Recticel : First half-year 2021 results - Strong volumes – Solid margins – Integration of FoamPartner

PRESS RELEASE

Regulated information - Inside information

Brussels, 27 August 2021 - 07:00 CET

First half-year 2021 results

Strong volumes - Solid margins - Integration of FoamPartner²

• Net sales increase from EUR 374.3 million1 to EUR 596.2 million (+59.3%), of which 39.7% organic growth, 0.4% currency effect and a EUR 71.9 million contribution from 2Q2021 FoamPartner sales
• Adjusted EBITDA: from EUR 19.0 million1 to EUR 56.9 million
• Result of the period (share of the Group): from EUR 60.1 million (including EUR 68.8 million result from discontinued operations) to EUR 28.0 million
• Net financial debt³: EUR 206.6 million

Olivier Chapelle (CEO): "The positive sales trend observed during 1Q2021 continued in 2Q2021, driven by very strong demand in Insulation and solid demand in Engineered Foams. In Bedding, volumes are now improving due to the lifting of the mobility and business restrictions which still affected Germany and The Netherlands specifically during 1H2021.

The chemical raw materials supply remains very tight due to planned maintenance and new force majeure incidents at the premises of our suppliers, affecting primarily the MDI availability and pricing. Normalization of the situation remains difficult to predict, and we continue to adapt pricing where necessary.

The integration of FoamPartner in Engineered Foams progresses smoothly, and forecasted synergies at the horizon of 2023 are expected to reach EUR 18 million. The divestment process of the Bedding business is on track and binding offers are expected by the end of 3Q2021.

Due to some delay with the carve-out process, the closing of the acquisition of Gór-Stal's insulation board business is now expected to take place in the course of 4Q2021.

Finally, there will be an important change in the composition of the Group Management Committee: after 19 years of service as CFO and Member of the Group Management Committee, Jean-Pierre Mellen has decided to retire on 31 August 2021. He will be succeeded by Dirk Verbruggen, currently General Counsel & General Secretary, who will combine the CFO and General Counsel responsibilities . Dirk joined Recticel's Legal Department in 1999, and was appointed General Counsel & General Secretary and member of the Management Committee in 2012. Jean-Pierre will continue to provide support until August 2022 for special assignments and in order to ensure a smooth transition. I take the opportunity to warmly thank Jean-Pierre for his many contributions and total commitment to Recticel."

OUTLOOK

Our underlying end-use markets continue to show positive momentum in a still very volatile environment. Based upon the current trading, our Group confirms its expectation of an Adjusted EBITDA in a range between EUR 123 million to EUR 133 million for the full year 2021, including the contributions of FoamPartner (9 months) and its related synergies.

1. Following the partial divestment from Automotive Interiors on 30 June 2020 (see press release of 01 July 2020), Automotive Interiors is integrated in the consolidated accounts according to the 'equity method'.
2. FoamPartner is fully consolidated for the first time as from 01 April 2021.
   To facilitate comparisons and understanding of the Group's underlying performance, all comments in this document on developments in revenue or results are made on a like -for-like basis unless otherwise indicated; i.e. 1H2020 revenues and results have been restated to reflect the divestments of Automotive Interiors and the Eurofoam participation on 30 June, 2020. The 1H2021 data include the 2Q2021 contribution of FoamPartner.

Press release - First half-year 2021 result - 27 August 2021 - 07:00 CET

1. CONSOLIDATED GROUP RESULTS

	in million EUR	1H2020	1H2021	%
		(a)	(b)	(b)/(a)-1
	Sales	374.3	596.2	59.3%
	Gross profit	65.3	109.4	67.4%
	as % of sales	17.5%	18.4%
	Income from associates 4	0.4	0.5	30.2%
	Adjusted EBITDA	19.1	56.9	198.1%
	as % of sales	5.1%	9.5%
	EBITDA	17.4	46.7	168.5%
	as % of sales	4.6%	7.8%
	Adjusted operating profit (loss)	0.9	33.8	n.m.
	as % of sales	0.2%	5.7%
	Operating profit (loss)	( 2.9)	23.6	n.m.
	as % of sales	-0.8%	4.0%
	Financial result	( 2.6)	( 1.8)	-29.1%
	Income from other associates 4	( 3.0)	0.6	n.m.
	Change in fair value of option structures	1.7	( 4.9)	n.m.
	Income taxes	( 2.0)	9.5	n.m.
	Result of the period of the continuing operations	( 8.7)	27.0	n.m.
	Result from discontinued operations	68.8	1.3	n.m.
	Result of the period (share of the Group)	60.1	28.0	-53.5%
	Result of the period (share of the Group)	1.09	0.50	-53.8%
	- base (per share, in EUR)
		30 Jun 2020	30 Jun 2021
	Total Equity	331.5	354.8	7.0%
	Net Financial Debt (incl. IFRS 16 - Leases) 3	43.8	206.6	371.3%
	Gearing ratio (Net financial debt/Total Equity)	13.2%	58.2%
	Leverage ratio (Net financial debt/EBITDA)	0.9	2.6

1. Excluding the drawn amounts under non -recourse factoring programs: EUR 45.2 million per 30 June 2021 versus EUR 0.0 million per 30 June 2020 and 31 December 2020.
2. Income from associates = income from associates considered as being part of the Group's core business are integrated in Operating profit (loss); i.e. Orsafoam
   Income from other associates = income from associates not considered as being part of the Group's core business are not integrated in Operating profit (loss); i.e. Proseat and TEMDA2 (formerly Automotive Interiors)

Press release - First half-year result 2021 - 27 August 2021 - 07:00 CET

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The following changes in the scope of consolidation took place in 1H2021:

• Acquisition of Swiss-based FoamPartner Group. FoamPartner has been fully integrated in the business line Engineered Foams as of 01 April 2021.

Changes in the scope of consolidation in 2020:

• Partial divestment of the Automotive Interiors activities at the end of June 2020, which are now operated through TEMDA2, the 51/49% Admetos/Recticel joint venture.
• Disposal of the 50% participation in the Eurofoam group (Flexible Foams) at the end of June 2020.

The results of the Automotive joint-ventures over 1H2021 are reported under 'Income from other associates.

Sales of chemical raw materials at cost to the Proseat and TEMDA2 companies, which previously were reported under the segment Automotive, are integrated under "Corporate/Eliminations".

Net Sales: EUR 596.2 million versus EUR 374.3 million in 1H2020.

1H2021 sales increased by 59.3% from EUR 374.3 million to EUR 596.2 million; of which 39.7% organic growth, 19.2% from FoamPartner sales over 2Q2021(EUR 71.9 million of sales) and +0.4% currency impact. Like-for-like 1H2021 sales exceed 1H2019 sales (pre-COVID-19) by 15.5%, from EUR 453.8 million to EUR 524.3 million.

The positive sales trend of the previous quarters continued in 2Q2021. Sales growth in comparison to 1H2020 has been driven by strong demand in most markets and by price increases mitigating the substantial impact of higher purchase price of chemical raw material and other components.

Breakdown of the sales by segment

in million EUR	1Q2020	2Q2020	1H2020	1Q2021	2Q2021	1H2021	1Q	2Q	1H
Engineered Foams	89.4	57.7	147.1	103.6	176.1	279.7	15.9%	205.0%	90.1%
Bedding	65.2	44.0	109.2	55.7	49.8	105.5	-14.5%	13.2%	-3.4%
Insulation	60.7	52.0	112.7	86.9	101.5	188.4	43.1%	95.1%	67.1%
Corporate / Eliminations	6.2	( 1.0)	5.2	10.5	12.1	22.5	69.4%	n.m.	336.6%
TOTAL CONSOLIDATED SALES	221.5	152.8	374.3	256.7	339.5	596.2	15.9%	122.2%	59.3%

Press release - First half-year result 2021 - 27 August 2021 - 07:00 CET

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• Engineered Foams sales increased by 90.1% over 1H2021, supported by solid demand, pricing adjustments and the integration of EUR 71.9 million sales from FoamPartner since 01 April 2021. Excluding FoamPartner, sales increased by 41.1%. Like-for-like sales exceeded 1H2019 by 9.7%.
• Bedding sales decreased by 3.4% over 1H2021. The decrease is due to mobility and shopping restrictions maintained in Germany and The Netherlands until 2Q2021.
• Insulation sales increased by 67.1% over 1H2021, driven by strong demand and higher prices compensating for the chemical raw material cost inflation (i.e. MDI). Sales exceeded the 1H2019 level by 45.2%.

Adjusted EBITDA: EUR 56.9 million versus EUR 19.1 million in 1H2020.

Adjusted EBITDA margin of 9.5% versus 5.1% in 1H2020 and 7.6% in 1H2019.

Breakdown of the Adjusted EBITDA by segment

in million EUR	1H2020	1H2021	1H
Engineered Foams	10.3	31.3	204.8%
Bedding	4.5	4.5	-1.3%
Insulation	11.3	28.8	155.6%
Corporate / Eliminations	( 7.0)	( 7.8)	10.5%
TOTAL ADJUSTED EBITDA	19.1	56.9	198.1%

The strong increase in Adjusted EBITDA generated by Engineered Foams and Insulation results from restored sales volumes in comparison to 1H2020, which was heavily affected by the COVID-19 crisis, from compensation of raw material cost inflation by increased selling prices and from further efficiency and mix improvements.

Adjusted operating profit (loss): EUR 33.8 million, versus EUR 0.9 million in 1H2020.

Adjusted operating profit (loss) margin of 5.7% versus 0.2% in 1H2020 and 3.7% in 1H2019.

Breakdown of the Adjusted operating profit (loss) by segment

in million EUR	1H2020	1H2021	1H
Engineered Foams	3.1	18.7	494.0%
Bedding	0.0	0.6	n.m.
Insulation	5.9	23.4	295.2%
Corporate / Eliminations	( 8.2)	( 8.8)	7.9%
TOTAL ADJUSTED	0.9	33.8	n.m.
OPERATING PROFIT (LOSS)

Press release - First half-year result 2021 - 27 August 2021 - 07:00 CET

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Adjustments to Operating profit (loss):

in million EUR	1H2020	1H2021
Restructuring charges and provisions	( 1,4)	( 3,3)
Other	( 0,3)	( 6,9)
Total impact on EBITDA	( 1,7)	( 10,2)
Impairments	( 2,1)	0,0
Total impact on Operating profit (loss)	( 3,8)	( 10,2)

Adjustments to Operating profit (loss) on continuing operations in 1H2021 include mainly:

• Reorganisation charges in Engineered Foams Netherlands, Germany and Switzerland (EUR 1.2 million), in Bedding Netherlands (EUR 1.5 million), and Corporate (EUR 0.5 million).
• Legal and advisory fees for (i) the acquisition of FoamPartner (Engineered Foams), (ii) the preparation of the divestment of the Bedding division, and (iii) the dealings related to the
  Greiner offer. The item 'Other' also comprises the reversal of some provisions for claims and onerous contracts in Engineered Foams (EUR 1.1 million), adjustment for a fair value adjustment on inventories by application of IFRS 3 (reversal of inventory step up values resulting from purchase price allocations; EUR -3.4 million) and real estate taxes (EUR -2.8 million) relating to the integration of FoamPartner in Engineered Foams, and a revaluation allowance for investment property in Belgium (EUR 2.0 million).

EBITDA: EUR 46.7 million versus EUR 17.4 million in 1H2020.

EBITDA margin of 7.8% versus 4.6% in 1H2020 and 6.7% in 1H2019.

Breakdown of EBITDA by segment

in million EUR	1H2020	1H2021	1H
Engineered Foams	9.5	24.5	158.7%
Bedding	3.5	3.0	-15.4%
Insulation	11.2	28.7	156.4%
Corporate / Eliminations	( 6.8)	( 9.5)	39.8%
TOTAL EBITDA	17.4	46.7	168.5%

Operating profit (loss): EUR 23.6 million versus EUR -2.9million in 1H2020.

Operating profit (loss) margin of 4.0% versus -0.8% in 1H2020 and 2.7% in 1H2019.

Press release - First half-year result 2021 - 27 August 2021 - 07:00 CET

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