Barco : Half Year Results 2024

Half Year Results 2024

17 Jul 2024 16:39 CEST

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Issuer

BARCO N.V.

Signs of improvement in Q2, while investing in future growth

Kortrijk, Belgium, 17 July 2024, 7:15 am - Today Barco (Euronext: BAR; Reuters: BARBt.BR; Bloomberg: BAR BB) announced results for the 6-month period ended 30 June 2024.

First half and second quarter 2024 highlights

• Orders 1H24 of 463.3 million euro, a decrease of 14% vs 1H23
• Orderbook at end 1H24 at 533.3 million euro, up 38.5 million euro versus end FY23
• Sales 1H24 of 434.5 million euro, a decrease of 17% versus 1H23
• Gross profit 1H24 of 172.6 million euro, or 39.7% of sales versus 40.9% in 1H23
• EBITDA 1H24 of 35.2 million euro, or 8.1% of sales versus 12.5% of sales in 1H23
• FCF 1H24 14.6 million euro, step-up of 38.7 million euro vs 1H23 FCF of -24.1 million
  
• Orders 2Q24 at 243.2 million euro, 4% lower vs 2Q23 and 10% higher versus 1Q24
• Sales 2Q24 of 238.6 million euro, 13% lower than 2Q23 and 22% higher than 1Q24
  
• New Entertainment manufacturing plant in Wuxi, China opened in May 2024
• On track to launch new products in 2H24 as planned

Executive summary

Group topline

(in millions of euros)	1H24	1H23	1H22	1H21	Change 1H24 vs 1H23
Orders	463.3	541.1	509.2	465.6	-14%
Sales	434.5	520.9	472.6	366.0	-17%

1H Quarter-by-quarter overview

Group topline - orders and sales starting to recover, led by the Americas

Although orders for the first semester were below last year, they were higher in the second quarter than the first quarter, indicating the start of an improvement in business conditions, particularly in the Americas. Compared to last year, second quarter orders declined 4% whereas first quarter orders declined 23%. In EMEA, market conditions remained soft, mainly due to ongoing inventory digestion by Healthcare and Meeting Experience customers. With a positive book-to-bill ratio in 1H24, the orderbook expanded to 533.3 million euro.

Likewise, while sales for the first semester declined 17% year-over-year, sales for the second quarter declined 13% versus last year but were 22% higher than in the first quarter. For the first half, sales in EMEA declined due to weak market conditions in Entertainment and inventory destocking in Healthcare and Meeting Experience, partially offset by flat sales in the Americas. Overall, we see customers delaying investments, driven by uncertainty in the macro-economic conditions and also in anticipation of the new product introductions that are planned for the second half of the year in all 3 divisions.

Division topline - gradual improvement in all divisions as of the second quarter

For the Healthcare division, orders and sales have gradually improved throughout the semester, while inventory levels at customers have been worked down to normalized levels. The division is on schedule to launch new products in the second half, which are expected to drive growth. Diagnostic Imaging had a solid sales performance, close to last year's level, with double-digit sales growth in the Americas region and strong demand for our premium portfolio. The EMEA market was softer and more competitive. However, Surgical and Modality customers still had excess inventory of existing product platforms in 1H24, which is delaying the demand pull of new product platforms where Barco's solutions are designed-in. This is mostly impacting modality contracts; therefore the product mix has shifted towards more surgical and software products.

The Enterprise division saw the impact of customer inventory reductions for Meeting Experience, mainly in EMEA. Customers took additional inventory toward the end of 2023, ahead of changes in partner terms. Since the beginning of the year, ClickShare inventories in the channel have reduced now with more than 20 million euro. Meanwhile, the sell-out of ClickShare by our distributors to resellers and end-customers was in line with the market, at a single-digit decline in value versus last year. After the successful strategic review in 2023, Control Rooms grew in 1H24 in orders and sales, delivering on a strong order book, and increased its share of software in the product mix. For Control Rooms, growth in EMEA and the Americas was partially offset by a decline in APAC, where Barco withdrew from a number of markets.

Entertainment also experienced better results in the second quarter than in the first quarter, with order intake up 18%, led by Americas and APAC. In the Cinema market, cinema exhibitors delayed investments due to a weak movie slate at the beginning of the year, following the strike in Hollywood in 2023. A stronger slate is expected in the second half of 2024. The division continued to deliver on Cinema-as-a-Service contracts resulting in an increasing mix of recurring revenue. For Immersive Experience demand is improving in the Americas, while EMEA is still facing soft market conditions. With several new product launches planned in the second half, the orderbook grew during the second quarter, as customers began to pre-order these new products.

EBITDA impacted by topline decline; Cashflow positive at 14.6 million euro

The gross profit margin was relatively steady at 39.7%, versus 40.9% in 1H23. The gross profit margin grew in Entertainment and especially in Healthcare, driven by a more favorable product mix and the cost efficiencies of the new factory in Suzhou. This was offset by a significant decline in Enterprise, which was impacted by lower ClickShare volume in the product mix.

EBITDA was 35.2 million euro, down from 65.0 million a year ago. EBITDA margin was 8.1%, which is 4.4 percentage points lower than in 1H23. In light of the upcoming product launches, investments in R&D increased year-over-year, however the total indirect spend decreased nominally. The depleted topline generated operating deleverage, especially in Enterprise where there was material impact from the ClickShare inventory corrections. The Enterprise division did recover during the semester with an EBITDA margin in the second quarter that was already moving towards the EBITDA margin in the full first half of 2023.

Free cash flow for 1H24 was 14.6 million euro positive, a significant improvement of 38.7 million versus negative FCF 24.1 million euro in 1H23. Capex for the semester amounted to 19.1 million euro, mainly for the Wuxi manufacturing plant and customer leases. ROCE was at 11% of sales.

Quote of the co-CEO's, An Steegen and Charles Beauduin

"In the first half of 2024, our business was hampered by customer inventory destocking in Meeting Experience and Healthcare. In Entertainment, customers delayed investments as a result of a light movie slate and in anticipation of our upcoming product launches.

While visibility remains low, we have reasons to look forward to a very different second half of the year. Customer inventory levels are returning to normalized levels and the market conditions are improving in Entertainment. In addition, we are on track to launch numerous new products across all divisions, which we expect will contribute to both topline and profitability.

We remain committed to continuing to invest in our innovation pipeline in preparation for more product introductions in 2025 and beyond. We are also enhancing our competitive cost position with the roll-out of our focused factories strategy, including the newly opened Entertainment plant in China."

Outlook full year 2024

The following statements are forward looking on a like-for-like basis and actual results may differ materially

Management expects topline growth in the second half versus last year. From 2025, we expect topline growth on a full year basis.

The EBITDA margin for the full year is depending on the topline and the product mix. For the second half, strong recovery is expected, with an EBITDA margin of 11-13% for the full year 2024.

Full press release in attachment.

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Disclaimer

This press release may contain forward-looking statements. Such statements reflect the current views of management regarding future events, and involve known and unknown risks, uncertainties and other factors that may cause actual results to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Barco is providing the information in this press release as of this date and does not undertake any obligation to update any forward-looking statements contained in this press release in light of new information, future events or otherwise. Barco disclaims any liability for statements made or published by third parties and does not undertake any obligation to correct inaccurate data, information, conclusions or opinions published by third parties in relation to this or any other press release issued by Barco.

About Barco

Barco, headquartered in Kortrijk (Belgium), is a global company leading in visualization, networking, and collaboration technology. Its innovative solutions drive advancements in the healthcare, enterprise, and entertainment markets. At the heart of Barco's success are over 3,000 dedicated 'visioneers', each passionately contributing to driving change through technology.

Listed on Euronext (BAR), Reuters (BARBt.BR), and Bloomberg (BAR BB), Barco realized sales of 1,050 million euro in 2023.

For further insights, please visit www.barco.comor connect on X, LinkedIn, YouTube, Instagram, and Facebook.

Barco. Visioneering a bright tomorrow. © 2024

2024-07-17-1h24-results.pdf

Source

Barco

Provider

Euronext

Company Name

BARCO

ISIN

BE0974362940

Symbol

BAR

Market

Euronext