Investors presentation Q3 Report September 30, 2014 November 27, 2014
Confidentiality This presentation has been prepared by Marcolin S.p.A. and its affiliates. The information contained herein is confidential and has been prepared solely for the needs of the adressee and is not to be relied upon by any other person or entity. Hence, if you wish to disclose copies of this report to any other person or entity, you must inform they that they may not use these reports for any purpose without Marcolin written consent. No representation, warranty or undertaking, express or implied, is made as to, and no reliance shoud be placed on, the fairness, accuracy, completeness or correctness of the information or the opinions contained herein. 2
Agenda At a glance Key consolidated financials: Q3 2014 Key consolidated financials: LTM Viva Integration Project Appendix 3
At a glance Key facts 2014 > Joint venture China announcement > Project Fortogna > Portfolio licences (RC) 4
Agenda At a glance Key consolidated financials: Q3 2014 Key consolidated financials: LTM Viva Integration Project Appendix 5
Key consolidated financials 272.2 Consolidated Net sales increased +1,6% vs. PY; at constant FX sales increased +3,7% . Sales Upside from TF (+ € 9.5m) and good performance of TB (+ € 2.6m) and DL Million EUR (+ € 1.4m). 277.9 267.9 2014 Constant FX Million EUR in 2013 2014 Q3 EBITDA Reported is € 22.0m ( € 25.0m previous year). Q3 29.5 10.8% 2014 Q3 Adjusted EBITDA* (excluding one-offs) is € 29.5m in line with EBITDA On Net previous year. sales LTM Adjusted Run-Rate EBITDA for 2014 is € 46.2m. LTM 46,2 13.2% Negative fluctuation of the exchange rate effect of about - € 0,5m vs. previous year. On Net sales 184.4 Net Debt Consolidated Net Debt as of September 2014 is € 184.4m ( € 166,2m end of December 2013) with a cash absorption of € 4.8m mostly due to Bond issuance expenses and other non recurring outflows. Million EUR The ratio Net financial position to LTM Adjusted run-rate EBITDA is 3.85 ; 3.85 NFP / including the Bond interest accruals in the Net Debt, the ratio would be 3.99 Adj LTM RR Ebitda * EBITDA is affected by a number of extraordinary items. For this reason it has been adjusted to restate the one-off effects deriving from the re-organization as represented in “ Consolidated Adjusted EBITDA” page. 6
2014 YTD Q3 272.2 Global sales YTD Q3 Consolidated Sales By market destination million EUR +1.6% vs PY 277.9 mill EUR +3.7% vs PY @ const FOREX Europe Asia North America 98.9 21.1 36.3% 7.8% Mill. EUR Mill. EUR 107.3 +6.0% +2.9% 39.4% Mill. EUR +1.4%* 44.9 * +5,0% costant forex 16.5% Mill. EUR - 2.5%* * + 1 % costant forex RoW 7
YTD Q3 P&L Executive Summary • Net Sales were positive: above last year + € 4.3m (+1.6%) in particular is growing fast in Italy (+11,8%) and in export, especially in Far East and Key Accounts channel, driven by TF, TB and BA. • Net Sales @ constant FX + € 10.0m or +3.7% vs. PY. • GM% in September 2014YTD was 110bps below PY, mainly due to VIVA for worse channel mix and higher close-out sales. Negative impact for € 3.1m due to fluctuation on exchange rate vs. same period of last year. • EBITDA Reported in September 2014YTD is € 22.0m vs. € 25.0m last year (respectively 8.1% vs. 9.3% of Net sales). • EBITDA Adjusted, excluding one off items, would be 10.8% (or € 29.5m). • Financial of € 8.4m is including € 12,7m for Bond interests (of which paid in May € 8.5m). 8
Consolidated Profit & Loss Key financials: YTD Q3 YTD Sept Actual 14 Actual 14 Actual 13 Actual 13 (EURm) Reported Reported %NS Pro-Forma Pro-Forma %NS Net sales 272,2 100,0% 267,9 100,0% Cost of sales (108,1) -39,7% (103,4) -38,6% -- Gross Margin 164,0 60,3% 164,4 61,4% Selling and marketing costs (129,1) -47,4% (125,0) -46,7% General and administrative expenses (22,8) -8,4% (25,0) -9,3% Other operating income and expenses 2,0 0,7% 3,3 1,2% Effects of accounting for associates 0,2 0,1% 0,3 0,1% -- OPERATING PROFIT (EBIT) 14,3 5,3% 18,1 6,8% Net finance costs (8,4) -3,1% (10,7) -4,0% -- Profit before taxes 5,9 2,2% 7,4 2,8% Income tax expense (2,8) -1,0% (5,1) -1,9% -- Net Result 3,1 1,1% 2,3 0,9% -- EBITDA 22,0 8,1% 25,0 9,3% -- EBITDA ADJUSTED 29,5 10,8% 29,7 11,1% 2014 Reported and 2013 Pro-Forma: both considering Marcolin, Cristallo and Viva 9 9
B/S Executive Summary • Inventory : compared to December 2013 has risen for € 16.1m (which is mostly due to turnover increase and service level improvement) • Net Trade Receivables: + € 5.3m increase compared to Dec 13 due to seasonality and turnover increase • Other Current Financials (Cash and Cash liquidity): are decreasing - € 4.8m strongly affected by the following items o 2014 Bond Expenses non recurring payments ( € 3,3m) o Non recurring payment to HVHC (price adjustment of € 3,4m) o One-offs Viva integration project ( € 5,7m) o Interests on the Bond notes paid in May for € 8.5m • Intangible assets: include renewal fees for SK and DL licenses, partially paid in 2014; in addition include € 1.8m Viva’s ERP new software • Payables: the increase of € 11.9m is in primarily attributable to the turnover increase. • Net Financial Position: versus same period of previous year is affected by Bond issuance; September 2014 increased from € 166.2m (Dec. 13) to € 184.4m, with a change of € 18.2m as detailed in the consolidated cash flow statement 10
Consolidated Balance Sheet Key financials: Q3 Balance Sheet (EURm) Sept-14 Dec-13 Change vs Dec Net trade receivables 67,5 62,2 5,3 Inventory 89,0 72,9 16,1 Payables to suppliers (76,6) (64,7) (11,9) TRADE WORKING CAPITAL 79,9 70,4 9,5 Other receivables 18,0 14,0 4,0 Other payables (26,0) (23,1) (2,9) NET WORKING CAPITAL 71,9 61,3 10,6 Other receivables - medium/long term 24,4 25,2 (0,8) Equity investments 2,1 2,0 0,1 Net tangible assets 24,5 23,5 1,0 Net intangible assets 41,5 34,7 6,8 Goodwill 263,4 256,9 6,5 FIXED ASSETS 355,9 342,3 13,6 Funds and reserves (20,2) (22,4) 2,2 NET INVESTED CAPITAL 407,6 381,1 26,5 Financial debts - short term 28,6 17,7 10,9 Financial debts - medium/long term 196,9 195,9 1,0 FINANCIAL POSITION 225,5 213,6 11,9 Other current financial (35,6) (40,3) 4,7 Other non current financial (5,4) (7,1) 1,7 NET FINANCIAL POSITION 184,4 166,2 18,2 NET EQUITY 223,2 215,0 8,2 COVERAGE OF NIC 407,6 381,1 26,5 Sept. 2014 and Dec 2013 Reported: both considering Marcolin, Cristallo and Viva 11
Net Financial Position Key financials: Q3 (EURm) September 2014 December 2013 Short Term borrowings 28,6 17,7 1 Medium Long Term borrowings 205,0 205,2 2 Gross borrowings 233,6 222,9 Cash and cash equivalents 33,7 38,5 Financial receivables current 1,8 1,8 Financial receivables non current 5,5 7,1 Reported Net indebtedness befor Amortized Fees 192,6 175,5 Bond issue amortized fees (8,2) (9,3) Reported Net indebtedness after Amortized Fees 184,4 166,2 Revolving Credit Facility €25mn 12,0 0,0 Short term borrowings from Banks 7,7 8,6 Receivable Factoring 0,0 1,1 Vendor Loan (HVHC) - Short Term 1,5 4,6 Bond accrued interests 6,5 2,3 Ministry of productive activities 0,1 0,1 Financial leasing VIVA 0,8 0,7 Other 0,0 0,3 Short Term gross borrowing 28,6 17,7 Senior Secured bonds €200mn 200,0 200,0 Vendor Loan (HVHC) - Long Term 3,4 3,0 Financial leasing VIVA 1,5 2,0 Ministry of productive activities 0,1 0,2 Other 0,1 0,0 Medium Long Term gross borrowing 205,0 205,2 12
Consolidated Cash Flow Statement Key financials: Q3 (EURm) September 2014 Dec 2013 Reported Operating activities Profit before income tax expense 5,9 (11,8) Depreciation, amortization and impairments 7,0 5,4 Accruals to provisions/ other non cash items 0,3 18,1 CF from operating activities before changes in WC, tax and int. 13,2 11,7 Movements in working capital (10,7) (14,8) Income taxes paid (3,1) (1,9) Interest paid (9,0) (17,5) Net cash flows provided by operating activities (9,6) (22,5) Investing activities (Purchase) of property, plant and equipment (4,0) (2,6) Proceeds from the sale of property, plant and equipment 0,4 (0,0) (Purchase) of intangible assets (5,3) (1,5) (Acquisition) of investment - Marcolin e Viva 0,0 (127,7) Net cash (used in) investing activities (8,8) (131,9) Adjustments to other non-cash items 2,9 5,5 Financing activities Net proceeds from/(repayments of) borrowings 8,0 91,6 Other cash flows from financing activities 0,0 51,3 Net cash from/(used in) financing activities 8,0 142,9 Net increase/(decrease) in cash and cash equivalents (7,5) (6,0) Effect of foreign exchange rate changes 2,7 (0,7) Cash and cash equivalents at beginning of period 38,5 45,2 Cash and cash equivalents at end of period 33,7 38,5 Dec 2013 Reported: Marcolin, Cristallo and Viva (Viva for the month from the acquisition date to the annual closing date) 13
Cash Flow Focus Key financials: Q3 (EURm) September 2014 Net increase/(decrease) in cash and cash equivalents (4,8) Bond interests paid in May 8,5 Bond Expenses paid in Jan/Feb 3,3 Vendor Loan - Price adjustment due to HVHC 3,4 Renewal Fees 2,9 One-offs Viva integration project 5,7 Adj. Net increase/(decrease) in cash and cash equivalents 18,9 14
Agenda At a glance Key consolidated financials: Q3 2014 Key consolidated financials: LTM Viva Integration Project Appendix 15
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