PARIS–(COMMERCIAL THREAD) – Regulatory news:

ESI Group (Paris: ESI), Paris, France, (ISIN Code: FR0004110310, Acronym: ESI), publishes its results for the fiscal year beginning on January 1^st and ending on December 31^st, 2020, approved by the Board of Directors on March 15^e, 2021.

Cristel de Rouvray, Managing Director of ESI Group, comments: “2020 was a pivotal year for Industry and ESI Group. During this unprecedented year, ESI had the opportunity to accelerate its multi-year transformation and to demonstrate both the resilience of its business model and the adaptability of its costs. We have contained the impact of declining revenues through proactive cost management, and the benefits of these decisions will still be visible in 2021 and beyond. We are building on a solid foundation, aiming for lasting gains in terms of revenue growth and profit, as the unique value we bring to the industry is further recognized. ESI is the essential partner in the digital transformation of our main customers. Through the focus and execution of best practices, we aim to expand the impact and number of these critical engagements, through our unique combination of predictive simulation software and industry-specific application knowledge gained at over the past 48 years. “

Cost control and good resilience of results

Full year sales amounted to 132.6 million euros thanks to the very significant share of recurring revenues and an increase in the share of licenses in turnover. Given the revenue challenge created by the COVID crisis, ESI Group has taken measures to reduce EBIT costs by 6.6% to € 128.9m compared to € 137.9m in FY19. The full benefit of many of these cost management steps will be realized in 2021.

The gross margin rate increased to 74.5% against 73.4% in 2019 due to the gross margin rate of licenses at 86.9% and the relative weight of licenses in total turnover (82.4 % during financial year 20 compared to 79.3% during financial year 19). Operating costs (R&D, S&M & G&A) fell 4.2% to € 95.1 million. Despite the drop in EBIT, net income remained positive (favorable exchange rate result and lower income tax) at 1.4 million euros.

ESI has a strong cash position

ESI Group has demonstrated its ability in a difficult global environment for the 2020 financial year to maintain a solid balance sheet. Net financial debt fell to € 24.9 million vs. € 29.4 million in 2019, with a gearing of 28.4% (Net debt / Equity) vs. 34.2% at the end of December 2019. The Group has ” solid cash at the end of the year at € 22.5 million, including a new loan guaranteed by the State of € 13.75 million (State guaranteed loan PGE) against € 20.2 million at the end of December FY19. He did not use his RCF in the short term (Revolving credit facility) at the end of this year against a use of 10 million euros last year.

A roadmap to align all the Group’s efforts to accelerate revenue growth

ESI was built on its ability to meet the complex challenges of engineers in all fields and in all industries. Over the past 18 months, the Group has deployed a significant transformation effort to align its teams across the world, adopt best practices in systems, processes and tools, and focus its strategy on its core business. The Group’s organization and roadmap are now defined to meet long-term objectives: generating strong revenue growth while significantly improving net income.

Communicated a year ago, ESI has organized its value proposition around 4 main business sectors and 4 main customer results.

Development roadmaps are now defined for each industry. These roadmaps make it possible to align multi-year investment priorities and guide the teams. ESI provides compelling solutions in mission critical applications that empower its customers to make the right decisions at the right time. A few success stories that the Group shared in 2020 illustrate this:

– With the help of ESI, Nissan Motors succeeded in creating the right methodology and made the right engineering decisions to industrialize a new material – CFRP (Carbon Fiber Reinforced Polymer); a key strategic step to reach their CO₂ reduction targets. After.

– Thanks to ESI’s human-centered solution, Latécoère has reduced its industrialization times while involving all stakeholders upstream of the development process to obtain their feedback and train operators in other regions of the world. After.

– A leading global heavy machinery OEM remained productive during the COVID-19 crisis while using ESI’s virtual reality solutions at home.

On the commercial side, capitalizing on its strong installed base, the Group has defined a marketing strategy based on customer segmentation to, on the one hand, strengthen the relationship and increase activity with existing large accounts and, on the other hand, generate new business opportunities on a global scale.

This alignment has also enabled the Group to rationalize certain elements of the Group’s cost structure (alignment of software development with return on investment, fewer installations, events and global and streamlined marketing), the benefits of which were partly visible in 2020. , and will continue to materialize in 2021 and the years to come.

The Group is currently anticipating sales for the first quarter of 2021 of between 52 and 55 million euros, compared to 54.9 million euros in the first quarter of 2020.

Forward-looking statements

This press release contains “forward-looking statements”. 2021 begins with a stronger foundation to focus more on execution towards sustainable growth and profitability. The continued support of the installed base allows the Group to focus on expanding business with the best global accounts and increasing the pipeline of new business. The Group expects sales for the first quarter of 2021 to be between 52 and 55 million euros compared to 54.9 million euros in the first quarter of 2020. These statements are subject to a number of risks. and uncertainties, including those related to the COVID-19 virus and further associated economic and market disruptions; other adverse changes or fluctuations in the world economy; further adverse fluctuations in our industry; fluctuations in exchange rates; changes in the current regulatory environment for world trade; fluctuations in customer and market demands; fluctuations in demand for our products, including orders from our large customers; cyber attacks; spending overruns; and the negative effects of price changes or effective tax rates. The company refers the reader to its Universal Registration Document – Chapter 3 presenting the risks related to the future performance of the company.

Future event

First quarter 2021 – April 29, 2021 (6 p.m. CET)

About ESI Group

Founded in 1973, ESI Group is a leading innovator in virtual prototyping solutions and a global catalyst for industrial transformation. Thanks to its unique know-how in materials physics, the company has developed and refined advanced simulation capabilities over the past 45 years. After identifying the shortcomings of the traditional approach to Product Lifecycle Management (PLM), ESI introduced a holistic methodology focused on industrial productivity and product performance throughout its lifecycle, this that is, Product Performance Lifecycle ™, from engineering to manufacturing and operation. Present in more than 20 countries, and in major industrial sectors, ESI employs 1,200 high-level specialists around the world and achieved 2020 turnover of € 132.6 million. ESI is headquartered in France and is listed on compartment B of Euronext Paris.

For more information, visit www.esi-group.com.

¹ Ongoing audit of the 2020 accounts

² Adjusted EBIT before integration of the IFRS 16 effect.