Progressing steadily on many fronts
Kortrijk, Belgium, 20 July 2010 - Barco (Nyse/Euronext: BAR; Reuters: BARBt.BR; Bloomberg: BAR BB) today announced results for the six month period ended 30 June, 2010.
Second quarter 2010 financial highlights:
• Barco's order book at the end of June 2010 stood at 513.3 million euro, not including some digital cinema frame contracts. At the end of June 2009 the order book was 336.7 million euro.
• Order intake for the quarter was at an all time high of 298.9 million euro, an increase of 112.4% from 140.7 million euro a year earlier.
• Sales of 192.2 million euro were up 16.7% from 164.7 million euro in 2Q09.
• Gross profits grew 37.4% to 63.7 million euro up from 46.3 million euro the previous year. Gross profit margin was 33.1%. In 2Q09 it was 28.1%. In 1Q10 it was 33.7%.
• EBITDA was 19.5 million euro compared to 8.4 million euro in 2Q09.
• EBIT was 5.8 million euro versus minus 5.6 million euro in 2Q09. EBIT margin was 3.0% compared to minus 3.4% in 2Q09.
• Net income for the quarter was 4.3 million euro compared to minus 5.2 million euro the year before.
• Net earnings per share were 0.36 euro compared to minus 0.44 euro in 2Q09.
• Free cash flow at the end of the quarter was minus 1.4 million euro compared to 12.4 million euro the year before.
Barco's second quarter was marked by truly unprecedented growth in order intake across all businesses except for digital signage. “This must have been our best quarter ever”, Mr Van Zele, President and CEO, said, “with orders coming in just shy of 300 million euro. This bodes well for Barco's performance in the quarters ahead. We are experiencing explosive growth in demand for our digital cinema projectors and are working very hard to deal with the supply chain issues this creates.” Mr van Zele also added that shipments for the quarter materialized slightly better than plan despite the ongoing global shortages in supplies of electronic components and subsystems. He said that margins continued to improve and that costs remained well under control.
Mr Van Zele stated that the success of the company is no longer just supported by two star performers, digital cinema and medical, as all the other divisions, with the exception of VLS/DS, experienced strong growth in incoming orders. “We were very pleased to see our control rooms and the defense/avionics divisions return to acceptable levels of profitability, while our VLS/DS business was still struggling to catch up. We are confident that the strategic acquisition of dZine will broaden Barco's capabilities with software enabled content solutions in order to increase the value proposition of what is currently a 'display centric' business model.”
He concluded: “In the final analysis we remain confident that all of our divisions can deliver on their corporate 10/10/20 targets. It is just a matter of time. We will do whatever it takes to get there.”
New reporting structure
As of 2010, Barco's activities are organized in two business groups or segments. Each business group is responsible for the management of its global business.
The business group Media, Entertainment & Simulation (MES) comprises the former Media & Entertainment division, with events, out-of-home media and digital cinema, and the simulation business of the former Avionics & Simulation division. The events and out-of-home media markets today are now respectively referred to as Video Lighting Solutions (VLS) and Digital Signage.
The other business group, Monitoring, Control & Medical (MCM), brings together the former Security & Monitoring division, with traffic, surveillance & monitoring, defense, medical and the avionics business of the former Avionics & Simulation division.
The results of 1Q10 were also reported in line with this new structure and prior-year financials have been restated.
Change in reporting frequency
The board of directors has decided to change the frequency of the company's financial reporting as of 3Q10. This means that as of 3Q10 Barco will give an Intermediary Report for the 1st and 3rd quarters instead of full results for these quarters.
CONSOLIDATED RESULTS FOR THE QUARTER
Sales and Order Intake
Sales for the quarter were 192.2 million euro, a 16.7% year-on-year increase. Organic sales growth was 10%. There was growth in all divisions except for simulation and video and lighting solutions/digital signage (VLS/DS). The medical, digital cinema and avionics markets realized the highest growth compared to the same quarter of the year before.
Sales to Europe, Middle East, Africa and Latin America (EMEALA) represented 42.5% of consolidated sales, while 35.6% of sales were realized in North America and 21.9% in Asia Pacific. Compared to 1Q10 sales were flat in the EMEALA region, while they grew respectively with 26.8% and 4.1% in North America and the APAC region.
Order intake in 2Q10 was 298.9 million euro, an increase of 112.4% (105% of which was organic growth) compared to the same quarter the year before. Growth in order intake excluding digital cinema and the FIMI acquisition was 39%. In comparison with 2Q09, growth was outspoken in all divisions with the exception of VLS/DS where order intake remained flat.
In order intake the APAC region took 18.9% of total, compared to 35% for the Americas and 46.1% for the EMEALA region. All three regions contributed strongly to the overall increase with growth rates close to or above 100%, compared to 2Q09.
The order book at the end of the quarter was 513.3 million euro or 52.4% higher than at the end of 2Q09 and 34.2% higher than in 1Q10.
Evolution order book
| (in million euro) | 2Q10 | 1Q10 | 4Q09 | 3Q09 | 2Q09 |
| Order book | 513.3 | 382.6 | 331.4 | 342.4 | 336.7 |
Gross Profit
Gross profit increased year-on-year by 37.4% to 63.7 million euro. Gross profit margin was 33.1% compared to 28.1% in the year ago quarter and 33.7% in 1Q10.
EBIT
EBITDA was 19.5 million euro compared to 8.4 million euro the year before. EBIT was 5.8 million euro compared to minus 5.6 million in 2Q09.
Research & development expenses decreased year-on-year from 19.2 million euro or 11.7% of sales to 16.2 million euro or 8.4% of sales. Sales & Marketing expenses increased from 23.4 million euro, 14.2% of sales, to 27.7 million euro, 14.4% of sales. General & administration expenses increased from 10.6 million euro or 6.4% of sales to 12.5 million euro or 6.5% of sales.
Other operating income was minus 1.4 million euro. 2Q09 had other operating income of 1.3 million euro.
Income Taxes
In 2Q10 taxes were 1.0 million euro compared to a positive tax impact of 1.1 million euro in 2Q09.
Net Income
Net income for the quarter increased to 4.3 million euro from minus 5.2 million euro for 2Q09, which includedEuro 0.4 m net loss from discontinued operations. Net margin for the quarter was 2.2% from minus 3.2% the year before.
Net earnings per ordinary share (EPS) were 0.36 euro, up from minus 0.44 euro in 2Q09. Fully diluted net earnings per share increased to 0.34 euro from minus 0.41 euro.
DIVISIONAL RESULTS FOR 2Q10
Media & Entertainment and Simulation business group (MES)
Order intake in MES increased by 173.6% from 68.8 million euro in 2Q09 to 188.1 million euro in 2Q10. The digital cinema and simulation divisions were the main contributors to this growth. Order intake for MES increased strongly in all three regions. In digital cinema the order intake of 113.7 million euro was almost 8 times that of the same period of the previous year, with strong demand from all three regions. Frame agreements are not included in the order intake. Order intake in VLS/DS declined slightly compared to 2Q09, the EMEALA region performing the strongest of the three regions in that division. The decline in global order intake for this division is due to the digital signage business. Turnaround is expected in 2H10 as the acquisition of dZine will broaden Barco's digital signage offering with the addition of advanced software tools for content creation and management. The simulation business tripled the order intake of 2Q09 thanks to the success of its new full mission simulator technology.
The order book at the end of June 2010 was 252.6 million euro, compared to 108.2 million euro the year before.
Sales in MES increased by 10.7% to 91.3 million euro in 2Q10 from 82.5 million euro in 2Q09. Growth came from North America and the APAC region. The EMEALA region showed a slight decline in sales. In the digital cinema market sales more than doubled to 46.5 million versus 2Q09. In 1Q10 sales in digital cinema were 30.5 million euro. The growth in shipments was realized despite the ongoing global shortages in supplies of electronic components and subsystems. These shortages are also the cause of lagging shipments in the VLS business, but they are expected to become less of an issue in 2H10. In 2Q10 sales were lower in simulation than the year before. Turnaround for this business is expected in 2H10.
At 24.9 million euro gross profit for the MES business group was up 46.5% compared to the same period the year before. Gross profit margin was 27.3% compared to 20.6% in 2Q09.
MES EBIT for 2Q10 was at -0.6 million euro compared to minus 6.4 million euro in 2Q09. The simulation and digital cinema divisions had a positive EBIT, the latter in the low double digits.
Monitoring & Control and Medical business group (MCM)
Order intake in MCM increased by 54.2% (40% of which organic) from 72.3 million euro in 2Q09 to 111.5 million euro in 2Q10. All divisions within the business group contributed to this growth. The medical business in particular did very well with an increase in incoming orders of 79.3%. Excluding the Fimi acquisition organic growth in order intake was 37%. In the control room business of the traffic, surveillance and monitoring (TSM) division the new LED powered cubes are perceived by the market to be best in class and are improving TSM's competitive position in the market. Global order intake for this division increased with 21.9%. Order intake for MCM almost doubled in North America and the APAC region. In the EMEALA region order intake grew with almost 25%.
The order book at the end of June 2010 was 261.1 million euro, compared to 229.6 million euro the year before.
Sales in MCM increased by 21.5% from 83.3 million euro in 2Q09 to 101.2 million euro in 2Q10. As in order intake, all divisions contributed to the increase in sales, as did all three regions, with North America realizing the highest relative growth. The medical division realized a very solid performance, despite the fact that shipments are hampered by supply shortages. The medical division is investing in the expansion of new sales channels and the development of new customer solutions that are widening the product portfolio in the healthcare market. The defense/avionics division benefited from the huge backlog in both businesses.
At 38.7 million euro, gross profit for the MCM business group increased by 30.3% compared to 2Q09. Gross profit margin was 38.3% compared to 35.6% in the same period the year before.
MCM EBIT for the quarter was at 6.4 million euro, a 6.3% EBIT margin, compared to 0.8 million euro in 2Q09, a 1% margin. The EBIT margin of the medical division was double digit. Both the TSM and the defense/avionics divisions are now close to corporate EBIT levels.
CONSOLIDATED RESULTS FOR THE FIRST HALF
First half 2010 financial highlights:
• The order book at the end of 1H10 stood at 513.3 million euro, not including some digital cinema frame contracts. At the end of June 2009 the order book was 336.7 million euro.
• Order intake for the first half year increased 72.4% to 515.1 million euro from 298.7 million euro a year earlier.
• At 368.2 million euro sales were up 19.0% from 309.5 million euro in 1H09.
• Gross profits grew 44.7% to 123.0 million euro up from 85.23 million euro the previous year. Gross profit margin was 33.4%. In 1H09 it was 27.5%.
• EBITDA was 38.2 million euro compared to 15.7 million euro in 1H09.
• EBIT was 11.1 million euro versus minus 11.6 million euro in 2Q09. EBIT margin was 3.0% compared to minus 3.7% in 1H09.
• Net income for 1H10 was 8.4 million euro compared to minus 6.1 million euro the year before.
• Net earnings per share were 0.70 euro compared to minus 0.51 euro in 1H09.
• Free cash flow at the end of the first half year was minus 1.7 million euro compared to 49.2 million euro the year before.
BALANCE SHEET
At the end of June 2010 Barco had a net cash position of 21.9 million euro, compared to a net cash position of 21.3 million euro on 31 March 2010 and a net cash position of 36.9 million euro on 30 June 2009. Barco did not acquire any of its own shares in the first six months of 20101. On 30 June 2010 trade receivables were at 154.4 million euro, up 6.4 million from 1Q10. DSO amounted to 72 days, down 5% from 1Q10, but up 7% compared to 2Q09. At 199.6 million euro inventory was 20.9 million euro higher than at end March 2010. Half of that increase is related to the digital cinema business while the other half is spread over the other businesses. Inventory turns were at 2.1 compared to 2.6 at the end of 2Q09. Trade payables were 92.4 million euro, compared to 85.6 million euro at the end of March 2010. End June 2009 trade payables were 53.4 million euro. Capex for 2Q10, excluding capitalized development, was 3.2 million euro, compared to 0.6 million euro the year before.
OUTLOOK FOR 2010
The following statements are forward looking and actual results may differ materially.
Considering the high level of incoming orders in 2Q10 and the order book exceeding 500 million euro at the end of June 2010, management expects Barco's growth momentum to continue in 2H10.
CONFERENCE CALL
Barco will host a conference call with investors and analysts on 20 July 2010 at 4:30 p.m. CET (10:30 a.m. EST), to discuss the results for the quarter. Eric van Zele, CEO, Dirk De Man, CFO and JP Tanghe, IRO, will host the call.
An audio cast of this conference call will be available on the Company's website www.barco.com at 8:00 p.m. Brussels time (2:00 p.m. EST).
ABOUT BARCO
Barco, a global technology company, designs and develops visualization products for a variety of professional markets. Barco has its own facilities for Sales & Marketing, Customer Support, R & D and Manufacturing in Europe, North America and Asia Pacific.
Barco (NYSE Euronext Brussels: BAR) is headquartered in Belgium and is present in more than 90 countries with about 3300 employees worldwide.
For more information and the full report “6 month period ended 30 June 2010”, please visit the Company's website at www.barco.com
1The company now owns 737,963 of its own shares or 5.82% before dilution. The acquisition of own shares program started in 2003.
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