Eric Van Zele CEO Barco, iMinds The Conference 2013

1. One Barco
The road ahead…
A journey of perpetual transformation
December 2013
Eric Van Zele
CEO

2. Barco 2012
You will find us where images are critical to professionals
NYSE
Euronext
International company
Headquartered in Belgium
Stocklisted (BAR) on
NYSE Euronext Brussels
Company Confidential
Slide 2
90+
Presence in more
than 90 countries
3,90O
Employees
1.156
Billion euro
sales in 2012

3. Vertical markets
Cinema
Healthcare
Corporate AV
Company Confidential
Slide 3
Venues &
Hospitality
Utilities, security
& surveillance
Defense &
Aerospace
OEM

4. Digital Cinema
“Enchanting 50 million moviegoers every day”
Company Confidential
Slide 4

5. Rental & Staging
Festival of the Light, Ghent
Company Confidential
Slide 5

6. Advanced Visualization Systems
Airtel India
Company Confidential
Slide 6

7. Simulation
”Barco consistently delivers in terms of quality, reliability and
performance”
Phil Morse, US Agent Ansible Design Ltd, London, England
Company Confidential
Slide 7

8. Defense & Aerospace
“Flying aboard 100 types of aircraft every day”
Company Confidential
Slide 8

9. 2009: Barco is determined to create shareholder value
BARCO share price (€)
▪ Barco has seen a significant historical
performance decline
100
-
80
60
40
▪ Since 2009, Barco is determined to
reverse this trend
20
9
May-13
May-12
May-11
May-10
May-09
May-08
May-07
May-06
May-05
May-04
May-03
May-02
May-01
0
Company Confidential
Slide 9
Flat revenue and declining market shares
Declining gross margins
Fluctuating and inconsistent EBIT
Declining shareholder value

10. 2009 - Time to act
 Organization ill prepared for Digital Cinema
 Wrong strategic focus on events market
 Silo culture destroyed value
 Complexity was life-threatening
 Global operations were substandard
 Technology too narrow, base needed broadening
 S&M pointed to inefficient go-to-market models
 Service and quality below customer expectations
 Management systems and processes end-of-life
Company Confidential
Slide 10

11. It took 4 years to reshape Barco: 2009-2012
Phase I (2009)
Weather the crisis
Phase II (2010)
Resume growth
and restore
profitability
Phase III
(2011/2012)
Consolidate global
leadership
2009 vs 2012
SALES from € 640m to € 1,160m
EBITDA from 3.8% to 13.8%
ROCE from -9% to 24%
Company Confidential
Slide 11

12. Rightsizing measures of 2009
1.
Sales
€ -85m
2.
Quality & sell-off related margin hits
€ -24m
3.
Operating expenses
€ -53m
4.
Additional restructuring provisions
€
5.
Capitalized R&D
€ -15m
6.
Inventories
€ -45m
7.
Impairments on goodwill
€ -25m
8.
Positive cash flow
Company Confidential
Slide 12
-6m
€ +64m

13. 2010: Strategic repositioning of Barco
Vision
Where do we
want to go ?
What do we
want to be?
Mission
Intelligence:
How do we realize
our goal ?
Strategy
Resources
Structure
How do we
organize ourselves
to get there ?
Company Confidential
Slide 13
Do we have the
right people & culture
to be successful ?
Processes
What are
the mission critical
business processes ?

14. Strategic repositioning of Barco
Phase II (2010)
Resume growth and restore
profitability
Phase I (2009)
Weather the crisis

Portfolio analysis
•
•
•
•
Align organi²zation with strategy
Invest and grow the core
Consolidate Avionics with Defense
Each business unit to 10/10/20

Leadership and culture
•
•
•
We-culture at the top
Values and behaviors
Next generation leaders

Customer intimacy
•
•
•
•
•

More customer centric approach
Strategic marketing
Key account focus
Professional channel management
Global service capability

Operational Excellence
•
•
•
•
Reduced complexity and footprint
Better systems and reporting
India and China
Quality and operational efficiency
Lead through technology
•
•
•
•
Company Confidential
Slide 14
Phase III (2011/2012)
Consolidate global leadership
IP-connectivity and processing
Next generation projector technologies
User friendly interfaces and
management systems
Multimedia systems

15. The first step in redefining Barco was an in-depth
analysis of the current portfolio
Market attractiveness
High
Score
Defense
&
avionics
Training
Simulator
Digital
Cinema
V&AR
Signage
Low
Score
Company Confidential
Slide 15
Medical
Source: Bain analysis, Barco management interviews
VLS other
VLS projector
Ability to win
Control room
High
Score

16. Further analysis helped to frame the industry trends
 Mobility: bring your own device (BYOD)…
 Increased bandwidth for wireless connections
 Teleworking / remote learning / remote collaboration
 Emerging need for multifunctional screens
 Customers demand more integrated end-to-end systems
 Customers demand full connectivity and collaboration
Company Confidential
Slide 16

17. Competitive Intelligence helped to discover new value creation
models with new contenders are being deployed… and showing
Barco’s unique position…
Traditional competitors
Emerging competitors
New
capabilities
Projection
Healthcare
Advanced
Visualization
Defense &
Aerospace
Company Confidential
Slide 17
New
markets
New
geographies

18. Market Intelligence helped in seeing the growth and its drivers
TAM growth 2011-2015
CAGR
(11-15)
9,000
7,000
3.8%
EUR 7.7bn
8,000
EUR 6.6bn
6,000
Ventures
5,000
Defense &
Aerospace
63
CRV
2.1%
12.5%
1,000
R&S
DC
0
2011
Corporate
AV
R&S
DC
2015
Market growth per division (€M)
Company Confidential
Slide 18
– Double digit growth in Healthcare
– Decline in DC off-set by growth in Professional AV
82
– Moderate growth in CRV, D&A and Ventures
 Within these markets, Barco targets those segments
that exhibit most attractive growth potential:
– Corporate AV in Entertainment ~10% CAGR
Entertainment
Corporate
AV
 The markets Barco serves, are growing at ~4% p.a.
driven by
126
529
Healthcare
2,000
1,058
3.2%
Defense &
Aerospace
CRV
3,000
€M
(11-15)
1.1%
Ventures
Healthcare
4,000
Growth drivers
– Point of Care in Healthcare >30% CAGR
– UAV market in Defense >10% CAGR
9.7%
464
6.1%
100
-8.3%
-306
 Expansion in terms of geographies into the BRIC
countries

19. …adding new and sizeable growth opportunities
 Mid Segment
 “Connectivity” & “Collaboration”
device
Lossless, low-latency
video transport
LOCAL
CONNECTIVITY
device
gateway
device
Controlled streaming
of audio/video
STREAMING
gateway
device
device
Company Confidential
Slide 19
Collaborative
decision making
through
data/video/audio
COLLABORATION

20. Generic growth options considered
Acquisitions
More software enabled
management systems
New technology
breakthroughs
Projector & Display
centric OEM Business
model
Mid-segment
markets
(less niche)
Company Confidential
Slide 20
More integrated
systems
New verticals
More service enabled
systems
New
geographies

21. Broadening the technology base
Display
technology
Projection
technology
Connectivity
Collaboration
Company Confidential
Slide 21

22. Dimensions of competitive advantage
Technology
Customer
Intimacy
Operational
Excellence
Company Confidential
Slide 22

23. 2009 – 2012
Company Confidential
Slide 23

24. Barco anno 2012
 1.16 billion strong and growing
 Global leader in projectors and displays for professional use
 Strategic acquisitions to reinforce collaboration
 Technology leader through innovative solutions for connectivity
 Playing a home game in ALL strategic geographies
 Building on innovative core technology platforms
 Value creation and enterpreneurship in promising ventures
 Built on worldclass systems, processes and operations
 Having strategic marketing with intelligence in place
Company Confidential
Slide 24

25. Great companies thrive on passion and commitment
Outstanding people and teams
operating in a motivating and nurturing environment
are key to success
Company Confidential
Slide 25

26. Leadership is key
The timeless role of leaders is
to help their organizations work
through necessary but painful changes
that don’t happen naturally
Company Confidential
Slide 26

27. The twelve dimensions of leadership
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
Company Confidential
Slide 27
Visioning
Empowering
Energizing
Designing and Aligning
Rewarding and Feedback
Team Building
Outside Orientation
Global Mindset
Tenacity
Emotional Intelligence
Life Balance
Resilience to Stress

28. Culture is key - Barco core values
1. We trust each other
2. We encourage team play
3. We care about our people
4. We deal openly and ethically
5. We delight our customers
6. We are accountable
7. We lead through innovation
8. We deal with facts
Company Confidential
Slide 28

29. Vision - The road ahead…
Over the next 4 years Barco should foster the ambition to grow
organically into
1.5 billion in revenues
 10% CAGR
 EBIT = > 9% on sales
 > 75 millions in FCF per annum
 Through increased focus on rapidly growing opportunities for networked &
collaborative visualization systems in the core markets, now defined as
Healthcare, Projection, Advanced Visualization, Defense & Aerospace
 …and beyond the 1,5 billion threshold through inorganic growth
Company Confidential
Slide 29

30. Barco’s strategy
Visualize
 Defend & reinforce
Barco’s leadership
position in the
“Visualize” core
Distribute &
Transmit
Manage
Capture
Applications
 Capitalize on the IPconnectivity and
collaboration
opportunity
 Expand into adjacent
markets
Company Confidential
Slide 30
Note:  Barco’s offer today in “Visualize”: Projectors, LCD displays, LED walls, Video walls
 Barco’s offer today in “Distribute & Transmit”: Image processors, Controllers

31. Barco now moving into Networking and Collaboration
Not Barco
Not Barco
Local
Area
Network
Gateway
Wide Area
Network
EN- / DE-CODING
EN- / DE-CODING
• Recorder
• Media management server
• Image processing server
Company Confidential
Slide 31
• Image
composition

32. Shaping new products and services
Leveraging the Internet stack....
... to extend business reach
Entertainment
•
Live event streaming
Corporate & Education
•
•
•
•
•
On-demand collaboration
Corporate HD streaming
Digital Signage
Campus broadcast & video distribution
Course recording & on-demand learning
Healthcare
•
•
•
Digital operating room
Centralized streaming and recording
Remote surgical collaboration

33. 7 ways to shape our own destiny







Visionary entrepreneurship
Inspiring leadership
Continuous education
Global mindset
Focus on innovation instead of duplication
Focus on rapid experimentation instead of business plans
Focus on growth rather than on cutting costs
Yes we can!
Company Confidential
Slide 33

34. Ten commandments of a turnaround
Company Confidential
Slide 34

35. Ten commandments of a turnaround
1. Dare to see reality the way it is and not the way you had hoped it to be
2. Market and Customer Intelligence: do the necessary diagnostics upfront
and consult with your people and your customers to collect their inputs
and get them involved early on
3. Competitive Intelligence: benchmark the industry leaders and assess why
they have been successful
4. Communicate your assessment of 'current state' clearly and succinctly to
all stakeholders. Don't beat around the bush and repeat often. Illustrate
why change is needed
5. Articulate a new vision & strategy for a brighter future and illustrate how
powerful it could be. Illustrate how it could benefit stakeholders. Push for
executive alignment and commitment and passion and buy-in
Company Confidential
Slide 35

36. Ten commandments of a turnaround
6. Be a role model for change. Change begins at the top. Create a leadership
team with a 'we' culture. Engage your most valuable players early on
7. Determine whether the current organizational structure is still suited for
deliverance of the new vision and strategy. Change if necessary
8. Business Intelligence: identify and publish the key performance indicators
and review and discuss them open and honestly and frequently with the
leadership team. Push for their collective commitment and enforce
accountability
9. Reward team behavior and team culture and implement new incentive
schemes that will reinforce and support your new vision and strategy
10. Celebrate successes and promote & reward those that have contributed to
your progress. Remove or eliminate those that try to inhibit change
Company Confidential
Slide 36

37. Thank you
Company Confidential
Slide 37