Barco NV (BAR) Earnings Call Transcript & Summary

Ladies and gentlemen, welcome to the conference call on the results of Barco. I am pleased to introduce you, Mr. Jan De Witte, CEO; Mrs. Ann Desender, CFO; and Mr. Carl Vanden Bussche, IRO. [Operator Instructions] As a reminder, this conference call is being recorded. Madam, sir, please go ahead.

Good morning, ladies and gentlemen. I'm Carl Vanden Bussche, Head of Investor Relations for Barco. Welcome to this conference call on the results of the fourth quarter and the full year 2020 results. Today with me in our office meeting room and in good health and at safe social distance, our CEO, Mr. Jan De Witte; and our CFO, Mrs. Ann Desender. Today, a bit earlier than expected. But despite the late notice, we clearly managed to get a good audience together and already a couple of people queuing for the first question. But all in all, in the current context, with reduced visibility and limited predictability and also related to some limited guidance on our site, we opted already last year to increase and deepen our level of disclosure and communication. Remember our calls with the first quarter and the third quarter results and associated deliverables. We now decided to also speed up the consolidation of our full year numbers and we believe it to be key to having the right numbers and insights as we move into the new year for both driving our internal operations, but also to inform our financial markets with those delay and in full. As we were completing the consolidation last week and passing a successful audit, we decided to decouple the full year results announcement from the annual report, which is still on the plan for early February, and to pull the announcement on the full year results forwards with 2 weeks, which is today. Ann and Jan will now walk us through the full year results and provide extra color on the latest results and how the growth opportunities look like and how we navigate the current and next quarters to come. We will do so using the full year earnings presentation, which is available on our investor portal since early this morning. Following the presentation, we foresee, of course, some time for Q&A. That's it for the introduction. Let's kick it off here. Jan, the floor is yours.

Thank you, Carl, for the intro. And thank you, Ann and Carl, by the way, for the effective, efficient and accelerated close we could do of the year, and that enables us to come out earlier and in full. I'll start with Page 3, I believe the executive [indiscernible] in October. Clearly, 2020 has been an off year for our financials, very much driven by the COVID pandemic impacts on our markets, leading to a top line decline of 29% overall for the year with deeper impacts in the second -- in the third quarter of the year. Especially our entertainment and enterprise businesses were impacted by country lockdowns in events and cinema and the obliged work from home or stay at home decisions in many countries. While on the health care business, we held quite stable over the year with COVID delivering upsides in diagnostic imaging but also generating negative impacts from pushed out elective procedures, both in diagnostics as well as in surgery. As an organization, we've managed with agility and flexibility throughout the year. And a mix of offense and defensive moves that allowed us to keep on servicing and serving our customers and winning new ones. We had quite a number of real commercial successes over the year, while at the same time, keeping up investments in our strategic priorities. With a 20% reduction in OpEx and despite sustaining priority investments in strategic projects, we were able to maintain EBITDA margin at 7%. Product mix with lower Cinema and ClickShare sales was a big factor in this lower EBITDA margin. At this point, we've got enough data points to feel comfortable that our markets will be coming out of COVID largely intact but on different timings. We see the move to hybrid working modes in many segments, not just corporate but also health care and even entertainment and the related need for image processing and connectivity, a long-term opportunity for Barco. And with the strategic projects we've protected, we feel Barco is in a strong position to capture the growth in our markets when recovery sets in. So in short, I would say, a year where we saw financials off track but where we succeeded in keeping our strategic foundations intact. If we then move to Page 4, financial highlights. Then I would say, the [ motion ] of financials, off track. I think the colors probably reflect that better than the words. Top line, around 30% below 2019, although we were -- managed to keep the order book only 13% below 2019. With pressures on the gross margin rate as a result of mix and logistics costs during a complex supply chain year and the pressure on gross margin on profit and top line also is reflected in the free cash flow for the year. So as a result of the cost actions, while we're fighting hard for the top line, we managed to keep EBITDA at 7%, which then, with restructuring costs and impairments taken, linked to additional restructuring actions we took in the second half of the year, results in a net income of minus EUR 4 million. If we move to the next page. If you look at quarterly dynamics, each quarter in 2020, it was somewhat of a different world as governments locked or unlocked our markets. Over the third quarter -- the fourth quarter, we saw a clear and encouraging improvement over the third quarter with 20% recovery in orders, 17% in sales and this is across the 3 divisions. And this is also, I would say, despite second waves and even third waves being felt over that fourth quarter. Enterprise ended a bit better than we had assumed with first clear uptakes in China. But also in Europe, Enterprise saw further improvement in corporate in EMEA and also Control Rooms in EMEA and U.S., although here, I would admit, we had expected a bit more but saw the impact of European lockdowns in end November, December impact primarily ClickShare. And on Healthcare, I think all of you will remember that we saw a dip in the third quarter. We saw this rebound as expected in the fourth quarter, both in diagnostic imaging as well as in surgery. If you take a brief look by region on Page [Audio Gap] improvement, we also saw across the different regions, EMEA and Americas, I would say, comparable dynamics over the year. Significant impacts in entertainment with cinema lockdowns and events being frozen to then near the end of the year, start to show signs of first recovery. Enterprise impacted by lockdowns, corporates as well as in Control Rooms. Yes, the silver lining for Enterprise is that COVID has created a much larger teleworking and video conferencing market, which will materialize in terms of opportunities for ClickShare once the back to office movements are really setting in. And then Healthcare resilience, with a mix of upside opportunities and some push-outs linked to those elective procedures. We see more or less the same dynamics in APAC, although on a different time line. And clearly, China is ahead of the rest of the world in terms of showing signs of recovery. Definitely, in Entertainment, that's the case. So let me hand it to Ann here to take us deeper into the financials, and then I'll come back again with more specific [Audio Gap]

Page #7, where we show the semester's results first half, still including first quarter's top line in line with 2019, drop in top line as of the second quarter and then continued in the second semester. The mix impact from primarily lower sales and ClickShare as well in Cinema have an impactful effect on the gross profit margins. And this is primarily seen also in the second semester. Over the year and throughout the year, we worked on cost containment actions, which were at full across the board in the second quarter, were done in the second semester. We moved over to a combination of resets and temporary measures but also with an eye on the future and really with what we call the defense and office strategies, preserving particular projects and also with an eye -- if we come out of this pandemic that we are stronger than competition to say. So in that sense, we are landing our EBITDA on the full year for 7%, considerably lower in the second half, driven by lower gross profit. So as we go into recovery mode and a new pickup in the next half year or in the next quarter, that should have a good impact again on our gross profit and mix, while we have reset our cost to go in the new year that's in a considerably lower cost basis compared to pre-COVID levels. Moving over to Slide 8 [Audio Gap] [ 14% ] of EBITDA, which was a trajectory of each time -- [ per year up ] in the previous years. There's a COVID impact on our top line, which you see here, minus 28%, which has had the biggest impact on our EBITDA, in part compensated by temporary and cost measures as well as cost resets. OpEx is down year-over-year 20%. Now that's to the lower EBITDA margin. In order to complete our stake into the Barco-CFG joint venture, where the result was positive but lower than the year before and also the impact of additional provisions taken, in particular, for bad debt on specific cinema customers. Moving on [Audio Gap] Most of the depreciation of lines, you could say, are in line actually with here before depreciations and amortization. Restructuring and impairment is an extra one. So you might remember, for [indiscernible] of the year, we already took a restructuring and impairment provision at that time, primarily noncash relating to the closing of the factory in Taiwan and the decision to outsource our unit -- [ our CM ] components. That's in the sense or with the eye on protecting our Control Rooms future gross margin, which we have seen being quite resilient, in fact, throughout this COVID wave. Then over the second semester, we continued on resets of our indirect costs, moving over to what we've done for structural measures in order to start the new year '21 with a cost level of about 15% lower than 2019. So with that, we are landing on a net income of minus EUR 4 million, so after a total restructuring and impairment costs of the year of EUR 14.5 million. Moving over to [Audio Gap] We landed the full year with a negative free cash flow of minus EUR 36 million. We could achieve a turnaround to a positive or with no longer negative on free cash flow in the second semester at plus EUR 15 million. Primarily the first semester and the second quarter actually was impacted by higher working capital, where at the mid of the year, we were at a peak working capital. Glad we could do gradual improvements on not only the average payment terms that our customers did not have to book off any ARs in particular or lost ARs, improved our DSOs compared to the mid of the year at 15 days, still 10 days higher year-over-year, landing at 70 -- 67 days. The highest payment terms are primarily linked to some cinema customers, which -- who we have payment plans, who are very strictly followed. Inventories, we could reduce compared to the peak of the mid-year but are still high. And the further we are building down of these inventories is linked to the pickup into our, in particular, entertainment markets that will then come over the course of next year. ROCE landing at 3%, all impacted, of course, by our EBITDA figures or result before restructuring and impairment. Net cash at the end of the year, landing at EUR 194 million, which is compared to the year before, down EUR 135 million. If we look at the bigger movements to explain this, this is a negative free cash flow. The dividends, which were paid out of EUR 33 million, investments, which we made to the amount of EUR 55 million as well as FX impact. One word on this particular investment, we did these otherwise minority stakes, which we measured at market price and the remeasurements at fair value is reflected in other comprehensive income. The amount which we recognized, in that sense, it's a nonrealized gain, it's EUR 18 million. Moving over to Page [Audio Gap] and our KPIs with respect to sustainability. Happy to report that for the 3 main KPIs, which we have set forward and shared also externally for 2020, that here, we could achieve and overachieve all the 3 KPIs. To start with the carbon footprint of our own operations, we have set the targets compared to the year 2015 to have a carbon footprint of 20% lower or better. We achieved this already in 2019 and then progressed on that part in 2020. Energy footprint of our products, the goal there was to have 25% less energy footprint of our products compared to 2015. We overachieved this with minus 27% in 2020. And then on the new products, which we are introducing to the market, the goal was to -- [ for 1 on 4 ] to have an eco scoring of an A or better. Happy to report that in the year 2020, 1 of the 2 products actually had a eco scoring of an A or better. So with that, moving over [Audio Gap]

So thank you, Ann. So yes, we'll have our relative standard pages again, quick look backwards and look forward. And let's start with Entertainment. Now I mean the story here in terms of 2020 is not new. Since the second quarter, we've seen cinemas across the world get closed or moved to a very partial capacity regime. And then movies being pushed out with them, the chicken-and-egg dynamics playing out between movie availability and cinemas being open. It has stayed like that for EMEA and Americas, I would say, for most of the year, while in China, as of September, we've seen the cinema activity come really back. As a result of this, we've seen the replacement projects in EMEA and the Americas being halted, not canceled. Because this technology upgrade, that's the driver of this replacement technology upgrades towards laser and 4K is critical and will even be more critical in a post-COVID era. We've seen new build deployments across the world. They are also delayed, but again, not canceled. And we've seen several of these restarts across different markets as of the third quarter already. Within the cinema ecosystem over the summer and fall, a lot has been discussed, experimented between studios, producers, cinemas, and streamers to land at the point today where there is little doubt around the importance of cinemas in the theatrical release window for the value in the ecosystem, especially for blockbusters. I think what the dynamics in the ecosystem also have demonstrated is the importance and resilience of premium cinema, making the new technologies like laser, a key for the competitiveness of cinema. And this is where Barco is well placed with our Series 4 platform and our broader technology innovation, which has enabled us, even in a tough year like 2020, to take up 2 points of share in the market. As 2021 is concerned, we see '21 as a transition year for cinema. With -- on the one hand, cinema already on its way to recover box office since September and projector demand seeing a first pickup since the fourth quarter of 2020. In the rest of the world, however, we only expect box office really to start picking up over the summer, coinciding of the unlocking of cinemas and the timing of movie slates to then lead to a pickup in the projector replacement dynamics as of the end of '21. This is still in line with what we all already or also expected in October of last year. So from a projector technology perspective, we see this restarting over 2021. Yes, not much visible in the first half, but more in the second half to then leads over 2022 to a recovery back to 2019 levels over 2022. In venues and hospitalities, we've seen the event sector go down in 2020, and we only expect it to start coming back after the summer of this year. The ProAV segment, however, has shown more resilience. Lockdowns has led to delays, low cancellations of orders. And since last summer, we see a clear pickup in China, again, followed by a pickup in EMEA in the fourth quarter. In Venues and Hospitalities, we expect to get back to pre-COVID levels as of the second quarter in China and in the rest of the world near the end of the year. Simulation, they have proved resilient in '20. And we see technology upgrades in this segment pick up again as of the first half of this year. If we move to the next Page 14 [Audio Gap] Control Rooms year-to-year 2020 started slow with slowdowns in oil and gas and then COVID set in. Though during COVID, the Control Rooms segments proved its resilience with projects being kept on the books, but mainly being delayed either because work in progress could not be finalized or new projects could not start given limited access to sites during the strong lockdowns, specifically in the mid of the year. For Barco, 2020 was also the year where we went in with a very strong hardware offering, the triple play, as we call it, but also a stronger software proposition again. And this has helped us to gain share in the market during 2020. We feel we're in a good starting position for 2021, especially with at least one competitor, one key player that is exiting the market and with a strong product portfolio and a strong order book to start the year. We see dynamics in this segment further gradually improve over the first half of this year and we're ready to take further share. weConnect, the virtual classroom, benefited in '20 from COVID to sign up several dozens of great reference sites in higher education but also in corporate learning and development. And we intend to further build that momentum in 2021 as those learning institutes are now upgrading to more immersive, more professional solutions. If we then move to corporate and specifically ClickShare. Here, beginning '20, we had just launched ClickShare Conference right before COVID hit. Now COVID has been leading to the creation of a market in video conferencing that is much larger and earlier than we assumed but will only translate in market for ClickShare Conference the moment people start to move back to offices or at least partially. Last October, in the call that we had with you, we took a deep dive in the dynamics we saw during that call in the ClickShare market, and I want to do the same today. So let's move to Page 15 [Audio Gap] First of all, there's no more doubt that the corporate world will move to a hybrid world where people will, on average, telework 1 to 2 days per week, and the other days of the week will be in offices, offices that will be equipped as collaboration spaces or hybrid connectivity spaces. Surveys that AVIXA, the association of pro AV professionals, has done and also our own surveys with our customers and channel indicated that the bulk of corporates intends to start planning and spending in the first half of this year to reequip their facilities with the ambition to turn their facilities into hybrid work and collaboration spaces. ClickShare and ClickShare Conference, in the meantime, have continued to get positive market fit communication from partners in the ecosystem, including several industry awards. And since the launch of ClickShare, we now have about 20,000 ClickShare Conference units installed with customers, in many cases, with big Fortune 1000 customers. We have more than 10% of those logos being part of the ClickShare Conference network at this point. Also over the past months, we further built out our distribution and awareness. We had 2 critical factors in building the broad capability that we have built over the past years with ClickShare Present. We're now educating, equipping our distributors and resellers to do a good job selling ClickShare Conference. We've continued to see progress in the sellout of ClickShare. I think last time, I showed you the second quarter to third quarter progression of about 30%. We've seen the same 30% progression from third quarter to fourth quarter. We also have, again, more data in what we clearly start to see in the data is the correlation between the ClickShare sellout and the different mobility indexes. One that we often look at is the Google COVID-19 Community Mobility Index. We see a correlation. We see the correlation with a European market that over the past 6 months has further unlocked. We see that correlation in the progress in the ClickShare sellout. We also saw dips when Germany went into a stronger lockdown end of November, when France went to a stronger lockdown. So yes, the -- we see the correlation both on the positive and the negative. We also see in those data, U.S. still being, I would say, flattish over the past 6 months, flattish in the mobility, also rather flattish in terms of the progress on ClickShare Conference. In the lockdown unlocking context, we see the first half of this year as an important transition where we expect back to office and investment in hybrid gear to pick up. And this is probably more pronounced in the second quarter as compared to the first quarter of the year. We'll then move to -- I think it's Page 16 [Audio Gap] line with 2019, with strength in radiology, including a boost in the first half in home reading but softer memo and modality solutions as a result of elective procedures being pushed out during the peaks of COVID in the hospitals. In surgical, we kept a good order momentum as we broadened partnerships with OEMs. So here, again, we've seen push-outs in line with elective surgery delays over 2020. As said, over the -- after the third quarter dip last year caused by those push-outs, we saw Healthcare rebound well in the fourth quarter as we assumed and communicated in October. We see 2021 growing again versus 2020 and 2019, with budgets normalizing and hospitals working hard to catch up on elective procedures. And with our health care teams, we will remain focused on taking share in the diagnostic imaging growth markets, building out our position, also building out our position in surgery and strengthening -- further strengthening our footprint in China. So with that, I want to jump to Page 18 [Audio Gap] one, starting with Healthcare, where we see growth versus 2020 -- growth versus 2019, and this is across diagnostic imaging and surgery and across the different regions. In Enterprise, we see 2021 as a recovery year where we go back to 2019 levels. We think mid of the year is an important point to start reaching '19 levels again, of course, with the back to office momentum and government decisions influencing the timing of the inflection points and the slope of the recovery, okay? So there, we are sensitive to the different decisions that are made in different countries. Entertainment, there, we see the renewed momentum in the western world pickup in late '21. We count 6 months -- 3 to 6 months between the moment where box office really starts to pick up and where money will be spent on technology. While this pickup, we've already seen happening in China and other parts of Asia, we've seen there 3, 4 months after box office started to pick up the technology in our JV in China start to pick up again. So there, we continue to see and expect to continue this pickup over the first half in '21. Events, here, we expect it to be an after summer pickup well into the third and the fourth quarter. So as you see different pickup, inflection points and possibly different slopes in that recovery, with today, still on clarity on how COVID and the vaccination, progress will play out over the next few months. On Page 9 [Audio Gap] to deal with the uncertainty that we knew and know we have over this first half of '21, we have reset our cost basis for the first half of '21 to well below the cost basis of 2019. If we do this by extending a number of temporary measures also in '21 and by turning a number of temporary measures into structural measures. And with this, we are bringing the first half cost to 15%, below the first half of '19. This allows us to start 2021 on a cautious note in terms of top line expectations to then further unlock OpEx in the second half when we expect the recovery momentum to be more clear and more stable. Maybe one word on strategy, Page [Audio Gap] strategic foundations are intact. And this is based on the one hand, on the fact that we started 2020 with a strong portfolio and organizational capabilities, and we've been continuing to invest in those strategic areas. On the other hand, the fact that we see our medium and long-term dynamics in our markets is healthy. There's been a lot of focus by our management team and our Board over the past 6 months to really understand what is changing, what is not changing in markets and how can we play offense in our different markets, in markets like health care, where countries are stepping up health care investments to increase care capacity and be even better prepared for whatever pandemics may hit our societies over the next coming years. With a cinema market where box office will recover over the next years and where we will see a further stepped up focus on premium formats and premium technology to compete with streaming. In Workplaces, yes, we will see hybrids become the new normal, driving the need for video conferencing and collaboration technology, I would say, in the sweet spot where we aim with ClickShare. And we've all lived in a more complex work requiring more control and monitoring infrastructure as we've seen with the resilience of Control Rooms and the strong ongoing funnels and order book evolution. And then across the board, we see the post-COVID world that will be more hybrid, not just in workplaces, but situations where people in person and people remotely will collaborate. We expect to see this in Events segments. We expect to see this and see this in education. We also see this coming in Healthcare, with different forms of telehealth. These will drive the need for connectivity and image processing technologies, which is core of Barco's capabilities. So amidst these turbulent times, we remain committed to our strategy. We're further aiming to accelerate and broaden our China capabilities and our presence in that market. We're focused on capturing growth in new markets with a strengthened portfolio, continuing the drive that we ignited already 3 years ago, continue to focus on innovation, innovation in Cinema with live streaming technologies, further building out software capabilities and IoT connectivity capabilities across all of our divisions. We're also accelerating our digital transformation under the leadership of an experienced Chief Digital Information Officer that we brought on board in our leadership team last year in August. And we'll do all this while sustaining focus on operational and commercial efficiency and focus on growth in our core markets. And then last but not least, you've heard Ann talk about sustainability. We're, as an organization, proud that even in a tough year, we stayed on track and delivered on our sustainability objectives, and we'll continue to move the bar higher on sustainability over the next couple of years. [Audio Gap] '21. At this point, we're not offering quantitative guidance for 2021 yet. And this is because we expect business conditions to still be defined by the pandemic for at least the first half of the year and definitely in enterprise and entertainment. Now in a scenario where we assume a recovery for entertainment only to start in the second half or late in the year. Secondly, a steady dynamic that we see in health care. And then thirdly, is stronger back to office activity, leading to improved demand for ClickShare as of the second quarter. In that type of scenario, we would see a top line for the first semester that moves close to the first half of last year. Under this type of assumption and given the resets we've done on our cost structure, we could expect a [ mid plus ] single-digit EBITDA margin for the first half of 2021. So first [Audio Gap] the reset cost structure, which gives us optionality to navigate the risk and opportunities ahead. And yes, that's why we say, as a result, we're in a strong position to capture the growth in our markets when the recovery sets in, and to get us back on the path towards our long-term financial objectives. It's also in this context of long-term opportunity that we -- is our objective to maintain a consistent dividend return for our shareholders. So our Board of Directors will propose to the General Assembly to distribute a gross dividend of EUR 0.378 per share and in addition, enable Barco's shareholders to invest in the company by offering the choice between payment and cash or a dividend in shares. And for transparency, our Chairman of the Board; Charles Beauduin; and Director, Frank Donck, who each represent Titan Baratto and respectively, 3D NV shareholders in Barco. They have confirmed that they are going to opt for the dividend in shares, keep the cash in the company. And so with that, I'm going to move it back to you, Carl, to guide us to the Q&A.

[Operator Instructions] So over to the operator.

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

Two from my end. First question was actually on the phasing you see in the first half. Do you think that the quarter-over-quarter recovery will continue into the first quarter? And is that also for each division that you see that recovery continuing? And then a second question was actually to have a little bit more granularity on the year-over-year trends, specifically in Enterprise in the fourth quarter, because I do note this seasonal recovery, but year-over-year, you do stand down 50%. So it seems to be a bit of an effect of seasonality as well. So is this mainly due to ClickShare? Or is this also Control Rooms?

Yes. Thank you, Matthias. I think good questions. Jan, are you willing to take?

Yes. The first half phasing, I mean, definitely in the first half, the second quarter, we expect to be better than the first quarter. And I mean you mentioned the seasonality, there is always seasonality where the first quarter is typically a slower start. That's I would say, specifically in Entertainment and Enterprise. Healthcare, there, we see the momentum -- the quarter-over-quarter momentum be quite steady. Then in terms of year-over-year trends, and I think you referred to the two or the curves that I drew there. You're right, yes, the fourth quarter, there is an element of seasonality in there, although in an exceptional year, it's definitely not the typical seasonality. For us, what is important is to confirm this sellout quarter-over-quarter improvement, which is a reflection of not just the budget availabilities, but the dynamics that we see in the channel at the same time, the uptake of the awareness and the fit with customer needs where we've seen month-by-month progress. They are also in the opportunity from us.

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

First one, if you look at your guidance, you indicate that in the H1 2021, with all the assumptions, you're going to gradually move toward the H1 level of last year. Could you indicate what that implies? Is that 5%, 10% or 15%, 20%, to give some indication? And then secondly, if you look at your presentation on Page 6, if I look at the Americas, which is quarter-on-quarter up 20% almost, it looks like the text on the left is always, let's say, somewhat more negatively prudent. So could you give the indication why it was up then 20%, whereas the granularity is not referring to this?

Okay. Perhaps I'll take the first question on H1. Going back to our outlook, perhaps important to emphasize that what we shared there is a plausible scenario given the limited visibility, limited predictability. And as we say in our statements, we're not really providing a quantitative guidance. On the other hand, we want to provide you with a handle how to look at the company. And we believe a plausible scenario is indeed that we start to see some back to office dynamics kicking in and boosting the ClickShare sales as of the second quarter, with the 2 other divisions more stable. If we translate that into our model, we expect the first half, getting closer to the first half is that with a variance of 10%, with a variance of 5%, that's difficult to tell for today. And time will tell. For sure, we will be smarter again in 3 months from now. But indeed, so it should be closer to the first half than to the second half performance. With that, on Page 6, Jan?

I'll take Page 6. And I admit, Kris, it's maybe a bit confusion because the page is mainly about 2020. So the text explains 2020 dynamics. We had added those Q2, Q3, Q4 progress. And so what you see in the Americas is first, yes, the dip in third quarter was very much an Americas event where our OEM customers, OEMs that integrate our technology and their solutions, adjusted their timetables and pushed out. The plus 19% you see is, in part, the rebound of those push-outs. It did not push out more than one quarter. At the same time, we did see in the health care market, the [ PAX ] market in the Americas, I mean, significant projects get back in the fourth quarter. Okay. So there's good progress in the Americas. It's the snapback or the push-out as well as good momentum in the diagnostic imaging market.

Next question is from Mr. Christophe Beghin from Kempen & Co.

I have a question on the performance of Enterprise over the H2. I noticed that indeed, top line dropped by 8%, but the EBITDA dropped by almost 70%. So I'm a bit surprised from how -- can you elaborate a bit more on the steep drop in profitability? Because if you then correct for IFRS and assuming that maybe Control Rooms was profitable, I should read that ClickShare was loss-making over H2? Or is that a wrong assumption?

Yes. Ann will take your question, Christophe.

Christophe, maybe to start with your last sentence, yes, we can confirm that this is not correct. It was certainly not loss-making in the second half. Indeed, the Enterprise division and in particular, ClickShare sales in a year-over-year comparison, have a big down on the top line and comes with a drop on gross profit margins, which for Enterprise has a negative mix effect, which is considerable. In the same token, we balanced the cost resets in the sense of the launch of our ClickShare Conference and to fight for any top line that we can have and also towards this launch that we just not increased or all of the costs to that same level of the top line and the gross profit margin. So in that sense, that's part of that they are often defense strategy that we have set out for the different divisions, but in particular, we have to preserve the commercial fight, so to speak, and to grab any opportunities as we see them with any back to office activities and anyhow with the potential which is there of the new normal and the sense of the hybrid working over there. So it has an impact, this investment, so to speak, in particular on commercial, on the second half and then that should -- a lock type of end results and then the back to office activities recovers, which we see gradually happening as the vaccines are being a success throughout the different countries. People can go back in part to the offices over the months in the first half of 2020. What I've spoken, we see it in the second quarter than in the first.

Yes. And indeed, I can add to that, Christophe. So we talked a couple of times about raising the awareness around ClickShare Conference and that is indeed the commercial actions that Ann is referring. We start to see proof points as a result of that awareness translated in increasing number of resellers, a good amount of industry awards, the growing alliance programs, 20,000 installs worldwide. But okay, it will take a bit of time to get that translated into the sales, the top line of ClickShare as well. And just closing on that, on your very first -- very last part of your question, yes, it is correct to state that Control Rooms was in the second half, again, like positive, not enough to bring the full year in a positive territory. But -- so on the right direction on lower sales compared to last year.

Okay. But then I'm still surprised to see the drop in profitability, while top line is only down 8% half year on half year. But then maybe my second question, we've seen a drop in the net cash position due to the several elements. One of the key points in Barco's investment case was a strong net cash position. And on capital allocation was, besides investing in Barco itself, maybe that management was also looking for M&A opportunities. With the current situation and the drop in net cash, how is management currently looking at this?

Yes. Okay. Thank you for the question, Christophe. Jan will kick it off.

Yes. So 2 elements to the cash first, the net cash, yes, came down one part because of net negative results. Second, working capital, which midst of the year went up. We've been working it further down, but it's not yet where it needs to be. So yes, one, I mean, focus over the next months is to recover net cash. The question around M&A, like I said, I think last time, yes, we have a heightened activity in looking for strategic opportunities, especially I would say, in the COVID aftermath opportunities, either to strengthen our market position or broaden our product capability.

So to conclude, it's not that the potential opportunity might push back in time. If there is a very interesting opportunity even now, you will still consider it?

Yes, I think that's the right statement. Again, it goes back to discussions this summer with our Board, okay? We very much are confident in the long-term perspective of our markets. And we decided mid last year to really play defense, offense on cash position, right, that we still, today, have a strong balance sheet. It's a bit less strong than when we went into, but I would say strong enough to give us all the optionality to do smart things on a strategic and operational level.

Next question is from Mr. Sébastien Lemonnier from INOCAP Gestion.

Just a quick follow-up question on the use of cash. And when I look at your press release, you said, Barco is in a strong position to capture the growth in our market when recovery set in. I can understand there is no yet full recovery, but everything is set up basically for the recovery, which is just like a matter of time. Why so far there is no use of cash? Because I can understand you look for acquisitions. But I start to wonder also, probably you look for kind of software add-on. And probably the valuation are more expensive after COVID than pre-COVID. So maybe that's the issue for the acquisition? And what about share buyback? Because we can either think that you do share buyback, and then you will [ consent ] your share, but you can also do share buyback, keep the share and maybe tomorrow, [ get ] an acquisition with the Barco share and that could offer your opportunity maybe to get something bigger. So just to patch your statement in perspective and if you can say a bit more about it?