Earnings Release • Jul 19, 2013
Earnings Release
Open in ViewerOpens in native device viewer
Date: 19 July 2013 For immediate release
Name: Carl Vanden Bussche Title: Director Investor Relations Tel: +32 56 26 23 22 E-mail: [email protected]
Barco absorbs two acquisitions and continues to invest in strategic growth
"Barco performed well delivering another semester of double-digit sales growth and good operational profitability even as we absorbed two acquisitions and continued to invest in several strategic growth initiatives," said Eric Van Zele, President and CEO.
"While our Projection division gained share in all of its markets, sales for our Healthcare and Advanced Visualization divisions were somewhat slow in the first semester. Market acceptance of our digital operating room solution is taking time but our efforts to create demand are bearing fruit and we expect to see stronger order intake going forward. In addition, sales for ClickShare are gaining momentum, supporting our outlook for a resumption of growth in the second half of the year for the Advanced Visualization division. Also in the Defense & Aerospace division we experienced slippage on a few major programs into the second half of the year and we took steps to reduce costs in view of reduced military spending worldwide, which resulted in our booking a 4.6 million euro restructuring provision. With these and other strategic growth initiatives taking hold, we believe we are on track to deliver another year of profitable growth."
Page 1 of 12
1 See 2Q13 trading update in annex 2
The results of the China Joint Venture and of projectiondesign® have been fully consolidated retro-actively as of 1 January 2013; the results of Awind have been consolidated as of 1 April 2013.
Order intake in 1H13 was 556.5 million euro, 2.5% above the same period in 2012 with increases in Asia Pacific (APAC) and North America offset by softness in the EMEALA region2 . The EMEALA region accounted for 39% of total order intake, North America 31% and the APAC region 30%.
With orders increasing year-over-year, the order book was nevertheless 4.5% lower compared to the end of last year and 12.3% lower compared to the end of June 2012 due to an improved sales conversion rate and shorter leadtimes.
| (in millions of euros) | 1H13 | 2H12 | 1H12 | 2H11 | 1H11 |
|---|---|---|---|---|---|
| Order book | 440.0 | 461.2 | 501.5 | 479.9 | 479.9 |
Sales of 597.9 million euro reflect growth in Projection and the Ventures partially offset by declines in Defense and Aerospace. Sales for Advanced Visualization and Healthcare were essentially flat.
Sales to Europe, Middle East, Africa and Latin America (EMEALA) represented 41% of consolidated sales, while 32% of sales were realized in North America and 27% in APAC. Compared to 1H12 sales were up by 5% in the EMEALA region, and by 11% and 28% in North America and the APAC region, respectively.
Gross profit increased to 195.9 million euro from 173.1 million euro, an increase of 13.2%. Gross profit margin was 32.8%, compared to 32.6% for the same period in 2012 and 32.4% for the 2H12.
Total indirect expenses increased by 15.6% versus last year, largely due to the addition of projectiondesign® and Awind (without the acquired businesses, indirect expenses increased by only 4.3%).
Barco NV President Kennedypark 35 8500 Kortrijk, Belgium
Page 2 of 12 2 EMEALA region includes Europe, Middle East, Africa and Latin America
Research & Development expenses increased by 8.1 million euro to 52.4 million euro, reflecting new product development projects in the Advanced Visualization division, higher R&D spending due to the addition of projectiondesign® and amortization of technology acquired from projectiondesign® and Awind. As a percent of sales, research and development expenses increased to 8.8% from 8.3% last year.
Sales & Marketing expenses increased by 13.3 million euro to 82.1 million euro compared to 68.9 million euro last year, in large part due to the above-mentioned acquisitions. As a percent of sales, Sales & Marketing expenses rose to 13.7%, compared to 13.0% last year. General & administration expenses were 27.0 million euro, compared to 25.5 million euro last year or 4.5% of sales versus 4.8% last year.
Other operating results amounted to 1.2 million euro, compared to 4.3 million euro last year.
EBITDA was 76.7 million euro, an increase of 7.0%, compared to 71.7 million euro the year before. EBITDA margin was 12.8% versus 13.5% in 1H12. At 12.8% Barco's operational profit margin remained healthy considering important investments made to future growth including acquisitions and non-recurring costs related to these acquisitions, including a booking of inventory step-up, in accordance with IFRS guidelines.
| 1H13 | Sales | EBITDA | EBITDA % |
|---|---|---|---|
| Projection | 285.4 | 47.6 | 16.7% |
| Healthcare | 98.6 | 12.2 | 12.3% |
| Advanced Visualization | 88.9 | 5.5 | 6.2% |
| Defense & Aerospace | 71.1 | 6.7 | 9.4% |
| Ventures | 55.4 | 4.8 | 8.7% |
| Intra-group eliminations | (1.6) | ||
| Group | 597.9 | 76.7 | 12.8% |
The gap between EBITDA and EBIT widened from 5.3% of sales to 5.8%. This is due to a combination of increased amortizations of capitalized development costs and intangibles booked in connection with the recent acquisitions (technology, customer lists and trade names), in accordance with IFRS-guidelines).
As a result EBIT before restructuring was 41.8 million euro, compared to 43.5 million euro in 1H12.
In 1H13 taxes were 4.3 million euro, for a tax rate of 12.0%, compared to 1.8 million euro in 1H12, or a tax rate of 4.0%.
A non-recurring restructuring provision of 4.6 million euro was booked in connection with actions taken to rightsize the Defense group, contributing to a decrease in net income attributable to equity holders for the semester from 43.5 million euro last year to 30.9 million euro. Net margin for the semester was 5.2%, compared to 8.2% the year before.
Page 3 of 12
Net earnings per ordinary share (EPS) for the half year were 2.54 euro, down from 3.62 euro in 1H12. Fully diluted net earnings per share were 2.45 euro, compared to 3.37 euro last year.
On 30 June 2013, Barco had a net financial cash position of 24.2 million euro, compared to 47.5 million euro on 30 June 2012 and 111.2 million euro on 31 December 2012. Barco used its cash to complete the acquisitions of projectiondesign® and Awind and to pay dividends.
Free cash flow for the first six months of 2013 was negative 11.6 million euro, compared to positive 29.1 million euro for the same period last year.
Barco generated 72.1 million euro in gross operating cash flow and expended cash primarily on increased income taxes and working capital. 3
At the end of 1H13, trade receivables were 194.5 million euro, the same level as last year and 11.4 million euro higher than 31 December 2012. DSO were at 57 days, compared to 60 days as of 30 June 2012 and 48 days as of 31 December 2012.
At 251.4 million euro inventory was 13.2 million euro lower than 30 June 2012 and 27.7 million euro higher than 31 December 2012. Inventory turns were at 3.0, compared to 2.5, at the end of June 2012 and 3.1 at the end of December 2012.
Trade payables stood at 118.4 million euro at the end of June 2013 compared to 152.5 million euro at the end of June 2012 and 127.5 million euro on 31 December 2012, reflecting tight controls over purchasing during 1H13 and DPOs for 1H13 being compatible with the record level attained in 1H12.
Capital expenditure, excluding capitalized development, was 10.1 million euro, compared to 10.3 million euro for the same period last year.
ROCE stood at 16%, compared to 19% at 30 June 2012 and 24% at 31 December 2012.
The following Balance Sheet items were significantly impacted by the acquisitions of projectiondesign® and Awind: Goodwill increased to 145.4 million euro on 30 June 2013 from 68.8 million on 31 December 2012. Other intangible assets increased from 25.0 million euro on 31 December 2012 to 55.5 million euro while non current liabilities increased from 25.9 million euro on 31 December 2012 to 77.9 million euro.
The projection division delivered top-line increases in both Digital Cinema and Professional AV. EBITDA declined as a percent of sales to 16.7% from last year's record 18.3% reflecting the addition of projectiondesign®, which is currently generating a lower margin.
Barco NV President Kennedypark 35 8500 Kortrijk, Belgium
3 Barco did not acquire any of its own shares in the first six months of 2013. The company now owns 716,163 of its own shares or 5.51% before dilution.
In the first semester of 2013, Barco expanded its market share in the Digital Cinema market with major program wins and roll-outs in Latin America, China and India. In anticipation of the maturing digital cinema market, Barco continued to introduce projectors for the professional AV mid-segment, building on its reputation for superior technology and global distribution network.
In this professional AV segment, the division posted strong growth in orders and sales, mainly reflecting the addition of projectiondesign®. Barco is on track with its integration plan that is designed to align projectiondesign®'s profitability with Barco's financial targets for the Projection division by optimizing sales and marketing, supply chain and manufacturing operations. During the first semester, Barco completed the alignment of the two companies' sales and marketing organizations and released its first joint product, the Collaborate projector, aimed at the mid venue projector segment. Along with integrating projectiondesign®, Barco continued to extend its global channel network in order to further penetrate the mid-segments of the professional AV market.
| Projection | 1H13 | 1H12 | Change % |
|---|---|---|---|
| Orders | 262.4 | 230.5 | 13.8% |
| Sales | 285.4 | 218.9 | 30.4% |
| EBITDA | 47.6 | 40.0 | 19.2% |
| EBITDA margin | 16.7% | 18.3% |
The division maintained its leadership position in diagnostic imaging, despite a somewhat weak demand in the modality business in Europe, and continued to implement its investment strategy of expanding into new market segments including digital operating rooms, interactive patient care and dentistry. During the semester, Barco continued to seed the market with first installations of its digital operating systems and to build the necessary sales and marketing infrastructure, signing agreements with new market-specific systems integrators and expanding agreements with existing channel partners. Recently both existing and new customers made commitments to install over 100 more operating rooms and the FDA has given Barco Class II approval to distribute the Nexxis-solution in the United States, opening up this large market to intensified business development. As a result, Barco is seeing solid evidence of early adoption of this new technology and is well positioned to drive new orders in the second half of the year on top of its traditional business. To better position Barco for the interactive patient care and dentistry segments, the company has expanded the solution offering and released products with revamped functionality.
| Healthcare | 1H13 | 1H12 | Change % |
|---|---|---|---|
| Orders | 92.7 | 94.2 | (1.5%) |
| Sales | 98.6 | 100.2 | (1.6%) |
| EBITDA | 12.2 | 12.0 | 1.6% |
| EBITDA margin | 12.3% | 12.0% |
The Advanced Visualization division posted flat sales reflecting the addition of collaboration solutions of Awind and ClickShare offset by lower sales for control rooms as a result of several project delays in Western Europe and Middle East. On the other hand sales for ClickShare have been steadily increasing with sales for the second quarter higher than the first quarter. In addition, Barco recently received the certification necessary to sell ClickShare in China and has started the certification process to sell in Japan and South Korea.
With additional access to important APAC markets for ClickShare and having added new partners and introduced its control room mid segment solutions throughout its channel network, Barco is well positioned to drive growth of its advanced visualization solutions.
| Advanced Visualization | 1H13 | 1H12 | Change % |
|---|---|---|---|
| Orders | 94.5 | 101.1 | (6.4%) |
| Sales | 88.9 | 89.6 | (0.8%) |
| EBITDA | 5.5 | 7.5 | (26.7%) |
| EBITDA margin | 6.1% | 8.4% |
Page 6 of 12
New and replacement business in avionics was not able to compensate for the ongoing reduction in defense spending worldwide, resulting in a 11.7% decline in sales. Barco is taking steps to streamline the defense business organization and improve the division's profitability. Based on orders for Avionics, sales are expected to rebound in the second half of the year.
| Defense & Aerospace | 1H13 | 1H12 | Change % |
|---|---|---|---|
| Orders | 59.5 | 69.2 | (14.0%) |
| Sales | 71.1 | 80.4 | (11.7%) |
| EBITDA | 6.7 | 7.7 | (13.0%) |
| EBITDA margin | 9.4% | 9.5% |
Strong performances at LiveDots and High End Systems drove sales growth. Sales mix negatively impacted the EBITDA margin.
| Ventures | 1H13 | 1H12 | Change % |
|---|---|---|---|
| Orders | 48.9 | 50.1 | (2.4%) |
| Sales | 55.4 | 42.2 | 31.3% |
| EBITDA | 4.8 | 4.5 | 5.1% |
| EBITDA margin | 8.6% | 10.8% |
The following statements are forward looking and actual results may differ materially.
On the basis of a solid mid-year performance, continued progress integrating acquired businesses and improving operational efficiency, Barco reiterates its expectation to generate profitable growth in 2013 albeit at a slower pace than in 2012.
Barco will host a conference call with investors and analysts on 19 July 2013 at 9:00 a.m. CET (3:00 am EST), to discuss the results of 1H13. Eric Van Zele, CEO, Carl Peeters, CFO and Carl Vanden Bussche, IRO, will host the call.
An audio cast of this conference call will be available on the Company's website www.barco.com by 12:30 p.m. Brussels time (6:30 a.m. EST).
Barco, a global technology company, designs and develops visualization products for a variety of selected professional markets. Barco has its own facilities for Sales & Marketing, Customer Support, R&D and Manufacturing in Europe, North America and APAC. Barco (NYSE Euronext Brussels: BAR) is active in more than 90 countries with more than 3,900 employees worldwide. Barco posted sales of 1.156 billion euro in 2012.
For more information and the full report "6 month period ended 30 June 2013", please visit the Company's website at www.barco.com
© Copyright 2013 by Barco
| Income Statement | (in thousands of euros) | 1st half 2013 | 1st half 2012 |
|---|---|---|---|
| Net sales | 597,868 | 530,994 | |
| Cost of goods sold | -401,944 | -357,883 | |
| Gross profit | 195,925 | 173,110 | |
| Research and development expenses | -46,287 | -39,487 | |
| Sales and marketing | -82,142 | -68,872 | |
| General and administration expenses | -26,962 | -25,537 | |
| Other operating income (expense) - net | 1,228 | 4,311 | |
| EBIT before restructuring | 41,763 | 43,526 | |
| Restructuring cost | -4,620 | 0 | |
| EBIT after restructuring | 37,142 | 43,526 | |
| Interest income | 545 | 2,216 | |
| Interest expense | -1,765 | -632 | |
| Income before taxes | 35,923 | 45,108 | |
| Income taxes | -4,297 | -1,822 | |
| Result after taxes | 31,626 | 43,287 | |
| Share in the result of joint ventures and associates | 27 | 237 | |
| Net income | 31,652 | 43,523 | |
| Non-controlling interest | -770 | 0 | |
| Net income attributable to equity holder of the parent | 30,883 | 43,523 | |
| Earnings per share (in euros) | 2.54 | 3.62 | |
| Diluted earnings per share (in euros) | 2.45 | 3.37 | |
| Selected Financial Ratios | 1st half 2013 | 1st half 2012 | |
| EBITDA on sales | 12.8% | 13.5% | |
| EBITDA minus capitalized development cost on sales | 8.0% | 8.8% | |
| EBIT on sales | 7.0% | 8.2% | |
| Total debt to equity | 10.3% | 3.4% | |
| Balance sheet | (in thousands of euros) | 30 June 2013 | 31 Dec 2012 |
| ASSETS | |||
| Goodwill | 145,371 | 68,809 | |
| Capitalized development cost | 88,110 | 81,978 | |
| Other intangible assets | 55,494 | 25,093 | |
| Land and buildings | 28,130 | 28,744 | |
| Other tangible assets | 41,384 | 30,661 | |
| Investments | 9,763 | 44,445 | |
| Deferred tax assets | 65,761 | 61,948 | |
| Other non-current assets Non-current assets |
14,513 448,525 |
18,041 359,719 |
|
| Inventory | 251,356 | 223,677 | |
| Trade debtors | 194,471 | 183,082 | |
| Other amounts receivable | 34,003 | 29,053 | |
| Deposits and cash at bank and in hand | 75,785 | 122,139 | |
| Prepaid expenses and accrued income | 5,336 | 4,209 |
Total Assets 1,009,476 921,879
| EQUITY AND LIABILITIES | ||
|---|---|---|
| Equity attributable to equity holders of the parent | 557,386 | 538,050 |
| Non-controlling interest | 3,048 | 0 |
| Equity | 560,434 | 538,050 |
| Long-term debts | 46,843 | 12,695 |
| Deferred tax liabilities | 10,758 | 3,089 |
| Other long-term liabilities | 20,315 | 10,161 |
| Non-current liabilities | 77,915 | 25,945 |
| Current portion of long-term debts | 2,676 | 4,105 |
| Short-term debts | 7,951 | 1,302 |
| Trade payables | 118,378 | 127,528 |
| Advances received on contracts in progress | 75,387 | 73,587 |
| Tax payables | 25,856 | 25,012 |
| Employee benefits | 55,767 | 57,958 |
| Other current liabilities | 7,964 | 8,241 |
| Accrued charges and deferred income | 29,362 | 20,763 |
| Provisions | 47,784 | 39,388 |
| Current liabilities | 371,127 | 357,884 |
| Total Equity and Liabilities | 1,009,476 | 921,879 |
| Cash flow statement | (in thousands of euros) | 1st half 2013 | 1st half 2012 |
|---|---|---|---|
| Cash flow from operating activities | |||
| EBIT after restructuring | 37,143 | 43,526 | |
| Unrealized foreign currency translation gain on Kladno | |||
| liquidation | 0 | -3,735 | |
| Amortization capitalized development cost | 23,058 | 20,256 | |
| Depreciation of tangible and intangible fixed assets | 11,910 | 7,908 | |
| Gains and losses on tangible fixed assets | -3 | 38 | |
| Share options recognized as cost | 636 | 391 | |
| Share of profit/(loss) of joint ventures | 27 | 237 | |
| Gross operating cash flow | 72,771 | 68,621 | |
| Changes in trade receivables | 14,879 | 113 | |
| Changes in inventory | -4,060 | -26,884 | |
| Changes in trade payables | -27,777 | 36,565 | |
| Other changes in net working capital | -14,939 | -17,313 | |
| Change in net working capital | -31,898 | -7,519 | |
| Net operating cash flow | 40,873 | 61,102 | |
| Interest income | 545 | 2,216 | |
| Interest expense | -1,765 | -632 | |
| Income taxes | -11,471 | 1,384 | |
| Cash flow from operating activities | 28,182 | 64,069 | |
| Cash flow from investing activities | |||
| Expenditure on product development | -29,160 | -25,066 | |
| Purchases of tangible and intangible fixed assets | -10,094 | -10,323 | |
| Proceeds on disposals of tangible and intangible fixed assets | 95 | 827 | |
| Acquisition of Group companies, net of acquired cash | -51,667 | -27,381 | |
| Other investing activities | 0 | -50 | |
| Interest in joint-ventures | 0 | -1,240 | |
| Cash flow from investing activities | -90,827 | -63,234 |
Page 10 of 12
| Cash flow from financing activities | ||
|---|---|---|
| Dividends paid | -16,856 | -13,153 |
| Share issue | 7,600 | 104 |
| Sale of own shares | 1,354 | 0 |
| Proceeds from (+), payments of (-) long-term liabilities | 20,962 | -1,730 |
| Proceeds from (+), payments of (-) short-term liabilities | 4,190 | -4,600 |
| Cash flow from financing activities | 17,249 | -19,379 |
| Net decrease/increase in cash and cash equivalents | -45,395 | -18,544 |
| Cash and cash equivalents at beginning of period | 122,139 | 79,165 |
| Cash and cash equivalents (CTA) | -958 | 567 |
| Cash and cash equivalents at end of period | 75,785 | 61,188 |
| Results per division | (in thousands of euros) | 1st half 2013 | 1st half 2012 |
|---|---|---|---|
| Sales | |||
| Projection | 285,447 | 218,941 | |
| Healthcare | 98,636 | 100,205 | |
| Advanced Visualization | 88,906 | 89,605 | |
| Defense & Aerospace | 71,058 | 80,442 | |
| Ventures | 55,390 | 42,190 | |
| Intra-group eliminations | -1,569 | -389 | |
| Group | 597,868 | 530,994 | |
| EBITDA | |||
| Projection | 47,638 | 39,959 | |
| Healthcare | 12,164 | 12,016 | |
| Advanced Visualization | 5,452 | 7,491 | |
| Defense & Aerospace | 6,695 | 7,677 | |
| Ventures | 4,781 | 4,548 | |
| Group | 76,730 | 71,691 |
Page 11 of 12
| (in millions of euros) | 2Q13 | 2Q12 | change |
|---|---|---|---|
| Barco | 440.0 | 501.5 | (12.3%) |
| (in millions of euros) | 2Q13 | 2Q12 | change |
|---|---|---|---|
| Barco | 283.3 | 283.3 | (0.6%) |
| (in millions of euros) | 2Q13 | 2Q12 | change |
|---|---|---|---|
| Projection | 155.4 | 119.0 | 30.7% |
| Healthcare | 47.2 | 49.7 | (5.0%) |
| Advanced Visualization | 51.3 | 50.8 | 1.0% |
| Defense & Aerospace | 41.8 | 46.5 | (10.2%) |
| Ventures | 26.7 | 25.2 | 5.9% |
| Intra-group eliminations | (0.9) | (0.3) | |
| Barco | 321.5 | 290.9 | 10.5% |
Building tools?
Free accounts include 100 API calls/year for testing.
Have a question? We'll get back to you promptly.