QSC increases profitability in first quarter of 2013
- EBITDA margin improves by 2 percentage points to 17 percent
- Consolidated net income of € 5.1 million more than doubled
- Revenues of € 113.0 million below previous year's level due to regulatory effects
- QSC reiterates guidance for full fiscal year after its good start to the year
Cologne, May 13, 2013. QSC got off to a good start in fiscal 2013, benefiting from significant growth of its ICT business as well as from temporarily higher demand for IP-based voice products. On the other hand, revenues in conventional TC business declined; heightened regulation since December 1, 2012, alone, is resulting in revenue shortfalls of between € 7 and € 8 million per quarter during the current fiscal year.
Overall, QSC generated revenues of € 113.0 million in the first quarter of 2013, compared to € 116.0 million for the same quarter one year earlier. While predominantly conventional TC revenues with resellers decreased by 29 percent to € 31.9 million as a result of regulatory and market effects, there was a rise in ICT revenues in the two other business units. Revenues in Direct Sales rose by 20 percent to € 50.6 million. Revenues in Indirect Sales increased by 6 percent to € 30.5 million due to, among other things, temporarily higher demand for voice products. QSC Chief Financial Officer, Jürgen Hermann, who will succeed Dr. Bernd Schlobohm as Chief Executive Officer on May 30, 2013, notes: "Our focus on the ICT market is paying off. We are achieving significant revenue growth here and winning further customers each quarter." During the past quarter, sporting goods retailer SportScheck and power grid operator Nowega, among others, opted for QSC.
Concentrating on ICT business affords higher earnings
QSC's focus on ICT business played a major role in enabling the company to increase its profitability in the first quarter of 2013. EBITDA rose from € 17.5 million in the first quarter of 2012 to € 18.9 million, while the EBITDA margin increased by 2 percentage points to 17 percent. Consolidated net income reached € 5.1 million, by comparison with € 2.3 million for the same quarter the year before. Free cash flow of € 5.1 million, on the other hand, remained slightly below the previous year's level of € 5.8 million, as QSC needed to increasingly invest in connecting new customers and new products. Given this backdrop, capital expenditures (capex) increased to € 9.8 million in the first quarter of 2013, compared to € 8.7 million for the comparable quarter the year before.
Significant growth planned in ICT business
Given its good start to the current year, QSC is reiterating its guidance for the full fiscal year. The company is planning 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. Operating business will continue to develop on a two-track basis: Sharply rising ICT revenues will be offset by declining conventional TC revenues, especially in the Resellers Business Unit. Numerous decisions by the German Federal Network Agency that were made in the autumn of 2012 will additionally burden TC business: In fiscal 2013, this alone will result in a revenue shortfall of some € 30 million in TC business and will reduce EBITDA by € 3 to € 4 million by comparison with the year before.
Jürgen Hermann stresses: "The effects of heightened TC regulation show how important it is for QSC to evolve into a full-fledged ICT provider. The lower the revenue percentage of legacy TC business is, the more apparent our company's progress in the ICT market will be." At CeBIT 2013, the company debuted its first modular solution for the Cloud workplace, QSC-tengo, which will simplify migration to the Cloud age, especially for small and mid-size enterprises. With a view to this innovation, in April 2013 market researcher Experton named QSC the "2013 Cloud Leader" in not just one but two categories. Hermann: "In the coming quarters, too, we'll be investing in new products, new customers and new people, thus putting in place the foundation for profitable growth in the coming years."
|In € million||Q1 2013||Q1 2012|
|Consolidated net income||5.1||2.3|
|Free cash flow||5.1||5.8|
|Capital expenditures (capex)||9.8||8.7|
The 3-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.
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