COPENHAGEN I 28 AUGUST 2020 RTX PRESENTATION Q3 2019/20 Presentation by CEO Peter Røpke CFO Morten Axel Petersen
DISCLAIMER This presentation contains statements regarding expectations for the future development of RTX A/S, in particular the direction of future product development, future sales, operating profits and business expansion. Such statements are subject to risks and uncertainties as various factors, many of which are outside the control of RTX, may cause the actual development and results to differ materially from the expectations expressed directly or indirectly in this presentation. Factors that might affect such expectations include, among others, rapid technological changes and evolving markets, overall economic and business conditions, fluctuations in currencies, demand for RTX’s services, competitive factors in the market and uncertainties concerning possible investments. 2 August 2020 I IR Presentation
STRENGTH PROFILE RTX has a: • Market-leading position in wireless solutions. • Proven ability to develop, innovate and manufacture customized solutions. • Track record of profitable growth , consistently sustained for many years. • Dedicated growth strategy – unleashing wireless wisdom through selected B2B target markets. • Solid business model with high degree of recurring revenue from loyal customers. • High profitability, that can be maintained with the right product mix. • Leverage opportunity within the current business setup. • Sustained focus on shareholder value - CFFO invested in value creation or paid back to the shareholders. 3 August 2020 I IR Presentation
RTX AT A GLANCE: SUSTAINED PROFITABLE GROWTH RTX is a global company with +25 years of extensive experience and knowledge KEY RTX FACTS in designing and manufacturing advanced wireless short-range radio systems and products. Our heritage has provided us with a unique combination of software 1993 and hardware capabilities which RTX leverages with globally recognized customers, from conceptualization to finished products and modules. Founded in 1993 and headquarter in Denmark +1,000 5-YEAR REVENUE GROWTH 5-YEAR EBITDA GROWTH 5-YEAR EBIT GROWTH DKK million DKK million DKK million Projects completed since 1993 CAGR CAGR CAGR 100 12.5% 14.2% 13.5% 87 560 83 77 75 289 72 475 70 66 434 396 59 52 350 FTEs at 30 September, 2019 +6.8m Units of products and modules delivered in 2018/19 14/1 4/15 15/1 5/16 16/1 6/17 17/1 7/18 18/1 8/19 14/1 4/15 15/1 5/16 16/1 6/17 17/1 7/18 18/1 8/19 14/1 4/15 15/1 5/16 16/1 6/17 17/1 7/18 18/1 8/19 4 4 August 2020 I IR Presentation
AGENDA 1. Business and Full-Year Update 2. Financial Update Q3 2019/20 3. Recap: Business Model and Growth Strategy 4. Q&A Session Peter Røp øpke Mor orten Axel l Petersen President & CEO CFO 5 August 2020 I IR Presentation
BUSINESS AND FULL- YEAR UPDATE 6 August 2020 I IR Presentation
BUSINESS UPDATE Q3 2019/20 • Satisfactory Q3 with revenue and earnings growth, despite COVID-19 challenges. • Revenue growth in the Enterprise segment (Business Communications) primarily driven by Headsets. • Within Design Services revenue growth is driven primarily by Healthcare and by recurring revenues from product sales and royalties, while revenues from engineering services (NRE) decrease in line with strategy. • Focus on cost management and resource utilization across the RTX organization. • Full year revenue outlook challenged by the COVID- 19 pandemic. Customers’ conversation rate from forecast to orders is lower than expected. • Full year earnings outlook maintained and narrowed with prudent cost management • Customers still committed to new product development activities. Therefore, RTX’s strategic direction is still considered to be right. 7 November 2019 I IR Presentation 7 August 2020 I IR Presentation 7
UPDATED OUTLOOK 2019/20 R E V E N U E O U T L O O K A D J U S T E D ; E A R N I N G S O U T L O O K M A I N TA I N E D A N D N A R R O W E D Resu esult Resu esult Resu esult Orig iginal outl outlook Upd pdated ou outlook (24 (24 DK DKK mill illion 20 2016 16/17 2017 20 17/18 2018 20 18/19 20 2019 19/20 Aug) 20 Aug 2019 19/20 Revenue 433.5 475.3 560.3 620 - 650 550 - 570 EBITDA 77.2 83.1 100.2 105 - 120 105 - 115 EBIT 72.3 74.9 86.7 75 - 90 80 - 90 The COVID-19 pandemic increases uncertainty related to the global flow of goods (sporadic lockdowns etc.). The outlook for 2019/20 assumes that no unforeseen events occur causing supply or logistics disruptions. As described in the annual report in the section concerning risk management, RTX is relatively highly exposed to foreign currencies, as a considerable part of the revenue is settled in US dollars. 8 August 2020 I IR Presentation
CURRENTLY EIGHT FRAMEWORK AGREEMENTS IN VARIOUS LIFE CYCLE STAGES DEVELOPMENT PHASE RAMP PHASE MAIN PHASE PROLONGATION/RENEWAL 1. Enterprise “Older” / “legacy” 2. Enterprise framework agreements 3. Enterprise 4. Healthcare Reasonably stable customer forecasts from established customers; some, but lower, Framework agreements 5. Enterprise (headset) quarter-on-quarter fluctuations announced during 2017/18 6. Enterprise in product sales Customer forecasts not yet stable in ramp phase; quarter- on-quarter fluctuations in product sales Framework agreements 7. ProAudio announced Q4 2018/19 8. Enterprise No product sales in development phase (some NRE revenue) Note: The life cycle stage will vary for individual products for the same customer, the above is therefore an approximation for the 9 August 2020 I IR Presentation “average” life cycle stage for each framework agreement
FINANCIAL UPDATE Q3 2019/20 10 August 2020 I IR Presentation
GROUP FINANCIAL HIGHLIGHTS Q3 2019/20 REVENUE EBITDA EBIT EBITDA-MARGIN EQUITY RATIO CFFO DKK 158 m DKK 39 m DKK 33 m 24.6 % 66 % DKK 48 m Q3 Q3 EBITDA EB EBIT EB REVENUE DKKm DKKm DKKm +6.5% +31% +24% 160,0 40,0 35,0 140,0 35,0 30,0 120,0 30,0 25,0 100,0 25,0 20,0 80,0 20,0 15,0 60,0 15,0 10,0 40,0 10,0 5,0 20,0 5,0 0,0 0,0 0,0 Q3 3 15 15/1 /16 Q3 3 16 16/1 /17 Q3 3 17 17/1 /18 Q3 3 18 18/1 /19 Q3 3 19 19/2 /20 Q3 3 15 15/1 /16 Q3 3 16 16/1 /17 Q3 3 17 17/1 /18 Q3 3 18 18/1 /19 Q3 3 19 19/2 /20 Q3 3 15 15/1 /16 Q3 3 16 16/1 /17 Q3 3 17 17/1 /18 Q3 3 18 18/1 /19 Q3 3 19 19/2 /20 DIVIDEND & REVENUE EBITDA EBIT EBITDA-MARGIN BUY-BACKS CFFO DKK 400 m DKK 55 m DKK 72 m 17.9 % DKK 62 m DKK 78 m 9M 9M August 2020 11 11 I IR Presentation
GROUP P&L Q3 & NINE MONTHS (9M) 2019/20 • Re Revenue in Q3 increased by 6.5% compared to last year. Both Business DKK million Q3 19/20 Q3 18/19 9M 19/20 9M 18/19 Communications (+7.8%) and Design Services (+3.5%) increased revenue. The growth was primarily driven by Enterprise Headsets and from the Healthcare segment Revenue 158.5 148.9 399.5 403.2 (patient monitoring). Enterprise Handset and Base Station products were impacted from deliveries postponed from Q2 into Q3 and by quarter-on-quarter fluctuations Cost of sale -72.6 -64.9 -171.8 -174.2 during the ramp phase of a large framework agreement announced during Q3 2017/18. Recurring revenue from product sales and royalties increased while Gross profit 85.9 83.9 227.7 229.0 revenues from engineering services (hourly-based engineering) decreased in line with the growth strategy. Gross margin % 54.2% 56.4% 57.0% 56.8% • FX corrected revenue growth of 4.7% due to positive impact, of limited magnitude, Other external cost -13.5 -14.4 -40.6 -46.2 from the USD exchange rate in Q3. Staff cost -41.1 -45.0 -136.0 -133.7 • The he Gro ross Ma Margin in Q3 decreased by 2.2 %-points over last year due to changes in the revenue mix with a higher share of product sales relative to revenues from Value of own work transferred to engineering services. assets 7.7 5.1 20.6 14.3 • Prudent cost management in response to COVID-19 have kept capaci city ty cos osts below plan. The average number of FTEs has increased from 281 in Q3 last year to 291 this EBITDA 38.9 29.7 71.7 63.4 year for ramping-up capacity in order to execute the new framework agreements Depreciation and amortization -6.3 -3.4 -17.0 -9.7 announced over the last couple of years. However, during Q3 the number of FTEs is largely unchanged, i.e. fewer new employees than planned and instead internal Operating Profit (EBIT) 32.6 26.2 54.6 53.6 reorganization of engineering resources. Additionally, lower employee bonus costs. Other external costs decreased compared to last year due to implementation of IFRS 16 (capitalization of leasing). • With increased revenue and tight cost management, EB EBITDA increased by 31.1% in Q3. For 9M, EBITDA is 13.1% above last year. Similarly, EB EBIT increased by 24.2% in Q3 and by 1.8% for 9M. August 2020 12 I IR Presentation
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