Envipco N : 2nd Quarter 2022 Report

Envipco Holding N.V.

Interim Financial Report | Second Quarter 2022

	Interim Financial Report Second Quarter 2022
Table of contents
This is Envipco ...................................................................................................................................................................................................	3
Highlights ...........................................................................................................................................................................................................	4
CEO comment ....................................................................................................................................................................................................	4
Key Figures..........................................................................................................................................................................................................	5
Financial Review .................................................................................................................................................................................................	5
Operations ..........................................................................................................................................................................................................	8
Market developments ......................................................................................................................................................................................	10
Outlook .............................................................................................................................................................................................................	11
Share information.............................................................................................................................................................................................	12
Transactions with related parties ....................................................................................................................................................................	12
Subsequent events ...........................................................................................................................................................................................	12
Interim financial statements (IFRS)..................................................................................................................................................................	13
Consolidated Statement of Comprehensive Income ........................................................................................................................	13
Consolidated Balance Sheet .............................................................................................................................................................	14
Consolidated Cash Flow Statement ..................................................................................................................................................	15
Consolidated Statement of Changes in Equity..................................................................................................................................	16
Selected Explanatory Notes .............................................................................................................................................................................	17

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Interim Financial Report Second Quarter 2022

This is Envipco

Envipco is a recycling technology company. We have over four decades of experience delivering thousands of reverse vending machines (RVMs) and systems to leading customers operating deposit return schemes (DRS) across the world. We bring a broad technology portfolio, an agile and partnership approach, and deep experience operating and involvement in DRS. Known and recognized for our service delivery, we offer compelling competitive products and solutions in our chosen markets.

Targeting key global markets

Highly competitive with ability to capture new market growth

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Interim Financial Report Second Quarter 2022

Highlights

• Record quarter with 103% year-on-year revenue growth to EUR 16.6 million in Q2'22
• Strong quarter in Europe with Q2'22 year-on-year revenue growth of 271% to EUR 5.3 million, driven by 353% growth in RVM sales stemming from Malta and Sweden
• Continued expansion in North America with Q2'22 year-on-year revenue growth of 67% to EUR 11.4 million, driven by strong growth in both Program Service volumes and RVM sales
• Significant contract won with Iceland Foods to install RVMs in all stores operating in Scotland, a promising steppingstone towards becoming successful in this important market
• Gross margin in Q2'22 33.3% up from 32.9% in Q1'22 from improved labor efficiencies and cost stabilization of components and logistics
• Organizational investments and significant increased market development activities in Ireland, Romania, and Portugal tied to DRS legislation and implementation

CEO comment

"Q2 was a record revenue quarter for the business and the result of strong execution across our existing and targeted new DRS markets. We were delighted to announce our first success in the UK with Iceland Foods in Scotland and anticipate that we will build on this in the next months as other commercial processes conclude. In addition, this quarter showed improved core Gross Margins which have stabilized and continue to show recovery from Q4 2021. In what is still an uncertain supply chain environment, we are continuing to manage cost, scale and optimize production, and streamline logistics, positioning the company well for profitable expansion. Wider activity and progress continue at a good pace in Romania, Ireland, Portugal, and Central Europe. The business has delivered a strong H1 in 2022 and we remain optimistic about solid growth this year and setting a good foundation towards our long-term targets." - Simon Bolton, CEO

Key figures

in EUR millions	Q2 2022	Q2 2021	H1 2022	H1 2021	FY 2021
Revenues					38.4
16.6	8.2	27.0	16.6
Gross Profit					13.4
5.5	3.0	9.0	6.1
Gross profit %					35.0%
33.3%	37.0%	33.2%	37.0%
Operating Expenses					14.7
5.8	3.4	10.3	7.2
EBIT					2.3*
(0.2)	(0.2)	(1.4)	2.5*
Net profit/(loss) after taxes after minority					0.6
(0.4)	(0.1)	(1.8)	1.9
EBITDA					5.5
0.9	0.9	0.7	4.3
Earnings/(loss) per share in €					0.01
(0.01)	(0.00)	(0.04)	0.04
Shareholders' equity					30.5
32.1	30.9	32.1	30.9

* Including other income of EUR 3.4 million positive (DPG settlement, PPP forgiveness).

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Interim Financial Report Second Quarter 2022

Financial review

Profit and loss

Second quarter 2022

Revenue in the second quarter of 2022 amounted to EUR 16.6 million, up 103% from EUR 8.2 million in the second quarter of 2021. Revenue growth was driven by strong year-on-year growth in both North American and Europe with RVM sales reaching EUR 8.3 million (+468%). Program services also experienced healthy growth representing EUR 8.3 million (+24%) in the quarter.

Total gross profit came in at EUR 5.5 million in Q2'22, up from EUR 3.0 million in Q2'21. Gross margin was 33.3%, down from 37.0% in Q2'21, but improved from 32.9% in Q1'22. Margin pressure from inflationary impacts on labor, component costs, and logistics seen throughout 2021 have moderated and begun to stabilize in H1'22. Envipco has also improved labor efficiencies with a reduction of temporary production labor in the quarter. While gross margins are expected to fluctuate quarter-over-quarter based on product and customer mix, the company is expecting margin levels to stabilize and improve over the medium term with continued pricing and product cost focus.

Total operating expenses amounted to EUR 5.8 million in the quarter, compared to EUR 3.4 million in Q2'21 and EUR

1. million in Q1'22. The year-on-year increase is mainly driven by scaling of operations in production centers (+ EUR

1. million), increased sales and marketing activities in Romania, Sweden and Malta (+ EUR 0.6 million), market development (+ EUR 0.3 million), and foreign exchange (+ EUR 0.3 million). Overall, these planned investments continue to be critical to enable profitable growth and capitalize on upcoming business opportunities as more European countries introduce DRS regulations.

Resulting EBITDA for Q2'22 was EUR 0.9 million, comparable to the EUR 0.9 million seen in Q2'21. Net Loss for the quarter amounted to EUR 0.4 million compared to Net Loss of EUR 0.1 million in Q2'21.

Revenue categories (EUR million)

18		+103%

16

14

12

10

8

6

4

2

0

Q2 21	Q3 21	Q4 21	Q1 22	Q2 22
			Program Services		Machine and Parts Sales

*Machine and Parts Sales include sales of RVMs and parts. Program Services include Lease, Service and Pick-up & Processing revenues.

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