Good sales momentum over the 4th
quarter, promising prospects for 2015
Regulatory News:
ESI Group (Paris:ESI):
- Solid Licensing activity
- Finalization of the strategic
refocusing of Services activity
- Dynamic activity in Europe,
difficult context in China and Russia
- Success of our disruptive solutions
of immersive virtual reality and environmental challenge
response
Alain de Rouvray, ESI Group’s Chairman and CEO, comments: “The
final quarter of 2014 reveals a positive sales dynamic partially
overshadowed by transition effects affecting both Licenses and
Services over the first three quarters. This performance confirms
the anticipated intensification of the seasonal effect. The year
was also marked by a negative currency effect and a difficult
political and economic context in BRIC countries. Nevertheless, the
deployment of our solutions among both business sector leaders and
their suppliers continues to highlight the essential strategic
importance of our technological solutions in the generation of
productivity gains in industry and the continual quest for
innovation. In particular, the success of our immersive virtual
reality offering and the interest in our solutions enabling a
response to environmental challenges such as air quality and
renewable energy illustrate the solidity of our strategy and its
diversification potential. Driven by the positive commercial
indicators observed at the start of 2015, ESI Group remains
confident in its growth and profitability improvement prospects
initiated in 2014.”
4th quarter and annual salesThe Company’s
financial year runs to January 31 (unaudited data)
€ millions Q4
2014
Q4
2013
Δ Δ (cc*) FY 2014
FY 2013 Δ Δ (cc*)
Licenses
40.8 38.0 +7.3% +6.9% 83.3 80.6
+3.3%
+4.4% Services 8.3
7.5 +10.7% +8.9% 27.8 28.7 -3.3%
- 2.9% Total 49.0 45.5
+7.8% +7.3% 111.0
109.3 +1.6% + 2.5%
* cc: constant currency
Breakdown in sales by quarter
€ millions Q4
2014
Q3
2014
Q2
2014
Q1
2014
Q4
2013
Q3
2013
Q2
2013
Q1
2013
Licenses
40.8
12.8
15.5 14.2 38.0 12.7 15.3 14.6
Services 8.3
6.5
7.0 5.9 7.5 6.8 7.4 7.1
Total 49.0 19.4
22.5 20.1 45.5 19.6
22.7 21.6
4th quarter sales: significant growth and
intensification of the seasonal effectSales totaled €49.0
million over the final quarter of 2014, giving dynamic growth of
+7.8% in actual terms (+7.3% at constant currency) compared with
the 4th quarter of 2013. Over the quarter, currency changes – most
specifically the American dollar’s fluctuation against the euro -
had a positive and reverse effect compared with the first three
quarters.Licenses sales totaled €40.8 million, an increase of +7.3%
in actual terms, and included renewal of contracts repositioned to
the final quarter of the year.Services activity, which now excludes
non-strategic business, reached €8.3 million, reflecting solid
growth of 10.7%.The 4th quarter accounted for 44.1% of total annual
sales (compared with 41.6% in 2013), confirming the anticipated
intensification of the seasonal effect.
2014 annual sales2014 annual sales came to €111.0
million, up +1.6% on the previous year in actual terms. There was a
negative currency effect of -€1.0 million over the period, mainly
due to the negative evolution of the Japanese Yen. At constant
currency the annual revenue would have totaled €112.0 million, up
+2.5%.The product mix continued to shift towards Licenses activity,
which has higher margins and now accounts for 75.0% of total sales
compared with 73.7% the previous year.
Licenses: solid activityLicenses activity recorded annual
sales of €83.3 million in 2014, giving growth of +4.4% at
constant currency compared with the previous year. This solid
growth was driven by the buoyant sales momentum in Europe, notably
France, and the solid sales growth recorded in the Americas.
Licenses saw the rate of repeat business remain at a high level of
85.7% at constant currency (vs. 86.7% in 2013). New Business (i.e.
excluding Add on) totaled €17.0 million, down €0.5 million,
and accounted for 20.1% of total Licenses sales. This reduction can
be explained by the current difficult political and economic
context in BRIC countries, and in particular in Russia and
China.
Services: completion of the strategic refocusing of this
activityServices activity recorded sales of €27.8 million in
2014, down -3.3%. This negative figure was a result of the
reduction over the first three quarters of the year due to
refocusing on projects with higher value added ; an action
completed before the last quarter, when a jump of +10.7% was
recorded.
Geographical mix: dynamism of European activity, difficult
context in BRIC countriesIn 2014, the geographical split in
sales shifted towards Europe, driven by increased Licenses
activity, most particularly in France and Germany. Europe accounted
for 48.2% of total sales, compared with 45.2% the previous year.
The reduction of share in the Asia zone’s (34.7% vs. 35.8%) was
mainly a result of a negative currency effect and the difficult
business context in China. The decrease in the Americas share to
17.2% of sales in 2014 compared with 19.0% in 2013 was a result of
the refocusing of the Services activity. Although the impact
decreased through the year, the abandoning of certain non-strategic
and lower margin services was not compensated by the increase in
Licenses activity over the year.Over the year as a whole, the
weight of activity in BRIC countries decreased compared with 2013,
accounting for 12.7% of total sales over the period compared with
15.3% the previous year. This decrease reflected falls recorded in
China and Russia and was not offset by upward trends in Brazil and
India.
2014 highlightsAdoption strengthened among strategic
partnersThe adoption of virtual prototyping is continuing among
our strategic partners and demonstrates the innovation-accelerator
nature of our solutions. That illustrates the crucial need for the
technologic disruption in the manufacturing sector.
Success of the immersive virtual reality
solutionDeployment of the IC.IDO immersive virtual reality
solution has accelerated among clients in the Transportation
sector. In particular, ESI Group won a tender launched by
Bombardier Inc.’s railway equipment division. ESI Group’s solution
delivers high quality operational results and enables industry to
reduce development costs thanks to a significant reduction of
engineering change requests.Extension of the Group’s collaboration
with the Fiat Chrysler Automobile Group also demonstrates the
quality of ESI Group’s immersive virtual reality solution. After
equipping its Italian centers the Italian manufacturer chose to do
the same for its Brazilian development center. This move is
illustrative of the strategic measures aggressively deployed by the
world’s major car manufacturers as they seek to reduce the
development and production cycles of their products.
Intensification of ESI Group’s contribution to environmental
constraintsThe buoyant increase in 2014 sales reflects the need
for production process flexibility among manufacturers, who are
being impacted by increasingly restrictive environmental standards
that require them to better control their carbon footprints. In the
field of Transportation, ESI Group’s virtual engineering solution
is establishing itself as representing major leverage in terms of
reducing development costs and speeding up the finalization of
future products ; most notably by enabling companies to
address, from the design phase, restrictive constraints, such as
making vehicles and airplanes lighter .In the field of Energy, ESI
Group has signed a 5-year strategic partnership with EDF Energies
Nouvelles (EDF EN). The objective is to develop innovative products
for the renewable energies market by making the most of virtual
prototyping solutions. EDF EN intends to optimize, using virtual
prototypes, its day-to-day operations and test the performance of
its future solar and wind power plants in standard, disrupted or
accidental operating conditions.
For all ESI news, go to www.esi-group.com/press
Next events:
2014 annual results:
April 16, 2015
About ESI
ESI is a world-leading provider of Virtual Prototyping software
and services with a strong foundation in the physics of materials
and Virtual Manufacturing.Founded over 40 years ago, ESI has
developed a unique proficiency in helping industrial manufacturers
replace physical prototypes by virtually replicating the
fabrication, assembly and testing of products in different
environments. Virtual Prototyping enables ESI’s clients to evaluate
the performance of their product and the consequences of its
manufacturing history, under normal or accidental conditions. By
benefiting from this information early in the process, enterprises
know whether a product can be built, and whether it will meet its
performance and certification objectives, before any physical
prototype is built. To enable customer innovation, ESI’s solutions
integrate the latest technologies in high performance computing and
immersive Virtual Reality, allowing companies to bring products to
life before they even exist.Today, ESI’s customer base spans nearly
every industry sector. The company employs about 1,000 high-level
specialists worldwide to address the needs of customers in more
than 40 countries.
ESI is listed in compartment C of NYSE Euronext Paris and is
granted “Entreprise Innovante” (Innovative Company) certification
since 2000 by Bpifrance. ESI is eligible for inclusion in FCPI
(venture capital trusts dedicated to innovation) and PEA PME.
2014 awards: winner of the 2014 ASMEP-ETI/Bpifrance award in the
Innovation and industrial strategy category and of the Grand Prix
des Entreprises de Croissance, in the Software and IT Services
category and winner of the “Ambitions d’Entrepreneurs” trophy in
the International category.
For further information, go to www.esi-group.com.
Investor RelationsESI Group - EuropeCorentine
Lemarchand, +33 1 53 65 14 14orESI Group – AmericaCorinne
Romefort-Régnier, + 1 415 994
3570orNewCapEmmanuel
HuynhorLouis-Victor Delouvrier+33
1 44 71 98 53
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