Interim results. September/October 2010

Transcription

1 Interim results September/October

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. 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 information concerning these and other important 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 FIRST HALF 2010 H in perspective Successful integration of acquisitions H results Trends in the mail industry Echo-decertification Conclusion 3

4 H IN PERSPECTIVE 4

5 NEOPOST TODAY The challenger in the mailroom equipment market #2 worldwide with 25% market share A culture of innovation R&D represents 4 to 5% of sales 5,500 employees 800,000 customers Decentralized organization: direct presence in 18 countries 3 Production centers and subcontracting in the Far East Gaining momentum High level of recurring revenues (70% of total sales) and strong cash flow generation 5

6 STRONG RESILIENCE THROUGHOUT RECESSION Sales growth excl. currency impacts EBIT margin* 6.1% 27% 26.1% 5% 2.4% 0% to 2% 25% 25.2%** 25.7% 25.7% 25.7% 0% -0.3% Guidance % Guidance 2010 CAGR = +2.7% -5% Sustainable growth and profitability 6 * Current operating income / total sales. ** Including PFE acquisition

7 CONTINUOUS IMPROVEMENT OF THE MODEL DURING RECESSION Successful product launches R&D: 4 to 5% of sales Mailing systems: by end-2010, 100% renewed within 2 years Document systems: by end-2010, 50% renewed within 2 years Development of recurring revenues: leasing, postage financing, supplies, maintenance, rate change protection Optimization of the US operations Reinforcement of the direct distribution through dealer acquisitions In Europe recent acquisitions in Scandinavia In the US direct distribution went from 31% to 57% in 5 years Acquisitions complementing Neopost s core business PFE, entry on the production folders/inserters market Satori, entry in the address /data quality & mailing optimization market Neopost, the dynamic challenger, capturing a growing share of the market 7

8 SUCCESSFUL INTEGRATION OF ACQUISITIONS 8

9 PFE ACQUISITION March 2008 Most significant acquisition since 2002 R&D and production centers based in the UK Good products, well-positioned with limited market access 480 employees A leader in the production folders/inserters market A market segment where Neopost was not present 2007 sales of about 27 million, low EBIT margin Neopost s development in the production folders/inserters market 9

10 SWIFT INTEGRATION OF PFE Integration of distribution networks: PFE networks aligned with Neopost networks PFE products increasingly integrated in Neopost distribution Optimization of supply chain process: Pooling of suppliers Rationalization of production centers Transfer of some of the production from Loughton (UK) to Drachten (the Netherlands) Integration of PFE products into Neopost supply chain Outsourcing of parts and sub-modules Redefinition of product lines 10

11 DOCUMENT SYSTEMS Folders/inserters range: Neopost before PFE acquisition Price in K 50 3 SI DS DS DS DS SI Office Mailroom Mail center Production 11

12 DOCUMENT SYSTEMS Folders/inserters range: Neopost & PFE Price in K 100 Maximailer DS-100 Maximailer + DS-140 Automailer 5 + DS-1000 Minimailer 2 Minimailer 4 3 SI DS DS DS DS SI Office Mailroom Mail center Production 12

13 DOCUMENT SYSTEMS Folders/inserters range: Neopost & PFE Price in K 150 DS DS DS DS-100/ DS DS DS DS DS Office Mailroom Mail center Production 13

14 UPDATE ON PFE Sales synergies Despite the economic slowdown, steady increase in the number of machines sold Change in number of machines sold 30% 20% 10% 0% +7% +24% +4% +27% +35% +25% 2009 growth H growth DS 1000/1200 DS100/140 Cost synergies Operating margin increased to reach 15% at end-2009 Demonstration of Neopost s ability to integrate acquisitions 14

15 UPDATE ON SATORI Acquired in September 2009 A US software company based in Seattle Specialized in address cleansing and mail pre-sorting High level of recurring revenues Generation of sales synergies through cross selling in Neopost distribution networks (US, UK) Sales 2009: $15m of which $3m were inter-company sales 2010(e): Double digit growth Improved EBIT margin Neopost s first step in the address/ data quality market 15

16 H RESULTS 16

17 H SALES Sales ( million) H Growth* Currency H impacts +3.0% increase in sales in H1 2010, +0.5% at constant exchange rates 17 * At constant exchange rates

18 IMPACT OF POSTAL RATE CHANGES Rate change impact H vs H1 2009: - 13m H2 2010(e) vs H2 2009: + 4m FY 2010(e) vs FY 2009: - 9m as forecasted; essentially in the USA and France One-off impacts of rate changes partially compensated by the development of Rate Change Protection Rate Change Protection Monthly payment Strong growth: H vs. H % 50% of total Rate Change sales by the end of % impact PFE on Group successful sales integration 2010 as forecasted 18

19 PERFORMANCE OVER THE LAST SEMESTERS Sales growth (at constant exchange rates excluding rate change impacts) 4% 3% +3.3% 2% 1% +1.2% 0% -1% -2% -1.4% H H H Good momentum 19

20 SALES GROWTH PER COUNTRY Change H / H1 2009* H sales: 470.9m North America France +3.6% -4.5% Rest of world 12% North America 41% United Kingdom -6.1% Germany 8% Germany +2.0% UK 12% Rest of the world +8.9% Group +0.5% France 27% Growth in North America, contrasted performance elsewhere 20 * At constant exchange rates

21 SALES GROWTH PER REVENUE TYPE Change H / H1 2009* H sales: 470.9m Recurring revenues -0.4% Rental & leasing 30% Services and supplies 41% Equipment sales +2.7% Equipment sales 29% Return to growth in equipment sales, recurring revenues negatively impacted by rate changes 21 * At constant exchange rates

22 SALES GROWTH PER BUSINESS LINE Change H / H1 2009* H sales: 470.9m Mailing systems -4.4% Document and logistics systems 31% Documents and logistics systems +13.5% Mailing systems 69% Strong performance of Document systems, Mailing systems negatively impacted by rate changes 22 * At constant exchange rates

23 OPERATING PERFORMANCE IN H H1 H1 Change million % Sales % Gross margin As % of sales % % +1.9% EBITDA As % of sales 32.2% 32.4% Current Operating Income As % of sales % % +3.7% +2.1% A high level of profitability, operating performance in line with expectations 23 /$ H = 1.30 and H = 1.35 ; / H = 0.86 and H = 0.88

24 FINANCING STRUCTURE In million Natixis private placement availability Revolving line availability Revolving line drawn (1) OCEANE 500 Crédit Agricole Private Placement USPP (1) 0 July 09 January 10 July 10 January 11 January 12 January 13 ILLUSTRATIVE (assuming constant financing needs) Neopost Net financing margin maintained strategy allows at a ample high level flexibility 24 (1) EUR/USD rates: at 31/07/09, at 31/01/2010 and at 31/07/10

25 COST OF DEBT EVOLUTION million H H H H1-10 vs H1-09 variation Net cost of debt (13.4) (16.6) (18.4) +5.0 Detail of the year-on-year increase in net cost of debt: OCEANE and Natixis Private Placement costs: + 3.4m Debt increase, interest rate and currency evolution: + 1.6m H2-10 net cost of debt forecast Savings coming from the USPP reimbursement: - 1.7m Others: - 1.1m 25

26 NET INCOME H1 H1 Change million % Operating Income % Net cost of debt (13) (18) Other financial gains or losses 1 (1) Taxes (30) (29) Share of associated companies 1 - Net Income % As % of sales 16.4% 15.1% EPS % Fully diluted EPS % Net margin maintained at a high level 26 /$ H = 1.30 and H = 1.35 ; / H = 0.86 and H = 0.88

27 SOLIDITY OF NEOPOST BALANCE SHEET Equity: 542m at end July 2010 vs. 443m one year ago Net debt: 728m at end July 2010 vs. 724m one year ago Leasing portfolio: 550m +7.2% as compared to the end of July 2009* Rental Net present value of future rental cash flows about 300m Leasing + rental future cash flows about 850m i.e. >> 100% of net debt Acquisitions Equity de is nouvelles under control technologies and debt is fully backed payantes by future cash flows 27 * At constant exchange rates

28 HEALTHY FINANCIAL STRUCTURE 31/07 31/01 31/07 million Financial debt Cash and marketable securities (118) (139) (154) Net financial debt Shareholders equity Net debt / shareholders equity 164% 146% 134% Net debt / EBITDA ratio EBITDA / financial charges* ratio Debt covenants** easily met 28 * Financial charges= cost of debt ** Minimum equity of 400m and maximum leverage ratio of 3.25

29 CASH FLOW GENERATION million H H Net income Depreciation Provisions Other non cash items Cash flow* (9) (2) (5) High level of cash flow 29 * After net cost of debt and income tax

30 WORKING CAPITAL REQUIREMENT 31/07 31/07 Change million % Inventories % Accounts receivable % Prepaid income (142) (158) +11.4% Other payables and receivables (235) (282) +20.1% Total excluding leasing (195) (204) +4.5% Strong negative level of WCR despite increase in accounts receivable 30

31 TRENDS IN THE MAIL INDUSTRY 31

32 CONVENTIONAL SEGMENTATION OF MAIL 3 different segments with different dynamics The Marketing segment is correlated with the economy and is expected to grow The transactional segment structurally declines with dematerialization The correspondence segment declines with development of electronic communication B B C C Marketing Transactional Correspondence Neopost addresses the needs of the B-to-B and B-to-C sub-segments 32

33 CORRELATION WITH THE ECONOMY U.S. Total - Mail Volumes (Bn Units) Recession Expected trends Other Mail* Standard Mail (Marketing mail) CAGR : +2.9% Strong cyclical decline Return to growth 50 0 First Class Mail (Transactional mail mainly) CAGR : +0.4% Acceleration of structural decline Further structural decline at a lower pace June * Other mail includes periodicals, packages and shipping

34 LATEST FIGURES IN LINE WITH NEOPOST EXPECTATIONS US scenario confirmed by most recent trends: Continuing trend of dematerialization of the transactional mail Mail volume in the US Q1 Q2 Q3 Q4 Q1 Q2 Rebound of the marketing mail due to the economic recovery As expected, the standard mail volumes started to grow again as the economy recovered 34

35 SIMILAR TRENDS IN EUROPE La Poste in France announced mail volume declining by 3.7% in H vs. -4.7% during year 2009 DPAG mail volume went from -5% in 2009 to -3% in Q and -1% in Q We see a significant lower decline in mail volume F. Appel, CEO DPAG, Q earnings call Mail volume trending towards stabilization 35

36 ECHO-DECERTIFICATION 36

37 IMPACT OF PREVIOUS DECERTIFICATIONS Equipment sales growth at constant exchange rates 30% 25% 20% 15% 10% 5% 0% -5% -10% -15% -20% H IJ launch H H H Decertification in the USA and Canada, PIP in the UK and SBP in the USA H H H H H Decertification in the USA H H H IS launch Economic downturn H Decertifications accelerate the growth of hardware sales 37

38 ECHO-DECERTIFICATION Decertification of all electromechanical machines in Canada and partially in the USA 2006 Shape-Based Pricing in the USA 2007 Decertification of the remaining electro-mechanical machines in the USA Pricing in Proportion in the UK With an average 5 year leasing period, past decertifications will continue to bring boosts of activity 38

39 ECHO-DECERTIFICATION First impacts expected in 2011 Strong opportunity for renewal of Neopost installed base US, Canada and UK Opportunity to gain market share Opportunity to grow recurring revenue by higher penetration in: Leasing Postage financing Maintenance service On-line services Opportunity maximized thanks to a stronger direct distribution Significant opportunities for hardware sales and market share gains which are tomorrow s recurring revenues growth 39

40 CONCLUSION 40

41 MEDIUM TERM PERSPECTIVES Improving trends in mail volumes Successful product launches Echo decertification Successful integration of acquisitions Strong control over operating costs Return to growth in hardware sales Continuing growth in recurring revenues High EBIT margin Strong cash flow generation Confidence for the next years to come 41

42 FY 2010 GUIDANCE Return to growth, assuming the economy does not deteriorate again: Sales 0% to 2% growth in 2010 at constant exchange rates Current operating margin Maintained at the high level of 25.7% of sales FY 2010 guidance confirmed, unchanged from March

43 APPENDIX 43

44 CONSOLIDATED BALANCE SHEET (1/2) 31/07 31/07 Assets million Goodwill Intangible fixed assets Tangible fixed assets Other non current financial assets Other non current receivables 8 20 Leasing receivables Deferred tax assets Inventory Accounts receivables Other current assets Cash & marketable securities Current financial instruments TOTAL 1,803 2,048 44

45 CONSOLIDATED BALANCE SHEET (2/2) Liabilities million 31/ / Shareholders equity Non current provisions 9 9 Non current financial debt Short-term financial debt Other non-current liabilities Deferred tax liabilities Non-current financial instruments 9 8 Prepaid income Other current liabilities Current financial instruments 4 2 TOTAL 1,803 2,048 45

46 DEBT STRUCTURE US Private Placement $175m, of which $75m at variable rates and $100m at a fixed rate (4.83%) 25m at a fixed rate (4.52%) Reimbursed on the 16 September 2010 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 46

47 DEBT STRUCTURE Banques Populaires / Caisses d Epargne / Natixis private placement 175m redeemable revolving loan Euribor +190bps 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: 480m as at 16/09/2010 covering future needs 47