Sat. Jan 18th, 2020

Hot Stocks: Landis+Gyr (SWISS: LAND.SW)

32 min read

 Landis+Gyr (SWISS: LAND.SW) newly stated unaudited fiscal results for the first half of fiscal year 2k19 (April 1–September 30, 2k19). Key highlights included:

  • Net revenue reached USD 862.80M, increasing 3.40 percent in constant currency
  • Order intake was USD 818.90M, a book to bill ratio of 0.950
  • Committed backlog up 7.10 percent year-over-year to USD 2.510B
  • Adjusted EBITDA up 16.90 percent to USD 124.90M, a margin of 14.50 percent; includes one-off gain of USD 5.60M resulting from a Brazilian VAT court case ruling (13.80 percent apart from the VAT court case ruling)
  • Stated EBITDA of USD 128.20M contrast to USD 114.90M in the previous year
  • Both the EMEA and Asia Pacific regions practiced sales growth of 10.50 percent and 32.00 percent in constant currency respectively in addition to Adjusted EBITDA margin expansion. The Americas posted resilient margins despite lower sales.
  • Net income up 21.30 percent to USD 71.80M or USD 2.450 for each share
  • Free Cash Flow, apart from M&A, USD 33.10M

Order Intake, Committed Backlog and Net Revenue
Order intake for H1 FY 2k19 was USD 818.90M, a decline of 7.10 percent year-over-year in constant currency and equal to a book to bill ratio of 0.950. Committed backlog was up 7.10 percent year-over-year at USD 2,514.10M. All regions stated inclines in committed backlog contrast to the prior year.

In H1 FY 2k19, net revenue grew 3.40 percent year-over-year in constant currency, to USD 862.80M.

The Americas region delivered lower net revenue year-over-year, falling 4.30 percent, or 4.10 percent in constant currency, because of the timing of the roll off of two full-scale deployments formerly underway in the US. The Americas’ committed order backlog grew by 7.40 percent, driven by new contract wins with Ameren, Colorado Springs Utilities, PSEG Long Island and others.

Net revenue in the EMEA region was up contrast to the previous year by 5.00 percent or 10.50 percent in constant currency. Strong volumes in the UK drove the region’s first-half performance, as destocking related to Brexit did not materialize. EMEAʼs committed order backlog stood at USD 790.20M at the duration end, up 3.90 percent year-over-year.

Asia Pacific likewise contributed to higher sales with year-over-year growth of 26.20 percent, or 32.00 percent in constant currency, as demand in Australia, Hong Kong, and India drove the incline. Committed backlog was USD 89.00M, up 36.70 percent contrast to H1 FY 2k18.

Overall, H1 FY 2k19 Adjusted EBITDA margin increased to 14.50 percent from 12.50 percent in the previous year. H1 FY 2k19 Adjusted EBITDA rose more significantly than sales, growing 16.90 percent year-over-year, coming in at USD 124.90M, counting the one-off positive impact from the Brazilian court VAT ruling of USD 5.60M. Continued cost and efficiency improvements in EMEA and Asia Pacific more than offset a revenue-driven decline in the Americas’ results, while lower incremental costs associated with eased supply chain constraints contributed USD 8.80M to the Adjusted EBITDA improvement.

Net Income and EPS
Net income for H1 FY 2k19 was USD 71.80M, or USD 2.450 for each share, and compares to USD 59.20M, or USD 2.010 for each share, for H1 FY 2k18, a boost of 21.30 percent and 21.90 percent respectively.

Cash Flow and Net Debt
Cash offered by operating and investing activities was USD 33.10M in H1 FY 2k19 contrast to USD (4.80)M in the previous year. H1 FY 2k18 included a USD 18.90M equity contribution cash outflow for the intelliHUB JV.

Free Cash Flow (apart from M&A) was USD 33.10M in H1 FY 2k19, a boost of USD 19.00M contrast to H1 FY 2k18, as the seasonal pattern of a markedly lower Free Cash Flow (apart from M&A) in the financial year’s first half continued.

In H1 FY 2k19, capital expenditure amounted to USD 12.70M, below the H1 FY 2k18 level of USD 16.90M, consistent with the Company’s asset-light business model. As of September 30, 2k19, the ratio of net debt to the trailing twelve months Adjusted EBITDA ratio was 0.40 times, with net debt USD 11.00M lower year-over-year, even after the payment of USD 94.00M in dividends and USD 20.30M for share buyback throughout H1 FY 2k19. The share buyback program is about 30.00 percent accomplished.

Guidance for FY 2k19
“We remain positive on the balance of FY 2k19, although regulatory delays could slow some project starts in the US. As a result, we have lowered our top line guidance somewhat. Our guidance for FY 2k19 Adjusted EBITDA and Free Cash Flow (apart from M&A) remains unchanged,” Mora concluded.

Landis+Gyr now anticipates FY 2k19 net revenue growth of about 1.00–4.00 percent in constant currency, as compared to the earlier range of 2.00–5.00 percent. Group Adjusted EBITDA is expected to be between USD 240.00M and USD 255.00M. Free Cash Flow (apart from M&A) is expected to be between USD 120.00M and USD 135.00M, with a dividend payout of at least 75.00 percent of Free Cash Flow (apart from M&A).

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