Barco Nv Unsp/Adr

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.