Landi Renzo

Earnings Release • Sep 11, 2019

H1 2019 FINANCIAL RESULTS REVIEW

Investor Meeting

Cristiano Musi Group CEO

Paolo Cilloni CFO and IR

H1 2019 – Highlights

• 2019 Outlook confirmed for Landi Renzo Group at 185-190M€ and Adj. EBIDTDA of ~27M€ • SAFE&CEC Outlook: revenues at 65-70M€; Adj.EBITDA between 6 and 7M€

Landi Renzo key events

Commercial / strategic development

• Started and almost completed new product validation with top "tier 1 OEM" worldwide, both for HD and Off Road

• Major European OEMs confirmed their programs with LPG until 2023 and awarded new OEM CNG programs in India (2021-2024)

• Signed an agreement with Hydrogenics to design and develop fuel cell hydrogen systems

• New Product development

• Development of the new CNG and LNG pressure regulator for Heavy Duty and Off Road and first application for Hydrogen. Started new experienced team on gas-EMS (Engine Management System)

• New CNG pressure regulator for passenger car and LCV applications both for AM and OEMs

• Key management events

• Landi Renzo S.p.A. signed a five-year medium-term financing agreement for a total amount of € 65 million, to re-finance the existing midterm loan and bond (fully repaid on July, 1st 2019) and sustain new R&D investments with more favorable interest rates

• LRG is currently updating its strategic plan, assessing any new opportunity offered by the sustainable mobility market, to identify a set of actions to accelerate growth and sustain the performance improvement. By end of 2019 this activity will be completed

In H1 2019 the product portfolio for PC, HD and H2 has been extensively renewed; moreover, LRG R&D team has been reinforced with a new technical team specialized on H² components and EMS for HD Gas-mobility

Revenue growth (+4,9%) in H1 leads to a net income of 2,9M€ (+70,6%). Economic results are in line with management expectations

M€; %

M €	2019 H1	2018 H1	Delta M€	Delta %
Revenues	102,0	97,3	4,7	4,9%
EBITDA Adj.	13,6	14,1	-0,5	-3,3%
% on Revenues	13,3%	14,5%
EBITDA	13,3	12,7	0,6	4,6%
% on Revenues	13,0%	13,0%
EBIT	7,0	7,5	-0,5	-6,1%
% on Revenues	6,9%	7,7%
Capital Gain/Loss	0,1	-1,2	1,2	NA
Financials	-2,6	-2,9	0,3	10,6%
EBT	4,5	3,4	1,1	32,1%
Taxes	-1,6	-1,7	0,1	5,0%
Net Income	2,9	1,7	1,2	70,6%

Highlights

• Revenues, in H1 2019, increase mainly due to OEM volumes growth (+17,3%), while AM business is aligned with the previous year
• Despite the increase of OEM share, H1 2019 EBITDA reached 13,0% of revenues, growing +4,6% vs H1 2018, positively impacted by the fixed cost reduction
• H1 2019 EBIT positive, 6,9% of revenues, in line with management expectations and with best practices in the automotive sector
• Capital gain and financials have a significant improvement (+1,5M€ vs H1 2018) positively affecting EBT results
• H1 2019 Net Income positive by 2,9M€ with an increase of 70,6% compared to last year
• Fifth consecutive quarter with positive net income

H1 2019 Net Sales breakdown by sector and geographical region

M€; %

Highlights

Sector

• Landi Renzo consolidates its presence as a top OEM "tier-1" supplier in Europe
• OEM sales up to 43,5% of total sales vs 38,9% in H12018

Region

• Growth concentrated in Europe (+8,8M€;+21,4%) mainly due to OEMs on LPG
• America revenues decrease mostly due to the Q1 slowdown of the Brazilian market
• Asia&RoW decrease mainly due to the reduction of the effect of local incentives to sustain alternative fuel mobility

Volume increase and an efficient cost control counter balanced the different channel sales mix in H1 2019

• EBITDA improved by 0,6M€ compared to last year due to:
• o Higher revenues impact by 1,3M€
• o Effect of change in sales mix between Aftermarket and OEM sectors impacting by 4,7M€, offset by fixed costs reduction by 2,7M€ thanks to the full benefit from the industrial turnaround implementation
• o «IFRS 16» adoption from 2019 (+1,3M€) positive impact on EBITDA
• Working Capital decreased in Q2 by 3,6M€ compared to last quarter, mainly due to a reduction of inventories

NFP remains stable, with significant R&D investments to support new products development for OEM systems and Heavy Duty components

(1) Short and long terms debt and bond are inclusive of amortized cost effect

(2) accrued interests included

(3) Financial liability related to first time adoption of IFRS 16 – Leases

(4) Fully repayment on 1 July 2019 (being 30 June 2019 a non-working day)

SAFE&CEC result shows strong improvement in performance with +9,5% of revenues and EBITDA from -1,2 to positive for 1,7 with Q2 at break even

M €	2019 1H	2018 1H	Delta M€	Delta %
Revenues	28,8	26,3	2,5	9,5%
EBITDA Adj.	2,0	0,5	1,5	280,1%
% on Revenues	6,9%	1,9%
EBITDA	1,7	-1,2	2,9	N/A
% on Revenues	5,8%	-4,5%
EBIT	0,4	-1,9	2,3	121,9%
% on Revenues	1,4%	-7,3%
Net Income	-0,4	-2,6	2,2	84,8%

Highlights

• Consolidated revenues reached 28,8M€, increasing by 9,5% compared to H1 2018, confirming the growing trend of volumes and the strong positioning of the Group on the market
• Adj. EBITDA improved by 1,5M€, thanks to the volume effect as well as the impact of cost saving initiatives completed in 2018
• Completion of integration activities reflected in H1 2019 EBITDA, positive by 1,7M€, compared to -1,2M€ in H1 2018
• H1 2019 net loss of 0,4M€, entirely generated in Q1, compared to -2,6M€ in H1 2018;
• Working capital affected by large stock to satisfy the existing order book
• Order book of H2 more than entirely covering the management budget of 2019

Landi Renzo - Company profile (09/09/2019)

BOARD OF DIRECTORS

SHAREHOLDING SHARE INFORMATION

N. of shares outstanding: 112.500.000 Price as of 09/09/2019 € 1.046 Capitalization: € 117.7 mln FTSE Italia STAR

TOP MANAGERS INVESTOR RELATIONS

Investor Relations Contacts:

Paolo Cilloni Tel: +39 0522 9433 E-mail: ir@landi.it www.landirenzogroup.com

STOCK VS MARKET

11

CONSOLIDATED P&L

(thousands of Euro)
CONSOLIDATED INCOME STATEMENT	30/06/2019	30/06/2018
Revenues from sales and services	102,035	97,296
Other revenue and income	229	163
Cost of raw materials, consumables and goods and change in inventories	-54,346	-46,580
Costs for services and use of third party assets	-19,097	-21,816
Personnel expenses	-14,237	-14,981
Allocation, write-downs and other operating expenses	-1,312	-1,399
Gross Operating Profit	13,272	12,683
Amortization, depreciation and impairment	-6,265	-5,223
Net Operating Profit	7,007	7,460
Financial income	4 9	7 7
Financial expenses	-2,373	-1,924
Exchange gains (losses)	-253	-1,035
Gains (losses) on equity investments valued using the equity method	9 7	-1,152
Profit (Loss) before tax	4,527	3,426
Current and deferred taxes	-1,641	-1,734
Net profit (loss) for the Group and minority interests, including:	2,886	1,692
Minority interests	-53	-93
Net profit (loss) for the Group	2,939	1,785
Basic earnings (loss) per share (calculated on 112,500,000 shares)	0.0261	0.0159
Diluted earnings (loss) per share	0.0261	0.0159

CONSOLIDATED BALANCE SHEET

(thousands of Euro)
ASSETS	30/06/2019	31/12/2018
Non-current assets
Land, property, plant, machinery and equipment	11,920	12,745
Development expenditure	7,599	6,932
Goodwill	30,094	30,094
Other intangible assets with finite useful lives	13,386	14,039
Right-of-use assets	7,029	0
Equity investments valued using the equity method	23,011	22,292
Other non-current financial assets	397	352
Other non-current assets	3,991	3,991
Deferred tax assets	9,907	10,538
Total non-current assets	107,334	100,983
Current assets
Trade receivables	43,349	35,131
Inventories	39,144	38,895
Other receivables and current assets	8,228	8,016
Current financial assets	2,760	0
Cash and cash equivalents	51,348	15,075
Total current assets	144,829	97,117
TOTAL ASSETS	252,163	198,100

CONSOLIDATED BALANCE SHEET

(thousands of Euro)
SHAREHOLDERS' EQUITY AND LIABILITIES	30/06/2019	31/12/2018
Shareholders' Equity
Share capital	11,250	11,250
Other reserves	49,268	43,931
Profit (loss) of the period	2,939	4,671
Total Shareholders' Equity of the Group	63,457	59,852
Minority interests	-328	-276
TOTAL SHAREHOLDERS' EQUITY	63,129	59,576
Non-current liabilities
Non-current bank loans	54,836	23,055
Other non-current financial liabilities	0	24,427
Non-current liabilities for right-of-use	4,991	0
Provisions for risks and charges	5,000	5,443
Defined benefit plans for employees	1,707	1,646
Deferred tax liabilities	419	339
Total non-current liabilities	66,953	54,910
Current liabilities
Bank financing and short-term loans	23,518	16,203
Other current financial liabilities	29,483	4,262
Current liabilities for right-of-use	1,989	0
Trade payables	59,231	55,166
Tax liabilities	2,471	2,385
Other current liabilities	5,389	5,598
Total current liabilities	122,081	83,614
TOTAL SHAREHOLDERS' EQUITY AND LIABILITIES	252,163	198,100

Disclaimer

This document has been prepared by Landi Renzo S.p.A for use during meetings with investors and financial analysts and is solely for information purposes. The information set out herein has not been verified by an independent audit company. Neither the Company nor any of its subsidiaries, affiliates, branches, representative offices (the "Group"), as well as any of their directors, officers, employees, advisers or agents (the "Group Representatives") accepts any responsibility for/or makes any representation or warranty, express or implied, as to the accuracy, timeliness or completeness of the information set out herein or any other related information regarding the Group, whether written, oral or in visual or electronic form, transmitted or made available. This document may contain forward-looking statements about the Company and/or the Group based on current expectations and opinions developed by the Company, as well as based on current plans, estimates, projections and projects of the Group. These forward-looking statements are subject to significant risks and uncertainties (many of which are outside the control of the Company and/or the Group) which could cause a material difference between forward-looking information and actual future results.

The information set out in this document is provided as of the date indicated herein. Except as required by applicable laws and regulations, the Company assumes no obligation to provide updates of any of the aforesaid forward looking statements. Under no circumstances shall the Group and/or any of the Group Representatives be held liable (for negligence or otherwise) for any loss or damage howsoever arising from any use of this document or its contents or otherwise in connection with the document or the aforesaid forward-looking statements. This document does not constitute an offer to sell or a solicitation to buy or subscribe to Company shares and neither this entire document or a portion of it may constitute a recommendation to effect any transaction or to conclude any legal act of any kind whatsoever. This document may not be reproduced or distributed, in whole or in part, by any person other than the Company. By viewing and/or accepting a copy of this document, you agree to be bound by the foregoing limitations