Barco Financial Results - continues to generate good cash flows. Big contracts for digital cinema bode well for the future

http://www.digitalcinemainfo.com/barcodigitalcinema_07_22_09.php

July 22, 2009

Source: Barco

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Barco announced results for the three and six-month periods ended 30 June, 2009.

Commenting on the results of 2Q09 Mr Van Zele, CEO, re-emphasized that Barco's strategy to focus on cash generation and a healthy balance sheet continued to bear fruit in 2Q09. Free cash flow generated in 2Q09 was 12.4 million euro, 8.2 million euro more than in the same quarter of 2008, thanks to a positive operating cash flow of 8.5 million euro and continued reduction of working capital. Also operating expenses were reduced by 11.8 million euro in 2Q09, bringing the total cost reduction for 1H09 to 26 million euro. At the end of the quarter Barco had a net cash position of 36.9 million euro, up from 24 million euro at the end of the previous quarter.

Sales were down 12 million euro or 6.8% versus the same quarter of last year, but nevertheless up 20 million euro compared to 1Q09. All operating divisions grew their sales compared to the previous quarter except for the medical division, where sales remained flat.

Barco's total order book at the end of the quarter remained healthy at 336.7 million euro, up 1.6% from last year. This order book does not yet reflect several big digital cinema contracts that have been signed during the quarter and that will help to offset the shortfalls in the events market. These contracts have a potential sales value over the next couple of years in excess of 250 million euro.

The company's incoming orders for the quarter were down 22.7% to 140.7 million euro, excluding recent big wins in digital cinema. This is a shortfall of 41.7 million euro compared to 2Q08, primarily in the events and the traffic and surveillance markets.

Gross profit margin was lower year-on-year and continued to be below target, mainly due to substantial inventory write-offs. However, it was improving versus 1Q09. EBITDA was 8.4 million euro compared to 21.4 million euro in 2Q08. Reported EBIT was minus 5.5 million euro for the quarter, depressed by non-cash charges such as reduced capitalization and increased inventory write-offs. Without these non-cash charges EBIT would have been positive for the quarter.

Mr Van Zele concluded his comments on the 2Q09 results by stating that the economic environment is expected to remain difficult in the second half of the year. Nevertheless Barco has a very healthy balance sheet and intends to keep it that way. Furthermore the ongoing management attention for increasing operational excellence will continue to bear fruit. For the remainder of 2009 he also expects the digital cinema market to further offset the decline in sales in other markets which are currently suffering from the economic crisis.

Mr Van Zele also announced that Barco had recently signed an 85 million euro revolving credit facility with key relationship banks. This agreement extends existing maturities with two and a half years.

DIVISIONAL RESULTS FOR 2Q09

Media & Entertainment division

Sales in the Media & Entertainment division remained almost flat in 2Q09 compared to the same quarter the year before. Sales are stabilizing and bottoming out in the video & lighting and media segments, but remain weak in the events segment. Sales in the digital cinema market again almost doubled compared to 2Q08 but were still hampered by supply chain shortages. Compared to 1Q09 sales for the division grew by 15.7%.

Order intake is down 26.7% for the division compared to 2Q08 with a clear downward trend in orders from rental companies. Order intake remains stable in fixed installations. In the digital cinema market orders are depending on financing structures. The latter being further developed, very large frame agreements have been made with key integrators and exhibitors worldwide.

The order book at the end of June was 79.4 million euro, up 2.8% from the year before.

Gross profit decreased strongly year-on-year due to a drop in gross margin, which results to a large extent from a shift towards lower margin products and the forced sell-off of media inventory. Furthermore there were also accelerated inventory write-offs in the media segment. EBIT for 2Q09 was at minus 7.8 million euro compared to minus 0.9 million euro the year before. Cost containment actions are ongoing. A further reduction in staff has been carried through and resources are re-allocated between the various market segments served by the Media & Entertainment division.