QSC AG
Company Presentation
Results Q3 2012
1
Cologne, November 5, 2012
AGENDA
-
- Highlights Q3 2012
-
- Financial results Q3 2012
- 3.Outlook 2012
-
- Questions & Answers
MAJOR ACHIEVEMENTS IN Q3 2012
- • Successful transformation process (Q-o-Q)
- •ICT revenues in Direct Sales up by 8% to € 49.5 million
- •ICT revenues in Indirect Sales up by 11% to € 32.1 million
- •TC revenues in Resellers down by 7% to € 38.9 million
- • New contracts in Direct Sales with a total contract value (TCV) of € 89.2 million in Q3 2012
- •Accelerated integration of INFO AG
- •Extension of the partnership with SAP
TRANSFORMATION PROCESS ON TRACK IN 2012
4
Growth drivers
- • Joint efforts of INFO AG and QSC to win customers are paying off
- •Higher demand for ICT products
- • Traditionally stronger demand for services such as Consulting and voice in H2 2012
- •INFO AG consolidation effect
Growth restraints
- • Fierce price competition in TC business
- • Declining demand for Call-by-Call and Preselect offerings
- •Unfavorable voice regulation
HIGHEST LEVEL OF NEW ORDERS EVER:TCV OF € 89.2 MILLION IN ONE QUARTER
| Industry |
Total contract value (Q3 2012) |
| Gas/Energy |
€ 65,564,000 |
| Industry/Oil & Chemistry |
€ 12,451,000 |
| Logistics/Shipping |
€ 2,472,000 |
| Retail |
€ 2,357,000 |
| Insurance/Healthcare |
€ 2,145,000 |
| Food & Beverages (Tobacco) |
€ 1,009,000 |
| Others |
€ 3,165,000 |
| Total |
€ 89,163,000 |
Largest order from a nationwide energy service provider:
- • ICT Outsourcing project with a TCV of more than € 60 million
- • QSC wins some 20 additional IT experts
- • Recurring revenues from H2 2013 onward
- • Contract runs for at least 5 years
HUGE IMPACT OF SINGLE PROJECTS ON TCV
- • In the first nine months, QSC has already won new contracts with a TCV of € 166.0 million
- • € 120.4 million stem from large orders from single customers
- • Winning large orders only possible thanks to close collaboration of INFO AG and QSC teams
- • For Q4 2012, QSC does not expect another large order
ACCELERATED INTEGRATION OF INFO AG
- • Merger of INFO AG and INFO Holding came into effect onJuly 17, 2012, much earlier than anticipated
- • Listing of INFO AG was terminated; no further costs for two public companies (AGM, designated sponsorship, financial reports, etc.)
- • In Q3 2012, QSC started several initiatives to streamline back office
- •Consolidation of infrastructure locations
- •Centralization of procurement
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- •Uniform management structures in various areas (Finance, HR, Legal, Marketing)
- • Emphasis on soft factors: "One company, one culture"
- ⇒QSC is focusing on sales and not on cost synergies
QSC OFFERS SAP SERVICES FROM THE CLOUD
- • In September 2012, INFO AG announced an extension of thelong-term partnership with SAP
- • INFO AG is among the first providers in the DACH region to makeSAP applications available from the Cloud
- •First services in Q4 2012 will include the SAP Afaria facility management solution and the SAP Mobile Platform
- • At INFO AG, more than 150 SAP consultants are helping companiesto establish and maintain the entire SAP business suite
QSC ALSO "DELIVERED" IN Q3 2012 – ON A GOOD WAY TO REACHING ALL MILESTONES FOR 2012
| Milestone |
Progress |
Target for 2012 |
| Integration |
Merger completed |
Merger completed
>Target achieved |
| New customers |
Total contract value of $\epsilon$ 89.2 million |
Direct Sales grows faster than market
> Target achieved |
New products with
Intellectual Property (IP) |
4th launch: QSC-Cospace business |
Launch 4-6 products
> Target most probably achieved |
| New sales partners |
Won 68 IT sales partners in 2012 |
Win 80 IT sales partners
> Raised target; original target of
50 partners already achieved |
-
- Highlights Q3 2012
-
- Financial results Q3 2012
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- Outlook 2012
-
- Questions & Answers
ONGOING TRANSFORMATION MAKE Y-o-Y COMPARISON QUITE DIFFICULT
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(1) Excluding depreciation and non-cash share-based payments
QSC'S PROGRESS SHOWS ITSELF MORE EASILYIN A Q-o-Q COMPARISON
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(1) Excluding depreciation and non-cash share-based payments
HUGE PROGRESS MADE IN ICT BUSINESS IN Q3 2012
HIGHER PROFITABILITY IN ICT BUSINESS ISDRIVING THE PROFITABILITY OF THE QSC GROUP
ON AVERAGE, QSC INVESTS 8% OF ITS REVENUES
Main CAPEX components
- • Customer-driven investments(e.g. routers, servers)
- • Maintenance investmentsfor existing infrastructure
- • Extension of capacity(e.g. data centers)
SUSTAINABLE FREE CASH FLOW
| (in $\epsilon$ million) |
June 30, 2012 |
Sept. 30, 2012 |
FCF Q3/2012 |
| Cash and cash equivalents |
36.9 |
36.9 |
$\Omega$ |
| Available-for-sale financial assets |
0.3 |
0.3 |
0 |
| Liquidity |
37.3 |
37.3 |
$\bf{0}$ |
Liabilities under financing
arrangements |
$-11.4$ |
$-12.3$ |
$-0.9$ |
| Liabilties due to banks |
$-64.2$ |
$-79.2$ |
$-15.0$ |
| Interest-bearing liabilities |
$-75.6$ |
$-91.5$ |
$-15.9$ |
| Net debt |
$-38.3$ |
$-54.2$ |
$-15.9$ |
| Acquisitions |
|
|
$+5.8$ |
| Share buy-back |
|
|
$+16.0$ |
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QSC'S FIRST SHARE BUY-BACK PROGRAMSUCCESSFULLY CONCLUDED
- •As of November 5, 2012, QSC concluded its share buy-back program
- • The company has bought 13,699,913 shares (9.98% of capital stock) for € 29.0 million (on average € 2.117 per QSC share)
- • By September 30, 2012, the company had already purchased 10,673,101 shares (7.78% of capital stock) for € 22.6 million
SOUND FINANCING: POSITIVE FREE CASH FLOW AND LOW NET DEBT
$$
\frac{\text{Net debt}}{\text{EBITDA}} = 0.7x
$$
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AGENDA
-
- Highlights Q3 2012
-
- Financial results Q3 2012
- 3.Outlook 2012
-
- Questions & Answers
QSC CONFIRMS GUIDANCE FOR 2012
QSC anticipates:
- •Revenues of € 480 – € 490 million
- •An EBITDA margin of 16%
- •Free cash flow of € 22 – € 26 million
QSC aims to again pay a dividend of at least € 0.08 for fiscal year 2012 – a yield of 3.8%, given a share price of € 2.10
UNFAVORABLE VOICE REGULATION EXPECTED
- • On December 1, 2012, an unfavorable voice regulation will most probably come into effect
- • QSC anticipates several decisions of the Regulator, among them:
- •A decline in termination fees for fixed-line calls by some 33%
- •Adecline in termination fees for mobile calls by some 40%
- • Estimated revenue shortfalls for QSC will be € 25 to € 30 million per annum, starting December 1, 2012 (~50% Indirect Sales,~50% Resellers)
- • Depending on the nature of the decisions, there might be a slight effect on earnings
ACCELERATED TRANSFORMATION PROCESS IS THE BEST STRATEGY AGAINST DECLINE IN TC BUSINESS
- • Unfavorable regulation, fierce price competition and changing demand are the driving forces in conventional TC business today
- • QSC foresaw these developments and started the transformation process to become an ICT provider
- • Since Q2 2012, ICT only Direct Sales has been the largest businessunit and is growing revenues and earnings quarter by quarter
- • Today, the ICT business is more and more in a position to offset the negative effects of conventional TC business
- ⇒ Transformation process has paved the way for substantial mid-term growth of revenues and profitability
AGENDA
-
- Highlights Q3 2012
-
- Financial results Q3 2012
- 3.Outlook 2012
-
- Questions & Answers
CONTACT
QSC AGArne ThullHead of Investor RelationsMathias-Brüggen-Strasse 55 50829 Cologne
Phone +49-221-6698-724 Fax +49-221-6698-009E-mail [email protected] Web www.qsc.de
twitter.com/QSCIRdetwitter.com/QSCIRenblog.qsc.dexing.com/companies/QSCAGslideshare.net/QSCAG
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SAFE HARBOR STATEMENT
This presentation includes forward-looking statements as such term is defined in the U.S. Private Securities Litigation Act of 1995. These forward-looking statements are based on management's current expectations and projections of future events and are subject to risks and uncertainties. Many factors could cause actual results to vary materially from future results expressed or implied by such forward-looking statements, including, but not limited to, changes in the competitive environment, changes in the rate of development and expansion of the technical capabilities of DSL technology, changes in prices of DSL technology and market share of our competitors, changes in the rate of development and expansion of alternative broadband technologies and changes in prices of such alternative broadband technologies, changes in government regulation, legal precedents or court decisions relating, among other things, to line sharing, rent for co location and unbundled local loops, the pricing and timely availability of leased lines, and other matters that might have an effect on our business, the timely development of value-added services, our ability to maintain and expand current marketing and distribution agreements and enter into new marketing and distribution agreements, our ability to receive additional financing if management planning targets are not met, the timely and complete payment of outstanding receivables from our distribution partners and resellers of QSC services and products, as well as the availability of sufficiently qualified employees. A complete list of the risks, uncertainties and other factors facing us can be found in our public reports and filings with the U.S. Securities and Exchange Commission.
DISCLAIMER
- • This document has been produced by QSC AG (the "Company") and is furnished to you solely for your information and may not be reproduced or redistributed, in whole or in part, to any other person
- • No representation or warranty (express or implied) is made as to, and no reliance should be placed on, the fairness, accuracy or completeness of the information contained herein and, accordingly, none of the Company or any of its parent or subsidiary undertakings or any of such person's officers or employees accepts any liability whatsoever arising directly or indirectly from the use of this document
- • The information contained in this document does not constitute or form a part of, and should not be construed as, an offer of securities for sale or invitation to subscribe for or purchase any securities and neither this document nor any information contained herein shall form the basis of, or be relied on in connection with, any offer of securities for sale or commitment whatsoever
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