Signify Nv Ord

Hello and welcome to the Signify First Quarter Results 2024. Throughout the call, all participants will be in listen-only mode, and afterwards there will be a question and answer session. Please note, this is limited to one question plus one follow-up. Today, I am pleased to present Eric Rondolan, CEO, Salco Kosanovic, CFO, and Selke Gertes, Head of IR. Please go ahead with your meeting.

Good morning, everyone, and welcome to Signify's earnings call for the first quarter 2024. With me today are Eric Gondola, CEO of Signify, and Zeljko Kosanovic, who has recently been appointed a Signify CFO, succeeding Javier van Engelen. During this call, Eric will first take you through the first quarter highlights, after which Zeljko will present the company's financial performance. Eric will then come back to discuss the outlook for the remainder of the year. And after that, we will be happy to take your questions. Our press release and presentation were published at 7 o'clock this morning. Both documents are available for download from our investor relations website. The transcript of this conference call will be made available as soon as possible. And with that, I will hand over to Eric.

Thank you, Telke. Good morning, everyone. And thank you for joining us today. Let's start with some of the highlights for the first quarter 2020 from slide four. In the first quarter, we saw improving dynamics in our US professional OEM and consumer businesses, while the market in China remained soft, and the European professional business was substantially below our expectations. We increased the installed base of connected light points from 124 million in Q4 last year to 126 million at the end of Q1 this year. LED-based cells were 87% of total sales, compared to 82% one year ago. Nominal sales declined by 12.5% to 1.468 billion including a negative currency effect of 2.6%. Comparable sales declined by 10.1%. Overall, the adjusted EBITDA margin decreased by 60 basis points to 8.3% due to the under absorption of fixed costs despite an improvement of the gross margin. Net income came at 44 million euros compared to 28 million in Q1 last year. The year-on-year improvement is mainly driven by lower financial expenses and higher income from operations. Finally, we delivered 80 million euros of free cash flow during the quarter as we continued to improve our working capital. During the first quarter, we successfully implemented our new organizational structure effective April 1st. It has received strong support internally and externally as it brings an enhanced focus and accountability to our businesses from an end-to-end market perspective. In terms of our reporting this quarter, we will only report sales and comparable sales growth by business as during the first quarter, proceedings with our social partners were still pending. As of Q2 2024, we will report sales and adjusted bid A by business. We will provide 2023 and Q1 2024 comparable financials for sales and profit by business by the end of June 2024. So let's move to slide five, starting with the professional business. Nominal sales in Q1 were at 943 million euros, with comparable sales showing a decline of 7.6%, mainly due to weak professional sales in Europe, offsetting moderate growth in India and emerging markets. We saw a much more resilient performance in the US market from a top-line pricing and also bottom-line perspective. Moving on to the consumer business on slide 6, nominal sales were at 299 million euros, with comparable sales showing a decline of 5.7%. Overall, we saw sequential improvement compared to previous quarters of our connected business. We also saw inventory levels of retailers return to normalized levels. Continuing with the OEM business on slide 7, nominal sales in Q1 were 103 million euros with comparable sales showing a decline of 7.4% on a sequential basis. basis we are starting to see improvements as inventory levels of OEM are returning to normalized levels in the majority of our business. And finally, the conventional business, moving to slide 8. Nominal sales in Q1 were €119 million, with comparable sales showing a decline of €34 reflecting the full impact of the fluorescent bands in Europe, while in Q1 2023, we benefited from a pre-buying effect. Let's move to slide 9, where I would like to discuss a couple of business highlights, starting off with two highlights of our professional business. In Austria, we equipped the Vienna City Hall with color kinetics-connected LED lighting. We completely renovated the festive lighting and installed over 1,100 color kinetics luminaires. The installation results in lower operating and maintenance costs while generating energy savings of up to 50%. We also introduced LumeXpert, an industry-first application for professional installers. The app simplifies and accelerates lighting projects. The in-app design tool enables project management and professional lighting calculations. Users can buy all Signify brands directly from our distributors with competitive delivery times. We expanded the collaboration between Philips Hue and Samsung SmartThings aimed at optimizing the interaction between the Philips Hue Sync TV app, Samsung's TV, and the SmartThings ecosystem. So the Philips U-SYNC TV app is available to consumers on a monthly subscription basis as a one-time purchase or as a one-time purchase. We have seen particularly good traction so far for the subscription model. Next, we achieved two test victories for Philips U and WIS in the German Stiftung Warentest. The test compared 10 smart lamps, seven with a base station and three without. The Philips Hue White and Color Ambience Lamp with Hue Bridge was the overall test winner due to its lighting properties, smart functions and the interaction between the light bulb and the bridge. The WiZ Attunable White and Color E27 lamp won the category Smart Lamps without base station. In addition, the WiZ lamp was highlighted for its affordability and environmental properties. Next, I would like to discuss our sustainability performance on slide 10. So we have now entered the fourth year of our gradualized Better World 2025 sustainability program. And during the first quarter, we were ahead of schedule to achieve our 2025 target to reduce emissions across the entire value chain by 40% against the 2019 baseline, doubling the pace required to the Paris Agreement 1.5 degree scenario. In addition, The company has received approval from the SBTI for its ambitious 2040 net zero target with a 90% absolute reduction of scope, one, two and three emissions. Circular revenues increased to 34%, surpassing already the 2025 target of 32%. The main contribution was from serviceable luminaires with a strong performance from both consumer and professional. Bread Labs revenues remain at 31%, on track to reach the 2025 target of 32%. This includes a strong contribution from consumer products that support health and well-being, mainly eye comfort. The percentage of women in leadership position decreased to 28%, 1% decrease versus the last quarter, and slightly behind our target. Signify continues its actions to increase women representation through focused hiring practices for diversity across all levels and through retention and engagement actions to reduce attrition. In addition, we received several external recognitions Signify was placed on the C&DP climate A list for the seventh consecutive year. We were recognized on CDP's 2023 supplier engagement letter board for our commitment to engagement in our supply chain to decrease carbon emissions. And we are also recognized on the Clean 200, a list of companies putting sustainable investment at the heart of this strategy. With this, I am now very pleased to introduce Jelko, who has just been appointed as Signify's new CEO. Jelko, take us through our financial performance in more details.