TomTom Reports Third Quarter 2009 Results
AMSTERDAM, Oct 28, 2009 (BUSINESS WIRE) --
Company: TomTom (TMOAF)
TomTom (Amsterdam:TOM2)
Excluding restructuring charges(1)
(in EUR millions) Q3'09 Q3'08 y.o.y. change Q2'09 q.o.q. change
Revenue 365 429 -15% 368 -1%
Gross result 191 240 -20% 188 2%
Gross margin 52% 56% 51%
EBITDA 96 119 -20% 88 9%
EBITDA margin 26% 28% 24%
Operating result 70 93 -25% 59 19%
Operating margin 19% 22% 16%
Net result 31 58 -48% 21 42%
EPS, EUR diluted 0.14 0.39 -63% 0.14 0%
Adjusted EPS(2), EUR diluted 0.20 0.47 -58% 0.22 -12%
Reported
(in EUR millions) Q3'09 Q3'08 y.o.y. change Q2'09 q.o.q. change
Revenue 365 429 -15% 368 -1%
Gross result 191 240 -20% 188 2%
Gross margin 52% 56% 51%
EBITDA 96 118 -19% 85 12%
EBITDA margin 26% 28% 23%
Operating result 70 92 -24% 57 23%
Operating margin 19% 21% 15%
Net result 31 58 -47% 20 53%
EPS, EUR diluted 0.14 0.38 -63% 0.13 8%
Adjusted EPS(2), EUR diluted 0.20 0.47 -58% 0.22 -12%
Third quarter 2009 financial highlights(1)
-- Revenue of EUR365 million
-- Operating result of EUR70 million, operating margin of 19%
-- Operating expenses reduced by EUR26 million, 17% year on year
-- Net cash flow from operating activities of EUR79 million
-- Net debt of EUR599 million (Q2 2009: EUR1,006 million)
Third quarter 2009 operational highlights
-- Launch of TomTom application for Apple iPhone
-- TomTom solution for Fiat Punto Evo launched
-- Further roll-out of LIVE Services in Portugal and Belgium
-- New PND ranges: TomTom XXL and TomTom Start
-- Tele Atlas leadership team fully in place
(1)For comparative reasons the restructuring charges of EUR 2.1 million in Q2 2009 and EUR 0.7 million in Q3 2008 have been excluded. (2)Earnings per share adjusted for acquisition related amortisation, non-cash goodwill impairment and restructuring charges on a post tax basis.
TomTom's Chief Executive Officer, Harold Goddijn
"We delivered strong profitability and cash flow in the third quarter as a result of our continued focus on cost and cash management. At the same time we are broadening our revenue base. In the past twelve months we were able to increase the contribution of non PND revenue from 20 percent to 30 percent of group revenue.''
Market and TomTom outlook 2009
End user demand continued to develop in line with our expectations in both Europe and North America. For the full year 2009, the European and North American PND market sizes are expected to be approximately 15 million and 17 million units respectively.
We are ahead of schedule to achieve our EUR90 million operating expenses savings target when comparing operating expenses in 2009 to the 2008 full year pro forma operating expenses of EUR627 million.
Operational review
Key figures TomTom (excluding Tele Atlas)
(in EUR millions) Q3'09 Q3'08 y.o.y. change Q2'09 q.o.q. change Revenue 318 377 -16% 322 -1% - of which PNDs 255 343 -26% 276 -7% - of which Other 63 34 85% 47 34% # of PNDs sold (in 000s) 2,581 2,526 2% 2,458 5% ASP 99 136 -27% 112 -12%
In the third quarter the market showed a stable PND end user demand on a sequential basis. Year over year the market decreased in Europe in the quarter by 7% from 4.1 million to 3.8 million units. In North America the market increased by 3% from 3.3 million to 3.4 million units during the same period. Our market shares in both geographies remained fairly stable at 44% in Europe and 18% in North America.
In the quarter the Consumer business unit refreshed our premium range with the TomTom GO X50 series, including a series of devices with LIVE Services. At the end of the quarter we also introduced a connected volume product in the USA, the TomTom XL LIVE. To address a broader range of customers we added two new PND ranges to our offering, the TomTom XXL and Start, catering to individual preferences and needs.
Halfway through the quarter we launched our iPhone application. The initial demand was strong and overall the reception of the application was positive. In the quarter close to 80 thousand downloads were registered.
The AUTO business unit announced that together with Fiat Group Automobiles we have developed an integrated portable navigation solution, which will be sold as an option in the Fiat Punto Evo. The collaboration offers Fiat the opportunity to integrate our solutions into multiple car models. During the quarter, the Carminat-TomTom solution was rolled out over multiple car models within Renault.
The WORK business unit announced the fully portable TomTom GO 9000 which is aimed at fleets where drivers and vehicles change frequently or where subcontractors are used. Early in October we announced the TomTom GO 7000 TRUCK, a product specifically designed for trucks and large vehicles. In the quarter the net number of subscribers grew by six thousand to 87 thousand.
Key figures Tele Atlas(1)
(in EUR millions) Q3'09 Q3'08 y.o.y. change Q2'09 q.o.q. change Revenue 47 52 -8% 46 3% - of which PNDs (external) 11 14 -17% 8 35% - of which Automotive (external) 13 13 -4% 13 -6% - of which Other 24 25 -5% 24 -3% # of map licenses (external, in 000s)(2) 1,249 1,520 -18% 1,017 22% (1) excluding restructuring charges (2) PND and automotive maps
Tele Atlas made clear progress in processing community input to further improve its map database. By using more community input to update, validate and realign or extend the data in our map database we have been able to further improve the freshness and accuracy of our maps at lower cost.
Tele Atlas signed an agreement with Vodafone to supply digital maps and location-based content, marked 20 years of collaboration with GIS modelling and mapping software leader ESRI and signed on with consumer electronics developer Nextar. We also expanded our digital map coverage in Argentina and Uruguay, working jointly with Datamap.
Tele Atlas' leadership team was completed with the appointments of the Chief Technology Officer and the Executive Vice President of Sales and Marketing.
Financial review
For ease of comparison restructuring charges are excluded from the financial review.
Revenue
Revenue for the group was EUR365 million for the quarter, a slight decrease of 0.8% sequentially (Q2 2009: EUR368 million) and a decrease of 15% compared with last year (Q3 2008: EUR429 million). The year on year decline reflects the continued impact of the weak economic environment on our business. The rate of year on year revenue decline slowed this quarter.
The revenue of the TomTom business (excluding the Tele Atlas business) over the past quarter amounted to EUR318 million, a decrease of 1.4% sequentially (Q2 2009: EUR322 million) and a decline of 16% compared to the previous year (Q3 2008: EUR377 million).
PND sales amounted to EUR255 million, representing 70% of group revenue in the quarter (Q2 2009: EUR276 million and 75%; Q3 2008: EUR343 million and 80%).
Other revenue, which consists of WORK, AUTO, services and other consumer revenue, increased by 34% sequentially to EUR63 million from EUR47 million in the second quarter of the year (Q3 2008: EUR34 million). The increase in other revenue was mainly driven by a strong increase in automotive sales and the new iPhone application.
Tele Atlas revenue (excluding inter company) was EUR47 million for the quarter, an increase of 3.2% sequentially (Q2 2009: EUR46 million) and a decline of 8.3% compared to the same quarter of last year (Q3 2008: EUR52 million). The year over year revenue decline was mainly the result of lower PND map sales.
Volumes and average selling prices
We shipped 2.58 million PND units in the quarter, an increase of 5.0% sequentially (Q2 2009: 2.46 million) and an increase of 2.2% year on year (Q3 2008: 2.53 million).
The average selling price for PNDs in the second quarter was EUR99, a decrease of 12% compared to the previous quarter (Q2 2009: EUR112) and a decrease of 27% compared to the third quarter of 2008 (Q3 2008: EUR136). The decline was driven by price decreases across a number of products, partly in anticipation of promotional activities in the fourth quarter. We continue to expect that the rate of ASP decline for the full year will be slower than in 2008.
Gross margin
The gross margin for the group was strong at 52%, which represents an increase of one percentage point sequentially (Q2 2009: 51%) and a decrease of four percentage points compared to the third quarter of last year (Q3 2008: 56%).
Operating expenses
In the quarter, total operating expenses amounted to EUR122 million, which represents a decrease of 5.7% or EUR7.3 million compared to the second quarter (Q2 2009: EUR129 million). The decrease in operating expenses was the result of reduced costs across all operating expense categories. Year on year pro forma operating expenses decreased by 17% for the quarter (Q3 2008: EUR147 million). Operating expenses as a percentage of revenue for the quarter decreased to 33% (Q2 2009: 35%, Q3 2008: 34%).
Research and development (R&D) expenses for the quarter were EUR31 million, an 8.1% decrease compared to the previous quarter (Q2 2009: EUR34 million) and a decrease of 18% compared to the R&D expenses for the previous year (Q3 2008: EUR38 million). The decrease is the result of improving efficiency in our map production activities.
Amortisation of technology and databases for the quarter was EUR19 million (Q2 2009: EUR21 million, Q3 2008: EUR17 million).
Marketing expenses showed a slight decline for the quarter at EUR21 million (Q2 2009: EUR22 million). The year on year comparison shows a decrease in marketing expenses of 31% (Q3 2008: EUR31 million). Total marketing expenses represented 5.8% of group revenue, a slight decrease compared to the previous quarter (Q2 2009: 6.0%), and a decrease of 1.4 percentage points compared to the same quarter last year (Q3 2008: 7.2%).
Selling, general and administrative (SG&A) expenses for the quarter amounted to EUR46 million, down slightly compared to the previous quarter (Q2 2009: EUR47 million) and by 18% compared to the same quarter last year (Q3 2008: EUR56 million). SG&A expenses for the group represented 13% of revenue, the same as in the previous quarter.
Stock compensation expenses for the quarter were EUR3.6 million, down from EUR5.1 million in the previous quarter. The costs in the previous quarter were higher because of share options which have since vested which resulted in lower ongoing costs.
The operating result for the quarter increased by EUR11 million quarter on quarter to EUR70 million (Q2 2009: EUR59 million). As a percentage of revenue, the operating profit increased by three percentage points to 19% (Q2 2009: 16%). Year on year the operating profit decreased by EUR23 million (Q3 2008: EUR93 million).
Financial results
The interest expense for the third quarter amounted to EUR27 million (Q2 2009: EUR15 million). The increased interest expense is explained by the one-off accelerated amortisation of the capitalised transaction costs on the borrowings (EUR13 million) which resulted from the debt repayment of EUR409 million. The interest expense was partly offset by a EUR3.0 million gain resulting from buying back part of the outstanding debt at a discount.
The other finance result shows a loss of EUR2.5 million, which arose mainly from foreign exchange contracts which were put in place to cover our committed and anticipated exposure in non-functional currencies. The loss on our foreign exchange hedge instruments was mainly driven by a weaker US dollar against the euro during the quarter which was partly offset by the weakening of the GB pound as we hedge both our GB pound sales and our net exposure related to our US dollar sales and purchases.
Tax
The net income tax charge in all the jurisdictions in which we operate was EUR9.8 million in the third quarter (Q2 2009: EUR6.8 million). The effective tax rate in the third quarter was 24.0% (Q2 2009: 24.1%).
Cash flow
In the third quarter, we had strong cash flows from operations of EUR114 million, an increase of EUR8.6 million versus the same period last year (Q3 2008: EUR105 million) and an increase of EUR16 million versus the previous quarter. The cash generated from operations was mainly driven by our operating profit of EUR70 million and by a further reduction of working capital which resulted in a cash inflow of EUR8.2 million. Net cash flow from operating activities was EUR79 million compared to EUR37 million in the same period last year and EUR96 million in the previous quarter.
The net proceeds of the equity issue were used to repay the loan and resulted in a cash outflow from financing activities of EUR64 million as the cash inflow from the private placement was booked in the previous quarter.
Debt financing
On 30 September 2009 the book value of our borrowings amounted to EUR996 million, a decrease of EUR398 million compared to the previous quarter (Q2 2009: EUR1,394 million). Excluding transaction costs, which are netted against the borrowings, our borrowings amounted to EUR1,018 million, down from EUR1,427 million in the previous quarter. The decrease results from a repayment of EUR409 million which includes a EUR3.0 million gain resulting from buying back part of the outstanding debt at a discount.
On 30 September 2009 our net debt had decreased to EUR599 million, down from EUR1,006 million at the start of the quarter. The decrease results from the cash inflow received from the rights issue in combination with a strong operating cash flow for the quarter. The net debt is the sum of the borrowings (EUR1,018 million), minus the cash and cash equivalents at the end of the period (EUR423 million) plus our financial lease commitments (EUR3.6 million).
The floating interest coupon of the loan is based on Euribor plus a margin. The Euribor element of the interest coupon is fixed with interest rate swaps.
Balance sheet
Current assets slightly decreased in the quarter, mainly driven by a decrease of EUR25 million in trade receivables to an amount of EUR212 million (Q2 2009: EUR237 million). Our inventories increased during the quarter by EUR13 million to EUR78 million (Q2 2009: EUR64 million). The cash position remained stable during the quarter at EUR423 million (Q2 2009: EUR423 million).
At the end of the third quarter, we had shareholder's equity of EUR943 million, up from EUR502 million at the beginning of the quarter, mainly resulting from the gross proceeds of the private placement and the rights issue.
- END-
Consolidated income statements
(in EUR thousands) Q3'09 Q3'08 YTD'09 YTD'08 Revenue 365,151 428,712 946,348 1,145,965 Cost of sales 173,857 188,530 460,056 603,169 Gross result 191,294 240,182 486,292 542,796 Research and development expenses 31,385 38,428 102,910 84,723 Amortisation of technology & databases 19,355 17,300 57,080 29,889 Marketing expenses 21,302 31,012 60,445 90,952 Selling, general and administrative expenses 46,132 56,685 146,870 141,326 Stock compensation expense 3,552 4,630 8,829 2,933 Total operating expenses 121,726 148,055 376,134 349,823 Operating result 69,568 92,127 110,158 192,973 Interest result -26,945 -26,460 -59,592 -24,496 Other finance result -2,542 11,424 -35,480 19,506 Result associates 672 0 1,870 -13,456 Result before tax 40,753 77,091 16,956 174,527 Income tax -9,780 -19,422 -3,205 -57,757 Net result 30,973 57,669 13,751 116,770 Minority interests 431 -36 0 162 Net result attributed to the group 30,542 57,705 13,751 116,608 EPS, EUR basic 0.14 0.39 0.08 0.79 EPS, EUR diluted 0.14 0.38 0.08 0.78 Basic number of shares (in millions) 213.4 148.7 171.3 147.8 Diluted number of shares (in millions) 215.9 150.8 172.0 150.1
Consolidated pro-forma income statements (excluding restructuring charges)*
(in EUR thousands) Q3'09 Q3'08 YTD'09 YTD'08 Revenue 365,151 428,712 946,348 1,220,111 Cost of sales 173,857 188,530 460,056 587,232 Gross result 191,294 240,182 486,292 632,879 Research and development expenses 31,385 38,428 102,910 127,440 Amortisation of technology & databases 19,355 17,300 57,080 50,255 Marketing expenses 21,302 31,012 60,445 102,903 Selling, general and administrative expenses 46,132 56,052 139,366 167,678 Stock compensation expense 3,552 4,630 8,829 10,478 Total operating expenses 121,726 147,422 368,630 458,754 Operating result 69,568 92,760 117,662 174,125 Interest result -26,945 -26,461 -59,592 -75,154 Other finance result -2,542 11,424 -35,480 20,060 Result associates 672 0 1,870 -1,211 Result before tax 40,753 77,723 24,460 117,820 Income tax -9,780 -19,583 -5,118 -45,448 Net result 30,973 58,140 19,342 72,372 Minority interests 431 -36 0 -137 Net result attributed to the group 30,542 58,176 19,342 72,509 EPS, EUR basic 0.14 0.39 0.11 0.49 EPS, EUR diluted 0.14 0.39 0.11 0.48 Basic number of shares (in millions) 213.4 148.7 171.3 147.8 Diluted number of shares (in millions) 215.9 150.8 172.0 150.1
* The figures assume consolidation of Tele Atlas throughout 2008 and exclude the restructuring charges of EUR0.7 million in Q3 2008, EUR5.4 million in Q1 2009 and EUR2.1 million in Q2 2009.
Consolidated balance sheet
(in EUR thousands) 30 Sept 2009 31 Dec 2008 Goodwill 854,717 854,713 Other intangible assets 977,637 1,011,194 Property, plant and equipment 45,204 53,155 Deferred tax assets 37,156 32,977 Investments 7,494 5,663 Total non-current assets 1,922,208 1,957,702 Inventories 77,509 145,398 Trade receivables 212,093 289,981 Other receivables and prepayments 36,501 15,987 Other financial assets 19,077 36,583 Cash and cash equivalents 422,932 321,039 Total current assets 768,112 808,988 Total assets 2,690,320 2,766,690 Share capital 44,337 24,663 Share Premium 973,691 575,918 Other reserves 42,218 32,746 Stock compensation reserve 74,932 69,469 Retained earnings/ (deficit) -196,602 -194,387 Minority interests 4,191 4,964 Total equity 942,767 513,373 Borrowings 795,233 1,241,900 Provisions 54,049 55,702 Long-term liability 3,640 4,749 Deferred tax liability 227,560 229,075 Total non-current liabilities 1,080,482 1,531,426 Trade payables 137,932 152,119 Borrowings 200,841 146,588 Tax and social security 42,584 29,044 Provisions 47,407 57,231 Other liabilities and accruals 238,307 336,909 Total current liabilities 667,071 721,891 Total equity and liabilities 2,690,320 2,766,690
Consolidated statements of cash flows
(in EUR thousands) Q3'09 Q3'08 YTD'09 YTD'08 Operating result 69,568 92,127 110,158 192,973 Financial gains / (losses) 8,766 25,569 -15,851 13,609 Depreciation of PPE 2,418 5,831 14,465 10,689 Amortisation of intangible assets 23,555 18,415 66,115 33,933 Change to provisions -2,529 1,331 -12,074 11,866 Change to stock compensation reserve 3,632 2,288 7,043 1,247 Changes in working capital: Change in inventories -12,464 -55,503 68,487 -68,103 Change in receivables and prepayments 7,073 80,753 57,379 194,187 Change in current liabilities 13,558 -65,826 -70,678 -178,166 Cash generated from operations 113,577 104,985 225,044 212,235 Interest received 289 565 1,877 11,566 Interest paid -23,155 -24,190 -57,745 -32,680 Corporate income taxes paid -12,184 -44,459 -14,985 -86,275 Net cash flow from operating activities 78,527 36,901 154,191 104,846 Investments in intangible assets -7,624 -12,401 -42,429 -20,931 Investments in property, plant and equipment -3,340 -4,374 -12,185 -25,159 Acquisition of subsidiary -2,604 -59,558 -2,604 -1,829,495 Total cash flow used in investing activities -13,568 -76,333 -57,218 -1,875,585 Repayment/proceeds from borrowings -412,048 -3,648 -412,048 1,550,789 Proceeds on issue of ordinary shares 348,189 7,686 415,867 20,376 Total cash flow from financing activities -63,859 4,038 3,819 1,571,165 Net increase in cash and cash equivalents 1,100 -35,394 100,792 -199,574 Cash and Cash equivalents at beginning of period 422,530 296,277 321,039 463,339 Exchange rate effect on cash balances held in foreign currencies -698 1,631 1,101 -1,251 Cash and Cash equivalents at end of period 422,932 262,514 422,932 262,514
Consolidated statement of changes in stockholders' equity
(in EUR thousands) share capital share premium other reserves stock compens. reserve retained earnings shareholders equity minority interests total 01 January 2009 24,663 575,918 32,746 69,469 -194,387 508,409 4,964 513,373 Translation differences -1,012 -1,012 -773 -1,785 Transfer to legal reserves 10,484 -15,966 -5,482 -5,482 Net income (expense) recognised directly in equity 0 0 9,472 0 -15,966 -6,494 -773 -7,267 Result for the year 13,751 13,751 0 13,751 Total recognised income and expense 0 0 9,472 0 -2,215 7,257 -773 6,484 Stock compensation reserve 5,463 5,463 5,463 Issue of Share Capital 19,674 397,773 417,447 417,447 31 September 2009 44,337 973,691 42,218 74,932 -196,602 938,576 4,191 942,767
Accounting policies
Basis of accounting
The condensed consolidated financial statements for the three-month period ended 30 September 2009 with related comparative information have been prepared using International Financial Reporting Standards (IFRS). Accounting policies and methods of computation followed in the interim financial statements, for the period ended 30 September 2009, are the same as those followed in the Financial Statements for the year ended 31 December 2008. Further disclosures as required under IFRS for a complete set of consolidated financial statements are not included in the condensed consolidated financial statements.
Audio web cast third quarter 2009 results The information for our third quarter results audio web cast is as follows: Date and time: 28 October 2009 at 14:00 CET Place: http://investors.tomtom.com/tomtom/presentations/ TomTom is listed at Euronext Amsterdam in the Netherlands ISIN: NL0000387058 / Symbol: TOM2
About TomTom N.V.
TomTom N.V. is the world's leading provider of navigation solutions and digital maps. TomTom N.V. has over 3300 employees working in four business units -- TomTom, Tele Atlas, AUTO and WORK.
TomTom's products are developed with an emphasis on innovation, quality, ease of use, safety and value. TomTom's products include all-in-one navigation devices which enable customers to navigate right out of the box; these are the award-winning TomTom GO family, the TomTom XL and TomTom ONE ranges and the TomTom RIDER. Additionally, independent research proves that TomTom products have a significant positive effect on driving and road safety.
Tele Atlas delivers the digital maps and dynamic content that power some of the world's most essential navigation and location-based services (LBS). Through a combination of its own products and partnerships, Tele Atlas offers digital map coverage of more than 200 countries and territories worldwide. The business unit AUTO develops and sells navigation systems and services to car manufacturers and OEMs. WORK combines industry leading communication and smart navigation technology with leading edge tracking and tracing expertise.
TomTom N.V. was founded in 1991 in Amsterdam and has offices in Europe, North America, Middle East, Africa and Asia Pacific. TomTom is listed at Euronext Amsterdam in The Netherlands. For more information, go to www.tomtom.com.
This document contains certain forward-looking statements relating to the business, financial performance and results of the Company and the industry in which it operates. These statements are based on the Company's current plans, estimates and projections, as well as its expectations of external conditions and events. In particular the words "expect", "anticipate", "estimate", "may", "should", "believe" and similar expressions are intended to identify forward-looking statements. Forward-looking statements involve risks and uncertainties that could cause actual results to differ materially from those in the forward-looking statements. These include, but are not limited to: the level of consumer acceptance of existing and new and upgraded products and services; the growth of overall market demand for the Company's products or for personal navigation products generally; the Company's ability to sustain and effectively manage its recent rapid growth; and the Company's relationship with third party suppliers, and its ability to accurately forecast the volume and timing of sales. Additional factors could cause future results to differ materially from those in the forward-looking.
SOURCE: TomTom
TomTom Financial Community Richard Piekaar, +31 20 757 5194 ir@tomtom.com
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Company: TomTom (TMOAF)
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