Barco Nv

Good morning, ladies and gentlemen. I am Willem François, I am Director of Investor Relations at Barco, and we welcome you this morning at our conference call on the results of the full year 2022. Together with me on stage today are Charles Beaudoin, CEO of Barco, and Anders Sender, CFO of Barco. Charla and Anne will walk you through the full year results update under the heading 32% top-line growth with significant profitability improvement, positioning BarcoWell for long-term profitable growth. Charlotte and Anne will provide extra color on the results and will take you through the earnings presentation, which is available on our investor portal since early this morning. After the presentation, we will open up for the Q&A round, when you will have the possibility to ask questions to Anne and Charlotte. And that's it for the introduction. We will start with the executive summary, and the floor is yours, Anne.

Good morning to you all. Happy to share with you the results on 2022 as well as the outlook for 2023. Starting on the summary, 2022 has been a year of strong profitable growth. landing or starting on the stop line, an increase of sales of 32%. Orders landed at the same amount of sales. You might remember that in 2021 orders picked up and after the COVID quite well, but there was some timing effect or lagging effect into the sales to order conversion. Happy that we worked through these challenges on supply chain, that we over the course of the years and in the second semester, we could normalize our lead times and get to more normal delivery terms. And with that, our book to build, as we then call it, orders to sales landed at one. Order book ended at a record high end position for the years and more on that later on. Our EBITDA margin of operational results increased to 13.7% in the second semester and landed on a full year to 12%. This has been the result of both improved gross profit margins and operating leverage on the top line growth. And you will see later on that this is really across the three divisions. Net earnings landed at 75 million and with this nice result we will be able, or the board has decided, to propose a 10% higher dividend compared to last year. With respect to the outlook 23, we are reconfirming our long-term profitable growth and EBITDA outlook. Moving over to the key highlights of the year and the figures, you will see that if we see the comparison compared to 21, these are all very nice green figures, which is then better except for one free cash flow, which came out lower than the year before. Orders and sales landed at that same figure, 1 billion 58 million. If we look to the order book, we landed close to 500 million, which is compared to the end of 2019 55% higher. If we look to the sales, sales up 32%. If we exclude, because there was some tailwind from the dollar, if we exclude the effect of the currencies, then our sales increased with 24% year over year. Again, you will see later on that this double-digit growth is a cross-division and a cross-region. EBITDA margin landed at 12%, thanks to and starting with the improvement on the gross profit margin. Gross profit margins improved 3.3%, which is the effect of a better product mix, but moreover, the consistent and persistent actions which have been done in calculating through higher costs into sales prices and over the year and in the second semester avoiding the higher broker fees which we had and this all actually as we worked through our challenges and resolved primarily through redesigns of our boards actually through the supply constraints. Free cash flow landed at 13%. The lower amount compared to one year ago is fully linked to higher inventories. Also in part to higher trade receivables, but that's then fully linked to the ramp up of course over the course of the years and the peak sales which we did in the fourth quarter. That income landing at 75 million or 7% of sales. This cell's top line of giving a little bit more color here whereby we in the graph show the increase of the cells compared to last year according to the three divisions and then to the right the overview of the regional breakdown of the cell's growth. So looking to the three divisions, all noted very nice figures and uptakes and then rounded starting with entertainment 29%, 31% for healthcare and enterprise 36%. If we look to the regions, then both EMEA and Americas, even at constant currencies, landed with more than 30% of growth year over year. And with that, we're back at the level of 2019. If we look to APAC, also a double-digit growth, 10% higher sales compared to the year before. Not yet, and this despite, I would say, the lockdowns or the impacts which the lockdowns in China continue to have. APAC is not yet at the level of 19, but that will then be a matter of time or short time. Like always in this call we are sharing our EBITDA bridge from the year before 2022 here. It is a little bit of a school book example, the graph or the visual which I'm able to share with you in the sense how do you get to profitable growth, it's more sales at better margins while containing OPEX. Of course, as you can see to the bigger block, the extra volume has been the main lever of the profitability uptake. 24% growth year over year at constant currencies. Cross-profit margins improved, and this in all of the three divisions. And then we further invested both in roadmap, commercialization, footprint, people, systems that this contained and in that sense keeping this operating leverage well under control. Do mind that in particular in the second semester the inflation and in particular in the US and EMEA did have also a considerable impact. If we look to the EBITDA margins per division, then we have healthcare with 11.2%, enterprise 19%, and entertainment almost 7%. One remark on entertainment reminds that they have the most challenges in the first semester relating to supply constraints, And with that, if you look first half, second half, then they really did a rebound in the second semester. So up for further improvements towards the more group average levels for the next year. Free cash flow landed at 13%, EBITDA margin of course the improved gross operating cash flow you just saw, but this has been in part offset by higher working capital. Higher trade received was all fully linked to the peak sales in the fourth quarter, DSO well under control and also well in balance with the average days at which we pay our suppliers. But then we have the higher inventories and which came out higher than anticipated at a certain moment. It really has to do with the supply change, with the supply challenges which we had, with proactive buying in order to make sure that we can deliver proactive buying in view of also price increases. We do see these higher inventories as a temporary thing and will get more to normalised levels over the course of 2023. With that, our Networking Capital lands at 14% of sales for last year and we are guiding there more towards back 10%. Capital expenditures amounted to 21 million, including besides the normal recurring investments, the further expansion of our China footprint. We renewed here our experience centers and there is also included projectors which are linked to the first cinema as a service contract. Our balance sheet remains a very strong one and also net cash amounts to 264 million. Next to our financial KPIs, we also further work hard on our non-financial KPIs, which then covers planet people and the communities, communities being the customers in the first place. On PLANET, there we have three main KPIs, which is the carbon emissions of our own operations, and which are then the part of revenues, which are with products which have an ECO score A or better, which we then called ECO Labels Revenues. Happy to see actually two kind of milestones which we reached. If we see to 2022, then the carbon emissions were only half of what they were in what we call the baseline level year 2015 when we started to measure those. The main trigger or lever in this is logistics and is it the modal shift as we call it so shipments more via boats and instead of via airs and flights. With respect to our sales we crossed the milestone of 50% so 50% of our top line of our sales is with eco-labeled revenues. You might remember that in 21 we were at 30%, 22 at 50%, and we work hard to get to the 70% for the next years. As our business further grew and nicely picked up, we also did extra hirings and at the end of last year, we are in total with more than 3,200 colleagues altogether, which is a net increase of 5%. We keep the pulse on how they are doing and how engaged they are and to keep them also engaged via pulse surveys and also in order to listen and to work further on this engagement. With respect to the net promoter score of our customers, also listening to our customers through regular service which we are doing, our net promoter score landed at 44 at year end last year which is a little lower than the year before which is again linked to supply constraints which we largely now have been able to resolve but still some work at hand and also relating to post sales services. And with that, actually, I'm happy to give the floor to Charles, who will give you a little bit more color on the divisional results, the outlook, as well as ready for Q&A. Thank you, Anne.

So I will try to take you through the breakdown of the divisions. First, let's look at healthcare. We have record high sales, driven mainly by resuming hospital investments, but also by product renewal and introduction of new products. So if we look at the order intake, it is well above pre-COVID levels. Sales are all-time high for this division. We have, of course, had large modality projects, and we have also seen a resumption of orders in mammography. The EBITDA margin is improving year on year to 11.2%. The mix of products plays a role, also the volume plays a role, so we have had very good results in healthcare. As well in the 2B business units, diagnostic imaging, diagnostic and surgical of course, diagnostic imaging, double digit sales growth in all the regions and actually more and more going to high end products that the healthcare systems now favour. We are also seeing large opportunities to expand the portfolio in adjacencies, so like digital pathology, the remote home reading is now very much in fashion for a number of diagnostic specialists. So we see also there that the growth is solid. Surgical and modality, we have gaining momentum. We have, of course, there the push towards digital solutions in operating room and also the digitalization of all the infrastructure in the operating theaters. Sales are driven by several large projects in America and China. So all in all, solid sales growth, record high. Orders are very in health care because usually we have bulk orders. They are fluctuating. We have a slight decline compared to last year. But there is nothing abnormal at that is when we register large orders that makes a difference. If we look at the enterprise, the second division, there of course big trends is the back to office wave that has benefited, where we have benefited a lot, not only from again using the offices but also the hybrid meetings which has become the norm. Double digit growth in both business units. We have a growing momentum for wireless conferencing and hybrid meetings. The EBITDA margin for their division is 19.1%. It's fueled, of course, by operating leverage on top line and also higher gross profit margin thanks to better product mix. If we then look in details to the two business units, meeting experience, sales have resumed strongly. It has started in EMEA and then followed by the Americas and with a little bit more lag in Asia. Hybrid meetings is becoming the absolute norm and our products are today more and more getting the norm for meeting rooms anyway. We have installed more than 1.1 million meeting rooms, so the NClicShare conference is above 60% of our volume. To have an idea of our penetration level, the estimates are between 100 and 200 million meeting rooms in the world, so we still have a job to do. In large video walls, other division, business unit in this division, we have a top line growth so that we get back to levels that are close to 2019, mainly driven by large utility and government projects in America's Middle East and Asia. Profitability is still lagging and management intends to conduct a strategic review for this business unit. EBITDA at 60 million and orders are compared up to 7% compared to 2021 and with the sales at absolute record high of 317 million. For entertainment, strong rebound as entertainment markets have reopened and supply chain constraints have eased. So we have a growing demand. Cinema clearly is not dead. So they have been, again, big orders placed. We have an order book that is at an all-time high. Sales have been growing throughout the year and with a very strong fourth quarter. The EBITDA margins are still below expectations at 6.9% for the full year. But the second half, they were already at 12.6%. Supply chain constraints have eased. And also, we now expect with the reopening of China to have a much larger impact than before. So if we look at the different business units, the cinema industry is rebounding very clearly in all markets, except China for 2022. We expect this year also China to join. And the demand for laser projectors is driven, of course, by the demand for quality entertainment, quality images and the lower cost of ownership for the cinema companies. In immersive experience, we have an outspoken growth in fixed installs, digital museums, projection mapping, simulation and lots of other verticals in that field. We have also had a strong rebound in events, excluding, of course, China. So, orders are, for the moment, for 2022, we're at 457 million, sales 399 million, for an ABBA of 27.5 million, or 6.9% of sales. So traditionally, after the breakdown of the divisions, we give you an outlook and we then will open for Q&A. So if we look ahead, actually all our markets for the moment are healthy. are even thriving, and we see very solid trends of demand for our products and our technologies. We see that in healthcare, we see that in enterprise, we see that in entertainment. In healthcare, we see an accelerating demand in emerging markets, especially in China, for diagnostic imaging. We see also lots of adjacencies opening up. We see the continuing push for digitalization of operating theaters. So we also see a shift towards more high-end products rather than volume products. Enterprise has been the star of the show. Hybrid video-enabled collaboration is today the norm. We have growing momentum for a click share, bring your own meeting proposition, bring your own device is the norm more and more in all the meetings. In LVX, we still see continued investments in control and management. Entertainment, cinema is coming, kicking back, so Anne is very hungry for better image and of course more content and better rendering of this content. Immersive experience is a segment that is strongly growing and is even now bigger than cinema. The outlook, well, we want to reconfirm a long term profitable growth. We, of course, have to make a few assumptions when we give an outlook. So we assume that macroeconomic conditions will be relatively stable. And we consider that a sales growth between 10% and 15% for 2023 versus last year is achievable. The EBITDA margin is expected to further improve and land above 14% for the full year 2022, reflecting operating leverage and higher sales, as well as improved gross margin because we have easing of constraints on the supply chain, lower cost of brokering, lower cost of transport, etc., With this outlook, we think we are able to confirm an increase in the dividend of 10%, so to 0.44 euros per share. So that's a 10% increase over the year ago. And you can see over the graph that the board has consistently increased the share over the last few years, except one time during COVID. So this is basically the outlook and the last results. So we now open it up to questions.

Thank you, Charles, and thank you, Om. We're indeed ready to open the Q&A round, and if you have a question, you can raise your hand virtually in the system. There is a button on the bottom, and you will be put in a queue, and I will then ask the operator to put you in the spotlight here, and then you will be able to ask your question. I would also like to repeat a house rule. Please ask a maximum of two questions at a time. If you have more questions, you can queue again. So we can have the first question in the spotlight. We have Mark with us. Mark, you're on mute still, I believe. Yes, there you are. Good morning, Mark. Your questions, please.

I do not hear you yet, Mark. Good morning.

Mark? No, we don't hear you yet.

Mark, can you try again?

Hello, Mark? Mark, can you speak?

Can you hear me now?

Yes, we can. Shoot. Yes, Mark? Yves, your question? Mark, can you try again? I think Mark is not hearing it. I suggest we move to another question and we'll come back to Mark in a minute. Maybe we can interact with Mark over the chat.

Mark?

Yes, Mark. Go ahead.

Yeah, so apologies. I'm not sure what was wrong. Thanks. Actually, a few questions. Maybe to start with the order strength in cinema, especially also in the fourth quarter. Obviously, we've seen the stories about cinema change being sometimes at difficulties at the attendance level, not at the level before. Still, you see that very strong intake. So, what are you seeing behind it? Is it actually the fact of high energy prices or maybe the fact that they need to see if cost is actually helping you a bit? What's really behind that strength of the order intake?

So Mark, very good question. Yes, energy and let's say lower cost because you are much more automated than less operators play a role, but I think the demand of the movie-going public more and more is to higher quality images and we see that distinctly the demand for 4K and more is driving the demand. So it's more actually improving the quality of the movie going experience even more than actually the cost savings.

And to brag a little bit, we have also been doing better than a competition. So we are also gaining some market share in there. That is also correct.

Absolutely. And how long is that feasibility for you? How long ahead can you sort of predict these trends?

The trend, we indicated quite a few years ago that there would be a renewal wave because of technology change. We stay with that prediction. But of course, we actually do not want to have too long delivery times. This means that we try to have basically a sales-to-order ratio of about one.

okay do you have a second question yeah so the second question that i have is is actually on uh on click share maybe a bit of similar on the visibility there it uh i think so far you've proven that it is a sort of coming out of covet's uh uh device um Is it, you're maybe not fully yet on the 2019 level, there's still some upsides to go, what do you, how far can you look ahead? Also there, looking at maybe some companies scrutinizing their CapEx budgets.

Well, I think, Mark, we see a very strong uptake and continued uptake for the click share solution. I briefly hinted in my presentation that we are only yet scratching the surface of the market. So we expect actually the product success to continue and to continue for quite some time.

to complement and a little bit towards your questioning is there a little bit proactive buying from their end, we are closely following up on the inventory which is in the channel and that's still well under control around two months so it's not that there has been a proactive buying from their side we follow up, sell out data every month and this is also confirmed the gradual uptake and the success which we have with ClickShare

Okay. Thank you, Mark, for your questions. We can bring up the next one. Yeah, there is one from the chat.

Yes, there is a question from Hugh Sips. He's asking for click share the year-over-year ASP evolutions.

The ASP evolution actually, as was indicated on the slides, what we of course have seen is that there is more and more sales in ClickShare Conference, which comes at about 33% higher. ASP compared to what we then call the click share present. So it's more that gradual shift then that is also impacting positively the top line and the average ASP of the click share range. the ASP within Qlikshare Present as such has remained kind of stable, as well as Qlikshare Conference, so within the different product offerings, the ASP has not largely evolved, but is primarily the mix of both. Does he have a second question?

Okay, the operator can bring it. Chris, we have you on the spotlight.

Yes, good morning. Can you hear me?

Yes, we can.

Perfect. First question would be on the outlook. Of course, very nice to see 10% to 15% top line growth, given the all cylinders that you're firing on. That's quite good. My question would be on the margin side, given that you've reached already almost actually 14% in H2. given that logically entertainment was quite weak in H1 last year with a negative margin. You've got your healthcare impact on your factory, of course, which is hurting margins in the short term. But if you look at all the rest, your costs are under control. So I'm just wondering, To what extent is there a lot of prudence in the outlook of above 14% or is it something which we would see evolving across the year gradually when momentum would kick in and China indeed is confirmed as from the second quarter? That's my first question. Thank you.

Thank you for the question and also thank you that you already gave the answer actually. Again. So it is like you were saying that gradually moving over the years indeed opportunities to improve primarily with the unlocking of China also and in general as we got through the second semester also entertainment back towards shapes which we like to see. But over the years and how far above the 14, then over the years we will see and work on and not see it work on.

It's also, Chris, because we are slightly prudent because we have a number of new product introductions and also investments in factories that are coming online, which will bring an increase in cost. So that is the reason of a slight prudence, as you remarked.

Okay, thank you. And then just a second question perhaps regarding the strategic exercise you're doing on large video walls. Could you give some more flavor to that, to what might this lead and what could be some impact on that? Thank you.

That is a little bit early to give more details. We have decided to start the exercise, and we will keep you posted on what the outcome is. It is clear that our ambition is profitable growth, so we need to basically look at what can be done to achieve that target.

Okay, thank you.

Thank you, Chris. We can have the next person in the spotlight. We have Sébastien. Sébastien, good morning.

Hi, good morning. Good morning, everyone. Congratulations for the result. Three quick questions. Can you update on the competitive landscape for ClickShare, both in Europe and the US? Because it seems to me that you're doing well due to market and market share win, but also some of the competitors might be under trouble. So happy to know a little bit better on this. Second is given the Chinese reopening, how you see the opportunity, further acceleration for immersive, any new start of cycle for renewal of the cinema business. So it would be great if you can update. And last one, M&A. I think some of the valuations are maybe still expensive, but less expensive than they used to be. How is basically the work on the M&A and the probability that we see something or not by 2023? Thanks a lot.

ClickShare. So the competitive landscape for ClickShare is evolving in a very favorable way for Barco because the the complexity of the click share namely click share conference has to work together with teams zoom go to meeting cisco whatever but also so the firmware that is on your pc but also with the firmware of the camera, together with the firmware of the soundbar. Most of these systems upgrade constantly, so we need also to constantly upgrade our firmware of ClickShare. And we are able to do that in a very successful way. This requires actually to have a large market share to be able to do that because to give an idea, last year teams had more than one upgrade per day. And we see basically that this leads to a big success for ClickShare and a rising market share for ClickShare.

I'll take the one on cinema in China and reopening up. Yes, I'm confirming that we do see cinema also in China reopening up. Like we have seen in the other regions, when then COVID is being unlocked, you can then say, it does take one or two quarters then to really see that also being translated into our figures. So in that sense, very positive on the evolution in China, convinced that they will rebound back. And we've seen before that they can do that quite quickly. But do mind, they need a couple of quarters to get their own operational cash flows also back into shape.

I think it is clear that we constantly monitor the field but at the same time we are very conscious that We need to create value, and so I think management is convinced to do something, and the board is also convinced that value creation is paramount.

Okay.

Thank you, Sébastien.

Thank you, Sébastien. The next question in the room. Yeah, we have one more from the chat.

Matthias Manhout is requesting to elaborate on the strategic review of large video worlds. And he mentions that at the Capital Markets Day, you were strategically still fully committed. What has triggered this change? How should we interpret? Are there changing market dynamics at the basis?

actually we always and what we are reconfirming is that they should get to profitable EBITDA margins which then go up to 5-10% actually and that's yeah there is certainly some patience to it type of but not endlessly if I can say it like that So that has not changed. The market conditions as such has not changed that dramatically or changed actually to the negative versus the capital markets day in there. It is being confirmed that more and more the focus goes and it's a slower moving market towards software. So in that sense we do want to give it a further push type of do not solely think that we might grow ourselves out of the problem and so the strategic review is really being focused on profitable products and profitable markets and with that actually that's the flavor or the more because we answered already to the question as you insist Mathias which is fine that's the more elaboration that we can give at the moment at the moment is there a second question Mathias?

no, then we can move to the next person in the row we have Bjorn Wolf

Hi, good morning. Can you hear me?

Yes, good morning.

Perfect, good morning. Thanks for taking the question. So my first question would be on the margin improvement on the healthcare division. You mentioned you had a good product mixture, you have operating leverage. So I was just wondering, what is the margin you feel confident for when this is growing and when you see the operating leverage really evolving? So what kind of margin do you feel confident for?

We don't guide specific EBITDA margins per division. We do that on a group level. But as indicated in your question already and highlighted before by Charles, we are there indeed in an investment mode. So yes, we have profitable growth or growth on the top line. Also better make some gross margins. But we do invest in footprint. We do invest in roadmap. So in that sense, and that is then a conscious choice for the mid to longer term actually profitability beyond capturing short term pickups. But they were at an 11% for last year, which was a very nice increase compared to the year before. It's not the purpose that they go down or anything.

Okay. Thank you. Next question would be then on entertainment and especially like on the projectors and the competitive landscape there. I mean, in the past we had like three players there, Sonny, Christy and you, and now this whole industry more becoming like a dual pool. And I was just wondering where, what's the end game of this market and how do you see your position and also your competitor that is left in there?

Well, I think the competitive landscape is a moving landscape, like always. But, of course, there are large economies of scale that favour us quite considerably. Our technology on lasers and on image processing and image activation, like we showed at the Capital Markets Day, is far advanced compared to, let's say, the general market. So we think we have a very strong competitive position. We want to further promote this competitive position throughout the industry.

to complement on entertainment, because we were zooming in on cinema. But then entertainment really has two strong legs now, being also the image processing, which is the fixed installs for museum theme parks, which are also for events. So actually on both actually we are well growing. It's a market immersive experience which is going fast actually. Immersive experience is everywhere as I say but it really is. It's all about the visualization. This and different parts of the world actually. And also there with the focus which we put on it since a couple of years now. Also in commercialization really has yielded and is further yielding. on top line figures, but also on market shares.

Okay, thank you.

Next person, we have Emmanuel.

Yes, hi. Good morning all. Good morning. No, I have two questions. So the first one is on enterprise. So your outlook looks more upbeat versus logistic. I would like to understand a little bit better why that is, in your opinion.

So I think Logitech, the outlook that Logitech gave was slightly misunderstood by the market. It was mainly the segment enterprise covers a lot of home cameras. And this market is diminishing when people go back to the office. Also, they have a much larger market share or a very, very high market share that is under more significant competition threat. The position is radically different and so yes, we are more upbeat than Logitech.

Do you have a lot of visibility on that? Because I think you mentioned previously that you only have something like Two months of earnings feasibility, I think, or maybe three?

No, no. We mentioned that there is only... I mean, we use a sales system that is through distributors. So what Anne mentioned is that sales results are not at all that we stuff the distribution. At the moment, we monitor that very carefully. the distribution has less than two months of stock or let's say of product ready to be shipped. And this is historically...

It is correct that the book and turn, or that ClickShare is primarily a book and turn business. So in that sense, it's not that we have such a large order book already open for the next month. We do have on a quarterly basis, so the visibility is the clearest for the next three months, because we do get from our channels the next quarter forecasts. So that's actually where we gain the best visibility from.

Okay. Yes, definitely. No, that's clear. Thank you. And then the second question I have is on working capital. So what is actually the reason that working capital was still pretty high despite the improved supply chains? Is this just a timing effect of a few quarters?

You are such a great guys. You always give the answers and the questions. Thank you. Indeed, it's double. As of course, we have such an uptake in our top line. The outstanding receivables also increase. which is then good news for the cash flow of the quarters, the next quarter then. So in that sense, there were higher receivables as with a top line increase of 32%, then you have some impact on that top line. But DSOs are at 54 days actually, so even lower a couple of days than the year before, so well under control. Inventories were really higher because we took in more than we normally do to secure and to work on the lowering of those lead times towards our customers. So indeed confirm that this and also taking sometimes into account price increases that were announced and to be done early on there. So it is a temporary thing, correct. This being said, it quite had an impact on the year end last year. But where we indicated 14% working capital on sales last year, we want to get that back to 10% and lower for 2023.

Okay, thank you. Can I ask one final quick one on the guidance? Do. Yeah. Yeah, so on the guidance, so the 10% to 15% sales guidance, could you give me the kind of split you expect between volumes and price? And I assume that this is based on constant ethics.

It is based on constant VIX with respect to it is a combination of price and volume. The exact figures we do not share, but it is a combination. It is a combination.

Okay, thank you.

Thank you, Emmanuel. The next question came in the room. We have Trion. Good morning, Trion.

Morning, William and Charles. Thanks for taking my question. I think my second question might have just been answered, but the first question was just following up on the M&A point. And obviously you didn't announce anything, but you did mention in the press release that one of the reasons the net cash fell was because of some minority investments. And I just wondered if you could sort of give a bit more detail on what they were, how big were they, And might we see more of those rather than acquisitions in the future?

But there are actually smaller stakes and also below public or transparency thresholds. So in that sense, we do not disclose the names. Yeah, one where we have taken a larger share into is Synionic, where we increased our stake towards 80%, so that's one which we can disclose. Whether there will be more, it's not a strategy to take a lot of smaller shares into investment, so that's not the case.

So what's the reason for taking those states? What's the benefit to Barco?

It's normally linked actually to some other strategic talks which we have or reviews which we are doing relating to the companies, but more I cannot tell on that.

I think we can disclose that we do sometimes do investments in strategic technology developments.

Okay, thank you. Yeah, then the last question was just on price. I didn't get the question before, so I was in a queue. I suspect Emmanuel asked it. But just that you mentioned that sales volume was the main lever of profitability improvements in the bridge. So I was wondering how much was price there and should we expect more price in 2023?

Price last year will have been about 5% to 7%. and whether to expect over the course of this year more, not expecting to have price decreases, so the price increases, to what extent, that's a little early to say.

I guess your order book is still at some old prices, so is there some natural price that should come through from the order book?

Yes, correct.

Okay, thank you.

Thank you. Thank you. Thank you, Priyanka. One more from a chat.

Indeed. A question from Pieter Der Daalen. CAPEX was partially driven by the first cinema as a service contracts. How do you expect this to impact CAPEX going forward as this type of contracts become more important?

It was a lower amount still last year, expecting to grow. But it's not that at this moment... If we guide and when we give the guidance at the capital market day actually for the CAPEX for the next three years at 150 million actually, then we do take into account in this about five, is it then five to ten impacts so far, not larger than that stake. Because it's a little too early to tell how many customers might move over to the CAPEX model. I remind that for most of our projector sales, this comes with an attachment of an extended maintenance contract, service revenues within cinema amount to 18% of the top line. So in that sense, it's not that we force our customers to go into that model. It is a choice.

Is there another one from the chat? Thank you, Peter. The operator can bring the next person on the screen. We have Mark again.

Yes, thanks. Thanks for the second round. First, an explanation on the inventory. You also mentioned that partly it's also because of you buying in inventory ahead of inflation, so taking benefit of the fact that those inventory prices will go up in the future. How significant is that? What kind of amount of inventory did you buy in ahead of price increases from your suppliers?

It could have been inflation or price increases which are already in the past as well. So it's a combination. We don't really have it split up. The larger amount is really to have the supply.

Yes, mainly recovered supply to be sure that we could ship product to our customers. That has been the prime concern is customers. There might be some strategic purchasing, but I don't think they are material in the numbers.

Okay, clear. And then on healthcare, I think the margin in second half, you mentioned in the release also that you started up the new factory. That also pushed down the profitability a bit. Is that something that is just like one half year and then you will start covering that factory and then quite quickly you can improve that margin or is it something that the investment will continue for a few semesters and it takes a bit longer before you recover that profitability?

So the factory is now operational. So that's the factory in China. We will also build a new factory in Italy for healthcare, so to have an A and a B site. We expect, let's say, productivity gains to come through now from the China factory this year, but we will still have costs of the startup of the second factory coming through. All in all, I think the influence on the numbers for 2023 will be light to moderate.

Okay, clear. Thank you.

Question from Philippe Van Est. The book to build an enterprise is moving below 1 in Q3 and Q4. Do you expect this trend to continue? Has the click share order intake passed a post-pandemic peak?

The first, thank you for the question, and I'm thinking out. Anyhow, the one, I would say, book to build to one is more of a long-term average, which is the best one, actually. Otherwise, you have customers that have way too long type of... So that's for sure. Did enterprise orders now really are at the peak? At the point? Click share. Click share, yeah. At the peak, at sales level, they were not yet at the peak compared to 2019. So there's room for still improvement. And anyhow, that's also what we are looking towards. I will say it positively, there is so much growth in the market, we have reconfirmed confidence really on the strongness of our proposition there, seeing this in the markets, saw that really also at ESA in Barcelona actually, so plenty of opportunity ahead and you will see this reflected in both orders and sales.

Thank you for those questions. We have more people in the queue, maybe one final. No more questions, so that's a perfect end at 10 sharp. I would like to thank everyone for your interest today in Barco and in our 2022 results. And I would also like to put your attention on our annual report, integrated annual report, which is also published today and will be available on our website. So many thanks to all and have a nice day. Thank you very much.