Quadient S.A. (QDT) Earnings Call Transcript & Summary

Good evening, and welcome to Quadient's Full Year 2021 Results Presentation. I am Catherine Hubert-Dorel, Quadient's Head of Investor Relations. Today's presentation will be hosted by Geoff Godet, CEO; and Laurent Du Passage, CFO. The presentation will be divided in 4 parts. First, Geoffrey will give you the highlights of the year. Then Geoffrey and Laurent will detail the performance of each solution. Then Laurent will walk you through the financial performance. And to finish off, Geoffrey will present the outlook for the year. [Operator Instructions] Thank you very much. And with that, over to you, Geoffrey.

Thank you, Catherine. Good evening, good afternoon to everybody. Today, as we present our fiscal 2021 results, we can already see some of the benefits from the investment made in reshaping the company in the last 2 years. Quadient now enjoys 2 fast-growing solution, leveraging a well-established mail business and fueled by powerful gross market drivers. Our 2 new solutions operate in attractive, fast-growing markets where they already enjoy leading position. As a matter of fact, our software business surpassed EUR 200 million in revenues for the first time in 2021, a remarkable size for a SaaS business. In addition, we're able to leverage the strength from our mail solution to deliver strategy. Our mail business is resilient and highly profitable. But more importantly, it is a fantastic way to grow our already well-recognized SaaS business, thanks to its large customer base and our MRS sales organization. Similarly, our Parcel Locker Solutions benefits from our customers' penetration as well as logistical and cost synergies with our mail business. So in conclusion, 3 synergistic businesses, delivering a unique and attractive business mix, as shown by the result of our fiscal year 2021. So moving to Slide 6. Let me give you a quick snapshot of Quadient financial performance for 2021. We are obviously proud to report solid results driven by revenue growth in all of the 3 solutions. At group level, organic revenue growth was 4.3%. And growth was supported by 3 main things. The first one, strong acquisition of new customers across our software solutions. So a good point is that we have a firm rebound and smart mailing equipment cells and clearly outpacing competition. And the third element is that we had a strong increase in our parcel locker installed base. and we'll detail, obviously, the performance of each solution later in the presentation. Organic growth for our current EBIT was 6%, a solid performance given the supply chain issues, notably experienced in the later part of the year, as you know. Profitability and cash generation remains solid with a stable EBITDA margin close to 24% and a robust free cash flow generation at EUR 104 million this year, again, a testimony of our clear focus on cost optimization as well. Leverage was also stable at 0.4x EBITDA. And finally, and not the least, net attributable income for the group stands at EUR 88 million, which is almost 120% year-on-year increase. So overall, a very solid performance despite a challenging macroeconomic environment and the COVID evolution in 2021. Moving to Slide 7. Based on the solid result realized during the year, our strong confidence in our midterm outlook and is in line with our capital allocation policy and shareholder return. We propose a $0.55 dividend per share for the full year 2021, paid in cash and in one installment on August 8, and therefore, increasing by 10% compared to last year. Moving to Slide 8. Before we turn to the review of our 3 solution, I would like to share with you on the progress Quadient has made this year in its corporate, social and responsibility program. As you know, CSR is at the heart of Quadient solution. And our back-to-growth strategy is fully aligned with our CSR priorities. You are now -- imagine family with the 5 pillars of the program. As you know, people, ethics and compliance, environment, philanthropy, and our solutions. We have set very clear 2023 targets for each of those pillars, and we're making very good progress towards achieving our goals. The recent ratings received, I believe, are a testimony to the commitment we have taken towards our social responsibilities. I will highlight the most recent ones, the EcoVadis rating. After 3 consecutive years, the gold status, Quadient has been awarded the platinum level in March 2022. I also want to emphasize the AA rating score that we have obtained for MSCI in 2021. And finally, to be noted, our 67th position in the Global 100, which recognize the most sustainable companies in the world among companies bigger than EUR 1 billion in sales. These ratings recognize the progress achieved by the Quadient teams, relentless effort in this domain and is the opportunity for me to thank all of them. Moving to Slide 9. Let's now turn to the review of our 3 solutions, starting with our SaaS platform, ICA or intelligent communication automation business. So moving to Slide 10. We are very proud of the progress made by our cloud-based software division. In particular, thanks to intense cross-selling effort, the extension of our product offering, the recent acquisition of YayPay and Beanworks. And therefore, we have managed to establish ICA as a leading professional cloud player in the world, recognized by industry experts, but more importantly, by our customer satisfaction rate. 2021 has been a year of further strong customer acquisition. With over more than 200 -- 2,000 -- sorry, 800 net new customers after churn, and 2/3 of them came from our cross-selling initiatives, 2/3. So once again, I believe this demonstrates the strength that our business model with the deployment of our cloud offering to our existing mailing customer base, enabling us to achieve a lower cost for customer acquisition compared to our peers. Our SaaS customer base is now shy just of 12,000 customers. And we expect this positive trend to continue in 2022, with the added benefit of the full deployment of Beanworks in Europe, in particular, in the U.K. and France. The second important trend for Software division is the continuation -- the continuous progress of our shift towards SaaS, as you know. 76% of our customers are now SaaS customers. And the share of subscription revenues as a percentage of the total sales now stands at 67% versus the 59% a year ago. And this shift away from license sales is key to our long-term sustainability of the business and the powerful source of upselling and cross-selling opportunities. A simple fact, I think, that I'd like you to have in mind is our cloud platform usage in 2021 is up 25%. And I believe this demonstrates the obviously positive impact from the shift in business model. This also translates into a 20% increase in annual recurring revenues, ARR, which now represent EUR 147 million versus just EUR 123 million a year ago, which shows that the growth of ARR has accelerated since last year. But I will let Laurent to give you more details about the financial performance of ICA. Laurent?

Thank you very much, Geoffrey, everyone. Now moving to Slide 11 to give you some color. I see accounts now for more than EUR 200 million of revenues in 2021. It has grown by 7.3% over the period. This growth was partially muted by the change of business model that Geoffrey again explained, which has strongly accelerated in H2. So if you look in Q4, notably, subscription accounts for 75% of license placements in large accounts. While it was just 25% a year ago, hence, perpetual license declined by 40% in Q4, translating into a flat revenue growth for Q4, as you can see on the bottom left chart. Overall, this change in business model penalizes our top line growth in the short term, notably for 2021 by about 6 points but is securing our future growth. ICA revenue mix, hence, continues to move more and more towards subscription-related revenue, 67% in '21 versus 59% 1 year ago, with a year-on-year growth above 17%, including small and medium businesses above 20%, out of which accounts receivable and accounts payable are above 70% while large accounts trend is above 10%. Perpetual licenses, which only account now for 14% of revenue over the full year, while it was 20% a year ago, have declined mostly due to this shift in business model, although one large deal, large enterprise deal was signed back in Q2. Regarding profitability now. ICA solution profit margin stands at a low point of 14.7% this year. It's down by 3.9 points compared to last year pro forma. It's as expected, and it's notably due to the focused investment in cloud platform, dilutive impact of fast-growing YayPay and Beanworks, but also again, the change in business model, which we consider has an impact of 4 points of the solution profit margin evolution. Now back to Geoffrey for the next slide on mail-related solutions.

Thank you, Laurent. Moving to Slide 12. Turning to our mail-related business. Full year 2021 results were marked by an outstanding hardware performance, most notably [ a norm ] and a gain of market share through new customer acquisitions. We estimate our outperformance versus the market at above 3% points, which demonstrate that our focus on customer services and continuous investment in improving our smart equipment and software offers are delivering positive results. So let's take one example. We launched a new iX-9 series of mailing system in the U.S. These upgrades and continuous innovation are important as the deployment of a new range of mailing and document system drives both higher revenue from supplies and increased usage of our small equipment. The penetration of upgrades in the installed base accelerated in 2021. And we now stand close to 12% of the share -- 12%, sorry, of share of the upgraded installed base, which is more than doubling the level of 2020. 2021 was also a record year for high-end product deliveries and orders, notably for those inserters that have now enjoyed growth for the last few years demonstrating our product superiority in this segment alone. Laurent, can you give us more information on the financials?

For sure. Now moving to Slide 13. We have been growing our mail-related solution this year by 1.8%, and it accounts for EUR 659 million of revenue this year. This growth was allowed by the strong rebound in hardware sales from H1. But even over H2, we see a very strong resilience of the overall business with only a 1.1% decline above Q4, as you can see again on the bottom left chart. This performance has been particularly fueled by North America. We also noticed a strong resilience in subscription-related revenue, it's the green part of the pie, coming from our installed base, leasing and rental, thanks to a good retention as well as the recovery in consumption of supplies. From a profitability standpoint now, the solution profit margin stays very high on this business. It's at 44.2%. It's down by 1 point against last year, and this is mostly related to the higher cost in freight and raw material price increase. Now back to Geoffrey on the next slide for Parcel Lockers.

Of course. So turning to Slide 14 now. Speaking now to our Parcel Locker Solutions. This is the smallest of our 3 solution in terms of revenue. That being said, our parcel locker business is highly promising. In just a few years, we have managed to establish Quadient as the #2 player globally behind Amazon while being the leader in specific geographies like Japan and the U.S.A. Our revenue has grown from just around EUR 20 million in 2018 to over more than EUR 80 million in 2020, and we now have an installed base globally close to 16,000 lockers worldwide. The expansion of our networks continued across all segments during last year. So let's take a few examples. For carriers, we signed a number of deals in Europe and North America, such as Relais Colis and Pickup in France, opening penetration into new countries with carrier Purolator in Canada and even more recently in the last quarter with DHL in Sweden to just name a few. These deals are important as not only they show the strong competitive appeal of Quadient offer, but has also open the door for further opportunities in other geographies. It also demonstrates our offer is very strong globally and set us as a true global leader in Parcel Locker Solution. If we look at another segment. In retail, we continue to roll out the existing contract, such as the large loss contract at the beginning of 2021 in the U.S. and in Canada. And we also won new ones with large retailers in France, like DECATHLON and [indiscernible]. Lastly, we are pleased, obviously, with the development of both the property management segment and the education and corporate segments, where new deals have been signed on both sides of the Atlantic now. Importantly, also, the increase in the number of installed parcel lockers goes together with the increase of lockers usage. The usage rates continue to increase at 61% this year versus 57% in 2020, a direct consequence of the expansion of e-commerce generating higher parcel volumes. We have now more than 70 million package, a 40% increase compared to last year that went through our lockers. The nature of the parcels expands as proven by the use of lockers to deliver our performance. As e-commerce continues to accelerate and consumption haven't changed, we are confident that this positive momentum will continue, both in terms of usage and in terms of demand for new lockers. As mentioned before, our pipeline continues to get stronger and bodes very well for future growth. Laurent, can you tell us more about the financial of our Parcel Locker Solutions?

Sure. Parcel Locker Solutions revenues account for EUR 83 million with a limited growth of 2.6% this year, mainly due to the unfavorable comparison basis over H2, which was a lost contract. Well, if you can remember, in H1, we had shown a 40% plus growth. You will find that comparison base on the bottom left chart with the phasing from Q1 to Q4 in comparison to last year. And you can see the tremendous value of Q3 last year, but also in Q4, which stood at EUR 30 million stand-alone or 88% growth, which resulted this year in a decline of 32% in Q4 as no equivalent large deals have been booked. The expansion of the installed base continues at a strong pace, reflected by the 19% growth in subscription-related revenue. And this accounts now for EUR 48 million, you can see on the right-hand side. Note that the worldwide installed base, as mentioned by Geoffrey further expanded by 2,800 additional new units over the full year as we saw in the previous slide. Also, we've seen a good start in the U.K. market this year. If we now talk about the solution profit, it's standing at minus 4.5%. It's 10 points less than last year. It suffered from freight cost increase. It has impacted the solution profit margin by at least 5 points out of those 10. And also, we did not benefit from the contribution of a large deal compared to last year while we've continued focused investment towards R&D and go-to-market, and this has intensified. Our growing installed base continues to be highly profitable at 27%. Now that we have reviewed our solutions performance of 2021, let me walk you through the financial performance of 2021. Moving now to Slide 17. Overall, with 4.3% organic growth in top line this year and slightly more than 6% organic growth in current EBITDA. And after some uncertainty we faced last year and notably regarding supply chain, which resulted in a guidance more frequently updated than in previous years, we finally managed to exceed initial guidance and be in line with all others summarized in this slide throughout '21. Moving now to the next slide on the revenue bridge, Slide 18. This 4.3% organic revenue growth is the growth between the EUR 1.029 billion we reported last year, and EUR 1.024 billion we reported this year, excluding both scope effect for about EUR 40 million. That's the gray bar and currency impact for EUR 8 million over this year. Scope effect is mostly tied to the sale of graphics activity back in January 2021, but also includes the sale of ProShip, Automated Packaging System and the acquisition of YayPay and Beanworks. Currency effect over the full year is still adverse despite the increase of the dollar against euro over H2. As you can see, each major solution and additional operations contribute to this organic growth, Parcel Locker having a smaller contribution this year, limited to EUR 2 million. Moving now to the next slide on the same bridge for EBIT. If we analyze the evolution of EBITDA against last year, we start from the EUR 152 million we reported. We exclude the earnout reversal as well as scope effect, which makes the EUR 140 million starting point for 2020. Our increase in year-on-year activity level, strong profitability of installed base and simplification allowed us to bring EUR 34 million of incremental margin, which was partially offset by the EUR 50 million additional plan spending. It's mostly sales in ICA MPLS, but also R&D. And the EUR 10 million of supply chain impact, which resulted in a net increase of current EBIT of EUR 8.5 million, which is slightly more than 6% organic growth. If we had all 3 major solutions we've been going through with Geoffrey, this brings us the major operation scope. It's EUR 942 million of revenue, and it's growing by 3% year-on-year. We need to move to next slide, Slide 20. Thank you. This revenue is very recurring at 70%, driven by subscription model across all solutions, which helps us having very good predictability of revenue and margin. North America revenue growth is very solid. It's 4.7% year-on-year. It's 55% of our revenue on major operation. It's been driven by an impressive MRS performance and double-digit organic growth in ICA, offsetting the one-off high comparison basis of the Parcel Locker loss contract. The level of activity in Europe is relatively flat, has suffered from a lower MRS rebound but also a strong growth in SaaS suppression. While international on its side continues to grow, being driven by Japanese locker base increase. The current EBIT for major operations stands at EUR 147 million. It's improved by 5.1% compared to last year, organic. And that's the result of the combination of acceleration of activities, linear organization that has been partially offset by increased investment that was planned, change in revenue mix that was planned, but also higher supply chain costs. If we summarize now on Slide 21. At group level, major operation, which we just discussed, accounts for 92% of group sales over the full year. And additional operations today stands at EUR 82 million with no EBIT contribution. Moving forward and post divestment of the Drachten and APS business, we expect run rate of revenue of additional operation to stand around EUR 60 million to EUR 65 million. Now moving to Slide 22. We are very pleased to share that Quadient net attributable income is up by circa 120% year-on-year. That's a result from the range of below EBIT items improvement. First, we had lower acquisition-related expenses due to lower M&A activity. Fewer restructuring costs in the optimization expenses line despite the net impact of the Drachten divestment. The cost of debt has strongly decreased, thanks to the decline of the average gross debt carried over the year. We reimbursed last portion of 2.5% bond in March 2021. And also, we've declined the average interest of our debt. We continued in H2 to have good news on the valuation of X’Ange and Partech participations, bringing a total of EUR 20 million this year, among which EUR 5 million in H2. We have a lower income tax compared to last year. It's notably due to some one-off booking to cover tax risk last year in 2020. The result is a net attributable income of EUR 88 million compared to EUR 40 million last year and EUR 14,000 2 years ago. The EPS stands at EUR 2.32 and EUR 2.17 fully diluted. Moving now on Slide 23. EBITDA stays strong and stable, as you can see on the first line, it's at 23.9%, where it was 24.7% before COVID. Change in working capital was kept limited as we were able to partially offset the impact of increased stock of EUR 13 million. And that's thanks to the additional receivable collection. Change in lease receivable was not as strong as last year, which is a very good sign from a business standpoint as it means the leasing portfolio has shrunk at a lower pace. Income tax paid has normalized compared to 2020, where we benefited from COVID-19 measures. And last but not least, CapEx stands in line with last year as we you see in the next slide where we'll go on the details of the CapEx, which all results in a very robust cash flow after CapEx of EUR 104 million. It's down compared to last year, which was exceptionally high due to the business consensus, but it's up against 2019. In acquisition, net of divestment, you see the balance of Beanworks cash acquisition less the Drachten/APS divestment. So in Slide 24, now I will do a focus on CapEx. It's in line with last year. However, development CapEx. So the dark blue purple part is higher due to the acceleration of development in software R&D, notably. It's been offset by the decline in IFRS 16 CapEx. Thanks to our limited renewal of real estate contract, it's in line with our work from anywhere contract program. CapEx for rent, which are detailed at the bottom, they are stable year-on-year. It's up for parcel lockers. It's down for MRS. At circa EUR 30 million per year, it's below our EUR 40 million plus yearly expectation, shown last year at the Capital Market Day. However, we still expect over the plan that this developed to be valid, which means significant deployments are expected in parcel lockers over 2022 and 2023. Now moving to Slide 25. Net financial debt is down by EUR 8 million at EUR 504 million against 2020. And this despite the acquisition of Beanworks. It's down even by EUR 164 million compared to 2019. The leverage ratio is stable against 2020. Leverage, excluding leasing, sits at 0.4x and leverage, excluding leasing and excluding IFRS 16, which is the ratio in which our covenant are based, ends at 1.9x including the ODIRNANE. Leasing receivable portfolio and rental future cash flows, shown on the right-hand side, are higher than our net debt position. And interestingly, also thanks to ForEx, the receivable -- the leasing receivable reported numbers are stable versus last year. Now to get some details on the maturity of debt, we move to Slide 26, you can see that we expect ODIRNANE to be repaid this year for EUR 265 million as planned in June. And it has already been addressed by new Schuldschein debt back in November 2021. I remind you that the ODIRNANE is accounted for as equity so mechanically leverage ratio will increase when we reimbursed to effect the change in financial installment. In February 2022, post closing, we already reimbursed 83 million of Schuldschein maturities of 2022 and 2023, which are the one flagged in gray in the bar chart with the different maturities. Liquidity position is very high at EUR 887 million, of which EUR 487 million of cash, which will normalize after repayment of ODIRNANE and, of course, the repayment we've already done of Schuldschein. Leasing portfolio receivables and rental future cash flows are very well spread and nicely balanced with our future debt maturities. That's what you can see on the bottom right of this slide. That being said now, let me hand back to Geoffrey for the 2022 outlook.

Thank you, Laurent. Let's move to Slide 28. Let me take the opportunity to give a few words of introduction. A year ago, we presented our Capital Market Day to open the second phase of our back to growth strategy. following the reorganization of the group, the second phase really aims at driving and delivering sustainable value and search for all stakeholders. And we have chosen 4 main objectives. The first one is related to acceleration of digitization. We live in a world increasingly connected, as you know, and the ability to monetize these virtual exchanges is boosting increasingly important and extremely attractive. At Quadient, all 3 solutions leverage on this digitalization trend, and we focus innovation to further improve, obviously, and develop our connected platforms, whether cloud-based for software solutions, connected for parcel lockers or through our SMART SaaS platform even for mail solution. We are extremely well positioned in these very attractive and fast-growing market today. The second point is our unique integrated business model, which provides us a wide range of synergies to extract both in terms of revenue and costs. Our mail solution gives a significant competitive advantage in terms of customer acquisition costs, market penetration, customer base access, operational and logistical scale for both our growth engines. The third objective. As attractive as our chosen markets are, growth cannot come at any cost. And we remain committed to a comprehensive approach to capital allocation. Our cash flow generation is solid. And we're careful to balance our growth CapEx, as Laurent mentioned, the strength of our balance sheet as well as a dynamic approach to shareholders' return as detailed before. We have been disciplined and we will continue to remain disciplined in our investment criteria. Our fourth and last objective. As discussed at the beginning of the presentation, our growth ambition cannot be separated from our CSR ambitions. Our back to growth strategy is built with sustainability embedded in its targets, and we are proud of the progress already made towards these goals. So moving to Slide 29. We are making solid progress in our execution, as you can see. When we set our strategy a few years ago, the 2 new businesses only accounted for 15% of the total group sales. We almost doubled that in just 3 years. Let me repeat, we just doubled that in 3 years. We made the right targeted acquisition. And in turn, it has contributed already to accelerate the trend. The fact that the market we have chosen benefit from solid fundamentals. We have also delivered strong organic growth as well. So looking ahead, we are naturally confident today that growth can only accelerate. Cross-selling our SaaS platform within our mail business is an underappreciated asset and opportunity, both from a gross and a cost savings standpoint. We are converting customers to our cloud-based platform offer and thus, increasing -- accelerating the increase in annual recurring revenue at a lower cost of customer acquisition. And we expect now a SaaS solution to deliver more than EUR 250 million of ARR by the end of 2023. For parcel lockers, we have truly exciting pipeline of projects ahead of us, as we mentioned. The deployment of large open parcel lockers network in our key countries is one of the many projects we're currently working on. We also continue to focus developing our retail offers with promising project ahead as well. In fact, all the segments are presenting exciting opportunities, and we are, therefore, very confident in our 2023 targets to have more than 25,000 lockers installed by the end of 2023. The decision made to invest in our 3 solution at the beginning of our journey are paying off. Moving to Slide 30. Current EBIT is obviously already past the inflection point, as you can see on this chart. When I took over as Quadient CEO in 2019, we embarked into a new journey to restructure and reposition the group. We set up our back to growth strategy, which consisted in 2 phases. First phase was to transform in the first 2 years in '21 to '23 to drive sustainable value. To do so, we divested assets for around EUR 110 million, EUR 150 million today, simplifying the group and making it more agile. We also invested a bit less than EUR 200 million in targeted acquisition in both software, SaaS and parcel lockers to strengthen and develop our market positioning. You can see these investments we decided to make -- to enable our transformation. As we evolve our business mix, EBIT has decreased, reflecting both the investment we made in R&D, in innovation and the go-to-market, scaling our local business, but also the voluntary shift in business model from license sales to our SaaS model for software businesses. And we have also worked hard to successfully maintain during that time, the profitability of our mail business and such despite the COVID-19 impact. So as we close 2021, we are confident that the bulk of the transformation is now behind us, and we have set the company on solid path to grow its current EBIT as well. Moving to Slide 31. 2022 is bringing challenges that we're taking very seriously. Geopolitical unrest was the war in Ukraine, high inflation, continuation of the supply chain tension and not mentioning even COVID. So let me address some of this concern now as I'm sure you will have some questions. So first on Ukraine. The war in Ukraine is obviously a tragedy for many perspective. And Quadient has mobilized itself to offer the help we can to all our Ukranian teams and their families. Quadient has no direct employees in this country, but we do work with a small group of software developers as contractors and we support and develop our accounts receivable automation solution, YayPay. So we have taken measures very, very early on to support and protect these team members as well as their families in a variety of ways. And we obviously remain in close contact with them today. Our accounts receivable automation software solution is cloud-based. It's hosted in Europe and North America. So with the business continuity measures in place and already executed, we do not anticipate any disruption to the use and to the support of our software. From a business standpoint, Quadient conducts no meaningful business in Russia today. We have in 2021, less than 0.1% of the group sales that came from within the country of Russia. So it is worth also I think noting that we have no supply chain exposure within the region. So a nice, I think, of both business and ethical implication of this war in Ukraine. And after a review, we have decided that we will no longer pursue business within the country of Russia. If we talk a little bit about inflation and supply chain. Inflation and supply chain disruption are concerned, obviously, as higher costs could continue to put pressure on margins in the future. But we have been actively looking, obviously, to align our production to our markets. And we continue to review our supply chain organization train to anticipate disruptions as much as we possibly can. One thing that I want to bring to your attention is our decision last summer to dispose of our own production sites is helping as it gives us more flexibility and the choice of our suppliers today. So all in all, we are careful when looking at future margin, but we're also optimistic as the profitability of the mail business is restored and such post-COVID. So we should start benefiting from the improving profitability of our installed base, both for parcel lockers and cloud-based software as they continue to grow in '22 and '23. We expect a strong organic growth in revenue for both our software and our parcel locker division. Both solutions are expected to grow double digit and such driven by both customer acquisition and increase in platform usage for our software and the deployment of the existing contract and also the materialization of part of the pipeline that we have mentioned on the local business. We anticipate a resilient revenue for mail activity with a limited organic decline and more likely better than the market trend. So when we take this potential challenge into account and the level of uncertainties, we expect for 2022 above 2% for organic sales growth and the low to mid-single-digit organic current EBIT growth. So moving to Slide 32. For the full year 2022 guidance and taking that into account, we also reiterate our 3-year guidance over '21 to '23, which anticipates an average organic revenue growth of at least 3% over the period and a minimum, mid-single-digit average organic growth and current EBIT. We also maintain naturally, our commitments by solution as detailed on the next slide, 33. So as we close 2021, we are on track to deliver our 3-year ambition by solutions. We are confident that we can continue to deliver strong growth from our cloud-based platform, our Parcel Locker Solution and while at the same time, benefiting from the high profitability of our resilient mail business. By doing so, we'll be in a good position to further accelerate the fundamental penetration of the group into these new attractive markets that I have described today. Thank you for your attention. Laurent, Catherine and I are obviously now ready to take your questions.

[Operator Instructions] And the first question comes from the line of Mourad Lahmidi from BNP Paribas.

So the first one is on the guidance for 2022. The above 2% organic growth. What would be the shape of the current year? Should we expect some softness in the first half due to the high comparison basis and a rebound in the second half? I have another question on MRF. So the future cash flow from rental are declining sharply in 2021. Is it because you are seeing more attrition in the countries that are based on rental? I have a third question on the parcel locker business. Could you give us the share of the installed base that is rented versus sold among the 15,800? And also, maybe you could elaborate on the business model that you -- that DHL and Relais Colis have chosen basically rental or sale model? Sorry, I have 2 other ones and then I'll wrap up. On ICA. So the profit margin contribution is expected at 30% in 2023. So almost doubling from 2021. Should we already see that trajectory in 2022? Or is it more back-end loaded? And finally, what's your level of commitment in the private equity funds that you mentioned during the presentation?

Thank you for all those questions. So I hope we're going to all capture them well. We can take them in the order that you have mentioned. I could maybe give a quick word before Laurent organize himself for some of the other questions as well. On the guidance for next year, obviously, we need to take into account many things that can happen from 1 quarter to another. I mentioned to you, as you know, the last time in Q3, the supply chain. So it will remain a dynamic here. That being said, generally speaking, we have some seasonality in the group. Our Q2 and Q4 is always bigger quarters within each of the semester. So Q1 and Q3 are a little bit smaller and a little bit stronger activity in Q2 and Q4. Aside of that, H1 is always rurally speaking, a little bit smaller than H2 as a result. But if I step back, as you know, we're moving more and more to subscriptions. So definitely, that has a compounding effect, obviously, on the pace and the return as we embark subscription revenue in the first part of the year versus the second one. So I believe that reasonably speaking, all things are equal compared to the year, we should have the same seasonality. We're looking at the same seasonality that we may have had in 2021. Laurent, anything you want to add to this?

No, no, I think it's a fair assessment on the [ synergy ].

Do you want to talk maybe the impact of the future cash flows on the rental?

Yes. And I trust your point, Mourad, is on the future rental cash flow that you have on Slide 25 and that we showed moved from EUR 205 million to EUR 288 million. And you are correct. So there is a decline and that you could see also in the CapEx in MRS. So basically, in MRS, we are rolling out less CapEx than we used to, notably in France, where we have the bulk of the -- I would say, a good chunk of the MRS franking machine rental revenue. So that's part of the explanation. But there is a second part is more the phasing of the rollout of the Japanese locker installed base. And as you know, we started this rollout in 2016 that has been intensively rolled out in '17, '18 and '19. And then we've been slightly rolling out less in 2021, but we continue to collect the cash flow that is committed by our customers on this installed base. And hence, you have a decrease there. which is more, I would say, associated to the phasing. So we collected the cash and we did not renew yet on those lockers. But obviously, at the end of the contract, you will have likely a renewable of these lockers. Again, we have very, very limited decommissioning of lockers. I mean, on our 15,000 installed base is barely a couple of units that we decommission every year.

Laurent, do you want to take the second question about the share of the installed base that is in the subscription or rental mode of the Parcel Locker Solution? And I believe there was a subsequent interest in to whether the Relais Colis and the Yamato large contract we signed, were hardware sales or subscription.

So Mourad, it's very easy, it's 50-50. And it continues to be 50-50. And I would say it highly depends on the verticals. But basically on the retail side that Geoffrey mentioned, we are mostly -- sorry, on the carrier side, as Geoffrey mentioned, sorry, we are mostly on the rental model. So yes, the commitment of Yamato in our JV, but also the one of Relais Colis are in a rental mode.

I can take, I think the ICA profit. So the ICA profit solution, our SaaS software solution, I believe that Mourad is referring to is at roughly 15% in 2021. And we have committed to bring the profitability of the SaaS business to 30% by the end of 2023. And in 2021, Laurent just mentioned, that we have roughly a 4 or 5 point of impact from the shift of business model, meaning that the drop in license being replaced with subscription-related customers. Now those subscription customers, right, they have an impact in a given year, but we have the subsequent benefit in the next year. So we do expect naturally, as we have less and less impact by this change of shift in model to have a natural step-up in '22 and in '23. Additionally, for us to be able to achieve our solution profitability improvement, we also count into an increase in the size of our customer base because those customers, those base of customers for our SaaS solutions are really highly profitable today. So obviously, when you add one more customer, it is with a high contribution to the rest of the base. We have added, as an example, 2,800 customers net new in 2021, and we do plan in '22 and '23. So at the end of the day, you will see naturally an improvement on the profitability in '22 and 23, so it will not be just in '23, but probably with a little bit more improvement in '22 and the rest of it, the bigger part in '23.

And I will take maybe the last one, Geoffrey. On the [ PE ] fund and more specifically, expansion partake and you raised the point, and it's a very, I would say, right question to ask because we made a significant profit, EUR 20 million this year on just the expansion partake. And you were asking -- I think the question, Mourad, the level of commitment we still had. So we have today, and that's going to be disclosed as it's usually in the appendix of our accounts, we have a commitment of EUR 3.7 million left overall. And just as a reminder, this year, in 2021, we had an increase of EUR 20 million on this, I would say, those stakes. And we cashed in just for the year 2021, EUR 10 million. So the commitment remaining is pretty low. It's EUR 3.7 million, and it's mostly exchange.

There are currently no questions in the queue. [Operator Instructions] And the next question comes from the line of Patrick Jousseaume from Societe Generale.

So regarding your revenue in PLS, what is the part which is in the Japanese JV, please? Second, could you elaborate a bit on the pipeline for PLS trend pipeline? And at group level, my understanding when you adjusted the guidance when you published Q3 results, was that -- or Q3 sales, was that you have missed some revenue during Q3? Were you able to -- because of the supply chain issues, were you able to get this revenue in Q4? Or is there still some catch-up to expect in the beginning of the current fiscal year, please?

Do you want to talk about the share of the PLS and I'll take the first part?

Yes. So what you're asking is the share of the Japanese basically a business of locker. It's about 1/4 of our total parcel locker business. So 1/4, about 25% of our total revenue is coming from the international segment.

So a few words on the pipeline. We obviously had seen coming out of the COVID, the validation that people were obviously during COVID doing more online and buying through e-commerce, what they used to be able to go into a store traditionally to procure for themselves. That has created, I believe, a change in the realization for some of the bigger players, the carriers, in particular, but also in terms of the big brand, distribution brands that they had to address a different way to handle the way their customers, they click and collect and the way they would potentially be able to support the delivery of those package that has been increasing and creating obviously, a lot of different tensions. So that pipeline of bigger deals and strategic deals that I have mentioned, have grown during the year, both in both segments, I would say, worldwide today. And if we look at the year, Q1, Q2, Q3, we had that more and more opportunities coming our way. And with the opportunities that has started maturing, obviously. So we're talking about big deals, which is why the sale cycle is probably between 9 months to potentially even more than a year, which is completely normal for such big deals. The good news for us is that we see that we have not lost any obviously. We have actually won already some initial phases of proof of concept or Phase 1 in some of those deals. So we're in a likely best position to be able to execute the rest of those deals. So obviously, looking in '22 at a pipeline at the beginning of the year that is way more mature, way more advanced and for which we're obviously counting in '22 to be able to secure some of those deals if we are having the luxury to have several of them at the same time, we'll be even happier. But we are accounting now to be able to execute on some of them in the coming months. Laurent, do you want to take the last question?

Can you remember...

Guidance the revenue opportunity, whether there will be a catch-up.

Yes. I was assuming you would take this question. No, it's a good question. On the -- so we made -- you're right, we made an adjustment. And when we announced the Q3 results over the full year, we had significant tension in supply chain. We, I think, managed very nicely, notably in January, the delivery of the orders we had to process. We still are at a higher level of backlog at the end of the year than what we used to be at end of quarter. So to answer your question, yes, some of the revenue has come in Q4, but we still have an excess of backlog that will generate in the future. And the key question is when, basically, and when are we expecting to see normalization of the supply chain. It's not the case today. We still have tension. We're still working on it. But I think we've demonstrated our ability to manage it wisely at a decent level.

If I can add, Laurent, we did deliver everything that we actually wanted to deliver in Q4. What happened is that the bookings, the placement of orders actually was stronger in Q4 than what we anticipated. And we have not been able to go above and beyond what we also wanted to be able to deliver in Q4. So it's kind of a good news because we have obviously a good business, underlying trend of good placement across the region. And that also, in particular, in the U.S., so the normal business dynamics getting into Q1. And we're going to be super careful at the end of every quarter to make sure that the supply chain tensions that we've seen last year, which continues today, we can manage them carefully at the end of every year quarter.

There are no further questions on the phone lines, so I will hand the call back to your host.

So we...

So Catherine, did you have other questions?

We do have other questions. So we're going to start with questions on the solutions and then we'll move to the group and the strategy. So starting with the lockers division. Can you give us some color about the utilization rate by country of your current installed base of lockers? So that's question number one. And still on lockers, a question on the confidence we have on our target for 2023. Can the latest contract you signed at the end of 2021 accelerate installation rate in 2022? Do you maintain your 2023 target of 25,000 lockers?

It's a good question. So the short answer is yes. We do expect an acceleration in '22. And yes, we do expect to be able to exceed the 25,000 lockers mark for 2023. And we can with confidence say that because we have already existing contract with committed volume on large contract that span over the next 2 years. So we have a good element on those contracts, in particular, the one that Laurent was mentioning, with Yamato and with Relais Colis, a few others. We also see an ongoing development of the more traditional short-term backlog and placement of orders, in particular on the property management segment, the corporate segment, the education segment, in particular universities. And we are obviously also encouraged by the fact that we now are able to do the same thing that we've been doing in the U.S. for those segments in the U.K. and starting a little bit in France as well. And then finally, we obviously are making good progress in the retail segment in France, in U.K., in many of the countries actually in the U.S. with both strategic initiatives but also smaller initiatives. So that's really the sum of both whereas been committed and signed in '21 even though we didn't see the full acceleration in terms of numbers of lockers, but that's why we do expect that acceleration in '22 and '23. Obviously, some of the big deals that we have mentioned in the pipeline with Patrick Jousseaume earlier, whether we sign them all or we sign some of them will help us potentially overachieve those targets when that happens, but we'll be happy to share those numbers once we can get those deals signed.

Maybe a word on the utilization rates?

Yes. So utilization rate is -- we don't communicate specifically by country or by segment. And I think it's really dependent on how the carriers, the brand decide to obviously establish their policies or the customer relationship that they want to have. And it's really related to the fact you look at a particular package into the parcel locker. And how much time do you give that customer to pick it up? So based on the time that you set, if it's 1 day, for example, you're going to look at all the open boxes and place a package into the locker and obviously into that box and consider it as utilized out of the rest. Those utilization is pretty high in the retail segment. We are looking at utilization rate that we believe is probably the max that you can really get around 75%, 80%. We see that not only in France, but we also see that in the U.S. So we felt it's more or less consistent. And we see the property management going through peak during the year because, obviously, each one of us, as we go buy online, we make more purchase at certain times during the year, early day period of time, end of the year. So we see the utilization peak above, which is always an issue that those maximum rate at the end of the year for the Property Management segment. And the carrier, obviously, it's a pretty steady flow of volume that the carriers can deliver. So utilization is usually pretty high in a given location. And we have the capacity to adjust the size of a given location based on utilization. So if we see, for example, in Japan that a location is not fully utilized, we can remove columns or boxes, and we move them to another location so that we always get a pretty decent utilization. We've seen the usage increasing both in the U.S. or I think I should say, generally speaking, beyond what we've seen before, based on the C2C cases and new use cases. We were very strongly focused on somebody or something online and we just distribute in. Now we're looking at return management, C2C services in Japan. We started to deliver drugs for pharmacies. And obviously, each of those use cases come and augment the utilization of our lockers and therefore, the value that people can extract out of them.

Still on lockers, do you need to expand specific renewal CapEx at the end of the contract period for your lockers? What is the average life for the lockers? And what is the current amortization length of the lockers? So looking at Laurent. More financial questions.

Very financial questions. At the end of the local lifetime, yes, there will be another CapEx to replace the existing locker. The key question is when. Today, we have, I would say, a relatively conservative approach, which we need to have. We need to have a present approach to basically ask the question, which is, does the locker has a value at the end of the contract? And if we have a contract which is shorter than the lifetime of the locker, could we reuse it in another location with certainty. That being said, depending on the location and timing of the contract, we would amortize the locker according to the standard contracts we have. You should take the example of Japan, where we have a good chunk of our rental parcel lockers. We have contract over 7 years. So we amortized our lockers over 7 years. But the first lockers we placed were in 2016. So now it's a reasonable question to ask if by 2023, this first locker will still be ready to use. And we believe that there could be an upside here, which would mean keeping the same material and continuing or renewing the same exiting contract for 1, 2, 3 years eventually.

The last question so far on lockers. Is Amazon a direct competitor for you? Or do you work only in their closed ecosystem?

It's a good -- it's actually a very good question because we generally see Amazon, obviously, into the parcel lockers. And it's true that they sometimes -- or in the U.S., I should say, some countries use the lockers exclusively for their own product. And if that's the case, it's not fully a competitor because they have an integrated approach. Their customers order online and they deliver in their own lockers. Actually, Amazon is also leveraging some of our own parcel lockers like in Japan, where even though they have a network, it's a small network and some of the package is being delivered through different carriers that are using our own network. And there, it's more that they are like any other brand online. And they need to find the most relevant cost-effective way to be able to deliver their package. And if that's the case, they're not a competitor, they could actually be a customer or a partner.

Moving on to ICA now. After the full SaaS transition of ICA, how much on license mix do you envision to keep as a run rate compared to the 20% revenue mix of 2021?

Ultimately, I would say our goal is to have 0. And the question is the pace at which we move from the 14% we reported this year to the 0. One of the items that remains in these licenses is the existing accounts, notably the large accounts that have earlier purchase perpetual licenses and other -- to which we are upselling some modules. And of course, we are not closing the door of the ability to upsell and make further business with them. Between last year at 20% of total revenue to 14%, which declined by 7 points. We expect that this trend will continue. So in the midterm -- or short to midterm, mid-single digit probably is the planned target. But in the longer run, obviously, we expect that this turns to a very limited and minimal ratio over the total revenue by [ year ].

Still on ICA. Can you give us some color on Beanworks and YayPay figures following the integration?

So we don't disclose as such Beanworks, YayPay financials. We mentioned that on accounts payables and accounts receivable, we made more than 70% growth compared to last year. So it's a tremendous growth, and I think we are very happy to see that the curve is materializing. And that those 2 businesses are becoming significant. As far as I can remember, we gave some color on the size of Beanworks' expected activity for this year in the press release just following the acquisition. We are mentioning about EUR 7 million of revenue, considering that YayPay is smaller than Beanworks, it gives you a good idea of the size of both companies together.

And last question on ICA. What is the part of the proprietary solution in the software portfolio?

So today, our 4 main platforms, Impress, Inspire, YayPay, Beanworks, our owned 100% by us. And it was the full purpose of developing ICA is to be in full control of our IP stack. And that being said, we do resell and we have partnership to resell some third-party technology today. The main one being the one we have with the JV with Esker, which is today mostly being resold in the French market still today. So I would say probably above 85% of the total sales represent our own IP, which is going to continue to increase naturally in the coming years.

Mail, to finish off with our solution. How do you feel about the Q4 figures for mail? Are you satisfied of your performance considering the shortage and freight headwinds?

So it's a good question. And I think Laurent already touched on that, so I'll go quick. We had a very good performance in Q4 for the mail because we did deliver at least what we wanted to deliver. And actually a 1% decline in the fourth quarter after a pretty strong year last year without the rebound of H1. So it's -- it was a more normalized H2. We're obviously very happy. Happy because we have made -- we have, I think, clearly outpaced the competition and even happier to your specific question because the bookings were even stronger. And therefore, there are bookings that we even had in Q4 that we have not been able to deliver because of the supply chain tension. So it's a positive and negative. We're obviously happy because the performance could have been even better if we had -- could have been delivered those machines. At the same time, which shows that we're still going to have some lingering issues on supply chain moving into Q1 and Q2 and Q3, and they're going to have to be extremely also careful the same way we've been in H2 last year and ensuring timely deliveries in Q1 and Q2.

Moving on to the strategy. Have you completed your M&A cycle? If you envision a new deal, what would be the segments, ICA or PLS?

Good question. We have been, I think, very clear on that, so I'll be a little bit quick. We've made the necessary investment in acquisition, very targeted, very specific to build up our -- the offer that we felt we didn't have or the capability to build ourselves for the software with the acquisition of YayPay and now Beanworks. And 4% locker smartly, I think, identifying the leader in the U.S. market, which we felt was the biggest market in terms of opportunities for us, and we did that early on in 2019. We moved into a phase today where we want to reap the benefit of those acquisitions, do the integration, like we've done this year and set the company on a steady course organically. We're not going to say we're never going to do acquisition again, but our focus clearly is on an organic focus and benefiting from the integration of those companies.

So on divestment regarding additional operation, should we expect new divestments?

So we are focused clearly on repositioning the group fully on our core and mail solution, as you know. In additional operation, we have mostly today actually some activities of our mail-related business for some export countries. We have some parcel locker activity that we actually -- like the deal in DHL in Sweden that is not accounted in our PLS number at major operation level. And then there is a remaining few, not necessarily core activities. So we'll continue to make sure that additional operation is contributing to the strategic goals of the company.

We have 2 more questions. Maybe one for Laurent. Can you give us a guidance on 2022, 2024? I think it means 2023 on the G&A expenses between the profit margin of the solutions and the current EBIT.

So we don't guide specifically, I think, on those metrics. That being said, you've seen that we've made strong efforts. And also we committed to continue leveraging the synergies of our support function to support our solutions. Of course, this includes finance, but not only. It also includes the real estate portion on which you saw on the CapEx that we have limited the renewal of the real estate contract we had. We also closed the range of offices in the U.S. last year, and we continued this year. So we will continue to make as much effort as we can to deliver the full group commitment on the EBIT trajectory. And that includes, obviously, considering the reduction of costs and the continued reduction of cost in the G&A side.

Last but not least, you stated that you could do some buybacks if you had opportunity during your plan. Considering the present low valuation and cash generation, have you considered any buyback instead of the increase in the dividend? Is the buyback approach still valid? Or would dividend payment should prevail?

It's a very good question actually. We have clearly stated in our capital allocation policy that Laurent presented at the Capital Market Day, that we would look at every year at excess cash, if we have any. And if we have excess cash, how to best leverage this cash, whether we had opportunities organically to invest into the company, whether there could be some strategic or acquisition or targeted acquisition opportunities. Or whether, obviously, we could return it to the shareholders. And if we could return it to the shareholders, in which way would it be the best way through dividend, obviously share buybacks. So that's naturally a question that the Board reviews on a regular basis. And we have not made a decision on the share buyback at this stage. We're just at the first year of the 3 YP, the Capital Market Day phase that we have described from '21 to '23. So it's probably a little early. That being said, maybe mid plan or even 2022, that's definitely something that we will continue to look at it on an ongoing dynamic way, recognizing that having a low share price is we see a great opportunity to potential year return -- to increase the return to our shareholder if we can leverage the extra cash.

Thank you, Geoffrey. There's no further questions.

Great. Thank you, Laurent. Thank you, Catherine. Thank you, everybody.

Thank you.

So I think this...

You may now disconnect your lines.