Strong performance in License sales and
general improvement in profitability
- Strong growth in Licensing
- Solid performance in engineering
studies
- General improvement in
profitability
- Ongoing integration of
acquisitions
Regulatory News:
Alain de Rouvray, ESI Group’s (Paris:ESI) Chairman and CEO,
comments: "The solid performance in the first half-year shows the
widening adoption of ESI Group's Virtual Prototyping solutions and
reflects the transformation of leading industrial firms to the
smart digital factory. This structural trend drives strong growth
of Licenses, particularly in the installed base, and is indicative
of the strength of ESI's industry standard solutions and the
Group's robust business model. The restructured Services division,
although held back by some cyclical effects, posted healthy growth
in high value added engineering studies which eventually lead on to
recurrent License sales. The cost control policy also delivered
further substantial improvements to profitability without reducing
the R&D investment which is core to the Group's development
strategy. Notably, ESI Group continues to differentiate itself
clearly from its competition by technological innovation and
adoption of disruptive technologies, including those represented in
recently acquired activities. The unique positioning of ESI's
solutions in the future markets for Virtual Engineering, coupled
with high-performing strategic international partnerships,
amplifies the solidity of the Group's activity and enables us to
look ahead with confidence over the short and medium term."
Consolidated half-year results
In € millions H1-FY15 H1-FY14
Δ (actual)
Δ (constant
currency)
Currency
effects
Total sales 48.4 42.6 +13.6% 3.2 +6.0%
Licenses 34.7 29.7 +17.0% 2.4 +8.8% Services 13.7 13.0 +5.6% 0.8
-0.6%
Gross margin 32.3 28.0 +15.3% 2.4
+6.7% % of sales 66.7% 65.7%
EBITDA* -2.5
-5.0 +49.3% -0.1 +51.3% % of sales -5.2% -11.7%
Current Operating Profit -3.7 -6.1 +38.9% -0.2
+42.2% % of sales -7.7% -14.3%
EBIT -4.6
-6.3 +27.6% -0.2 +30.7% % of sales -9.5% -14.8%
Attributable net profit/loss -3.6 -5.0 +28.2%
-0.6 +40.3% % of sales -7.4% -11.7%
Available
cash 10.0 8.2 +23.1%
These figures were approved by the Board of Directors on
September 15, 2015.
(*) EBITDA excludes the non-recurring result and now includes
the impact of R&D capitalization and provisions/reversals for
impairment of trade receivables. 2014 amount restated. See annexed
reconciliation table.
Reminder: the seasonal nature of the ESI Group’s Licenses
business results in the recognition of the largest share of annual
revenue in the fourth quarter of the year. Closing date of the
year: January 31.
Acquisition in the period: CIVITEC's activity was integrated
from March 27, 2015 and Ciespace's assets were consolidated as from
April 10, 2015. PicViz's assets are consolidated as from March 30,
2015, and Presto software was integrated from May 6, 2015.
Revenues by quarter
In € millions Q1 2015
ended April 30
Q1 2014 % chg. % chg.
(cer*) Q2 2015
ended July 31
Q2 2014 % chg. % chg.
(cer*)
Licenses
17.1 14.2
+20.2% +10.3% 17.6
15.5
+14.1% +7.4%
Services
7.0 5.9
+17.8% +9.9% 6.7
7.0
-4.8% -9.4%
Total
24.1 20.1 +19.5% +10.2%
24.3 22.5 +8.2% +2.2%
* cer: at constant exchange rates
Reminder: Closing date of the year: January 31
Revenue for the 1st half of 2015: strong growth
in licensing and solid performance in high value added engineering
studies
H1 revenues – Revenues for the 1st half of 2015 amounted
to €48.4 million, a healthy 13.6% growth in actual terms (+6.0% at
constant exchange rates). This strong performance reflects the
dynamism of the Licensing activity and was helped by currency
movements over the period, mainly in the US dollar, Japanese yen
and Korean won. Recent acquisitions mainly concerned technologies
requiring further development and their revenue impact was
therefore limited at this stage to €0.1 million. The product mix
shifted toward Licensing activity, which accounted for 71.7% of
revenues compared to 69.6% in the 1st half of 2014.
H1 Licenses – Licenses revenue recorded annual sales of
€34.7 million, a strong increase of 17% at actual rates (+8.8% at
constant exchange rates) driven by the remarkable 26.9% increase in
repeat business in the installed base (+17.1% at constant exchange
rates). The rate of repeat business was a massive 94.7% at actual
rates (87.4% at constant exchange rates compared to 76% in the 1st
half of 2014). New Business fell back by -8.1% at actual rates
(-12.9% at constant exchange rates) hampered by cyclical effects,
including the still difficult environment in Russia. The excellent
performance of IC.IDO has to be highlighted as it has been adopted
not only in traditional areas such as Ground Transportation and
Aerospace but also in Heavy Industry such as Kubota for its
loaders.
H1 Services – Services revenue was €13.7 million, up by
+5.6% at actual exchange rates (-0.6% at constant exchange rates).
The success of engineering studies, the core of ESI Group's
business, where revenues rose by +19.4% (+11.9% at constant rates),
reflected the continued refocus on high expertise, high value added
projects, particularly in Japan, France, Germany and the US. This
structural trend was, however, masked by declines in sales of other
services evident in the 2nd quarter.
H1 geographic mix – Over the period the geographical
distribution of revenues in actual currency shifted toward Asia
(41.1% vs. 40.2%) and the Americas (20.4% vs. 17.1%), and away from
Europe (38.5% vs. 42.7%) where sales were held back by Russia.
These trends, albeit amplified by the fall in the euro against the
US dollar and Asian currencies, reflect very strong License sales
at constant exchange rates; up by an impressive 24% in the USA and
26% in China.
At actual exchange rates, activity in BRIC countries contributed
12.2% of revenues compared to 13.3% in the prior year period as
growth in China and India was offset by the still difficult
environment in Russia.
Results for the 1st half of 2015: improved
profitability
Changed definition of EBITDA
The published EBITDA now includes the impact of capitalization
of R&D spending and the provisions for depreciation of trade
receivables. The change reflects the Group's aim to better
represent the business value of its EBITDA and thereby better
represent an innovation strategy which is based on acquisitions of
technology and R&D projects. These strategic investments, the
engine of future development, are an integral part of the Group's
intangible assets.
EBITDA is now reported at - €2.5 million, an increase of 49.3%
on the prior year period when calculated on a consistent basis, and
reflects a considerable improvement in profitability. Without the
change in definition, EBITDA would have been - €4.7 million, up by
1.7% on the prior year period. Eliminating the effect of
acquisitions over this first six months, EBITDA would be - €3.8
million, up by 20.5%, again showing the clear improvement in the
Group's underlying performance thanks in large part to the cost
control policy. (See annexed reconciliation table.)
Improvement in Gross Margin
Gross margin was 66.7% of actual sales, a 1 percentage point
improvement thanks to the shift in the product mix toward
Licenses.
Continuation of cost control policy
The Group's cost control policy helped to contain the growth of
General and Administrative (G&A) and Sales and Marketing
(S&M) spending to below revenue growth. G&A expenses were
€8.1 million, 16.8% of revenues vs. 18.5% the prior year. S&M
costs were €18.0 million, 37.3% of revenues against 38.2%
previously.
Spending on R&D was €13.9 million (not including the CIR
research tax credit), up by 23.5% (+14.1% at constant exchange
rates). This investment includes spending on existing technologies
and recent initiatives for external growth, including active
security in transportation, Cloud deployment, big data visual
analytics and fluid thermodynamics. Excluding acquisitions, the
R&D spend was €13.4 million. After adjusting for the impact of
the capitalization of the development costs and the CIR, R&D
costs were €9.8 million, down by €0.1 million. The figure was
boosted by lower amortization over the period, as determined by the
timing of the releases of new versions of ESI software.
Results - Robust business model
The improvement in Current Operating Profit was also due to
S&M and G&A expenses growing more slowly than revenues; a
deliberate policy in line with the Group's strategy to boost
profitability.
The smaller increase in EBIT margin reflected the costs of
technological acquisitions over the period.
After taking into account the financial result and tax, the
attributable net loss was - €3.6 million, a significant 28.2%
improvement on the 1st half of 2014.
Solid financial structure
Available cash amounted to €10.0 million at July 31, 2015,
versus €8.2 million at July 31, 2014. Net debt was €7.4 million,
vs. €10.7 million at January 31, 2015 and gearing (debt-to-equity
ratio) of just 8.9% underlines the balance sheet strength of ESI
Group.
Outlook: technological integration of recent acquisitions
allowing the democratization of Virtual Prototyping.
As a leader in supporting the transition to the digital factory,
ESI Group is actively pursuing a strategy of integrating future
technologies in its offering as it progresses on a path towards
democratizing Virtual Prototyping throughout the industrial
ecosystem. With this in mind, the Group's technology platforms are
built to encourage total, immersive and real-time integration of
all stages of industrial product development, from concept/design
to prototype manufacture and regulatory pre-certification.
Innovative visualization technologies like IC.IDO and the
availability in Cloud/SaaS mode of the VPS/VMS virtual prototyping
chain are considerably increasing the collaborative potential of
ESI Group solutions and offer the opportunity to radically reduce
costs of acquisition and ownership.
By building on its unique assets and products, with technology
that has been substantially enhanced by recent acquisitions, ESI
Group aims to extend the use of its solutions to everyone involved
in the product development process (engineers, technicians,
management, marketing, etc.). Medium term, these growth areas
should sustain the commercial momentum the Group has been seeing
for several quarters.
Reconciliation table following the change in the definition
of EBITDA
In € millions
H1 FY15 H1 FY14
Turnover 48.4 42.6 EBITDA -
former definition -4.7 -4.8 of which organic -3.8
-4.8 of which 2015 M&A -0.9 R&D capitalization - net
effect 2.8 0.2 Net provisions for accounts receivable depreciation
-0.6 -0.4
EBITDA - new definition -2.5
-5.0 of which organic -2.1 -5.0 of which 2015 M&A -0.4
Amortization on other tangible and intangible assets -1.1
-1.1 Other Net provisions 0.0 0.0
Current Operating
Profit -3.7 -6.1
For more ESI news, visit: www.esi-group.com/company/press
Next Event:
Sales for the 3rd quarter:
November 26, 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 more than 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.
For further information, go to www.esi-group.com.
View source
version on businesswire.com: http://www.businesswire.com/news/home/20150917006220/en/
Investors RelationsESI Group - EuropeCorentine
Lemarchand, +33 1 53 65 14 14orESI Group - AmericasCorinne
Romefort-Régnier, + 1 415 994
3570orNewCapEmmanuel Huynh or Louis-Victor
Delouvrier, +33 1 44 71 98 53
ITT Educational Services (CE) (USOTC:ESINQ)
Historical Stock Chart
From Mar 2024 to Apr 2024
ITT Educational Services (CE) (USOTC:ESINQ)
Historical Stock Chart
From Apr 2023 to Apr 2024