Signify reports first quarter sales of EUR 1.5 billion, operational profitability of 8.3% and a free cash flow of EUR 80 million

Press Release

April 26, 2024

Signify reports first quarter sales of EUR 1.5 billion, operational profitability of 8.3% and a free cash flow of EUR 80 million

First quarter 20241

Signify's installed base of connected light points increased from 124 million in Q4 23 to 126 million in Q1 24
Achieved reasonable assurance on full Brighter Lives, Better World 2025 program, including scope 3 emissions
Sales of EUR 1,468 million; nominal sales decline of -12.5% and CSG of -10.1%
LED-based sales represented 87% of total sales (Q1 23: 82%)
Adj. EBITA margin of 8.3% (Q1 23: 8.9%)
Net income of EUR 44 million (Q1 23: EUR 28 million)
Free cash flow of EUR 80 million (Q1 23: EUR 51 million)

Eindhoven, the Netherlands – Signify (Euronext: LIGHT), the world leader in lighting, today announced the company’s first quarter 2024 results.

“In the first quarter, we saw improving dynamics in our US Professional, OEM and Consumer businesses, while the market in China remained soft and the European Professional business was substantially below our expectation. Our operating margin was resilient, thanks to gross margin expansion as price dynamics normalize, compensated by bill of material improvements. We also began to see the positive impact of our cost reduction program and strong free cash flow generation, as we continued to improve our working capital,” said Eric Rondolat, CEO of Signify.

“On April 1, we successfully implemented our new organizational structure. The new model brings enhanced focus and accountability to our business from an end-customer perspective, and has earned strong support internally and externally. As the year progresses, we anticipate a sequential comparable sales growth improvement, driven by momentum in the Americas and our OEM and Consumer businesses. The continued effort to manage the gross margin, combined with the implementation of our cost reduction program, will deliver a positive effect on our operating margin in the quarters ahead, in line with our guidance for the full year.”

Brighter Lives, Better World 2025

The first quarter of 2024 marks the start of Signify's fourth year of its Brighter Lives, Better World 2025 sustainability program commitments that contribute to doubling its positive impact on the environment and society.

Double the pace of the Paris AgreementSignify is ahead of schedule to achieve its 2025 target to reduce emissions across the full value chain by 40% against its 2019 baseline - double the pace required by the Paris Agreement 1.5 degree scenario. In addition, the company has received approval from the Science Based Targets initiative (SBTi) for its ambitious 2040 Net Zero target with a 90% absolute reduction of scope 1, 2 and 3 emissions.

Double Circular revenuesCircular revenues increased to 34%, surpassing the 2025 target of 32%. The main contribution was from serviceable luminaires, with a strong performance from both consumer and professional.

Double Brighter lives revenuesBrighter lives revenues remained at 31%, on track to reach the 2025 target of 32%. This includes a strong contribution from consumer products that support health and well-being, mainly EyeComfort.

Double the percentage of women in leadershipThe percentage of women in leadership positions decreased to 28%, a 1% decrease versus last quarter, and slightly behind target. Signify continues its actions to increase women representation through focused hiring practices for diversity across all levels, and through retention and engagement actions to reduce attrition.

In the first quarter, Signify received several external recognitions for its leadership in Sustainability. Signify was placed on CDP's 2023 Climate A-List for the seventh consecutive year. It was also recognized on CDP's 2023 Supplier Engagement Leaderboard for its commitment to engagement in its supply chain to decrease carbon emissions. Lastly, Signify is recognized on the Clean200, a list of companies putting sustainable investments at the heart of their strategy.

In addition, Signify released Environmental Product Declarations that advance transparency and sustainable innovation, covering the vast majority of its LED portfolio. Signify has committed to sharing the environmental impact of its full range of LED products. Being transparent about our products' environmental impact gives customers the information they need to make informed decisions.

Outlook

For 2024, Signify continues to expect:

An Adjusted EBITA margin improvement of up to 50 bps, including first benefits from the announced restructuring program
Free cash flow generation of 6-7% of sales, including an incremental and non-recurring negative impact of around EUR 150 million related to the restructuring program and a reduction of US pension liabilities.

Conference call and audio webcast

Eric Rondolat (CEO) and Zeljko Kosanovic (CFO) will host a conference call for analysts and institutional investors at 9:00 a.m. CET to discuss the first quarter 2024 results. A live audio webcast of the conference call will be available via the Investor Relations WebsiteThe analyst presentation is available via this link

1This press release contains certain non-IFRS financial measures and ratios, such as comparable sales growth, EBITA, adjusted EBITA and free cash flow, and related ratios, which are not recognized measures of financial performance or liquidity under IFRS. For a reconciliation of these non-IFRS financial measures to the most directly comparable IFRS financial measures, see appendix B, Reconciliation of non-IFRS financial measures, of this press release.

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