Neopost: First-Quarter 2014 Financial Information

  Neopost: First-Quarter 2014 Financial Information


  *Sales rose 0.3% at constant exchange rates (organic^1 growth: - 0.4%)


  *+1% to +3% organic growth in sales expected for 2014
  *2014 current operating margin before acquisition-related costs^2 forecast
    at 22.5% to 23.5%

Business Wire

PARIS -- May 27, 2014

Regulatory News:

Neopost (Paris:NEO), the number two worldwide supplier of mail solutions and a
major player in the fields of communications and logistics solutions, today
announced consolidated sales totalling €257.4 million for Q1 2014 (period
ended on 30 April 2014). Taking changes in foreign exchange rates into
account, sales declined 2.6% compared with first-quarter 2013. At constant
exchange rates, sales were up 0.3%. Organic growth was slightly negative at

Denis Thiery, Chairman and Chief Executive Officer of Neopost, commented:
"Although we knew that the start of the year would be challenging, Neopost
delivered a modest performance in the first quarter. This is largely due to a
high basis for comparison related to a number of large deals concluded last
year, the end of the decertification echo effect in the US market, and the
completion of the postal locker roll-out in Australia. Commercial activity is
sustained for Mail Solutions and our growth outlook for Communication &
Shipping Solutions remains intact. We are confident in our capacity to resume
the pace of growth to match up to our ambitions in the course of the next
quarters. "

Change in sales by business line

                                             Change     Q1         Organic
                    Q1      Q1                                     change^1(at
€ million                        Change  at        2013      constant
                    2014    2013             constant              exchange
                                             exchange   restated   rates)
Mail Solutions     212.3  222.0  -4.4%   -2.1%     222.0     -2.1%
Communication &
Shipping           45.1   42.3   +6.7%   +12.5%    44.1      +7.8%
Total              257.4  264.3  -2.6%   +0.3%     266.1     -0.4%

(Unaudited data)

Mail solutions

During the first quarter, sales of Mail Solutions were down 4.4%, i.e. -2.1%
at constant exchange rates.

This decline reflects both a slight contraction in recurring revenue and a
decline in equipment sales, notably for folders/inserters, after particularly
robust performances by Neopost for mid and high end equipment in Q1 2013.

In the US, mailing systems sales were impacted by the end of the

Mail Solutions sales accounted for 82% of Group sales in Q1 2014.

Communication & Shipping Solutions

Communication & Shipping Solutions posted a 6.7% rise in Q1 14 sales,
increasing +12.5% at constant exchange rate. Restated for the scope effect
relating to the acquisition of the Canadian DMTI Spatial company (consolidated
as of fourth-quarter 2013), organic growth in sales for Communication &
Shipping Solutions was 7.8%. This organic growth performance exceeded 12%
however if one eliminates the difference in revenues due to the installation
of the automated parcel lockers for Australia Post. This deployment was in
full-swing in first-quarter 2013 and is now complete.

The quarter saw particularly sustained growth in Customer Communication
Management, notably in direct sales by GMC Software Technology and sales
through the European subsidiaries of the Neopost distribution network. Growth
was also positive, if modest, for Data Quality. Stripping out the completion
of the roll-out of parcel lockers for Australia Post, growth was very sound
also in Shipping Solutions.

In all, Communication & Shipping solutions accounted for 18% of Group sales in
first-quarter 2014.

Change in sales by region

                Q1      Q1               Change at
€ million                    Change  constant
                2014    2013             exchange
North America  97.5   105.0  -7.1%   -1.8%
Europe         143.6  139.6  +2.9%   +2.6%
o/w, France    55.5   56.8   -2.2%   -2.2%
Asia-Pacific   15.4   18.8   -18.3%  -5.6%
Other          0.9    0.9    -6.5%   -0.9%
Total          257.4  264.3  -2.6%   +0.3%

(Unaudited data)

North America

Sales in North America were down 7.1%, or -1.8% at constant exchange rates.
This quarter saw the end of the boost to sales of mailing systems provided
throughout the 2013 financial year by the echo-decertification in the US
market. Moreover, the first quarter of 2013 constituted a high basis for
comparison, due to a number of large deals of high-end folders/inserters and
GMC Software Technology licences sold by the Neopost network. Sales of
equipment and licences are expected to increase: during Q1 2014, the sales
teams rebuilt their pipeline, while a high volume of leasing contracts are set
to mature by the year-end. Besides, recurring revenue contracted somewhat in
the first quarter of 2014, compared with the first quarter of 2013. Lastly,
Neopost benefited from the integration of DMTI Spatial.


In Europe, Nepost recorded a 2.9% increase in sales, i.e. +2.6% at constant
exchange rate. With the exception of France, the Group recorded solid growth
in almost all European countries. Neopost saw a substantial recovery in
equipment sales in the United Kingdom, and very robust growth in Mail
Solutions in Scandinavia. The UK and Germany, together with several other
countries in Europe, all posted very good performances in Communication &
Shipping Solutions.


Sales in the Asia-Pacific region declined 18.3%, or -5.6% at constant exchange
rates. As expected, results in the region reflected the impact of the end of
deployment of the automated postal locker network for Australia Post.
Stripping out the difference in revenue linked to the installation of these
lockers, sales in Asia-Pacific showed positive growth.

Change in sales by revenue type

                                Q1      Q1               Change at
€ million                                    Change  constant
                                2014    2013             exchange
Sales of equipment & licences  81.4   83.3   -2.2%   +1.1%
Recurring revenue              176.0  181.0  -2.8%   -0.1%
Total                          257.4  264.3  -2.6%   +0.3%

(Unaudited data)

Sales of equipment & licences

Sales of equipment and licences decreased by 2.2%. At constant exchange rates,
sales were up 1.1%. The picture was a contrasting one in Mail Solutions as
sales of mailing systems were down in North America and France, but rose
significantly in the United Kingdom and Scandinavia. This result also reflects
the decline in sales of folders/inserters at the top end of the range and the
impact of the completion of the postal locker roll-out in Australia. As
regards Communication & Shipping Solutions, sales of software solutions
continued their upward trend.

Equipment and licence sales represented 32% of sales in Q1 2014.

Recurring revenue

In first-quarter 2014, recurring revenue rose 2.8% and remained practically
stable at constant exchange rates (-0.1%), reflecting the positive
contribution of Communication & Shipping Solutions revenues. As regards Mail
Solutions, Neopost once again reported growth in services, maintenance,
leasing and financing revenues, while rentals and consumables were down.

Recurring revenue accounted for 68% of sales in Q1 2014.

Other highlights of the quarter and recent events

Kick-off of the operational phase of Packcity

Following a successful pilot phase launched in November last year, Neopost and
its partner GeoPost have started the operational phase of the Packcity
project, which will see the roll-out of some 1,500 secure automated lockers in
France for pick-up and return of parcels by 2016.

In recent weeks, Neopost and GeoPost formally agreed the terms of their
partnership, created the legal structures, selected the parcel locker terminal
provider and established a dedicated Packcity team. Meanwhile, a number of
partners, including Monop’ and real estate companies Klépierre, Altarea
Cogedim and Immochan, indicated or confirmed their interest in locating the
terminals in their shops or shopping centres. The first lockers will be
installed and the first parcels delivered by GeoPost before the end of the
second quarter.

Acquisition of DCS

Neopost is announcing the acquisition of Data Capture Solutions Ltd (DCS), a
leading UK supplier of document management software and service solutions
targeted at improving business efficiency. DCS offers notably document capture

DCS revenue stood at £3.7m in 2013. DCS will be fully consolidated in Neopost
accounts as from May 2014.

Acquisition of SPSI

Neopost has also recently announced the acquisition of SPSI, a leading
American provider of high-volume multi-carrier parcel shipping solutions. SPSI
sells and supports several supply chain and logistics systems. ProShip®, its
leading solution, ranks among the top 5 volume shipping software in the US and
is the fastest performing solution on the market today, capable of managing
millions of shipments per day. SPSI’s customers are large retailers,
e-retailers, pharmaceutical distributors and third-party logistic providers.
SPSI’s average customer volumes stand at 50,000 packages per day, with several
customers above one million. SPSI enjoys strong relationships with the largest
carriers, being certified by DHL, FedEx, UPS and USPS, among others.

SPSI is based in Brookfield, WI, with offices in Chicago, IL. It currently
employs about 50 people. SPSI posted revenues of US$ 10 million in 2013,
growing at a double-digit rate versus 2012. SPSI, recently renamed ProShip
Inc., will be fully consolidated in Neopost accounts as from May 2014.

Overview of the Group’s financial position


Current operating margin in the first quarter developed in line with the
Group’s expectations for full-year 2014.

Financial position

The Group’s financial position is sound. Debt is related solely to financing
equipment leased or rented to customers.

Outlook unchanged

Despite the modest performances in first-quarter 2014, Neopost confirms its
expectation for organic growth in sales in 2014 of between +1% and +3%, based
on the following organic growth assumptions: Mail Solutions' sales remaining
more or less stable and double-digit growth for Communication & Shipping

Turning to earnings performance, the Group confirms its expectation of
achieving a current operating margin^3 before acquisition-related expenses of
between 22.5% and 23.5% of sales.

Denis Thiery concluded: "We are confident in our ability to achieve the
guidance we announced for the full year. The performance delivered by Mail
Solutions will improve, especially in the United States. We will also benefit
from the start-up of Packcity, our automated locker network in France in the
second half of the year. Meanwhile, opportunities for commercial synergies
across our business lines are increasing. The acquisition of SPSI marks a new
stage in the expansion of our Communication & Shipping Solutions portfolio.
SPSI is set to become the cornerstone of growth strategy for all our Shipping
solutions in the US. "


The AGM will be held in Paris on 1 July 2014. Second-quarter sales will be
published on 4 September 2014, after market close.


NEOPOST IS THE EUROPEAN LEADER and the number two worldwide supplier of Mail
Solutions, as well as an increasingly significant player in the fields of
Communication and Shipping Solutions. As a specialist provider of mailroom
equipment, Neopost supplies the most technologically advanced solutions for
metering, folding/inserting and addressing, providing a full range of
services, including consultancy, maintenance and financing solutions. Neopost
is also progressively building a portfolio of new activities to enhance its
offering and support its clients’ needs in the fields of Customer
Communications Management, Data Quality and Logistics Solutions.
With a direct presence in 31 countries and 6,100 employees, Neopost posted
annual sales of €1.1 billion in 2013. Its products and services are sold in
more than 90 countries.

Neopost is listed in Compartment A of Euronext Paris and belongs notably to
the SBF 120 index.


Sales by distribution network

Sales                               Q1 2014
(in € million)                      NIO    CSS DU  Elimination  Total
Mail Solutions                      212.3  -       -            212.3
Communication & Shipping Solutions  22.6   26.9    (4.4)        45.1
Total sales                         234.9  26.9    (4.4)        257.4


  *Mail Solutions: mail metering systems, document management systems
    (folders/inserters for offices, mail rooms and production; other mail room
    equipment) and related services
  *Communication & Shipping Solutions (CSS): data quality, customer
    communication management solutions, logistics solutions, document
    finishing solutions and graphics solutions
  *Neopost Integrated Operations: Neopost subsidiaries developing, producing
    and distributing Neopost products and services
  *CSS Dedicated Units: Neopost ID, Satori, Human Inference, GMC Software
    Technology and DMTI Spatial, ProShip..

^1 Q1 2014 sales are compared with Q1 2013 sales, with the addition of sales
generated by DMTI in Q1 2013 (amounting to €1.8 million). Organic growth is
calculated at constant exchange rates.
^2 Current operating margin before acquisition-related expenses = current
operating income before acquisition-related expenses as a percentage of sales.
^3 Excluding new acquisitions.


Gaële Le Men, Investor Relations Officer
Tel: +33 (0)1 45 36 31 39
Fabrice BARON, DDB Financial
Tel.: +33(0) 1 53 32 61 27
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