Landis+Gyr Group AG / Key word(s): Half Year Results/Quarterly / Interim Statement
Cham, Switzerland – October 27th, 2022 – Landis+Gyr (SIX: LAND) today announced unaudited financial results for the first half of financial year 2022 (April 1st - September 30th, 2022). Key highlights included:
“We see a favorable environment for energy efficiency technologies and solutions, which is reflected in our continued solid order intake, and further amplified by the current energy crisis. While the first half of FY 2022 continues to be impacted by ongoing supply chain challenges, we expect to see improvements in the second half. Due to the volatile availability of components needed to convert our high order backlog, we have temporarily higher inventories. While this impacts our cash position in the short-term, we are well positioned for a production ramp up in the second half of the current fiscal year”, said Werner Lieberherr, Chief Executive Officer of Landis+Gyr. “Due to the continuation of deployments of critical infrastructure even during economic cooldowns, Landis+Gyr is recession-resilient, and paired with our strategic transformation, we feel confident about the future”, Lieberherr concluded.
Order Intake, Committed Backlog and Net Revenue
Group order intake for the first half of FY 2022 was USD 773.2 million, a book-to-bill ratio of 1.06 and a decrease of 56.7% when compared to the extraordinarily strong H1 FY 2021. The solid order intake development was driven by contract wins across all three regions. Committed backlog was up 7.5% year-over-year reaching a new record level of USD 3,479.7 million.
The Americas region recorded an order intake of USD 409.3 million (book-to-bill of 1.04) and the committed backlog rose by 12.2% to USD 2,604.2 million. In EMEA, orders of USD 264.4 million (book-to-bill of 1.07) were booked leading to a 12.7% lower committed backlog of USD 702.1 million due to FX rate movements. At constant currencies, the EMEA committed backlog increased by 3.5% year-over-year. In Asia Pacific, order intake amounted to USD 99.5 million (book-to-bill of 1.12) leading to a year-over-year 56.4% higher committed backlog of USD 173.3 million.
In the first six months of FY 2022, net revenue rose 10.3% in constant currency to USD 728.7 million (4.0% reported) despite the ongoing supply chain challenges from USD 700.9 million in H1 FY 2021.The difficult supply chain situation led to an estimated USD 80 million of net revenues being pushed out during the period. The businesses acquired during FY 2021 contributed approximately USD 23 million incrementally to net revenues year-over-year.
Net revenue per segment was as follows (in USD million, except where indicated):
The Americas region delivered higher net revenue, up 20.4% in constant currency, of USD 391.7 million. Growth was driven by the conversion of the strong backlog and the performance in North America and Japan and despite the continued challenging component availability situation.
Net revenue in the EMEA region was down compared to the prior year’s period by 6.0% in constant currency to USD 248.0 million. The decline was mainly driven by the non-availability of critical components with the French and UK markets being most affected.
Net revenue in the Asia Pacific region was up 23.8% in constant currency to USD 89.0 million with Australia & New Zealand (ANZ) being the main driver.
Adjusted Gross Profit and Adjusted and Reported EBITDA*
The Adjusted EBITDA by segment was as follows (in USD million, except where indicated):
Adjusted gross profit decreased by 6.7% to USD 226.9 million or by 358 basis points to a margin of 31.1%. Favorability due to higher volume was more than offset by increased supply chain costs. Transactional FX pressure due to the strong US Dollar was partially mitigated through hedging.
Adjusted operating expenses in H1 FY 2022 increased by USD 5.6 million or 3.2% versus the previous year period to USD 178.2 million. This increase is mainly attributable to ramp-up investments to support current and future backlog conversion in Americas, acquisitions in EMEA and strategic initiatives. Adjusted R&D expenses increased to 11.4% of net revenues in H1 FY 2022.
Overall, the Adjusted EBITDA in H1 FY 2022 was USD 48.7 million (down 31.2% YoY) and the Adjusted EBITDA margin was 6.7% compared to 10.1% in H1 FY 2021. Adjusted EBITDA decreased due to significantly higher supply chain costs of approximately USD 29 million year-over-year and higher adjusted operating expenses.
In H1 FY 2022, operating income was USD 10.5 million, a decrease of 77.3% compared to USD 46.3 million in H1 FY 2021. Reported EBITDA for the first six months of FY 2022 was USD 51.0 million versus USD 86.2 million in the same period in FY 2021, a decline of 40.8%.
The adjustments to bridge between reported EBITDA in the Group’s financial statements and Adjusted EBITDA are as follows (in USD million):
In H1 FY 2022, adjustments were made in three categories. First, with respect to restructuring charges, the USD 6.5 million related mostly to the discontinuation of manufacturing activities in India. Secondly, the warranty normalization adjustments of USD (2.5) million represents the amount of warranty provisions made relative to the average actual warranty utilization for the last three years. This means warranty provisions in H1 FY 2022 were again below historical levels. Thirdly, the timing difference on FX derivatives adjustment was USD (6.3) million in H1 FY 2022, which relates to mark to market differences on hedges, primarily as a result of the stronger US Dollar versus the British Pound and the Euro.
Net Income and EPS
Net income attributable to Landis+Gyr Group shareholders for H1 FY 2022 was USD 186.5 million compared to USD 35.0 million in the prior year period. Diluted EPS was USD 6.57 compared to USD 1.21 in H1 FY 2021. Net income includes a gain on the sale of the minority stake in Intellihub, which closed on April 1st, 2022, of USD 229.7 million pre-tax and approximately USD 161 million after current and deferred taxes.
Cash Flow and Net Debt
Cash provided by operating activities was USD (82.9) million in H1 FY 2022, including a USD (52.8m) tax payment related to the Intellihub divestment, compared to USD 50.4 million in the prior year period. Free Cash Flow (excl. M&A) was USD (38.9) million, a decrease of USD 80.5 million compared to the prior year. The decrease is mainly due to the significant build-up of inventories, up USD 76.3 million in H1 FY 2022, in anticipation of a production ramp-up in H2. In H1 FY 2022, capital expenditure amounted to USD 8.9 million and remained unchanged versus the previous year period.
As of September 30th, 2022, the ratio of net debt to trailing twelve months Adjusted EBITDA was 0.63 times, with net debt of USD 79.3 million, after the dividend payment in June 2022 and the sale of the Intellihub minority stake.
Outlook for FY 2022
While customer demand for Landis+Gyr’s products and solutions remains high, the sustained supply chain constraints combined with an unstable geopolitical and economic situation result in considerable uncertainties. Barring any unforeseen circumstances, Landis+Gyr confirms its guidance for FY 2022 provided in May 2022 with net revenue growth in FY 2022 of between 6% and 10% including FY 2021 acquisitions. As announced earlier, Landis+Gyr will continue to make significant additional strategic transformation investments of approximately 2% of net revenues in FY 2022. Together with higher expected cost from supply chain and cost inflation, the Adjusted EBITDA margin for FY 2022 is expected to be between 5% and 8% of net revenues. Due to higher operating working capital needs, the Free Cash Flow (excluding M&A) for FY 2022 is expected to come in towards the lower end of the guided range of between USD 30 million and USD 60 million.
The H1 FY 2022 earnings presentation, which forms part of this ad hoc announcement, as well as the Half Year Report 2022 are available on the Company’s website at www.landisgyr.com/investors/results-center/.
Investor Webcast and Telephone Conference
The management of Landis+Gyr will host an investor/analyst call to discuss the Company's results.
Please dial in 10 minutes before the start of the presentation and ask for “Landis+Gyrʼs first half year results 2022”.
Head of Investor Relations
Landis+Gyr is a leading global provider of integrated energy management solutions. We measure and analyze energy utilization to generate empowering analytics for smart grid and infrastructure management, enabling utilities and consumers to reduce energy consumption. Our innovative and proven portfolio of software, services and intelligent sensor technology is a key driver to decarbonize the grid. Having avoided more than 9 million tons of CO2 in FY 2021, Landis+Gyr manages energy better – since 1896. With sales of USD 1.5 billion in FY 2021, Landis+Gyr employs around 6,800 talented people across five continents. For more information, please visit our website www.landisgyr.com.
This ad hoc announcement and information referred to herein contains (a) preliminary, unaudited numbers that may be subject to change and (b) information regarding alternative performance measures or non USGAAP measures, such as “Reported EBITDA”, “Adjusted EBITDA”, “Adjusted Gross Profit”, “Adjusted Research and Development”, “Adjusted Sales, General and Administrative”, and “Adjusted Operating Expenses”. Definitions of these measures and reconciliations between such measures and their USGAAP counterparts if not defined in this announcement may be found on pages 28 to 30 of the Landis+Gyr Half Year Financial Report Fiscal Year 2022 on our website at www.landisgyr.com/investors.
This ad hoc announcement includes forward-looking information and statements, including statements concerning the outlook for Landis+Gyr Group AGʼs businesses. These statements are based on current expectations, estimates and projections about the factors that may affect the Companyʼs future performance, including global economic conditions, and the economic conditions of the regions and industries that are major markets for Landis+Gyr. These expectations, estimates and projections are generally identifiable by statements containing words such as “expects”, “believes”, “estimates”, “targets”, “plans”, “outlook”, “guidance” or similar expressions. There are numerous risks, uncertainties and other factors, many of which are beyond Landis+Gyrʼs control, that could cause the Companyʼs actual results to differ materially from the forward-looking information and statements made in this announcement and which could affect the Companyʼs ability to achieve its stated targets. The important factors that could cause such differences include, among others: the duration, severity, geographic spread and potential after effects of the COVID-19 pandemic, government actions to address or mitigate the impact of the COVID-19 pandemic, and the potential negative impacts of COVID-19 on the global economy, any of the Company’s operations and those of its customers and suppliers; global shortage of energy or supplied components as well as increased freight rates, business risks associated with the volatile global economic environment and political conditions, unrests and/or wars; costs associated with compliance activities; market acceptance of new products and services; changes in governmental regulations and currency exchange rates; estimates of future warranty claims and expenses and sufficiency of accruals; and other such factors as may be discussed from time to time in Landis+Gyr Group AG filings with the SIX Swiss Exchange. Although Landis+Gyr Group AG believes that its expectations reflected in any such forward-looking statement are based upon reasonable assumptions, it can give no assurance that those expectations will be achieved.
* For a reconciliation of non-GAAP measures, see chapter “Supplemental Reconciliations and Definitions (unaudited)” in this ad hoc announcement.
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Landis+Gyr Group AG
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