pr q3 2020 - signify · 2020. 10. 23. · press release october 23, 2020 signify reports third...

PressRelease

October23,2020

SignifyreportsthirdquartersalesofEUR1.7billion,operationalprofitabilityof11.5%andfreecashflowofEUR214million

Thirdquarter20201

• Signify’sinstalledbaseofconnectedlightpointsincreasedfrom64millioninQ220to71millioninQ320• SalesofEUR1,728million,nominalsalesgrowthof12.1%andCSGof-8.3%• LED-basedsalesrepresented82%oftotalsales(Q319:81%)• Adj.indirectcostsdownEUR22million,or-4.9%excl.FXeffectsandchangesinscope2• Adj.EBITAmarginincreasedby50bpsto11.5%,includingcurrencyimpactof-30bps• Adj.EBITAmarginofthegrowingprofitenginesincreasedby130bpsto12.3%• NetincomeofEUR90million(Q319:EUR74million)• FreecashflowincreasedtoEUR214million(Q319:EUR45million)• CooperLightingintegrationandsynergiesaheadofplan• Achievedcarbonneutralityandsetcoursetodoublepositiveimpactonenvironmentandsocietyin2025• DebtprepaymentofEUR350milliontoreduceoverallgrossdebtposition;netleverageat2.2x

Eindhoven, the Netherlands – Signify (Euronext: LIGHT), the world leader in lighting, today announced thecompany’s2020thirdquarterresults.“WeareveryproudofourcarbonneutralityachievementinQ3andofthelaunchofournewsustainabilityprogramaimedatdoublingourpositiveimpactontheenvironmentandsocietyin 2025. Amidst difficult market dynamics caused by the COVID-19 pandemic, this financial quarter we arereporting yet another resilientperformanceunderpinnedbyour consumerand connected lighting.Our grossmargin improvement, through rigorous pricemanagement, translated into a higher operational margin. Ourdisciplineinworkingcapitalmanagementallowedustogenerateasolidfreecashflowforthequarter,whileaspreviously announced, we reduced our debt by EUR 350 million,” said CEO Eric Rondolat. “Given theaccelerationofthepandemicinmanyregions,weremaincautiousaboutmarketdevelopments,butconfidentinourability to furtheradapt,whichwehavedemonstratedsince thebeginningof theyear.Our teams remainfocusedonmakingcontinuedgoodprogressontheintegrationofCooperLightingandKlite,whilerelentlesslydrivingourgrowthplatformstodevelopnewbusinessopportunitiesinlinewithourstrategy.”

Outlook

Given recent developments of the pandemic, Signify does not provide financial guidance for full year 2020.Signifyremainsconfidentintheunderlyingresilienceofitsbusinessesandoperatingmodel,andthatitsliquidityneedsarewellcoveredbythefinancialframeworkithasinplace.DuringthevirtualCapitalMarketsDay2020,whichisscheduledonDecember9,Signifywillprovidemoredetailsonitsexpectationsforthemedium-term.

¹Thispress releasecontains certainnon-IFRS financialmeasuresand ratios, suchas comparable salesgrowth,EBITA,adjustedEBITAand freecash flow,andrelatedratios,whicharenotrecognizedmeasuresoffinancialperformanceorliquidityunderIFRS.Forareconciliationofthesenon-IFRSfinancialmeasurestothemostdirectlycomparableIFRSfinancialmeasures,seeappendixB,Reconciliationofnon-IFRSfinancialmeasures,ofthispressrelease.2ChangesinscoperelatetotheconsolidationofCooperLightingandKlite

Financialreview

Thirdquarter Ninemonths2019 2020 change inmillionsofEUR,exceptpercentages 2019 2020 change

-8.3% Comparablesalesgrowth -15.3%-3.6% Effectsofcurrencymovements -1.2%24.0% Consolidationandotherchanges 19.3%

1,542 1,728 12.1% Sales 4,497 4,624 2.8% 585 689 17.8% Adjustedgrossmargin 1,699 1,801 6.0%

37.9% 39.9% Adj.grossmargin(as%ofsales) 37.8% 39.0%

-377 -443 Adj.SG&Aexpenses -1,155 -1,237 -65 -77 Adj.R&Dexpenses -201 -211 -442 -520 -17.7% Adj.indirectcosts -1,356 -1,448 -6.8%

28.7% 30.1% Adj.indirectcosts(as%ofsales) 30.2% 31.3%

169 199 17.7% AdjustedEBITA 416 444 6.6%11.0% 11.5% AdjustedEBITAmargin 9.3% 9.6%

-31 -38 Adjusteditems -80 -93 138 161 16.6% EBITA 336 351 4.4%

114 131 14.9% Incomefromoperations(EBIT) 263 261 -0.7% -11 -16 Netfinancialincome/expense -32 -42 -28 -25 Incometaxexpense -63 -21 74 90 21.0% Netincome 169 198 17.3%

45 214 Freecashflow 220 484 0.58 0.67 BasicEPS(€) 1.34 1.53 27,337 37,057 Employees(FTE) 27,337 37,057

ThirdquarterSalesamountedtoEUR1,728million,anominalincreaseof12.1%.Adjustedfor3.6%negativecurrencyeffectsand 24.0% consolidation, comparable sales decreased by 8.3%. LED-based sales decreased by 8.2% and nowaccountfor82%oftotalsales.Theadjustedgrossmarginincreasedby200bpsto39.9%,includingacurrencyeffectof-10bps,largelyasaresultofsolidpricingmanagement.TheadjustedindirectcostsincreasedbyEUR78million.Excludingcurrencyeffectsandchangesinscope,theadjustedindirectcostsaredownEUR22million,or4.9%.AdjustedEBITAamountedtoEUR199million,a17.7%increasecomparedtothesameperiod lastyear.The Adjusted EBITA margin improved by 50 bps to 11.5%, mainly driven by the robust gross marginimprovement. Total restructuring costs were EUR 25 million and acquisition-related charges and otherincidentalswereEUR13million.NetincomeincreasedfromEUR74millionlastyeartoEUR90millioninQ320.Free cash flow amounted to EUR 214 million, reflecting profitability improvements, strong working capitalmanagementandtheconsolidationofCooperLightingandKlite.

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Growingprofitengines

Inpercentages CSG Adj.EBITAmargin

Q32019 Q32020 Q32019 Q32020

DigitalSolutions 1.7% -11.2% 12.3% 11.7%DigitalProducts 0.1% -2.0% 9.4% 13.1%Growingprofitengines 1.0% -7.9% 11.0% 12.3%

ThirdquarterComparablesalesofthegrowingprofitenginesdeclinedby7.9%duetotheongoingspreadofCOVID-19andthemeasurestakenbygovernmentsandcustomers.Despitethedeclineintop-line,thegrowingprofitengineshaveimprovedtheAdjustedEBITAmarginby130bpsto12.3%,withaparticularlystrongmarginimprovementintheDigitalProductsdivision,drivenbyanincreaseingrossmarginandindirectcostsavings.

DigitalSolutions

Thirdquarter Ninemonths

2019 2020 change inmillionsofEUR,unlessotherwiseindicated 2019 2020 change

-11.2% Comparablesalesgrowth -16.0%

698 916 31.2% Sales 1,929 2,336 21.1% 86 107 24.4% AdjustedEBITA 174 225 29.6%

12.3% 11.7% AdjustedEBITAmargin 9.0% 9.6% 86 78 -8.7% EBITA 151 155 2.8% 63 50 -21.3% Incomefromoperations(EBIT) 84 72 -14.0%

ThirdquarterSales amounted to EUR 916million, a nominal increase of 31.2% as a result of the consolidation of CooperLighting.Comparablesalesdeclinedby11.2%andreflectsacontinueddifficultmarketenvironment,albeitanimprovedtrendcomparedwithlastquarter.ThemostseverelyimpactedmarketswereLatinAmerica,Canada,India, Southeast Asia, Italy and France. LED-based sales accounted for 92% of total sales including CooperLighting. Connected-based sales represented 27% of total sales excluding Cooper Lighting. Adjusted EBITAamountedtoEUR107million,resultinginanAdjustedEBITAmarginof11.7%.AdjustedEBITAmarginremainedstableyear-on-yearwhenincludingthepro-formaCooperLightingfinancialsinQ319.

DigitalProducts

Thirdquarter Ninemonths2019 2020 change inmillionsofEUR,unlessotherwiseindicated 2019 2020 change


565 575 1.9% Sales 1,681 1,577 -6.2% 53 76 42.2% AdjustedEBITA 145 167 15.2%

9.4% 13.1% AdjustedEBITAmargin 8.6% 10.6%

35 73 111.3% EBITA 118 154 31.0%

33 71 115.7% Incomefromoperations(EBIT) 114 149 30.9%

ThirdquarterSalesamountedtoEUR575million,anominalincreaseof1.9%andadecreaseof2.0%onacomparablebasis.Connected-based sales represented 21%of total sales.While demand in theOEMand Professional channelscontinuedtobeimpactedbythemeasurestakenbygovernmentsandcustomers,salesintheconsumerchannelshowedastrongperformance,particularly in theconnectedhomecategory forwhichsell-out rates remainedrobust.AdjustedEBITAamountedtoEUR76million,resultinginanimprovementintheAdjustedEBITAmarginof370bpsdrivenbyapositivemiximpactfromconnectedhome,solidpricemanagementandcontinuedbill-of-materialsavings,andtheongoingsuccessfulintegrationofKlite.

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ConventionalProducts


2019 2020 change inmillionsofEUR,unlessotherwiseindicated 2019 2020 change


274 233 -15.0% Sales 869 701 -19.4% 53 42 -21.4% AdjustedEBITA 172 124 -28.0%

19.4% 17.9% AdjustedEBITAmargin 19.8% 17.7% 41 35 -13.7% EBITA 152 119 -21.5% 41 35 -13.7% Incomefromoperations(EBIT) 151 119 -21.4%

ThirdquarterSales amounted to EUR 233million, a comparable decrease of 11.0%. Despite the impact of the pandemic,ConventionalProductsshowedasolidperformancemainlyasa resultof strongdemand forconsumer lamps,UV-Clightingandhorticulturelighting.Thedivisioncontinuedtogainmarketshareandgeneratesolidfreecashflow.

Other

ThirdquarterOtherrepresentsamountsnotallocatedtotheoperatingsegmentsandincludescertaincostsrelatedtocentralR&D activities to drive innovation aswell as group enabling functions. Adjusted EBITA amounted to EUR -26million(Q319:EUR-23million).EBITAamountedtoEUR-25million(Q319:EUR-23million).Restructuringcostsandotherincidentalswereinsignificantduringthequarter.

Salesbymarket


2019 2020 Change CSG inmillionsofEUR,exceptpercentages 2019 2020 change CSG

553 523 -5.3% -3.8% Europe 1,585 1,431 -9.8% -8.8%

433 659 52.1% -13.2% Americas 1,295 1,758 35.7% -17.6%466 404 -13.2% -8.2% RestoftheWorld 1,356 1,050 -22.5% -20.7%91 141 56.2% 1.7% Globalbusinesses 261 385 47.3% -9.9%

1,542 1,728 12.1% -8.3% Total 4,497 4,624 2.8% -15.3%

In2020AmericasincludeCooperLightingandGlobalbusinessesincludeKlite

ThirdquarterComparablesalesinEuropedecreasedby3.8%,followinggradualrecoveriesinmarketssuchastheBenelux,NordicsandGermany.ComparablesalesintheAmericasdecreasedby13.2%reflectingcontinuedchallengingmarketconditions.IntheRestoftheWorld,comparablesalesdeclinedby8.2%,withanegativeimpactinparticularfromIndia,IndonesiaandSoutheastAsia.InChina,demandcontinuestoshowsignsofrecovery.

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Workingcapital

inmillionsofEUR,unlessotherwiseindicated

30Sep,2019 30Jun,2020 30Sep,2020

Inventories 1,030 1,032 1,000

Tradeandotherreceivables 1,213 1,096 1,155

Tradeandotherpayables (1,582) (1,659) (1,749)

Otherworkingcapitalitems2) (74) (17) 37

Workingcapital 588 452 443

As%ofLTM*sales 9.4% 7.3% 7.0%*LTM:LastTwelveMonths

6,614 6,336 6,275

ThirdquarterWorking capital improvedby EUR145million to EUR443million year-on-year, reflecting solid inventory andreceivablesmanagement, notwithstanding the addition of Cooper Lighting's working capital.Working capitalrepresents7.0%ofsales,comparedwith9.4%attheendofSeptember2019.Workingcapitalimprovedby300bpsto6.4%ofsaleswhenincludingpro-formalasttwelve-monthssalesforbothCooperLightingandKlite.

Cashflowanalysis

Thirdquarter Ninemonths2019 2020 inmillionsofEUR 2019 2020

114 131 Incomefromoperations(EBIT) 263 261

74 82 Depreciationandamortization 211 245 44 40 Additionsto(releasesof)provisions 113 97 -67 -40 Utilizationsofprovisions -177 -138 -69 46 Changeinworkingcapital -42 120 -3 -4 Netinterestandfinancingcostspaid -13 -27 -25 -23 Incometaxespaid -64 -51 -8 -26 Netcapex -44 -47 -14 9 Other -27 24 45 214 Freecashflow 220 484

ThirdquarterFree cash flow amounted to EUR 214 million. This is reflecting higher profitability, strong working capitalmanagementandtheconsolidationofCooperLightingandKlite.FreecashflowincludedarestructuringpayoutofEUR11million(Q319:EUR20million).

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Netdebtandtotalequity

inmillionsofEUR 30Sep,2019 30Jun,2020 30Sep,2020

Short-termdebt 117 113 100

Long-termdebt 1,379 2,619 2,251Grossdebt 1,496 2,732 2,351

Cashandcashequivalents 639 1,026 762

Netdebt 857 1,706 1,589Totalequity 2,200 2,341 2,295

ThirdquarterFollowingthedebtprepaymentofEUR350milliontoreduceouroverallgrossdebtposition,ourcashpositiondecreasedbyEUR264milliontoEUR762millioncomparedwiththeendofJune2020.NetdebtamountedtoEUR1,589million,adecreaseofEUR117millioncomparedwiththeendof June2020.Net leveragereducedfrom2.4xattheendofJune2020to2.2xattheendofSeptember2020,whichisinlinewithourdeleveragingstrategy.TotalequitydecreasedtoEUR2,295millionattheendofQ3(Q220:EUR2,341million),primarilyduetocurrencytranslationresultsandthepurchaseoftreasurysharestocoveremployeelongtermincentiveplans,offsetpartlybynetincome.

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Otherinformation

AppendixA–SelectionoffinancialstatementsAppendixB–Reconciliationofnon-IFRSfinancialmeasuresAppendixC–FinancialGlossary

ConferencecallandaudiowebcastEricRondolat(CEO),RenévanSchooten(CFO)andJaviervanEngelen(CFO)willhostaconferencecallforanalystsandinstitutionalinvestorsat9:00a.m.CETtodiscussthirdquarter2020results.AliveaudiowebcastoftheconferencecallwillbeavailableviatheInvestorRelationswebsite.

Financialcalendar2020October27,2020EGM2020December9,2020CapitalMarketsDay2020January29,2021Fourthquarterandfullyearresults2020

Forfurtherinformation,pleasecontact:

SignifyInvestorRelationsRogierDierckxTel:+31611384609E-mail:[email protected]

SignifyCorporateCommunicationsElcovanGroningenTel:+31610865519E-mail:[email protected]

AboutSignifySignify (Euronext: LIGHT) is theworld leader in lighting for professionals and consumers and lighting for theInternetofThings.OurPhilipsproducts,Interactconnectedlightingsystemsanddata-enabledservices,deliverbusinessvalueandtransformlifeinhomes,buildingsandpublicspaces.With2019salesofEUR6.2billion,wehave approximately 37,000 employees and are present in over 70 countries. We unlock the extraordinarypotentialof light forbrighter livesandabetterworld.Weachievedcarbonneutrality in2020andhavebeennamed Industry Leader in the Dow Jones Sustainability Index for three years in a row. News from Signify islocated at the Newsroom, Twitter, LinkedIn and Instagram. Information for investors can be found on theInvestorRelationspage.

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https://www.signify.com/global/our-company/investorsmailto:[email protected]:[email protected]://www.signify.comhttps://www.lighting.philips.com/https://www.interact-lighting.com/enhttps://www.signify.com/global/our-company/news/press-releases/2020/20200908-signify-achieves-carbon-neutrality-and-sets-course-to-double-its-positive-impact-on-the-environment-and-societyhttps://www.signify.com/global/our-company/news/press-releases/2019/20190916-signify-named-industry-leader-in-2019-dow-jones-sustainability-indexhttps://www.signify.com/newshttps://www.twitter.com/Signify_Presshttps://www.linkedin.com/showcase/18082655/admin/updates/https://www.instagram.com/signify_press/https://www.signify.com/investors

ImportantInformation

Forward-LookingStatementsandRisks&UncertaintiesThis document and the related oral presentation contain, and responses to questions following the presentation maycontain,forward-lookingstatementsthatreflecttheintentions,beliefsorcurrentexpectationsandprojectionsofSignifyN.V.(the“Company”,andtogetherwithitssubsidiaries,the“Group”),includingstatementsregardingstrategy,estimatesofsalesgrowthandfutureoperationalresults.

Bytheirnature,thesestatementsinvolverisksanduncertaintiesfacingtheCompanyanditsGroupcompanies,andanumberofimportantfactorscouldcauseactualresultsoroutcomestodiffermateriallyfromthoseexpressedinanyforward-lookingstatementas a resultof risks anduncertainties. Such risks, uncertainties andother important factors includebut arenotlimitedto:adverseeconomicandpoliticaldevelopments,theimpactsofCOVID-19,rapidtechnologicalchange,competitionin the general lighting market, development of lighting systems and services, successful implementation of businesstransformationprograms,impactofacquisitionsandothertransactions,reputationalandadverseeffectsonbusinessduetoactivitiesinEnvironment,Health&Safety,compliancerisks,abilitytoattractandretaintalentedpersonnel,adversecurrencyeffects,pensionliabilities,andexposuretointernationaltaxlaws.Pleasesee“RiskFactorsandRiskManagement”inChapter12oftheAnnualReport2019fordiscussionofmaterialrisks,uncertaintiesandotherimportantfactorswhichmayhaveamaterial adverseeffecton thebusiness, resultsofoperations, financial conditionandprospectsof theGroup. Such risks,uncertainties andother important factors should be read in conjunctionwith the information included in theCompany’sAnnualReport2019.

Additional risks currently not known to the Group or that the Group has not consideredmaterial as of the date of thisdocumentcouldalsoprovetobeimportantandmayhaveamaterialadverseeffectonthebusiness,resultsofoperations,financialconditionandprospectsoftheGrouporcouldcausetheforward-lookingeventsdiscussedinthisdocumentnottooccur.TheGroupundertakesnoduty toandwillnotnecessarilyupdateanyof the forward-lookingstatements in lightofnewinformationorfutureevents,excepttotheextentrequiredbyapplicablelaw.

MarketandIndustryInformationAllreferencestomarketshare,marketdata,industrystatisticsandindustryforecastsinthisdocumentconsistofestimatescompiledbyindustryprofessionals,competitors,organizationsoranalysts,ofpubliclyavailableinformationoroftheGroup’sownassessmentofitssalesandmarkets.Rankingsarebasedonsalesunlessotherwisestated.

Non-IFRSFinancialMeasuresCertainpartsofthisdocumentcontainnon-IFRSfinancialmeasuresandratios,suchascomparablesalesgrowth,adjustedgrossmargin, EBITA, adjusted EBITA, and free cash flow, andother related ratios,which are not recognizedmeasures offinancialperformanceorliquidityunderIFRS.Thenon-IFRSfinancialmeasurespresentedaremeasuresusedbymanagementtomonitortheunderlyingperformanceoftheGroup’sbusinessandoperationsand,accordingly,theyhavenotbeenauditedorreviewed.Notallcompaniescalculatenon-IFRSfinancialmeasuresinthesamemanneroronaconsistentbasisandthesemeasures and ratiosmaynot be comparable tomeasures usedby other companies under the sameor similar names. Areconciliationofthesenon-IFRSfinancialmeasurestothemostdirectlycomparableIFRSfinancialmeasuresiscontainedinthis document. For further information on non-IFRS financial measures, see “Chapter 18 Reconciliation of non-IFRSmeasures”intheAnnualReport2019.

PresentationAllamountsareinmillionsofeurosunlessotherwisestated.Duetorounding,amountsmaynotadduptototalsprovided.Allreporteddataareunaudited.Unlessotherwiseindicated,financialinformationhasbeenpreparedinaccordancewiththeaccountingpoliciesasstatedintheAnnualReport2019andsemi-annualreport2020.

ChangeinreportingsegmentsEffective Q2 2020, to further adapt to the industry transition and strengthen customer centricity, Signify changed theorganizationalstructure,whichincludedchangingthepreviouslyfourbusinessgroups(BG’s)tothreedivisions.

• Division Digital Solutions (formerly BG Professional, including Cooper Lighting Solutions) offers luminaires, lightingsystemsandservicesfortheInternetofThingstothecustomersintheprofessionalsegment;

• Division Digital Products (combines BG LED and BG Home). This division offers LED lamps, LED luminaires andconnected products, including Hue and Wiz, and LED electronics to professional customers, OEM partners andconsumers.BybringingtogetheritsentireconsumerLEDportfolio,Signifycanbettermanagethislightingcategoryforitschannelpartners;and

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• Division Conventional Products (formerly BG Lamps) continues to focus on conventional lamps and electronics forprofessional customers,OEMpartnersandconsumers. It isorganized separately tobringa cleardistinctionbetweenconventionalanddigitalofferings.

In line with this change, effective Q2 2020, Signify's operating segments are Digital Solutions, Digital Products, andConventionalProducts.The segmentsareorganizedbasedon thenatureof theproductsandservices. ‘Other’ representsamounts not allocated to the operating segments and includes certain costs related to central R&D activities to driveinnovationaswellasgroupenablingfunctions.

MarketAbuseRegulationThispressreleasecontainsinformationwithinthemeaningofArticle7(1)oftheEUMarketAbuseRegulation.

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AppendixA–Financialstatementinformation

A.Condensedconsolidatedstatementofincome

InmillionsofEURunlessotherwisestatedThirdquarter JanuarytoSeptember2019 2020 2019 2020

Sales 1,542 1,728 4,497 4,624Costofsales (967) (1,060) (2,819) (2,855)Grossmargin 575 668 1,678 1,768Selling,generalandadministrativeexpenses (406) (458) (1,219) (1,296)Researchanddevelopmentexpenses (68) (80) (207) (216)Impairmentofgoodwill — — — —Otherbusinessincome 15 4 18 9Otherbusinessexpenses (2) (2) (7) (5)Incomefromoperations 114 131 263 261Financialincome 4 4 12 13Financialexpenses (15) (20) (44) (55)Resultsrelatingtoinvestmentsinassociates 0 0 1 0Incomebeforetaxes 103 115 232 219Incometaxexpense (28) (25) (63) (21)Netincome 74 90 169 198

Attributionofnetincomefortheperiod:Netincome(loss)attributabletoshareholdersofSignifyN.V. 73 85 169 194Netincome(loss)attributabletonon-controllinginterests 1 5 0 4

Amountsmaynotaddupduetorounding

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B.Condensedconsolidatedstatementofcomprehensiveincome

InmillionsofEURThirdquarter JanuarytoSeptember2019 2020 2019 2020

Netincome(loss) 74 90 169 198Pensionsandotherpost-employmentplans:Remeasurements — (5) (2) (5)Incometaxeffectonremeasurements — — — —

Totalofitemsthatwillnotbereclassifiedtoprofitorloss — (5) (2) (5)

Currencytranslationdifferences:Netcurrentperiodchange,beforetax 73 (139) 91 (251)Incometaxeffect — — (1) —

NetinvestmenthedgeNetcurrentperiodchange,beforetax — 16 — 22Incometaxeffect — — — —

Cashflowhedges:Netcurrentperiodchange,beforetax (10) 19 (5) 24Incometaxeffect 2 (4) 2 (5)

Totalofitemsthatareormaybereclassifiedtoprofitorloss 65 (108) 86 (210)

Othercomprehensiveincome(loss) 65 (113) 83 (216)Totalcomprehensiveincome(loss) 140 (23) 252 (18)

Totalcomprehensiveincome(loss)attributableto:ShareholdersofSignifyN.V. 135 (26) 249 (18)Non-controllinginterests 4 3 3 —

Amountsmaynotaddupduetorounding.

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C.Condensedconsolidatedstatementoffinancialposition

InmillionsofEURDecember31,

2019September30,

2020Non-currentassetsProperty,plantandequipment 644 738Goodwill 1,943 2,331Intangibleassets,otherthangoodwill 443 831Investmentsinassociates 14 11Financialassets 49 58Deferredtaxassets 384 468Otherassets 64 60Totalnon-currentassets 3,541 4,498

CurrentassetsInventories 874 1,000Financialassets — —Otherassets 161 213Derivativefinancialassets 16 60Incometaxreceivable 48 53Tradeandotherreceivables 1,223 1,155Cashandcashequivalents 847 762Assetsclassifiedasheldforsale 4 —Totalcurrentassets 3,174 3,243Totalassets 6,715 7,740

EquityShareholders’equity 2,181 2,152Non-controllinginterests 142 143Totalequity 2,324 2,295

Non-currentliabilitiesDebt 1,369 2,251Post-employmentbenefits 437 420Provisions 216 228Deferredtaxliabilities 28 26Incometaxpayable 52 102Otherliabilities 135 142Totalnon-currentliabilities 2,236 3,168

CurrentliabilitiesDebt,includingbankoverdrafts 96 100Derivativefinancialliabilities 20 16Incometaxpayable 22 37Tradeandotherpayables 1,684 1,749Provisions 149 155Otherliabilities 183 220Liabilitiesfromassetsclassifiedasheldforsale 2 —Totalcurrentliabilities 2,155 2,277Totalliabilitiesandtotalequity 6,715 7,740


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D.Condensedconsolidatedstatementofcashflows

InmillionsofEUR

Thirdquarter JanuarytoSeptember

20191 2020 20191 2020

Cashflowsfromoperatingactivities

Netincome(loss) 74 90 169 198

Adjustmentstoreconcilenetincome(loss)tonetcashprovidedbyoperatingactivities: 147 169 404 423

•Depreciation,amortizationandimpairmentofnon-financialassets 74 82 211 245

•Impairment(reversal)ofgoodwill,othernon-currentfinancialassetsandinvestmentsinassociates — — — —

•Netgainonsaleofassets (9) — (10) (1)

•Netinterestexpenseondebt,borrowingsandotherliabilities 3 9 11 24

•Incometaxexpense 28 25 63 21

•Additionsto(releasesof)provisions 37 35 95 82

•Additionsto(releasesof)post-employmentbenefits 6 4 18 15

•Otheritems 7 14 15 37

Decrease(increase)inworkingcapital: (69) 46 (42) 120

•Decrease(increase)intradeandotherreceivables (2) (91) 41 214

•Decrease(increase)ininventories (23) 5 (135) (52)

•Increase(decrease)intradeandotherpayables (55) 124 38 (78)

•Increase(decrease)inothercurrentassetsandliabilities 10 8 14 36

Increase(decrease)inothernon-currentassetsandliabilities (4) 1 (12) 7

Utilizationsofprovisions (41) (32) (133) (114)

Utilizationsofpost-employmentbenefits (27) (8) (44) (24)

Netinterestandfinancingcostspaid (3) (4) (13) (27)

Incometaxespaid (25) (23) (64) (51)

Netcashprovidedby(usedfor)operatingactivities 53 240 265 532

Cashflowsfrominvestingactivities

Netcapitalexpenditures: (8) (26) (44) (47)

•Additionsofintangibleassets (6) (10) (22) (23)

•Capitalexpendituresonproperty,plantandequipment (12) (17) (35) (45)

•Proceedsfromdisposalofproperty,plantandequipment 11 1 13 21

Netproceedsfrom(cashusedfor)derivativesandotherfinancialassets (2) (36) (1) (29)

Purchasesofbusinesses,netofcashacquired (4) (11) (24) (1,285)

Proceedsfromsaleofbusinesses,netofcashdisposedof — — 5 2

Netcashprovidedby(usedfor)investingactivities (14) (73) (64) (1,360)

Cashflowsfromfinancingactivities

Dividendpaid (1) — (165) —

Proceedsfromissuanceofdebt 11 1 12 3,737

Repaymentofdebt (41) (369) (96) (2,898)

Purchaseoftreasuryshares — (32) (6) (38)

Netcashprovidedby(usedfor)financingactivities (32) (400) (255) 801

Netcashflows 7 (233) (54) (28)

Effectofchangesinexchangeratesoncashandcashequivalentsandbankoverdrafts 12 (28) 21 (56)

Cashandcashequivalentsandbankoverdraftsatthebeginningoftheperiod2 612 1,016 664 840

Cashandcashequivalentsandbankoverdraftsattheendoftheperiod3 631 756 631 756

1Certainreclassificationshavebeenmadetoprioryearfigurestoconformwithcurrentyearpresentation.RefertoourAnnualReport2019forfurtherdetailsofthereclassifications.Thesereclassificationsdidnotimpactnetcashflows,ortotalcashflowsfromoperating,investingandfinancingactivities.

2ForQ32020andQ32019,includedbankoverdraftsofEUR10millionandEUR9million,respectively.ForJanuarytoSeptemberof2020and2019,includedbankoverdraftsofEUR7millionandEUR12million,respectively.

3IncludedbankoverdraftsofEUR6millionandEUR7millionasatSeptember30,2020and2019,respectively.


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AppendixB-Reconciliationofnon-IFRSfinancialmeasures

Changeinreportingsegments

As indicated in the Important Information section, Signify changed its segment reporting. Themain changerelates to combining BG LED and BGHome into division Digital Products. The comparatives 2019 in belowtableshavebeenupdatedtoreflecttheupdatedsegmentstructure.

Salesgrowthcompositionperbusinessin%

ThirdquarterComparable

growthCurrency

effectsConsolidationand

otherchangesNominalgrowth

2020vs2019DigitalSolutions (11.2) (3.4) 45.8 31.2DigitalProducts (2.0) (3.9) 7.8 1.9ConventionalProducts (11.0) (3.8) (0.3) (15.0)Total (8.3) (3.6) 24.0 12.1

JanuarytoSeptemberComparable

growthCurrency



2020vs2019DigitalSolutions (16.0) (1.1) 38.2 21.1DigitalProducts (12.6) (1.4) 7.8 (6.2)ConventionalProducts (18.1) (1.1) (0.2) (19.4)Total (15.3) (1.2) 19.3 2.8

Salesgrowthcompositionpermarketin%

ThirdquarterComparable

growthCurrency



2020vs2019Europe (3.8) (1.2) (0.4) (5.3)Americas (13.2) (4.7) 70.0 52.1RestoftheWorld (8.2) (5.1) 0.1 (13.2)Globalbusinesses 1.7 (2.8) 57.2 56.2Total (8.3) (3.6) 24.0 12.1

JanuarytoSeptemberComparable

growthCurrency



2020vs2019Europe (8.8) (0.7) (0.3) (9.8)Americas (17.6) (1.2) 54.6 35.7RestoftheWorld (20.7) (1.9) 0.1 (22.5)Globalbusinesses (9.9) (1.3) 58.5 47.3Total (15.3) (1.2) 19.3 2.8In2020AmericasincludeCooperLightingandGlobalbusinessesincludeKliteAmountsmaynotaddupduetorounding.

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AdjustedEBITAtoIncomefromoperations(orEBIT)inmillionsofEUR

SignifyDigital

SolutionsDigital

ProductsConventional

Products OtherThirdquarter2020AdjustedEBITA 199 107 76 42 (26)Restructuring (25) (14) (3) (8) —Acquisition-relatedcharges (14) (15) 1 — —Incidentalitems 1 (1) — 1 —EBITA 161 78 73 35 (25)Amortization1 (31) (28) (2) — 0Incomefromoperations(orEBIT) 131 50 71 35 (26)

Thirdquarter2019AdjustedEBITA 169 86 53 53 (23)Restructuring (24) (1) (13) (8) (2)Acquisition-relatedcharges (1) — (1) — —Incidentalitems (6) 1 (5) (5) 3EBITA 138 86 35 41 (23)Amortization1 (25) (22) (2) — (1)Incomefromoperations(orEBIT) 114 63 33 41 (23)

1Amortizationandimpairmentsofacquisitionrelatedintangibleassetsandgoodwill.

SignifyDigital

SolutionsDigital

ProductsConventional

Products OtherJanuarytoSeptember2020AdjustedEBITA 444 225 167 124 (72)Restructuring (40) (19) (7) (10) (4)Acquisition-relatedcharges (47) (46) (1) — —Incidentalitems (7) (5) (4) 5 (2)EBITA 351 155 154 119 (78)Amortization1 (90) (83) (6) — (1)Incomefromoperations(orEBIT) 261 72 149 119 (79)

JanuarytoSeptember2019AdjustedEBITA 416 174 145 172 (74)Restructuring (57) (16) (16) (13) (12)Acquisition-relatedcharges (2) (1) (1) — —Incidentalitems (21) (5) (10) (7) 1EBITA 336 151 118 152 (85)Amortization1 (73) (67) (4) — (2)Incomefromoperations(orEBIT) 263 84 114 151 (86)

1Amortizationandimpairmentsofacquisitionrelatedintangibleassetsandgoodwill.


15

Thirdquarter2020IncomefromoperationstoAdjustedEBITAinmillionsofEUR

Reported Restructuring

Acquisitionrelatedcharges

Incidentalitems2 Adjusted

Thirdquarter2020Sales 1,728 — — — 1,728Costofsales (1,060) 20 3 (1) (1,039)Grossmargin 668 20 3 (1) 689

Selling,generalandadministrativeexpenses (458) 2 12 1 (443)Researchanddevelopmentexpenses (80) 3 — — (77)Indirectcosts1 (538) 5 12 1 (520)Impairmentofgoodwill — — — — —Otherbusinessincome 4 — (1) (1) 1Otherbusinessexpenses (2) — — 1 (1)Incomefromoperations 131 25 14 (1) 168Amortization (31) — — — (31)Incomefromoperationsexcludingamortization(EBITA) 161 25 14 (1) 199

Thirdquarter2019Sales 1,542 — — — 1,542Costofsales (967) 8 — 2 (957)Grossmargin 575 8 — 2 585Selling,generalandadministrativeexpenses (406) 13 1 15 (377)Researchanddevelopmentexpenses (68) 2 — — (65)Indirectcosts (474) 16 1 15 (442)Impairmentofgoodwill — — — — —Otherbusinessincome 15 — — (11) 3Otherbusinessexpenses (2) — — 1 (2)Incomefromoperations 114 24 1 6 144Amortization (25) — — — (25)Incomefromoperationsexcludingamortization(EBITA) 138 24 1 6 169

1 Adj.indirectcostsincludedapositivecurrencyimpactofEUR12millionandchangesinscopeofEUR112millioninQ320.Adjustingforthecurrencyandchangesinscope,indirectcostsreducedbyEUR22milliononacomparablebasis.

2 Incidental itemsarenon-recurringbynatureandrelatetoseparation,companynamechange,transformation,environmentalprovisionfor inactivesitesanddiscountingeffectoflong-termprovisions.


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JanuarytoSeptember2020IncomefromoperationstoAdjustedEBITAinmillionsofEUR

Reported Restructuring

Acquisitionrelatedcharges

Incidentalitems2 Adjusted

JanuarytoSeptember2020Sales 4,624 — — — 4,624Costofsales (2,855) 22 17 (6) (2,823)Grossmargin 1,768 22 17 (6) 1,801Selling,generalandadministrativeexpenses (1,296) 13 31 15 (1,237)Researchanddevelopmentexpenses (216) 4 — — (211)Indirectcosts (1,512) 17 31 15 (1,448)Impairmentofgoodwill — — — — —Otherbusinessincome 9 — (1) (1) 7Otherbusinessexpenses (5) — — — (5)Incomefromoperations 261 40 47 7 354Amortization (90) — — — (90)Incomefromoperationsexcludingamortization(EBITA) 351 40 47 7 444

JanuarytoSeptember2019Sales 4,497 — — — 4,497Costofsales (2,819) 19 — 2 (2,798)Grossmargin 1,678 19 — 2 1,699Selling,generalandadministrativeexpenses (1,219) 32 2 30 (1,155)Researchanddevelopmentexpenses (207) 6 — — (201)Indirectcosts (1,426) 38 2 30 (1,356)Impairmentofgoodwill — — — — —Otherbusinessincome 18 — — (12) 6Otherbusinessexpenses (7) — — 1 (6)Incomefromoperations 263 57 2 21 343Amortization (73) — — — (73)

Incomefromoperationsexcludingamortization(EBITA) 336 57 2 21 416

2Incidentalitemsarenon-recurringbynatureandrelatetoseparation,companynamechange,transformation,environmentalprovisionforinactivesitesand

discountingeffectoflong-termprovisions.


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Appendix C – Financial glossaryAcquisition-relatedchargesCoststhataredirectlytriggeredbytheacquisitionofacompany,suchastransactioncosts,purchaseaccounting related costs and integration-relatedexpenses

AdjustedEBITAEBITA excluding restructuring costs, acquisition-relatedchargesandotherincidentalcharges

AdjustedEBITAmarginAdjusted EBITA divided by sales to third parties(excludingintersegment)

AdjustedgrossmarginGross margin, excluding restructuring costs,acquisition-related charges and other incidentalitemsattributabletocostofsales

AdjustedindirectcostsIndirect costs, excluding restructuring costs,acquisition-related charges and other incidentalitemsattributabletoindirectcosts

AdjustedR&DexpensesResearch and development expenses, excludingrestructuring costs, acquisition-related chargesandotherincidentalitemsattributabletoresearchanddevelopmentexpenses

AdjustedSG&AexpensesSelling, general and administrative expenses,excluding restructuring costs, acquisition-relatedchargesandother incidental itemsattributabletoselling,generalandadministrativeexpenses

ChangesinscopeConsolidation effects related to acquisitions(mainlyCooperLighting)

Comparablesalesgrowth(CSG)Theperiod-on-periodgrowthinsalesexcludingtheeffects of currency movements and changes inconsolidationandotherchanges

EBITIncomefromoperations

EBITAIncome from operations excluding amortizationand impairment of acquisition related intangibleassetsandgoodwill

EBITDAIncome from operations excluding depreciation,amortization and impairment of non-financialassets

EffectsofchangesinconsolidationandotherchangesIn the event a business is acquired (or divested),the impact of the consolidation (or de-consolidation) on the Group’s figures is included(orexcluded)inthecalculationofthecomparablesales growth figures. Other changes includeregulatory changes and changes originating fromnewaccountingstandards

EffectsofcurrencymovementsCalculated by translating the foreign currencyfinancials of the previous period and the currentperiod into euros at the same average exchangerates

EmployeesEmployeesofSignifyatperiodendexpressedonafull-timeequivalent(FTE)basis

FreecashflowNet cash provided by operating activities minusnet capital expenditures. Free cash flow includesinterestpaidandincometaxespaid

GrossmarginSalesminuscostofsales

IncidentalchargesAnyitemwithanincomestatementimpact(lossorgain)thatisdeemedtobebothsignificantandnotpart of normal business activity. Other incidentalitemsmayextendoverseveralquarterswithinthesamefinancialyear

IndirectcostsThe sum of selling, general and administrativeexpensesandR&Dexpenses

NetcapitalexpendituresAdditionsofintangibleassets,capitalexpenditureson property, plant and equipment and proceedsfromdisposalofproperty,plantandequipment

NetdebtShort-term debt, long-term debt minus cash andcashequivalents

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NetleverageratioThe ratio of consolidated reported net debt toconsolidated reported EBITDA for the purpose ofcalculatingthefinancialcovenant

R&DexpensesResearchanddevelopmentexpenses

RestructuringcostsThe estimated costs of initiated reorganizations,themostsignificantofwhichhavebeenapprovedby the group, and which generally involve therealignment of certain parts of the industrial andcommercialorganization

SG&AexpensesSelling,generalandadministrativeexpenses

WorkingcapitalThe sum of inventories, trade and otherreceivables, other current assets, derivativefinancialassetsminusthesumoftradeandotherpayables, derivative financial liabilities and othercurrentliabilities

19

Press Release OutlookFinancial reviewGrowing profit enginesDigital SolutionsDigital ProductsConventional ProductsOtherSales by marketWorking capitalCash flow analysisNet debtOther informationImportant Information

Appendix A – Financial statement informationA. Condensed consolidated statement of incomeB. Condensed consolidated statement of comprehensive incomeC. Condensed consolidated statement of financial positionD. Condensed consolidated statement of cash flows

Appendix B - Reconciliation of non-IFRS financial measuresSales growth composition per businessSales growth composition per marketAdjusted EBITA to income from operations (or EBIT)Income from operations to Adjusted EBITA

Appendix C - Financial glossary

pr q3 2020 - signify · 2020. 10. 23. · press release october 23, 2020 signify reports third...

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