Earnings Release • Feb 29, 2016
Earnings Release
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34% annual growth 121% growth for the drone business Investments accelerating in 2016, benefiting from the 300 million euros capital increase Capacity for innovation and marketing effectiveness further strengthened
| Condensed consolidated accounts(1) Proforma(2) , IFRS, €M Details appended |
Q4 2014 | Q4 2015 | Change | 2014 | 2015 | Change |
|---|---|---|---|---|---|---|
| Revenues | 80.4 | 108.2 | +35% | 243.9 | 326.3 | +34% |
| - Drones | 37.1 | 74.0 | +99% | 83.0 | 183.4 | +121% |
| - Automotive | 36.2 | 29.1 | -20% | 144.4 | 125.4 | -13% |
| - Connected devices | 6.4 | 4.4 | -31% | 14.5 | 15.4 | +6% |
| - Other | 0.6 | 0.7 | +11% | 2.0 | 2.1 | +6% |
| Gross margin | 42.7 | 50.4 | +18% | 128.5 | 152.7 | +19% |
| % of revenues | 53.1% | 46.9% | 52.7% | 46.8% | ||
| Income from ordinary operations | 4.5 | 3.3 | -40% | 1.1 | -0.4 | -131% |
| % of revenues | 5.5% | 3.1% | 0.5% | -0.1% | ||
| EBIT | 4.7 | 5.1 | +9% | 0.6 | 2.1 | +258% |
| % of revenues | 5.9% | 4.7% | 0.2% | 0.6% | ||
| Net income, Group share | 2.9 | 4.6 | +59% | -2.8 | 1.6 | NS |
| Net income, minority interests | 2.9 | 4.5 | +55% | -2.6 | 0.5 | NS |
| % of revenues | 3.7% | 4.1% | -1.1% | 0.2% | ||
| Earnings per share (3) | 0.23 | 0.35 | +52% | -0.20 | 0.04 | NS |
| Diluted earnings per share | 0.23 | 0.35 | -0.20 | 0.04 | NS | |
| Net cash | 77.2 | 331.7 | +330% | 77.2 | 331.7 | +330% |
(1) Consolidated earnings include Pix4D from January 1, 2014 (fully consolidated), Airinov from July 1, 2015 and MicaSense from October 1, 2015.
(2) Proforma: Plug & Play revenues, included in the Connected Devices business until December 31, 2014, have been reclassified under the Consumer Automotive business since January 1, 2015. The figures for 2014 are presented on a comparable basis, i.e. after reclassifying Plug & Play revenues under the Consumer Automotive business.
(3) Accounting number of shares (weighted average) at December 31, 2015: 14,015,054; diluted number of shares: 14,136,165.
Fourth-quarter revenues came to 108.2 million euros, in line with the Group's target of at least 105 million euros, with 35% growth (25% at constant exchange rates), driven by the doubling of the Consumer and Commercial Drone business.
2015 saw the same trends continue, paving the way for growth to accelerate as planned, with revenues up 34% (21% at constant exchange rates) compared with 2014 to 326.3 million euros (versus 4% growth in 2014).
During this record year, the Group also made major advances in a number of areas, including:
deployments of its subsidiaries, primarily in the US, where the team now has the critical mass needed to drive its growth forward;
The resources allocated to deploy this growth strategy on the buoyant civil drone market were limited in 2015 and 2014 by the continued target for earnings to break even: over the year, the Group recorded a slight current operating loss of -0.4 million euros and 2.1 million euros in EBIT. Following the capital increase in December 2015, Parrot will now be making major investments to support the market's expansion through innovation and marketing on both consumer and commercial segments.
In the fourth quarter of 2015, Drone revenues (68% of Group revenues, versus 46% in Q4 2014) came to 74.0 million euros, compared with 37.1 million euros for the same period the previous year (+99%). Consumer Drones represented 88% of revenues for the business, with 12% for Commercial Drones. Income from ordinary operations came to 2.9 million euros, with contributions from both market segments. In this quarter, Parrot sold over 400,000 consumer drones and signed new contracts with leading retailers, particularly in the US. This segment's dynamic commercial development has been driven primarily by the strong levels of interest among retailers in the Minidrones range and the launch of Parrot Bebop 2 at the end of the year.
For the full year in 2015, Drone revenues climbed to 183.4 million euros (56% of Group revenues), compared with 83 million euros (34% of Group revenues) in 2014, up 121% (+120% for Consumer Drones and +126% for Commercial Drones). The Group has sold over one million drones. In an expanding market, the current operating loss came to -2.2 million euros, representing 1% of revenues for the Drone business. Consumer Drones generated 85% of revenues for the business, with Commercial Drones accounting for 15%, i.e. 28.3 million euros. senseFly and Pix4D, the commercial drone subsidiaries, have continued to grow quickly, while Airinov and MicaSense, specialized in precision farming, joined the Group in 2015 and have been consolidated since the second half of the year, contributing 1.3 million euros for the year.
Following this year, marked by the drone industry's emergence, the Group has achieved a new maturity and its progress has been very positive overall:
The Connected Devices business is part of the Parrot Drone company and includes income from the sale of Zik headphones and Flower Power sensors. It also houses the related research projects, further strengthening the Group's capacity for innovation. During the fourth quarter of 2015, revenues for Connected Devices (4% of Group revenues, versus 8% in Q4 2014) came to 4.4 million euros (versus 6.4 million euros in Q4 2014).
For the full year, Connected Devices revenues (5% of Group revenues, versus 6% in 2014) totaled 15.4 million euros (versus 14.5 million euros in 2014). The current operating loss came to -6.7 million euros, compared with -7.2 million euros in 2014.
During the fourth quarter of 2015, Automotive revenues (27% of Group revenues, versus 45% in 2014) came to 29.1 million euros, compared with 36 million euros for the same period the previous year. OEM Automotive solutions generated 67% of revenues for the business. EBIT came to 3.7 million euros, representing 13% of revenues for the business.
For the full year, Automotive revenues came to 125.4 million euros (39% of Group revenues), down 13% from 2014 (after -17% in 2014 and -26% in 2013). Four new manufacturers equipped their high-end models with infotainment platforms developed by Parrot in 2015. Alongside this, the actions taken to rebuild a good level of profitability have delivered benefits: the business achieved 11.3 million euros in income from ordinary operations, with an operating margin of 9%.
For the fourth quarter of 2015, Parrot recorded a gross margin of 46.6%, compared with 53.1% for the fourth quarter of the previous year. The contraction in the gross margin reflects the sales mix, with a stronger focus on innovative consumer products (73% of Group revenues all activities combined, versus 70% in Q4 2014) and the foreign exchange effect (-2.7 pts). For the full year, the gross margin came to 46.8%, versus 52.7% in 2014 with the same effects (68% of Group revenues for the consumer segment vs. 57% and euro-dollar exchange rate: -3.7 pts).
In the fourth quarter, income from ordinary operations came to 3.3 million euros, with an operating margin of 3.1%. Operating expenditure totaled 47.1 million euros. The 27% increase was allocated primarily to cover the new product launches and the marketing campaigns for the end-of-year holiday period.
The changes in the main cost items were as follows (compared with the fourth quarter of 2014):
Non-current operating income is 1.7 million euro: the remeasurement of the interest in MicaSense at fair value offsets the other costs, with EBIT coming out at 5.1 million euros (4.7% of revenues).
Financial income and expenses for the fourth quarter came to 0.7 million euros, primarily due to the impact of exchange rates, with a -0.2 million euro tax charge. Net income (Group share) represented 4.1% of the Group's revenues, with +4.5 million euros.
For the full year in 2015, income from ordinary operations totaled -0.4 million euros, in line with the Group's target to be close to breaking even. This result has been achieved while moving forward with a differentiating consumer-commercial growth strategy in the emerging civil drone industry.
Non-current operating expenditure (3.8 million euros) includes external costs relating to the reorganization of Parrot SA and the proceedings to defend patents in the US, offset by the remeasurement at fair value of the interests held in Airinov and MicaSense, with EBIT coming out at 2.1 million euros (0.6% of revenues).
Financial income and expenses for 2015 came to 0.9 million euros, primarily due to the impact of exchange rates, with a -0.2 million euro tax charge. For 2015, full-year net income totaled 1.6 million euros, with minority interests, i.e. the investments in commercial civil drone startups, representing 0.5 million euros.
At December 31, 2015, the Group's workforce represented 1,082 people (including 10 people from MicaSense), with its R&D teams making up 45% of staff, i.e. 486 people, and 227 people focused on sales and marketing. The Group also employs 88 external contractors (versus 74 at September 30, 2015), who temporarily provide any additional technical expertise required.
At December 31, 2015, Parrot had 331.7 million euros in net cash, including 288.3 million euros from the capital increase of December 2015. The Group's shareholders' equity represents 425.1 million euros. Cash consumption over the year totaled 41.4 million euros, including 7.9 million euros for the commercial drone acquisitions.
Net inventories represent 68.4 million euros, equivalent to 65 days of operations, compared with 43 one year earlier. The sales and product strategy rolled out in 2016 will aim to reduce their relatively high level, which reflects the orders recently booked to set up operations with the new retailers who have joined our network, in North, Central and South America in particular. Trade receivables represent 85.0 million euros, with 84.5 million euros of trade payables. The ratios for accounts payable and receivable are in line with the previous
year, with high levels of purchases at the end of the period included in trade payables. Operational working capital represented 68.9 million euros.
Parrot is moving forward with its ambition to develop its global leadership for consumer and commercial drones. The new civil drone industry is taking shape. It offers vast potential, as confirmed by the first market research reports; in particular, it is benefiting from legislative changes aimed at promoting the integration of the new technologies made possible by civil drones within society, particularly to meet the needs of various professionals.
After passing the 300 million euro revenue mark and completing its major round of fundraising, Parrot has achieved a new level of maturity. Its experiences and achievements in 2015 are paving the way for a structuring phase, before moving forward with its sustainable expansion. Among other features, the 2016 action plan, which is already progressing well, aims to:
The optimization of the organization (i) will involve:
And (ii) aims to make it possible to:
Optimize and ensure strict control over its industrial and operational organization, primarily with:
Supplies launched with a new leading industrial Electronic Manufacturing Services (EMS) partner during the first half of the year;
For 2016:
This strategy is being rolled out with a focus on investment to drive growth in the Group's business and consolidate its position as a major player for civil drones, aiming by 2018 to reestablish an operating margin in line with the Group's development model, combining sustainable growth and profitability.
Founded in 1994 by Henri Seydoux, Parrot creates, develops and markets advanced technology wireless products for consumers and professionals. The company builds on a common technological expertise to innovate and develop in three primary markets:
Headquartered in Paris, Parrot currently employs more than 1 000 people worldwide and generates the majority of its sales overseas. Parrot has been listed on Euronext Paris since 2006. (FR0004038263 – PARRO). For more information, please visit www.parrot.com
Investors, analysts, financial media Marie Calleux - T.: +33(0) 1 48 03 60 60 [email protected]
Tech and consumer media Vanessa Loury - T.: +33(0) 1 48 03 60 60 [email protected]
The consolidated accounts:
Breakdown of revenues by business
| Consolidated accounts - IFRS (€M and % of Group revenues) |
Q4 2014 | Q4 2015 | 2014 | 2015 | ||||
|---|---|---|---|---|---|---|---|---|
| Automotive | 37,1 | 46% | 74,0 | 68% | 83,0 | 34% | 183,4 | 56% |
| Consumer | 33,8 | 42% | 65,0 | 60% | 70,5 | 29% | 155,2 | 47% |
| OEM | 3,3 | 4% | 9,0 | 8% | 12,5 | 5% | 28,3 | 9% |
| Drones | 6,4 | 8% | 4,4 | 4% | 14,5 | 6% | 15,4 | 5% |
| Consumer | 5,3 | 7% | 4,2 | 4% | 12,4 | 5% | 14,1 | 4% |
| Commercial | 1,1 | 1% | 0,2 | NS | 2,1 | $1\%$ | 1,2 | $1\%$ |
| Connected Devices | 36,2 | 45% | 29,1 | 27% | 144,4 | 59% | 125,4 | 38% |
| Audio | 15,6 | 19% | 9,5 | 9% | 53,9 | 22% | 52,8 | 16% |
| Plug & Play | 20,6 | 26% | 19,6 | 18% | 90,5 | 37% | 72,6 | 22% |
| Other connected devices | 0,6 | 1% | 0,7 | 1% | 2,0 | $1\%$ | 2,1 | 1% |
| Other | 80,4 | 100% | 108,2 | 100% | 243,9 | 100% | 326,3 | 100% |
| Group total | 37,1 | 46% | 74,0 | 68% | 83,0 | 34% | 183,4 | 56% |
| Consolidated accounts TFRS (€M) |
Automotive | Drones | Connected Devices |
Other |
|---|---|---|---|---|
| Q4 2015 | ||||
| Revenues | 74,0 | 4.4 | 29,1 | 0,6 |
| Income from ordinary operations | 2,9 | $-2.9$ | 3,7 | $-0,4$ |
| % of revenues | 4% | $-66%$ | 13% | $-61%$ |
| 2015 | ||||
| Revenues | 183,4 | 15,4 | 125,4 | 2,1 |
| Income from ordinary operations | $-2,2$ | $-6,7$ | 11,2 | $-2,7$ |
| % of revenues | $-1%$ | $-44%$ | 9% | $-132%$ |
| Consolidated accounts | ||||
|---|---|---|---|---|
| IFRS (€M) | Q4 2014 | Q4 2015 | 2014 | 2015 |
| Revenues | 80,4 | 108,2 | 243,9 | 326,3 |
| Gross margin | 42,7 | 50,4 | 128,5 | 152,7 |
| % of revenues | 53,1% | 46,6% | 52,7% | 46,8% |
| R&D costs | $-12,7$ | $-13.9$ | $-50.1$ | $-57,7$ |
| % of revenues | $-15,8%$ | 12,9% | $-20,6%$ | 17,7% |
| Sales and marketing costs | $-15,5$ | $-22,9$ | $-45.9$ | $-59,3$ |
| % of revenues | $-19,3%$ | 21,1% | $-18,8%$ | 18,2% |
| Administrative costs and overheads | $-5,6$ | 5,2 | $-16,7$ | $-19,5$ |
| % of revenues | $-6,9%$ | 4,8% | $-6,9%$ | 6,0% |
| Production and quality costs | -4,4 | 5,2 | $-14,6$ | $-16,6$ |
| % of revenues | $-5,5%$ | 4,8% | $-6,0%$ | 5,1% |
| Income from ordinary operations | 4,5 | 3,3 | 1,1 | $-0,4$ |
| % of revenues | 5,5% | 3,1% | 0,5% | $-0,1%$ |
| EBIT | 4,7 | 5,1 | 0,6 | 2,1 |
| % of revenues | 5,9% | 4,7% | 0,2% | 0,6% |
| Financial income / expense | $-0,6$ | 0,7 | 0,6 | 0,9 |
| Corporate income tax | -1,1 | $-0,2$ | $-4,0$ | $-0,2$ |
| Income from associates | $-1,1$ | |||
| Net income | 2,9 | 4,6 | $-2,8$ | 1,6 |
| Minority interests | $-0,09$ | 0,1 | $-0,3$ | 1,1 |
| Net income (Group share) | 2,9 | 4,5 | $-2,6$ | 0,5 |
| % of revenues | 3,7% | 4,1% | $-1,1%$ | 0,2% |
$\ldots$
Balance sheet
| Consolidated accounts IFRS (€M) |
Dec 31, 2014 | Jun 30, 2014 | Dec 31, 2015 |
|---|---|---|---|
| Non-current assets | 100,5 | 100,3 | 124,7 |
| Goodwill | 39,9 | 40,2 | 58,1 |
| Other intangible assets | 43,2 | 42,9 | 41,0 |
| Property, plant and equipment | 9,0 | 8,7 | 9,8 |
| Financial assets | 6,3 | 6,4 | 5,4 |
| Investments in associates | 1,2 | ||
| Deferred tax assets | 2,1 | 2.1 | 9,1 |
| Current assets | 210,2 | 189,0 | 531,0 |
| Inventories | 31,8 | 46,5 | 68,4 |
| Trade receivables | 62,6 | 48,3 | 85,0 |
| Other receivables | 26,0 | 28,2 | 26,4 |
| Other current financial assets | 19,4 | 13,0 | 158,0 |
| Cash and cash equivalents | 70,3 | 53,0 | 193,1 |
| TOTAL ASSETS | 310,7 | 289,3 | 655,6 |
| Shareholders' equity | |||
| Share capital | 1,9 | 1,9 | 4,6 |
| Issue and contribution premiums | 50,7 | 44,9 | 331,1 |
| Reserves excluding earnings for the period | 130,9 | 116,6 | 83,9 |
| Earnings for the period - Group share | $-2,6$ | $-10,1$ | ,5 |
| Exchange gains or losses | 2,8 | 3,5 | 5,0 |
| Equity attributable to Parrot shareholders | 183,8 | 156,8 | 425,1 |
| Minority interests | $-0,9$ | 0.2 | 0,5 |
| Non-current liabilities | 28,9 | 16,3 | 75,4 |
| Non-current financial liabilities | 5,2 | 1,4 | 17,0 |
| Provisions for pensions and other employee benefits | 2,6 | 2,8 | 2,3 |
| Deferred tax liabilities | 0,1 | 1,0 | |
| Other non-current provisions | |||
| Other non-current liabilities | 20,9 | 12,0 | 55,0 |
| Current liabilities | 98,9 | 116,0 | 154,5 |
| Current financial liabilities | 7,3 | 0,4 | 2,3 |
| Current provisions | 8,5 | 10,9 | 11,8 |
| Trade payables | 61,2 | 49,3 | 84,5 |
| Current tax liability | 2,1 | 3,1 | 5,1 |
| Other current liabilities | 19,8 | 52,3 | 50,7 |
| TOTAL SHAREHOLDERS' EQUITY AND LIABILITIES | 310,7 | 289,3 | 655,5 |
$\ldots$
Cash-flow statement
| Consolidated accounts IFRS (€M) |
Dec 31, 2014 | Jun 30, 2014 | Dec 31, 2015 |
|---|---|---|---|
| CASH FLOW FROM OPERATIONS | |||
| Earnings for the period | $-2,9$ | $-9,5$ | 1,6 |
| Income from associates | 1,2 | ||
| Depreciation and amortization | 11,7 | 10,0 | 19,2 |
| Capital gains and losses on disposals | |||
| Remeasurement at fair value | 0,1 | 0,1 | |
| Tax charges | 0,9 | $-7,2$ | |
| Cost of share-based payments | 4,1 | 2,4 | 0,2 |
| Net finance costs | 2,6 | 0,8 | 4,1 |
| Cash flow from operations before tax and net finance costs | $-0,4$ | $-0,3$ | $-0,1$ |
| Change in working capital requirements | 14,2 | 3,6 | 19,0 |
| Tax paid | 5,5 | $-13,2$ | $-32,2$ |
| Net cash from operating activities (a) | $-3,8$ | $-0,8$ | $-4,5$ |
| INVESTING CASH FLOW | 16,0 | $-10,4$ | $-17,6$ |
| Acquisition of property, plant and equipment and intangible assets | |||
| Acquisition of subsidiaries, net of cash acquired | $-19,4$ | 4,4 | $-13,3$ |
| Acquisition of long-term financial investments | 0,3 | $-4,7$ | |
| Disposal of long-term financial investments | $-4,4$ | $-0,2$ | $-3,3$ |
| Cash flow from investment activities (b) | 0,2 | 0,1 | 0,1 |
| FINANCING CASH FLOW | $-23,3$ | $-4,5$ | $-21,1$ |
| Equity contributions | |||
| Receipts linked to new loans | 1,0 | 1,3 | 290,3 |
| Cash invested for over 3 months | 1,2 | 17,8 | |
| Net finance costs | 23,3 | 6,4 | $-138,6$ |
| Exchange hedging instruments | 0,4 | $-0,3$ | 0,1 |
| Repayment of short-term financial debt (net) | |||
| Repayment of other debt | $-10,5$ | $-11,0$ | |
| Treasury stock purchases and sales | $-6,8$ | ||
| Cash flow from financing activities (c) | $-3,0$ | $-0,3$ | |
| Net change in cash position ( $d = a + b + c$ ) | 19,1 | $-5,4$ | 158,3 |
| Net foreign exchange gain / loss | 11,7 | $-20,4$ | 119,5 |
| Cash and cash equivalents at period-start | 4,4 | 3,1 | 3,3 |
| Cash and cash equivalents at period-end | 54,3 | 70,3 | 70,3 |
| Other current financial assets | 70,3 | 53,0 | 193,1 |
| Cash, cash equivalents and other current financial assets at | 19,4 | 13,0 | 158,0 |
| period-end |
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