CIMdata PLM Industry Summary Online Archive
11 February 2010
Financial News
Dassault Systèmes Reports 2009 Fourth Quarter Results, With Operating Margin Expansion and Earnings Growth
Dassault Systèmes (DS) reported IFRS unaudited financial results for the fourth quarter and year ended December 31, 2009. These results were reviewed by the Company’s Board of Directors on February 10, 2010.
Summary Highlights
- 2009 fourth quarter and full year results in line with Company financial objectives
- Fourth quarter sequential new license revenue performance led by Americas and ENOVIA
- Resilient 2009 recurring software revenue, up 5% in constant currencies
- 2009 non-IFRS operating margin reaches DS’ objective of 25%, with two consecutive quarters of operating margin expansion
- Cash and short-term investments pass €1 billion milestone, net financial position of €858 million
- Pending acquisition of IBM PLM on track for completion by early April, largest acquisition in DS history
Fourth Quarter and Full Year 2009 Financial Summary
(unaudited)
In millions of Euros, except per share data |
|
IFRS |
|
Non-IFRS |
||||||||
|
|
|
|
Change |
|
Change in cc* |
|
|
|
Change |
|
Change in cc* |
Q4 Total Revenue |
|
339.0 |
|
(11%) |
|
(7%) |
|
339.1 |
|
(12%) |
|
(7%) |
Q4 Software Revenue |
|
301.1 |
|
(9%) |
|
(5%) |
|
301.2 |
|
(9%) |
|
(5%) |
Q4 EPS |
|
0.65 |
|
38% |
|
|
|
0.68 |
|
3% |
|
|
Q4 Operating Margin |
|
27.1% |
|
|
|
|
|
32.6% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
In millions of Euros, except per share data |
IFRS |
|
Non-IFRS |
|||||||||
|
|
|
|
Change |
|
Change in cc* |
|
|
|
Change |
|
Change in cc* |
FY 2009 Total Revenue |
|
1,251.3 |
|
(6%) |
|
(9%) |
|
1,252.8 |
|
(6%) |
|
(9%) |
FY 2009 Software Revenue |
|
1,099.8 |
|
(5%) |
|
(8%) |
|
1,101.3 |
|
(5%) |
|
(8%) |
FY 2009 EPS |
|
1.43 |
|
(15%)** |
|
|
|
1.86 |
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(8%) |
|
|
FY 2009 Operating Margin |
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18.5% |
|
|
|
|
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25.0% |
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|
|
|
* |
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In constant currencies. |
|
** |
In 2008 DS recorded a €17 million (€0.13 per share) gain on sale for its prior corporate headquarters facility in other operating income and expense, net |
. |
“Dassault Systèmes made significant progress during 2009 to prepare for the future,” commented Bernard Charlès, Dassault Systèmes President and Chief Executive Officer. “We strengthened the leadership of each of our six brands, enhanced the quality and performance of our entire software portfolio, improved the global efficiency of our organization, and our global market share has grown as well. On top of this we are eager to integrate the IBM PLM organization. Our customers will benefit from closer relationships with our sales and support teams, as well as unique deployment capabilities thanks to our renewed partnership with IBM.
“Looking forward, we have laid the ground-work for our growth over the next five years, thanks to the industry’s largest sales capacity, our Version 6 platform and our wide applications portfolio. All this is coming at the right time to help our customers address their new challenges to advance sustainable innovation. As a result, we believe Dassault Systèmes will be very well positioned to leverage market conditions as they improve.”
Fourth Quarter 2009 Financial Review
(unaudited)
In millions of Euros |
|
IFRS |
|
Non-IFRS |
||||||||
|
|
Q4 2009 |
|
Q4 2008 |
|
Change in cc* |
|
Q4 2009 |
|
Q4 2008 |
|
Change in cc* |
Total Revenue |
|
339.0 |
|
382.9 |
|
(7%) |
|
339.1 |
|
384.4 |
|
(7%) |
Software Revenue |
|
301.1 |
|
330.8 |
|
(5%) |
|
301.2 |
|
332.3 |
|
(5%) |
Services and other Revenue |
|
37.9 |
|
52.1 |
|
(24%) |
|
37.9 |
|
52.1 |
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(24%) |
|
|
|
|
|
|
|
|
|
|
|
|
|
PLM software Revenue |
|
237.1 |
|
255.8 |
|
(3%) |
|
237.2 |
|
257.3 |
|
(4%) |
Mainstream 3D software Revenue |
|
64.0 |
|
75.0 |
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(9%) |
|
64.0 |
|
75.0 |
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(9%) |
|
|
|
|
|
|
|
|
|
|
|
|
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Americas |
|
103.3 |
|
118.9 |
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(3%) |
|
103.3 |
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119.2 |
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(3%) |
Europe |
|
160.9 |
|
178.3 |
|
(9%) |
|
161.0 |
|
178.8 |
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(9%) |
Asia |
|
74.8 |
|
85.7 |
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(9%) |
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74.8 |
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86.4 |
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(9%) |
*In constant currencies.
Fourth quarter results were in line with the Company’s financial objectives. New license revenue grew 66% sequentially in constant currency, higher than normal seasonality, reflecting increased activity in both the Americas and Asia. While new business activity is still lower year on year, the Company started to see a return to some larger transactions in both its ENOVIA and CATIA businesses.
- Excluding currency headwinds, IFRS total revenue and non-IFRS total revenue decreased 7%. Software revenue results in comparison to the year-ago quarter reflected lower activity due to the recession, partially offset by stable recurring software revenue. On a constant currency basis, IFRS and non-IFRS software revenue decreased 5%, with new licenses revenue decreasing 12%, while recurring software revenue was almost unchanged year over year.
- Excluding currency effects, non-IFRS PLM software revenue declined 4%, with CATIA lower by 7% and ENOVIA by 4%, while Other PLM increased 7% principally thanks to SIMULIA and DELMIA. Mainstream 3D software revenue decreased 9% in constant currencies.
- The Company’s cost savings program benefits are clear from the reduction of operating expenses during the 2009 fourth quarter. Specifically, IFRS and non-IFRS operating expenses decreased by 18% and 16% (11% excluding currency impact), respectively, during the 2009 fourth quarter in comparison to the 2008 period.
- Fourth quarter 2009 IFRS and non-IFRS operating margins and earnings per share grew in comparison to the year-ago quarter. The IFRS operating margin and net income per diluted share increased to 27.1% and €0.65, respectively. The non-IFRS operating margin expanded to 32.6% from 29.7% and non-IFRS net income per diluted share increased 3% to €0.68 per diluted share in comparison to the 2008 period. IFRS and non-IFRS net income per diluted share also benefited from decreases in the effective tax rate.
2009 Full Year Financial Summary
(unaudited)
In millions of Euros |
|
IFRS |
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Non-IFRS |
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|
FY 2009 |
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FY 2008 |
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Change in cc* |
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FY 2009 |
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FY 2008 |
|
Change in cc* |
Total Revenue |
|
1,251.3 |
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1,334.8 |
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(9%) |
|
1,252.8 |
|
1,338.2 |
|
(9%) |
Software Revenue |
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1,099.8 |
|
1,154.4 |
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(8%) |
|
1,101.3 |
|
1,157.8 |
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(8%) |
Services and other Revenue |
|
151.5 |
|
180.4 |
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(19%) |
|
151.5 |
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180.4 |
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(19%) |
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|
|
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|
|
|
|
|
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|
|
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PLM software Revenue |
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839.0 |
|
878.2 |
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(7%) |
|
840.5 |
|
881.6 |
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(8%) |
Mainstream 3D software Revenue |
|
260.8 |
|
276.2 |
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(9%) |
|
260.8 |
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276.2 |
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(9%) |
|
|
|
|
|
|
|
|
|
|
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|
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Americas |
|
386.3 |
|
410.1 |
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(11%) |
|
386.9 |
|
411.9 |
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(11%) |
Europe |
|
577.5 |
|
620.2 |
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(6%) |
|
577.7 |
|
621.0 |
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(6%) |
Asia |
|
287.5 |
|
304.5 |
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(14%) |
|
288.2 |
|
305.3 |
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(14%) |
*In constant currencies.
Full year financial results were in line with the Company’s financial objectives. Overall revenue results reflect the benefits of recurring software revenue, which represented 73% of total software revenue and 64% of total revenue. Operating margin and earnings results benefited from the cost savings program put in place by the Company. At year-end the Company had 7,834 personnel, a generally stable overall employee base in comparison to 2008. The Company continued to add resources in research and development, expanding R&D headcount by 4% at December 31, 2009 compared to the 2008 year-end.
- 2009 IFRS and non-IFRS total revenue declined approximately 6% on a reported basis and by 9% in constant currencies, reflecting the impact of the global economic recession.
- Looking at revenue results by region, Europe held up well, with a decrease limited to 6% in constant currencies thanks to stable results in Germany and France which helped offset lower activity in other countries within the region. Revenue in the Americas decreased 11% on lower activity in the U.S. while in Latin America the Company saw year-over-year growth. Revenue in Asia decreased 14% in constant currencies due principally to a strong decrease in new activity in Japan, offset in part by growth in China and Korea.
- 2009 IFRS and non-IFRS software revenue was lower by approximately 8%, reflecting a decrease in new licenses revenue of 32% offset in part by periodic licenses, maintenance, and product development revenue growth of 5% (all figures in constant currencies).
- Non-IFRS recurring software revenue totaled €806.7 million and represented 73% of total software revenue during 2009, compared to 64% in 2008.
- Evolution of services and other revenue during 2009 principally reflected a decrease in consulting activity as a consequence of lower new software sales.
- Non-IFRS operating expenses decreased 8% excluding currency impact in 2009 compared to 2008 (IFRS and non-IFRS operating expenses decreased by 4% and 6%, respectively) and the Company overachieved its €120 million savings objective.
- Primarily reflecting lower interest rates on cash investments, financial revenue and other, net swung from a positive contribution of €8.9 million for 2008 to (€4.1) million for 2009.
- The decrease in IFRS diluted net income per share of 15% for 2009 in part reflected the 2008 gain on sale of part of the Company’s prior corporate headquarters facility included in other operating income and expense, net.
- Thanks to the Company’s cost savings program, the non-IFRS operating margin was 25.0% compared to 25.6% for 2008 despite the decrease in revenue. Non-IFRS net income per diluted share decreased 8%.
Cash Flow and Other Financial Highlights
IFRS net operating cash flow was €297.9 million for 2009 compared to €309.1 million for the year ended December 31, 2008.
Cash and short-term investments passed the €1 billion milestone, reaching €1.06 billion at December 31, 2009, compared to €840.4million at December31, 2008. During 2009, the Company paid cash dividends totalling €54.8 million, with the cash dividend per share stable with the prior year.
The Company’s net financial position was €858million, net of outstanding debt consisting of €200million of financial long-term debt, at December 31, 2009.
Summary Business and Corporate Highlights
2009 new business activity and re-orders by customers included among others: Babcock and Wilcox Power Generation Group, Inc., Bath Ironworks, Beckman Coulter, BMW, Bombardier, Boston Apparel Group, Dana Holding Corporation, EADS, Eldo, Embraer, GE Healthcare, Great Wall Motor Company Ltd., Guess, Inc., Gulfstream, Hawker Beechcraft, Johnson Controls, Piaggio Aero, Procter & Gamble, Renault Group, Samsung Heavy Industries, Spirit, Trent Ltd., Under Armour, and Vanity Fair.
Dassault Systèmes and IBM announced their intent to integrate the IBM PLM sales force within DS and to sign a new global alliance to expand PLM in all industries - In October, 2009 DS and IBM signed a definitive agreement whereby DS would acquire the IBM sales and client support business operations encompassing DS PLM software application portfolio, as well as customer contracts and related assets (“IBM PLM”), for approximately $600 million in cash less assumed liabilities. DS and IBM also defined the next steps in their long-standing relationship, with plans to establish DS as a strategic IBM global alliance partner and to expand their services partnership.
Dassault Systèmes expands PLM at P&G providing Technology to Simplify and Optimize the Packaging and Artwork Process – In a separate press release issued today, DS announced that Procter & Gamble, the world’s largest consumer goods company, has extended the scope of its V6 PLM implementation to incorporate global packaging and artwork initiatives. This builds on P&G’s for an enterprise-wide PLM process. Together, DS and P&G are developing a highly integrated suite of products to help make the packaging process more efficient, improve speed to market, increase shelf impact and, ultimately, create a better experience for consumers. Streamlining these services is another example of how DS is supporting P&G’s focus on “Simplify, Scale & Execute” which is one of P&G’s key growth strategies.
Lifelike Experience and Social Innovation at Heart of New V6 Release V6R2010x – In November, 2009 DS launched V6R2010x, in support of DS’ PLM 2.0 and Social Innovation strategy serving new audiences within all communities, including traditional industry-oriented ones. The enhancements are delivered in the three sectors of V6’s organic architecture (Lifelike Experience, Collaborative I-PLM and IP Creation). V6R2010x extends the reach of the V6 platform beyond on-premises solutions to include mobile and cloud solutions. The V6R2010x platform delivers new and unique capabilities that connect users within their companies or with external online communities. It enables them to create and share their IP and 3D experiences with the ease of use of common Internet tools and the control required in industrial companies.
Standardization of Planning Processes within Central Environment Simplifies Early Product Development - In November, 2009 DS announced that global power tools provider ANDREAS STIHL AG & Co. KG had selected Dassault Systèmes DELMIA Process Engineer to optimize complex planning processes for product development. The STIHL Group develops, manufactures, and distributes power equipment for forestry, landscaping, and construction industries. Products are sold primarily through authorized service dealers. The STIHL global sales organization includes 32 sales subsidiaries, more than 120 importers, and nearly 35,000 dealers in over 160 countries on five continents. STIHL has been the world’s best-selling chainsaw brand since 1971.
Dassault Systèmes Unveils Collaborative Innovation Initiative for Consumer Packaged Goods – In November 2009, DS unveiled a new initiative designed specifically to enable consumer packaged goods companies to increase overall organizational efficiency and cost management. The primary value of the Collaborative Business Processes Initiative for Consumer Packaged Goods companies is to accelerate innovation by promoting global standardization and re-use of intellectual property throughout the supply chain helping to generate global economies of scale, reduce cycle times and improve quality.
Business Outlook
Thibault de Tersant, Senior Executive Vice President and CFO, commented, “Looking at 2009 as a whole, it was rewarding to see how well DS managed through this difficult period. Thanks to the value our software brings to our customers’ businesses, our recurring revenue was quite resilient, enabling us to contain the impact of the global recession to a single-digit software revenue decrease. And thanks to the efforts of the entire DS organization, we have been able to protect our operating margin, while maintaining our sales and customer services capacity, as well as increasing our R&D staffing.
“Turning to our outlook, we expect 2010 to be a period of slow economic recovery. Nonetheless, within this environment we expect to drive double-digit constant currency new license revenue growth before taking into account the contribution from the IBM PLM acquisition.
“Incorporating the IBM PLM acquisition into our financial objectives, assuming it is completed by early April, leads to a target revenue growth of 15% to 17% in constant currencies for 2010 and a target improvement in our operating margin of about 100 basis points in comparison to 2009.
“Our outlook for the first quarter assumes normal seasonal factors and the flow-through impact from lower new license sales during 2009 on maintenance growth as well as some conservatism around sales activity as we prepare for the acquisition to close.”
The Company’s objectives are prepared and communicated only on a non-IFRS basis and are subject to the cautionary statement set forth below.
The Company has assumed that the acquisition of IBM PLM is completed during the second quarter of 2010 and has incorporated the effects of this transaction for an estimated period of nine months during 2010. The Company’s current objectives are the following:
- First quarter 2010 non-IFRS total revenue objective range of about €280 to €300 million and non-IFRS EPS range of about €0.32 to €0.39;
- 2010 non-IFRS total revenue objective growth range of about 15% to 17% in constant currencies (€1.410 to €1.440 billion: including approximately €165 million from the inclusion of IBM PLM, based upon the 2010 currency exchange rate assumptions below);
- 2010 non-IFRS operating margin of about 26%;
- 2010 non-IFRS EPS range of about €2.09 to €2.19;
- Objectives are based upon exchange rate assumptions for the 2010 first quarter and full year of US$1.45 per €1.00 and JPY140 per €1.00.
The non-IFRS objectives set forth above do not take into account the following accounting elements, and are estimated based upon the estimated 2010 currency exchange rates above. They do not take into account the impact the IBM PLM acquisition may have on the following elements: (i) deferred revenue write-downs estimated at approximately €0 million for 2010; (ii) share-based compensation expense estimated at approximately €15 million for 2010, and (iii) amortization of acquired intangibles estimated at approximately €38 million for 2010. The above objectives do not include any impact from other operating income and expense, net principally comprised of notably, acquisition, integration and restructuring expenses. These estimates also do not include any new stock option or share grants, or any new acquisitions or restructurings completed after February 11, 2010.
Webcast and Conference Call Information
Dassault Systèmes will host an analysts meeting in Paris which will be webcasted and a conference call today, Thursday, February 11, 2010. Management will host the webcast at 10:00 AM time London time/11:00 AM CET time and will then host the conference call at 9:00 AM New York time /2:00 PM London time/3:00 PM CET. The webcast and conference call will be available via the Internet by accessing http://www.3ds.com/company/finance/. Please go to the website at least fifteen minutes prior to the webcast or conference call to register, download and install any necessary audio software. The webcast and conference call will be archived for 30 days.
Additional investor information can be accessed at http://www.3ds.com/company/finance/ or by calling Dassault Systèmes’ Investor Relations at 33.1.61.62.69.24.
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