company presentation fy 2018 results › ir_snt_company_ppt_fy2018_web.pdf · 2019-04-01 ·...
TRANSCRIPT
Hannes Niederhauser, CEORichard Neuwirth, CFO
April 2019
COMPANY PRESENTATIONFY 2018 RESULTS
2
S&T AT A GLANCE
1 S&T provides globally IoT 4.0 technology
S&T offers vertical IoT solutions + security appliances for Industrial/Infotainment/Smart Energy/Medical
IoT grows fast: 2020 25 Bn. devices will beconnected to the internet
3 S&T in figures
Guidance 2018 reached: EUR 991 Mio. revenues and EBITDA guidance exceeded with EUR 90,5 Mio.
~ 4,300 employees in 25 countries
4 Listed in Frankfurt and member of the TecDAX® & SDAX®
Headquarter in Linz, Austria, listed in Frankfurt ~EUR 1.4 Bn. market cap 2018 trading volume of ~1,4 Bn.
2 S&T is an IT service provider with regional focus
Germany, Austria, Switzerland (DACH) East Europe
SAN DIEGO
MONTREAL
AUGSBURG
LINZ
TOULON
PENANG
BEIJING
TAIPEI
MOSCOWWARSAW
3
S&T HIGHLIGHTS
Revenue FY 2018 (FY 2017): +12,3% EUR 990,9 Mio. (EUR 882,0 Mio.) EBITDA FY 2018 (FY 2017): +33,0% EUR 90,5 Mio. (EUR 68,1 Mio.) Net income FY 2018 (FY 2017): +65,0% EUR 48,5 Mio. (EUR 29,4 Mio.)
Cooperation with Foxconn intensified Alliance with Microsoft and Intel for Industry 4.0 Cloud Solutions IoT software framework “SUSiEtec” successfully launched in 2018
TecDAX® listed since Sept. 2016 , SDAX® listed since Sept. 2018 6 years growth path of share price: 38% CAGR per year Continuous dividend increase: 2014 - 2017: 7ct; 8ct; 10ct; 13ct; 2018p: 16ct
Profit Focus
Shareholder Focus
Leading IoT alliance
Solid balance sheet: 43,3% equity ratio (December 31, 2018) Strong liquidity to finance organic and an-organic growth Promissory Note Loan (“Schuldscheindarlehen”) up to EUR 150 Mio. in progress
Finance Growth
Communications
4
S&T BUSINESS MODEL
* incl. I/C revenues
Upgrade of “Embedded Systems” segment in America to “IoT Solutions” to be completed in 2019
IT Services | Europe
DACH RegionEastern Europe
Revenue plan 2019: EUR 450 Mio.*
Targets: EBITDA > 5% GM > 30% Growth pa: 5%
Services DACHServices EE
IoT Solutions | Europe + Asia
Revenue plan 2019: EUR 525 Mio.*
Targets: EBITDA > 12% GM > 40% Growth pa: >12%
IoT Solutions | America
Revenue plan 2019: EUR 190 Mio.*
Targets: EBITDA > 12%GM > 40%Growth pa: 10%
MedicalIndustrial Infotainment AvionicsSmart EnergyMedicalServices DACH
IOT SOLUTIONS: SMART FACTORY
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Our offering: from Edge to Cloud
EaaS: Embedded as a Service
Integration of IoT / IT end-to-end
Operation of IoT Services (cloud, on-premise)
Smart Factory
Customer Example 3 Monitor robot arm torque and heat map
of stressful positions for intra logistic solution Enables predictive maintenance service,
stock optimization & remote monitoring
Customer Example 1 Industry Computer Platforms
Customer Example 2 Modern user experience & process
control in factory environment
EMBEDDED SYSTEMS: AI FOR AUTONOMOUS DRIVING
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Use Cases
For professional vehicles, car prototypes (level 4)
Automated guided vehicles (AGV)
Cooperation with Intel (Mobileye)
USD 28 Mio. revenue in 2018
Smart Vehicles Embedded Edge Server
Facts and customer projects
US and China lead customers
High-growth potential
Design wins with 3 major car manufacturers to boost to USD 50 in 2019
EMBEDDED SYSTEMS: IN FLIGHT ENTERTAINMENT
7
Use Cases
Secure wireless connectivity for Commercial Airlines and Aviation
Solutions for BYOD devices enabling cost savings
Ethernet based solutions for line-fit or retro fit installation
Increasing software content
Secure wireless connectivity S&T outperforms TecDaxComprehensive solution offering
Facts
Used in 4.000+ airplanes worldwide
US certification ‘FAA’s PMA Supplement’ for worldwide deployment
Customers: EasyJet, Lufthansa, Pegasus Airlines, Immfly
Global Eagle Entertainment, Gogo, Ameco (Air China (USD 18 Mio.))
IT SERVICES: A COMPREHENSIVE PORTFOLIO
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Synergies with the IoT Solutions & Embedded Systems
Access to highly skilled and cost efficient software engineers in EE
System integration capabilities to provide IoT turnkey solutions
Sales channel for the IoT Solutions in Eastern Europe
Portfolio Top Customers
Recent project wins
Hyper-converged datacenter in Switzerland (~ EUR 12 Mio.)
First SAP S/4HANA cloud solution in Austria
New production IT infrastructure in Czech Republic
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S&T 3-YEARS TREND OF PROFITABLE GROWTH
10% EBITDA target in short-term reach
503,7
882,0
990,9
0,0
100,0
200,0
300,0
400,0
500,0
600,0
700,0
800,0
900,0
1 000,0
2016 2017 2018
Revenues(Mio. EUR)
20,4
29,4
48,5
0,0
5,0
10,0
15,0
20,0
25,0
30,0
35,0
40,0
45,0
50,0
2016 2017 2018
Net income(Mio. EUR )
34,4
68,1
90,5
0,0
10,0
20,0
30,0
40,0
50,0
60,0
70,0
80,0
90,0
100,0
2016 2017 2018
EBITDA(Mio. EUR)
+75%
+12%
+98%
+33%
+44%
+65%
68,1
90,5
FY 2017 FY 2018
386,8
320,3
174,9
448,9
376,7
165,5*
IT Services IoT Solutions Embedded Systems
LEFT: FY 2017 | RIGHT: FY 2018
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IOT SEGMENT DRIVES PROFITABILITY
* USD FX effect ~ EUR 10 Mio. | ** Difference based on change/new management fees to S&T AG (part of IT Services Segment) ***excluding I/C revenues
Long-term strategy of profitable revenue growth was continued in 2018
13,6
35,1
19,4
26,4
52,7
11,5
IT Services IoT Solutions Embedded Systems
LEFT: FY 2017 | RIGHT: FY 2018
Revenue FY 2017 vs FY 2018*** EBITDA FY 2017 vs FY 2018 Group EBITDA
+33%
-4,3**
- 5,0**
+9,3**
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S&T GROUP BALANCE SHEET
Strong operational cash flow in Q4 2018 with ~ EUR 55 Mio. | Continued focus on working capital optimization
Mio. EUR 31.12.2018 31.12.2017 31.12.2018 31.12.2017
NON-CURRENT ASSETS 292,5 268,0 CAPITAL AND RESERVES 367,3 331,9
Fixed Assets 262,7 239,4 Equity 367,3 331,9
Other Assets 29,8 28,6 NON-CURRENT LIABILITIES 131,9 134,6
CURRENT ASSETS 555,5 536,9 Long-term loans and borrowings 79,4 68,7
Inventories 130,8 104,0 Other Non-Current Liabilities 52,4 65,9
Trade Accounts Receivable 202,7 172,4 CURRENT LIABILITIES 348,8 338,4
Contract Assets from Customers 4,4 0,0 Trade Accounts Payable 177,0 154,9
Cash and cash equivalents 171,8 216,9 Contract Liabilities from Customers 37,5 0,0
Other receivables and prepayments 46,0 43,5 Short Term loans and borrowings 39,6 46,4
Other Current Liabilities 94,7 137,1
Total Assets 847,9 804,9 Total Liabilities & Equity 847,9 804,9
Equity Ratio 43,3% 41,2%
Net Cash 52,7 101,8
Working Capital 160,3 121,5
0
500
1000
1500
2000
Backlog Pipeline
2017
2018
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GOOD START INTO 2019
Backlog development remains positive New IoT customer projects won in Q1 2019
Autonomous driving: new project won with a German car manufacturer (~ EUR 38 Mio.)
In-flight entertainment solution with one of China’s largest airlines (~ USD 18 Mio.)
Smart grid technologies with LINZ AG (~ EUR 10 Mio.)
S&T takes technology leadership in IIoT
Strong product portfolio for TSN standard
Realize real time communication for IoT applications based on Time Sensitive Networking
Further design wins with TSN in Q1 2019
SUSiEtec: S&T’s IoT-Software-Framework
Extended focus and new modules in 2019
Enhanced Smart Grid Offering upcoming
Launch of new IoT-ready smart grid platform: Q2 2019
New integrated solution from meter to cloud-ready application (Microsoft Azure)
Excellent price per metering point based on cooperation with Asian Contract Manufacturer
2019 Guidance confirmed: EUR 1,1 Bn. Revenues (plus potential M&A in 2019) and > EUR 100 Mio. EBITDA
606,8
1.632,6
+28%
474,2
1.104,6
+48%
DIVIDEND DEVELOPMENT & PROMISSORY NOTE LOAN
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DIVIDEND DEVELOPMENT 2014-2018
The S&T Executive Board will propose a 16ct dividend for 2018 to AGM in May 2019
PROMISSORY NOTE LOAN
Marketing with launch volume of EUR 100 Mio. on 5/7 years term started on March 5, 2019
Reoffer spreads: 100/120 bps on 5/7 years term
S&T considers to take on EUR 150 Mio. on additional financial debt to be denominated on April 17, 2019
S&T will have a fire power over EUR 300 Mio. for further growth (organic and via M&A)
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10
12
14
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2014 2015 2016 2017 2018p
EUR
CEN
T
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MARGIN IMPROVEMENT PROGRAM (MIP)
Target 1: Increase Gross Margin from 35% in 2018 to 40% within 4 years Further enhance the product portfolio:
Increase revenues in IoT products to >75% adds 2,8% GM
Increase SLA’s and Recurring Services to 10% (today 6%) of installed base adds 2,4% GM
Further COGS optimization
Target 2: EBITDA margins > 10% (from 5% in 2013) Long term target to improve EBITDA to 10% almost achieved
Further increase of EBITDA above 10% planned based on higher Gross Margin
Target 3: Increase EBITDA to Net income conversion > 60%
Big improvement in 2018, net income is 54% of EBITDA (2017: 40%)
Amortization from PPA (especially Kontron) fading out
Utilization of substantial tax-loss carry forwards ongoing
IoT products~2,8% potential
SLA’s and Recurring Services
~2,4% potential
COGS optimization~0,5% potential
Today 35% GM
Goal 40% GM
Ad
din
g u
p t
o 5
% G
M
Dragon 2Manufacturing
Dragon 4 IoT/Embedded Edge Server
Rising SunJoint Marketing China
Dragon 5Embedded ODM Services
Cooperation 100% implemented Just launched2018: USD 10m revenues
Implementation in 2019 –cooperation with Ennoconn using “Kontron” brand
Design & manufacturing of embedded products
Dedicated factory in China, Kunshan Joint technology leadership in Industry 4.0
Foxconn becomes major customer of S&T
Production via Foxconn in ChinaLow volumes locally in Europe
Cost leader: Best manufacturing cost in the industry
“Apple” quality
Foxconn delivers edge real time servers branded “Kontron”
S&T adds IoT Software and grids
Foxconn well connected in China
Industry 4.0 sales to Foxconn factories
Any volume by single supplier Full engineering value chain for
customers (mechanics, HW, SW, IT grids, service SLAs)
Integrate Foxconn products
Price leader in the industry Target up to EUR 200 Mio. Revenues (2023)
Target up to EUR 200 Mio. Revenues in China (2023)
Add EUR 100 Mio. Revenues (2023)
15
GROWTH INITIATIVES WITH FOXCONN/ENNOCONN
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S&T ACQUISITION STRATEGY
M&A will add additional revenues on top of 2019 guidance: 5 projects in the pipeline to be decided in 2019
Acquisitions targets – “Technology Pearls” Complement our technology
SW Companies in the American region
Target small technology companies: Reasonable price despite high multiples
Acquisitions targets – “Volume Suppliers” Kontron model: Buy synergetic volume
companies at reasonable prices (multiples <10)
Increase GM from 25% to 40% under S&T ownership
Acquisitions targets – “Start Up's” Acquire small & innovative Start Up’s
Win new IIoT products or source for engineers
Target companies with a size of EUR 1 Mio. in revenue
Valuation of technology companies significantly decreased in Q4 2018
S&T will leverage on this development going forward
With an increased focus on working capital and cash generation, plus additional funds from a Promissory Note Loan (Schuldscheindarlehen), up to EUR 150 Mio.
S&T has >EUR 300 Mio. at hand for M&A
17
S&T GROWTH PATH CONTINUOUS
EBITDA will grow over proportionally from EUR 91 Mio. in 2018 to above EUR 200 Mio. in 2023
Organic growth in line with market growth per segment
Additional organic growth potential from the growth programs
Anorganic growth via start-ups & acquisitionsEUR 2 Bn.
2023
2018
IT Services
420
IoT Solutions
450
EUR 1 Bn.
Growth in AsiaAcquisitions
Embedded ODM Services
Edge Server
Smart Meter
IoT Technologies
Potential up to EUR 300 Mio.
Potential up to EUR 200 Mio.
Potential up to EUR 100 Mio.
Potential up to EUR 100 Mio.
Potential up to EUR 200 Mio.
Potential up to EUR 400 Mio.
THE S&T SHARE - TECDAX & SDAX MEMBER; TARGET: MDAX
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Coverage Kepler Cheuvreux | Buy: EUR 28,00
Hauck & Aufhäuser | Buy: EUR 28,50
Pareto Securities | Buy: EUR 27,00
Warburg Research | Buy: EUR 21,00
Two new analysts will cover S&T AG
Shareholder Structure
Ennoconn Corporation -27%
BNP Paribas Asset Management - 8%
Freefloat - 65% - includes as follows:
Investec Asset Management Ltd - 4%
Allianz Global Investors GmbH - 4%
Dorval Asset Management - 3%
Hannes Niederhauser - 2%
Liquidity
0,00
5,00
10,00
15,00
20,00
25,00
30,00
0
100
200
300
400
500
600
TecDAX Index SDAX S&T AG EUR
S&T outperforms TecDax
0
500 000 000
1 000 000 000
1 500 000 000
2012 2013 2014 2015 2016 2017 2018
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S&T‘S GROWTH PATH CONTINUES: EUR 2 BN. IN 2023
Guidance for 2019: ~ EUR 1,1 Bn. revenues (plus potential M&A in 2019) and at least EUR 100 Mio. EBITDA
EBITDA(in EUR Mio.)
22,928,3
34,4
68,1
90,5> 100
2014 2015 2016 2017 2018 2019fc
Backlog EURMio.
12/13 12/14 12/15 12/16 12/17 12/18
Project Pipeline 308 644 701 1.002 1.105 1.632
Scheduled Orders 97 157 181 306 474 607
GM 33,0 % 33,9 % 33,5% 35,7 % 35,0%
EBITDA 5,9% 6,0% 6,8% 7,7% 9,1%
2014 2015 2016 2017 2018 2019fc
IoT Solutions | America
IoT Solutions | Europe
IT Services
385504468
882991
Revenue(in EUR Mio.)
> 1.100
20
SUMMARY
Growth areas America + China Technology SUSiEtec + TSN Cost efficient engineering in EE High growth in Industry 4.0Opportunities
Increased guidance 2018 achieved 33% EBITDA growth and 60% Net
income growth in 2018 Successful transformation from
HW into a IoT Solutions companyAchievements
Big players enter our niches in Industry 4.0
US-Dollar development Address right technology trends Risks
2 Bn. revenues in 2023 Ongoing GM Improvement to
40% and EBITDA to > 10% Leadership in IoT/Industry 4.0 MDAX membershipTargets
21
DISCLAIMER
This document includes 'forward-looking statements'. Forward-looking statements are all statements, which do not describe facts of the past, but containing the words "believe", "estimate","expect", "anticipate", "assume", "plan", "intend", "could", and words of similar meaning. These forward-looking statements are subject to inherent risks and uncertainties since they relate tofuture events and are based on current assumptions and estimates of S&T AG, which might not occur at all or occur not as assumed. They therefore do not constitute a guarantee for theoccurrence of future results or performances of S&T AG. The actual financial position and the actual results of S&T AG, as well as the overall economic development and the regulatory environmentmay differ materially from the expectations, which are assumed explicitly or implicitly in the forward-looking statements and do not comply to them. Analysts and investors, and any other person orentity that may need to take decisions, or prepare or release opinions about the shares / securities issued by S&T AG are cautioned not to place undue reliance on those forward-lookingstatements, which speak only as of the date of this document. Past performance cannot be relied upon as a guide to future performance.
Except as required by applicable law, S&T AG undertakes no obligation to revise these forward-looking statements to reflect events and circumstances after the date of this presentation, including,without limitation, changes in S&T’s business or strategy or to reflect the occurrence of unanticipated events. The financial information and opinions contained in this document are unaudited andare subject to change without notice. This document contains summarized information or information that has not been audited. In this sense, this information is subject to, and must be read inconjunction with, all other publicly available information, including if it is necessary, any fuller disclosure document published by S&T AG. None of the Company, its subsidiaries or affiliates or by anyof its officers, directors, employees, advisors, representatives or agents shall be liable whatsoever for any loss however arising, directly or indirectly, from any use of this document its content orotherwise arising in connection with this document.
This document or any of the information contained herein do not constitute, form part of or shall be construed as an offer or invitation to purchase, subscribe, sale or exchange, nor a request for anoffer of purchase, subscription, sale or exchange of shares / securities of S&T AG, or any advice or recommendation with respect to such shares / securities. This document or a part of it shall notform the basis of or relied upon in connection with any contract or commitment whatsoever.
This document does not constitute an offer to purchase securities in the United States, Canada, Australia, South Africa and Japan. Securities, including the bond of S&T AG may not be sold oroffered for sale within the United States or to or for the account of / in favor of US citizens (as defined in Regulation S under the U.S. Securities Act of 1933 in the current version (the "SecuritiesAct") unless they are registered under the regulations of the Securities Act or unless they are subject to an exemption from registration. Neither S&T AG nor any other person intend to register theoffer or a part thereof in the United States or to make a public offer of the securities in the United States.
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APPENDIXS&T KEY FIGURES
*Includes EUR 26 Mio. one-time effect in Kontron
In Mio. EUR 2016 2017 2018
Revenues 503,7 882,0 990,9
Gross Profit (Margin) 168,9 (33,5%) 315,0 (35,7%) 346,5 (35,0%)
EBITDA (Margin) 34,4 (6,8%) 68,1 (7,7%) 90,5 (9,1%)
EBIT before PPA amortization 28,2 47,9 67,3
Net Income 20,4 29,4 48,5
EBITDA Interest Coverage Ratio 7,9 9,8 14,5
Net Cash 32,0 101,8 52,7
Working Capital 119,2 121,5 123,2
Equity Ratio 36,0% 41,2% 43,3%
Operating Cashflow 61,4* 44,9 35,5
Employees 3.786 3.918 4.335
MichaelRiegert
OlgaSinenko
Steve Chen
RobertCourteau
ChristophNeumann
EVPAmerica/Asia
EVPSmart Energy
EVP Asia
EVPCommunication
VP Technology
23
APPENDIXEXPERIENCED MANAGEMENT TEAM
Hannes Niederhauser
Richard Neuwirth
Peter Sturz
Michael Jeske
Carlos Queiroz
CEO CFOCOO
Services EECOO
Services DACHCOO
IoT / Europe
Executive Board
Extended Management Board
