Strong performance improvements as
foundation for the Group OneESI 2024 strategic plan for higher
growth and profitability
- Full year revenues at €136.6m: +4.6% YoY at constant
exchange rate (cer), +3.0% at current exchange rate, at the top end
of the Group’s shared guidance (€133.5m to €136.5m)
- Doubling Adjusted EBIT1 margin from 4.5% to 9.6%
- Healthy financial situation – Gearing improved – from 28.4%
in 2020 to 17.2% in 2021
Regulatory News:
ESI Group, Rungis, France,
(ISIN Code: FR0004110310, Symbol: ESI) (Paris:ESI),
today releases its sales and
results for the full year 2021 (period from January 1st to December
31st) approved by the Board of Directors on February 28th,
2022.
Cristel de Rouvray, Chief Executive Officer of ESI Group,
comments: “In 2021 we successfully steered our company through
a governance change, announced our redefining 3-year strategic plan
and demonstrated considerable performance improvements. We
reignited growth and more than doubled our Adjusted EBIT margin. On
this excellent foundation we now enter the 1st year of our “OneESI
2024 – focus to grow” plan. Across the globe, all our stakeholders
are now experiencing the early benefits of this significant change
in our ability to focus and drive results. I am confident in our
ability to deliver our communicated multi-year objectives and
long-term value to our shareholders by repositioning our
Group.”
2021, a foundational year for ESI Group
2021 results show that ESI
Group continues delivering on its commitments. FY21 marks the first
significant improvement in profitability, the result of actions
initiated over a year ago while reigniting growth.
ESI Group generated revenues
at the top end of the range communicated to the market (between
€133.5m and €136.5m) at €136.6m in 2021, up 4.6% at constant
exchange rate (cer). For licenses, repeat business (Renewals +
Add-ons) grew by 3.7% (cer) to €99.1m and new business grew by 8.6%
(cer). For services, consulting activity revenues increased by 9.6%
cer at €24.8m. Q4 revenues amounted to €30.6m (vs €29.9m in 2020),
up 2.2% cer, for an H2 growth of 5.8% cer.
The geographical breakdown of
full-year revenues showed that all regions grew: the EMEA region
+4.5% (cer), Asia +2.7% (cer) and the Americas +10% (cer). Asia and
Americas were negatively impacted by Forex (-3.5% for Asia and
-3.7% for Americas).
In 2021, led by a renewed
leadership team, ESI Group embarked on its 3-year strategic plan
“OneESI 24 – Focus to grow” (more info HERE) by initiating parallel and complementary
projects aiming to transform its operating model and practices. The
Group continued investing in talent, in its offerings, and its
products within a healthy run-rate framework to help drive cost
reductions (headcount - 6%, costs to adjusted Ebit -2,3%). The
growth of the topline of €4,0m, combined with costs reduction, led
to an increase in Adjusted EBIT1 of €6,9m.
Gross margin rate increased to
75.3% vs 74.5% in 2020 due to higher licensing and consulting gross
margins. In 2021, staff costs decreased to €91.3 m vs €93.4m last
year. The Group reduced its headcount as announced during its 2021
Investor’s conference – from 1,217 (end of December 2020) to 1,144
(end of December 2021).
Impact of strategic plan on figures: Restructuring
impact
To increase its
competitiveness, ESI implemented a transformation of its management
and a reduction in headcount in the various regions of the Group in
accordance with the legal rules applicable to each of them. ESI
also decided to disengage from non-core software development
projects or non-strategic research projects outside the Group’s
three offerings.
The impacts of this
restructuring and transforming plan are estimated to costs €27.6m,
in line with plan, comprising mainly:
- Provisions for reduction in headcount – already notified: €6.7m
(Cash impact). This is in line with the headcount reduction that
the Group announced to the market. The Group is passed the
mid-point and on track to complete this initiative by end of
December 2022.
- Impairment of intangibles as related to products & services
deemed non-core: €20.7m (no cash impact)
Financial highlights
(€m)
12/31/2021 12m2
12/31/2020 12m
Change
Change Constant exchange rate
(cer)
Revenue
136.6
132.6
+3.0%
+4.6%
Licenses
111.4
109.2
+2.0%
+3.7%
Services
25.2
23.4
+8.0%
+9.2%
Gross margin
102.9
98.7
+4.2%
+6.0%
% revenue
75.3%
74.5%
Adjusted EBIT3
12.7
5.8
+120%
+134.1%
Adjusted EBIT margin4
9.6%
4.5%
Restructuring costs
-27.6
EBIT
-16.4
4,0
Net result
-18.5
1.4
% revenue
-13.5%
1.1%
Cash
30.3
22.5
+35%
A healthy financial situation
In 2021, ESI Group
demonstrated its capacity to improve its financial situation. ESI
Group controlled its costs, reduced its debt (from €24.9m in 2020
to €12.5m in 2021) and significantly improved its gearing (net
debt5/Equity) from 28.4% in 2020 to 17.2% in 2021.
The Group has significantly
increased its cash position end of year from €22.5m to €30.3m
thanks to a substantial free cash flow6 of €10.9m.
All teams mobilized to deliver
on OneESI 2024 plan
The Group is confident in its
strategic plan:
- Industry continues to accelerate the transformation of their
production to a faster, more profitable, and more environmentally
friendly model. The pandemic has accelerated this process and
shifting from physical to virtual test and prototypes became a
priority.
- ESI Group's core offering & packaging focuses on product
performance simulation, smart manufacturing process simulation and
human workflows simulation. As announced during its strategic plan
presentation, the Group is redeploying significant software
development resources and innovation efforts on offer
priorities.
- In that context, ESI’s solutions are mission-critical for its
customer base.
- ESI’s customers continuously give credits to ESI’s added value:
- Ford Leverages Virtual Prototyping to Propel Lightweighting
Capabilities to the Next Level – HERE
- SEAT S.A. Technical Center and ESI Group set new car
development standards towards 100% digital with the brand-new CUPRA
Formentor – HERE
- Volvo Trucks unleashes the possibilities of Virtual Prototyping
for optimizing acoustic performance – HERE
- Kone anticipates elevator breakdowns and optimizes product
design using Digital Twins for predictive/ prescriptive maintenance
– HERE
- To align with best practices, the Group is working to re-align
its pricing practices. This critical workstream will impact the
Group’s performance more visibly in FY23 and beyond.
- As in the past two years, a proactive cost control policy has
been implemented. Many of the restructuring costs have been charged
to the year 2021 without reducing the R&D costs. There will
certainly be more investments to support growth, but the
foundations are solid with clear strategy of focus.
Forward-looking statement
Q1 – FY22 perspectives excluding special projects
Q1 - FY22
Growth excl. forex
4%
6%
Long-term perspectives
At constant exchange
rate
2022
2023
2024
Revenue (excluding special
projects7)
4% - 6%
6% - 8%
7% - 9%
Adjusted EBIT8
10% - 12%
15% - 17%
20% - 22%
The Group will organize an
investor’s conference in early Fall 2022 and will give an update on
the plan and extend its guidance to 2025.
These statements are subject
to a number of risks and uncertainties, including those related to
the COVID-19 virus and associated further economic and market
disruptions; further adverse changes or fluctuations in the global
economy; further adverse fluctuations in our industry, foreign
exchange fluctuations, changes in the current global trade
regulatory environment; fluctuations in customer demands and
markets; fluctuations in demand for our products including orders
from our large customers; cyber-attacks; expense overruns; and
adverse effects of price changes or effective tax rates. The
company directs readers to its Universal Registration Document –
Chapter 3 presenting the risks associated with the company’s future
performance.
Upcoming events
- Q1 revenues – May 2nd, 2022
- Annual General Meeting – June 28th, 2022
About ESI Group Founded in 1973, ESI Group envisions a
world where Industry commits to bold outcomes, addressing high
stakes concerns - environmental impact, safety & comfort for
consumers and workers, adaptable and sustainable business models.
ESI provides reliable and customized solutions anchored on
predictive physics modeling and virtual prototyping expertise to
allow industries to make the right decisions at the right time,
while managing their complexity. Acting principally in automotive
& land transportation, aerospace, defense & naval and heavy
industry, ESI is present in more than 20 countries, employs 1200
people around the world and reported 2021 sales of €136.6 million.
ESI is headquartered in France and is listed on compartment B of
Euronext Paris. For further information, go to
www.esi-group.com.
APPENDIX – ADJUSTED EBIT
The Board of Directors of ESI Group reviewed and closed, on
February 28, 2022, the Group’s consolidated financial statements
for the fiscal year ended December 31, 2021. Audit procedures
performed by the Group statutory auditors are being finalized.
Adjusted EBIT definition: operational income (EBIT) adjusted
for:
- Stock-based compensation expenses,
- Acquisition, integration and restructuring charges,
- Impairment & amortization of intangible assets related to
acquisitions (including goodwill and revalued assets),
- The application of IFRS 16 (leases),
- and other special items not related to current operations.
Adjusted EBIT has been presented for the 1st time during
Strategic plan presentation on Oct 5th, 2021.
Adjusted EBIT margin is calculated on revenue excluding special
projects. It is not only existing for financial communication. It’s
not a change of accounting method in IFRS P&L in FY21.
€m
2021
2020
EBIT
-16.4
4.0
- application of IFRS 16
-0.5
-0.3
- restructuring charges
27.6
0.0
- stock-based compensation expenses
0.9
0.8
- impairment & amortization of
intangible assets related to acquisitions
1.3
1.2
- other non-recurring items
-0.2
0.0
Adjusted EBIT
12.7
5.8
In % of revenue – excluding Special
projects
9.6%
4.5%
Disclaimer: Adjusted EBIT and Adjusted EBIT are non-GAAP
indicators used by the management to monitor performance, as
presented in the strategic 3-year plan. They do not represent a
substitute to GAAP indicators.
1 Adjusted EBIT is a non-GAAP indicator based on EBIT (IFRS).
Adjusted EBIT corresponds to EBIT before stock-based compensation
expenses, restructuring charges, impairment and amortization of
intangibles related to acquisition, IFRS 16 standard on leases and
other non-recurring items. Adjusted EBIT margin is calculated based
on revenue excluding special projects (public grant for R&D
projects). 2 Ongoing audit of 2021 financial statements 3 Adjusted
EBIT is a non-GAAP indicator based on EBIT (IFRS). Adjusted EBIT
corresponds to EBIT before stock-based compensation expenses,
restructuring charges, impairment and amortization of intangibles
related to acquisition, IFRS 16 standard on leases and other
non-recurring items. 4 Adjusted EBIT margin is calculated based on
revenue excluding special projects (public grant for R&D
projects). 5 Gross financial debt retreated from available cash 6
Free cash flow is composed of net cash margin generated from
operating activities, change in working capital and capital
expenditures 7 For the 3-year plan, the growth of revenue excludes
special projects (public grant for R&D projects) 8 Adjusted
EBIT is a non-GAAP indicator based on EBIT (IFRS). Adjusted EBIT
corresponds to EBIT before stock-based compensation expenses,
restructuring charges, impairment and amortization of intangibles
related to acquisition, IFRS 16 standard on leases and other
non-recurring items.
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version on businesswire.com: https://www.businesswire.com/news/home/20220301005900/en/
ESI Group Florence
Barré investors@esi-group.com +33 1 49 78 28 28
Verbatee - Press & Shareholder Relations JJérôme Goaer, j.goaer@verbatee.com, +33 6 61
61 79 34 Aline
Besselièvre, a.besselievre@verbatee.com, +33 6 61 85 10
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