Landis+Gyr Group AG · SIX:LAND
Landis+Gyr — Investor Presentation (October 2018)
41 slides from Landis+Gyr's investor presentation, Oct 11, 2018
Slide 1: CFA Institute Research Challenge
CFA Institute Research Challenge October 11, 2018 - Zurich Jonathan Elmer Chief Financial Officer Igor Dremelj Vice President Strategic Solution Sales © Landis+Gyr | October 2018 | CFA Institute Research Challenge
Slide 2: Important notices
Important notices This presentation includes forward-looking information and statements including statements concerning the outlook for our businesses. These statements are based on current expectations, estimates and projections about the factors that may affect our future performance, including gl
Slide 3: Section 1: Landis+Gyr Company Highlights
Section 1: Landis+Gyr Company Highlights © Landis+Gyr | October 2018 | CFA Institute Research Challenge
Slide 4: 120 years of service to utility customers
120 years of service to utility customers Ecosystem of connected Mechanical meters Solid state meters Smart meters Smart grid intelligent devices Organic growth ▪ High quality electricity meters ▪ Re-shaping Landis+Gyr ▪ Communication technology ▪ Investments in smart grid ▪ Evolution ▪ First range
Slide 5: Landis+Gyr – a global leader
Landis+Gyr – a global leader Global leader in Smart Metering and Smart Grid solutions 120 Years Over 80 million of service to Serving Nearly USD 1 billion Headquartered in smart grid connected customers 3,500+ of self-funded Switzerland intelligent devices as a trusted utilities R&D investment with
Slide 6: Pace of smart meter market development
Global growing smart metering and smart grid solutions market… Organic growth1 Market Maturity / Illustrative 1st wave 2nd wave Americas Electricity comm. meters APAC EMEA US in USD billions Pace of smart meter market development 1.7 1.2 Dec-17 Dec-21 EMEA Electricity and gas comm. meters in USD bil
Slide 7: …. to enable utility journey towards the interactive grid
…. to enable utility journey towards the interactive grid Utility industry transformation roadmap: 4 Optimize Predict Interactive grid ▪ Real time decisions 3 Control ▪ Automation down to the end point through distributed intelligence Active grid ▪ Predictive actions to optimize grid 2 Monitor ▪ Nea
Slide 8: Best-in-class portfolio of end-to-end solutions
Best-in-class portfolio of end-to-end solutions Broad solutions offering… 11% 71% 18% Standalone devices Connected intelligent devices Software & services Non-AMI Industrial, Advanced load Distributed Heat/cold Portfolio electricity Standalone gas Residential AMI commercial & Smart gas mgmt Energy O
Slide 9: Section 2: Market Overview
Section 2: Market Overview © Landis+Gyr | October 2018 | CFA Institute Research Challenge
Slide 10: Attractive long term growth potential for L+G in Americas
Attractive long term growth potential for L+G in Americas L+G Installed base North America Communicating electricity meters in NAM ▪ Current growth driver: 2nd wave deployments, smart grid solutions USD billions 1.1 1.2 +30m Dec-17 Dec-21 Smart Meters ▪ Long-term growth opportunity: smart grid solut
Slide 11: EMEA growth driven by AMI penetration…
EMEA growth driven by AMI penetration… Electricity AMI penetration Electricity AMI Rollout Status end of year 2017, Main European Countries (end of year 2017) AT Mandated 2016 2021 >80% 10–50% 0–5% 50–80% 5–10% BE Mandated only in Flanders 2019 2024 CH Mandated 2018 2027 DE Mandated but gradual 2017
Slide 12: …with clear strategic levers and market trends to support longer-term growth
…with clear strategic levers and market trends to support longer-term growth Smart meters installed base forecasts: Long-term growth drivers: Smart meter installed base Penetration Units millions (%) 300 100% ▪ Long term goal of remaining market leader for Smart Electricity and Smart gas in major EM
Slide 13: Large untapped AMI potential in APAC to fuel growth in the region
Large untapped AMI potential in APAC to fuel growth in the region China and SEA ▪ Expected installed base of c.610m meters by 2022 India − AMR meters to be replaced by AMI meters starting in 2020 at pace of 30- ▪ Expected installed base of 100m meters by 40m per year 2022 − Communicating meters repr
Slide 14: Section 3: FY 2017 Highlights
Section 3: FY 2017 Highlights © Landis+Gyr | October 2018 | CFA Institute Research Challenge
Slide 15: Business highlights – Fiscal Year 2017
Business highlights – Fiscal Year 2017 Group: Overall Group performance for FY2017: ▪ Sales growth year over year of 4.7% (2.6% in constant currency) ▪ Adjusted EBITDA stable at USD 212.0 million ▪ Free cash flow reached USD 87.5 million, up USD 34.4 million compared to FY2016 ▪ Key Group guidance p
Slide 16: Key regional developments – Fiscal Year 2017
Key regional developments – Fiscal Year 2017 Americas EMEA Asia Pacific ▪ Good order intake and overall ▪ Major AMI deployments in the UK, ▪ Major AMI deployments with CLP, financial performance driven by US the Netherlands and France continue Hong Kong on track AMI business with strong momentum ▪ D
Slide 17: Consolidated results – Full-Year to March 2018 (FY2017)
Consolidated results – Full-Year to March 2018 (FY2017) USD in millions (except per share amounts) FY2017 FY2016 Change ▪ At constant currencies, order Order Intake 1'574.4 1'325.5 18.8% intake grew by 16.0% and Change in constant currency 16.0% revenue by 2.6% Committed Backlog 2'389.0 2'491.4 (4.1
Slide 18: Adjustments to EBITDA – FY2017
Adjustments to EBITDA – FY2017 USD in millions H1 FY2017 H2 FY2017 FY2017 FY2016 Change Adjustments FY2017 EBITDA 43.1 102.0 145.1 150.8 (3.8%) ▪ Adjustments in H2 FY2017 reduced to USD 1.3 Adjustments million, net ▪ Restructuring – Costs mainly associated with the Restructuring Charges 8.1 6.5 14.7
Slide 19: Cash flow – FY2017
Cash flow – FY2017 USD in millions FY2017 FY2016 Change Net income (loss) 46.8 (62.1) n/a Operating Working Capital management improved by USD Depreciation, amortization and FY2016 14.1 million despite higher 97.3 156.2 (37.7%) goodwill impairment sales Change in OWC, net 14.1 (10.0) n/a Other (33.6
Slide 20: Outlook
Outlook FY2018 Outlook: ▪ Landis+Gyr expects FY2018 sales growth of approximately 3 - 6%. ▪ Group Adjusted EBITDA expected to be in the range of USD 222 million and USD 232 million. ▪ Free cash flow1 between USD 95 million and USD 105 million. ▪ Given some of the supply chain challenges currently be
Slide 21: Section 4: Our Products
Section 4: Our Products © Landis+Gyr | October 2018 | CFA Institute Research Challenge
Slide 22: Smart metering systems — end-to-end solutions helping utilities
Smart metering systems —an end-to-end solutions helping Utilities improve their business and operations Residential Commercial Network gateway Head-end systems Advanced grid analytics Data transmission & Data processing & Smart electricity meters FAN WAN collection analytics Industrial Network bridg
Slide 23: Wide portfolio a differentiated value proposition
Wide portfolio a differentiated value proposition Standalone Devices Connected Intelligent Devices Software & Services Industrial, Advanced Non-AMI Other Heat/cold Standalone Residential commercial load mgmt Portfolio electricity Smart gas devices Services Software Other meters gas AMI & grid meters
Slide 24: Selected product presentation: E450 Linky
Selected product presentation E450 Linky – Facilitating energy transition in France State-of-the-art future-proof smart meter developed for ERDF and the French market that enables accurate consumption based energy profiling, optimized load control and demand response as well as higher consumer engag
Slide 25: Selected product presentation: E470 SMETS
Selected product presentation E470 SMETS - Flexible smart metering offering for the UK Advanced Smart Electricity Meter designed to meet UK Regulatory and Industry Specifications build off proven reliable L+G technology ▪ Aligned to the UK Smart Metering Equipment Technical Specifications (SMETS) ▪
Slide 26: Selected product presentation: E350 Focus AX-SD
Selected product presentation E350 Focus AX-SD – The No.1 Residential Smart Meter in North America Landis+Gyr’s third-generation design with field-proven reliability as the answer to today’s evolving utility requirements in North America ▪ Most advanced cam-driven 200A switch design to withstand 10K
Slide 27: Delivering Utility IoT today – L+G Network portfolio
Delivering Utility IoT today – L+G Network portfolio Network gateway Network bridge Network node Enabling community intelligence at the edge of Connect new and legacy DA equipment with Bring any sensor into the Wi-SUN compliant, the grid with support for multiple RF Mesh while simultaneously providi
Slide 28: Gridstream - Serving Utility Billing & Customer Care and Network Planning
Gridstream - Serving Utility Billing & Customer Care and Network Planning & Operations teams Billing Network Planning & Customer Care & Operations Meter Data Management [MDM]: Advanced Grid Analytics [AGA]: ▪ Continuous meter to cash support ▪ Harnessing the power of physics based through data valid
Slide 29: Selected product presentation: Meter Data Management
Selected product presentation Meter Data Management– Data management, processing and unification MDM is the unifying integration point and system of record for consolidation, analysis, validation and normalization of metering data: ▪ Continuous Data Validation & Estimation - every read from every me
Slide 30: Selected product presentation: Advanced Grid Analytics
Selected product presentation Advanced Grid Analytics –Driving convergence of Utility IT & OT AGA with its unique combination of physics-based and statistical analysis helps Utilities based on smart meter data to: ▪ Predict and improve asset life ▪ Understand the impact of Distributed Energy Resourc
Slide 31: Appendix 1: Supplementary Materials
Appendix 1: Supplementary Materials © Landis+Gyr | October 2018 | CFA Institute Research Challenge
Slide 32: Net revenue year-over-year bridge – FY2017
Net revenue year-over-year bridge – FY2017 Net revenue year-over-year bridge: Americas EMEA USD in millions Driven by Industry wide strong US AMI supply chain 2000 sales offsetting an shortages limited 1800 34.5 1,737.8 expected decline growth in AMI 38.5 10.5 (4.9) 1,659.2 in Japan revenues deploym
Slide 33: Adjusted EBITDA year-over-year bridge – FY2017
Adjusted EBITDA year-over-year bridge – FY2017 Adjusted EBITDA y-o-y bridge: Adjusted USD in millions Gross Profit decline resulted from 212.0 30.4 1.2 212.0 mix changes in 200 Americas & delays in cost optimized product (31.6) launches in EMEA. 150 Improvement to EBITDA Adjusted 100 Operating Expen
Slide 34: Net debt & refinancing
Net debt & refinancing USD in millions ratio ▪ Cash generation of USD 87 million reduced net debt to USD 140 127 0.7 40 million, 0.2 times Adjusted 120 0.6 EBITDA 100 0.6 0.5 ▪ Bridge loan repaid as new USD 240 million multi-currency line 80 0.4 of credit facility put in place 60 0.3 40 ▪ Dividend p
Slide 35: Americas segment – FY2017
Americas segment – FY2017 USD in millions FY2017 FY2016 Change ▪ Continued strong revenue in core US AMI market offset some expected declines Net revenue to external customers 972.2 931.2 4.4% in Japan Change in constant currency 4.1% ▪ Important agreement signed to help TEPCO Adjusted Gross Profit
Slide 36: EMEA segment – FY2017
EMEA segment – FY2017 USD in millions FY2017 FY2016 Change ▪ Revenue growth impacted by supply chain shortages in Q4 Net revenue to external customers 627.2 587.8 6.7% ▪ Adjusted Gross Profit impacted by delay to Change in constant currency 1.7% product cost reductions Adjusted Gross Profit 155.9 17
Slide 37: EMEA segment – Comments on FY2017 results
EMEA segment – Comments on FY2017 results Key market developments EMEA results ▪ UK: In total over 18 million smart meters under contract, of which ▪ EMEAs revenue impacted by industry wide supply approximately 5 million have been deployed chain constraints which reduced H2 sales by about ▪ Smart me
Slide 38: EMEA segment restructuring – update on Project Lightfoot
EMEA segment restructuring – update on Project Lightfoot Manufacturing restructuring activities EMEA restructuring program ▪ UK: Successfully initiated restructuring of UK ▪ Annual savings of USD 25 million across EMEA (previous manufacturing sites. target USD 20 million) expected from restructuring
Slide 39: Asia Pacific segment – FY2017
Asia Pacific segment – FY2017 USD in millions FY2017 FY2016 Change ▪ Revenue declined as expected market growth did not materialize with slow take-up of “Power Net revenue to external customers 138.4 140.2 (1.3%) of Choice” regulatory change in Australia Change in constant currency (3.4%) ▪ Adjusted
Slide 40: Asia Pacific – Joint venture to acquire Acumen from Origin
Asia Pacific – Joint venture to acquire Acumen from Origin Transaction Impact / Outlook ▪ Joint Venture (PEP: 80% / Landis+Gyr: 20%) buys Origin’s ▪ Important milestone in turnaround of Asia Pacific business Acumen business for AUD 267 million ▪ Expected Landis+Gyr meter sales to the JV of over USD
Slide 41: Dates and contacts
Dates and contacts Important Dates Investor Relations Release of H1’2018 Results: www.landisgyr.com/investors October 26, 2018 Documents for CFA Institute Research Challenge Webcast www.landisgyr.com/investors/CFA Q&A session with CFO: November 8, 2018 Conference call Capital Markets Day: December 5
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