Barco Nv

Good morning, ladies and gentlemen. Welcome to the earnings call for Barcodes Full Year Results 2024. My name is Willem Franszoo and I'm the Head of Investor Relations and today we are publishing our results under the heading Strong Cash Generation in a Challenging Year. The results will be presented by our CEO Ann Segen and the CFO Anne Sender. This will take about 15 to 20 minutes and after the presentation we will open for questions and I will now give the word to Anstegen who will kick off the presentation.

Thank you Willem and good morning everybody. So let me start with the summary of the group's results for 24. So after a very difficult start of the year we saw the situation actually improve throughout the second half where we ended up almost flat compared to the year before. We saw quite some divisional and regional differences, where we saw very strong performance in the Americas and weaker and softer market conditions in EMEA and APAC. We started the year with a very strong order book, around $564 million. That was definitely with a significant growth in the entertainment business. Also a very healthy book-to-bill, larger than one. And we also stepped up our revenue from eco-labeled products to 68% from the total revenue. For EBDA margin, for EBDA we landed at 121 million, which is 12.8% from sales, with a significant step up in the second half. So gross profit percentage was of course supported by the introduction of new products, also more software in the mix, but it was also offset with a weak sales in our meeting experience click share. Now, in the second half, we also basically controlled OPEX, but in a way that we did not jeopardize, of course, our investments and our developments. And we ended up with an EBITDA margin of 16.7% for the second half. Net income came in at 63 million, and we generated a strong free cash flow at 110 million. That was driven by improved working capital. Our CAPA expenditure was mainly going to 43 million and was mainly going in cinema as a service and our focused factories investments. And for net cash, we ended at a position of about 260 million euro. When we look at the differences in the divisions and also in the regions, then we can say that our healthcare division was the most stable and resilient throughout the year. where we saw year-over-year minus 4% sales. That was fueled by the Americas and new product introductions. In enterprise, we saw minus 16% year-over-year, mainly driven by the weak sales in click share, stable sales in control rooms, and entertainment minus 9%, slow start of the year for cinema, but that definitely covers in the second half with a stronger movie state. and overall weaker market conditions, especially in India for immersive experience. So when you look at the regions, we did grow in the Americas across all the regions, 6% over the year. And also here, the new product introductions did help, and also the large deals that we closed in cinema in the second half of the year. In India we saw the strongest drop, minus 27%, overall actually difficult market conditions in many of our business units, but especially in Glickshare and Immersive Experience. And in APAC a modest reduction of minus 8%. We did see a modest improvement in China. But that was then offsetted with other regions in APAC. Also to note here that we stopped actually our controlling business as part of our transformation last year in certain countries in APAC. And that was reflected in the numbers in APAC also for 24. And now I hand it over to Ron for more details on the numbers.

Thank you, and good morning to all of you, also from my end. Looking into a little bit more of the figures, representing the first half, second half, combined in these wonderful years. The first half, indeed, soft and particular with respect to the lower sales, which we picked up in the second semester, as we got to the absorption, so to speak, effect of inventories at our customers, and as, for instance, the investment climate in cinema did pick up again, as of the second quarter actually already, but further into landing orders and sales into the second half. Second semester, we laid down 512 million of sales, which is minus 3% compared to the year before, and combined on a full year, that gets to 947 million of sales, minus 10% year over year. Gross profits came down to 40.7%, one percentage point lower than last year, which is primarily the impact of lower click share sales in the end, as well as within entertainment, lower performance of immersive experience. There has been some delay on new products which will be launched this year and which come with a better margin as relating to image processing products. We did contain our OPEX well over both semesters and that landed our OPEX at minus five percent, so it would contain half of the decline surface peak offset in our top items. And then landing at an EBITDA of 12.8%. In there, there is a BUDY included into the order operating income of 10 million, which has an impact, which is relating to a sale and misback. of building in the US, which we concluded the building which we are not fully utilizing and in that sense looking for more flexibility going forward. So that has an impact on the full year results of 10 million in EBITDA, excluding this one, we get to a full year EBITDA of 11.8%. Same figures that I'm in our usual presentation of the bridge EBITDA full years. So in that sense, yeah, the more down, of course, is relating to lower sales and then one percentage points lower gross profit margin. offset and in part with OPEX containment, so minus 5.4% lower OPEX offsetting indeed integration. R&D we maintained and this really because to really go full force on our product roadmap and product introductions of which we had many in the year and also still more than few to come in this year, so that's nice. Sales and marketing included the positive impact from the Synionic company, so our cinema sales company, which we integrated and which we have again 100% of share into that. And then also the positive impact of the control rooms strategy, which we revisited and the size of measures which we took on cost actually, which were helpful. And then there is a goody part, so to speak, on other income included in there the two bigger items or the higher results into our China joint venture, which is a recurring thing. And then a non-recurring is the gain 10 million relating to the sale and back of our U.S., of a U.S. facility. So with that, we are landing at 12.8% EBITDA in March.

Going further down into the P&L, up to our net income, starting from EBITDA, which we explained.

Depreciations are higher than last year, as expected, and has to do with the high depreciations on our cinema-as-a-service income. Business restructuring came down, which is all including layoff costs, is 11 million, so actually in line with the year before. Then interest and taxes, interest or higher taxes or lower effective tax rate is the same, 18% as in previous years. Then landing at an income of 63 million or 0.7%.

earnings per share. Moving over to the free cash flow.

So, a strong free cash flow, which we're able to generate with continued focus and work done on our working capital, we could also get the positive impact in our results of that one. So free cash flow ending at 110 million, up 72 million versus the year before. Our net operating cash flow landed at 161 million, including 16 million coming from lowered working capital. Our networking capital is now ending at 11.8% of sales, which is an improvement of 4.8 percentage points versus the year before. The average day sales of spending, 63 in line with year before. Improvement on average payables, 61. Further opportunity there to get the equation that DSO is lower than before, so that's on further work at hand for this year. We worked on customer advances as well into that, and could have a considerable higher amount of that on as well, helping on a networking capital. And we've been able to build down our inventories to 25 million. If we look to our inventory turns, then they are still only at 2.1, which is stable year over year. So further opportunities ahead there to do better and continue better also in this area. We furthered with steady capital expenditures and investments to the tune of 43 million rounded here, which is according to our strategy, continuing investments and manufacturing in our factories, into automation of our factories, as well as into cinema as a service included for 15 million in year 43. Then the net proceeds of the sale and lease back impact on the free cash flow has an impact, a positive impact in the recurring of 12 million. And so with that landing at the net cash of around the 260 million, up 18 million year over year, that adds to the dividends of 43 million, 25 share buyback, and then 20 million relating to the buyouts of our minority shareholders in Sinyame. When we look to the non-financial KPIs, I'm actually glad to see that we made progress, a nice progress actually, on the different ones. Many more to read KPIs into our integrated report, which we also published today. We're taking out here three. So, sales from eco-labeled products stepped up to 68%. So, when we look also to the introduction of new products, then we are already at 86 of new products or eco-labelled. So, further stepping up towards our yearly step up towards our target, which we have to get to 80% in 2027, we are on the path to get there. Employee engagement score improved with one percentage points to 73. So that's also nice work done across actually different regions and divisions to keep it up at that level. further working on continuous improvement also there to get to 75 within 2020. In total, we are with 3,135 FTE at year end, which is down versus the year before. You saw the restructuring costs and the P&L. Here are a couple of main actions, which are SEMS, which is the closing of the factory in China, in Changping, as we then open the automated factory in Wuxi. Control rooms, announcement of integration, or two bigger items. very happy with the customer net promoter scores which had an uptake of six points last year and landed at 54. so also when we look into our more deep dive the after sales service exposure which we get there on our product quality and and reliability of our products yeah which we stand for of course um yeah very nice course in the And with that, I give the word to Anne to give some colors on the... Yes, and I will check whether you're still...

Okay, so let me give some more color on the different divisions, starting with healthcare. As I mentioned already, very resilient for bus business in 2024. Definitely driven by good performance in the Americas and also new product introductions. So that resulted in an order uptake of 6.5% over last year, sales minus 4%. Also, thanks to the product mix, more software, more new products, we saw a step up in gross profit that also reflected in the EBDA with an increase of 2.8 percentage points on EBDA margin. When we look at diagnostic imaging, full-year growth, definitely a pick-up in the second half with the new products that we introduced. Very strong growth and demand in the Americas with double-digit sales growth there. A little bit softer conditions also here in EMEA and APAC. It's slower than the procedures, longer sales cycles, and also, of course, softer macroeconomic conditions in EMEA and APAC. Now, we had very successful launches of two new products in diagnostic imaging. One was this 8MP home reading, that's a full portfolio now, but also our flagship mammography medical screen, it's 32 megapixel, it's called OneLook, had a very, very successful launch in the second half of the year. Now, we see towards the future that besides, of course, the new disruptive products and hardware that we introduce in the markets, that more and more of our differentiation will come actually from new software features, more AI use cases, and of course also stepping up our performance in other verticals like digital pathology. Now, when we look at surgical and modality, there we saw a growth returning in the fourth quarter. It took our customers throughout the first half to basically bring down their inventories. We are glad to see that we are at normal levels now, and that also basically caused that we saw an uptick of orders in the fourth quarter and the second half in the fourth quarter, especially actually in the Americas and especially also on our Nexus network portfolio for operating rooms. Now, that is, of course, also good for the portfolio because that is a high-margin product and that is good to have in the product mix. That was offset with more competition, more cost-driven competition in our modality displays, which we, of course, address by our global footprint and, of course, local production, local sourcing in China. That's our way to address, actually, the competitiveness, our competitive position in modality. When we go to enterprise, again, we saw 17% decline in orders, 16% in sales, mainly driven by weak click share performance, stable business in control rooms. We also turned our control room business into a profitable business with a very healthy EBDA margin, and that resulted for the division in a drop in EBDA of 6%. Now, when we look at meeting experience, we started 24 with high inventory in the channel. It took us longer than foreseen to build up that excess of inventory. It actually rippled through almost the whole year, but especially in the first three quarters of the year. And on top of that, we see in EMEA also competition, competition not only from Chinese competitors, but also from the proprietary loom systems. Now that said, we could maintain our market share in the agnostic space with our Glickshare solution being agnostic, being flexible, very secure, and of course have an augmented user experience. And that was then reflected in growth actually for our Glickshare business in the second half in the Americas. Now, for this year, we are developing our next platform on the ClickShare family portfolio. That is an Android-based platform. It's a completely new architecture based on this M-Lab platform. This is in very strong collaboration with Microsoft. And this allows us, next to our BYOM ClickShare agnostic system, also to bring a room system on the market. And overall, this will increase actually our reach in the video conferencing market. And we plan to launch this product in the second half of this year. When we look at control rooms, then we basically saw growth in the Americas. A little bit slowdown in EMEA and BPAC, longer sales cycles there. Of course, our control software platform, the one that we launched already the year before, is definitely basically getting lost. in the market is very secure, very scalable, very flexible, and those are actually the benefits that our customers start seeing in all our markets in control rooms. Today, that contributed for 30% of the total sales came from our new platform, and we're stepping that up to 40% in 25. Besides our software platform, we also have a very up-to-date hardware portfolio with our LED, LCD and RPC technologies. And those are also part of the mix in 24. When we go to entertainment, so slow start of the year for cinema, overall software market conditions for immersive experience resulted in 6% decline in orders, about 9% decline in sales, and EBDA was a slight improvement, 0.4 percentage points there. So cinema, slow start of the year, again, a limited movie slate, still a consequence of the strikes that we saw a year before. That movie slate improved drastically towards the second half, and that also basically made it so that our business rebounded in the second half of the year, with large deals, especially in the Americas. We also had a launch of our HDR light steering projector for premium cinema theaters. So we basically launched a pilot program in the US and in the UK last year, which was also very successfully accepted by actually our exhibitors, our customers, but also by the audience. And of course, this year is the year where we also start ramping this product in production and into the markets. For Immersive Experience, overall weaker market conditions there. Also, customers awaiting new product releases. That's that we launched three very important new products in Immersive Experience in 2024. I600 more towards the beginning of the year. That is our mid-segment projector. And then towards the second half of the year, we had QDX, our high-end projector, and F400 as our simulation projector. There is one product in image processing, the Encore 3, that was delayed towards this first half, where we actually see, overall we see actually an immersive experience, a good order book, including those new products. So when we look then at the outlook for 25, we do believe that we start the year in a better position than we start 24. The reason for that is that our customers basically did build down their inventory levels and then back to normal levels. We also can benefit from a full year effect of our new product introductions. We are seeing more and more software in our product mix, which helps us also for our margins. And of course, we opened our Hushi factory last year on time within budget. And also there, we basically invest in automation. And that will also reflect in our gross profit margins to 25%. Now, with these things, and assuming that the geopolitical and macroeconomic conditions do not strongly deteriorate, we expect top-line growth for the full year, with an increase in the EBDA margin. Also, our Board of Directors will propose to the General Assembly to distribute a gross dividend of €0.51. for €51 per share, which is up €3 versus last year's dividends. And we want to say that we are and remain committed to exploring acquisition opportunities to strategically strengthen the group, as well to optimize our capital allocation and delivering long-term value to our shareholders. But backed by robust free cash flow generation and a strong balance sheet, the Board of Directors has decided to initiate a share buyback program and we're planning to purchase Barco shares for an amount up to 60 million over the next 12 months. The Board of Directors will carefully assess and determine the optimal use of the repurchased shares at a later stage.

And now I hand it back to Will. Thank you.

We will now open up for questions. If you have a question, you can raise your virtual hand. I see some of you have already done that. Alternatively, you can also post a question in the chat, but just raising the hand is preferred. If you have a lot of questions, more than two, please, we will take two at a time, and then you can queue again for more questions. So, I'm going to start with the first one, and that is Matthias. You can now unmute yourself, and then you can ask your question. Good morning.

Good morning. Thanks. Hope you can hear me. Yes, we can. That's a good start. So thank you for allowing me to ask these questions. Maybe two from my end to start with. Your guide for sales growth and improvement in margins. Could you maybe elaborate a little bit on how you see that from a divisional perspective? More specifically, enterprise, what should we expect there? And then the second question I have was on the capital allocation. So you announced a 16 million euro share buyback. I would say, why 60 million? And I note the comment of the board of directors that will decide at a later stage. Can you maybe elaborate? Are there presently any ongoing M&A discussions still ongoing? And is it actually the goal to effectively destroy the shares? My first two questions. Thank you.

So I'll start and you can come through. So on growth actually, so indeed, going in actually with a more broader statement or outlook you could say on growth here over the years and without so to speak precise figures. So we'll see as we get smarter and into the years actually on how we can find windows actually. Post to the positive, there were some headwinds, which we had last year with respect to higher inventories of customers, with the situation around the movie state and cinema, which we don't have anymore. Then we have quite a lot of new product introductions over the course of last year launched, which are into effect as of the start of this year. So these are the main dynamics actually to the positive, to back actually our sales growth. Now, we see that actually, without giving precise, I would say, guidance so far on the divisional outlooks in that respect, so talking on a group level actually, but this is what I just named, yeah, cover the three divisions. so to speak. So that's a more, I would then say, general answer. As to whether actually, yeah, Trump 2.0, or who you can call it, might then have an impact on some hesitance on oil investments, etc. That's a little too early to tell. You're very conscious there, and closely monitoring as to what you can do. With our focus factories, yeah, we do have the ability to deliver out of Europe or out of China. Of course, we don't know what in the end it will be, so preparing that one. So in that sense, that's why we indicated on the, do not further deteriorate or end to our outlook statement. So that's a little bit in general where we go for. I have sympathy that you would like to have it more precise, I would say, but we also learned that it's better to first have proof points and then fine-tune as we go.

For capital allocation, so again, we generate a very strong free cash flow position. So that's why the supervisory board and the board of directors actually also decided to increase the dividends and also basically start a share-buy-back program. So, that is definitely, share price is low at this moment, so it's a good moment to invest. So, in that sense. Now, what are the other ways that we will allocate our capital? Of course, there is our regular business, our cinema as a service, our capital investments in manufacturing sites. Besides that, we continue to look at M&A. The two particular targets that we had last year did not work out. But that does not mean that we continue to screen the landscape and see where there are good fits for Barco that will strengthen actually the group. And I think at this moment, the board of directors wanted to keep the option open, how to allocate actually the capital that comes through the share buyback.

As to the amount, so yeah, it's calculated as with the dividends, which will be an effect of about 45 million. And then on top, the 16 million that that combines is about 110 on the cash.

Okay. Thank you very much.

Next question is for Chris Kippers from the Grove Petercam. You can unmute yourself before asking a question.

Indeed. Thank you, Willem. Can you hear me? Yes, we can. Perfect, thank you. Good morning. Good morning. Two questions also from my side. First one, very strong, I think, cost control. If you look at all lines, R&D, sales and marketing, admin, so with sales stable, the absolute numbers were even down. Given that we still see some, certainly, of course, here in Belgium, but also in some other countries, some inflationary impact, when your sales go up, to what extent should we see an inflationary impact, or are these levels lower? just manageable going forward or any still some things you can improve right there. Second question, free cash flow, quite strong in 24, of course, but this was partially driven by, you could say, some one-offs to a certain extent. So the build-down of inventories, 25 million, you've had the sale of the buildings. Also, CapEx seemed to have dropped somewhat. So going forward, what should we anticipate here, or what is the recurring level of free cash flow given the guidance you've given us? Thank you.

So, yeah, so on cost control, this is something that we always do diligently. And we also need to basically compensate for inflation, which means that top line growth. We aim, of course, the mission is to grow. If not, cost control is definitely one of the measures that we take. We do that in a very focused way so that we don't jeopardize actually our future revenue generators and that we basically look in where else we can optimize our costs. So this is actually practice, good practice that we have throughout the years. And we will apply that also for 2025. But again, the main goal here is, of course, to go for four-year growth.

But indeed, as to your models, if I can say so, for 2025, we are also looking at how we can offset the impact of inflation with efficiencies. As to the free cash flow, So a couple of things. So indeed working capital nicely worked down, including, so in total it's 16 million, including 25 million on inventories. There were further opportunities in there. Of course, not to the tune directly to expect nominal as the down which we did last year, so to speak, but getting now at 11.8% of our working capital as percentage of sales. We do want to have some further improvements on that one and working on those in 2025. and the main thing around this is actually further improving our inventory.

Yes, and there we constantly focus on it, but also we still had quite some stock from post-COVID, like end-of-life components that we had basically pull in, but gradually as we go, of course, we start consuming those. So this is definitely also something that will happen.

So further improvement there. The 12 million upside on the sale and its back-end, it is now recurring. With respect to the capital expenditures included for 43 million towards this year 25 actually, we keep it at that level. So that's the assumption to include in there. In that sense, that cinema as a service does continue. We further invest into automation, into factories, actually factory revamp included as well here in Korsvik. So in that sense, that's to take into account. With respect to the other items, it's more stable, like effective tax rate and those things. So in that sense, for a healthy free cash flow again this year, some areas where we certainly can further improve, starting, of course, with a better operational result or EBITDA, some further improvements on working capital, and with that, keeping it stable. Likewise, as you mentioned, Chris, some extras have been realized in 2020.

Thank you. And just coming back on the working capital percentage of sales, given your mix and product mix and also the fact that you're distributing differently, sometimes direct-to-consumer now with the bar, for example, or things like that, to what extent does this hinder your further decline? Or would you say that 10% to 11% of sales is an achievable number in a normal recurring way of working? Thank you.

towards 11%, we want to move. That's actually the concrete target they spelled out. There are indeed a couple of things, which is product portfolio, also more things coming from longer underway on the sea, so to speak, that has also an impact in the air. New product launches and the startup of those also has some impact. But anyhow, these are things to be managed. So in that sense, yeah, further improvement, but not to the tune of what we did nominal-wise in 2024.

Okay, thank you.

Thank you, Chris, for those questions. Next in line is Stefano Tofano from Ebian Amro. Stefano, you can unmute yourself.

Yes, good morning.

I hope you can hear me. We do.

Good morning. Good morning.

Good morning. I have seven questions, but I will just ask a few. Just for my understanding, so the full year adjusted the down margin 12.8%. It included one percentage point impact of the CERN Eastpac facility. The guidance is that over this 12.8%, so including this impact, so that's the first question. The answer is yes. Okay, thank you. The second question is, again, on the gross margin improvement. So, I mean, obviously, I imagine there is continuous gains to be achieved for the gross margins as you continue to utilize your footprints. and also utilization rates of your facilities go up. But can you be a little bit more specific, if possible, on any potential improvements over this year? And then my last question is, if I may, just a very general one. You talked a lot about more software within the mix. Can you quantify that, please, a little bit more? What kind of steps are we seeing from, let's say, 24 to 25?

I'll take the software one. Go with the gross profit margin. So gross profit margin, further improvements over there. With the next new products, also more software gradually coming, global footprint, these are actually the three main ones where there is where we have seen continuous improvements and and are building into results actually what we've done that we see across actually different businesses in 24 already there was then one more down and one percentage point which we lost compared to the year before which has to do with our sales and future, which primarily was impacted by the inventory research at our channels. And then second, a negative product mix and immersive experience, where they landed on the orders with respect to the image processing products, but where the shipments and the launch is only coming as of this year. So these actually are the main levers that to quantify as such we do want to get back to the percentage which we had in the previous year or in 2023. So at least get that one percentage point back and that's actually what we were working at.

And regarding software, so I would say in 24, probably one quarter, 25% of our sales is software. What do we consider software today is of course all our software platforms, like ClickShare, like Control, like Nexus in operating rooms. And for those, you've seen the numbers, we're already more than 30% actually of the sales of that business units is then related to software. Now, towards the future, we see more coming in. So we also see, first of all, more software features. So you increase, actually, and you differentiate with more software features on those platforms. But we see ourselves also stepping more and more into software applications and AI use cases. which is of course developments that we're working on right now that will over time also get us into more recurring revenue and that is something that we're definitely focused on and will increase actually also our software share in the coming years. But overall it's definitely an area where we focus on and of course it's good for the mix, for our portfolio mix.

Thank you.

Yeah, one business where we have decided, we have chosen towards indeed more softwares and control rooms then. And so in that sense, this year or in 2024, we were at about more than 30% of software sales in the total equation. And then for the second year, it went up to 4K.

Yeah, that was control, yeah.

It's only one example.

Yes.

Perfect. Thank you. Thank you, Stakano. Next in line is Hiceps from KVC Securities.

Yes, thank you. First of all, congratulations with a nice set of second half results. And how many months were the successful launches in healthcare of the two products that you mentioned? So the HMP and the OneLook, how many months were they included in the second half? And are they responsible for the nice half-year on half-year pickup of the EBITDA margin in healthcare? And the second question is on ClickShare. You mentioned that you're not only seeing competition from Chinese players, but also from Can you elaborate a little bit more on that? And do you see that only in Asia? And do you expect that also to come in the U.S. and EMEA? And how do you react to these Chinese players who are more focused on price? What is your, let's say, yeah. What's your plan going forward?

Yes. Okay. So for the new products in diagnostic imaging, so the 8 MP, so the home reading, we almost had the full year in 24. Second quarter. No, no, yeah, April second quarter. Okay, second quarter. The one look was October 1st. So that was a very successful launch. We actually sold about 1,000 or a little bit more than 1,000 actually for the last month of the year. So that definitely helped us with the numbers that you see in healthcare. But overall, I think we saw quite robust and resilient markets overall. Also, the inventory built out at the customer side, which also created nice orders on Nexus for surgical. But yes, of course, the new products in diagnosis definitely contributed to the good results in healthcare. Regarding click share and competition, yes, we mentioned already Chinese competition. That is mainly in EMEA. Sorry. We don't see Chinese competition in the US. How do we fight that? Well, of course, with our patents, our intellectual property portfolio. This is something that we're launching actions actually against these companies in Europe. Sorry, sorry. So that's one way. The competition that we see from room systems is in general. So the room system market is picking up. Sorry, I lost my voice. Israel picking up will also do so in 2025. Our answer to that is a new platform where, besides the ClickShare wireless offering, we will also offer now a room system based on an Android platform.

As of the middle of the year, which we will launch, I think. Excuse me.

Together with Microsoft, yes.

Okay, yeah. Okay, I hope you could catch that one.

Okay, good. Thank you, Yves, for those questions. Next in line is Mark Hesselink from ING.

Yes, thank you. First question also coming back on clicks here. Given quite some moving parts with the inventory levels at your clients, so a very big negative impact in the first quarter. and I think a very difficult comparable base now in the fourth quarter. But if you try to strip that out and look a little bit at the underlying trends, how is that going over the four quarters of the year? And also, if you compare it to your, maybe let's say the pre-COVID level, how far are you off from what maybe what you could approach?

Yes. So I think, just to say, the inventory levels, so yes we started the year with 20 million extra in the channels, that we completely built off towards the end of the year. So we start this year with very normal inventory levels, back to the beginning of 2022. So we don't have this challenge anymore of extra inventory in the channels. When you deduct this extra inventory, then I would say that we actually grew pretty much with the market. And the market basically started to pick up as of third, fourth quarter. That's actually, I think, then we saw pretty normal trends compared to how the market was doing.

This being said, the sellout in the second semester was not yet at the level of the year before. I think that's also your question, Mark. So in that sense, yeah, it was in line with the mark, so to speak, and certainly it was better. Certainly better in the second semester than the first semester, not yet at the levels that we had before. So in that sense, yeah, we will see how that's further improving.

Yes, and pre-COVID, well, that was, yeah, that was higher. We're talking 2019 at the time. At that time, the competition was also less. There was less competition from room systems, definitely from Chinese players. So the market dynamics have changed actually quite a lot there.

And there, from a regional perspective, we saw that in the Americas we do see growth in our figures and likewise also into sellouts. Europe is a more challenging market, macroeconomics-wise, and in tough markets, more competition as such.

But again, the way that we want to differentiate is also with our products. Having a more secure, more flexible, more agnostic product is definitely something that we want to differentiate ourselves and not go into a downright price fight, especially in the European market.

Okay, thanks. Maybe a link to that, because I think the big change is the proprietary rooms. If you look at that from a long-term perspective, how does that change your market opportunity? Is that something that means that the structural market opportunity for ClickShare is less because we now have these proprietary rooms? Or how are you looking at that?

Well, it definitely increases our addressable market, because now we basically can address all rooms, so that helps. I think working with Microsoft, which is a very dominant UCNC player in this video conferencing market, is also a good thing, basically being now also promoted by Microsoft. We're also the first adopter of Microsoft's new Android platform, which will also basically give us some extra momentum actually when we launch this product. So I think we tap into a bigger addressable market. For us, we started last year with interfusing this switch. Remember, that was a standalone device. that allowed in one room to switch between an MTR system and a ClickShare system. And now what we're doing is we're building a full MTR system. And it will also allow, and that is then a whole portfolio of products that we bring out, to switch also towards our ClickShare agnostic video conferencing for when the need is there. So when visitors are in the room or when you have a Zoom conference call. So this is actually adding then also the differentiator that we have from click share, agnostic click share, into that room system. So that's the way that I think the market is evolving and being first with this new platform, or one of the first ones with this new platform, is going to give us, I think, a first-movers advantage.

So,

Okay, clear, thanks. My second question is on, I mean, a bit of speculation probably for your side, but tariffs. Yes. Probably that might happen quite a lot or it could happen quite a lot. Are you preparing and how will it impact you? Yes.

Yeah, we're definitely monitoring, so we definitely have a task force work group here that monitors this very carefully. I think our first responses here are that we have, of course, the flexibility of the manufacturing footprint that we have as well, our manufacturing in China, but also in Belgium and Italy. Now, of course, tariffs can come anywhere, so they might also come in Europe, but that's one flexibility that we have. The other one is that most of our products are not being produced in the Americas. So also our competitors do not produce projectors or medical monitor screens in the US. But then still to be seen where they produce and if these countries get tariffs compared to the countries where we produce. Yeah, what else do we have under control? Yeah, we continuously working of course on our cost efficiency on these products. So that's another thing to bring the cost down. And, yeah, then price increases is definitely if we have the way and if we see this as possible in our competitive landscape, that's also one of the things that we keep in mind.

But, yes, we're monitoring that very, very carefully.

And could it be like extreme scenarios that you move also production to the U.S.? Is that something –

Well, at this moment, there are no concrete plans to do that. Let's see what that means, if it will ever get that far, yeah.

Okay, very clear. Thank you.

Thank you, Mark. Okay, thank you, Mark. We're back at Matthias Maanhout from Teflon Chevreux for some more questions. Matthias.

Yeah, hi, thanks. A couple of follow-ups. Just one clarification, so the guidance, I just want to be sure that I understand it pretty good. So you are guiding for a margin increase from the 12 SPOC 8% you've reported, including the one-off of the sale and leaseback.

Correct.

Yes. Okay. Then a second question is actually on the transition to laser in cinema. Could you give us a feeling on where do we sit in the cycle? How much is already done and how much is there still to be done?

I think at this moment we're about a 30% install base on laser worldwide. Barco has a quite big market share there, over 65% for new install capture rate. even close to 70% in certain countries. But overall, the install base is around 30% on laser. So there is still a big wave to come Maybe also here to mention is that you know that Sony stepped out of the projector business in cinema. There's still Sony systems installed and they go end of life or end of contract, actually a service contract in 26. So that wave is still also one to focus on, of course.

Okay, thank you.

Thank you, Matthias. Chris, you also had more questions. Please go ahead.

Yes, indeed. Good morning. A follow-up, indeed, from my side. Just to be sure, if you look at the non-recurring costs or the restructuring costs actually so not the 11 million leasing in the us or the the sale of the building but just the restructuring cost you've put in the pnl is the second consecutive year it amounts to roughly 11 million um what should we expect from this level going forward because there's also influences of course your adjusted va margins so just to make sure is it again around this level or are we almost done now with restructurings thank you we are almost yeah

Don't, in that sense, never say never. You see how things are evolving, type of, but certainly not to the tune of your months posted in the past two years.

Yeah. And then the second question, just a detail perhaps on ClickShare. We see that ClickShare bar was about 10% of top line. To what extent is that filling the pipeline or with the inventory of the client base? Or to what extent is this also sales to consumers? Because it's a direct-to-consumer model, so I presume it's quite direct sales.

So we sold more than almost 10,000 video bars actually since launch. So we basically sell that through our regular channels, but also we introduced the open channel approach, which is more than a wider set of resellers. that do not get the same conditions from us. So in that sense, yes, it's opened up to a larger reseller space.

But if you talk about normalised inventory levels, then it's actually on all of the different products in the channel.

And of course, this is also geared towards small and mid-sized meeting rooms. So that's, of course, also for smaller companies, SMEs. And that's also why we actually went with this open channel approach to reach them, actually.

Okay, thank you. Thank you, Chris.

Stefano, Stefano from AB Anandro, you also had some follow-up questions.

Yes, so two follow-up questions. I don't know if you can specify how much the impact of SaaS is on the full-year EBIT results if there wouldn't have been any SaaS. That's the first question. And the second question is, can you give us the EBITDA margins for control rooms?

Okay. On the first one, I can be precise. On the second one, we do not disclose. So on cinema, if... I tried. Yeah, of course. No problem. So on the first one, if you just open CapEx sales instead of cinema as a service, then our sales would have been 30 million higher in 2024. But the good thing about recurring revenues, of course, is that you start the year not from zero, but from a nice amount, which is actually, in cinema in particular, 32 million. For, yeah, control rooms.

It is positive, healthy positive. Yes, it's healthy positive and we're actually very... happy seeing those results in control rooms because the big transformation that we did in this business is actually now turning out to be successful and it's with consistent feedback actually also from our customer base on the software products that we have been launching and that we're bringing to the market now. So it's definitely a very positive way to start this year in our control room business.

Yeah, and also help with the decisive cost measures which we also took, or through that the organization is stable, moving forward, really going for it. So in that sense, yeah, a nice positive and structural improvement for a study further. All right. Thank you very much.

Thank you, thank you. Thank you, Stefano. We also have a question from Trion Reed, Berenberg. Trion, you may unmute yourself and ask your question.

Thanks, Willem. Thanks, guys. Hopefully you can hear me fine. Good morning. Hi. Just one question just on China. I think one of the reasons that 24 was weak was we expected a rebound in China. It didn't come. Could you just comment on what you're seeing there? Is there any sign of improvement?

Yes, so China, we had a very modest growth. Actually, in 2024, it was mainly driven by entertainment and actually mainly by cinema. That's what we have been mentioning before. Box office is starting to improve. Movie slate is starting to improve there. And the whole laser pickup wave is starting again. I think in healthcare, we have through the anti-corruption homes. So this is now the new way of life. So we have to basically deal with it and also in the channels figure out what that means. But there I think we see strong leads, especially in our surgical and mobility business. And also for the diagnostic imaging, we're working actually on setting up the channels now in this new era after the anti-bribery measures that were taken there. So there I think we're to the worst and we're setting up for growth in healthcare. Maybe one other one on immersive experience. There also the market is changing in China, so less government sponsoring, so less what we call B2G to governments, more B2B, which also takes from our side and also from our partners and channels that we now need to deal with that new reality, set up also new partnerships, which are more in this B2B space. And that work is going on. We actually... start seeing some nice inputs there, but it's also working our way through. We hit the bottom, that's for sure. If any, it will only go uphill at what pace is still to be seen.

Thank you.

Okay, I see no more raised hands. If you have one more for Trion, but no, it's just if anybody of you has a last question, now is the time.

Trion, you still have another question?

No, nothing for me.

Thanks. Okay. Then we believe we can close this earnings call. The recording of the call will be available by noon today on our investor portal. And today we also published our integrated annual report. So I invite you all to go see and find it on our investor portal. You will find a lot of background and stories from the people at Barco and from all divisions and markets. Really worth a look. And before we close, I would also like to draw your attention to our upcoming Capital Markets Day, which we will organize on October 23rd of this year. And we will host our analysts and institutional investors for a strategy update, a lot of product demonstrations, and also the opportunity to meet management at our headquarters in Kortrijk, Belgium. So for now, thank you for your attention and have a very good rest of your day. Thank you very much.