Barco NV (BAR) Earnings Call Transcript & Summary

[Audio Gap] [Operator Instructions] As a reminder, this conference call is being recorded. Madam, sir, please go ahead.

Good morning, ladies and gentlemen. I am Carl Vanden Bussche, Head of Investor Relations for Barco. Welcome to this conference call on the results of the first half 2020. And indeed, today with me, our CEO, Mr. Jan De Witte; and our CFO, Mrs. Ann Desender. Both Jan and Ann will present and will provide some extra color on the first half results, and we will do so following the first half earnings presentation. That presentation has been made available on our Investor portal on barco.com earlier this morning and also via a link sent to you via Ann Bouckaert. And following the presentation, we foresee some time for Q&A as well. And that's it for the introduction. Let's kick it off here. Jan, the floor is yours.

Thank you, Carl, and I suggest we start on Page 4. Good morning to [Audio Gap] Now when we last had an analyst call, it was mid-April. We gave you an indication of how Barco business was being touched and would be impacted by COVID. And I would say, 3 months later, that things largely played out as we had assumed and projected at that time, be it (sic) [ albeit ] with the top line, that is a couple of points weaker than [ projected ]. And this relates to the significant impact in the second quarter in our Entertainment business and our Enterprise business, specifically with a very significant drop in the months of April and May, though we saw first signs of recovery as of the month of June. Our Healthcare business has been holding strong throughout the first half. And this overall impact of COVID on our mix of businesses brought the top line for the group for the first half down with a decline of minus 18%. Now thanks to decisive actions in -- on cost, we brought indirect costs down by 15% year-over-year. And as such, we were able to keep our EBITDA margin at around 10%. We did see working capital peak, as we had been driving supply of parts in the month of February and March to secure our factory operations, to then see the market for finished products in the Western world drop very steeply in early April, leaving us with both higher-than-normal components as well as finished goods inventories. Now in parallel to running the numbers, we had our leadership team and all of our Barco colleagues engaged to navigate this crisis. We kept our employees safe while ensuring short and long-term business continuity. Over the second quarter, we also saw clear business impacts and made choices, but we also see our midterm and long-term growth opportunities remaining intact, being that COVID injected a clear delay, a clear gap in market development and road maps for our business units. If you flip to Page 5 [Audio Gap] but if we look back to the second quarter, then the grids on Page 5 that we showed to you mid-April turned out to be directionally correct. In Entertainment, we did see the expected material negative impact in cinema replacement, as well as in our events business, come true. Also the medium negative impact in new cinema installs and fixed installs in our ProAV business came true, and those have their own budget logic and benefited, as of May, from the gradual unlocking of countries and museum-type settings. But altogether, it led to a 44% drop in top line for our Entertainment business in the second quarter. In Enterprise, which we called 3 months ago with a medium negative outlook, we saw a very significant drop in April and May, again, linked to the lockdowns of corporates, of businesses, leading to 48% year-over-year drop. More specifically, here, we also saw a clear improvement from April to May, and then from May to June, as corporates and businesses came out of their lockdowns in many of our geographies. And we expect these improvement trends to continue. Then on Healthcare, as we also saw mid-April, Healthcare proved to be the stronghold for the business, with plus 5% growth, driven by strong diagnostic business that, to some extent, benefited from COVID, and sustained growth in our surgical business that did feel some headwinds here during the second quarter are -- as operating rooms being put on nonactive as a result of elective surgeries that were pushed out in time. As I flagged also in mid-April, our supply chain continued to show the agility to deal with this complex world and continued to supply where we have markets, be it with higher transportation costs, which we saw reflected in the gross margin, and with working capital increasing, as we could not build down parts inventories fast enough. If you look at Page 6, it has been a quarter of proactive agile changes. We made changes in our organization and operations, both physically as well as mentally, to keep our people safe and productive during their teleworking days. We also focused on business continuity in our markets and for our customers during this crisis. And also, we ensured we kept making progress on strategic projects and initiatives that we know will secure our leadership position in our markets in a post-COVID world. On the cost side, we were proactive and decisive in leveraging different mechanisms across the geographies where we operate to bring our costs down and be, as much as possible, in line with how we saw top line come down, all of this with the objective to protect our EBITDA margin and our business reserves. We froze discretionary spending. We leveraged temporary unemployment mechanisms. We pushed out lower-priority projects and investments. And this crisis was also the right time to execute on the outsourcing of our LCM, our liquid crystal modules component, which is part of UniSee. We decided to outsource that to an OEM in Asia, which gives us access to a step-change lower product costs. And this allowed us to close down our Taiwan factory. Overall, we focused on our cash, with a lot of focus on receivables and also inventories. Though here, the sudden lockdown and drop in the Western markets, after we had pushed hard to get parts supply up and running, resulted in a spike, peak in our inventory. If we switch to Page 7, we saw sales for the first half showing negative growth in the range of 15% to 20% down year-over-year, with Americas a bit better than others as they started with a stronger first quarter. Both in EMEA and Americas, we saw a good start in the first quarter. In the second quarter, we clearly saw the cinema renewal wave stall, as well as ClickShare and control rooms that showed significant drops linked to corporates closing their [ ORs ] and halting their projects. Diagnostic imaging showed again strong resilience in a market that needed imaging technology to fight COVID. In APAC, we saw the stalling of the market a bit earlier but also saw some activity, like our ProAV fixed installs, come back a bit earlier than in the Western market. Overall, while we saw customers push out existing orders or delay decisions, often because they were not able to be in the office to transact, we did see no material cancellation of orders, okay? So it's mainly a pushing out of the order book, not a cancellation of orders. And let me here hand it to Ann to take us deeper into [Audio Gap]

We are on Page 8 with the overview of the financial highlight figures. Not really used to see that kind of, I would say, comparison. Thereby, in the previous period, we more sight -- we more saw, in comparison with the previous period, more green, and now we are more in the red. But likewise, where we worked on to be a more resilient company in previous years and also starting with a company, when you go into such an pandemic, that has a good balance sheet structure, really helped us also in this period to get through it. Orders and sales slowed down compared to last year. Orders, 25% down. Sales, 18% down. We did indeed see month-over-month first recovery and positive signs as of June. So this is, again, hopeful. And also, if we look to the order book, we landed at EUR 317 million, which is essentially the same level as we ended last year with. It is 8% down year-over-year. But as we look to our order book and the orders, we did not see real material cancellations. So it is really a push out of different projects to later, but not lost. Gross profit margin, OpEx, both worked on this heavily and took decisive measures, primarily, of course, as of the second quarter, which yielded, and in that sense, could contain our gross profit margin. It is down 1.1% versus last year, but that's quite solid still. Higher transport costs had a really big impact here, kind of all fighting for the same transport lines, which were also not that obvious during those months, had an impact on gross profit margin and also the mix effect, primarily the lower sales of our ClickShares had the most important impact on gross profit margins. But overall, if you look to the divisional results, you will see there that this has been quite contained. OpEx, we adjusted downwards year-over-year, 15% across the company and also across fixed and valuable costs. So discretionary spending cuts, the adjusted activity levels in line with drop -- top line drop, et cetera, et cetera. So with that landing and containing the impact of the hits of the top line with cost containment measures to our EBITDA and landing there at 10% EBITDA margin, down 3.6% year-over-year. And as Jan already kind of flagged, free cash flow, we are at the peak moment at this time, impacting our free cash flow, coming to that back in a couple of slides with more details. Likewise, on net income, I'll come back. Moving over to Slide 9, the new pattern, as what you have seen in previous times. Currency didn't really play, a little positive. But for the rest, actually, it has not kept us awake in this first semester as such. The big drop is -- on the big red bar as such is on sales, excluding FX impact, minus 19%. Gross profits slightly red bar that contains this impact, and then the OpEx down, excluding FX here, minus 16%, has to a good part been able to mitigate the impact of the drop in top line on profitability. The other results, including our share in the BarcoCFG results, which have been a loss in the first half. This is our joint venture in cinema in China. And then we also took some provisions on bad debt. It's smaller numbers, but adding together to an impact, likewise, on a couple of other provisions, and so with that, landing at 10% of sales. You see here, and we added this now here for the first time in this visual, the breakup of per division. And also the [ area ] is quite in a different pattern as you would have expected, or if you compare it actually at least with the previous periods. And yes, needless to say that we have Healthcare, who has not been impacted or, to the contrary, positively by this COVID time. On Slide 10 [Audio Gap] depreciations and amortizations essentially flat. We did took an impairment and restructuring costs. This is primarily impairments on noncash, relating to the announced closing of our factory in Taiwan and a decision to outsource our UniSee LCM out to an external supplier. We will work on that in the second semester gradually to do that transfer. But as we announced this and decided it, we have taken this impairment cost into our P&L for an amount of EUR 8 million. Income taxes are at the same effective tax rate as last year. And then one maybe on the results and the share of associates, or minority interest, you can also call it, this is a minority interest on the profits in Cinionic for the first half. Landing with that at a net income of EUR 10.4 million and an earnings per share of EUR 0.12, calculated here after the impact of the split. So for the first half, we have good landing at minus EUR 51 million. Gross operating cash flow, EUR 36 million. So this is EBITDA, but then that's after the payout of the Fit to Lead, also lay-off provisions of EUR 4 million, as planned, and they're on schedule. Working capital, high peak, high at this moment at about 11% of sales. Main part in this is the inventory. So as indeed, the markets in Asia started to close down as of February. We did everything to contain, that we could, secure continuity in our production, continuity in supply chain of incoming goods, which we succeeded well so that we could keep on delivering in time for customers. We've done breaks on purchases when we saw the different lockdowns, but there is a time lag effect between your orders, which you still have goods, and then incoming goods. You then break on your trade payables. So you see, in the free cash flow, inventory is still up, not yet down. And then accounts payable are down, as we continued to pay our suppliers in time. So we did not do any specific actions in there and kept there to our, yes, all our promises. DSOs are at 82 days, which is -- yes, we have to wait 30 days longer on average or 1 month to get our money in, mainly linked, the bigger impact here, to Entertainment and Cinema, where we actually proactively also reached out to our customers and have payment plans with several of them. Money is still coming in. So in that sense, they are following their payment plans, but working together there with the customers to get that all -- yes, well managed, I would say, to get it and have this done better again by the end of the year. So these 3 impacts have caused that we are at this midpoint now or at the peak of our working capital. We are still, net cash, EUR 223 million. The difference versus year-over-year is, of course, the negative free cash flow. Dividends, we paid out on the results of 2019, and an extra investment with this in Unilumin. ROCE, we land at 16%. With that, I conclude the overview of the more figures part and give it back to [Audio Gap]

[Audio Gap] the first half and how we see this translate to the second half, yes, of course as far as we can predict how COVID, and specifically, unlockings and lockdowns may play out for the rest of the year. So starting on Page [Audio Gap] Cinema. Cinemas pretty much across the world went into lockdown, and major movie releases were pushed out to the second half and beyond. And our customers have been managing their lack of income and lack of cash inflow very narrowly, which translated into push out of replacement, projector replacement projects, which we saw pretty much come to a standstill in the second quarter. Expansion opportunities in new builds of new cinemas in specific emerging markets, and like the Middle East, got some delays but saw a lighter impact as a result of COVID. One of our competitors in Cinema exited the markets. For us, not unexpectedly, but it definitely, towards the coming years, creates opportunity for share capture in the market. In the Venues and Hospitality side, again, in the first half, we saw the events sector being significantly hit with their events being canceled and orders being pushed out to later in the year. On the ProAV, the fixed installs segment, we saw a softer top line, but also showing more resilience with the lockdowns, again, resulted in lower activity but no cancellations of order. Also, in China, which went faster into the lockdown, came faster out of the lockdown, we saw that translated into early recovery of the ProAV fixed install segments already, as of the April period. Simulation proved to be very resilient, with projects shifts, but also a stronger demand for real-scale simulators. Overall, in Entertainment, we saw our gross profit margins being quite stable. But we saw, as a translation of the volume impact and the negative fixed cost leverage, we saw a significant impact on the EBITDA as well as the EBITDA margin. If you look now at the second half, what we see happening in Cinema is that theaters are globally reopening in the June-August time frame. We see that in Europe. We see that in the Americas. This morning, the Chinese national Film Administration decided to reopen the Chinese cinemas as of July 20, okay. So cinemas are reopening as we speak. There's, of course, the question on the movie slate and a little bit the [ check-and-act ] situation between the theaters and the releases of the new movies. We also know that our Cinema customers are going to focus on cash in the first months after they reopen, and shore up their balance sheets again. So we expect this to reactivate the replacement opportunity near the end of the year. Replacement opportunity is going to trail by a couple of months the reopening of the cinemas. In terms of the cinema expansion, the newest build here we expect and see at the beginning of recovery. The budgets are there. This is not linked to the movie slate. So we see those projects pick up again as people can get back to their jobs. For the Venues & Hospitality Division, here, events will only slowly pick up after the summer. A lot of the big ones have been canceled. So slow pickup there. ProAV segment, showing again more resilience and start to see recovery in line with easing up of the constraints. We see that definitely in museum-type settings and museum-type events. And then Simulation, we continue to see steady performance in the second half for that business unit, that already did well in the first half. Okay. So overall, I would say, after the second quarter lockdowns, we're expecting a slow comeback in cinema replacement markets and events, mainly towards the fourth quarter, but an earlier pickup, again, for the cinema expansion projects and the ProAV fixed installs. We then -- starting with Corporate, which is primarily the ClickShare family of products. We saw, in the first half, a clear softness as of mid-end March and during the lockdown pretty much, because companies shut their doors. People went home, worked from home. We also saw -- see the first recovery in May and June as people were coming back to work and many companies are starting to operate in hybrid modes, people in the office, part of the people working from home. We saw this start in EMEA, with a mix of pickup in our ClickShare Presentation as well as in our ClickShare Conference product. During COVID, and very much at this point in time, we were seeding the markets. We're stepping up our marketing to promote the newly launched ClickShare Conference, a product which has been very well-received by the users, the customers, the channel as a product that, in this world of stepped-up video conferencing, activity in videoconferencing with mix of people in a meeting room, mix of people working from home, this is a big enabler to improve the quality of this type of meetings. On the Control Rooms side, the market, as such, is resilient. This is about critical infrastructure, crisis management infrastructure. Some of our meeting rooms were used as crisis center for COVID control. And so there's a need for this type of technology. We did see projects go in slow motion, as people could not access their sites to execute on those projects. We also saw the second quarter being better than the first quarter despite COVID. And that was related, I would say, mainly to a weaker first quarter, where we saw some of the oil shock impact. On weConnect, which is an incubator product that we launched broader in the market last year. Virtual classroom proposition, which, for many higher education, business schools and corporate education centers, is a highly professional product to enable remote education. We've seen a significant uptick there and a very strong buildup of funnel, and some great reference projects that we've landed and are installing ahead of the reopening of those institutions after the summer for the new school year. Also here on Enterprise, gross profit margin remained stable, which again led to an EBITDA margin mainly going down because of volume effect, and EBITDA margin going down because of fixed cost leverage effect. Looking into the second half, we expect both ClickShare Presentation and ClickShare Conference to rebound. We've seen the first signs of that in the month of June. In fact, we're on a track where the month of May was better than April, June was better than May, outlook for July looks better than June. So we see this market steadily come back. And both for ClickShare Presentation as well as Conference, where, for ClickShare Conference, we're still launching this product. We are stepping up our marketing to make this product known in the markets, especially the market that's now larger than we assumed a year back, with the acceleration of videoconferencing. Control Rooms in the second half, we see the market opportunity confirmed, and we expect that to translate in a further pickup, in line with market recovery. For these type of projects, access to the sites is important. We've seen the negative effects of that during lockdowns. This is one area where we're also cautious with how future lockdowns may impact further delays or not in this -- in the segment. So overall, for Enterprise, I would say we saw the declines across all regions in both the Corporate as well as the Control Rooms segment, with early signs of recovery over the month of June linked to the unlocking, the back-to-office movements in the economies. And we further see this business unit pick up, in line with how economic activity in the geographies will be picking up. Moving to Page [Audio Gap] very solid growth in the sales, both driven by OEMs, medtech OEMs that use our technology, stepping up their capacity as well as the opportunity for home-reading radiology, for which we had the right product at the right time. In surgical, remains solid, definitely, on orders growth over the first half. Here, sales growth was positive, though more modest in the first half, with elective surgeries being postponed, which resulted in delays in deployments in surgery. Demetra, our new product for skin cancer, which we launched in Belgium last year and started to launch in Germany, we're picking that up as we speak, post-COVID. We did delay our launch in the Americas, which was planned for March. So we kept the money, and we're now going to spend that money in terms of launching in the market in the fourth quarter, normally, of this year. Overall financials for the first half, I mean, very good operating leverage on the higher sales, together with -- I mean, very good discipline that we kept on OpEx, bringing both the EBITDA margin and the EBITDA absolute to a significantly improved levels, while we still continue to invest in growth initiatives in our In China For China program. For the second half, yes, we expect Healthcare to continue on its momentum. Diagnostics is a steady-growth business. It has now shown to be able to do this also in very tough times. Surgery, here, we expect an uptake in the second half, partial transition of first half push-outs and a reflection of the stronger order take over the first half. And then China, a very important focal point in our Healthcare business, continues to steady deliver on the growth and the growth investments that we have made there. So I hope that this gave a bit of color as to what drove the second quarter and what we're trending towards in the second half -- over the second quarter. Now like we did in April, we've tried to summarize this in a schematic, which you can [Audio Gap] and the impact we expect for the full year '20, impact related to the growth momentum which we had at the beginning of the year. This is still very much in line with what we showed you in April. The last column then shows how we see the third quarter compared to the second quarter of this year. With a plus sign, meaning that we see the third quarter better, increased volume versus the second quarter, and the squiggle sign meaning that we see third quarter volumes in line with the second quarter. Okay. So the highlights, if you look again at Cinema, we still see the third quarter in line with the second quarter. And that's the slowness on the restart, or the lagging of the restart, of the replacement market holding back the better dynamic that we see on the new builds and the market expansions. For Venues & Hospitality, we see the third quarter better than the second quarter, mainly driven by the fixed installs picking up again as a result of the gradual unlocking of the Entertainment and some events. Simulation, we did well in the second quarter. We continue to do well in the third quarter. In Enterprise, we see us doing better in the third quarter than the second quarter, with ClickShare picking up speed again. And it's both ClickShare Presentation as well as the launching -- the pickup from 0 to a new business in ClickShare Conference. Control Rooms, we see again here, a third quarter in line with the second quarter, which, as I said, was a fairly good second quarter, better than the first quarter. And then Healthcare, we continue solid year-over-year growth that we saw in the first half. We're continuing to do that in the diagnostic, and then surgery steadily picking up. Maybe one word on [Audio Gap] a lot of uncertainty remains for us, and I trust for all of you on the phone and many of my colleague CEOs across the world. There's the uncertainty around the shape of the recession, which is not clear, though I think there's consensus that it will not be a V shape. But also the reemerging of outbreaks and how authorities will react with limited or broad lockdowns, where specifically in the Entertainment space, I think there's higher sensitivity to government decisions. So besides gaining insights in our markets and following up government decisions as much as possible, we're also focusing on business resilience, rapid reaction to ensure we keep Barco healthy to be and remain in a strong position for when the recovery would restart in earnest. We're containing our costs, and we're redeploying resources from low-activity areas to growth areas, like our Healthcare business. But overall, we're trying to set up for a 2021 with a healthy level of conservatism. And therefore, we're working out the business plan for '21, where we're going to keep our indirect cost levels at 2019 levels. That puts us in a position to do well in 2021. So then on Page 19 with the outlook, okay. And while in this presentation, we've tried to give you as much insight in the market dynamics that we see and what we expect to see, it's also a given that there is still a lot of uncertainty and unknowns, the shape of the recession and the risk of repeat lockdowns. And therefore, at this point, we're not reinstating guidance for the year. We do expect that the second quarter, we've seen the worst, the weakest of the year. And expect that in the third quarter, the fourth quarter, we're going to see a steady quarter-to-quarter improvement between now and the end of the year. As I said, for 2021, preparing for 2021, assessing this quarterly progression, we are planning a budget. We're going to work a budget, where, with good caution, we plan for a 2021 cost base which is going to look like 2019 cost base at group level. At business unit level, we'll make the redeployments of the OpEx as needed. So what does this mean for second half profitability? We're currently running at cost levels under 2019, as a result of the many cost actions, cost containment, including temporary unemployment. This has allowed us to be at 10% EBITDA for the first half, despite a very significant sales drop. Over the second half, we're going to remain cautious and disciplined in how we relax these cost actions, in alignment with how over the third and the fourth quarter we expect this quarter-to-quarter improvement. And we've shown we can do this over the first half, and our aspiration for the second half is to ensure we deliver a second half performance at first half level or better. But we also know, again, that the way to our top line will develop will be a very important driver in our profitability. As you've seen in that walk, EBITDA walk that Ann showed, the biggest driver in our EBITDA and EBITDA margin is how the top line will play out. And that's where, over the next 2 quarters, we still have, let's say, more proof points to deliver, to extrapolate towards a clearer outlook there. So with that, I'm going to hand it back to Carl to manage the Q&A.

Thank you, Jan. The operator will explain you how that works. [Operator Instructions] Over to the operator.

[Operator Instructions] We have 1 first question from Mr. Matthias Maenhaut from Kepler Cheuvreux.

Two questions from my end. First, a more general question. Clearly, your balance sheet is in a good shape, and you are able to use your cash, put it at work, giving more support to your customers. If you look at how the competitive environment actually evolves, do you think this is -- for you, is a differentiating impact? And will it lead to a bigger take of share, I would say, when the growth returns? And then a second question is actually on the Cinema business. You recently announced a retrofit and deal with Kinepolis. Can you maybe talk a little bit more about that offering, and how was dynamics in terms of margins versus the rest of the product portfolio in Cinema? And do you think that, given the current, I would say, adverse or challenging conditions, will the Cinema change? And there is a risk of people actually, not low or replacing, but using these retrofit offerings?

Okay. Matthias, the first question on balance sheet and how to play that out in a competitive environment will be addressed by Jan.

Yes. I'll take the second too, there. So a question on the balance sheet. Yes. Yes, balance sheet is in good shape. We are using it with caution, of course. We're capable with some of our customers to -- specifically in Entertainment, again, to work with them on payment plans. We've also allowed for customers that -- where the projectors are not running, to extend their warranty by 3 months. It really caters to the needs of those customers. It's buying us a lot of loyalty and goodwill. It also -- our balance sheet puts us in a position to further offer OpEx-type propositions. I think you may have heard us in the past 2 years talk about that. I mean, we want more OpEx. In those times, as I said, customers want to talk OpEx, but they still buy CapEx. Because of COVID, there's definitely more interest in OpEx-type propositions. Our balance sheet allows us to do that. Of course, we're only going to do it with players that are -- have a long term viability. The question on the retrofit also relates a little bit to that, okay? So why do customers want to go with the retrofit? It's a laser retrofit, okay? So it gives them the better light quality, but it also gives them the lower operating costs. Energy consumption is about half for a laser light source as compared to a lamp light source. So that's why installing laser retrofits is a productivity move by the cinemas. It's also a move, because we offer it as an OpEx-type model, it's a move for them to have a different way of financing. Now is laser retrofits going to avoid replacement of projectors? The answer is, not really. I mean, in the installed base, in the market, not every projector can be retrofitted. Second, a projector that has been running for 9 years and is starting to fall apart, a retrofit is not going to fix that issue. And then the other is the next-generation -- the current generation of new projectors is 4K resolution. Old projectors are 2K resolution. Laser retrofit does not fix 2K into 4K. And especially, I think cinemas, they understand very well that they need to deliver a differentiated experience to the consumer, different, better than the 4K resolution that they see on their TV back home. So yes, laser retrofit is going to help certain segments to upgrade at the time where they may not have the capability to upgrade, but is not replacing the replacement wave of the 80,000 to 100,000 projectors that we've been talking of.

Thank you, Jan. Thank you, Matthias, for the questions.

Next question is from Mr. Guy Sips from KBC Securities.

First question is a follow-up question on the first one. Can you give us an idea of the margins on the retrofit? Are they in line with the other products? And the second question is on ClickShare. So with the downturn we saw is partly by the G curve we saw from clients waiting for the new picture conferencing system and as well as the COVID-19. Can you elaborate a little bit on these 2 elements? Or what do you expect that -- the first element was the impact -- what was the impact of the first element of these postponements of clients?

Yes. I'll take the first question on margin. So yes, we don't disclose margins on subsegment levels, nor on product types. Let's say as a takeaway on entertainment, we shared that gross profit margins have remained stable year-over-year. And as part of that, it is more lasers. There is a bit of retrofit in that deployment part as well. So on the next question, Jan, would you like to take that?

So question on ClickShare. So as I said, we've seen from April to May to June, we've seen this market come back, and we're definitely trying to jigger it. Both customers, and even more our channel, confirmed that this is the product at this point. Now interestingly, and that's probably going to answer your question the best, is out of the -- if I look at the June numbers, 85% is still the old ClickShare presentation, which is, to me, reassuring. It means that the product that the market knows is still selling, okay? While the product that we just launched, if we do our marketing job well, especially now in the post-COVID videoconferencing world, has potential to continue or to pick up growth in addition to the growth that we see or the pickup that we see in the old ClickShare. So in terms of cannibalization, one versus the other, we do not really see that yet at this point in time.

Next question is from Mr. Christophe Beghin from Kempen.

I have a question actually as well on the Enterprise division, and specifically on ClickShare. I had a call [ slightly ] with Carl this morning, and you stated that if we look to the units sold, that it were quite similar at the level of 2018. If we then calculate, you give a split of the enterprise sales versus the corporate, and then we arrived at EUR 64 million for the corporate segment versus 59% in first half year of 2018, which was EUR 88 million. So we see a decent drop in the sales versus first half year of '18, but you have sold 10,000 units more. Can you elaborate a bit more on that?

Okay. Christophe, perhaps just to clarify on the question and on my remark there. My comparison to first half '18 was actually the EBITDA margin of the Enterprise division in '18 was actually at the same level as the EBITDA margin of Enterprise now in the first half of 2020. So I did not [ really imply ] anything really on quantities shipped on ClickShare.

No. But the units are disclosed in the -- you give a jump from units at year-end versus the units at the end of first half year in both first half year '18 and first half year of '20. So you see that you have sold 80,000 units this half year versus 70,000 units in the first half year of 2018.

Yes. These are approximate numbers indeed, how we, let's say, inform you or keep you informed on the growing installed base of ClickShare. So it's difficult to take conclusions from that. But in terms of ASP, we're pretty much still at the same level on ClickShare as we were at the end of last year. So around 1,000 -- a bit below EUR 1,000.

Definitely, ClickShare pricing has not changed yet. I mean, there's always a bit of end quarter negotiation, but I mean, we're talking -- this is low single-digit percentages if and when that happens, that...

And then I have a follow-up on the same. Is then profitability on ClickShare coming down?

Not really. Yes. So as we referred to in the slide of enterprise, also gross profit margin on enterprise remained quite stable in the first half compared to a year ago. So while actually, in detail, volumes came down, gross profit margin stayed quite solid.

I think that -- I think the key -- and that's pretty much across all business units. Our gross margins are holding up quite well. The biggest impact was transportation costs, that in the past few months ate a chunk. So what you see happening, our EBITDA margin is negative operating leverage, which we've tackled to a large extent, but very tough to tackle a full 18% top line growth.

Maybe then the last thing. Can you confirm then that over the first half year of '20, that the EBITDA for the Control Rooms division was positive?

So we don't disclose on subsegment levels. The EBITDA margin for the first half, let's say it was...

Was it absolutely positive? Was it profit-making or loss-making? Can you maybe just confirm that?

We stick to the statement that it was not better than last year, Christophe.

Next question is from Mr. Kris Kippers from Degroof Petercam.

One is coming back to the optionality of the balance sheet. If you look indeed on the client side, you indeed can mitigate some things for them, which is interesting, of course. But would you also consider doing some interesting add-on purchases or perhaps larger ones, in view of the market situation and what the optionality of that cash position could be? And then the second question would be on the outlook. If you look indeed on the 2021 cost base guidance, would this then imply that there's also indirect [ E and S ] indication for both revenue and EBITDA evolution that it should not exceed materially the 2019 level? But I presume that you would repeat the 2022 outlook, is that correct?

Thank you, Kris, for these questions. Jan will take the first, and Ann will take the second question.

So the short answer on the first part is yes. Already, I think that more than a year ago, we said look, we feel we're in the shape where we can start to use that balance sheet for M&A-type deals, even more in a tough environment. So yes, we are considering, yes. Typically, it's more after the dust settles that the good opportunities come up. At this point, there's bad opportunities. Companies that were in bad shape and they'll be even in worse shape because of COVID. So the short answer is yes, we are definitely exploring that.

The second question, we remain our ambition on the more longer-term to be and stay a profitable growth company. As to the impact of '21 and where we see actually, and yes, uncertainty on top line, but there to really be also more on the cautious side, and in that respect, towards our indirect costs. We see our [Audio Gap] quarters becoming better in this year and in the fourth quarter then already kind of in line with '19 levels, which indicates that for 2021, yes, we should get back at the kind of level, top line-wise of 2019 or better. Now to be more -- and that's more on the cautious side as to indirect costs. When we go into the planning phase, which we typically start over the summer, that's why we have set our target as let's not go for an indirect cost level, which is higher than 2019. If we have more upticks or upsides seen and coming on the top line, then we have the options to do more. [ We ] certainly, that's certainly not going in position. And that's where we put it straight in and certainly in the company, and we also wanted to share that guidance with you, then towards the years after to sustain a profitable growth company that we [ reconfirm ].

Yes, which is essentially what we said at the Capital Markets Day, right? We're a mid-plus single-digit growth company with an EBITDA outlook, 14%, 17%, that we took that very serious when we set it. And so our plans are working towards delivering on that outlook.

Next question is from Mr. Marc Hesselink from ING.