COPENHAGEN I 24 JANUARY 2019 RTX PRESENTATION Q1 2019/20 Presentation by CEO Peter Røpke CFO Morten Axel Petersen
DISCLAIMER This presentation contains statements regarding expectations for the future development of RTX A/S, in particular the direction of future product development, future sales, operating profits and business expansion. Such statements are subject to risks and uncertainties as various factors, many of which are outside the control of RTX, may cause the actual development and results to differ materially from the expectations expressed directly or indirectly in this presentation. Factors that might affect such expectations include, among others, rapid technological changes and evolving markets, overall economic and business conditions, fluctuations in currencies, demand for RTX’s services, competitive factors in the market and uncertainties concerning possible investments. 2 January 2020 I IR Presentation
STRENGTH PROFILE RTX has a: • Market-leading position in wireless solutions. • Proven ability to develop, innovate and manufacture customized solutions. • Track record of profitable growth , consistently sustained for many years. • Dedicated growth strategy – unleashing wireless wisdom through selected B2B target markets. • Solid business model with high degree of recurring revenue from loyal customers. • High profitability, that can be maintained with the right product mix. • Leverage opportunity within the current business setup. • Sustained focus on shareholder value - CFFO invested in value creation or paid back to the shareholders. 3 January 2020 I IR Presentation
AGENDA 1. Recap: RTX Business Model 2. Business and Financial Update Q1 2019/20 3. Outlook and Long-Term Ambitions 4. Q&A Session Peter Røp øpke Mor orten Axel l Petersen President & CEO CFO Appendix: RTX Growth Strategy 4 January 2020 I IR Presentation
RECAP: RTX BUSINESS MODEL 5 January 2020 I IR Presentation
RTX AT A GLANCE: SUSTAINED PROFITABLE GROWTH RTX is a global company with +25 years of extensive experience and knowledge KEY RTX FACTS in designing and manufacturing advanced wireless short-range radio systems and products. Our heritage has provided us with a unique combination of software 1993 and hardware capabilities which RTX leverages with globally recognized customers, from conceptualization to finished products and modules. Founded in 1993 and headquarter in Denmark +1,000 5-YEAR REVENUE GROWTH 5-YEAR EBITDA GROWTH 5-YEAR EBIT GROWTH DKK million DKK million DKK million Projects completed since 1993 CAGR CAGR CAGR 100 12.5% 14.2% 13.5% 87 560 83 77 75 289 72 475 70 66 434 396 59 52 350 FTEs at 30 September, 2019 +6.8m Units of products and modules delivered in 2018/19 14/1 4/15 15/1 5/16 16/1 6/17 17/1 7/18 18/1 8/19 14/1 4/15 15/1 5/16 16/1 6/17 17/1 7/18 18/1 8/19 14/1 4/15 15/1 5/16 16/1 6/17 17/1 7/18 18/1 8/19 6 6 January 2020 I IR Presentation
WHAT WE DO Enterprise ProAudio With years of experience in ProAudio In the Enterprise segment, RTX designs, design, development and manufacturing, develops, and supplies wireless IP RTX has gained the expertise to deliver telephony solutions used in communication systems for professional use, e.g. in office incredible sound quality in high-density environments, call centers, retail or storage RF environments as well as in challenging radio environments with a high degree facilities etc. The wireless IP telephony of interference. Offering includes both solutions are supplied on both an ODM and an OEM basis. dedicated RTX modules and custom ODM/OEM products. Healthcare B2B Headsets In the Healthcare segment, RTX is primarily involved in the development, As an Enterprise adjacency expansion, the design and supply of wireless modules RTX ODM/OEM headset offering for call and products used for continuous patient centers, office environment, retail and monitoring in hospitals. Additionally, RTX storage facilities consist of several different is involved in the design of wireless models supporting customer demand for solutions for projects in assisted living high quality and deep integration across the such as hearing and accessories. Enterprise space. 7 January 2020 I IR Presentation
RTX BUSINESS MODEL FOR CONTINUED PROFITABLE GROWTH Leverage effect for profitable growth Deployment in attractive B2B target markets Core capabilities 8 January 2020 I IR Presentation
ODM MODEL OPERATED VIA FRAMEWORK AGREEMENTS WITH HIGH “STICKINESS” OF RECURRING REVENUE ILLUSTRATIVE RTX BUSINESS CASE BY PRODUCT LIFE CYCLE – FOR ONE COMBINATION OF PRODUCT AND CUSTOMER Effort and Revenue Revenue Engineering Effort ODM/OEM Revenue Start-up for replacement NRE Revenue product Years YEAR 1 YEAR 5 YEAR 2 YEAR 3 YEAR 4 YEAR 6 YEAR 7 YEAR 8 RAMP PHASE MAIN PHASE END OF REPLACEMENT DEVELOPMENT PHASE PRODUCT LIFE 9 January 2020 I IR Presentation
WHO WE WORK FOR 10 January 2020 I IR Presentation
BUSINESS AND FINANCIAL UPDATE Q1 2019/20 11 January 2020 I IR Presentation
BUSINESS UPDATE Q1 2019/20 • Satisfactory Q1 revenue and earnings, in line with plan - especially the Enterprise segment in Business Communications performing well • Design Services’ revenues from the ProAudio and Healthcare target segments are marginally below last year due to lower engineering (NRE) revenues, not fully compensated by higher revenue from product sales and royalties, as the unit’s resources focus increasingly on creating long-term recurring revenues. • Continues strategic development towards more larger framework agrements and lower share of business with smaller customers … • …and development towards higher share of revenues from recurring revenues from product sales and royalties 12 November 2019 I IR Presentation 12 12
SEVEN FRAMEWORK AGREEMENTS IN VARIOUS LIFE CYCLE STAGES DEVELOPMENT PHASE RAMP PHASE MAIN PHASE PROLONGATION/RENEWAL 1. Enterprise “Older” / “legacy” 2. Enterprise framework agreements 3. Enterprise Reasonably stable customer forecasts from established customers; some, but lower, Framework agreements 4. Enterprise (headset) quarter-on-quarter fluctuations announced during 2017/18 5. Enterprise in product sales Customer forecasts not yet stable in ramp phase; quarter- on-quarter fluctuations in product sales Framework agreements 6. ProAudio announced Q4 2018/19 7. Enterprise No product sales in development phase (some NRE revenue) Note: The life cycle stage will vary for individual products for the same customer, the above is therefore an approximation for the 13 January 2020 I IR Presentation “average” life cycle stage for each framework agreement
GROUP FINANCIAL HIGHLIGHTS Q1 2019/20 REVENUE EBITDA EBIT EBITDA-MARGIN EQUITY RATIO CFFO DKK 16 m DKK 128 m DKK 21 m 16.7 % 71 % DKK 6.5 m EB EBITDA EBIT EB REVENUE DKKm DKKm DKKm +109% 18 +10% 140 25 +102% 15 120 20 12 100 15 80 9 60 10 6 40 3 5 20 0 0 0 Q1 1 15 15/1 /16 Q1 1 16 16/1 /17 Q1 1 17 17/1 /18 Q1 1 18 18/1 /19 Q1 1 19 19/2 /20 Q1 1 15 15/1 /16 Q1 1 16 16/1 /17 Q1 1 17 17/1 /18 Q1 1 18 18/1 /19 Q1 1 19 19/2 /20 Q1 1 15 15/1 /16 Q1 1 16 16/1 /17 Q1 1 17 17/1 /18 Q1 1 18 18/1 /19 Q1 1 19 19/2 /20 14 14
GROUP P&L Q1 2019/20 • DKK million Q1 19/20 Q1 18/19 Net rev Net evenue increased by 10.2% in Q1 to DKK 128.3 million driven by higher sales especially in the Enterprise segment within Business Communications. Revenue growth in Business Communications was 15.8% with the framework agreements Revenue 128.3 116.4 announced during 2017/18 (in “ramp phase”) contributing to the growth. Design Services revenue decreased marginally by 0.9% compared to last year as the Cost of sale -52.8 -49.7 increased recurring revenues from product sales and royalties within the ProAudio and Healthcare segments could not fully compensate lower Gross profit 75.5 66.7 engineering (NRE) revenues. Gross margin. % 58.9% 57.3% • The revenue growth in Q1 was positively affected by the USD exchange rate with FX corrected revenue growth of 7.3%. Other external cost -14.4 -16.7 • Th The e Gr Gross Ma Margin in Q1 was 1.6%-points above last year due to changes in the revenue mix. Staff cost -46.6 -43.4 • St Staff ff costs ts increased as planned with the strategy execution – for ramping-up Value of own work transferred to assets 6.9 4.0 capacity in order to execute the two major framework agreements announced during 2017/18, for handling development on the two additional framework EBITDA 21.4 10.6 agreements announced end of Q4 2018/19 and for continuing to build the organization and infrastructure necessary for further growth. The average Depreciation and amortization -5.1 -2.8 number of FTEs increased to 291 in Q1 2019/20 compared to 267 in Q1 2018/19. Other capaci city ty (ex external) costs ts decreased compared to last year due to one-off Operating Profit (EBIT) 16.3 7.8 costs in Q1 last year. • Operati ting per erfo formance in Q1 improved with EBIT BITDA increasing by 101.8% and EBI BIT increasing by 109.2%. 15
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