Cyient reports Q4 FY 20 financial results

HYDERABAD, India, May 7, 2020 / — Cyient (Estd: 1991, NSE: CYIENT), a global engineering and technology solutions company, today reported its consolidated financial results for the fourth quarter (Q4) of FY 2020 ending March 31, 2020.

Financial Highlights:

For FY2020

• Group revenue at $625.2 Mn (₹44,274 Mn); de-growth of 5.3% (4.0% in CC terms) and degrowth 4.1% YoY (₹ terms)
• Services revenue at $550.7 Mn; de-growth of 5.1% (3.7% in CC terms)
• DLM revenue at $74.6 Mn; de-growth of 6.6%
• Normalized EBIT excluding one-offs at ₹4,084 Mn; de-growth of 23.4%
• Normalized EBIT margins excluding one-offs at 9.2%; lower by 232 bps
  • Normalized EBIT margin for services excluding one-offs at 10.5%, lower by 228bps
• Free Cash flow at ₹4,102Mn (highest ever)
• Free Cash Flow conversion at 56.9%
• Normalized PAT at ₹3,727 Mn; de-growth of 23.9%
• Total dividend for the year stood at Rs 15/- per share

For Q4 FY20

• Consolidated revenue at $149.2 Mn; degrowth of 3.8% QoQ and de-growth of 9.7% YoY
• Services revenue at $132.3 Mn; de-growth of 5.6% QoQ (5.4% in CC) and de-growth 10.0% YoY
• DLM revenue at $17 Mn; growth of 12.4% QoQ; de-growth of 7.1% YoY
• Cash flow to EBITDA conversion at 74.0%
• Normalized EBIT excluding one-offs at ₹905 Mn
  • Normalized EBIT margin excluding one-offs 8.4%; lower by 118 bps QoQ
  • Normalized EBIT margin for services excluding one-offs at 9.6%, lower by 100 bps QoQ

Business Highlights

• Signed an agreement with Hitachi Rail to deliver a series of project engineering services to support and accelerate the evolution of its signaling technology and enhance its project execution capacity in April 2020
• Mysore facility to support manufacturing of COVID-19 diagnosis units and X-ray system assemblies
• Providing Telangana State Police with drone-based surveillance technology to help implement the COVID-19 related lockdown in Hyderabad
• Contributed ₹ 20 Mn to the Telangana Chief Minister’s Relief Fund to support the government’s efforts in fighting the COVID-19 pandemic in April 2020

Message from the Management

Commenting on the results, Mr. Krishna Bodanapu, Managing Director and Chief Executive Officer, said, “Our performance was below expectations both on revenue and margin terms largely due to the impact of COVID which was significant on many parts of our business. Our revenue for the quarter stood at $149.2 Mn, 3.8% lower QoQ in constant currency. Services revenue at $132.3 Mn is lower by 5.4% in constant currency due to de-growth in Utilities and Semiconductor businesses and was offset by an increase in the Aerospace & Defense business. The DLM revenue at $17 Mn was higher by 12.4% QoQ. Our Gross margin at 33.5% was lower by 248 bps QoQ with significant impact due to the shortfall in revenue. DLM gross margin at 13.3% was lower due to changes in revenue mix. Lower utilization during the quarter due to COVID preparedness also impacted the margin. Our EBIT margin was lower by 120 bps mainly due to a volume drop. For the year, our revenue stood at $625.2 Mn which is 5.3% lower YoY. Services revenue at $550.7 Mn was lower by 5.1% YoY while DLM at $74.6 Mn was lower by 6.6%. Degrowth in the services business was driven predominantly by A&D, Communication and Portfolio BUs. We are focused on accelerating business growth and have strengthened our leadership team with the appointment of Karthik Natarajan as the President & Chief Operating Officer and Felice Gray-Kemp as Sr. Vice President & General Counsel. With both joining us we will strengthen our focus on winning new business, especially in digital focused, IP-driven solutions and services. We will continue to strengthen our capabilities across business verticals and realign ourselves to achieve growth through these challenging times.”

Commenting on the results, Mr. Ajay Aggarwal, President & CFO, said, “The revenue for FY20 stood at $625.2 Mn (₹ 44,274 Mn) with operating profit of $57 Mn (₹ 4,084 Mn) and normalized PAT of $52.2 Mn (₹ 3,727 Mn). Our sustained focus on collections led to a robust EBIDTA to FCF conversion of 56.9% and healthy cash balance of ₹ 9,518 Mn. We generated FCF of ₹ 4,102 Mn for the year. We are preparing to secure future in these challenging times with an aggressive cost control and optimization plan with primary focus on liquidity and cash. This includes rigorous initiatives on collections, working capital cycles, receivables, payables, and discretionary cost control. We continue to tap opportunities for automation, pyramid rationalization, subcontracting cost optimization and other cost levers. We expect our margins to strengthen in FY21 where the full benefits of improved operational efficiency will be visible. The COVID-19 pandemic has slowed down the positive momentum that we had seen building in the overall performance. However, we stay confident in our ability to embrace and adapt to the new normal and to get back to an industry-leading growth and profitability position over the long term.”