Outstanding Growth
2022 Outlook Raised
- Half Year Gross Sales at €1.947.4 million up 33.8%
- Half Year Adjusted EBITA at €66.5 million up 39.3%
- Half Year Operating Free Cash Flow Before Tax at €166
million
- Leverage ratio of Net Debt over LTM Adjusted EBITDA after
Leases of 1.8x
Regulatory News:
Exclusive Networks (Paris:EXN) (Euronext Paris: EXN), a global
leader in cyber security, today announces financial results for the
six months ended June 30, 2022. Management will hold a conference
call at 9:00 am (CET) today, available via webcast
(https://ir.exclusive-networks.com/). A replay will be
available.
Jesper Trolle, Chief Executive Officer, commented: “I am
really proud of the excellent results we delivered in the first
half of the year. As always, our teams around the world have been
instrumental to this performance and I want to warmly thank them
for their hard work. Not only did we deliver record half-year Gross
Sales but we also managed to grow our profitability faster than our
top line, and generate cash faster than in the past. Market
dynamics during the first half of the year have remained favourable
and we continue seeing strong market trends given the critical
importance for businesses and public entities of all sizes of an
adequate cyber security infrastructure.
Our positioning as the only global pure player in cybersecurity
and our unparalleled execution capabilities enable us to deliver
growth above the market, with our backlog remaining as strong as it
has been.
We recognize the increasingly challenging macroeconomic
environment worldwide, however, our strong start to the year
carrying on into the second half of the year, robust forward
indicators and the growing strategic importance of cybersecurity
provide us with good visibility for the rest of 2022. Therefore,
and in the absence of any unforeseen events, we are confident in
our capacity to deliver on the upward revision to the outlook we
release today for the full year.”
H1 2022 GROUP FINANCIAL PERFORMANCE
Gross Sales and Adjusted profitability metrics are using
non-GAAP measures. Revenue and Net Margin are reported in IFRS
format. Full results as per IFRS are presented in the Appendix
along with the reconciliation detailing the differences with
non-GAAP measures. Please refer to the glossary at the end of the
press release for further explanations.
in € million
H1 2021
H1 2022
Change
Reported
Constant
Currency*
Gross sales1
1,455.1
1,947.4
33.8%
31.2%
Revenue
1,105.9
1,473.7
33.3%
31.0%
Net Margin
145.4
187.6
29.0%
% Gross Sales
10.0%
9.6%
-0.4 pt
Adj. EBITA
47.7
66.5
39.3%
% Net Margin
32.8%
35.4%
+2.6 pt
Adj. Net Income
31.8
47.4
49.0%
* Variation at constant currency is
computed using the second half of 2021 rates applied to the first
half of 2022 Gross Sales. The USD, GBP and PLN evolved as follows;
1EUR: 1.094 USD; 1EUR: 0.842 GBP, 1EUR: 4.633PLN respectively for
H1 2022 and 1EUR: 1.206 USD, 1EUR: 0.868 GBP, 1EUR: 4.537 PLN
respectively for H1 2021.
Gross Sales were €1,947.4 million, an increase of 33.8% year
over year on a reported basis and up 31.2% at constant currency.
The majority of this growth (72%) was driven by business with
existing vendors in their current geographies. The balance of the
growth was the result of vendor expansion (14%) and acquisitions
(14%). Vendor expansion is a combination of vendors entering new
geographies (c.5%) and new vendor relationships (c.9%). The
acquisitions of Ignition Technology and Networks Unlimited
supported our growth through M&A.
Vendors retention rates increased in the first half of the year,
supported by increasing demand for our vendors’ solutions and the
continued engagement of our channel partners. Net euro retention
rates2 for the first half of 2022 were up 128% (vs 112% in the
first half of 2021) with customers net euro retention rates2 at
127% (vs 108% in the first half of 2021).
Revenue as reported in the Consolidated Financial Statements
takes into account the recognition of the sales of support and
maintenance on a Net Margin basis as per IFRS as Exclusive Networks
are not the primary obligor for these solutions. Revenue grew in
line with Gross Sales.
Net Margin reached €187.6 million in the first half of 2022, an
increase of 29.0% year on year. This was below top line growth
driven by the variation in mix of geography and deal size.
Adjusted EBITA rose significantly to €66.5 million, up 39.3%
year over year, growing faster than our top line. Adj. EBITA margin
over Net Margin was up 261 bps year on year to 35.4% as the Group
benefits from operating leverage.
Adjusted Net Income was €47.5 million, an increase up 49.4% year
over year on a Reported basis.
H1 2022 PERFORMANCE BY REGION
in € million
H1 2021
H1 2022
Change
Reported
Constant
Currency*
EMEA
Gross Sales
1,130.8
1,528.0
35.1%
34.6%
Adj. EBITA
48.9
69.7
42.4%
APAC
Gross Sales
193.4
219.3
13.4%
6.2%
Adj. EBITA
7.7
10.8
39.8%
AMERICAS
Gross Sales
130.9
200.1
52.9%
39.0%
Adj. EBITA
3.3
4.4
36.0%
Total
Gross Sales
1,455.1
1,947.4
33.8%
31.2%
Adj. EBITA
47.7
66.5
39.3%
EMEA: Gross Sales at €1,528.0 million, up 35.1% year on
year. In EMEA, the Group benefited from a continued positive
momentum with growth in all countries. The region experienced an
acceleration in the development of the Enterprise market and an
increasing share of large deals, particularly in the UK and
Germany.
Profitability also increased, with Adjusted EBITA standing at
€69.7 million and growing 42.4% year on year.
APAC: Gross Sales reached €219.3 million, up 13.4% year
on year. The region experienced a robust acceleration of growth, in
particular in the second quarter, supported by both large deals in
Singapore and in the Philippines and a strong overall performance
in the region.
The top-line growth was coupled with a very strong increase in
profitability, with Adjusted EBITA growing c.40% year over year, to
€10.8 million, with solid margin trends coupled with significant
operating leverage.
AMERICAS: Gross Sales were €200.1 million, up 52.9% year
on year. The strong performance was fuelled by high demand for
cybersecurity solutions of key vendors, the addition of some
vendors to our portfolio in Americas, and the sustained enterprise
momentum with large deals. Adjusted EBITA margin was up 36.0% year
on year, in line with the 39.0% growth of Gross Sales at constant
currency.
H1 2022 CASH FLOW AND FINANCING
Operating Free Cash Flow Before Tax was €166.2 million in H1
2022, representing a 227.7% cash conversion from Adjusted EBITDA,
up from 111.7% last year. This increase in cash generation in the
period was driven by the strong business performance and a
significant working capital cash release through increase in
factoring facilities without recourse, improvement in commercial
conditions with vendors and new schedule of VAT payments in the UK,
reducing working capital by a total of €103m in the first half of
2022, despite the activity growth.
Leverage: Exclusive Networks’ Financial Gross Debt as at June
30, 2022, was €518 million, with Cash & Cash Equivalents
standing at €257 million and Net Debt at €261 million. This
resulted in a leverage ratio of Net Debt over Last Twelve Month
Adjusted EBITDA after Leases of 1.8x. The significant reduction in
leverage was driven by the strong cash generation in the period. We
now target a leverage ratio below 2.0x Net Debt/EBITDA at the end
of 2022.
OUTLOOK
On the back of the solid H1 2022 performance and carrying into
the second half, Exclusive Networks’ management team has decided to
revise upwards its outlook for the full year of 2022 as
follows:
- Gross sales are now expected to exceed
€4.2billion (vs above €3.8billion previously expected);
- The net margin is now expected to be
between €392 million and €400 million (vs €362 to 368 million
before);
- The Adjusted EBITA is now expected to be
between €146 million and €152 million (vs between €133 and 138
million earlier);
- And Operating Free Cash Flow Before Tax is
now expected above 160% of Adj. EBITA vs in excess of 80% of Adj.
EBITA before.
APPENDIX
H1 2022 CONSOLIDATED P&L
(in € million)
30 June 22
30 June 21
Revenue
1,474
1,106
Costs of purchased goods and services
-1,283
-958
Freight on sales
-3
-3
Net Margin
188
145
Personnel costs
-90
-72
Other operating costs
-29
-23
Depreciation and amortization
-36
-34
Recurring operating profit
32
16
Non-recurring operating income and
expenses
0
-5
Operating profit
32
11
Finance debt costs
-7
-16
Interest on lease liabilities
0
0
Other financial income and expenses
-5
1
Net financial income/(expense)
-13
-15
Profit/(loss) before income tax
19
-4
Income tax
-8
-15
Profit/(loss) for the period
11
-19
Profit/(loss) attributable to:
- Owners of the parent company
10
-19
- Non-controlling interests
1
0
Earnings per share attributable to parent
company (in €):
- Basic earnings per share
0.11
(0.07)
- Diluted earnings per share
0.11
(0.07)
H1 2022 CONSOLIDATED BALANCE SHEET
(in € million)
30 June 22
31 Dec 21
30 June 21
ASSETS
Goodwill
294
314
289
Other intangible assets
1,159
1,154
1,163
Property, plant and equipment
7
7
8
Right-of-use assets
21
19
20
Non-current other financial assets
38
35
38
Deferred tax assets
10
11
24
TOTAL NON-CURRENT ASSETS
1,529
1,540
1,542
Trade receivables and related accounts
895
956
666
Income tax receivables
13
4
6
Inventories
184
150
101
Current other financial assets
17
10
10
Cash and cash equivalents
257
130
133
TOTAL CURRENT ASSETS
1,366
1,249
916
TOTAL ASSETS
2,895
2,789
2,458
EQUITY AND LIABILITIES
Share capital and share premium
976
976
740
Retained earnings and other reserves
-35
-44
-57
Foreign currency translation reserve
19
0
-9
Equity attributable to the owners of the
parent company
960
932
674
Non-controlling interests
3
2
1
TOTAL EQUITY
963
934
675
Non-current other financial
liabilities
485
485
705
Non-current lease liabilities
13
12
13
Non-current provisions
3
4
5
Other non-current liabilities
1
4
-
Deferred tax liabilities
295
295
302
TOTAL NON-CURRENT LIABILITIES
797
801
1.025
Trade payables and related accounts
1,026
950
681
Current other financial liabilities
92
90
61
Current lease liabilities
8
7
7
Current provisions
2
2
1
Current derivative liabilities
-
-
-
Current tax liabilities
6
6
8
TOTAL CURRENT LIABILITIES
1,134
1,054
758
TOTAL EQUITY AND LIABILITIES
2,895
2,789
2,458
H1 2022 CASH FLOW STATEMENT
(in € million)
30 June 22
30 June 21
OPERATING ACTIVITIES
Profit/(loss) for the period
11
-19
Adjustments for:
- Depreciation, amortization, impairment
and change in provisions
36
34
- Financial debt costs & interests on
lease liabilities
8
15
- Share-based expenses
2
2
- Income tax expenses
8
15
- Gains and losses on disposal of fixed
assets
0
0
- Other non-cash items
6
0
Income tax paid
-10
-9
Cash flows from op. activities before
change in working capital
61
38
Change in net working capital -
trade
103
21
Change in net working capital - other
-12
-14
NET CASH FROM OPERATING
ACTIVITIES
152
45
INVESTING ACTIVITIES
Additions to property, plant and equipment
and intangible assets
-3
-4
Disposals of fixed assets
0
1
Changes in other financial assets
-1
-2
Impact of changes in scope of
consolidation
-1
-4
NET CASH FROM INVESTING
ACTIVITIES
-4
-9
FINANCING ACTIVITIES
Dividends paid
-
-
Disposal (acquisition) of Treasury
shares
0
-3
Purchase of non-controlling interests
-4
0
Proceeds from issuance of bank
borrowings
-
-
Proceeds from issuance of other financial
liabilities
12
16
Factoring liabilities
-3
-35
Short-term financing
-5
-5
Interest Paid
-8
-15
Repayment of bank borrowing
-1
-21
Repayment of other financial
liabilities
-13
-9
Repayment of lease liabilities
-5
-4
NET CASH FROM FINANCING
ACTIVITIES
-26
-76
Effects of exchange rate fluctuations on
cash and cash equivalents
0
1
INCREASE IN NET CASH AND CASH
EQUIVALENTS
122
-39
Net cash and cash equivalents at the
beginning of the period
125
162
Net cash and cash equivalents at the end
of the period
247
123
CONFERENCE CALL
Jesper Trolle, Chief Executive Officer and Pierre
Boccon-Liaudet, Chief Financial Officer, will present the First
Half 2022 performance during a conference call in English to be
held today September 14, 2022, at 9:00 am (CET).
You can follow the conference call live via webcast at the
following link: https://ir.exclusive-networks.com/.
A replay will also be available for a period of one year.
All documents relating to this publication will be placed online
on the Exclusive Networks Investor Relations website at
https://ir.exclusive-networks.com/
Regulated information related to this press release and
presentation is available on https://ir.exclusive-networks.com/
PROVISIONAL CALENDAR
- Q3 Financial update (Gross Sales and Revenue): November
9, 2022
About Exclusive Networks
Exclusive Networks is a global trusted cybersecurity specialist
for digital infrastructure helping to drive the transition to a
totally trusted digital future for all people and
organisations.
Our distinctive approach to cybersecurity gives partners more
opportunity and more customer relevance. Our specialism is their
strength – equipping them to capitalise on rapidly evolving
technologies and transformative business models.
The Exclusive Networks story is a global one with a
services-first ideology at its core, harnessing innovation and
disruption to deliver partner value. With offices in 46 countries
and the ability to service customers in over 170 countries across
five continents, Exclusive Networks has a unique ‘local sale,
global scale’ model, combining the extreme focus and value of local
independents with the scale and service delivery of a single
worldwide cybersecurity powerhouse.
Exclusive Networks is listed on the Euronext Paris stock
exchange (Ticker: EXN). For more information visit
www.exclusive-networks.com.
DISCLAIMER
This press release may contain forward-looking statements. Such
statements may include projections, estimates, assumptions,
statements regarding plans, objectives, intentions and/or
expectations with respect to future financial results, events,
operations and services and product development, as well as
statements, regarding future performance or events. Forward-looking
statements are generally identified by the words “expects”,
“anticipates”, “believes”, “intends”, “estimates”, “plans”,
“projects”, “may”, “would” “should” or the negatives of these terms
and similar expressions. Although Exclusive Network’s management
currently believes that the expectations reflected in such
forward-looking statements are reasonable, investors are cautioned
that forward-looking statements are subject to various risks and
uncertainties (including, without limitation, risks identified in
Exclusive Networks’ Registration Document available on Exclusive
Networks’ website), because they relate to future events and depend
on future circumstances that may or may not occur and may be
different from those anticipated, many of which are difficult to
predict and generally beyond the control of Exclusive Networks.
Actual results and developments may differ materially from those
expressed in, implied by or projected by forward-looking
statements. Forward-looking statements are not intended to and do
not give any assurances or comfort as to future events or results.
Other than as required by applicable law, Exclusive Networks does
not undertake any obligation to update or revise any
forward-looking statement.
This press release does not contain or constitute an offer of
securities for sale or an invitation or inducement to invest in
securities in France, the United States or any other
jurisdiction.
__________________________
1 As per new Gross Sales reporting
methodology after IC eliminations
2Defined as Gross Sales generated in year
N from vendors/customers active in year N-1 divided by Gross Sales
from the same vendors/customers in year N-1
View source
version on businesswire.com: https://www.businesswire.com/news/home/20220913006250/en/
EXCLUSIVE NETWORKS Stéphanie Bia SVP, Marketing,
Communication and Investor Relations
Communications_global@exclusive-networks.com
Investors & Analysts
Hacene Boumendjel Head of Investor Relations
ir@exclusive-networks.com
Media FTI Consulting
Cosme Julien-Madoni / Charlotte Stephen / Tom Blundell +33 (0)1 47
03 68 19 exclusivenetworks@fticonsulting.com
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