F I L A Fabbrica Italiana Lapis ed Affini S p A : 9M 2020 F.I.L.A. Group Results

9M 2020 FILA Group Results

Disclaimer

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3Q & 9M 2020 Highlights

3Q 2020 results:

• Sales of 170,9mln € (185,1mln € in 3Q 2019), with comparable FX;
• Adjusted EBITDA, without IFRS 16 effects and with comparable FX, of 31,9mln €, improving on Q3 2019 (29,9mln €);
• EBITDA margin at 18,7% from 16,2% in 3Q2019;
• Strong growth in Fine Art worldwide (+30% vs 3Q 2019), with positive contribution on margins, that partially offset the effects of the school lockdown in India and Mexico.

9M 2020 results:

• Sales of 471,3mln € (535,9mln € in 9M 2019) with decline of -57,1mln € (-10,7%), with comparable FX, due to COVID-19 impacts and referred for 60% to India and Mexico. Fine Art +13,8% and School & Office -19,6% vs 9M 2019;
• Adjusted EBITDA, without IFRS 16 effects, of 78,1mln € (88,2mln € in 9M 2019) with a decrease of 10,9mln € (-12,4%), with comparable FX;
• EBITDA margin at 16,6 % from 16,5% in 9M2019;
• Net Bank Debt of 470,3mln € (493,3mln € as at September 2019) with a decrease of 23,0mln € in the last 12 months, notwithstanding the cash out for ARCHES® acquisition of 43,6mln € and 4,2mln € related to consulting fees and other closing expense => Net Bank Debt decrease in last twelve months of 70,8mln € including positive FX effect of approx. 22,5mln €;
• "Free Cash Flow to Equity" worse of 13,2mln compared 9M 2019 due to lower EBITDA, consultancy cash out for Arches consultancy fees and higher inventory level (in particular in North America and Mexico), but in line with expectations.

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9M 2020 Highlights

COVID-19 impacts in the first 9M 2020 affected in particular India and Mexico for prolonged school lock-down and lack on line sales. Here under a 9M main economic and financial data comparison between 2020 and 2019:

€ million
3rd PARTIES SALES		Actual 2020 YTD			Actual 2019 YTD		Var vs PY
	September			September
Dixon (Mexico)		12,1		34,5		(22,4)
DOMS Industries PVT Ltd (India)	28,7	53,6	(24,9)
EBITDA		Actual 2020 YTD			Actual 2019 YTD		Var vs PY
	September			September
Dixon (Mexico)		1,4		5,1		(3,6)
DOMS Industries PVT Ltd (India)	2,6	6,6	(4,0)
NFP IFRS 16 excluded		Actual 2020 YTD			Actual 2019 YTD		Var vs PY
	September			September
Dixon (Mexico)		(35,2)		(42,9)		7,8
DOMS Industries PVT Ltd (India)	(7,7)	(4,3)	(3,4)

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9M 2020 Core Business Sales

(€ million)

-64,5mln€-12,0%

535,9

471,3

9M 2019A

9M 2020A

Adjusted

• Core Business Sales of 471,3mln €, -64,5mln € (-12,0%) compared to 9M 2019 Results;
• Core Business Sales variation -57,1mln € (-10,7%), FX effects excluded, of which:
• • By Geographic Area: Asia -24,0mln € (-37,6%), Centre & South America -22,1mln € (-45,6%), Europe -7,1mln € (-4,2%), North America -4,2mln € (-1,6%) partially offset by Other Countries +0,3mln € (+14,4%);
  • By Product line: School & Office -75,1mln € (-19,6%), Industrial -1,1mln € (-7,3%) partially offset by Fine Art, Hobby & Digital +19,1mln € (+13,8%).

Core Business Sales for 2020 include since March 2020 Arches sales for 3,1mln € and for 2019 include Superior sales for 5,4mln €, business sold in October 2019.

SALES BY PRODUCT LINE

9M 2020
64,2%				Fine Art, Hobby &
			Digital
				Industrial
2,9%	32,9%			School & Office
9M 2019
			Fine Art, Hobby &
71,6%
			Digital
				Industrial
				School & Office

25,7%

2,7%

SALES BY GEOGRAPHICAL AREA

9M 2020	Europe

52,9%	4,6%		N. America
8,2%
		C&S
	0,4%
		America
			Asia
	33,9%		RoW
9M 2019	9,1%
	Europe
	11,9%		N. America
47,4%	0,4%		C&S America
			Asia
	31,2%		RoW

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Data in millions of euros; for precise data refer to 9M FILA financial report

9M 2020 EBITDA Adjusted (Excluded IFRS 16)

Margin (%)	16,5		16,6	(€ million)
	88,2	-10,1mln€
	7,5
	-11,5%	78,1
			9,5
	80,7		68,6
	9M 2019A		9M 2020A
	Reported		Adjustment

• Adjusted EBITDA of 78,1mln €, -10,1mln € (-11,5%) compared to 9M 2019 Results;
• Adjusted EBITDA variation -10,9mln € (-12,4%), FX effects excluded;
• 9,5mln € of extraordinary costs in 9M 2020 mainly related to Fila Arches acquisition (4,7mln €), COVID-19 pandemic (3,0mln €) and FILA Group reorganization costs (1,5mln €); 7,5mln € of extraordinary costs in 9M 2019 mainly due to reorganization costs;

Adjusted EBITDA for 2020 include since March 2020 Arches Ebitda for 1,5mln € and for 2019 include Superior Ebitda for 1,0 mln €, business sold in October 2019.

ADJUSTED EBITDA BY GEOGRAPHICAL AREA

9M 2019	5,7%						9M 2020
		Europe						Europe
					48,6%	1,4%
45,6%	15,0%			N. America				10,7%				N. America
	-0,4%			C&S America				-0,5%				C&S America
				Asia								Asia
	34,1%			RoW				39,8%				RoW

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Data in millions of euros; for precise data refer to 9M FILA financial report

9M 2020 Net Income Adjusted (Excluded IFRS 16)

(€ million)	-11,6mln€
33,1
-35,1%
6,0
	21,5
	6,8
27,1
	14,7
9M 2019A	9M 2020A
	Adjusted

• Adjusted Net Income of 21,5mln €, -35,1% compared to 9M 2019. Results mainly affected by higher financial costs related to negative FX effect;
• The adjustment of the Group Result in 9M 2020 for 6,8mln € mainly refers to extraordinary operating costs for Arches acquisition and COVID-19 pandemic, net of taxes effects;
• The adjustment of the Group Result in 9M 2019 for 6,0mln € mainly refers to group reorganization costs, net of taxes effects.

Data in millions of euros; for precise data refer to 9M FILA financial report	7

9M 2020 Net Financial Position

(€ million)		9M 2019A		2019A		9M 2020A
Cash and Cash Equivalents		26,8		85,6		79,4
Financial Liabilities	(520,1)	(489,1)	(549,6)
Net Bank Debt				(403,5)
Amortized cost		5,9		5,6		7,0
Financial Receivables	0,8	1,1	0,1
Mark to Market Hedging	(18,9)	(13,6)	(20,8)
NFP excluded IFRS 16		(505,6)		(410,4)		(483,9)
IFRS 16		(78,2)		(87,8)		(85,1)
NFP included IFRS 16		(583,8)		(498,2)		(569,0)

•	Net Bank Debt decrease of 23,0mln	in the last twelve
	months, notwithstanding	out	for Arches
	acquisition of 43,6mln € and related consultancy fees and
	other closing expenses for 4,2mln € => Net Bank Debt
	decrease in last twelve months of 70,8mln € excluding
	Arches Acquisition cash out, but including positive fx
	effect of approx. 22,5mln €;
•	9M 2020 Net Financial Position increase	70,8	€

compared to FY2019, below the main variations:

• M&A Arches acquisition price for 43,6mln €;
• Free Cash Flow to Equity negative for 30,7mln € (26,5mln € excluding consultancy fees and other closing expenses for 4,2mln €).

Data in millions of euros; for precise data refer to 9M FILA financial report	8

9M 2020 Cash Flow Statement

(€ million)

CASH FLOW

		EBIT
		Adjustments for non monetary costs
16		Adjustments for taxes
	Cash-flow from operating activities before changes in NWC
IFRS		Changes in net working capital
EXCLUDED		Operating cash-flow
	Investments in tangible and intagible assets
		Free Cash Flow
		Net financial expenses
		Other changes
		IFRS 16 Impact
		Free Cash Flow to Equity
		Capital increase/reimbursement/dividends
		Adjustment mark to market hedging
		Effect of FX rate movements
		IFRS 16 Net Financial Position
		M&A - Acquisition: 2019 Minority acquisition - 2020 Arches
		Changes in Net Financial Position

	9M 2019A			9M 2020A
57,7		43,7
25,3		25,6
(8,6)	(5,5)
74,4		63,8
(62,0)		(73,8)
12,4		(10,0)
(14,1)		(7,5)
(1,6)		(17,5)
(17,7)		(16,0)
(3,4)	(2,4)
5,2	5,2
(17,5)		(30,7)*
(4,3)		(0,3)
(13,6)	(7,6)
(14,6)	17,6
(78,2)	(6,3)
(2,8)	(43,6)
(131,0)		(70,8)

*Including cash out of 4,2mln € for consultancy fees and other closing expenses related to Arches acquisition.

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Data in millions of euros for precise data refer to 9M FILA financial report

Appendix

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9M 2020 Income Statement Reported

(€ million)			9M 2019A			% on Sales	9M 2020A	% on Sales
PROFIT & LOSS
	Core Business Sales	535,9					471,1
	Other revenues	5,5					6,8
	Total revenues		541,4					477,9
	Cost for Raw Materials and Supplies net Increase(decrease) inventory	(248,3)	(46,3%)		(215,8)		(45,8%)
	Costs for Services and Use of Third-Party Assets	(91,2)	(17,0%)		(79,4)		(16,9%)
	Personnel Costs	(106,2)	(19,8%)		(98,2)		(20,8%)
	Other Operating Costs	(5,5)	(1,0%)		(6,0)		(1,3%)
	Total operating costs	(451,2)	(84,2%)		(399,4)		(84,8%)
	EBITDA		90,2	16,8%		78,5		16,7%
	Depreciation and Amortization	(29,8)	(5,6%)		(31,4)		(6,7%)
	Write-Downs	(1,0)	(0,2%)		(1,5)		(0,3%)
	EBIT		59,5	11,1%		45,6		9,7%
	Financial income/expenses	(21,2)	(4,0%)		(27,7)		(5,9%)
	Income/expenses from associates at equity method	0,1	0,0%		(0,0)		(0,0%)
	PBT		38,4	7,2%		17,8		3,8%
	Taxes	(11,9)	(2,2%)		(5,5)		(1,2%)
	Total net profit (loss) of the period		26,5	4,9%		12,3		2,6%
	Total net profit (loss) attributable to non controlling interests	1,3	0,2%		(0,5)		(0,1%)
	Fila Group's total net profit (loss) of the period		25,2	4,7%		12,8		2,7%

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Data in millions of euros for precise data refer to 9M FILA financial report

9M 2020 Income Statement Adjusted

(€ million)			9M 2019A			% on Sales	9M 2020A		% on Sales
P&L ADJUSTMENTS
	REPORTED CORE BUSINESS SALES	535,9					471,1
	Total Adjustments								0,2
	ADJUSTED CORE BUSINESS SALES		535,9					471,3
	REPORTED EBITDA	90,2	16,8%		78,5	16,7%
	IFRS 16 Impact	(9,6)					(9,9)
	Total Adjustments	7,5					9,5
	ADJUSTED EBITDA EXCLUDED IFRS 16		88,2	16,5%		78,1	16,6%
	REPORTED FILA GROUP NET PROFIT	25,2	4,7%		12,8	2,7%
	IFRS 16 Impact	1,9					1,9
	Total Adjustments	6,0					6,8
	ADJUSTED FILA GROUP NET PROFIT EXCLUDED IFRS 16		33,1	6,2%		21,5	4,6%

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Data in millions of euros for precise data refer to 9M FILA financial report

9M 2020 Balance Sheet Reported

(€ million)			2019A			9M 2020A
BALANCE SHEET
	Intangible assets	430,6	449,6
	Tangible Assets	186,0	175,2
	Financial Fixed Assets	3,7	3,5
	Fixed Assets	620,3	628,2
	Other Non Current Assets/Liabilities	18,3	19,4
	Trade Working Capital	291,1	341,6
	Other Current Assets and Liabilities	3,8	1,3
	Net Working Capital	294,9	343,0
	Provisions & Funds	(78,0)	(80,1)
	NET CAPITAL EMPLOYED		855,5		910,5
	Shareholders equity	(357,3)	(341,5)
	Net Financial Position	(498,2)	(569,0)
	TOTAL NET SOURCES		(855,5)		(910,5)

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Data in millions of euros for precise data refer to 9M FILA financial report

FILA Shareholders

Total shares *

Ordinary shares only

	Class B	Market
	Shares
	investor
Ordinary	15,8%
68,1%
Shares
84,2%

Pencil 31,9%

*Total shares 51.040.048 of which : Ordinary shares 42.958.192; Class B shares 8.801.856 (enjoy three votes each in accordance with Article 127- sexies of Legislative Decree No. 58/1998).

Investor Relations F.I.L.A.

Stefano De Rosa CFO/IR Officer - Francesca Cocco IR [e-mail]

([phone]

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