Quadient unveils the second phase of its “Back to Growth” strategic
plan, aimed at delivering sustainable value
Quadient unveils the second phase of its “Back to
Growth” strategic plan, aimed at delivering sustainable
value
Key
highlights
- “Back to Growth – Transform” (phase 1 of the plan)
successfully completed
- Software and parcel locker solutions revenue up from 18% of
total revenue in 2018 to 27% in 2020
- Promising acquisitions (Parcel Pending, YayPay, Beanworks) and
several divestments achieved, resulting in circa €105 million
net cash spent in M&A over the period
- Circa €100 million of revenue and cost synergies generated
in 2020
- Subscription-related revenue accounting for 69% of 2020 sales
within Major Operations
- “Back to Growth – Drive Sustainable Value” (phase 2 of
the plan) sets new ambitious organic targets over the next 3-year
period
- Minimum 3% organic revenue CAGR over 2021-23, with minimum 2%
organic revenue growth in 2021
- Minimum mid-single digit organic current EBIT1,2 growth over
2021-23, with 4-6% organic current EBIT growth in 2021
- Leverage ratio excluding leasing below 1.75x in 2023, post
repayment of ODIRNANE
- Dividend policy maintained at minimum 20% net income payout,
with a floor of €50cts dividend per share
Paris, 30 March 2021
Quadient (Euronext Paris: QDT), a leader in
helping businesses create meaningful customer connections through
digital and physical channels, holds today a Capital Markets Day
during which management unveils the second phase of its “Back to
Growth” strategic plan, setting new profitable and sustainable
growth ambitions for the next three years. This strategic update
results from an in-depth review of the company’s current status, a
thorough analysis of market trends and customer needs, as well as a
complete assessment of invested capital with a view to maximize
value for shareholders as well as benefits for all
stakeholders.
“The thorough execution of the first phase of
our Back to Growth strategic plan has laid strong foundations,
putting Quadient in a position to deliver sustainable value for its
shareholders and all stakeholders over the next three years and
beyond,” said Geoffrey Godet, Chief Executive Officer of Quadient.
“We have deeply changed our operating model, simplified our
organization and reshaped our portfolio, and having completed
acquisitions in the business areas that we had targeted. In the
meantime, we have successfully developed our software and parcel
locker activities, constrained the decline of our mail-related
business, increased the proportion of subscription-related revenue
and generated significant synergies.”
“As we are entering the second phase of Back to
Growth, we are confident in our capacity to leverage our leading
positions to reap the benefits of a further digitization of the
economy and an increasingly high volume of parcel deliveries while
maintaining our highly cash-generative mail business. Our new
profitable growth trajectory is primarily based on organic
initiatives, ranging from investments delivering high returns, the
deployment of our end-to-end SaaS/cloud intelligent communication
automation software portfolio and the generation of further
synergies. In the meantime, we will continue to assess the
effectiveness of our invested capital and will deploy our excess
cash to additional potential organic initiatives, bolt-on M&A
opportunities and/or share buybacks within the limit of our
deleveraging targets.”
“Back to Growth” key
achievements
Implemented early 2019, “Back to Growth”
strategic plan involved both a strong refocus of Quadient’s
solutions portfolio and a major transformation of its operating
model. Quadient aimed at building leading market positions in
highly growing businesses that are synergistic with its
foundational mail-related activities. Customer communication and
experience management, business process and document workflow
automation, as well as automated parcel locker solutions were
selected to be the company’s growth engines while continuing to
benefit from Quadient’s strong position in the highly profitable
and cash generative mail-related business. Gradually increasing the
part of these growth engines within Quadient’s total revenue has
been set as a critical metric of Quadient’s transformation: in two
years, combining organic growth initiatives and targeted
acquisitions, the software and parcel locker solutions went up from
18% of total revenue in 2018 to 27% in 2020.
In line with these strategic directions,
Quadient has been actively reshaping its portfolio, reinforcing its
positions in selected markets through organic developments and
bolt-on acquisitions while undergoing some divestments. Early 2019,
Quadient acquired Parcel Pending, a leading US player in parcel
lockers and has been scaling this business, successfully expanding
into the US retail market and now exporting its franchise in the
residential property market in new geographies such as the UK and
France. Quadient has also acquired YayPay and more recently
Beanworks, two leading North American FinTech respectively
specialized in the automated management of Accounts Receivables and
Accounts Payables, bolstering Quadient’s software offer. In the
meantime, Quadient has divested its data quality business (Satori
Software and Human Inference, both in 2019), significantly reduced
its shipping software activities (disposal of ProShip and shutdown
of Temando, both in 2020) and recently sold its graphics activities
in Australia and New Zealand. M&A transactions have been
conducted with rigorous financial discipline. The net cash spent in
M&A over the period amounts to c. €105 million,
including c. €195-200 million spent in acquisitions and
c. €90-95 million received from divestments.
In the meantime, Quadient has profoundly changed
its organization to simplify its operating model, gain efficiency
and unite the entire company under a unified brand and a strong
common culture. The executive team has been renewed with new
talents hired to lead the transformation, leaner management layers
were put in place with a strong regional focus, and centers of
excellence were established to streamline internal tools and
processes, and better leverage the teams’ expertise.
From the outset of the plan, fostering synergies
has been set as a central objective. Thanks to commercial
cross-selling between the solutions, Quadient has successfully
generated around €70 million in revenue synergies in 2020. And
with its new integrated organization in place,
€25 to 35 million were saved in costs synergies,
including centralized marketing and administrative functions,
back-office efficiencies, mutualized R&D as well as integrated
supply chains and logistics.
Another key direction of “Back to Growth” has
been to favor across all its solutions – whether smart hardware or
software – a resilient value-creation model based on recurring
revenues. In 2020, subscription-related revenue accounted for 69%
of sales within Quadient’s Major Operations3, with increasing
services attached to the sale or rental of hardware solutions and a
swift transition towards SaaS/Cloud models for software
solutions.
The improvement in Quadient’s financial
performance was obviously slowed down in 2020 in the context of the
Covid pandemic which has interrupted a series of seven consecutive
quarters of organic growth. Quadient has however demonstrated the
strong resilience of its business model in the first part of 2020
and recorded a sharp rebound in the second part of the year, boding
well for organic growth to resume in 2021, combining solid growth
in software and parcel lockers solutions together with a contained
decline in mail-related solutions. In the meantime, despite the
impact of the Covid crisis, Quadient has maintained a sound
profitability level, generated strong free cash-flows and kept a
healthy balance sheet (please refer to the separate press release
dedicated to Quadient’s full-year 2020 results published
today).
Further convergence of Quadient’s
software businesses
The phase two of “Back to Growth” will encompass
further changes in Quadient’s operating model. While the Covid
crisis is accelerating digitization, the needs for customer
communications management, customer experience management, Accounts
Receivable (AR) and Accounts Payable (AP) automation solutions are
increasingly converging. Quadient has therefore decided to combine
its Customer Experience Management and Business Process Automation
software solutions into a true end-to-end cloud-based global
business communications platform named “Intelligent Communication
Automation”.
This best-of-breed suite of business
communications management software, which addresses the needs of
customers of all size, features Quadient Inspire, Quadient Impress
as well as Quadient’s comprehensive SaaS AP/AR automation offer
which has been strengthened by the recent acquisitions of YayPay
and Beanworks. Based on 2020 figures, Intelligent Communication
Automation already represents €183 million in revenue,
including 59% of subscription-related revenue, the latter having
increased by 13% in 2020.
This integration will allow Quadient to generate
further cost synergies between Customer Experience Management and
Business Process Automation on product management and marketing and
go-to-market. It will bring technology and R&D synergies to the
next level, knowing for instance that Quadient Inspire and Quadient
Impress already enjoy more than 60% of shared source code.
Innovation will be stimulated to provide Quadient’s customers with
additional services and features, leveraging cloud, and Artificial
Intelligence. Intelligent Communication Automation will also bring
scale for Quadient to become a more established software provider,
the company being already the third largest French horizontal
software publisher. This more holistic, integrated and simplified
value proposition will benefit both clients and partners, driving
further revenue synergies within each customer segment.
New metrics and specific targets set by
solution to drive growth and profitability
Following “Back to Growth” strategic direction,
Quadient will continue focusing on markets driven by the
acceleration of digitization, the explosion of e-commerce and
declining but still large and resilient mail volumes. To drive its
three core solutions even more efficiently, Quadient has set KPIs
for each solution which will help the company monitoring its growth
trajectory as well as its profitability.
To address the challenge of building an even
more recurring SaaS/cloud business model, the monitoring of
Intelligent Communication Automation (€183 million in sales
within Major Operations3 in 2020 based on Quadient’s new reporting)
will focus on:
- the number of SaaS/subscription customers over the total number
of customers (65% in 2020, up from 56% in 2019);
- the annualized revenue to be generated by its
subscription-related revenue streams (€132 million at the end
of 2020, up 11% from the end of 2019);
- the share of this subscription-related revenue over the total
revenue of the solution (59% in 2020, up from 50% in 2019).
Regarding Mail-Related Solutions
(€653 million in sales within Major Operations3 in 2020 based
on Quadient’s new reporting), Quadient will monitor:
- the share of new generation smart devices among total number of
devices in the total installed base (4.9% at the end of 2020, up
from 1.1% at the end of 2019) to size the upside potential for
upgrading its installed base, in line with Quadient’s commitment to
invest in its offering to gain market share and maximize value over
time;
- the spread between the evolution of supplies revenue and the
total revenue of the solution to measure the resilience of its
model regardless of the usage of its installed base (this
resilience index stands at 5.2% in 2020, up from 1.7% in
2019);
- the share of subscription-related revenue over the total
revenue of the solution to ensure that Mail-Related Solutions
continue to provide a high level of recurring cash-flows (up from
72% in 2019 to 74% in 2020).
Finally, for Parcel Locker Solutions
(€83 million in sales within Major Operations3 in 2020 based
on Quadient’s new reporting), Quadient will monitor:
- the size of its lockers’ installed base (up from 7,000 lockers
at the end of 2018 to 13,000 lockers at the end of 2020);
- the usage rate of its lockers (up from c.25% in 2018 to c.65%
in 2020);
- the year-over-year growth in subscription-related revenue (up
from €16 million in 2018 to €42 million in 2020).
In addition, Quadient is introducing a new
profitability metric per solution to monitor the financial
performance of its three Major Solutions in a consistent and
comparable way. These solution profit margins will be calculated as
revenues minus cost of goods sold as well as all sales, services,
marketing, product and R&D expenses. Based on Quadient’s new
reporting, solution profit margins stand in 2020 at 21.3% for
Intelligent Communication Automation, 45.3% for Mail-Related
Solutions and 5.6% for Parcel Locker Solutions (including a 25-30%
profit margin of the parcel lockers installed base).
As part of the new trajectory defined for the
Phase Two of “Back to Growth”, Quadient has set specific targets
for each solution aimed at reaching an ambitious profile by the end
the 2021-2023 three-year period, ensuring that each solution
effectively contributes to sustainable value creation at company
level:
- Intelligent Communication Automation:
- Over 20-25% subscription-related revenue CAGR over the
three-year plan;
- Around 30% solution profit margin on a full-year basis by the
end of the three-year plan.
- Mail-Related Solutions:
- Better than -5% organic CAGR revenue decline over the
three-year plan;
- High solution profit margin in the range of 43-45% on a
full-year basis by the end of the three-year plan.
- Parcel Locker Solutions:
- More than 25,000 lockers installed by the end of the three-year
plan;
- Around 30-40% profit margin of the installed base on a
full-year basis by the end of the three-year plan.
A robust, sustainable and profitable
organic growth trajectory, supported by a clear and efficient
capital allocation policy
Going forward, Quadient will continue to build
on its strengths to roll out the second phase of its “Back to
Growth” strategic plan. With a clear focus on innovation and
technology, Quadient will continue to leverage its leadership
positions and its strong software and hardware installed base to
generate additional growth of its highly contributive
subscription-related revenue and further deploy cross-selling
opportunities and value-creation synergies across its
solutions.
On this basis, Quadient aims at achieving a
minimum 3% organic revenue CAGR over 2021-2023, with a minimum 2%
organic revenue growth in 2021. Quadient also aims at delivering a
minimum mid-single-digit organic current EBIT4 CAGR5 over
2021-2023, with 4-6% organic current EBIT growth in 2021.
Focusing its growth trajectory on organic
opportunities, Quadient will bolster the investments to support its
operations as long as they offer attractive risk-adjusted returns.
Quadient plans to maintain its R&D and maintenance capital
expenditures (CAPEX) within a controlled range of approximately
€70 to 80 million (including IFRS 16) per year over
2021-2023. In the meantime, its rented equipment CAPEX should reach
€40 million or more per year over 2021-2023, depending on
opportunities to accelerate the deployment of the rented parcel
lockers installed base.
While continuing to generate recurring
cash-flows, Quadient aims at maintaining a healthy, yet efficient
balance sheet by bringing down its net debt excluding
leasing/EBITDA excluding leasing below 1.75x in 2023, post
repayment of ODIRNANE bonds6.
Quadient’s strategic approach will continue to
be based on an ongoing assessment of its invested capital in order
to maximize long term value for its shareholders. This involves
that Quadient continuously ensures that it is the best owner of its
various businesses in terms of value creation, not excluding
potential divestments or spin-offs, provided that capital could be
re-deployed more effectively. Quadient may consider potential
opportunistic bolt-on acquisitions applying strict criteria,
including covering cost of capital by year 3 post closing. As part
of its portfolio management, Quadient will keep on restructuring
its Additional Operations (€110 million in revenues in 2020
representing 11% of total revenue) with a view to either grow,
improve or exit these businesses.
Finally, Quadient is leaving its dividend policy
unchanged, maintaining a minimum 20% net income dividend payout
with a floor of €50cts dividend per share. As part of its
shareholder return policy Quadient will additionally consider using
yearly excess cash available for share buybacks, subject to
value-creation criteria.
Strong ESG commitments
In line with its commitment to Corporate Social
Responsibility (CSR), Quadient has recently joined the United
Nations Global Compact, the world’s largest corporate
sustainability initiative, aligning its CSR policy with the UN
Global Compact’s ten universal principles on human rights, labor,
environment and anti-corruption.
Quadient's approach to corporate responsibility
is based on improving working conditions, promoting a culture of
integrity, reducing its environmental footprint, providing
innovative, reliable and sustainable solutions, and supporting the
communities in which the company operates. These pillars have been
aligned with the UN Global Compact principles that Quadient commits
to respect, support and promote by joining the initiative. Becoming
a signatory member also implies taking action to advance the UN
Sustainable Development Goals (SDGs), eight of which Quadient is
already committed to.
In order to drive sustainable value, Quadient
has set itself precise objectives to be reached by or before 2023
as part of the second phase of its “Back to Growth” strategic plan
(for more details on these objectives, please refer to slides 115,
116 and 117 of Quadient’s Capital Markets Day presentation).
CONFERENCE CALL
& WEBCAST
Quadient will host a
conference call and webcast today at 2:00 pm Paris time (1:00 pm
London time).
To join the webcast,
click on the following link: Webcast.
To join the conference
call, please use one of the following phone numbers:
- France: +33 (0) 1 70 37 71 66;
- United States: +1 202 204 1514;
- United Kingdom (standard
international): +44 (0) 33 0551 0200;
Password:
Quadient.
A replay of the audio
webcast will be available for a period of one year.
***
CALENDAR
·26 May 2021: Q1 2021
sales release (after close of trading on the Euronext
Paris regulated market).
***
About
Quadient®
Quadient is the driving force behind the world’s
most meaningful customer experiences. By focusing on three key
solution areas, Intelligent Communication Automation, Parcel Locker
Solutions and Mail-Related Solutions, Quadient helps simplify the
connection between people and what matters. Quadient supports
hundreds of thousands of customers worldwide in their quest to
create relevant, personalized connections and achieve customer
experience excellence. Quadient is listed in compartment B of
Euronext Paris (QDT) and is part of the CAC® Mid & Small and
EnterNext® Tech 40 indices.
For more information about Quadient, visit
https://invest.quadient.com/.
Contacts
Laurent Sfaxi, Quadient+33 (0)1 45 36 61
39l.sfaxi@quadient.comfinancial-communication@quadient.com Caroline
Baude, Quadient+33 (0)1 45 36 31
82c.baude@quadient.com |
OPRG FinancialIsabelle Laurent / Fabrice Baron+33
(0)1 53 32 61 51 / +33 (0)1 53 32 61
27isabelle.laurent@oprgfinancial.frfabrice.baron@oprgfinancial.fr |
APPENDIX
New
reporting
In million euros |
FY 2020 |
Organic Change vs. 2019 |
FY 2020 |
|
Sales |
Solution Profit Margin(a) |
Major Operations |
919 |
-5.9% |
36.9% |
Intelligent Communication Automation |
183 |
-3.5% |
21.3% |
Parcel Locker Solutions |
83 |
+36.1% |
5.6% |
Mail-Related Solutions |
653 |
-10.3% |
45.3% |
Additional
Operations |
110 |
-17.6% |
15.4% |
Group total |
1,029 |
-7.3% |
34.6% |
(a) Unaudited figures |
In million euros |
FY 2020 |
Organic Change vs. 2019 |
Major Operations |
919 |
-5.9% |
North America |
501 |
-1.5% |
Main European countries |
367 |
-12.5% |
International |
51 |
+4.7% |
Additional
Operations |
110 |
-17.6% |
Group total |
1,029 |
-7.3% |
1 Based on 2020 current EBIT excluding earn-out reversal related
to the Parcel Pending acquisition.2 Current EBIT = current
operating income before acquisition-related expenses.
3 Major Operations includes Intelligent
Communication Automation, Mail-Related Solutions and Parcel Locker
Solutions in Quadient’s main geographies, accounting for 89% of
total sales in 2020.4 Current EBIT = current operating income
before acquisition-related expenses.5 Based on 2020 current EBIT
excluding earn-out reversal related to the Parcel Pending
acquisition.6 ODIRNANE bonds amount to €265 million, maturing
in 2022. Since there is no contractual obligation to repay the
nominal or to pay coupons to holders of the bonds, ODIRNANE bonds
have been recognized as an equity instrument.
- Quadient CMD Press Release VA VDEF