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QSC reiterates guidance for full fiscal 2013 on heels of good quarter

  • New orders total € 44.7 million in third quarter of 2013
  • EBITDA margin reaches 17 % on revenues of € 113.8 million
  • Strong order intake necessitates higher capital expenditures
  • Free cash flow stands at € 6.5 million in third quarter of 2013

Cologne, November 11, 2013. During the current fiscal year, QSC has been benefiting from its evolution into an integrated ICT provider and has been growing its revenues significantly, especially in IT Outsourcing and IT Consulting business. On the other hand, revenues in conventional TC business are declining as a result of market and regulatory effects; the heightened regulation since December 1, 2012, alone, has resulted in revenue shortfalls of between € 7 and € 8 million and an EBITDA burden of nearly one million euros each quarter in 2013.

Sustained growth in ICT business

QSC generated revenues of € 113.8 million in the third quarter of 2013, compared to € 120.5 million for the same quarter the year before. After nine months, this metric aggregates to € 340.3 million, in contrast to € 353.2 million for the same period one year earlier; growth in operating business is being offset by a regulatory-induced revenue shortfall of nearly € 23 million. ICT business in Direct Sales with larger enterprises, in particular, has developed on a positive note during the current fiscal year, with revenues rising by € 15.8 million in the first nine months of 2013 to € 153.3 million. Outsourcing, Consulting and Networking business have benefited from the sustained high level of new orders: During the third quarter of 2013, alone, QSC won contracts totaling € 44.7 million.

At the beginning of these contracts, which run for a term of at least 3 to 5 years, QSC has to make non-recurring investments in connecting these new customers to its own infrastructure. For this reason, too, capital expenditures in the third quarter of 2013 rose to € 16.4 million, by comparison with € 9.8 million the year before. Moreover, responding to the sustained high level of new orders, QSC had already modernized the storage capacities at its own data centers ahead of schedule in the summer of 2013. In spite of higher investments, though, the company was able to increase free cash flow from € 5.9 million for the comparable quarter one year earlier to € 6.5 million in the third quarter of 2013; after nine months, this metric stands at € 18.1 million, by comparison with € 18.2 million the year before.

Investing in future growth

In addition to investments in tangible assets, QSC also invested in future growth during the third quarter of 2013, first and foremost in ICT professionals and innovations. The workforce has risen by 236 since September 30, 2012, to a total of 1,664 people. The presentation of the QSC-Box at the International Radio Exhibition (IFA) in Berlin in September 2013 showed the kinds of opportunities that can be opened up through the combination of IT and TC know-how. Yet these kinds of investments in future growth have hardly any impact on QSC's strong profitability: Solely as a result of regulatory effects, though, EBITDA amounted to € 19.4 million in the third quarter of 2013, in contrast to € 20.4 million for the same quarter one year earlier, while the EBITDA margin continued to stand at 17 percent. On a 9-month comparison basis, EBITDA grew to € 57.4 million from € 56.0 million for the same period one year earlier.

Consolidated net income of € 15.0 million after nine months

Following the merger of INFO AG with QSC in August 2013 and the resulting decision to operate jointly under the QSC brand name in the future, it was necessary for QSC to make non-recurring write-downs on the INFO AG brand in the third quarter of 2013. Overall, depreciation expense therefore rose to € 13.8 million, as opposed to € 13.0 million in the third quarter of 2012. At € 5.5 million, operating profit, or EBIT, was down from the previous year's level of € 7.4 million. However, after nine months, the company's EBIT of € 18.4 million is up from the previous year's level of € 16.4 million, as is consolidated net income: This metric stands at € 15.0 million, in contrast to € 12.4 million for the first nine months of 2012.

Given this development, QSC is reiterating the guidance it had announced in early March 2013 for the full fiscal year: The company anticipates an EBITDA margin of at least 17 percent and a free cash flow in the amount of at least € 24 million on revenues of at least € 450 million.

In € million Q3 2013 Q3 2012 9M 2013 9M 2012
Total revenues 113.8 120.5 340.3 353.2
Revenues, Direct Sales (ICT) 52.4 49.5 153.3 137.5
Revenues, Indirect Sales (ICT/TC) 30.9 32.1 92.1 89.7
Revenues, Resellers (TC) 30.5 38.9 94.8 125.9
EBITDA 19.4 20.4 57.4 56.0
EBIT 5.5 7.4 18.4 16.4
Consolidated net income 4.7 7.3 15.0 12.4
Earnings per share (in €) 0.04 0.06 0.12 0.09
Free cash flow 6.5 5.9 18.1 18.2
Capital expenditures 16.4 9.8 34.8 29.4
Workforce 1,664 1,428    

Notes:
The 9-month report is available for download at www.qsc.de/en/qsc-ag/investor-relations.html. This corporate news contains forward-looking statements. These forward-looking statements are based on current expectations and forecasts of future events by the management of QSC AG. Due to risks or mistaken assumptions, actual results may deviate substantially from those made in such forward-looking statements.

Queries to:
QSC AG
Arne Thull
Head of Investor Relations
Phone: +49 221 669-8724
Fax: +49 221 669-8009
E-mail: invest@qsc.de
Internet: www.qsc.de


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