Recticel : Annual Results 2023

PRESS RELEASE

Regulated information - Inside information

Brussels, 29 February 2024 - 07:00 CET

Recticel Annual Results 2023

• Recticel transitioned into a provider of smart insulation solutions for sustainable buildings
• Net sales decrease from € 587.8 million1 in 2022 to € 529.4 million (-9.9%) in 2023
• Adjusted EBITDA: from € 64.4 million1 to € 39.2 million (-39.2%)
• Net cash position: € 161.9 million (31 December 2022: net financial debt of € 250.0 million1/2)
• Proposal to pay a stable gross dividend of € 0.31 per share

Jan Vergote (CEO Recticel): "Our full year 2023 results reflect the adverse trends in the European construction markets, mainly caused by inflation and an unprecedented increase in the cost of money. This has resulted into shrinking market volumes, with margin pressures in our Insulation Boards activity being especially fierce in the second half. The full effect of the drop in the number of new building permits has yet to be seen, whereas renovation markets seem somewhat more resilient.

Despite this market context, as from the fourth quarter we have stopped the decrease in volumes in Insulation Boards and have increased year-over-year sales volume and market share in our premium Insulated Panels activity. A combination of planned and unplanned production stops at our suppliers' facilities, as well as longer supply lines due to the geopolitical issues in the Red Sea, is resulting into MDI price hikes and potential shortages, which will require us to increase sale prices accordingly.

We are implementing cost reductions, improve our positions in attractive market segments, and are increasing our focus on innovation to better address the challenges of the upcoming large scale sustainability transition in construction.

We have created a growth platform for Trimo's premium Insulated Panels strategy in Western Europe by closing the acquisition of REX Panels & Profiles in the early days of 2024. Integration is progressing well, and we expect to be ready with technical adjustments and certifications by the end of the year.

Our net cash position, which further increased during the second half of 2023, will allow us to further invest in smart additions and geographical expansion, as well as greenfield initiatives where appropriate.

Despite the low visibility on the timing of a potential market recovery, we are confident that we will significantly increase our Adjusted EBITDA compared to 2023."

1. As announced in the press release of 14 June 2023, The Soundcoat Company Inc. was not part of the divestment to Carpenter Co and was transferred from discontinued operations to continuing operations as of 1 January 2022. The formerly published 2022 income statements, financial position and cash-flow statements have been restated accordingly.
   Trimo d.o.o. (Insulated Panels) is fully consolidated as of 1 May 2022.
2. Excluding the drawn amounts under non-recourse factoring programs: € 0.0 million per 31 December 2023 compared to € 13.2 million per 31 December 2022.

Press release - Annual results 2023 - 29 February 2024 - 7:00 CET

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CONSOLIDATED GROUP RESULTS - KEY FIGURES

				in million EUR
	2022 restated¹		2023			%
Sales	587.8	529.4	-9.9%
Gross profit	113.4	90.1	-20.6%
as % of sales	19.3%	17.0%
Adjusted EBITDA	64.4	39.2	-39.2%
as % of sales	10.9%	7.4%
EBITDA	59.9	36.1	-39.7%
as % of sales	10.2%	6.8%
Adjusted operating profit (loss)	43.8	15.9	-63.7%
as % of sales	7.4%	3.0%
Operating profit (loss)	38.3	12.6	-67.1%
as % of sales	6.5%	2.4%
Financial result	(10.0)	(4.1)			n.m.
Income from other associates³	(1.2)	(1.8)			n.m.
Impairment other associates	0.0	(7.7)			n.m.
Change in fair value of option structures	2.3	0.0			n.m.
Income taxes	(16.0)	(8.0)			n.m.
Result of the period of continuing operations	13.5	(9.0)			n.m.
Result of discontinued operations	49.3	12.2	-75.3%
Result of the period (share of the Group)	62.4	3.3	-94.7%
Result of the period (share of the Group) - base (per share, in EUR)	1.12	0.06	-94.7%
	31 DEC 2022		31 DEC 2023			%
Total equity	446.2	438.0	-1.8%
Net financial debt (incl. IFRS 16 - Leases)	250.0	(161.9)			n.m.
Gearing ratio (Net financial debt / Total equity)	56.0%		n.a.
Leverage ratio (Net financial debt / EBITDA)⁴	2.2		n.a.

The following change in the scope of consolidation took place in 2023: disposal on 12 June 2023 of the Engineered Foams activities, which were already accounted for as Discontinued Operations on 30 June 2022.

The results of the Automotive joint-venture (TEMDA2/Ascorium) are reported under 'Income from other associates'.

3

4

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 (until April 2022) and Ascorium (formerly Automotive Interiors).

The pro forma leverage ratio = Net financial debt (after application of IFRS 5) divided by the sum of (a) EBITDA (last 12 months) (before application of IFRS 5) and (b) EBITDA (last 12 months) of the acquired company Trimo d.o.o. This pro forma leverage ratio is a better comparable.

Press release - Annual results 2023 - 29 February 2024 - 7:00 CET

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Sales: from € 587.8 million1 in 2022 to € 529.4 million in 2023.

																															in million EUR
	1Q2022			2Q2022			3Q2022			4Q2022			2022			1Q2023			2Q2023			3Q2023			4Q2023			2023			% FY
	restated¹			restated¹			restated¹			restated¹			restated¹
Sales	126.9		160.4		160.2		140.3		587.8		127.7		138.4		132.3		131.0		529.4		-9.9%

Fourth quarter 2023:

4Q2023 sales decreased by 6.6% from € 140.3 million1 in 2022 to € 131.0 million, including -0.15% currency effect, due to lower prices as a consequence of raw material deflation and competitive pressure.

Sequentially, from 3Q2023 to 4Q2023, volumes in Insulation Boards have resisted well and volume in Insulated Panels has recovered above year-over-year comparatives. In parallel, the order intake in Insulation Boards remains volatile, while order intake in Insulated Panels remains at a level allowing to continue on the positive evolution observed as from the third quarter of 2023.

Full year 2023:

FY2023 sales decreased by 9.9% from € 587.8 million1 to € 529.4 million, including -0.62% currency impact.

Adjusted EBITDA: from € 64.4 million1 in 2022 to € 39.2 million in 2023.

Adjusted EBITDA margin decreased from 10.9% to 7.4%.

																in million EUR
	1H2022		2H2022		2022		1H2023			2H2023			2023			% FY
	restated¹		restated¹		restated¹
Adjusted EBITDA	27.1	37.2	64.4	15.9		23.3		39.2		-39.2%

Adjusted EBITDA was negatively impacted by the margin erosion in Insulation Boards, which was the consequence of increased competitive pressure in a building market affected by large volume reductions and decreasing raw material input prices.

Adjusted operating profit (loss): from € 43.8 million1 in 2022 to € 15.9 million in 2023. Adjusted operating profit (loss) margin decreased from 7.4% to 3.0%.

																in million EUR
	1H2022		2H2022		2022		1H2023			2H2023			2023			% FY
	restated¹		restated¹		restated¹
Adjusted operating profit (loss)	24.1	19.6	43.8	6.7		9.2		15.9		-63.7%

Adjustments to Operating profit (loss):

																in million EUR
	1H2022			2H2022			2022			1H2023			2H2023			2023
	restated¹			restated¹			restated¹
Restructuring charges and provisions	(1.2)		0.3		(0.9)		(1.2)		(1.9)		(3.1)
Other	(3.4)		(0.2)		(3.6)		(1.1)		1.2		0.1
Total impact on EBITDA	(4.6)			0.1			(4.5)			(2.3)			(0.7)			(3.0)
Impairments	(0.1)		(1.0)		(1.0)		(0.3)		0.0		(0.3)
Total impact on Operating profit (loss)	(4.6)			(0.9)			(5.5)			(2.6)			(0.7)			(3.3)

Press release - Annual results 2023 - 29 February 2024 - 7:00 CET

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Adjustments to Operating profit (loss) on continuing operations in 2023 amount to € -3.3 million and include:

• € -3.1 million of restructuring costs;
• € 0.1 million of other adjustments : mainly M&A related transaction costs offset by partial release of the Ascorium insurance (€ 1.0 million);
• € -0.3 million impairment on intangible and tangible fixed assets.

Adjustments to Operating profit (loss) on continuing operations in 2022 amounted to € -5.5 million and included:

• € -0.9 million of restructuring costs;
• € -3.6 million of other adjustments, which relate mainly to (i) legal and financial advisory fees (€ -1.6 million) primarily linked to the acquisition of Trimo, (ii) a fair value adjustment on inventories by application of IFRS 3 (reversal of inventory step up values) resulting from the purchase price allocation of Trimo (€ -2.7 million);
• € -1.0 million impairment on right of use assets following the expected reduced usage of the IHQ building following the divestment of Engineered Foams to Carpenter.

EBITDA: from € 59.9 million1 in 2022 to € 36.1 million in 2023.

EBITDA margin decreased from 10.2% to 6.8%.

Operating profit (loss): from € 38.3 million1 in 2022 to € 12.6 million in 2023. Operating profit (loss) margin decreased from 6.5% to 2.4%.

Financial result: from € -10.0 million1 in 2022 to € -4.1million in 2023.

Interest charges increased from € -5.6 million1 in 2022 to € -7.8 million in 2023 as a result of the higher debt following the Trimo acquisition in the second quarter of 2022 and the gradually increasing variable market interest rates. These interest charges were partially offset in 2H2023 by the interest income on the cash € +3.9 million.

Other net financial income and expenses: from € -4.8 million1 in 2022 to € -0.1 million in 2023. The negative amount in 2022 is linked to a € -6.2 million one-off reversal of historic currency translation adjustments as a result of the liquidation of a holding company in the UK.

Income and impairment from other associates: from € -1.2million1 in 2022 to € -9.5 million in 2023 relates primarily to the full impairment of the TEMDA2 investment value (at 49%).

Fair value of option structures: from € +2.3 million1 in 2022 to € +0 million in 2023.

Income and deferred taxes: from € -16.0 million1 in 2022 to € -8.0million in 2023.

• Current income tax: from € -9.3 million1 in 2022 to € -4.5 million in 2023; current tax charges decrease in line with the lower results.
• Deferred tax: from € -6.7 million1 in 2022 to € -3.5 million in 2023; decrease partially related to changes in tax legislation in Belgium in 2022.

Result of the period of continuing operations: from € 13.5 million1 in 2022 to € -9.0 million in 2023.

Press release - Annual results 2023 - 29 February 2024 - 7:00 CET

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Result from discontinued operations: from € 49.3 million1 in 2022 to € 12.2 million in 2023.

The result from discontinued operations in 2023 mainly represents:

(i) the result until 12 June 2023 of the Engineered Foams activities sold to Carpenter Co. (€ -0.5 million);

1. the net capital gain on the disposal of the Engineered Foams activities sold to Carpenter Co. amounting to € +10.7 million and composed of the following items:
2. • gain on the divestment of Engineered Foams: € +32.2 million (including € 22.3 million provisions on transactions related tax exposures and indemnities;
   • direct attributable transaction costs: € -6.8 million;
   • Cumulative Translation Adjustment release in the income statement: € -7.5 million;
   • positive result 1H2023 Orsa Foam (€ +0.5 million) + impairment (€ -6.9 million) + related costs (€ -0.8 million).
3. the result of the Aquinos closing account settlement (including the release of the closing accounts provision and the interest on the Aquinos receivable (€ +2.0 million)).

The total result (restated) of discontinued operations in 2022 was composed of:

1. the result of the period of the Engineered Foams activities which were sold to the Carpenter Co. (€ +32.8 million);
2. the result of the first three months of 2022 of the Bedding activities (€ +1.3 million);
3. the net capital gain on the disposal of the Bedding activities sold to Aquinos Group (€ +17.9 million, including € 5.0 million of provisions for indemnities);
4. the impact of the restatement linked to the transfer from discontinued operations to continuing operations of The Soundcoat Company Inc. (€ -3.5 million);
5. the result of the settlements related to the divestment of the Ascorium activities (€ +0.8 million).

Consolidated result of the period (share of the Group): from € 62.4 million in 2022 to € 3.3 million in 2023.

FINANCIAL POSITION

									in million EUR
	31 DEC 2022		31 MAR 2023		30 JUN 2023		30 SEP 2023		31 DEC 2023
	restated¹
Total equity	446.2		-		437.3		-		438.0
Net financial debt excluding factoring	239.8	250.8	(151.0)	(163.9)	(173.2)
+ Lease debt (IFRS 16)	10.2	9.5	8.8	8.3	11.3
Net financial debt	250.0		260.3		(142.3)		(155.6)		(161.9)
+ Drawn amounts under factoring programs	13.2	18.9	0.0	0.0	0.0
Total net financial debt	263.2		279.1		(142.3)		(155.6)		(161.9)
Gearing ratio (incl. IFRS 16)	56.0%	-		N/A	-		N/A
Leverage ratio (incl. IFRS 16)	2.2	-		N/A	-		N/A

The Group's net cash position further improved by € 6.3 million over 4Q2023, due to disciplined working capital management, some M&A related incoming payments and positive interest income.

SUBSEQUENT EVENT - REX ACQUISITION

Recticel announced that on 10 January 2024 it successfully completed the acquisition of REX Panels & Profiles SA. This acquisition is the second major step in deploying its strategy to become a pan-European leader in the insulated panels segment (see also press release of 21 December 2023). The acquisition price was paid in cash for an enterprise value of EUR 70 million. REX Panels & Profiles SA will be consolidated in Recticel's financial statements as from 10 January 2024.

Press release - Annual results 2023 - 29 February 2024 - 7:00 CET

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SUSTAINABILITY

In October 2022, Recticel joined the Science Based Targets initiative (SBTi) community in a concerted effort to limit global warming to 1.5°C above pre-industrial levels. Recticel's GHG emissions reduction plan with near-term targets for 2030 and net-zero targets for 2050 (baseline 2021) was approved by SBTi on 14 February 2024.

All our emissions are calculated according to the Greenhouse Gas Protocol for the full scope of our activities - Insulation Boards, Insulated Panels, Acoustic Solutions - for the years 2021, 2022, 2023. Due to a major methodology change resulting from obtaining more granular data from key suppliers, we restated the previous years.

The 2023 absolute emission reduction on scope 1 and 2 versus base year 2021 is in line with the projected plan to reach 90% reduction by 2030 (SBTi). This is demonstrated by the Carbon and Energy Intensity Indicators, based on sales volume, which eliminates any price volatility, irrelevant to the climate change contribution.

			2021 restated						%		%
	Indicators		SBTi base		2022 restated		2023		2023-		2023-
								2022		2021
			year
	Greenhouse gas indicators (tCO2e)
	Scope 1	5,746	5,270	4,437	-15.8%	-22.8%
	Scope 2	5,115	4,483	3,575	-20.3%	-30.1%
	Scope 2 - market based	5,115	4,483	3,575
	Scope 2 - location based	5,179	4,962	3,913
	variance (= impact of renewable energy)	64	479	338
	Scope 3 (excluding investments)	737,001	717,813	665,563	-7.3%	-9.7%
	Scope 1+2+3 (excluding investments)	747,862	727,567	673,575	-7.4%	-9.9%
	Scope 1+2+3 (including investments)	768,944	746,889	691,905	-7.4%	-10.0%
	Renewable energy indicators (MWh)
	Photovoltaic energy consumption	710	2,904	2,383	-17.9%	+235.7%
	Photovoltaic energy production on-site	760	4,287	3,848	-10.2%	+406.4%
	Carbon and energy intensity indicators, based on sales volume ¹
	Carbon intensity scope 1+2, per sales volume (tCO2e/1000m³)	3.4	3.0	2.7	-9.5%	-20.1%
	Carbon intensity scope 1+2+3, per sales volume (tCO2e/1000m³)	234.0	223.8	228.2	2.0%	-2.5%
	Energy intensity, per sales volume (MWh/1000m³)	18.2	16.7	15.6	-6.4%	-14.0%

	Avoided emissions ²		2022		2023		%
		restated
	Estimated avoided emissions from all our building insulation products over their lifetime (multiple)	33.6	38.4	+14.3%

1. The Greenhouse Gas Protocol Category 3.15 Investment, is not included in the carbon and energy intensity indicators.
2. Calculated according to the Attributional Life Cycle Assessment (LCA), GHG Protocol framework. Totality of GHG emissions considered (scope 1+2+3).

Press release - Annual results 2023 - 29 February 2024 - 7:00 CET

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PROPOSED DIVIDEND

The Board of Directors will propose to the Annual General Meeting of 28 May 2024 the payment of a stable gross dividend of € 0.31 per share on 56,230,920 shares. This represents a total dividend pay-out of € 17.4 million (2022: respectively € 0.31 per share and € 17.4 million in total).

° ° °

APPENDICES

All figures and tables contained in these annexes have been compiled in accordance with the IFRS accounting and valuation principles, as adopted within the European Union. The applied valuation principles, as published in the latest annual report at 31 December 2022, were applied for the figures included in this press release.

The analysis of the risk management is described in the annual report and the IAS 34 Interim report per 30 June 2023, both which are available from www.recticel.com.

STATUTORY AUDITOR'S NOTE ON THE CONSOLIDATED FINANCIAL INFORMATION THE YEAR ENDED 31 DECEMBER 2023

The statutory auditor, PwC Bedrijfsrevisoren BV / Reviseurs d'Entreprises SRL, represented by Marc Daelman*, has confirmed that the audit, which is substantially complete, has not to date revealed any material misstatement in the draft consolidated accounts, and that the accounting data reported in the press release is consistent, in all material respects, with the draft accounts from which it has been derived.

Diegem, 28 February 2024

The statutory auditor

PwC Bedrijfsrevisoren BV/Reviseurs d'Entreprises SRL

Represented by

Marc Daelman*

Bedrijfsrevisor/Réviseur d'entreprises

* Acting on behalf of Marc Daelman BV

Press release - Annual results 2023 - 29 February 2024 - 7:00 CET

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CONSOLIDATED INCOME STATEMENT

			in thousand EUR
	2022 restated¹		2023
Sales	587,834		529,426
Cost of sales	(474,420)	(439,336)
Gross profit	113,414		90,090
General and administrative expenses	(31,859)	(35,634)
Sales and marketing expenses	(28,870)	(30,355)
Research and development expenses	(4,531)	(4,572)
Impairment of goodwill, intangible and tangible assets	(1,047)	(293)
Other operating revenues	1,664	4,727
Other operating expenses	(10,516)	(11,380)
Income from associates	0	(0)
Operating profit (loss)	38,255		12,582
Interest income	996	3,959
Interest expenses	(6,277)	(7,872)
Other financial income	7,136	2,922
Other financial expenses	(11,835)	(3,074)
Financial result	(9,979)		(4,065)
Income from other associates	(1,176)	(1,772)
Impairment other associates		(7,748)
Change in fair value of option structures	2,330	0
Result of the period before taxes	29,430		(1,002)
Income taxes	(15,953)	(7,986)
Result of the period after taxes - continuing operations	13,478		(8,989)
Result of discontinued operations	49,298	12,154
Result of the period after taxes - continuing and discontinued operations	62,776		3,165
of which share of the Group	62,400	3,310
of which non-controlling interests	377	(145)

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 Ascorium (formerly Automotive Interiors).

EARNINGS PER SHARE

	2022 restated¹		2023
Number of shares outstanding (including treasury shares)	56,208,420	56,230,920
Weighted average number of shares outstanding (before dilution effect)	55,799,134	55,897,911
Weighted average number of shares outstanding (after dilution effect)	56,686,814	56,511,223
			in EUR
Earnings per share
Earnings per share - continuing operations	0.24	(0.16)
Earnings per share - discontinued operations	0.88	0.22
Earnings per share of continuing and discontinued operations	1.13		0.06
Earnings per share from continuing operations
Earnings per share from continuing operations - Basic	0.24	(0.16)
Earnings per share from continuing operations - Diluted	0.24	(0.16)
Earnings per share from discontinued operations
Earnings per share from discontinued operations - Basic	0.88	0.22
Earnings per share from discontinued operations - Diluted	0.87	0.22
Net book value	7.43		7.79

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CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

in thousand EUR

		2022		2023
		restated¹
	Result for the period after taxes	62,776		3,165
	Other comprehensive income
	Actuarial gains (losses) on employee benefits recognized in equity	6,832	(1,030)
	Deferred taxes on actuarial gains (losses) on employee benefits	(1,189)	174
	Currency translation differences that will not subsequently be recycled to profit and loss	92	(97)
	Share in other comprehensive income in joint ventures & associates that will not subsequently be recycled to	0	0
	profit and loss
	Items that will not subsequently be recycled to profit and loss	5,735	(954)
	Hedging reserves	0	0
	Currency translation differences that subsequently may be recycled to profit and loss	(4,954)	(1,793)
	Foreign currency translation reserve difference recycled in the income statement	4,240	7,423
	Deferred taxes on retained earnings	267	86
	Share in other comprehensive income in joint ventures & associates that subsequently may be recycled to profit	0	0
	and loss
	Items that subsequently may be recycled to profit and loss	(447)	5,716
	Other comprehensive income net of tax	5,288		4,762
	Total comprehensive income for the period	68,064		7,927
	Total comprehensive income for the period	68,064	7,927
	Total comprehensive income for the period attributable to the owners of the parent	67,686	8,072
	Total comprehensive income for the period attributable to non-controlling interests	377	(145)
	Total comprehensive income for the period attributable to the owners of the parent	67,686	8,072
	Total comprehensive income for the period attributable to the owners of the parent - Continuing operations	18,786	(9,930)
	Total comprehensive income for the period attributable to the owners of the parent - Discontinued operations	48,901	18,002

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CONSOLIDATED STATEMENT OF FINANCIAL POSITION

			in thousand EUR
	31 DEC 2022		31 DEC 2023
	restated¹
Intangible assets	77,357	70,094
Goodwill	63,218	62,409
Property, plant & equipment	111,491	120,687
Right-of-use assets	27,742	27,771
Investment property	113	0
Investments in associates	0	(0)
Investments in other associates	9,520	0
Non-current receivables	15,477	17,534
Deferred tax assets	23,508	21,551
Non-current assets	328,426		320,046
Inventories	57,346	43,692
Trade receivables	67,716	78,135
Deferred receivable for share investments/divestment	25,286	12,922
Other receivables and other financial assets	9,754	10,027
Income tax receivables	2,332	3,739
Other investments	0	0
Cash and cash equivalents	39,782	191,393
Assets classified as held for sale	544,236	0
Current assets	746,452		339,907
TOTAL ASSETS	1,074,878		659,954
Capital	140,521	140,577
Share premium	133,596	133,729
Share capital	274,117		274,307
Treasury shares	(1,450)	(1,450)
Other reserves	(354)	(2,106)
Retained earnings	132,461	160,974
Hedging and translation reserves	(1,752)	4,556
Elements of comprehensive income of discontinued operations	41,284	0
Equity (share of the Group)	444,305		436,281
Equity attributable to non-controlling interests	1,850	1,706
Total equity	446,155		437,987
Employee benefit liabilities	13,207	12,412
Provisions	17,992	31,148
Deferred tax liabilities	21,704	23,088
Financial liabilities	196,763	23,082
Other amounts payable	1,016	982
Non-current liabilities	250,681		90,711
Provisions	256	0
Financial liabilities	93,824	6,415
Trade payables	75,638	70,068
Current contract liabilities	7,587	8,037
Income tax payables	4,444	1,781
Deferred payables for share investments	0	0
Other amounts payable	29,964	44,955
Liabilities directly associated with assets classified as held for sale	166,329	0
Current liabilities	378,042		131,256
TOTAL EQUITY AND LIABILITIES	1,074,878		659,954

Press release - Annual results 2023 - 29 February 2024 - 7:00 CET

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