BELYSSE GROUP NV LSF9 Balta Issuer S.à.r.l
Senior Secured Notes due 2024
Q3 2021 - Period ended September 30, 2021
2021
QUARTERLY REPORT
Registered office: 15, Boulevard Friedrich Wilhelm Raiffeisen, L-2411 Luxembourg R.C.S. Luxembourg: B 198084
Table of Contents | ||
3.1.2. | YTD 2021 ........................................................................................................................................................ | 6 | |
3.2. | RUGS .................................................................................................................................................................. | 6 | |
3.3. | COMMERCIAL..................................................................................................................................................... | 6 | |
3.4. | RESIDENTIAL ...................................................................................................................................................... | 6 | |
4. OTHER FINANCIAL ITEMS REVIEW.......................................................................................................................... | 7 | ||
4.1. INTEGRATION AND RESTRUCTURING EXPENSE .................................................................................................. | 7 | ||
4.2. | NET FINANCING EXPENSES ................................................................................................................................. | 7 | |
4.3. | TAXATION .......................................................................................................................................................... | 7 | |
4.4. | EARNINGS PER SHARE ........................................................................................................................................ | 7 | |
4.5. CASHFLOW AND NET DEBT................................................................................................................................. | 7 | ||
5. | RISK FACTORS ........................................................................................................................................................ | 7 | |
6. CONSOLIDATED INTERIM FINANCIAL STATEMENTS................................................................................................ | 8 | ||
6.1. CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME .............................................................................. | 8 | ||
6.2. CONSOLIDATED STATEMENT OF FINANCIAL POSITION....................................................................................... | 9 | ||
6.3. CONSOLIDATED STATEMENT OF CASH FLOWS ................................................................................................. | 10 | ||
6.4. CONSOLIDATED STATEMENT OF CHANGES IN EQUITY...................................................................................... | 11 | ||
6.5. SELECTED EXPLANATORY NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS ..... | 12 | ||
6.5.1. | SIGNIFICANT ACCOUNTING POLICIES............................................................................................................ | 12 | |
6.5.2. | SEGMENT REPORTING .................................................................................................................................. | 13 | |
6.5.3. INTEGRATION AND RESTRUCTURING EXPENSES........................................................................................... | 14 | ||
6.5.4. | GOODWILL ................................................................................................................................................... | 14 | |
6.5.5. | NET DEBT RECONCILIATION .......................................................................................................................... | 14 | |
6.5.6. | RELATED PARTY TRANSACTIONS .................................................................................................................. | 15 | |
6.5.7. | COMMITMENTS............................................................................................................................................ | 15 | |
6.5.8. EVENTS AFTER THE STATEMENT OF FINANCIAL POSITION DATE................................................................... | 15 | ||
7. | GLOSSARY: ALTERNATIVE PERFORMANCE MEASURES ......................................................................................... | 17 |
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1. Key Figures
(€ thousands) | Q3 2021 | Q3 2020 |
Results | ||
Revenue | 151,455 | 144,399 |
Adjusted EBITDA | 20,951 | 21,805 |
Adjusted EBITDA Margin | 13.8% | 15.1% |
Integration and restructuring expenses | 2,074 | (1,187) |
EBITDA | 23,025 | 20,618 |
Depreciation / amortisation | (9,440) | (9,690) |
Operating profit / (loss) for the period | 13,585 | 10,928 |
Net finance expenses | (6,917) | (7,833) |
Income tax benefit / (expense) | (5,554) | (2,327) |
Profit/(loss) for the period | 1,114 | 767 |
(€ thousands) | YtD 2021 | YtD 2020 |
Results | ||
Revenue | 469,761 | 410,781 |
Adjusted EBITDA | 65,119 | 40,014 |
Adjusted EBITDA Margin | 13.9% | 9.7% |
Integration and restructuring expenses | (8,881) | (3,805) |
EBITDA | 56,238 | 36,209 |
Depreciation / amortisation | (28,674) | (29,568) |
Operating profit / (loss) for the period | 27,564 | 6,641 |
Net finance expenses | (22,627) | (21,554) |
Income tax benefit / (expense) | (7,152) | (1,189) |
Profit/(loss) for the period | (2,216) | (16,101) |
Cash flow | ||
Cash at beginning of period | 106,289 | 19,241 |
Net cash generated / (used) by operating activities | 8,019 | 69,590 |
Net cash used by investing activities | (19,149) | (16,460) |
Net cash generated / (used) by financing activities | (41,516) | 45,484 |
Cash at end of period | 53,643 | 117,855 |
Financial position
In relation to Balta's financing agreements, the documentation provides for the effect of changes in accounting standards to be neutralized. As such, the application of IFRS 16 has no consequence for the Group's financing.
(€ thousands) | Q3 2021 | Q3 2020 |
Net debt1 | 282,781 | 241,030 |
Leverage | 3.3 | 4.7 |
Note 1: IFRS 16 effect is excluded from the leverage comparison (see glossary)
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2. Management discussion and analysis of the results 2.1. Group Highlights
-
Q3 consolidated Revenue of €151.5m, higher than Q3 2020 by €7.1m (+4.9% YoY). o Organic revenue improved by 4.9%, while FX effects were negligible
o Revenue growth by division: Rugs +8.7%, Residential -3.6%, Commercial +9.9% - Q3 Adjusted EBITDA slightly reduced to €21.0m from €21.8m in Q3 of last year (-4.0% YoY), with an Adjusted EBITDA margin of 13.8% compared to 15.1% in Q3 2020.
- Rugs +€1.6m YoY
- Residential -€3.1m YoY o Commercial +€0.8m YoY
- While slightly below Q3 2020, Q3 2021 Adjusted EBITDA was 21.4% higher than in Q3 2019.
- Net Debt at the end of Q3 2021 increased by 9.4% to €322.5m compared to the end of H1 2021 due to higher working capital, mainly as a result of cost increases in raw materials. Leverage1 at the end of Q3 2021 was 3.3x compared to 3.0x at the end of H1 2021.
- Total available liquidity amounted to €71.1m at the end of Q3 2021, comprising cash of €53.6m and €17.5m headroom under our revolving credit facilities.
2.2. Business Update
- The results in Q3 2021 reflect better prices and product mix, as well as the impact of our NEXT initiatives. Fixed expenses normalised as our activities continued to recover to pre-pandemic levels.
- Price increases in all divisions partially compensated for the significantly higher raw materials, transportation and more recent energy costs impacting our industry. Cost of Goods Sold in Q3 has still somewhat benefitted from the lower cost of raw materials purchased earlier in the year, although this effect is coming to an end.
- Our volumes in the Commercial division are slower to recover than in Rugs and Residential and are still below pre-COVID-19 levels, however Q3 saw an improving US market.
- Net cashflow during Q3 2021 saw an outflow of €33.8m. Higher inventory, due to increasing raw material costs, and higher accounts receivables, as sales increased, accounted for most of the cash outflow.
- Our NEXT program continued to deliver strong results in Q3 2021. Operational NEXT savings added €5m to our YTD 2021 Adjusted EBITDA versus 2020. Top-line NEXT initiatives delivered €42m of incremental revenue YTD 2021 versus 2020. Overall, NEXT results are ahead of target.
1 Excluding IFRS 16 impact but including sale and leaseback
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2.3. Cyrille Ragoucy, CEO and Chairman of the Board of Balta
said,
"Trading in the third quarter of 2021 added to the strong record of improvement over the last 15 months. Our YTD 2021 Adjusted EBITDA ended well above the same periods in 2019 and 2020. Revenue in the Commercial division, which has been slower to recover from the pandemic, grew compared to Q3 2020, mainly due to a recovery in the US construction sector.
In Q3, the strong increase in raw material and transportation costs first seen by the industry in Q2 2021 started to significantly impact Balta's Cost of Goods Sold. While the start of the quarter still saw some benefit from the lower cost of raw materials purchased earlier in the year, this effect is coming to an end. As well as focussing on growing our business and continuously improving efficiency through our NEXT program, Balta has implemented price increases across all divisions to pass on the inflationary pressure. The significant energy cost increases in Europe started to impact us as from September and will require further action."
3. Operating review per segment
3.1. Revenue and Adjusted EBITDA per segment
3.1.1. Q3 2021
Q3 | Q3 | o/w organic | o/w | ||
(€ million, unless otherwise mentioned) | 2021 | 2020 | % Change | growth | FX |
Rugs | 52.5 | 48.3 | 8.7% | ||
Commercial | 48.9 | 44.5 | 9.9% | ||
Residential | 45.5 | 47.1 | (3.6)% | ||
Non-Woven | 4.6 | 4.4 | 2.9% | ||
Consolidated Revenue | 151.5 | 144.4 | 4.9% | 4.9% | (0.0)% |
Rugs | 8.5 | 6.9 | 22.3% | ||
Commercial | 7.9 | 7.1 | 10.6% | ||
Residential | 4.2 | 7.3 | (42.5)% | ||
Non-Woven | 0.4 | 0.5 | (15.5)% | ||
Consolidated Adjusted EBITDA | 21.0 | 21.8 | (4.0)% | (3.5)% | (0.4)% |
Rugs | 16.1% | 14.3% | |||
Commercial | 16.2% | 16.1% | |||
Residential | 9.2% | 15.4% | |||
Non-Woven | 9.6% | 11.7% | |||
Consolidated Adjusted EBITDA Margin | 13.8% | 15.1% |
Note: the segment table has been copied from the press release issued by Balta Group NV, where EBITDA is €0.03m higher than at LSF9 Balta Issuer level due to a markup on management services provided at level of Balta Group NV and then charged to LSF9 Balta Issuer and subsidiaries.
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Balta Group NV published this content on 29 November 2021 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 30 November 2021 08:20:05 UTC.
