Jenoptik reports improvements in revenue and earnings in third quarter in comparison with prior quarters

The effects of the COVID-19 pandemic and uncertainty in the automotive industry were also noticeable in the present reporting period too, and impacted on business performance in the third quarter. Overall economic development was still weak, particularly in the traditional automotive business, but also in parts of the aviation and medical technology industries. Nevertheless, demand for our products and services was pleasing in the third quarter, as previously announced, and at a value of 177.0 million euros was considerably above the prior-quarter order intake of 122.2 million euros. In the period from January through September 2020, the order intake fell to 510.9 million euros (prior year: adjusted 558.7 million euros) due to a weaker first half of the year that was affected by the COVID-19 pandemic. The order backlog grew to 496.7 million euros (31/12/2019: adjusted 464.7 million euros), with acquired entities INTEROB and TRIOPTICS adding orders worth 51.4 million euros.

The COVID-19 pandemic had varying effects on the development of revenue of the Jenoptik divisions. The pandemic had little to no impact on business with public-sector contractors and the semiconductor equipment industry, which actually posted growth. By contrast, the Light & Production division was strongly affected by developments in the automotive industry, but over the year still saw a slight improvement in revenue. Revenue for the July through September period of 176.1 million euros was up on the two prior quarters of 2020. Over the first nine months of 2020, the Group generated cumulative revenue of 505.0 million euros, a fall of 13.1 percent (prior year: adjusted 581.4 million euros). The contribution to revenue made by the INTEROB group, acquired in February 2020, came to 9.5 million euros. TRIOPTICS, included in the Consolidated Financial Statements at the end of the quarter, made a contribution of 0.9 million euros.

A more favourable product mix as well as measures taken to limit the impact of the COVID-19 pandemic, such as short-time working, had a positive effect on profitability over the course of the year. Adjusted EBITDA increased strongly from 17.3 and 24.9 million euros in the first and second quarters to a figure of 31.7 million euros in the reporting quarter. In the period from January through September, adjusted EBITDA fell to 73.9 million euros as a result of revenue development in the first six months (prior year: 92.4 million euros). The adjusted EBITDA margin for the quarter was 18.0 percent and a cumulative 14.6 percent for the first nine months (prior year: Q3 18.3 percent, 9M 15.9 percent). The adjustments include impacts arising from structural and portfolio measures amounting to a total of minus 7.3 million euros (prior year: minus 1.0 million euros), of which minus 0.9 million euros for restructuring and site optimization, minus 3.0 million euros for cost-reduction programs, and minus 3.4 million euros for M+A activities.

“As already announced, Jenoptik’s order intake stabilized in the third quarter at the prior-year level. In the period from July through September, we also saw an appreciable improvement in the quality of our earnings compared to the prior quarters. This makes us confident for the coming months,” says Stefan Traeger, President & CEO of JENOPTIK AG.

Solid cash flow development continued – consolidation of TRIOPTICS clearly reflected in changes to balance sheet ratios

In the first quarter, the Executive Board took precautionary action allowing it to react quickly to the situation created by the corona pandemic. In addition to securing the company’s liquidity and profitability, measures were put in place to safeguard the operating businesses, including the supply chain, and optimize the working capital. Consequently, the operating cash flow saw an encouraging increase to 31.1 million euros as of September 30, 2020 (prior year: 27.4 million euros). As a result, the free cash flow also saw a strong increase to 13.4 million euros over the reporting period (prior year: 7.3 million euros). Adjusted for the cash impacts arising from structural and portfolio measures, the free cash flow actually grew to 18.5 million euros.

Cash and cash equivalents, together with current financial investments, fell in line with expectations to 83.1 million euros as of September 30 due to the acquisitions and the repayment of a debenture loan (31/12/2019: 168.7 million euros). In view of the present situation, the Group continues to see itself in a very good position with short-term liquid funds and unused lines of credit worth over 50 million euros, as well as additional bridge financing of 300 million euros. The sharp rise in financial debt following the acquisitions resulted in net debt increasing to 242.3 million euros (31/12/2019: minus 9.1 million euros).

Development of the divisions: improved margin in Light & Optics, good growth in Light & Safety, as expected declines in Light & Production and VINCORION

In the first nine months of 2020, the Light & Optics division generated revenue of 209.8 million euros, 11.2 percent below the adjusted and thus comparable prior-year figure of 236.4 million euros. Business with the semiconductor equipment industry remained robust, but the division posted sharp declines due to the pandemic in its biophotonics and industrial solutions areas. Compared to the prior year, EBITDA adjusted for the impacts arising from structural and portfolio measures of 1.7 million euros fell by 2.8 percent, to 48.1 million euros, and thus at a markedly lower rate than revenue (prior year: 49.5 million euros). The adjusted EBITDA margin accordingly increased appreciably from 20.8 percent to 22.8 percent, in part due to a more profitable product mix. In the first nine months of 2020, the division reported an order intake worth 214.6 million euros, almost the same as the adjusted prior-year figure of 216.8 million euros, particularly due to sustained good demand from the semiconductor equipment industry. At the end of September 2020, the order backlog, buoyed by the acquisition, had a value of 162.2 million euros, and was considerably higher than the figure at year-end 2019 (31/12/2019: adjusted 143.5 million euros). TRIOPTICS added 24.3 million euros to the division’s order backlog.

The Light & Production division proved to be most susceptible to the ongoing reluctance to invest and considerable uncertainty within the automotive industry, which has been seen since 2019. In the first nine months, the division’s revenue fell by 30.4 percent on the prior-year period to 119.0 million euros (prior year: 170.9 million euros). Compared to prior quarters, Light & Production achieved the highest quarterly revenue of 44.6 million euros in the third quarter of this fiscal year. For the first time this year, the division reported a positive EBITDA of 9.1 million euros in the third quarter, mainly due to higher revenue and cost savings. However, this, together with improved profitability in the automation business, was not enough to offset underutilization in the other areas throughout the period covered by the report. The division’s EBITDA, adjusted for the impacts of structural and portfolio measures worth minus 1.5 million euros, came to minus 5.9 million euros in the entire reporting period (prior year: 19.2 million euros). Following a very weak second quarter, the order intake grew to 56.8 million euros in the period from July through September (prior year: 45.6 million euros). In the first nine months of 2020, the order intake in Light & Production was worth 121.7 million euros (prior year: 158.7 million euros), still reflecting the impacts of an order cancellation in June and project postponements. Including the acquired INTEROB orders, worth 27.1 million euros, the division’s order backlog of 100.6 million euros at the end of the reporting period was sharply up on the figure at year-end 2019 (31/12/2019: 81.6 million euros).

Despite the COVID-19 pandemic, stable capital spending patterns by public-sector contractors helped the Light & Safety division to achieve very good business performance overall in the first nine months of 2020. Revenue rose by 9.3 percent to 82.1 million euros (prior year: 75.1 million euros). As a result of good business development, the Light & Safety division also managed to significantly improve its operating results. Adjusted EBITDA increased to 14.0 million euros in the period covered by the report (prior year: 11.9 million euros). The adjusted EBITDA margin accordingly grew appreciably to 17.0 percent (prior year: 15.9 percent). The division’s order intake is subject to typical fluctuations and, for project-related reasons, came to 66.1 million euros in the first nine months of 2020 (prior year: 72.2 million euros). The division’s order backlog fell by 26.1 percent to 51.6 million euros (31/12/2019: 69.9 million euros).

In the first nine months of the year, VINCORION generated revenue of 91.0 million euros, thereby falling short of the prior-year figure of 96.8 million euros. Demand in the power systems area remained good, but fell in the aviation and energy & drive areas due to the difficult global situation. As a result, and due to a lower-margin product mix, VINCORION’s operating result saw a decline. Over the reporting period, EBITDA came to 6.9 million euros, down on the prior-year figure of 10.6 million euros. The EBITDA margin fell from 10.9 percent in the prior year to a present 7.5 percent. The order intake in the reporting period was 105.2 million euros, practically unchanged on the prior-year figure of 108.0 million euros. The order backlog grew to 182.2 million euros and was thus substantially higher than at the end of 2019 (31/12/2019: 169.7 million euros).

Revenue outlook and margin target for 2020, including TRIOPTICS

The Executive Board updated its assessment for the 2020 fiscal year in mid-October. Due to persistently weak overall economic development and further drastic measures to contain the COVID-19 pandemic, the Executive Board anticipates revenue, excluding TRIOPTICS, to come in at between 730 and 750 million euros in the 2020 fiscal year. This would equate to a decline of 10 to 13 percent on the adjusted prior-year figure. Following a further improvement in the quality of earnings in the third quarter compared to the prior quarter, the adjusted EBITDA margin for the full year 2020 is now expected to be at the upper end of the previously forecast range of 14.5 to 15.0 percent. Including TRIOPTICS’ contribution to revenue of around 25 million euros, revenue for the full year 2020 is expected to come in at between 755 and 775 million euros, with an adjusted EBITDA margin of between 15.0 and 15.5 percent excluding PPA impacts arising from the acquisition of TRIOPTICS. “The structural and portfolio measures are to help Jenoptik achieve accelerated growth and improved profitability starting in 2021,” says Traeger.

The quarterly statement is available in the “Investors/Reports and Presentations” section of the Jenoptik website. The “Jenoptik app” can be used to view the report on mobile devices running iOS or Android. Images for download can be found in the Jenoptik image database at media.jenoptik.com.

*Figures without note are not adjusted

This announcement can contain forward-looking statements that are based on current expectations and certain assumptions of the management of the Jenoptik Group. A variety of known and unknown risks, uncertainties and other factors can cause the actual results, the financial situation, the development or the performance of the company to be materially different from the announced forward-looking statements. Such factors can be, among others, changes in currency exchange rates and interest rates, the introduction of competing products or the change of the business strategy. The company does not assume any obligation to update such forward-looking statements in the light of future developments.