Full-year results. March-April 2011

Transcription

1 Full-year results March-April

2 DISCLAIMER Safe Harbour Statement This presentation contains forward-looking statements (made pursuant to the safe harbour provisions of the Private Securities Litigation Reform Act of 1995). By their nature, forward-looking statements involve risk and uncertainty. Forward-looking statements represent the company s judgement regarding future events, and are based on currently available information events. Consequently the company cannot guarantee their accuracy and their completeness and actual results may differ materially from those the company anticipated due to a number of uncertainties, many of which the company is not aware of. For additional factors that may cause the company s actual results to differ materially from expectations and underlying assumptions, please refer to the reports filed by the company with the Autorité des Marchés Financiers. 2

3 Highlights 2010 Financial Statements Focus on Neopost North America 2011 Outlook 3

4 2010 HIGHLIGHTS

5 2010 KEY FIGURES Sales: 965.6m Annual sales growth (At constant exchange rates) 2010 quarterly sales growth (At constant exchange rates) 7% 6% +6.1% 7% 6% 5% 4% 3% 2% +2.4% +2.0% 5% 4% 3% 2% +1.4% +3.3% +3.6% 1% 0% -1% % % 0% -1% -0.4% Q Q Q Q Current operating margin*: 25.7% of sales Net margin: 16.2% of sales Rebound of the activity after having well resisted during the crisis 5 * Current operating income / total sales

6 2010 KEY POINTS (1/2) Numerous product launches: IS 5000 and IS 6000 in the USA IS 280 in the United Kingdom Roll-out of IS 350 to IS 480 on all markets DS Success of high end folders/ inserters Number of DS-100/140/1000/1200 sold per semester (Rebased H1-09 = 100) H1-09 H2-09 H1-10 H2-10 Rebound of the activity after having well resisted A great year for products launches during the crisis 6

7 2010 KEY POINTS (2/2) Success of the integration of dealers acquired in 2009 In the USA In Scandinavia Performance of Satori 2009: $15m (including $3m of inter company sales) 2010: +10% growth Deployment in the United Kingdom Improved EBIT margin Rebound of the activity after having well resisted Successful integrations during the crisis 7

8 UPDATE ON MAIL VOLUMES Mail volumes in the USA USPS in the USA Continuing increase of the marketing mail in 2010 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Transactional mail structurally decreasing 10% 5% 0% La Poste in France Mail volume declining by 3.5% in 2010 versus -5% in % -10% -15% 1st Class mail Standard mail Deutsche Post Mail volume declining by 3.5% in 2010 Slight increase of the volumes in Q4-20% Evolutions in line with Neopost s view 8

9 2010 FINANCIAL STATEMENTS 9

10 2010 SALES Sales (in million) FY 2009 Change* Currency FY 2010 impacts Sales growth of +5.8% in 2010, +2.0% at constant exchange rates 10 * Excluding currency impacts

11 SALES BY AREA 2010 / 2009 change* 2010 sales: 965.6m North America France UK +4.8% -2.4% -2.9% Rest of world 14% Germany 7% North America 41% Germany +1.2% UK 12% Rest of world Total Group +8.3% +2.0% France 26% Further growth in North America, contrasted performance elsewhere 11 * At constant exchange rates

12 SALES GROWTH PER REVENUE TYPE 2010 / 2009 change* 2010 sales: 965.6m Recurring revenue ** +1.1% Rental & leasing 29% Services and supplies 40% Equipment sales +4.0% Equipment sales 31% Four consecutive quarters of growth in equipment sales 12 * At constant exchange rates ** After adjustment for changes in revenues from postal rate changes, recurring revenue increased by about 3%.

13 SALES GROWTH PER BUSINESS LINE 2010 / 2009 change* 2010 sales: 965.6m Mailing systems ** -1.1% Document and logistics systems 31% Documents and logistics systems +9.5% Mailing systems 69% Good performance of the Document systems 13 * At constant exchange rates ** After adjustment for changes in revenues from postal rate changes, mailing systems revenue would have increased by about 1%.

14 CURRENT OPERATING MARGIN Change In million % Sales % Gross margin As % of sales % % +4.4% EBITDA % As % of sales 32.5% 32.5% Current Operating Income As % of sales % % +5.7% A high level of profitability 14 /$ 2010 = 1.32 and 2009 = 1.40 ; / 2010 = 0.86 and 2009 = 0.89

15 PERFORMANCE ANALYSIS Positive factors Negative factors Optimization plan Mix effect Adjustment of production facilities Rebound of equipment sales Success of high-end folders / inserters R&D IFRS impacts Rate change: - 11m in revenues End of R&D projects related to the IS range Subcontracting Short-term dilutive impacts of acquisitions Control of operating costs Natural currency hedge Distributors Targeted acquisitions Good control of the operating margin 15

16 1500 FINANCING STRUCTURE In million July 09 January 10 July 10 January m Natixis / BPCE private placement availability Revolving line availability Revolving line drawn (1) Maturity: June 2013 Rate: Euribor + 20bp OCEANE Maturity: February 2015 Rate: 3.75% Crédit Agricole Private Placement Maturity: December 2012 Rate: 4.09% USPP (1) Maturity: September 2010 Rate: 4.83% and 4.52% Maturity: September 2014 Rate: Euribor + 190bp After reimbursement of the USPP, Neopost has Net margin maintained at a high level sufficient financing capacity 16 (1) EUR/USD : at 31/01/2010, at 31/07/10 and 1,3692 at 31/01/2011

17 COST OF DEBT EVOLUTION Net cost of debt In million 1 st Semester 2009 (13.4) 2010 (18.4) Variation % 2 nd Semester (16.6) (13.5) Total (30.0) (31.9) Important decrease of the cost of debt between H1 and H2 2010: Savings coming from the USPP reimbursement: - 2,4m Exceptional items: - 2,5m 2011 net cost of debt is expected between 30m and 31m A financial result under control 17

18 NET INCOME In million Change % Operating Income % Net cost of debt (30) (32) Other financial gains or losses - (1) Taxes (57) (59) Share of associated companies - 1 Net Income % As % of sales 16.2% 16.2% Net Attributable Income % EPS % Fully diluted EPS % A high level of Net Margin 18 /$ 2010 = 1,32 and 2009 = 1,40 ; / 2010 = 0,86 and 2009 = 0,89

19 CASH FLOW GENERATION In million Change % EBITDA % Other items 5 (8) Cash flow* Change in Working Capital Requirement (16) (8) Change in lease receivables (38) (51) Interests and Income taxes paid (75) (62) Cash flow from Operations % Investments (134) (80) Cash flow after Investments High cash flow from operations that are highly recurring and growing 19 * Before net cost of debt and income tax /$ 2010 = 1,32 and 2009 = 1,40 ; / 2010 = 0,86 and 2009 = 0,89

20 CHANGE IN WORKING CAPITAL REQUIREMENT Details of the variation In million Inventories Accounts receivable Prepaid income Other payables and receivables Total excluding leasing (7) (13) 2 2 (16) (25) (8) A structurally negative WCR at - 196m 20 /$ 2010 = 1.32 and 2009 = 1.40 ; / 2010 = 0.86 and 2009 = 0.89

21 HEALTHY FINANCIAL STRUCTURE In million Financial debt Cash and marketable securities Net financial debt 31/ (139) / (136) 689 Shareholders equity Net debt / shareholders equity Net debt / EBITDA ratio EBITDA / financial charges* ratio % % A strengthened equity level and covenants** that are easily met 21 * Financial charges= cost of debt ** Minimum equity of 400m and maximum leverage ratio of 3.25

22 SOLIDITY OF NEOPOST BALANCE SHEET Equity: 606m at end-january 2011 versus 490m at end-january 2010 Leasing portfolio as at end-january 2011: 572 M +10% versus end-january 2010* Rental Net present value of future rental cash flows above 300m Net debt: 689m at end-january 2011 Leasing + rental future cash flows about 900m i.e. >> 100% of net debt Acquisitions de nouvelles technologies Debt is totally backed by future cash flows payantes 22 * At constant exchange rates

23 INCREASE OF THE DIVIDEND IN In EPS Dividend Pay-out ratio: 100% Cash Of which 59% Cash Of which % 78% 79% 52% Cash 2.25 Interim dividend 1.65 A proposed dividend of 3,90 per share for FY 2010, i.e. a yield above 6%* 23 * Based on 27 March 2011 closing price ( 64.31)

24 FOCUS ON NEOPOST NORTH AMERICA 24

25 NORTH AMERICA: THE WORLD S LARGEST AND MOST DYNAMIC MARKET North America is the world s largest market 50% + of world s total volume of mail 50% + of mailing systems global installed base North American postal organizations are extremely dynamic Long track record in encouraging the mandatory renewal of the installed base (decertifications) Early adopters of new technologies: digitalization, connectivity, IBI, Shape-Based Pricing Technological innovation as a driver for operational efficiency / productivity Mail accounts for an increasing share of marketing expenditure From 19.5% of total US advertising spending in 2002 to 23% in

26 NORTH AMERICA: NEOPOST S LARGEST MARKET North America accounts for 41% of Neopost total revenues in 2010 Neopost employs 1,800 people in North America North America has been Neopost engine for growth in 2010 and momentum will remain positive in 2011 and beyond Neopost key marketing initiatives and product launches target North America first, prior to global roll-out Longstanding partnership with US and Canadian postal organizations: Shared vision, common goals 26

27 NEOPOST NORTH AMERICA Canada : Headquarters in Toronto 20%* market share 2010 revenues: CAD 36m Sales force: 60 people including dealers USA : Headquarters in Milford, CT 18%* market share 2010 revenues: USD 490m Sales force: 800 people including dealers Satori HQ HQ Logistic center Call center R&D 27 * in percentage of the installed base of franking machines end of 2010

28 NORTH AMERICA: A STRUCTURAL OPPORTUNITY FOR NEOPOST Neopost, the North American challenger # 2 in Canada with 20% market share* # 2 in the US with 18% market share* Neopost has already been capturing a growing share of North American total revenues Despite recession, Neopost has been growing faster than market average at +3% per year from 2007 to North American sales in USD millions *of mailing system installed base - Source USPS and Canada Post

29 NORTH AMERICAN DECERTIFICATION ECHO: A MARKET OPPORTUNITY FOR NEOPOST Decertification of all electromechanical machines in Canada and partially in the USA 2007 Shape-Based Pricing in the USA Decertification of the remaining electro-mechanical machines in the USA With an average 5 year leasing period, past decertifications will continue to bring boosts of activity 29

30 CONSISTENT ROLL OUT OF NEOPOST STRATEGY IN NORTH AMERICA Launch of new innovative products Optimization of distribution Promotion of leasing and financial services Marketing of services Operational efficiency in particular through 2008/09 restructuring Creating a new culture among employees Neopost has prepared itself for seizing the decertification echo opportunity 30

31 TIMELY LAUNCH OF MAILING SYSTEMS Price in $k IS IS-480 IS IS-440 IS IS-280 IS-350 IS Volume envelopes / day envelopes / day >200 envelopes / day 31

32 FOLDERS/INSERTERS: A RANGE AMPLY RENEWED Price in $k 150 DS DS DS DS-100/ DS DS DS DS DS Office Mailroom Mail center Production 32

33 A CONTINUOUS MOVE TOWARDS A MORE DIRECT DISTRIBUTION The goal is to be direct in highly dense metropolitan areas From 31%* direct in 2004 to 57%* direct in 2010 in the US %* direct 43% indirect Key recent acquisitions: Baltimore, Florida, San Diego, Connecticut, Los Angeles, New York/Long Island, Atlanta, Philadelphia, Washington DC Further acquisitions still possible 33 *Percentage of the installed base covered by a direct distribution

34 BENEFITS OF A MORE DIRECT DISTRIBUTION Capture 100% of revenues Deployment of Neopost s business model Grow recurring revenues Leasing and financial services Maintenance and other services Increase cross selling between mailing and document systems More consistency in the deployment of the marketing strategy Better access to large and national accounts Ability to define the pace of investments [Moving direct boasts effective leverage over operations] 34

35 DISTINCTIVE DISTRIBUTION MODEL Combine the best of direct control and dealer s entrepreneurial spirit Drive decision making to the market level Centralize all non-customer facing activities Roll-out market by market Local decision-making entails faster customer response 35

36 PROMOTION OF LEASING A high value added service High probability of replacement of equipment at end of contract Ability to bundle additional services High profitability Leasing expansion Increased penetration* +50% in 5 years Dealer acquisitions Around 60% of the installed base covered with leasing North American leasing portfolio in USD millions A critical tool to plan for equipment renewal in the context of the decertification echo 36 *Penetration rate: hardware sales leased / total hardware sales

37 DEVELOPMENT OF SERVICES Postage financing Service launched in 2006 Attachment rate* reached 60% in 2010 Online services Available thanks to mailing systems digital technology /connectivity Attachment rate* around 30% in 2010 Rate change protection (RCP) In 2010, RCP represented 60%+ of rate change revenues in North America Maintenance Increased attachment rate Dealer acquisitions Potential to further increase recurring revenues will be boosted by opportunity of decertification echo 37 *Attachment rate: number of service contract / new machine

38 US OPTIMISATION PLAN R&D: merger of 3 US centres into 1 (Austin) Supply chain: 1 North American logistics platform (Memphis) plus introduction of direct shipment US distribution: Combined 3 separate entities to create Neopost USA Closed all West coast operations and established headquarters in CT, including the leasing company Consolidated of all call center activities in Dallas, TX Established a cohesive management team for Neopost USA A stronger organisation creating a new momentum 38

39 CREATING A NEW CUSTOMER-CENTRIC CULTURE A differentiating culture versus competition A drive for excellence in customer experience and employee satisfaction NEOPOST WINS INTERNAL COMMUNICATION AWARD IN CANADA TORONTO, ON 10 March 2011 Neopost internal communications campaign received a prestigious 2010 Silver Leaf Award for excellence in business communication, presented by the International Association of Business Communicators (IABC). According to Neopost Canada president, Lou Gizzarelli, internal communications helps foster a customer-centric culture: It helps Neopost to differentiate itself from its competitors. As a result of our efforts, customer satisfaction is up, sales are up, employee engagement is up. Mr. Gizzarelli added: Our 2010 employee engagement survey results showed substantial gains in our customer-centric culture. And an amazing 96% of our Canadian team indicated they had a good understanding of their business unit s goals and objectives. We achieved that company-wide alignment by focusing on clear and consistent internal communications. It works. 39

40 LOW-END: A NEW GROWTH POTENTIAL Most of our US growth is today achieved in the Mid/High-end segment Total US Meter Population* The Low-end segment is very significant We have a lower market share in that segment It is a profitable segment, which requires a specific approach Low-end 70% Mid-end 20% High-end 10% 40 * Based on USPS published data and Neopost estimates

41 LOW-END INITIATIVE Creation of a dedicated Small Business Solutions Group Set up the right sales and service organization Increase market share in the low-end segment, and contribute to recurring revenue growth Handle remotely the lower end of the market With the neodirect sales channel Focus field sales professionals on higher $ value sales Increase field sales productivity and revenue Optimize distribution costs 41

42 CONCLUSION Completely realigned efficient organization Optimized and more direct distribution network More maturing leases allowing for hardware growth coupled with strong lease portfolio management Strong innovative renewed product portfolio Higher level of services attachment rate which will translate in higher recurring revenues for the future Strong customer-centric culture Low-end initiative Significant growth opportunities in North America 42

43 2011 OUTLOOK

44 2011 OUTLOOK Good momentum in North America More contrasted performance in Europe Sales growth at constant exchange rates Expected between 2% and 4% Current Operating Margin expected Expected between 25.5% and 26% of sales 44

45 APPENDIX 45

46 CONSOLIDATED BALANCE SHEET (1/2) Assets In million 31/ / Goodwill Intangible fixed assets Tangible fixed assets Other non-current financial assets Other non-current receivables Leasing receivables Deferred tax assets Inventory Accounts receivables Other current assets Cash & marketable securities TOTAL 1,970 2,056 46

47 CONSOLIDATED BALANCE SHEET (2/2) Liabilities In million 31/ / Shareholders equity Non-current provisions 9 10 Non-current financial debt Short-term financial debt Deferred tax liabilities Other non-current liabilities Prepaid income Current financial instruments 2 1 Other current liabilities TOTAL 1,970 2,056 47

48 DEBT STRUCTURE Private placement with Crédit Agricole Regional Banks 133m at a fixed rate (4.09%) Maturity: December 2012 Revolving credit 750m at variable rates, EURIBOR or LIBOR +20bps Multi-currency drawings the currency of future cash flow Maturity: June 2012, extended to June 2013 for 675m Acquisitions Simple de nouvelles debt structure technologies payantes 48

49 DEBT STRUCTURE Banques Populaires / Caisses d Epargne / Natixis private placement 175m redeemable revolving loan Euribor +190bp Maturity: September 2014 OCEANE 300m, 3,622,750 convertible bonds Maturity: 1 st February 2015 Interest: 3.75% 30% premium on reference share price of 63.70, i.e Dividend protection clause Funds not yet drawn down: 558m as at 01/31/2011 covering future needs 49