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Welcome to the DATAGROUP SE conference call on the figures for the first quarter of the financial year 2021, 2022. [Operator Instructions] The presentation is also available for download in the Investor Relation section on DATAGROUP's website. I would now like to welcome Oliver Thome, CFO of DATAGROUP.
Thank you very much. And ladies and gentlemen, I would like to welcome you to DATAGROUP's conference on the Q1 numbers. My name is Oliver Thome and I'm CFO at DATAGROUP.Next slide, please. As you have probably already seen in our press release from this morning, the year has started very well for us. We had a strong start into the year in Q1 of the year '21, '22, with a substantial increase in revenue, margins and earnings. The revenues in the first quarter increased by 13.4% to EUR 123.2 million. The organic growth of about 5.6% during the last 12 months is within our expectation and the Management Board. And the first time, full consolidated companies, the URANO and dna today, DATAGROUP BIT Oldenburg were also able to develop very well in the DATAGROUP environment. The strong development of our CORBOX sales has reflected in 5 new customers, 18 contract renewals and 10 contract extensions. EBITDA could even be improved by 29.4% to EUR 19.2 million. Next slide, please. The great development of our EBIT from 49.1% to a total of EUR 10.4 million is also reflected in the EPS, which increased by 84.7% to EUR 0.76. Next slide, please. And so, I'm pleased to explain some selected profit and loss figures to you. And in the past quarter, we were able to significantly increase revenue by more than 30.5%, I almost explained. But very important, and this is that the gross profit could be increased by almost 14.2%. And on the other hand, it's very important to see that our personnel costs only rose by around 11.9%. So we were able to translate the good sales and cost development into a significant increase in our profitability and the EBITDA as well as in the EBIT. Next slide, please. You can see the increase in goodwill in the selected key balance sheet figures. And this is due to the acquisition of the two companies we bought last year. I already mentioned the URANO and BIT Oldenburg, former dna in the past fiscal year. Supported by the strong operated cash flow the past quarter, net debt only increased by around EUR 6 million. And this leads to an equity ratio likewise to significantly rising to 22.8%, especially thanks to the strong results of the past quarter. Next slide, please. [ Operating ] statement. You can primarily see the almost mentioned strong increase in the operated cash flow driven by the good operating earnings and the optimization of the working capital. The cash flow from investing activities shows on one hand, an earnout of one company acquisition of the past fiscal year. The CapEx investments, on the other hand, could be reduced to a normal level, which we expect in a long-term range of about 2% up to 3% of the revenues. To explain it to you and to make it a little bit more clear, the acquisition of BIT Düsseldorf formerly [indiscernible] Data, and the entry to a new customer group, required investments and an infrastructure, especially a second data center, which was reflected in the 2019 figures with a significant higher investments. These investments were stabilized and optimized in 2022, and we expect that we will be in the long-term range between 2% and 3% as I already explained to you. Overall, this leads to a change in cash and cash equivalents of plus EUR 16.1 million compared to the first quarter of the past year. Next slide, please. Those of you who have been with us for a long time know the excellent development of our share price. In the past year, in particular, the share price developed very positively. A little bit sad, we are about the current crisis in Ukraine and this crisis is putting pressure on the stock exchanges around the world. And the DATAGROUP share is also currently affected. Overall, we are nevertheless, very satisfied with the development of the 12-month period and assume that the share price will recover again in the future when the crisis in the Ukraine will be solved by the European Union, U.S. and Russia. Next slide, please. The consensus estimates can be said that we keep what we promised. Then, turning over the EBITDA and the net income exceeded the estimates on the consensus 2021. And you know at our Annual General Meeting on the 10th of March, we will publish the guidance for the current fiscal year and give you an outlook on our medium-term planning. Next slide, please. There were only a few changes in the shareholder structure in the past fiscal year and our [indiscernible] Max Schaber will remain invested in the company in the long term. Next slide, please. You all can see that we will continue very actively our -- to present our company to existing and potential investors at road shows and conferences to underline the attractiveness of DATAGROUP's business model. We have now come to the end of the presentation. I would like to thank you for your interest in joining this conference. And I'm now happy to answer your questions.
[Operator Instructions] At the moment, we have four questions from Mr. Knut Woller. The first question is, what was your organic growth in the first quarter of '21, 2022?
This is a question. We adjust them. We just looked at them. You know our business model has some -- there are some variances from quarter-to-quarter. So that it's very hard to measure only quarter 1 to quarter 1 in the past year. So we decided to only to show our long-term growth, and this long-term growth is shown 5.6%.What is not shown is the organic growth in this 5.6% of these companies who joined DATAGROUP from the side of URANO, dna, which developed very, very strongly in the environment of DATAGROUP. So I cannot give you the answer exactly for the Q1 and only for the 12-month period.
The next question is, do you expect other operating income to be a tailwind year-over-year in 2021, 2022?
That's a good question. I want to answer it with a long-term view to DATAGROUP. And I think the tailwind we have here, over the year, there is a headwind on the other side, and these are effects in the past who equalized each. So we have some tailwind with further having the vaccination centers not on the level of the past year, but still on our contract situation. On the other hand, our business is always prudent by tailwind and headwind. And so we cannot say that there is more tailwind than other years. So we expect further growing and very -- a good situation for us for this year.
Why were personnel expenses down quarter-over-quarter?
DATAGROUP's strategy, since we made our CORBOX business model, reflects that we have a centralized production unit, especially our DATAGROUP operation and our DATAGROUP with our service desk. This allows us that we optimize our personnel costs because there is no dedicated infrastructure for technical realization in each company. So we were able to equalize these customer situations for all DATAGROUP. And this is the reason why we can reduce our personnel expenses in part of the potential -- or the percentage of our revenues. And we believe that this development goes further off.
The fourth question is that the operating cash flow enjoy a tailwind from FIS troubles in 2019/2020? And if so, to which extent?
No, no. I don't want to think that there is a tailwind of FIS in our cash flow statement. And so the answer is no, there is no tailwind from FIS. We do have a major restructuring or analysis of the recruits we need, and we are very optimistic that the crew we made are from the level of what we need, but there is no tailwind in our cash flow statement from IFS.
Next up, we have a question from Mr. Gustav Froberg.
Can you hear me okay?
Yes, we can hear you.
I have two questions, please. First question, I was hoping you could provide some more qualitative comments around the margin drivers in the quarter. I'm particularly curious just to learn a bit more about the strength of the EBITDA and EBIT margin? And then second question relates to the same thing. Your run rate EBIT for Q1 points to a full year EBIT figure above EUR 40 million. And I was wondering if there's any reason, for example, why you cannot achieve this maybe due to one-offs in Q1? Or is there any profitable contracts that are concluding later in the year, that means that EUR 40 million plus is not a good number?
Maybe we'll start at first at the question to the margin. The question to the margin is that we are very focused on giving our business into the CORBOX business model to our long-term contract. And when we see that this development and the switch from project base sales to our CORBOX business model with long-term product-as-a-service approaches, this allows us to optimize these contracts which have a duration of about 4 up to 5 years in the first step. And so this transfer of one plan project phase to our CORBOX long term will -- is the reason why our margin is this year better than in the past. The second question you mentioned is where I want to leave you to join us at the 10th of March. And there, we will give you our estimations for the current year. But I cannot give you an answer before. But we are optimistic that we have done the good fiscal year, '21, '22.
Okay. So no one-offs or any profitable contracts rolling over, anything like that in Q1 that will start the figure in Q2, 3 and 4?
No. This is a run rate to CORBOX business. There are no special effects from actuarial high margins. There are some figures, including that I just talked about with the vaccination centers, but these contracts are still running. So we have to see what will be the effect, but this will not be an effect, which will show quite different accounts in the further quarter close of DATAGROUP.
Next up, we have a question from Mr. Tim Wunderlich.
My question would be, could you give us an update on the M&A pipeline, first of all? And then about the working capital improvement, you mentioned this and the cash flow was extremely strong in Q1. And my question would be in how far the working capital improvements are sustainable? So I think your current working capital ratio is around 11% of revenues. I mean, do you expect this to go down and stay down below 11% going forward?
Thank you for your question. At first, you asked about the M&A pipeline. The M&A pipeline is still filled. We are very active here in different stadiums. I cannot give you too much details on this, but you know our strategy of looking for technology for additional strategy positions and on local white flags, we -- these aren't the companies we are now screening and we are talking about. So our strategy of organic growth and inorganic growth is still going on like in the past. The second question you talked is about the cash flow statement and the operating income. This is quite right. We have quite very, very strong operating cash flow from -- driven our EBIT or our results. On the other hand, we have some good positions in our trade receivables and liabilities. There, we have some positions. And you know, we work with some public or with the public sector and the payment practice of the public sector is not as good as in the industrial sector. So we have sometimes from quarter-to-quarter, some very good positions or some tailwind and some time's a little bit headwind. But in common, we have a quite good look and a close look for the development of our working capital. So this will not be a one wonder, but the Q1 has been extremely strong. On the other hand, like I explained in the presentation, our CapEx estimation will be very stable. We -- you have seen it in '21. In '21, we had investments in CapEx of about EUR 15 million and we are in a comparable level like in '21. We are growing, and we have two more companies in site with URANO and dna. But I think that between 2% and 3% CapEx investments of the revenue will be a proper position.
Next up, we have a question from Mr. Andreas Wolf. Mr. Wolf, can you hear us? And then we'll switch to a question from Mr. Yannik Siering.
Can you hear me?
Yes, we can hear you.
Okay. Great. Most of my questions were already answered, so I would just have one left. Could you talk about the tax rate? Is there any guidance for the full year? My understanding from last year was that there would be a positive effect on the tax rate in case of acquisitions done by FIS, right? So now, we've seen 35.5% Q1. Could you elaborate a bit on that?
The estimation for the tax rate, I cannot give you a detailed answer. We are very positively, we have a potential to have a tailwind in our tax rate. But this, at first, means that we have the common understanding for the reorganization part of FIS. And when it seems to be so that we are in the right path, we are very confident with this. Then, we can -- we are now looking for potential tax optimization and are discussing them with our consultant, but there is not quite a result. So we did not have shown it in our first quarter.
Next up, we have a question from Mr. [ Matthias Ensminger ]. Are you planning a capital increase?
No, this is a question I normally give to Max Schaber. You have seen that our equity ratio is nearly 20 point -- 23%. So in this moment, we are very comfortable with this equity ratio. But it depends on the further development of organic and inorganic growth and the opportunities we have in the market. In this situation, and you have seen our net debt is a very comfortable situation as well. So that we will decide this on the one hand, in the question of financing our growth and inorganic growth. And on the other hand, to have a quite look on our balance sheet and the ratios which we have. But in this moment, we are not looking for short-term equity increase.
Next up, we have Mr. Andreas Wolf.
We have some technical issues?
I see you on green. But we can't hear you.
Can you hear me now?
Yes, we can hear.
Okay. Okay. I had to dial in again. Sorry, another route. So I would have a couple of questions. So the first one would be the most obvious one. So especially if we look at the IT space, many companies complain about wage inflation. Maybe you could share your view on the developments that you observed within DATAGROUP? And what are the consequences basically for you also, given the fact that the contracts that you have with your clients are usually more or less fixed, given the services that you are providing? So what's here, what's your strategy? The second would be, in general, on the individual entities within DATAGROUP. Are all parts of DATAGROUP already running at full steam, i.e., Financial Services? DATAGROUP Ulm had some issues a while ago. Maybe you could update us quickly here whether there is more tailwind coming from -- what to be expected from -- efficiency in the future in these places? That would be helpful.
Okay. The first question, thank you very much, therefore, it was about the inflation and our contract situation. And in all cases, we have especially rules in our contracts, which are looking for this inflation and it gives us the possibility to make adoption of our rates. And this is what we are quite looking -- where we are working normally every year on it. This is not a special situation. The only situation we have now in our view is that the inflation is much more higher than in the past. But from this point of view, we do not see an extraordinary negative in our business model. The second question you talked about is of the full stem of our subsidiaries, where we do not publish the individual financial statements. But what you have seen or what I just explained is that especially these two units, there's FIS and this is Ulm. We are very close on these companies. We are very confident that the strategy of entering these markets of the finance industry, for example, is the right decision. What was very hard is to make the investments in the infrastructure for running this business. But now we are able, and this is where we are meanwhile successful in it, is to onboard new customers with profitable contracts in this area. So let me have a summarize -- to summarize it, we are on a good way with these companies, especially with FIS and we are on the right path of the reorganization of this unit. And so we will work hard for it.
Next up, we have a follow-up question from Mr. Knut Woller. What is the split payout for finance leases in 2021/2022?
I have to give this some follow-up -- I cannot say what is the budget of the finance leases. I know what you want to know, it's a question of discounted cash flow and the need for capital in our business, but I have to give this answer after the call.
At the moment, we have no further questions. [Operator Instructions] We have no further questions. Thank you for participating in our conference call today. The call will be made available on DATAGROUP's website after the conference.
Thank you very much from my side, and we will see us next time and I wish you a great time. Thank you very much.