION Dustin s Cloud Platform - The one-stop-shop targeting SMBs Dustin s customer base Public/ Large corporations ~5k customers SMB ~100k customers Consumers ~350k customers 60,000 50,000 40,000 Seats and customers 2,000 1,500 Increasing share of high-margin recurring revenue Scalable platform aggregating a wide portfolio of SaaS to the Nordic B2B market Launch being Microsoft centric due to strong legacy and cloud services brand recognition 30,000 20,000 10,000 0,000 Q4 15/16 Q1 16/17 Q2 16/17 Q3 16/17 Number of seats Q4 16/17 Q1 17/18 Q2 17/18 Q3 17/18 Number of customers Q4 17/18 1,000 0,500 0,000 Fast growth within Dustin s SMB customer base and significant cross-selling opportunities SaaS bundled with in-house Dustin solutions. e.g. Office 365 migration and Helpdesk Ease of use to order and manage subscriptions Dustin s multi-channel sales model ideal to convert and migrate transactional HW customers 25 25