Esprinet S.p.a. · MIL:PRT
Esprinet — Q2 2019 Earnings Presentation
33 slides from Esprinet's earnings presentation, Sep 12, 2019
Slide 1: Q2 2019 Financial Highlights
Q2 2019 Financial Highlights September 12, 2019
Slide 2: Forward looking statement
Forward looking statement This presentation may contain forward-looking statements that are subject to risks and uncertainties, including those pertaining to the anticipated benefits to be realized from the proposals described herein. Forward-looking statements may include, in particular, statements
Slide 3: Agenda
FINANCIALS BUSINESS UPDATE AGENDA OUTLOOK & FINAL REMARKS Q&A SESSION
Slide 4: Q2 in a nutshell
Q2 in a nutshell Sales ICONA 842 M€ +11% on Q2 2018 EBIT ICONA 7.2 M€(1) +30% on Q2 2018 Net profit ICONA 4.6 M€ +67% on Q2 2018 Net financial debt ICONA 183.1 M€ 90.0 M€ excluding IFRS 16 NOTES (1) 6.2 M€ (+12%) excluding effects of IFRS 16 «Leases». 4
Slide 5: Financials
© esprinet 12s
Slide 6: Profit & Loss - IFRS 16 Reconciliation
Profit & Loss - IFRS 16 Reconciliation Q2 2019 IFRS 16: P&L impact post IFRS 16 «as reported» • The adoption of IFRS 16, the (euro/mln) Q2 2019 adj. Q2 2019 new lease standard, determined an increase of EBIT of 1.0 M€ Sales 842,0 100,00% 842,0 100,00% and a more significant increase Cost of sales (8
Slide 7: Profit & Loss
Profit & Loss (euro/mln) Q2 2019 (1) Q2 2018 Var. % Q2 2019 • Reported net sales at 842.0 M€ Sales 842,0 100,00% 756,9 100,00% 11% increased +11% compared to the prior- Cost of sales (801,8) -93,22% (718,9) -94,98% 12% year Q2 (+85.1 M€). Gross Profit 40,3 4,78% 38,0 5,02% 6% • Gross profit up +6% a
Slide 8: Profit & Loss - IFRS 16 Reconciliation H1 2019
Profit & Loss - IFRS 16 Reconciliation H1 2019 IFRS 16: P&L impact post IFRS 16 «as reported» (euro/mln) H1 2019 adj. H1 2019 Sales 1.717,5 100,00% 1.717,5 100,00% Cost of sales (1.636,4) -95,28% (1.636,4) -95,28% • The adoption of IFRS 16 Lease Gross Profit 81,1 4,72% - 81,1 4,72% determined an inc
Slide 9: Profit & Loss
Profit & Loss (euro/mln) H1 2019 (1) H1 2018 Var. % FY 2018 adj. (2) H1 2019 • Reported net sales at 1,717.5 M€ Sales 1.717,5 100,00% 1.538,2 100,00% 12% 3.571,2 100,00% increased +12% compared to the prior- Cost of sales (1.636,4) -95,28% (1.461,2) -95,00% 12% (3.400,5) -95,22% year half (+179.3 M€
Slide 10: Balance Sheet Highlights
Balance Sheet Highlights IAS 17 post IFRS16 BS at June 30, 2019 (euro/mln) 30.06.19 31.12.18 30.06.19 • At June 30, 2019 the Group’s net equity Net operating working capital 338,8 10,4 339,8 was 346,2 M€. Goodwill 91,0 90,6 91,0 • At the same date the Group had 91.0 Other fixed assets 29,5 27,9 122,
Slide 11: Working Capital Metrics
Working Capital Metrics 70 Cash Conversion Cycle 40 34 35 60 32 32 31 30 • Cash conversion cycle 29 sequentially stable at 28 days: 28 28 27 28 30 50 27 27 26 27 Idays = 48 26 25 DSO = 38 40 DPO = (58) Tot = 28 20 30 • Compared to Q2 2018 metrics 57 58 58 53 53 51 55 54 55 52 57 56 15 Idays decrease
Slide 12: Cash Flow Generation
Cash Flow Generation (euro/mln) H1 2019 H1 2018 • Cash flow generated from operations was 21.2 M€ (+59%). Cash flow generated from operations 21,2 13,3 • Dividend distribution during Q2 of Cash flow provided by (used in) changes in working capital (338,2) (152,4) 6.9 M€. Other cash flow provided by
Slide 13: Return on Capital Employed
Return on Capital Employed (euro/mln) TTM ended March 31 TTM ended June 30 TTM ended December 31 (1) TTM Net Operating Profit After Tax (NOPAT) 2018 2019 2018 2019 2017 2018 EBIT 37,3 41,9 37,3 42,5 36,7 41,0 (2) Income taxes on EBIT -9,5 -10,7 -9,5 -10,9 -9,4 -10,5 NOPAT 27,8 31,2 27,8 31,7 27,3 30
Slide 14: Return on Capital Employed
Return on Capital Employed 450.000 11,4% 12,0% 10,9% 11,0% 400.000 10,1% 9,4% 10,0% 350.000 8,8% 8,5% 9,0% 8,1% 8,3% 300.000 7,7% 7,6% 8,0% 7,2% 7,0% 6,7% 6,9% 7,0% 250.000 6,0% 200.000 5,0% 150.000 4,0% 3,0% 100.000 2,0% 50.000 1,0% 0 0,0% 2016 Q1 2016 Q2 2016 Q3 2016 Q4 2017 Q1 2017 Q2 2017 Q3 201
Slide 15: Debt Structure review
Debt Structure review • Unsecured 3-year Syndicated Revolving Credit Facility near to be finalised by Esprinet SpA with a pool of 9 Italian and Spanish banks in order to replace oustanding facility expiring in February 2022, the financial covenants of which were breached based on FY 2018 consolidate
Slide 16: Share repurchase activity
Share repurchase activity Timetable • Start: July 12, 2019 • End: March 31, 2020 Share repurchases(1) Remainder of the program • Number of shares repurchased: • Number of shares: 706,709 763,508 (1.46% of total) (1.35%) out of a total • Amount repurchased: 2.283 M€ authorization from AGM of 2.81% (w
Slide 17: Business Update
© esprinet’ BUSINESS UPDATE
Slide 18: Market dynamics
Market dynamics Overall Market performance Esprinet Group performance Both the Italian and Spanish operations of the Group grew more than the Q1 2019 Q2 2019 H1 2019 market and achieved a market share growth of 1.5% and 1.2% Region vs. vs. vs. respectively in Italy and Spain. Q1 2018 Q2 2018 H1 2018
Slide 19: Sales Breakdown: H1 2019 vs H1 2018
Sales Breakdown: H1 2019 vs H1 2018 19
Slide 20: Gross Profit Dynamics
Gross Profit Dynamics PCs & Phones ICONA PCs and Smartphones collectively grew in terms of Gross Profit margin during both H1 and Q2 2019. Advanced Solutions GP% in Q2 2019 was substantially stable sequentially compared to Q1 2019 and Advanced was down compared to Q2 2018 mostly on mix and among oth
Slide 21: Gross Profit Dynamics
Gross Profit Dynamics Volumes vs Margins ROCE improvement initiatives ongoing The new strategic guidelines are driving a Over-performance in the more number of negotiations with vendors and challenging Consumer customer segment customers and we expect to either get (both retailers & e-tailers) put p
Slide 22: Working Capital Dynamics
Working Capital Dynamics Inventory Payables Receivables No major changes in vendor payment terms and no special Customer payment terms stable support achieved yet on vendors with the exception of a major Average levels of inventory retailer were significant credit with low ROCE. progressively declin
Slide 23: Key undertakings
Key undertakings Market Balance sheet Key strategic initiatives Training on new ROCE metrics Strong growth of «Advanced Growth in market share in Italy completed and negotiations with Solution» at +15%. and Spain above expectations vendors-customers on deals with thanks to excellent execution. criti
Slide 24: Outlook & Final Remarks
© esprinet’ OUTLOOK & FINAL REMARKS
Slide 25: Investment Highlights
Investment Highlights A new attractiveness of the market Strong positioning • A sizable and growing 14.6 B€ addressable market (*) • Strong leadership in southern Europe: 24.4% share against 17.5% of #2 (*) 2 1 • IT distribution gaining share on total IT spending (from 39.5% to 53.0% (*)) • Growing
Slide 26: Outlook / Delivery
Outlook / Delivery Q3 2019 2019 2020 Moderate top-line growth in future Quarter looks very strong in terms years as focus keeps being ROCE of sales performance. We reiterate the target for a FY performance. 2019E EBIT in the range 38-42 Gross margins still under pressure Improvements in GP % as resu
Slide 27: Final remarks
Final remarks A solid quarter of growth in sales, market share, EBIT and net profitability Strong set of ongoing internal activities as well as negotiations with vendors and customers to improve ROCE Q3 took off in line with budgeted EBIT targets mainly due to very solid top-line performance Full ye
Slide 28: Upcoming events
Upcoming events Date Event Venue Banca IMI - XII Italian Stock Market October 2nd 2019 Milan (Italy) Opportunities Conference October 23rd 2019 STAR CONFERENCE LONDON London (UK) November 13th 2019 Q3-2019 press release Vimercate (Italy) 28
Slide 29: © esprinet
© esprinet
Slide 30: Thank you
Thank you GRAZIE +» GRACIAS * DANKE + MERCI « 7A} « dita » iat © esprinet
Slide 31: The Industry
THE INDUSTRY
Slide 32: Size Of Addressable End User Market
Size Of Addressable End User Market EITO figures for IT Clients - Advanced Solutions & Smartphones - EUROMONITOR for other Consumer electronics End-user consumption converted to distri price assuming average 15% margin for resellers/retailers Conversion from Context panel sales to Total distri sales
Slide 33: Weight Of Distris On Addressed Market
Weight Of Distris On Addressed Market EITO figures for IT Clients - Advanced Solutions & Smartphones - EUROMONITOR for other Consumer electronics End-user consumption converted to distri price assuming average 15% margin for resellers/retailers Conversion from Context panel sales to Total distri sal