RTX PRESENTATION Presentation by CEO Peter Røpke - COPENHAGEN I 4 DECEMBER 2019
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COPENHAGEN I 4 DECEMBER 2019
R T X P R E S E N TAT I O N
Presentation by
CEO Peter Røpke
I IR Presentation
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.
November 2019 I IR Presentation 2
R T X AT A G L A N C E :
S U S TA I N E D P R O F I TA B L E G R O W T H
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
and hardware capabilities which RTX leverages with globally recognized
customers, from conceptualization to finished products and modules.
1993
Founded in 1993 and
headquarter in Denmark
5-YEAR REVENUE GROWTH
DKK million
5-YEAR EBITDA GROWTH
DKK million
5-YEAR EBIT GROWTH
DKK million
+1,000
Projects completed
CAGR CAGR 100 CAGR since 1993
12.5% 14.2% 13.5%
87
560 83
77 75
350
396
434
475
59
70
52
66
72
289
FTEs at
30 September, 2019
+6.8m
Units of products and
14/15 15/16 16/17 17/18 18/19 14/15 15/16 16/17 17/18 18/19 14/15 15/16 16/17 17/18 18/19 modules delivered in 2018/19
November 2019 I IR Presentation 3
RTX BUSINESS MODEL FOR
C O N T I N U E D P R O F I TA B L E G R O W T H
Leverage effect for
profitable growth
Deployment in attractive
B2B target markets
Core capabilities
November 2019 I IR Presentation 4
O D M M O D E L O P E R AT E D V I A F R A M E W O R K A G R E E M E N T S
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 2 YEAR 3 YEAR 4 YEAR 5 YEAR 6 YEAR 7 YEAR 8
DEVELOPMENT PHASE RAMP PHASE MAIN PHASE END OF REPLACEMENT
LIFE PRODUCT
November 2019 I IR Presentation 5
WHO WE WORK FOR
November 2019 I IR Presentation 6
R T X G R O W T H S T R AT E G Y I N TA R G E T M A R K E T S
RTX TODAY: REVENUE BY TARGET MARKETS 2018/19 RTX GROWTH STRATEGY UNTIL 2021/22
TOTAL REVENUE STRENGTHEN POSITION IN HEALTHCARE
RTX CAGR1
560 DKKm ~12.5%
• Increase share-of-wallet
CAGR1
5% ~11.0%
UTILIZE UNIQUE POSITION IN PROAUDIO
• Leverage unique technology into recurring revenue via ODM/OEM
SERVICES
26% HEALTHCARE
DESIGN
model
CAGR1
~11.0%
• Lead the transition to digital wireless in pro audio markets
PROAUDIO
EXPAND LEADERSHIP AND GROW INTO ADJACENCIES IN ENTERPRISE
• Continue to gain market share and drive market consolidation
• Drive recurring revenue from long-term customer agreements via
COMMUNICATION
69%
CAGR1 pure play ODM/OEM model
~13.0%
• Utilize system integration as competitive advantage
BUSINESS
ENTERPRISE • Leverage Enterprise leadership position and sector expertise to
Wireless/IP telephony establish a presence in adjacencies, such as B2B Headsets
and headsets
1 3-year revenue CAGR (2016-19). November 2019 I IR Presentation 7
LO N G - T E R M F I N A N C I A L A M B I T I O N S
Further execution of growth strategy expected to lead to profitable growth
ORGANIC REVENUE GROWTH EBITDA MARGIN ASSUMPTIONS
The long-term revenue and earnings ambitions are
AVERAGE OF 18-20% based on constant currencies with the ambitions
especially being sensitive to the USD/DKK exchange
13-16% P.A. BY 2021/22 rate. They are also based on the current
macroeconomic and political environment, where
major developments may also impact the
UNTIL 2021/22 ambitions. The ambitions are also based on stable
raw material prices and supply chain performance
and availability. Also, note that the long-term
ORGANIC REVENUE GROWTH EARNINGS (EBITDA MARGIN) financial ambitions are until/by the fiscal year
Based on our strategy of deploying our wireless wisdom in With our long-term revenue growth ambitions, and with the 2021/22 and in the interim years growth rates and
selected B2B target markets for growth via recurring revnues, leverage effect on the scalability of our resources from margins realized may vary from year to year.
and based on execution of existing and new framework increased recurring revenues, it is the ambition of RTX to
agreements, it is the ambition of RTX to grow revenues achieve an EBITDA margin of 18-20% by the completion of
organically by an average of 13-16% p.a. in the period from the fiscal year 2021/22. This ambition reflects inclusion of the
end 2018/19 up to and including the fiscal year 2021/22. effect of the implementation of IFRS 16 regarding leasing.
November 2019 I IR Presentation 8
O U T LO O K 2 0 1 9 / 2 0
DKK million Result 2016/17 Result 2017/18 Result 2018/19 Outlook 2019/20
Revenue 433.5 475.3 560.3 620 - 650
EBITDA 77.2 83.1 100.2 105 - 120
EBIT 72.3 74.9 86.7 75 - 90
As described in our annual report in the section concerning risk management, RTX is relatively highly exposed to foreign
currencies, as a considerable part of the revenue is settled in US dollars.
Given the nature of the expected growth from framework agreements under ramp-up as well as from new framework
agreements being started up, it is expected that the revenue and earnings distribution over 2019/20 will be relatively
backloaded towards the end of the year – as also described in our annual report.
November 2019 I IR Presentation 9
Q&A SESSION
November 2019 I IR Presentation 10APPENDIX
1. RTX Introduction and Investment Case
2. RTX Growth Strategy
3. 2018/19 Highlights
November 2019 I IR Presentation 11RTX INTRODUCTION
AND INVESTMENT
CASE
November 2019 I IR Presentation 12WHY INVEST
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.
November 2019 I IR Presentation 13W H AT W E D O
Enterprise ProAudio
In the Enterprise segment, RTX designs, With years of experience in ProAudio
develops, and supplies wireless IP design, development and manufacturing,
telephony solutions used in communication RTX has gained the expertise to deliver
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
facilities etc. The wireless IP telephony radio environments with a high degree
solutions are supplied on both an ODM of interference. Offering includes both
and an OEM basis. dedicated RTX modules and custom
ODM/OEM products.
Healthcare
B2B Headsets In the Healthcare segment, RTX is
As an Enterprise adjacency expansion, the primarily involved in the development,
RTX ODM/OEM headset offering for call design and supply of wireless modules
centers, office environment, retail and and products used for continuous patient
storage facilities consist of several different monitoring in hospitals. Additionally, RTX
models supporting customer demand for is involved in the design of wireless
high quality and deep integration across the solutions for projects in assisted living
Enterprise space. such as hearing and accessories.
November 2019 I IR Presentation 14HOW WE WORK: F R O M D E S I G N TO P R O D U C T S A N D P R O D U C T I O N Taking a customer-centric approach, understanding market trends and acting as a professional partner is an integral part of how we do business at RTX. We believe that we provide a true value proposition and best results when collaborating closely with our customers – either through projects or in ODM or OEM solutions. SPECIFICATION AND DEVELOPMENT AND TESTING AND PRODUCTION AND DESIGN INTEGRATION CERTIFICATION SUPPLY CHAIN MANAGEMENT At RTX, we start by truly understanding In close collaboration with our Based on years of experience, Using a well-established network customer requirements and user needs. customers, following agile our in-house pretest services of ISO9001, ISO14001, ISO13485, This is accomplished by focusing on the development practices, we develop reduce time to market and TS16949 and AS9100 certified ‘why’ and not only the ‘what’. We prototypes to evaluate system decrease approval and manufacturers, we guarantee combine this insight with our wireless performance in-house. We build on certification costs for our production through the entire know-how into a Product Requirement our extensive wireless and audio customers. If required, we can product life-cycle. Specification. Our engineering teams capabilities and integrate each also handle the full type approval then design the optimal solution based design at system level so that every service for our customers. on a combination of software, hardware component and sub-system works and mechanics. Combined with our list perfectly, evaluating performance of patented solutions and in-house against test cases for the fully developed protocols, we ensure our integrated system. customers a compelling result. November 2019 I IR Presentation 15
RTX GROWTH
S T R AT E G Y
November 2019 I IR Presentation 16R T X G R O W T H S T R AT E G Y I N TA R G E T M A R K E T S
RTX TODAY: REVENUE BY TARGET MARKETS 2018/19 RTX GROWTH STRATEGY UNTIL 2021/22
TOTAL REVENUE STRENGTHEN POSITION IN HEALTHCARE
RTX CAGR1
560 DKKm ~12.5%
• Increase share-of-wallet
CAGR1
5% ~11.0%
UTILIZE UNIQUE POSITION IN PROAUDIO
• Leverage unique technology into recurring revenue via ODM/OEM
SERVICES
26% HEALTHCARE
DESIGN
model
CAGR1
~11.0%
• Lead the transition to digital wireless in pro audio markets
PROAUDIO
EXPAND LEADERSHIP AND GROW INTO ADJACENCIES IN ENTERPRISE
• Continue to gain market share and drive market consolidation
• Drive recurring revenue from long-term customer agreements via
COMMUNICATION
69%
CAGR1 pure play ODM/OEM model
~13.0%
• Utilize system integration as competitive advantage
BUSINESS
ENTERPRISE • Leverage Enterprise leadership position and sector expertise to
Wireless/IP telephony establish a presence in adjacencies, such as B2B Headsets
and headsets
1 3-year revenue CAGR (2016-19). November 2019 I IR Presentation 17ENTERPRISE: RTX GROWTH STRATEGY
E X PA N D L E A D E R S H I P A N D G R O W I N TO A D J A C E N C I E S
CONTINUE TO GAIN MARKET SHARE
AND DRIVE MARKET CONSOLIDATION
Drive recurring revenue from long-term Utilize system integration Leverage enterprise leadership position
customer agreements via pure play as competitive advantage and sector expertise to establish a
ODM/OEM model presence in adjacencies1
Grow with DECT technology while ensuring long-term technology agility
1 E.g. B2B headsets, conference phones and/or beacons.
November 2019 I IR Presentation 18ENTERPRISE ADJACENCY, B2B HEADSETS: MARKET TRENDS & RTX GROWTH STRATEGY
LEVERAGE ENTERPRISE POSITION IN ADJACENCIES
EXAMPLE: B2B HEADSETS
HIGH-GROWTH MARKET DRIVEN PRIMARILY BY THE LEVERAGE ENTERPRISE LEADERSHIP POSITION AND
DEMAND FOR WIRELESS CONNECTIVITY SECTOR EXPERTISE TO ESTABLISH PRESENCE IN B2B HEADSETS
GLOBAL PROFESSIONAL HEADSET MARKET
Revenue & Units
34
3,0 35
31
2,5 27 30 Provide ODM/OEM headset offering Utilize system integration
24 2.1
2,0 19
21 1.9
25
as additional revenue opportunity as competitive advantage
1.7
1,5 1.2
1.4
1.5
1,3
20
for Enterprise partners
1,1 15
1,0
0,9
1,0 0,6 0,7 CAGR1
~14.0% 10
0,5 0,8 5
0,6 0,6 0,7 0,7 0,8
0,0 0
2017 2018 2019F 2020F 2021F 2022F
Units in million Wireless Revenue in USDbn
Corded Revenue in USDbn
Source: Frost & Sullivan
1 2018-2022 wireless revenue CAGR.
November 2019 I IR Presentation 19PROAUDIO: MARKET TRENDS
P R O A U D I O M A R K E T T R A N S I T I O N C R E AT E S
RTX GROWTH OPPORTUNITIES
RTX PROAUDIO CONSISTS OF THREE SEGMENTS, MICS & STAGE IS ATTRACTIVE DUE TO 2 MILLION PRO WIRELESS MICS, PLUS NON-
WITH MICS & STAGE AS OUR PRIMARY ONGOING TRANSISTION FROM MICS UPSIDE, CONSTITUTE SIGNIFICANT
TARGET AREA FOR GROWTH WIRED ANALOG TO DIGITAL WIRELESS RTX GROWTH OPPORTUNITY
• Spectrum repack PRO WIRELESS MICROPHONE MARKET
• Microphone frequencies are being reallocated to Million Units Per Year
2.3
MICS & STAGE 2.2
video- and broadband services1 2.1
2.0
1.9
• The regulatory changes are occuring in both US and 1.8 1.8
Europe
• Increased need
PROAUDIO • The music industry is becoming increasingly more
INTERCOM dependent on live performances; due to disruptions
in music publishing industry
• Live performances are growing significantly in
complexity and needed channel count/number of
microphones 2017 2018 2019F 2020F 2021F 2022F 2023F
GAMING
• New requirements
Significant additional market potential, beyond micro- phones, in
• New requirements to robustness, and security instruments, DJ products, and other pro audio devices, where
requires a digital transmission technology wireless transmission is relevant3.
Source: Arizton.
1 At the benefit of e.g. mobile phones, internet broadband etc. 2 2017 to 2023 CAGR.
3 Pro audio devices such as power amplifiers, speaker enclosures, and mixers. DJ products such as digital controllers, mixers, and headphones. Instruments such as e.g. guitars. November 2019 I IR Presentation 20PROAUDIO: RTX GROWTH STRATEGY
UTILIZE UNIQUE POSITION IN PROAUDIO
LEAD THE TRANSITION TO DIGITAL WIRELESS
IN PRO AUDIO MARKETS
Deploy and refine our existing
technology base… Attractive value propositions
for RTX customers
…into a flexible technology
platform with dedicated Short time-to-market Attractive cost of entry
RTX modules and custom
ODM/OEM
LEVERAGE UNIQUE TECHNOLOGY INTO RECURRING
REVENUE VIA ODM/OEM MODEL
Scalability for RTX
We move from engineering hours… …to recurring revenue
November 2019 I IR Presentation 21HEALTHCARE: MARKET TRENDS & RTX GROWTH STRATEGY
S T R E N G T H E N P O S I T I O N I N H E A LT H C A R E
HEALTHCARE MARKET DEPENDS ON NEW TECHNOLOGIES, EXPAND EXISTING CONTINUOUS PATIENT MONITORING BUSINESS
DIGITAL AND WIRELESS, TO INCREASE EFFICIENCY BY INCREASING SHARE-OF-WALLET WITH OURONG-TERM
AND KEEP UP WITH DEMAND BLUE CHIP HEALTHCARE CUSTOMER
Medtech1 sales are estimated Pressure to reduce costs and
at 425 USD billion globally prove value remains intense3
with expected CAGR of 5% and drives need for new Extend portfolio Expand share of value chain
towards 20222 technology4. of ODM offerings (e.g. production of
subassemblies)
Source: Economic Intelligence Unit, OECD, Deloitte
1 E.g. in vitro diagnostics, cardiology, diagnostic imaging etc.
2 Healthcare growth in general, is driven by ageing and growing populations, emerging market expansion, increase in chronic diseases (e.g. cancer, heart disease, and diabetes), and advances in treatments
3 Resulting in focus on efficient use of resources, shift in focus from procedures towards outcomes (also referred to as value-based healthcare), and increasing focus on virtual healthcare – all to help drive cost efficiency
4 E.g. networked medical devices (mobile, wearing external, implantable), remote care system, identification systems etc. November 2019 I IR Presentation 222018/19 HIGHLIGHTS November 2019 I IR Presentation 23
S AT I S FA C TO R Y 2 0 1 8 / 1 9 P E R F O R M A N C E
AS SOLID BASIS FOR FURTHER GROWTH
ENTERPRISE
• Framework agreement entered into in 17/18 now in ramp-up phase
• New handset and base station range sold to existing customers
• New major framework agreement entered into (during Q4 18/19)
ENTERPRISE ADJACENCY, B2B HEADSET
• Customer launch in December 2018 and thus framework agreement
(from 17/18) in ramp-up phase
PROAUDIO
• Significant growth in recurring revenues from product sales and royalties
• New framework agreement entered into (during Q4 18/19)
HEALTHCARE
• Agreement to increase product range with existing large customer as
basis for future growth
November 2019 I IR Presentation 24
24HIGHLIGHTS 2018/19
REVENUE EBITDA CASH (CFFO) EPS DISTRIBUTION TO SHAREHOLDERS
DKK million DKK million DKK million
560
100
108 8,4 PAID DIVIDENDS 2018/19
475 96
83 7
17.1 DKKM
2.0 DKK per share
SHARE BUY-BACK 2018/19
27.2 DKKM
17/18 18/19 17/18 18/19 17/18 18/19 17/18 18/19 with one programme continuing in 2019/20
+18% +21% +13% +19% PROPOSED DIVIDENDS JANUARY 2020
REVENUE SPLIT
2.5 DKK/SHARE
+25% compared to 2018/19
DKK million
BUSINESS COMMUNICATIONS DESIGN SERVICES
387 174 CONTINUED SHARE BUY-BACK 2019/20
32.8 DKKM
356 31 145 29 by continuing ongoing programme and
through announced new programme
November 2019 I IR Presentation 25THANK YOU FOR
YOUR AT TENTION
Further information, please contact
President and CEO Peter Røpke at +45 9632 2300
November 2019 I IR Presentation 26You can also read
