H1 2014 results: improved profitability
and strong cash generation
- Revenues: €1,505 million, +1.7% at constant rate and scope[1] and excl. legacy
- Adjusted EBITDA: €213 million, +6.3% at constant rate and scope
- Group free cash flow: €129 million, up €105 million versus H1 2013
- Strong deleveraging: net nominal debt at €671 million, down €166 million versus H1 2013
Paris (France), 25 July 2014 - Technicolor (Euronext Paris: TCH; OTCQX: TCLRY) today announces its results for the first half of 2014.
Frederic Rose, Chief Executive Officer of Technicolor, stated:
"We are well on track to achieve our 2014 objectives and to exceed our prior guidance on free cash flow generation. Our performance continues to be fueled by profitable growth in Connected Home, the signature of new license agreements and the very strong growth in visual effects."
Key points
· Improved profitability: Adjusted EBITDA margin at 14.2% (up 1.2 point) and Adjusted EBIT at 8.4% (up 1.4 point).
· Strong cash generation with Group free cash flow of €129 million, driven by improvement in profitability and financial charges and a particularly strong working capital performance.
· Positive net income of €27 million, despite €19 million negative impact related to accelerated debt repayments.
· Progress in innovation, in particular around immersive technologies across the Group.
· Strengthening market positions by sustained organic growth in Connected Home and Production Services. Connected Home expanded again much faster than the market and Visual Effects activities grew double-digit across facilities.
· Seizing selected external growth opportunities with the announced acquisition of Mr. X, expected to be completed in the third quarter, following the acquisition of Thales display IP portfolio in February 2014.
2014 guidance
· Technicolor confirms its objective to reach an Adjusted EBITDA between €550 million and €575 million;
· Expects to exceed the upper range of its free cash flow objective of €180 million to €200 million, despite the impact of higher cash restructuring charges compared with 2013;
· Expects a positive net income;
· Confirms its objective to reach a Net Debt to Adjusted EBITDA ratio below 1.2x at end December 2014.
Innovation
In the first half of 2014, Technicolor reinforced its IP portfolio both organically and through selected IP acquisitions. The Group continued to expand its offering of patents related to standards, specifically in Blu-rayTM and HDMI standards. Technicolor participates in patent pools for both of these standards and in the first half 2014 added 52 essential patents to the Premier BD patent pool and 4 essential patents to the HDMI pool. To complement its organic development efforts, Technicolor also completed the acquisition of more than 120 patents and applications relevant to the LTE standard, which further reinforced the added value for the industry of its mobile devices licensing programs.
Technicolor continued to be active around immersive technologies including those designed to upscale images and to help create an immersive Hollywood grade experience at home, through the development and deployment of the latest advancements in HDR, 4K and Wide Color Gamut, across its businesses. With an eye on providing the best image quality to consumers, the Technology segment embedded its research algorithms in content producing the best viewing experience regardless of hardware limitations. Technicolor signed with HP a Color Certification program to offer by the third quarter of 2014 HP Envy and HP Pavilion monitors ensuring that consumers are getting color accuracy online. Operating businesses also reached important milestones in immersive technologies. The 4K streaming service offered by M-GO in partnership with Samsung will be available in the third quarter of 2014. Production Services started work on a number of Ultra HD TV shows to be delivered by the end of 2014 and the Connected Home segment has been selected to deliver 4K set-top boxes in volume to Tata Sky from early 2015.
The Connected Home segment had a particularly strong pace of innovation that resulted in several contract wins in Europe, Middle East & Africa with Telecom and Cable operators. It is also developing additional software features on top of Qeo and its own middleware, and is rolling out its roadmap to ensure the widespread use of Qeo on connected devices.
