I N V E S T O R P R E S E N TAT I O N Wednesday, November 7 th 2018 - - PowerPoint PPT Presentation
I N V E S T O R P R E S E N TAT I O N Wednesday, November 7 th 2018 Fondazione Cariplo Milan 1 Todays Speakers Lorenzo Zaniboni Cesare Agrati Paolo Pozzi Andrea Costantini Giandomenico Sbaragli Group Operations Director President &
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Wednesday, November 7th 2018
Fondazione Cariplo Milan
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Today’s Speakers
Andrea Costantini Group CFO Paolo Pozzi Group CEO Giandomenico Sbaragli Group S&M Director Lorenzo Zaniboni Group Operations Director Cesare Agrati President & CEO Paolo Ceretti CEO Pier Luigi Rossi Board member Piero Galli Board member
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AGENDA
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Our target of choice: Agrati Group
Introduction and investment highlights
Nuts AFP
Advanced Formed Parts
Bolts
High and medium strength
Special Screws
Interior Exterior Safety Brake & Wheel Steering Seating Chassis Axle Seating Powertrain Bumpers Interior Headliner Structures Trunk Airbag Engine
Founded in the ‘30 in Veduggio, north of Milan, is a market leader in the development, production and distribution of fastening systems and advanced solutions mainly in the automotive market
Critical components
metallic fastening systems
entrepreneurial history of continuous and profitable growth
innovation
devoted to fund Agrati Group future growth
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Investment rationale
Introduction and investment highlights
Global market leader One-stop-shop for fastening systems Global footprint High profitability and cash generation Strong management team Excellent global platform for growth
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131 189 249 327 337 376 405 428 467 80 113 61 191
09A 10A 11A 12A 13A 14A 15A 16A 17A
Revenues M&A 4,6% 5,8% 4,1% 6,7% 9,8% 11,4% 15,3% 16,3% 15,5% EBITDA Adj %
Resilient revenues & EBITDA growth
Introduction and investment highlights
Growth not influenced by automotive market fluctuations
Source: Company data YoY organic growth 658 489 269 362 Note: 2009 - 2015 ITA GAAP 12% 8% 6% 9% 3%
REVENUE CAGR +22,4%
Acquisition in France Acquisition in US
6 16 15 22 33 43 62 80 102 EBITDA Adj
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AGENDA
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Agrati: the history
Company Overview
Consistent development through business model evolution and organizational changes
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Key highlights
Company Overview
A truly global leader in fastening systems with footprint in all key geographies
Management figures - 2017
MILLION EURO
Company data
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Global footprint
Company
Global platform with production plants and sales offices close to main automotive OEMs
12 Production Plants 12 Sales & Application Offices 5 Logistic Centers 3 Tech Centers
Source: Company data 74.000 sqm 52.400 Tons/year 211 Equipment 137.000 sqm 99.000 Tons/year 600 Equipment 37.000 sqm 15.000 Tons/year 69 Equipment USA EU ASIA 500 Employees 369 Employees 1.738 Employees
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Global sales
Company
Global player with 90% of revenues outside Italy Global presence with focus on the most specialized markets with high growth potential
32%
AMERICAS
60.5%
EMEA
7.5%
APAC
Source: Company data
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Clients portfolio
10 CLIENTS ACCOUNTING APPROX. 60% OF TOTAL SALES 90% OF SALES FROM AUTOMOTIVE MARKET
Automotive focused and balanced clients portfolio
Company
Source: Company data
Sales Top 5: 51%
15% 11% 11% 9% 5%
3% each 2% each 1% each
30%
Other
60% 28% 2% 3% 3% 4%
Sales 2017 Automotive OEMs Automotive TIER 1 Commercial vehicle Distribution Industrial Other € 658 M
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Bolts 58% Nuts 10% Special Screws 9% AFP 15% Other 8%
High tech solutions
Company
Wide and diversified product portfolio: high volume critical parts
Wheel bolt Wheel nut Hub bolt Cam bolt Cilinder head bolt Gearbox screw Safety belt screw
Bolts, screws, nuts 77% of revenues
Source: Company data
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Bolts 58% Nuts 10% Special Screws 9% AFP Other 8%
High tech solutions
Company
Wide and diversified product portfolio: high value engineered products
Braking systems Powertrain Safety and comfort APPLICATIONS
AFP 15% of revenues
Source: Company data
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Co-design: a new way to find opportunities
Company
Acquired Activities Ongoing Activities
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AGENDA
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Value creation platform
Positioning and perspectives
Five levers to support business development and market opportunities
Solid & promising client portfolio Stable & Attractive market Strong market positioning Efficient & profitable industrial system Platform for growth
Value creation platform
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Fastener market structure
Stable and attractive market Positioning and perspectives 67,5 % total market CAGR ‘17-22 40,5% 27,4% 32,1% 100% 27,7% 19,7% 13,7% 9,0% 6,1% 4,0% 13,6% 6,1% 4,6% 2,9% 3,2% 3,7% 4,2% 3,6% 3,2% 3,3% 4,8% 3,2% 2,7% 4,3%
Global fastener market value is ~€68B in 2017, with automotive as first industry & APAC as main geography
GLOBAL INDUSTRIAL FASTENER MARKET SPLIT (B€, 2017)
Split by geography Split by industry
Source: Freedonia; GIA Report, Management analysis
27,3 18,5 21,7 18,7 13,3 9,2 9,2 6,1 4,1 4,1 2,7
APAC Americas EMEA Total Motor vehicles Machinery Electric & electronic equipment MRO Metal products Aerospace Construction Other OEM Standard products
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Vehicle fastener applications
Stable and attractive market Positioning and perspectives
Vehicle application Value of total vehicle (%)
Engine & powertrain 27% Chassis/Suspension 20% Braking & wheels 10% Interior/exterior trim 12% Seating 8% Safety 7% Body and White 7% Other 9%
CAR FASTENING PIECES KEY NUMBERS VALUE
Every vehicle is equipped with around 3.000 assembly points
Source: WRC Research; A2MAC1
Average size car presents about 1.000 SKUs for a total of ~2-3.000 assembly points depending on car model Hybrid vehicles have 3-6% more pieces due to additional engine components Electric vehicles have ~20-25% less pieces due to fewer engine components ~ €230 per car ~ €600 per heavy truck vehicle
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Automotive industry faces relevant challenges
Stable and attractive market Positioning and perspectives
Mobility Shared Mobility Customers behaviors Convenience / loss of status symbol Regulatory City-region-govern. regulation Urbanization Electrification Digitalization & Connectivity
Changes will impact the whole supply chain and the size/mix of fastener mkt
Sustainability Autonomous driving IMPACT
Impact on market size Impact on ability to win
Vehicles production forecast Growing fastener reliability Mega platforms convergence Attention to safety & comfort Powertrain mix change Advanced driver aids Increased vehicle lifecycle Raw materials fluctuations Fastener value increase
TRENDS
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Source: LMC; Company data
Vehicle production forecast
Stable and attractive market Positioning and perspectives
CAGR 18-22 2,4%
2018 – 2022 expectations showcase stable growth rate at ~2,4% APAC fastest growing region at ~2,8%
NUMBER OF VEHICLES PRODUCED BY GEOGRAPHY 2017-2022 (M)
Note: Graphs include personal vehicles and LCV
Vehicles production forecast
Growing fastener reliability Mega platforms convergence Attention to safety & comfort Powertrain mix change Advanced driver aids Increased vehicle lifecycle Raw materials fluctuations Fastener value increase
NAFTA EMEA APAC
50,5 52,4 54,1 55,5 57,2 25,5 26,3 27,1 27,5 28,0 21,1 20,9 21,4 21,6 22,2 2018F 2019F 2020F 2021F 2022F
95 + 0,5% + 1,6% + 2,8% 97 100 103 105 107
+ 4.0% + 4,9% CAGR 15-17 3,5%
49,9 24,8 20,5 2017
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4% 11% 4% 8% 99% 99% 99% 99% 92% 81% 2017 2018 2019 2020 2025 2030 ICE HEV EV
Powertrain mix change
Stable and attractive market Positioning and perspectives
Low before 2025, with positive impact from Hybrid Vehicles Electric Vehicle is a good opportunity as contributes to enhance the fastener market
% OF HYBRID & ELECTRIC VEHICLES PRODUCED (M)
~
+
0,5 ICE + HEV EV Breakdown 108,5 109,5 4,5 13,5
+14 mln (+15%)
ICE = Internal Combustion Eng. HEV = Hybrid Vehicle EV = Electric Vehicle
Source: Bloomberg; GIA report
Impact on # fasteners/car ICE HEV EV Vehicles production forecast Growing fastener reliability Mega platforms convergence Attention to safety & comfort
Powertrain mix change
Advanced driver aids Increased vehicle lifecycle Raw materials fluctuations Fastener value increase
95 97 100 103 113 123
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19,6 0,5 1,0 2,0 23,1 2 1,5 19,6 Fasteners mkt 2018 Americas EMEA APAC Fasteners mkt 2022 Volume driven Value driven Fasteners mkt 2018
Fastener value increase
Stable and attractive market Positioning and perspectives
AUTOMOTIVE FASTENER MARKET GROWTH (B€)
Automotive fasteners market is expected to grow more than the automotive market due to inflation, raw materials mix and production processes, which increase unit price
Source: GIA report
Vehicles production forecast Growing fastener reliability Mega platforms convergence Attention to safety & comfort Powertrain mix change Advanced driver aids Increased vehicle lifecycle Raw materials fluctuations
Fastener value increase
CAGR 18-22 4,2%
VEHICLE MATERIAL MIX SHIFT
48% 12% 20% 40% 10% 12% 6% 13% 2% 4% 13% 19% 2017 2030 Conventional Steel High strength Steel Magnesium Aluminium Plastics Other
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Attention to safety and comfort
Stable and attractive market Positioning and perspectives Vehicles production forecast Growing fastener reliability Mega platforms convergence
Attention to safety & comfort
Powertrain mix change Advanced driver aids Increased vehicle lifecycle Raw materials fluctuations Fastener value increase
Source: Company data
Belts Brake by wire Electric parking brake Electric adjusting seats HIGHER ENGINEERED PRODUCTS Lane assist Electric parking syst. Cameras Airbag
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Value creation platform
Positioning and perspectives
Five levers to support business development and market opportunities
Solid & promising client portfolio Stable & Attractive market Strong market positioning Efficient & profitable industrial system Platform for growth
Value creation platform
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Product portfolio positioning
Strong market positioning Positioning and perspectives
Note:
Screws & others);
each product segment)
PRODUCT PORTFOLIO WIDTH AND DEPTH – COMPETITIVE LANDSCAPE
Within automotive market, Agrati is recognized as a “one-stop-shop” thanks to its product portfolio width and depth
Product portfolio width +
4 3 2 1 20 15 10 5
Sundram
Total Part numbers* 15.000 New Part # a year 1.000 Innovation ratio: 7% Full range totally renewed every 15 years
*Includes only manufactured products
27 609 92 1.086 506 385 870 1.745 638 1.138 1.084 1.644 1.469 870 833 752 750 713 658 520 447 389 296 291 216 213 211 186 182 126
ITW Arconic Stanley B&D LISI SFS McLean Fogg Gruppo Fontana Kamax Aoyama Nedschroef Agrati Jinhap Sundram Fast. Ejot QST Bulten Cold Heading Trifast San Shing Ribe MNP BrugolaAuto Fasteners Non Auto Fasteners Non Fasteners
Competitor overview
Strong market positioning Positioning and perspectives
EBITDA %
19,8%
12,1%
15,5%
15,4% 17,2% 10,3% 15,0% 11,3% 22,2% 9,4%
EBIT %
12,1%
5,3%
14,4% 10,9% 7,5%
18,7% 5,7%
Source: annual reports; websites; Aida; Onesource/Hoovers DB; company data
FASTENER MARKET KEY PLAYERS REVENUES (M€), EBITDA % AND EBIT % - 2017
The first 10 players represent 18% of the market, all the rest being highly fragmented Agrati is n. 7 world player for automotive fastener market in terms of revenues
Note: Competitors (rev.> 100M€)
9.570 11.294 9.642 10.696 12.175 11.479
The One-stop-Shop positioning qualifies Agrati as one of the best performers in terms of profitability
PMC 28
Product portfolio drives profitability
Strong market positioning Positioning and perspectives
Bolts have the largest share of product sales, with high resistance growing in absolute terms and AFP products gaining significant share
44% 44% 38% 21% 20% 20% 12% 11% 15% 7% 7% 10% 10% 10% 9% 7% 8% 8% 2015 2016 2017 High res. Bolts Medium res. Bolts AFP Nuts Special Screws Other
405 489 658 SALES BREAKDOWN BY PRODUCTS ‘15-’17 (M€)
Source: Company data
AGRATI EBITDA % Vs. PEERS Industry avg ~13%
Direct peers ~10%
Top performers ~20% Low performers ~8%
5,8% 4,4% 6,3% 9,4% 11,0% 14,6% 16,3% 15,5% 2010 2011 2012 2013 2014 2015 2016 2017
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Value creation platform
Positioning and perspectives
Five levers to support business development and market opportunities
Solid & promising client portfolio Stable & Attractive market Strong market positioning Efficient & profitable industrial system Platform for growth
Value creation platform
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Top 5 5% #3 2% Top 10 3% Top 10 2% #3 3% #1 11%
Outstanding customer loyalty
Strong and promising client portfolio Positioning and perspectives
Agrati customers show very high levels of loyalty There has been a continuous build-up track record for the last 20 years and Agrati never lost a single customer, thus converting into a top ranking vs competitors
Source: Company data
+20 years 8 - 18 years Last 5 years #1 15% #3 11% #2 9% #1 2%
Revenues share Ranking among suppliers
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Total Market 2018
Automotive fastener market
Strong and promising client portfolio Positioning and perspectives
Agrati OEM client portfolio represents approx. 65% of global vehicle production, sizeable opportunity both on OEM and Tier 1
19,6 B€
OEM Market 2,1 OEM Market
9,4 10,2
Source: Company data; LMC; GIA report 2017
4,4 3,7
10,2 B€
Tier components Non clients Other Agrati OEM clients TOP 7 OEM Clients
Focus on Japanese Customers
(Nissan, Mitsubishi, Honda, Toyota in US and EU)
Geographical Synergies
through the localization process of European OEMs in APAC and NA
Tier1 approach OEM approach
Geographical Synergies Focus on AFP
development, often in co-design
Product Synergies
0,2 0,37 0,03 Agrati sales 0,6 B€
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4 Sales pillars
Strong and promising client portfolio Positioning and perspectives
Full Service Provider Co-design Technical Leadership Globalization
INNOVATION
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Strong and promising client portfolio Positioning and perspectives
Co-design
Innovation and new clients’ applications are pursued through an integrated co-design and R&D team
Full new automotive platforms development Solution of customer technical problems Support on industrial development of complex parts Full platform joint definition Design & FEM Simulation Prototyping LAB & on FIELD Testing & Validation
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Technical leadership
Strong and promising client portfolio Positioning and perspectives
R&D and co-design activities are the enablers of “engineered products” (AFP), resulting in higher value per piece positioning
€ 14 M 7% of sales € 100 M 15% of sales AFP 2008 AFP 2017
PLASTIC HOUSING VALVE-TRAIN GEARBOX
Powertrain
DISK BRAKES DRUM BRAKES BOOSTER
Braking
ADJUSTER MECHANISM SEAT FRAMES ADJUSTER MECHANISM
Seats&Mechanism
FLAG NUTS CAGE NUTS PIPE NUTS &SLEEVE
Others
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E-Mobility Batteries
New mobility trend
AFP to lead automotive megatrends
Autonomous driving Comfort Safety Mobility
Strong and promising client portfolio Positioning and perspectives
Braking systems
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Full Service Provider (FSP)
Strong and promising client portfolio
Full complement of customized logistic services on global level
FSP
2 dedicated units € 53 M global revenues in 2017 Automotive and Industrial customers
OEM
support
range
Strategy
management
Source: Company data
Positioning and perspectives
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Value creation platform
Positioning and perspectives
Five levers to support business development and market opportunities
Solid & promising client portfolio Stable & Attractive market Strong market positioning Efficient & profitable industrial system Platform for growth
Value creation platform
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Agrati Production System
Efficient and profitable industrial system
In a complex industrial environment, our unique production standard makes us sound and resilient to market needs and flexibility requirements APS is the platform to address integration processes of newly acquired companies Annual production 160.000 tons produced 8 billion shipped parts
Raw material preparation Cold forging Threading Machining Heat treatment Surface treatment Automatic sorting Delivery
Vertically integrated manufacturing process Proprietary standard production system
Positioning and perspectives
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Agrati University and Agrati Care
Company Welfare
Efficient and profitable industrial system Positioning and perspectives
Enablers of competencies, quality, retention and efficiency
Corporate Academy Model
Cooperation with Schools and Universities
Active collaboration with 17 institutes
People Empowerment
Talent Management
Retention
below 5% per year
satisfied or very satisfied*
*Employees survey 2016
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Operational excellence
Efficient and profitable industrial system Positioning and perspectives 270 340 330 340 370 410 490 658 25,8% 23,5% 25,1% 24,6% 23,6% 22,5% 21,8% 20,8% 2010 2011 2012 2013 2014 2015 2016 2017 Revenues Labour cost %
LABOUR COST TREND 2010-2017 REVENUES / EMPLOYEES TREND 2010-2017 >1.000 equipment >25.000 part numbers* >2.600 employees KEY FIGURES
Source: Company data
142 160 177 178 192 211 227 252 1.908 2.123 1.866 1.907 1.925 1.941 2.157 2.607 2010 2011 2012 2013 2014 2015 2016 2017 Rev / employees [k€] Employees
Operating KPIs at the highest industry standards, sustainable over time
*Includes make and buy products
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Quality management
Efficient and profitable industrial system Positioning and perspectives
APS Quality Management is aimed to design a sound process from the beginning in order to ensure consistent results in delivery
IPB TREND
(Incidents Per Billion)
Source: Company data
119 99 114 82 76 46 2012 2013 2014 2015 2016 2017
160.000 control plans 250.000 batch checking > 9 mln checks KEY FIGURES > 30.000 instruments PPM TREND
(Defective Parts Per Million)
2012 2013 2014 2015 2016 2017 <1
QUALITY CERTIFICATION
<1 <1 <1 <1 <1
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Supply chain
Efficient and profitable industrial system Positioning and perspectives
manufacturing plants management
OTD TREND
(On Time Delivery)
INVENTORY LEVEL TREND 350 heavy trucks 700 tons shipped >430 delivery points >150 suppliers Daily volumes
Source: Company data
91% 94% 95% 93% 96% 98% 2012 2013 2014 2015 2016 2017 75,2 92,8 87,4 87,1 86,9 81,6 109,1 112,6 28% 27% 26% 26% 23% 20% 18% 17% 2010 2011 2012 2013 2014 2015 2016 2017 Inventory value [M€] Inventory on revenues
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Value creation platform
Positioning and perspectives
Five levers to support business development and market opportunities
Solid & promising client portfolio Stable & Attractive market Strong market positioning Efficient & profitable industrial system Platform for growth
Value creation platform
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Agrati business development capabilities
Platform for growth Positioning and perspectives
Italian small company development
Greenfield investment
Distressed company and turnaround
Profitable company integration
Strong management team Key enablers Technical leadership
Agrati history shows an effective capability to address integration processes in different scenarios
Organizational model 2003 2005 2010 2016
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Solid and profitable growth
Positioning and perspectives
Agrati shows above average revenue growth & EBITDA margin vs peers
Source: annual reports; websites; Aida; Onesource/Hoovers DB
Revenue CAGR (‘14 – ‘17) EBITDA % 2017
MARKET MAP KEY PLAYERS
Specialized Differentiated Other
LISI SFS Fontana Kamax Agrati Sundram Gem-year Bulten Trifast Bollhoff EJOT QST San Shing Fastech Ribe Brugola Agrati
0% 5% 10% 15% 20% 25% 0% 5% 10% 15% 20% 25% 30%
Revenues ‘17
Platform for growth
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M&A activity in the fastener industry
Positioning and perspectives
Low market concentration shows further opportunities for M&A The market is undergoing a strong consolidation momentum with a relevant number of M&A deals
TOP 10 players 18% Others 82%
FASTENER MARKET CONCENTRATION
24 14 30 29 35 29 41 47 49 49
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
# OF FASTENER MKT M&A DEALS PER YEAR 2008 - 2017
Source: annual reports; websites; Aida; Onesource/Hoovers DB; fastenernewsdesk.com
Platform for growth
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Five value creation paths for future growth
Positioning and perspectives
GEOGRAPHIC EXPANSION INDUSTRY EXPANSION PRODUCT DIVERSIFICATION VERTICAL INTEGRATION MARKET PENETRATION
GROWTH TYPE RATIONALE/DRIVERS ORGANIC FIT M&A FIT FOCUS AGRATI
Low Medium High
Aerospace Medicals Engineered products Electric components Light material & plastic Special screws & rivets Distributors China Korea Japan China Coatings & heat treatments Platform for growth
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AGENDA
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337 376 405 427 467 62 191 13A 14A 15A 16A 17A 8% 18% Organic Total CAGR 13-17 489 658 2,0x
Net Revenues evolution
H1 Net Revenues Bridge – M€
5 years, doubling revenues
net of FX impact of €360M (+5% vs H1 2017) Net Revenues evolution (2013 – 2017) – M€
Source: Company data
344 348 11,9 360 H1 2017 H1 2018 FX Impact H1 2018 ex FX Impact 5% Growth
IFRS Agrati Inc. ITA GAAP
Key financials
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55 8,0
51 1,6 52 1,7 54
H1 2017 ∆ Mix/Price ∆ Raw Materials ∆ Other H1 2018 Manag. Adj H1 EBITDA w/ Man. Adj FX Impact H1 2018 ex FX Impact
16,0% 14,5% 14,9%(3) 15,0% 33 43 62 80 102
13A 14A 15A 16A 17A
3,1x
EBITDA evolution
H1 EBITDA Bridge – M€
EBITDA Margin
EBITDA evolution (2013 – 2017) – M€ Indexed contracts (% on revenues)
driven by
costs
improved product mix and M&A
with H1 2017 EBITDA, with 14,9% margin
(1) (1)
(1) Adjusted EBITDA (2) Including management adjustments due to extraordinary logistic costs (3) Based on Net FX Impact revenues
(2)
IFRS ITA GAAP
3,7% 34,7% 40,8% 16A 17A H1 18 37,1 pp Key financials
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7 8 8 9 15 9 16 23 19 30 13A 14A 15A 16A 17A H1 2018 77 77 73 117 108 125 13A 14A 15A 16A 17A H1 2018 23,0% 20,6% 18,1% 23,9% 16,5% Avg: 19,5%
TWC & capex evolution
decreases over years, due to the adoption of a lean inventory management strategy…
significant investments Capex evolution (2013 – H1 2018) – M€ TWC evolution (2013 – H1 2018) – M€
TWC / Revenues
USA M&A
Mkt Benchmark(1)
(1) Bloomberg data on a benchmark
(2) Affected by Sept. 2016 M&A (3) Not considering 2016 data
(2) (3)
5,0% 5,6% 16A 17A
Mkt Benchmark(1)
34,5% 35,9% 16A 17A Agrati: 19,5% Agrati: 6,4%
IFRS ITA GAAP
16 24 31 28 45 15 Capex / Revenues 4,6% 6,5% 7,7% 5,7% 6,8% Avg: 6,4%
(3) (2)
Capacity & efficiency Maintenance
n.a. breakdown maintenance vs capacity
Key financials
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82 83 80 38 236 223 227 13A 14A 15A 16A 17A H1 2018 2,5x 1,9x 1,3x 1,6x 2,3x 264 3,3x 1,3x 0,6x 0,7x 0,7x 1,1x
NFP & operating cash flow evolution
NFP evolution (2013 – H1 2018) – M€
NFP / EBITDA
NFP despite continuous investments and M&A activities carried out over the years
yearly strong cash generation between €30M - €40M, allows the company to pursue organic growth and M&A activity
25 28 39 58 73 31 13A 14A 15A 16A 17A H1 2018
Operating cash flow evolution (2013 – H1 2018) – M€
USA M&A NFP / EQUITY
(1) Affected by Sept. 2016 M&A
(1) (1)
IFRS ITA GAAP
Key financials
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AGENDA
54
Transaction overview
Business Combination will be in the form of a merger of Agrati into IDEAMI Mostly primary transaction: up to €175M(1) (70% of IDEAMI Proceeds) devoted to fund Agrati Group future growth Listing of Agrati on the AIM market of the Italian Stock Exchange
Key Transaction Objectives
Enhance Agrati financial flexibility to continue its growth strategy Future admission to STAR segment of MTA markets is targeted
The transaction represents one of the largest Italian listing in 2018
(1) That can be reduced up to €115M depending on the exercise of the withdrawal right
Transaction
55
Valuation
Valuation Approach Transaction Data Valuation Approach
Combination
share
Transaction Data
− EV/EBITDA adj(3): 7,0x − EV/EBIT adj(3): 11,0x
Exchange ratio set at 2,53 IDEAMI ordinary shares each Agrati share
(1) Considering surplus asset of €7,8M related to minority shareholding in ABF (2) Based on €215,1M net financial position as of August 2018 (3) 2017 IFRS adjusted for non recurring items (4) Assuming no withdrawal
Transaction
56
Key transaction steps
2 steps occurring simultaneously upon merger completion
by the first €15M of withdrawals
Acquisition Business Combination
(1) Assuming no withdrawal (2) Assuming no withdrawal and max dilution (3) Calculated as the weighted average daily price of the calendar month before the exercise
Transaction
57
Shareholders structure evolution
(1) Excluding Sponsors’ shares, assuming the conversion of the first Tranche of Sponsors’ shares (2) Market shares + Banca IMI’s ordinary shares without lock up
At Business Combination(1) At €15,5 (Fully diluted)
No Withdrawal 30%-1 Withdrawal
Agrati Holding 62,7% DeA Capital 3,5% Banca IMI 3,5% Market 30,2%
Free float 33,2%(2) Free float 24,4%(2) Agrati Holding 58,4% DeA Capital 5,4% Banca IMI 5,4% Market 30,7% Agrati Holding 71,1% DeA Capital 3,9% Banca IMI 3,9% Market 21,2% Agrati Holding 65,6% DeA Capital 6,0% Banca IMI 6,0% Market 22,4%
Transaction
58
Corporate governance & lock-up
Lock-up commitments Corporate Governance
− 18 months for DeA Capital and Banca IMI − 24 months for Agrati Holding
independency and gender
− 5 appointed by Agrati Holding − 2 appointed by DeA Capital
Transaction
59
End of the withdrawal right exercise period by IDEAMI shareholders
Transaction timeline
October November December February
IDeaMI and Agrati BoD approvals of the transaction
28 07
Today Investor Presentation
30
IDEAMI ordinary and extraordinary Shareholders’ meeting to approve the transaction End of creditors
January
2018 2019
20-25 days 60 days
Merge of Agrati in IDEAMI to be effective Transaction
60
AGENDA
61
Organization chart
President & CEO
Vice President
Since 2016
CEO
Since 1995
CFO
Since 2016
Quality
Since 2007
HR
Since 2011
Purchasing
Since 2014
IT
Since 2015
Sales & Marketing
Since 2009
Operations
Since 2007
R&D
Since 2011
Product development
Since 1999
Agrati S.p.A.
Since 1995
Agrati CVB
Since 2011
Agrati FSP
Since 2002 YAF
Since 2015
Agrati Inc.
Since 2015
ECExecutive Committee member
Note: Please note that the Management Committee also includes Mr. Fabrizio Perini, the Group CAO
Agrati France
Since 1989
Experienced & Loyal Management team with strong engineering and manufacturing expertise
Appendix
ECCompany Management
62
Income statement
2016A 2017A H1 17 H1 18 Net Revenues 488.506 658.077 343.523 348.222 Cost of Revenues (376.475) (520.340) (268.818) (278.613) Gross Profit 112.031 137.737 74.705 69.609 Other operating income 5.935 3.712 1.082 1.522 Other operating expenses (4.248) (2.436) (781) (1.241) Selling expenses (27.876) (33.622) (17.172) (17.524) General and Administrative expenses (31.620) (40.315) (21.530) (20.767) Other non-recurring income 136 4.772 134
(4.519) (674) (290)
49.839 69.173 36.148 31.599 Financial income 1.271 1.306 569 467 Financial expenses (5.401) (10.104) (5.351) (5.052) Net financial income / (expenses) (4.130) (8.797) (4.782) (4.585) Profit / (Loss) from investments in related entities (122) (1.657) (1.657) (6) Profit / (Loss) before taxes 45.586 58.719 29.710 27.008 Income taxes (12.609) (6.989) (10.277) (8.088) Net Profit/(Loss) 32.978 51.730 19.432 18.921 Net Profit/(Loss) attributable to the Group 30.689 51.730 17.934 18.921 Net Profit/(Loss) attributable to non-cont. Int. 2.289
Data in k€
63
Balance sheet
ASSETS 2016A 2017A 2017 Restated H1 18 Property, plant and equipment 205.978 208.569 200.980 201.661 Goodwill & int. assets with indef. useful lives 61.198 53.789 53.789 55.324 Intangible assets 113.648 94.591 94.591 93.701 Investments in related entities 10.054 8.397 2.189 2.186 Other non-current financial assets 2.742 2.560 2.280 2.996 Deferred tax assets 9.309 7.732 7.732 7.233 Other non-current assets 3.412 4.119 4.119 1.903 Total Non-current assets 406.341 379.757 365.681 365.004 Inventories 109.099 112.737 112.737 121.236 Trade receivables 106.941 108.168 108.168 121.612 Current tax assets 3.808 2.320 2.320 3.796 Other current receivables 11.391 12.053 12.053 9.548 Assets held for sale
156 Current financial assets 777 1.531
45.665 35.230 35.230 39.935 Total Current assets 277.682 272.039 272.039 296.282 Assets held for distribution 14.077 13.961 TOTAL ASSETS 684.023 651.796 651.796 675.247 EQUITY AND LIABILITIES 2016A 2017A 2017 Restated H1 18 EQUITY Share capital 20.000 20.000 20.000 20.000 Reserves 101.845 93.219 93.219 130.025 Profit / (Loss) brought forward 5.988 17.835 17.835 36.131 Net result for the year attributable to the Group 30.689 51.730 51.730 18.921 Group Equity 158.521 182.784 182.784 205.076 Non-controlling interests 7.668
166.189 182.784 182.784 205.076 LIABILITIES Non-current financial debt 217.968 179.061 179.061 181.771 Other non-current financial liabilities 15.750 22.995 22.995 15.750 Employee benefits 12.602 11.695 11.695 11.123 Deferred tax liabilities 44.981 29.420 29.420 29.931 Long-term provisions 2.824 2.636 2.636 1.318 Other non-current liabilities 256 646 646 1.231 Total Non-current liabilities 294.381 246.454 246.454 241.124 Current financial debt 51.127 39.977 39.977 32.968 Current portion of non-current financial debt 26.043 31.133 31.133 32.243 Trade payables 99.243 112.471 112.471 117.677 Current tax liabilities 4.067 4.000 4.000 4.582 Short-term provisions 5.837 1.727 1.727 1.670 Other current liabilities 37.136 33.251 33.252 39.908 Total Current liabilities 223.453 222.558 222.559 229.047 TOTAL EQUITY AND LIABILITIES 684.023 651.796 651.796 675.247
(1)
(1) Restated to reflect the assets held for sale classification
(1)
Appendix Data in k€
64
Cash flow statement
2016A 2017A H1 17 H1 18 Cash and cash equivalents at the beginning of period 46.928 45.665 45.665 35.230 Net Profit / (Loss) 30.689 51.730 19.432 18.921 Depreciation, Amortization 25.724 36.866 18.629 18.921 Net gains/losses on disposal of PPE and intangible assets (393) (1.623) 290
1.481 (5.205) 4.255 (1.946) Change in tax assets/liabilities 2.892 1.421
Change in inventories 7.112 (3.638) (2.502) (8.498) Change in trade receivables (4.499) (1.227) (24.752) (13.445) Change in trade payables 1.546 13.228 9.225 5.206 Change in other payables and receivables (6.876) (18.920) 3.952 12.997 Cash flow from operating activities 57.674 72.633 28.530 31.260 Acquisition of PPE and intangible assets (27.789) (44.926) (20.875) (14.941) Proceeds from the sale of PPE and intangible assets 11.008 7.523 764 210 Net cash used in investing activities (16.781) (37.403) (20.111) (14.731) Acquisition of subsidiaries, net of cash acquired (230.598) (17.727) Proceeds from non-controlling interests 15.750
3.062 (572) 233 659 Change in investments in related entities 141 1.657
(Payments) / Proceeds from loans and borrowings 178.611 (37.723) (25.215) (10.433) Dividends paid (10.500)
(43.535) (54.365) (23.008) (9.771) Translation exchange differences and other changes 1.379 8.700 (6.184) (2.053) Total change in cash and cash equivalents (1.263) (10.435) (20.773) 4.705 Cash and cash equivalents at the end of period 45.665 35.230 24.893 39.935
Appendix Data in k€
65
Agrati performance
2009 = 100%, indexed
VEHICLE PRODUCTION VS AGRATI PERFORMANCE
Global vehicle production* Agrati organic Agrati inorganic
Product portfolio positioning allowed the company to organically outgrow the vehicles mkt by ~2x organically and ~3x considering the acquisitions
~2X ~3X
2009 2010 2011 2012 2013 2014 2015 2016 2017 Source: Company data; ANFIA report 163 331 459
*Not included heavy commercial vehicles and trucks
100 100
Appendix
66
Current shareholding structure
− Not listed, no entitlement to ordinary dividends and no voting rights − 6:1 conversion to Ordinary Shares at certain triggers
− Strike Price: €10,5 − 2 warrants every 10 ordinary shares at IPO − 3 warrants every 10 ordinary shares at BC
DeA Capital 8,25% Banca IMI 8,25% Market 83,50%
Cesare Agrati
(2)Carlos Agrati
Agrati Holding Agrati S.p.A.
2,5%(1) 100% 0,1%(1) 97,4%(1)
(2) (2)
(1) Net of 19,67% of treasury shares (2) Based on Ordinary shares
Appendix
67
Disclaimer
For the purposes of this disclaimer, this presentation (the “Presentation”) comprises the attached slides, the speeches made by the presenter(s), the question and answer session and any materials distributed at, or in connection with, the Presentation. THIS PRESENTATION IS STRICTLY CONFIDENTIAL AND IS BEING PROVIDED TO YOU SOLELY FOR YOUR INFORMATION. This Presentation is being made available to a limited number of recipients solely for the purpose of introducing the Company. This Presentation is strictly confidential. It is furnished to you solely for your information, should not be treated as an investment advice and may not be copied, reproduced, distributed or otherwise made available (in whole or in part) to any other person by any recipient. In particular, neither this document nor any copy thereof may be taken or transmitted or distributed, directly or indirectly, into Canada, Japan or Australia or to any resident thereof or into the United States, its territories or possessions. The distribution of this Presentation in other jurisdictions may be restricted by law and persons into whose possession this document comes should inform themselves about, and observe, any such restrictions. Any failure to comply with these restrictions may constitute a violation of the laws of the United States, Canada, Japan, or Australia or any such other jurisdiction. By accepting this report you agree to be bound by the foregoing limitations. This Presentation is not an offer of securities in the United States or any other jurisdiction. Securities may not be sold in the United States without registration or without any case of exemption from registration under the U.S. Securities Act of 1933, as amended. IDeaMI S.p.A. (“IDeaMI”) and A. Agrati S.p.A. (“Agrati”) have not registered and do not intend to register any offering of securities in the United States or to make any public offering in any jurisdiction. This Presentation does not constitute or form part of, and should not be construed as, an offer or invitation to subscribe for or purchase any securities, and neither this document nor anything contained herein shall form the basis of or be relied on in connection with or act as any inducement to enter into any contract or commitment whatsoever. This document has not been published and has only been made available to institutional
Agrati’s mandatory documentation as well as in the proxy statement IDeaMI will prepare relating to the proposed transaction (the “Proposed Transaction”). This presentation should be read together with, and is qualified in its entirety by, the mandatory documentation above as well as the proxy statement, and you should read all the abovementioned documentation, including the risk factors set forth therein. Certain statements made in this presentation are forward-looking
and involve known and unknown risks, uncertainties and other factors that may cause actual results and developments to differ materially from any future results and developments expressed or implied by such forward looking statements including but not limited to the factors described under “Risk Factors” in IDeaMI’s public filings. IDeaMI and Agrati have no obligation to periodically update or release any revisions to the forward-looking statements contained in this presentation or reflect events or circumstances after the date of this document. This Presentation contains industry statistical data and growth forecasts for industry segments prepared by third parties. IDeaMI and Agrati did not prepare such data and forecasts and assume no liability for the same. By accepting receipt of this document and/or attending any presentation of the same, each recipient acknowledges the confidential nature of the information it contains and undertakes not to disclose it in any way either in Italy and/or abroad, and not to use the information for purposes unrelated to the Proposed Transaction, in accordance with the Confidentiality Agreement signed by each recipient. By attending this Presentation you will be taken to have represented, warranted and undertaken that: (i) you have read and understood and agree to be bound by and comply with the contents of this notice; and (ii) you will treat and safeguard as strictly private and confidential all such information and take all reasonable steps to preserve such confidentiality.