HMS Networks Q2 2020 presentation

July 15th2020

Staffan Dahlström, CEO, Joakim Nideborn, CFO

Agenda

Summary

Business update

Financial results

Q&A

Financial summary of Q2 2020 and first six months

Q2

  • Net sales 355 MSEK (416),-15%
  • Order intake 302 MSEK (375),-19%
  • EBIT 69 MSEK (72)
  • EBIT margin 19% (17)
  • Cash flow from ops. of 115 MSEK (51)
  • EPS 1.24 (1.10)

First six months

  • Net sales 716 MSEK (796),-10%
  • Order intake 703 MSEK (762),-8%
  • EBIT 136 MSEK (132)
  • EBIT margin 19% (17)
  • Cash flow from ops. of 170 MSEK (103)
  • EPS 2.26 (1.98)

We are Connecting Devices™

HMS is working with "Users" and "Makers"

HMS have thousands of industrial customers

Users of Industrial Automation Systems

These companies work in end-user industries:

  • Examples of Users
  • HMS typically reaches these customers indirectly

via intermediaries (Systems Integrators, Distributors and Solution Partners).

Makers of Industrial Equipment

These companies make:

  • Intelligent Industrial Machines
    • Packaging machine,CT-scanner, Windmill, Elevator, genset, AGV, heavy duty vehicle etc. "Machine
      Categories"
  • Intelligent Industrial Devices
    • Drives, PLC, HMI, Robot controller, actuator, nutrunner, circuit breaker etc."Device Categories"
  • HMS typically address these customers directly with HMS sales force.

Understanding of HMS sales Q2 2020

Agenda

Summary

Business update

Financial results

Q&A

Business update second quarter 2020

  • The challenging macro situation impacting all main markets
    • Our three main markets in Europe - Germany, France and Italy continues to suffer from lower demand as a result of Corona slow down
    • USA held up well in Q1 but is now also impacted by the market decline
  • Japan and China are holding up well and showing growing order intake
  • The decline impacts all our four brands - all suffering from double digit decline in order intake
  • High focus on setting up digital events with customers
  • HMS had 128 digital events between February to June with 5 498 registered attendees 5 425 hours of engagement

Corona update

Q2

  • All HMS team members are OK and healthy
  • Short-timework in Germany and Sweden (about 20%)
  • All supply facilities are working without any major disruption

Q3 expectations

  • Expected continued soft market in all major markets
  • Short-timework continues in Germany, until further notice
  • Close monitoring of the situation and potential implementation ofshort-time work at higher level as well as in other areas
  • Most fairs cancelled for the rest of 2020

Strategy

  • Once the Corona situation is behind us we expect good market conditions for Automation & Digitalization, and we should then have intact teams to execute our business - until then we keep a close eye on our cost and cash flow

Agenda

Summary

Business update

Financial results

Q&A

Order intake 302 MSEK

ORDER INTAKE, MSEK

450

-19%

1 600

401

1 500

400

387

387

1 400

375

372

360

350

350

336

337

1 300

1 200

302

300

289

288

1 100

1 000

250

900

800

200

700

150

600

500

100

400

300

50

200

100

0

Q317

Q417

Q118

Q218

Q318

Q418

Q119

Q219

Q319

Q419

Q120

Q220

0

Growth 15%

8%

17%

3%

24%

34%

11%

11%

3%

-13%

4%

-19%

Order intake R12

Order intake

Comments on Q2 order intake

  • Order intake in Q2 302 MSEK (375), corresponding to a decrease of 19%
  • Organic a decrease of 17%
  • Q1 stocking orders of30-40 MSEK
  • Continued decline in Germany, Italy and France
  • USA now also heavily impacted,-20%
  • Japan and China growing more than 20%

Comments on first six months order intake

  • Order intake first six months 703 MSEK (762), corresponding to a decrease of 8%
  • Organic a decrease of 10%
  • Germany and Italy are down more than 20%
  • Japan and China growing more than 20%

Net sales 355 MSEK

NET SALES, MSEK

450

416

-15%

1 600

1 500

400

380

377

1 400

353

363

361

355

350

346

1 300

329

1 200

320

305

301

300

1 100

1 000

250

900

800

200

700

150

600

500

100

400

300

50

200

100

0

Q317

Q417

Q118

Q218

Q318

Q418

Q119

Q219

Q319

Q419

Q120

Q220

0

Growth

20%

14%

15%

10%

16%

20%

19%

26%

7%

-5%

-5%

-15%

Net Sales R12

Net Sales

Comments on Q2 Net Sales

  • Net Sales of 355 MSEK (416), corresponding to a decrease of 15%
  • Organic a decrease of 14%
  • EMEA:-23%
  • Americas: +4%
  • Asia:-8% (record quarter in Q2 2019)

Comments on first six months Net Sales

  • Net Sales of 716 MSEK (796), corresponding to a decrease of 10%
  • Organic a decrease of 11%
  • EMEA:-17%
  • Americas: +3%
  • Asia:-1%

Sales per region Q2 2020

Sales per region Q2 2020, MSEK

EMEA

• Net Sales 198 MSEK (256)

• 56% of Group sales (62%)

• Germany represents 42%

Americas

24%

56%

Asia

• Net Sales 84 MSEK (81)

20%

• Net Sales 73 MSEK (79)

24% of Group sales (19%)

20% of Group sales (19%)

USA represents 82%

Japan represents 49%

EBIT 69 MSEK (19% margin)

EBIT, MSEK

80

74

-5%

300

72

69

70

67

65

63

63

250

60

60

56

55

52

200

50

40

150

30

31

100

20

10

50

0

Q417

Q118

Q218

Q318

Q418

Q119

Q219

Q319

Q419

Q120

0

Q317

Q220

EBIT, % 21%

10%

20%

19%

21%

14%

16%

17%

15%

16%

19%

19%

EBIT R12

EBIT

Comments on Q2 results

  • EBIT 69 MSEK (72), EBIT margin of 19.4% (17.3)
  • Q2 gross margin of 62.0% (61.2), positive effects from a favorable product mix, pricing and efficiency improvements
  • OPEX decrease of 21 MSEK corresponding to an organic decrease of 25 MSEK(-14%)
  • Short-timework OPEX reduction by 8 MSEK

Comments on first six months results

  • EBIT of 136 MSEK (132), corresponding to 18.9% (16.6) margin
  • Gross margin 62.2% (60.3)
  • OPEX decrease of 27 MSEK, corresponding to an organic decrease of 39 MSEK, mainly related to corona effects and restructuring program implemented in Q3 2019
  • Restructuring program effects as planned, 45 MSEK OPEX reduction annually

EPS 1.24 SEK

EPS, SEK

+13%

1.3

1.24

5.0

1.2

1.10

4.5

1.09

1.1

1.01

4.0

1.0

0.98

0.90

0.90

0.90

0.9

0.88

3.5

0.80

0.8

3.0

0.68*

0.7

2.5

0.6

0.5

0.43

2.0

0.4

1.5

0.3

1.0

0.2

0.1

0.5

0.0

Q317

Q417

Q118

Q218

Q318

Q418

Q119

Q219

Q319

Q419

Q120

Q220

0.0

*Adjusted EPS

EPS R12

EPS

Comments on Q2 EPS

  • EPS of 1.24 SEK (1.10)
  • Net financials of 0 MSEK(-2)

Comments on first six months EPS

  • EPS of 2.26 (1.98)
  • Net financials of-5 MSEK (-7)

Cash flow from operations of 115 MSEK in Q2

CASH FLOW, MSEK

+123%

120

115

350

110

100

300

90

90

250

80

73

70

61

200

62

60

52

51

55

51

49

50

150

40

36

100

30

20

20

50

10

0

Q417

Q118

Q218

Q318

Q418

Q119

Q219

Q319

Q419

Q120

Q220

0

Q317

Cash flow R12

Cash flow

Comments on Q2 Cash Flow

  • Cash flow from operating activities of 115 MSEK (51)
  • Changes in NWC of 18 MSEK
  • NWC in % of sales 11.0%

Comments on first six months Cash Flow

  • Cash flow from operating activities of 170 MSEK (103)
  • Changes in NWC of-11 MSEK

Net debt 263 MSEK

Net debt and leverage, MSEK

550

524

-50%

1.8

1.7

500

96

463

1.6

450

1.5

409

1.4

400

98

402

390

381

1.3

365

342

98

93

1.2

350

335

91

1.1

300

263

1.0

250

0.9

85

0.8

200

428

0.7

365

0.6

150

311

309

299

0.5

100

0.4

178

0.3

50

0.2

0.1

0

Q118

Q218

Q318

Q418

Q119

Q219

Q319

Q419

Q120

Q220

0.0

Net debt/EBITDA

Net debt IFRS 16

Net debt

Comments on Net debt and leverage

  • Net debt / EBITDA of 0.73 (1.61)
  • Net debt / Equity: 0.24 (0.58)
  • Reduced leverage as result of no dividend

Q&A

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Disclaimer

HMS Networks AB published this content on 15 July 2020 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 15 July 2020 08:05:07 UTC