Q4 & Full Year 2019 results January 31, 2020
Important information Forward-Looking Statements and Risks & Uncertainties This document and the related oral presentation contain, and responses to questions following the presentation may contain, forward-looking statements that reflect the intentions, beliefs or current expectations and projections of Signify N.V. (the “Company”, and together with its subsidiaries, the “Group”), including statements regarding strategy, estim ates of sales growth and future operational results. By their nature, these statements involve risks and uncertainties facing the Company and its Group Companies and a number of important factors could cause actual results or outcomes to differ materially from those expressed in any forward-looking statement as a result of risks and uncertainties. Such risks, uncertainties and other important factors include but are not limited to: adverse economic and political developments, the impacts of rapid technological change, competition in the general lighting market, development of lighting systems and services, successful implementation of business transformation programs, impact of acquisitions and other transactions, impact of the Group’s operation as a separate publicly listed company, pension liabilities and costs, establishment of corporate and brand identity, adverse tax consequences from the separation from Royal Philips and exposure to international tax laws. Please see “Risk Factors and Risk Management” in Chapter 12 of the Annual Report 2018 for discussion of material risks, uncertainties and other important factors which may have a material adverse effect on the business, results of operations, financial condition and prospects of the Group. Such risks, uncertainties and other importa nt factors should be read in conjunction with the information included in the Company’s Annual Report 2018 and the semi-annual report 2019. Additional risks currently not known to the Group or that the Group has not considered material as of the date of this document could also prove to be important and may have a material adverse effect on the business, results of operations, financial condition and prospects of the Group or could cause the forward-looking events discussed in this document not to occur. The Group undertakes no duty to and will not necessarily update any of the forward-looking statements in light of new information or future events, except to the extent required by applicable law. Market and Industry Information All references to market share, market data, industry statistics and industry forecasts in this document consist of estimates compiled by industry professionals, competitors, organizations or analysts, of publicly available information or of the Group’s own assessment of its sales and markets. Rankings are based on sales unless otherwise stated. Non-IFRS Financial Statements Certain parts of this document contain non-IFRS financial measures and ratios, such as comparable sales growth, adjusted gross margin, EBITA, adjusted EBITA, EBITDA, adjusted EBITDA and free cash flow, and other related ratios, which are not recognized measures of financial performance or liquidity under IFRS. The non-IFRS financial measures presented ar e measures used by management to monitor the underlying performance of the Group’s business and operations and, accordingly, they have not been audited or reviewed. Not all companies calculate non-IFRS financial measures in the same manner or on a consistent basis and these measures and ratios may not be comparable to measures used by other companies under the same or similar names. A reconciliation of these non-IFRS financial measures to the most directly comparable IFRS financial measures is contained in this document. For further information on non- IFRS financial measures, see “Chapter 18 Reconciliation of non - IFRS measures” in the Annual Report 2018. Presentation All amounts are in millions of euros unless otherwise stated. Due to rounding, amounts may not add up to totals provided. All reported data are unaudited. Unless otherwise indicated, financial information has been prepared in accordance with the accounting policies as stated in the Annual Report 2018 and the semi-annual report 2019. Market Abuse Regulation This presentation contains information within the meaning of Article 7(1) of the EU Market Abuse Regulation. 2
Content Summary performance 2019 by Eric Rondolat Financial performance for Q4 19 by Stéphane Rougeot FY 19 highlights by Eric Rondolat Outlook & conclusion by Eric Rondolat Q&A 3
Summary financial & business performance 2019 • LED-based comparable sales grew by 1.4% in FY 19 and represented 78% of sales • Signify’s installed base of connected light points increased from 44m at YE18 to 56m at YE19 % • Adj. EBITA margin improved by 30 bps to 10.4%, including a currency impact of -20bps • Adj. indirect costs decreased by EUR 125m, or -6,6%, on a currency & scope comparable basis • FCF of EUR 529m (FY 18: EUR 306m), or 8.5% of sales, incl. a EUR 71m positive impact from IFRS 16 • Proposed 2019 dividend per share of EUR 1.35 (+3.8%) in cash • Enhanced focus on growth initiatives to strengthen our market leadership and improve our growth profile • Substantial acquisitions made in 2019 to strengthen our business and financial profile • Solid progress made on our 2020 Sustainability goals; well on track to become carbon neutral this year 4
Content Summary performance 2019 by Eric Rondolat Financial performance for Q4 19 by Stéphane Rougeot FY 19 highlights by Eric Rondolat Outlook & conclusion by Eric Rondolat Q&A 5
The growing profit engines reported a CSG of -0.7% and Adjusted EBITA margin improvement of 180 bps in Q4 19 Adjusted Adjusted EBITA vs LY (EURm) vs LY (bps) CSG % Q4 19 EBITA % (EURm) -2.9% +8 77 14.3% -10 LED -1.5% 92 +7 12.7% +70 Professional 9.5% +22 38 19.8% +1,090 Home -0.7% +36 207 14.2% +180 Total 6
LED Adjusted EBITA margin remained solid at 14.3% Key observations for Q4 19 Sales (in EURm) & comparable sales growth (in %) • Nominal sales increased by 12.3% reflecting the 0.9% 0.2% -0.2% consolidation of the Klite acquisition -1.8% -2.9% • Comparable sales decreased by 2.9% • LED lamps delivered a solid performance • LED electronics continued to be impacted by lower customer demand in most regions 481 449 445 457 541 Q4 18 Q1 19 Q2 19 Q3 19 Q4 19 Adjusted EBITA (in EURm & as % of sales) • Adjusted EBITA margin remained solid at 14.3%, mainly 14.4% 14.3% as a result of ongoing procurement savings 12.3% 12.0% 11.9% 69 54 53 56 77 Q4 18 Q1 19 Q2 19 Q3 19 Q4 19 7
LED business highlights Launched the WiZMote Introduced remote Launched first Launched first D4i driver control device for quick control-based fan ceiling generation of round (Xitanium SR 165W C170 access and control category in China shape Industry drivers sXt D4i) • • • New technology with Allows for very compact D4i is the new standard • Plug & play connected integrated lighting and and round high bay LED for interoperability of light right out of the box cooling system fixtures drivers and sensors • 8 settings allow for quick • • • Strengthens our all-in- Generate more than 40% Allows for easy exchange access and control one lighting ceiling energy savings compared of different IoT nodes or • Pair the WiZMote to the portfolio by expanding to HID fixtures sensors on outdoor WiZ app for enriched, • offering for home users Watertight metal fixtures personalized settings • • Available in China since enclosure enables usage Helps municipalities to October 2019 in harsh industrial transition to connected environments outdoor lighting 8
Professional Adjusted EBITA margin improved by 70 bps, mainly driven by indirect cost savings Sales (in EURm) & comparable sales growth (in %) Key observations for Q4 19 • CSG of -1.5%, mainly due to 1.7% • Challenging market conditions, most notably in India -1.5% -1.5% -5.6% -6.9% and China • Lower market activity in the US 715 599 632 698 720 Q4 18 Q1 19 Q2 19 Q3 19 Q4 19 Adjusted EBITA (in EURm & as % of sales) • Adjusted EBITA margin increased by 70 bps to 12.7%, 12.7% 12.3% 12.0% mainly driven by indirect cost reductions 8.8% 5.3% 85 32 55 86 92 Q4 18 Q1 19 Q2 19 Q3 19 Q4 19 9
Professional business highlights Launched tailor-made Extended the reach of Provided Australis Launched Interact 3D-printed luminaires Trulifi through three Seafoods with Industry in collaboration for circular economy new partnerships aquaculture LED lighting with Pilkington • • • • Reduces carbon With Vodafone Germany Lights mimic the sun Provides industrial • footprint by 47% vs we combine 4G/5G Allows fish to see feed businesses with energy metal luminaires connectivity with LiFi better and grow better, savings • • • Provides customers with With Latecoere we resulting in higher Feed Establishes safer working a level of flexibility that develop LiFi systems for Conversion Rate and environment in traditional commercial airplanes cleaner water warehouses and factory • • manufacturing can’t With Ellamp we develop Lights are submerged at environments • offer LiFi systems for busses 5 meters, reducing Delivers insights into • To install thousands of and trains infections by sea lice space usage, boosting • 3D-printed luminaires at More than 100 pilots who live closer to the efficiency M&S in UK worldwide surface 10
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