Piovan S p A : Financial Results 9M 2020

FINANCIAL RESULTS 9M 2020

12 November 2020

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Information to Distributors

Solely for the purposes of the product governance requirements contained within: (a) EU Directive 2014/65/EU on markets in financial instruments, as amended ("MiFID II"); (b) Articles 9 and 10 of Commission Delegated Directive (EU) 2017/593 supplementing MiFID II; and (c) local implementing measures (together, the "MiFID II Product Governance Requirements"), and disclaiming all and any liability, whether arising in tort, contract or otherwise, which any "manufacturer" (for the purposes of the MiFID II Product Governance Requirements) may otherwise have with respect thereto, the ordinary shares and the warrants of Piovan S.p.A. (the "Securities") have been subject to a product approval process, which has determined that such Securities are: (i) compatible with an end target market of retail investors and investors who meet the criteria of professional clients and eligible counterparties, each as defined in MiFID II; and (ii) eligible for distribution through all distribution channels as are permitted by MiFID II (the "Target Market Assessment").

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For the avoidance of doubt, the Target Market Assessment does not constitute: (a) an assessment of suitability or appropriateness for the purposes of MiFID II; or (b) a recommendation to any investor or group of investors to invest in, or purchase, or take any other action whatsoever with respect to the securities. Each distributor is responsible for undertaking its own target market assessment in respect of the securities and determining appropriate distribution channels.

2

Piovan at a Glance

The Leading Automation Solutions Provider for Plastic, Food & non plastic, Services

What

we do

Applications

• Engineering, production and installation of customized automation solutions
• Global leader in plastic and plastic compounds
• Growing presence in food and non plastic (e.g. powder ingredients)

		LTM Sep-20 Key Financials
Revenues	EBITDA	Net Income	Cash Conv.3	ROCE4

€218m	€32m	€18m	~96%	~39%
	(14% Margin)	(8% Margin)		After impact
				of IFRS 16
-6%	+3%	+7%	~1%
Year-on-Year	Year-on-Year	Year-on-Year	Recurring Capex /
	(based on Adjusted figures
		Revenues
	for comparability

Our	• Global and diversified customer base
across several end-markets
customers	• Over 2,300 customers1
Global	• 8 manufacturing sites in 4 continents
• 22 services & sales companies
footprint	worldwide2

• 70 countries covered
• C. 4% of Revenues invested in R&D
  Innovation and Engineering2

DNA	• 175 dedicated employees2

				purposes)
				9M 2020 Revenues Breakdown5
		by Geography	by Application	by Channel
		South		Services	Distributors
		America
		Italy	13%	OEMs 7%
	North	5%
	18%		9%
	America
20%			Food & Non
				Plastic
Asia		EMEA	Systems 9%
	45%	Plastics
12%

	Systems	End-
	78%
82%	users
	84%
International

Source: Company information

1In 2020. 2As of June 2020. 3Defined as EBITDA - Recurring Capex / EBITDA. 4Computed as EBIT / Net Invested Capital excluding Goodwill and Put and Call Options. Net Invested Capital adjusted for the application of IFRS 16. 5Excluding other sales & other income.

4

PIOVAN COMPETITIVE ADVANTAGES

Global leader in attractive market

Strong innovation DNA and focus on the environment and circular economy

Turn-key solutions for complex customer needs

Truly global presence with local service network

Diversified and long-standing customer base

Track record of profitable growth and cash generation

Growth strategy based on both organic and M&A expansion and new technologies

5

Exploiting Strong Technological Synergies Across Different Materials

Developed For Plastics, Piovan Technological Platforms Can Have Multiple Applications

		Systems	Storage	Handling
		Granules	Powder
		Plastic	ü	ü	ü
	Food¹ & non	plastic	ü		ü
Added	Creamy Liquids	ü		ü
Recently

Dosing & Blending	Drying &	Temperature	Coolers	Supervision
Granules	Powder	Dehum.	Control	Software
ü	ü	ü	ü	ü	ü
ü		ü	ü		ü
					ü

Source: Company information	6
¹Sugar, Flour, Coco and Milk in Powder

DIVERSIFIED RANGE OF END-MARKETS SERVED

		Plastic			Food &
		Consumer &	Construction &	Automotive &	non
Packaging		plastic
	Technical	Compounds	Industrial
		As a percentage of Piovan 9M 2020 Revenues
31.0%		22.0%	12.6%	12.0%	9.0%
Preforms - PET	Rigid	Fibers	Recycling & Compound
		Medical
Thermoforming	Film		Pipes & Cables
		Tech Parts
Source: Company information

Services

13.4%

7

9M 2020 Financial Results

PIOVAN 3Q 2020 KEY BUSINESS HIGHLIGHTS

Acquisition of 100% of Doteco SpA

The rapid decision-making process allowed the Company to reorganize the cost structure and adapt to the new conditions

Acquisition of the 10% of the minority of Penta Srl, which now is owned 100% by Piovan Group

Strong resilience in less cyclical areas like medical and recycled packaging

R&D efforts in packaging recycle technologies

Strong activity in food business with increase of both orders and customer base

The presence of local structures of the group allowed us to gain market share in times of travel restrictions

Approval of dividend distribution

9

PIOVAN GROUP AND DOTECO

TECHNOLOGICAL SYNERGIES

Software

Complete Supervision, Monitoring and Control of the Production Process

Analysis

Instrumentation

1

2

3

4

5

6

7

8

Storage

Material Handling

Dosing & Blending

Drying & Dehum.

Temperature Control

Dosing & Blending

Coolers

Granulators

Piovan

Doteco

Piovan products	6
Outside Piovan focus	1

2	3	5	7	8
		4

Primary

Machine

Automating The Whole Process From Silos To Primary Machines

Source: Company information

PIOVAN GROUP AND DOTECO

GEOGRAPHICAL SYNERGIES

Universal Dynamics Inc.

Piovan Canada

Piovan Mexico

Doteco Inc. Nord America

Piovan Brasil

Global presence

Piovan Group	Doteco
Production plants	Production plants
Service and Sales Branches/Offices
Branches
Distributors and representatives HQ

Piovan Headquarters	Piovan UK
FDM	Piovan Slovakia
Aquatech	Piovan Turkey
Penta - Progema	Piovan Algeria
Fea	Piovan UAE
Doteco	Piovan Morocco
Piovan Germany	Energys
Piovan France
Piovan Austria
Piovan Hungary
Piovan Czech Republic
11

Piovan China

Piovan Beijing (Rep.Office)

Piovan Shenzhen (Rep.Office)

Piovan India

Piovan Thailand

Piovan Indonesia

Piovan Vietnam

Piovan Japan

Piovan Malaysia

Toba PNC

Our Contribution to Circular Economy

Solutions for post consumed plastic and biopolymers

Systems for reduction and control of contaminants

Safe, traceable and stable processes

Service team for CAPEX life maximisation

8 patents registered in 2020 "recycling related"

22.5 % of revenues in Packaging, Fibres, Recycling and Compound is "circular economy related"

12

Putting People First

• Piovan Groups has implemented worldwide the highest Safety and Monitoring protocols and Mitigation Actions to limit the development of COVID-19
• The Group's facilities have been always fully operative assuring high quality products in time to our Customers
• Tangible actions include, but are not limited to:

Separation Barriers

Wearing protective masks

Cleaning the hands frequently with the appropriate gel

Keeping the minimum safety distance from other people

13

Resilient Plastic and Service & Spare Parts, While Food & Other Powders is Back to Growth

Revenues by Application (€m)1		Revenues by Geography (€m)1		Comments

Growth YoY

Growth YoY

	168.2				168.2
				South
		152.3		8.4 (5.1%)
Services	21.5	(32.3)%	America	152.3	(32.3)%
(13.1%)
Food & Non		20.0	(6.8)%	North	34.1	7.6 (5.1%)	(9.2)%
12.5 (7.6%)	(13.4%)		America
Plastic			(20.8%)	29.6	(13.0)%
Systems		13.5 (9.0%)	7.4%
			(19.8%)
				Asia	20.8
				(12.7%)	18.0	(13.6)%
						(12.0%)
	130.0
Plastic	(79.3%)	115.9	(10.8)%
Systems		(77.6%)		EMEA	100.8	94.2
			(6.5)%
			(61.5%)
						(63.1%)
	9M 19	9M 20			9M 19	9M 20

BY APPLICATION

• Plastic Systems: Below 9M 2019 due to COVID19 restrictions on mobility (in particular in 1H), which delayed deliveries and installations.
• Food Systems: Ahead 9M 2019, as a consequence of positive order intake during the year resulting in strong Q3.
• Services: Slight decrease due to restrictions on mobility particularly in Q2.

BY GEOGRAPHY

• North America: COVID19 impact in 9M 2020, particularly in Q2 and Q3 .
• ASIA: Decreased due COVID19 impact in China at the beginning of the year and in South East Asia later in the year.
• EMEA: Slow down due to COVID19 restrictions, mainly in Q2, business recovered in Q3 thanks also to good performance of food market.
• South America: Slow down in Q3 due to COVID19 impact.

Indicates other revenue and income (c. €4.2m in 9M 2019 and €2.8m in 9M 2020)

Source: Company Information	14
1Revenues % breakdown excludes other revenue and income.

Improving Profitability Both at EBITDA and EBIT Level

Contribution Margin

EBITDA

EBIT

Net Income

€m and Margin

€m and Margin

€m and Margin

€m and Margin

48.4 %

48.7%

13.2%

81.5

74.211.5%

19.420.0

9.4%

10.5%

15.8

15.9

6.9%

6.9%

11.710.5

9M 19

9M 20

9M 19

9M 20

9M 19

9M 20

9M 19

9M 20

Source: Company Information

15

Overview of Operating Costs Breakdown

Operating Cost Base as a % of Revenues

Growth YoY

Comments

Raw Materials

Variable Costs

Personnel

Other

EBITDA

Source: Company Information

37.8%	38.2%

13.8%

13.1%

26.0%

26.4%

10.9%	9.1%
	13.2%
11.5%
9M FY19	9M FY20

16

~39bps

~(65)bps

~41bps

~(177)bps

~163bps

• Raw materials substantially stable
• Variable costs reduced more than proportionally thanks to lower level of sales commissions and transportation costs
• Cost of labour reduced in line with a lower level of sales
• Other costs decreased thanks to the efforts in reducing travelling, advertising and consultancy costs

EBITDA Bridge from 9M 2019 to 9M 2020

9M 19 to 9M 20 EBITDA bridge (€m)

EBITDA	11.5%		+1.6% EBITDA margin
margin		+3.1% EBITDA growth
			• Personnel costs decrease due to the
		Overall impact: (7.3)
	19.4	effect of optimization measures

3.5

0.4

(7.7)

4.4

• Decrease in Other costs mainly driven by reduction of travel, advertising, consultancy and other costs

13.2%

20.0

EBITDA 9M 19	Contribution Margin due to	Contribution Margin due to Cost	Personnel	Other Costs	EBITDA 9M 20
	Revenues	Reduction

Source: Company Information	17

Net Debt Walk from Dec-19 to Sep-20

Dec-19 to Sep-20 Net Debt bridge (€m)

Working Capital Seasonality (€m)

					NWC						As a % of Revenue
13.3 %		12.3 %	7.1 %	11.1 %	11.6 %	9.7 %
	31.2										24.8
															24.6
				27.9											20.7
						16.2
	Jun-19	Sep-19	Dec-19	Mar-20	Jun-20Sep-20

• Influenced by a more than proportional reduction in trade payables, compared to trade receivables, mainly due to Covid-19

0.9

(4.0)

(2.8)

2.9

1.2

2.2

Overall change in WC: 4.5

4.6

5.6

0.1

0.9

(20.0)

(1.2)

Net Debt / (Cash)

EBITDA

Recurring Capex Change in Work in

Change in Trade

Other Change in

Taxes

Other

Penta 10%

Net Debt / (Cash)

Non Recurring

Net Debt / (Cash)

Dec-19

Progress and

Receivables /

WC

Minority

Sep-20 pre Non

Capex and New

Sep-20

Stocks 1

Payables

Acquisition and

Recurring Capex

IFRS 16 Contracts

Put Options

and New IFRS 16

Evaluation

Contracts

Source: Company Information
1 Including advances and contract liabilities.	18

Net Debt Walk from Sep-19 to Sep-20

Sep-19 to Sep-20 Net Debt bridge (€m)

Working Capital Seasonality (€m)

					NWC						As a % of Revenue
13.3 %		12.3 %	7.1 %	11.1 %	11.6 %	9.7 %
	31.2										24.8
															24.6
				27.9											20.7
						16.2
	Jun-19	Sep-19	Dec-19	Mar-20	Jun-20Sep-20

• Includes translation reserve variation €(2.4)m, put options evaluation €(0.7)m, 10% Penta acquisition €(2.8)m, change in consolidation perimeter for Toba €(1.7)m and other liabilities changes

11.1

(10.2)

7.4

(2.8)

Overall change in WC: (7.2)

8.8

1.4

7.3

(31.6)

(0.4)

(5.9)

(0.9)

Net Debt / (Cash)

EBITDA

Recurring Capex

Change in Work in

1

Change in Trade Other change in WC

Taxes

Other

Net Debt / (Cash)

Non Recurring Capex

Net Debt / (Cash)

Sep-19

Progress and Stocks

Receivables /

Sep-20 pre Non

and New IFRS 16

Sep-20

Payables

Recurring Capex and

Contracts

New IFRS 16

Contracts

Source: Company Information
1 Including advances and contract liabilities.	19

Appendix

Income Statement

€m	9M 2019	9M 2020 Reported	Δ% 9M 2019 vs 9M 2020
Sales	164.0	149.4	(8.9%)
Other sales & other income	4.2	2.8	(32.3%)
o/w capital gain on asset disposal	0.7	-
Revenues	168.2	152.3	(9.5%)
Raw materials	(63.6)	(58.1)	(8.6%)
Cost of services	(37.7)	(31.3)	(17.1%)
o/w extraordinary costs	(0.8)	-	-
Personnel	(43.7)	(40.2)	(8.1%)
Other costs	(3.8)	(2.7)	(30.7%)
EBITDA	19.4	20.0	3.3%
Capital gain on asset disposal	(0.7)	-	-
Extraordinary costs	0.8	-	-
Adjusted EBITDA	19.5	20.0	2.8%
% Adjusted Margin	11.6%	13.2%
D&A and provisions	(3.6)	(4.1)	13.5%
EBIT	15.8	15.9	0.9%
Finance income / (expenses)	0.0	(0.1)	(251.2%)
Exchange income (expenses)	0.5	(0.9)	n.m.
Gains (losses) on liabilities for options granted to	(0.1)	0.1	n.m.
non-controlling interests
Gains (losses) from equity investments carried at	0.1	-	-
equity
EBT	16.3	15.1	(7.1%)
Taxes	(4.6)	(4.6)
Net Income	11.7	10.5	(10.1%)
Attributable to Piovan shareholders	11.8	11.1	(5.9%)
Attributable to minority shareholders	(0.1)	(0.6)	n.m.

Source: Company Information

21

Balance Sheet

€m	Dec-19	Sep-20
Property Plant & Equipment	52.4	50.0
Intangible Assets (incl. Goodwill)	7.5	7.2
Financial Assets	0.3	0.3
Net Fixed Assets	60.2	57.4
Trade receivable	52.8	43.8
Inventory	29.3	33.2
Trade payables	(40.6)	(25.9)
Advanced payments from customers	(16.1)	(19.9)
Contract assets/(liabilities)	1.2	(0.2)
Net Trade Capital	26.6	31.0
Tax receivables	3.7	2.5
Other current activities	3.7	4.5
Tax payables	(6.7)	(5.6)
Other current liabilities	(11.1)	(11.7)
NWC	16.2	20.7
Other Credits	4.9	4.5
Other Debts	(5.2)	(4.7)
Pension Fund	(4.8)	(5.0)
Net Invested Capital before Option	71.3	73.0
Put & Call Option	(5.3)	(2.3)
Net Invested Capital	66.1	70.7
Total Shareholders' Equity	65.2	73.5
Net Debt / (Cash)	0.9	(2.8)
Total Sources	66.1	70.7

Source: Company Information

22

Cash Flow Statement

€m	Dec-19	Sep-20
Adj. EBITDA	31.0	20.0
Recurring Capex	(2.7)	(0.9)
% on Revenues	(1.1)%	(0.6)%
Cash generation	28.4	19.1
Cash Conversion %	91.4%	95.4%
Non-Recurring Capex	(11.5)	(0.4)
Disposal	1.5	0.1
∆ Net Working Capital	(0.1)	(4.5)
Corporate Taxes	(7.3)	(4.6)
∆ Funds	0.9	0.2
Non operating Items	(1.9)	0.7
Cash Flow from Operation	10.0	10.6
Adjusting Items	(0.1)	-
∆ Put and Call Option	2.6	(3.0)
Dividend distribution	(7.7)	-
Changes in equity	(2.9)	(2.2)
Other financial charges	0.0	(0.1)
∆ Exchange loss/gain	(0.0)	(0.9)
Income from equtiy method investments	(0.1)	0.1
Acquisitions	(2.2)	-
IFRS 16 impact in the period	(3.2)	(0.9)
∆ Net Financial Position	(3.6)	3.8
NFP BoP	(2.6)	0.9
∆ Net Financial Position	3.6	(3.8)
NFP EoP	0.9	(2.8)

Source: Company Information

23