Earnings Release • Nov 23, 2018
Earnings Release
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Novembre 2018
| New CEO appointment |
• Appointment of Mr. Cristiano Musi as LR group CEO (in charge since Dec. 2016) |
|
|---|---|---|
| Operational efficiency Completed |
• Structured and extensive operational efficiency program with a top tier consulting company: o Improved operational efficiency and redefine manufacturing footprint o Streamlined R&D activities to recover the marginality on the core business o Redefined LRG organization and management position needs |
|
| m a r g o |
Management reinforcement Completed |
• Appointed a new Group CTO and VP Strategic Development, with the aim to sustain the long term relaunch of the Group (Oct. 2017) • Appointed a new Global Head of Manufacturing and Supply Chain with the aim to implement the "center of excellence" project and implementing operational efficiency to sustain the relaunch of the Group • Appointed a new Head of Purchasing to strengthen the Group's sourcing capabilities |
| r P h c n u a L e- R |
Business resources rationalization Completed |
• Debt renegotiated with banks and bondholders and 8,9 M€ capital injection by the main shareholder (Mar.'17) • Sale of a company branch to AVL and agreement on R&D project development (Apr. 2017) • Sale of 18S to B&C Speakers (Oct. 2017) • Merge of SAFE (gas distribution) and Clean Energy Compression (fully owned by Clean Energy Fuels, listed in the Nasdaq), setting up a new worldwide leading Group in the compression segment |
| Strategic plan Implementation Ongoing, on track |
• New 2018-2022 strategic plan presented the in Sep. 2017 • Implementation launched in Nov. 2017: o New organization o LRG product portfolio innovation and evolution (OEM projects for the Medium & Heavy Duty segment) o Rationalization opportunities completed |
Due to the deconsolidation of Gas Distribution and Compressed Natural Gas and Sound sectors, 9M 2018 financial figures are not directly comparable with the same period of previous year
To provide a meaningful explanation of main difference, in the following of this document 9M 2018 results are compared only with 9M 2017 Automotive sector figures
| M€ | FY 2017 | FY 2016 | Delta M€ | Delta % | |
|---|---|---|---|---|---|
| Revenues | 206,3 | 184,2 | 22,1 | 12,0% | |
| EBITDA Adj. | 12,7 | 2,7 | 10,0 | 363,7% | |
| % on Revenues | 6,2% | 1,5% | |||
| EBITDA | 4,7 | -2,9 | 7,6 | 262,0% | |
| % on Revenues | 2,3% | -1,6% | |||
| EBIT Adj. | -1,5 | -13,3 | 11,8 | 88,7% | |
| % on Revenues | -0,7% | -7,2% | |||
| EBIT | -11,5 | -18,9 | 7,4 | 39,3% | |
| % on Revenues | -5,6% | -10,3% | |||
| Capital Gain | 21,1 | 0,0 | 21,1 | ||
| Financials | -6,1 | -4,2 | -1,9 | 46,3% | |
| EBT | 3,5 | -23,1 | 26,6 | 115,2% | |
| Taxes | 0,2 | -2,9 | 3,1 | 107,9% | |
| Net Income | 3,7 | -26,0 | 29,7 | 114,2% | |
| % on Revenues | 1,8% | -14,1% |
| Feb. Group - restructuring Dec (i.e. Excellence prj.) 2017 |
• In 2017, the Group completed a structured and extensive turnaround program, to recover the marginality on the core business • Most Departments and Business areas were involved in the program (e.g. Procurement, Manufacturing, Logistics, R&D, S&OP, Admin.), in Italy and abroad |
• Restructuring costs: 11,0M€ • Costs reduction: 1,1M€ (2017); 13-15M€ (run-rate) |
|---|---|---|
| Technical Jul. Laboratory sale 2017 to AVL |
• Landi Renzo-AVL signed (April) and finalized (July) the agreement for the sales of a company branch concerning the technical laboratories • The agreement also entail the cooperation on R&D strategic projects on CNG, LNG and Hydrogen, that will strengthen innovation |
• Sale value: 5,7M€ • Cash-in: 0,6M€ (10 years) • Capital Loss: 2,0M€ • Fixed cost reduction: ext 3,0M€ per year (from 2018) |
| 18 Sound sale to Dec. 2017 B&C Speakers |
• The Group completed the sale of Eighteen Sound in December '17 • The subsidiary was considered as a non-core asset; the operation further strengthen the capital of the Group |
• Cash-in 2017: 6,8M€ • Debt Reduction: 0,6M€ • Capital Loss: 0,7M€ |
| Merge of Safe Dec. 2017 CEC in a NewCo |
• SAFE (gas distribution) and Clean Energy Compression merged, setting up a new worldwide leading Group in the compression segment • Landi Renzo holds a 51% majority share of the NewCo, while Clean Energy Fuels Corp. holds the remaining 49% • The focus of the business will be on the compressor sectors for CNG stations and on Renewable Natural Gas (RNG) at a global level; with a market share above 15% in Europe and the United States |
• Capital Gain: 21,8M€ • Debt Reduction: 2,9M€ |
| China Dec. 2017 building sale |
• The building owned in China (Beijing), considered as a non-core asset, was disposed, in line with the Strategic Plan's guidelines • The full payment was received in December '17 |
• Cash-in 2017: 4,5M€ • Capital Gain: 3,0M€ 7 |
| like for like | |||||||
|---|---|---|---|---|---|---|---|
| M€ | 2018 9M |
2017 (1) 9M |
Delta M€ |
Delta % | 2017 9M Automotive |
Delta M€ |
Delta % |
| Revenues | 138,1 | 149,5 | -11,4 | -7,6% | 123,0 | 15,1 | 12,3% |
| EBITDA Adj. | 19,1 | 9,8 | 9,3 | 94,9% | 9,6 | 9,5 | 98,7% |
| % on Revenues | 13,9% | 6,6% | 7,8% | ||||
| EBITDA | 17,5 | 7,0 | 10,5 | 148,6% | 6,9 | 10,7 | 155,5% |
| % on Revenues | 12,7% | 4,7% | 5,6% | ||||
| EBIT Adj. | 11,2 | -1,7 | 12,9 | N/A | -0,4 | 11,6 | N/A |
| % on Revenues | 8,1% | -1,1% | -0,3% | ||||
| EBIT | 9,6 | -6,4 | 16,0 | N/A | -5,1 | 14,7 | N/A |
| % on Revenues | 6,9% | -4,3% | -4,2% | ||||
| Capital Gain/Loss | -1,2 | 0,0 | -1,2 | ||||
| Financials | -4,1 | -4,2 | 0,1 | ||||
| EBT | 4,2 | -10,6 | 14,8 | N/A | |||
| Taxes | -1,9 | -0,7 | -1,2 | ||||
| Net Income | 2,3 | -11,3 | 13,6 | N/A | |||
| % on Revenues | 1,7% | -7,5% |
Highlights
(1): 2017 9M P&L included sectors that were out of consolidation perimeter (Gas Distribution and Compressed Natural Gas) or no longer present in 2018 (Sound)
2017 9M "Automotive" figures refer to the same perimeter of 2018 9M
M€
M€, %
| Balance Sheet | 2018 at 30.09 |
2018 at 30.06 |
2018 at 31.03 |
FY 2017 | delta |
|---|---|---|---|---|---|
| Intangible Assets | 49,4 | 49,7 | 50,4 | 51,3 | -1,9 |
| Tangible Assets | 12,5 | 13,4 | 13,5 | 14,6 | -2,1 |
| Other non-current Assets | 34,7 | 35,5 | 36,1 | 37,3 | -2,6 |
| Fixed Capital | 96,5 | 98,5 | 99,9 | 103,2 | -6,7 |
| Receivables | 33,8 | 36,4 | 30,4 | 29,1 | 4,7 |
| Inventory | 45,4 | 39,0 | 38,8 | 36,6 | 8,8 |
| Paybles | -54,6 | -53,5 | -49,2 | -47,8 | -6,8 |
| Other current assets/liabilities | 0,9 | -0,9 | 0,3 | -0,6 | 1,5 |
| Working Capital | 25,5 | 21,0 | 20,3 | 17,3 | 8,2 |
| % on Revenues | 14,0% | 11,8% | 12,1% | 10,3% | |
| TFR and other Funds | -8,3 | -10,9 | -11,5 | -14,8 | 6,5 |
| Invested Capital | 113,7 | 108,6 | 108,7 | 105,7 | 8,0 |
| Shareholder's Equity | 57,1 | 57,0 | 54,9 | 56,7 | 0,4 |
| Net Financial Position | 56,6 | 51,6 | 53,8 | 49,0 | 7,6 |
| Total Sources | 113,7 | 108,6 | 108,7 | 105,7 | 8,0 |
Highlights
• Working Capital in line with Strategic Plan target at 14,0% of revenues
• Inventory at 30.09 was impacted by purchase orders in advance to satisfy Q4 needs
• Net Financial Position increased by 7,6M€ mainly due to extraordinary payment for TFR and other funds
M€, % on rolling revenues 12M
| DSO 70 64 |
66 | 75 | 68 | 70 |
|---|---|---|---|---|
| DPO 136 138 |
138 | 134 | 137 | 135 |
| DIOH 101 80 |
85 | 80 | 91 | 94 |
(*) Short and long terms debt and bond are inclusive of amortized cost effect (**) accrued interests included 12
| SAFE & CEC Economics |
M€ Revenues EBITDA Adj. % on Revenues EBITDA % on Revenues EBIT % on Revenues Net Income % on Revenues |
2018 Q1 9,9 -1,0 -10,4% -1,5 -14,9% -1,8 -18,3% -1,9 -19,0% |
2018 Q2 16,4 1,5 9,4% 0,3 1,8% -0,1 -0,6% -0,7 -4,3% |
2018 Q3 14,1 1,0 6,8% 0,9 6,3% 0,7 5,3% -0,1 -0,8% |
2018 9M 40,3 1,5 3,6% -0,3 -0,7% -1,2 -2,9% -2,7 -6,7% |
• 9M sales in line with expectations • Key markets: o US and Latam: ~ 43% o Europe: ~ 37% o MEA: ~ 20% • Over the first 3 quarters of 2018, EBITDA has a growing trend, moving from Q1 negative (1,5M€) to Q2 positive (0,3M€) and Q3 positive (0,9M€) • Extraordinary one-off costs due to integration activities |
|---|---|---|---|---|---|---|
| SAFE & CEC Financials |
M€ Working Capital Net Financial Position |
2018 at 31.03 6,8 -1,9 |
2018 at 30.06 6,8 2018 -1,6 |
2018 at 30.09 9,0 -4,0 |
• Working capital in line with budget. % on revenues is close to 15% • Net Financial Position negative for 3,9M€ with 7,3M€ debt and 3,4M€ cash available |
| Europe | Russia & CSI | ||
|---|---|---|---|
| North America OEM • Market oriented towards Fuel System Integrator AM • Market "fleet oriented", dominated by LPG, with high quality demand |
OEM • LPG still an option for next 3-5 yrs as strategy to meet future CAFE limits • Spain, France, Germany are growing CNG markets, driven by expanding networks • Strong demand for HD AM • The main AM Markets remains Italy and Poland, with growing opportunities in eastern Europe • "Km 0" retrofitting – the market is more and more converting new vehicles vs second-hand cars |
OEM • Market demand driven by several local OEMs both for CNG and LPG AM • Russia has a fast growth in LPG; CNG conversions are increasing supported by refuelling network expansion and incentive plans • Other regional markets still active both for CNG and LPG |
Asia OEM • OEM demand focused on HD power train production (CNG and LNG) • Chinese market for new CNG/LNG trucks accounts for more than 100k new powertrains/year (global CNG / LNG HD sales is 130k units/year) • India implementing Bharat 6 new Emissions (04/2020): technology discontinuity opens new competitive scenarios |
| LatAm AM • The major markets remain Brazil and Argentina, which restarted heavily in 2018 • Mexico is growing on CNG as long as the distribution network increases; however LPG is still dominating • Colombia demand driven by gas utilities (big jump in 2018) • Peru Government is evaluating fiscal rebates to imported LPG/CNG cars |
OEM • Iran is the main market AM • • and Nigeria |
MEA Algeria and Egypt are large and growing Markets The sub-Saharan area is going to be interested in "LPG revolution" while CNG is expected to grow in South Africa |
AM • Indian Market growing significantly during 2018 • China is still a market dominated by local manufacturers: direct injection engine conversion is requiring high quality products allowing non-Chinese manufacturers entrance |
| Cross OEM / AM global opportunities |
19
Targeted Partnerships for accelerating results achievement
| Diesel Dual Fuel | • Experience in transforming mid/heavy-duty diesels in bi-fuel vehicles through dedicated kit • Successfully installed and tested complete system on agricultural vehicle |
|
|---|---|---|
| «0 km» Conversion | • High growing market worldwide, with LRG highly recognize worldwide as market leader and complete product offering • Expertise to set up a LRG-managed workshop, and to train Customer's workforce |
|
| New opportunities | • Leverage consolidated experience and network to set up framework agreements with large car fleet owners / managers or mobility solutions providers • Explore new emerging technologies (e.g.: Autonomous drive) |
Consolidate diaphragm technology with OEM experience up to 300 kW
To confirm leadership in leading edge technologies and extend the range to higher displacement engines
Available for External and Internal Tanks applications with high level of customization
System Solution to easy lay-out and fuel line design and installation
Leverage current PC technology and quality for HD applications
Extend injectors application range to multi-point solutions
Consolidate and extend OEM experience
• Mono-fuel Engine Management System
• DDF Applications
…
Globally, more than 8.000 new CNG stations are expected to be installed worldwide by 2022 (6% CAGR)
| 5 year plan | Mid-long term | ||||||
|---|---|---|---|---|---|---|---|
| 2018 | 2019 | 2020 | 2021 | 2022 | 2023 | ||
| Exploit service network to fulfil increasing demand from fleet owners / managers, mobility solution providers, and car dealers for "0 km" conversion programs |
|||||||
| M E O |
Develop Gas solutions as an affordable alternative to electrification and the only real technology solution for Heavy Duty, particularly in emerging markets |
||||||
| E F A |
medium term | RNG and LNG as more environmental friendly and efficient solutions in the | |||||
| S | Hydrogen technology seems to be a natural expansion of current business | ||||||
| Forward looking: extend our leadership in the gas-mobility by enlarging our offering |
|||||||
| | Develop multi-disciplinary skills Electric Vehicles |
to navigate the "new era of automotive" alongside | |||||
| | focus on Hydrogen | Enlarge technology capabilities to all alternative fuels developments, with strong |
www.landirenzogroup.com 29
Investor Relations Contacts:
Paolo Cilloni Tel: +39 0522 9433 E-mail: [email protected] www.landirenzogroup.com
N. of shares outstanding: 112.500.000 Price as of 14/11/18 € 1.138 Capitalization: € 128.025 mln FTSE Italia STAR
This document has been prepared by Landi Renzo S.p.A for use during meetings with investors and financial analysts and is solely for information purposes. The information set out herein has not been verified by an independent audit company. Neither the Company nor any of its subsidiaries, affiliates, branches, representative offices (the "Group"), as well as any of their directors, officers, employees, advisers or agents (the "Group Representatives") accepts any responsibility for/or makes any representation or warranty, express or implied, as to the accuracy, timeliness or completeness of the information set out herein or any other related information regarding the Group, whether written, oral or in visual or electronic form, transmitted or made available. This document may contain forward-looking statements about the Company and/or the Group based on current expectations and opinions developed by the Company, as well as based on current plans, estimates, projections and projects of the Group. These forward-looking statements are subject to significant risks and uncertainties (many of which are outside the control of the Company and/or the Group) which could cause a material difference between forward-looking information and actual future results.
The information set out in this document is provided as of the date indicated herein. Except as required by applicable laws and regulations, the Company assumes no obligation to provide updates of any of the aforesaid forward looking statements. Under no circumstances shall the Group and/or any of the Group Representatives be held liable (for negligence or otherwise) for any loss or damage howsoever arising from any use of this document or its contents or otherwise in connection with the document or the aforesaid forward-looking statements. This document does not constitute an offer to sell or a solicitation to buy or subscribe to Company shares and neither this entire document or a portion of it may constitute a recommendation to effect any transaction or to conclude any legal act of any kind whatsoever. This document may not be reproduced or distributed, in whole or in part, by any person other than the Company. By viewing and/or accepting a copy of this document, you agree to be bound by the foregoing limitations
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