Colt CZ Group SE

Investor Presentation • May 23, 2024

COLT CZ GROUP SE FINANCIAL RESULTS Q1 2024

INVESTOR PRESENTATION

LEGAL DISCLAIMER

IMPORTANT – YOU MUST READ THE FOLLOWING BEFORE CONTINUING

• This presentation (the "Presentation") has been prepared by Colt CZ Group SE, with its registered office at náměstí Republiky 2090/3a, Nové Město, 110 00 Praha 1, Identification Number 291 51 961, registered in the Commercial Register maintained by the Municipal Court in Prague, Section H, Insert 962 (the "Colt CZ"). By attending the meeting where this Presentation is made or by reading the Presentation document, you agree to be bound by the following terms and conditions.
• The Presentation has been prepared with due care. However, certain inconsistencies or omissions might have appeared herein. Therefore, it is recommended that any person intending to undertake any investment decision on any security issued by Colt CZ or any member of its group (the "Group") shall only rely on information released as an official communication by Colt CZ in accordance with the legal and regulatory provisions that are binding for Colt CZ.
• Past performance can not be taken as an indication or guarantee of future results, and no representation or warranty, express or implied, is made regarding future performance. Colt CZ does not (i) warrant that the assumptions underlying the forward-looking statements in this Presentation are free from errors, (ii) accept any responsibility for the future accuracy of the opinions expressed in this Presentation, or (iii) undertake any obligation to update the statements in this Presentation to reflect subsequent events. The forward-looking statements in this Presentation are made only as of the date hereof. Neither delivery of this Presentation nor any further discussions between Colt CZ and you shall, under any circumstances, result in any implication that there has been no change in Colt CZ affairs since such date.
• Forward-looking statements, including statements relating to expectations regarding future financial results, give no guarantee or assurance that such results will be achieved. Expectations of the Colt CZ management are based on present knowledge, awareness and/or views of the management members and are dependent on many factors, which may cause the actual results that Colt CZ will achieve may differ materially from those discussed in this Presentation. Many such factors are beyond the present knowledge, awareness and/or control of Colt CZ, or cannot be predicted. None of the Group, Colt CZ or its directors, managers, advisers or representatives of such persons makes any representation or warranty, expressed or implied, as to (i) the fairness, accuracy, completeness or correctness of this Presentation, (ii) the sufficiency of this Presentation for your purposes. or (iii) the appropriateness of this Presentation for any purpose other than that for which it was intended. Nothing contained herein is or should be relied upon as a promise or representation, whether as to the past or the future.
• This Presentation should not be construed as legal, regulatory, tax, accounting, investment or other advice. Nothing contained herein shall constitute any representation or warranty as to the future performance of any security, credit, currency, rate or other market or economic measure. No reliance may be placed for any purpose whatsoever on this Presentation.
• This Presentation was prepared for information purposes only and is neither a purchase nor sale offer nor a solicitation of a n offer to purchase or sell any securities or financial instruments or an invitation to participate in any commercial venture. This Presentation is neither an offer nor an invitation to purchase or subscribe for any securities in any jurisdiction, and no statements contained herein may serve as a basis for any agreement, commitment or investment decision, or may be relied upon in connection with any agreement, commitment or investment decision.

AGENDA AND TODAY'S PRESENTERS

AGENDA PRESENTERS

JAN DRAHOTA

Chairman of the Board of Directors CEO of Colt CZ Group SE

JAN ZAJÍC

Member of the Board of Directors CEO of Česká zbrojovka a.s.

RADEK MUSIL CEO of Sellier & Bellot a.s.

JANA MATOUŠKOVÁ Head of Group Finance Colt CZ Group SE

COLT CZ AT A GLANCE

REVENUES CZK 3,667.1 m ↑ 21.7% vs Q1 2023

ADJUSTED EBITDA CZK 488.4 m ↓ 28.5% vs Q1 2023

ADJUSTED NET PROFIT

CZK 359.9 m ↓ 47.8% vs Q1 2023 ADJUSTED EPS1 CZK 10 ↓ 50% vs Q1 2023

2024 FULL YEAR GUIDANCE CONFIRMED

SELLIER & BELLOT ACQUISITION COMPLETED

REVENUES – SIGNIFICANT INCREASE OF SALES TO M&LE CUSTOMERS

COMMENTS

• Share of military and law enforcement sales up, in line with Company´s expectations
• Military and law enforcement sales influenced by consolidation of swissAA revenues

Q1 2024 WAS THE STRONGEST FIRST QUARTER IN GROUP'S HISTORY

COMMENTS

• Q1 2024 was the strongest first quarter in terms of revenues ever despite the impact of quarterly seasonality
• Q2 2024 is expected to be even stronger (see updated guidance page 10) due to confirmed deliveries of large M&LE contracts
• Share of ammunition sales up due to the consolidation of swissAA, but still negligible EBITDA impact

Q1 2024 PROFITABILITY AFFECTED BY ONE-OFF EFFECT

ADJUSTED NET PROFIT ¹ ADJUSTED EARNINGS PER SHARE ²

COMMENTS

• Q1 2024 profitability (EBIT, EBITDA and NI) decreased by marketing/ product campaigns and discounts in the USA to reignite CZ US sales
• Technical problems with several Colt SKU's3 also negatively impacted profitability of Q1 (already resolved)
• Additional operational costs in swissAA with a negative impact on EBITDA margin
• Q1 2024 net profit down due to lower financial income if compared with Q1 2023 at the back of FX rates developments

Notes: Financial results are unaudited 1 – Full breakdown of adjustments available on page 22 2 – Calculation based on the concept of Basic EPS

3 – Stock keeping unit

CAPEX IN LINE WITH 2024 GUIDANCE

CAPITAL EXPENDITURES ¹ CAPEX GEOGRAPHICAL SPLIT

COMMENTS

• Q1 2024 CAPEX is in line with FY CAPEX guidance ( i.e. less than 5% of revenues)
• Additional capital expenditures in the North America and swissAA production in Q1 2024
• FY guidance for CAPEX 2024 with Sellier & Bellot included

TOTAL INDEBTEDNESS AFFECTED BY THE ADVANCE PAYMENT FOR S&B ACQUISITION IN 12/2023

EXPECTED DEBT MATURITY PROFILE

(INC. ACQUISITION FINANCING) NET FINANCIAL DEBT ¹ & NET LEVERAGE RATIO 2,3

COMMENTS

• Net financial debt jump at the end of 2023 due to prepayment of S&B acquisition
• The combined pro-forma post-acquisition net leverage is expected below 3x Net Debt/EBITDA
• Cash generative business of both companies will allow leverage reduction going forward, with expected acquisition loan repaym ent by 2029

Notes: Financial results are unaudited

• 1 Net financial debt is defined as long-term and short-term bonds, bank loans and borrowings and finance lease liabilities (non-current and current), less cash and cash equivalents, less other current financial assets (marketable securities)
• 2 Net leverage ratio is defined as the ratio of net financial debt at the end of the period to LTM unadjusted EBITDA
• 3 Net Leverage ration 1.8. is adjusted by advance payment of acquisition of Sellier & Bellot

COMPANY REMAINS CONFIDENT ON THE 6M 2024 PERFORMANCE

6M GUIDANCE

COMMENTS

• We expect a high quarterly seasonality of revenues in 2024, even higher than the previous years
• Gradual sales ramp up from the first months of the year and a very strong Q2 2024 performance
• Q4 2024 is expected to be the strongest quarter, contributing to app. 30% of guidance overall

FY 2024 GUIDANCE CONFIRMED – STRONG ORGANIC GROWTH WITH INCREASED SEASONALITY, POSITIVE EFFECTS OF S&B ACQUISITION

COMMENTS

• We expect a high quarterly seasonality of revenues in 2024, even higher than the previous years
• Gradual sales ramp up from the first months of the year and a very strong Q2 2024 performance
• Q4 2024 is expected to be the strongest quarter, contributing to app. 30% of guidance overall

ACQUISITION OF SELLIER & BELLOT SUCCESSFULLY COMPLETED

• SPA signed on Dec 18, 2023
• Consolidation from Closing Date May 16, 2024
• Enterprise value 8.5x EBITDA 2023 or USD 826 m
• Purchase price is USD 703 m (net of debt), of which:
  • USD 350 m paid in cash, and
  • USD 353 m paid in newly issued shares resulting in CBC´s stake in Colt CZ of 27.71% (13,476,440 shares at issue price EUR 24.10662 per share)
• Locked box as of Dec 31, 2023
• The 2023 audited financial results of S&B confirmed our expectations with respect to S&B performance
  • Consistently profitable with a growing trend
  • High margin generations
  • Rising share of military and law enforcement sales in line with Colt CZ strategy

REVENUES FROM THE SALE OF OWN PRODUCTS, GOODS AND SERVICES

EBITDA

2023 REVENUE BY SEGMENT

SELLIER & BELLOT INTRODUCTION

ACQUISITION OF SELLIER & BELLOT – INTRODUCTION1

• Established 1825
• Production of ammunition for commercial market and M&LE
• HQ and production located in Vlašim
• 1,630 employees
• Production of manufacturing machines
• In-house production of all components except gun powder

S&B REVENUE BREAKDOWN BY GEOGRAPHY

REVENUES FROM THE SALE OF OWN PRODUCTS, GOODS AND SERVICES

EBITDA

Q1 2024 REVENUE BY SEGMENT

ACQUISITION OF SELLIER & BELLOT – PRODUCT PORTFOLIO

	% REVENUES	COMMERCIAL		M&LE
		NUMBER OF CALIBERS	BULLET TYPES	NUMBER OF CALIBERS	BULLET TYPES
PISTOL & REVOLVER AMMO	50%	21	FMJ, TFMJ, SP, JHP, SJHP, XRG-D, LFN, LRN, WC	10	FMJ, TFMJ, SP, JHP, FMJ HP, TB, HS, FRANGIBLE, BLANK
RIFLE AMMO	38%	42	EDGE, TXRG, XRG, HPC, SCR, PTS, SBT, SP, SPCE, HPBT	12	FMJ/STEEL CORE, SOLID STEEL, BLANK, TRACER, IR-DIM TRACER, SS109, AP, AP/WC, M193, SNIPER, FRANGIBLE
SHOTGUN AMMO	2%	5	BIRD SHOT, BUCK SHOT, SLUG	-	OPEN DOOR, RUBBER SHOT, RUBBER BALL
RIMFIRE AMMO	3%	6	LEAD BULLET, HOLLOW-POINT LEAD BULLET	-
COMPONENTS & OTHERS	7%	4	BULLETS, UNPRIMERED CASES, PRIMERS, PERCUSSION CAPS	-

THANK YOU FOR YOUR ATTENTION

APPENDIX

ADJUSTED EBITDA RECONCILIATION

In CZK '000	Q1 2024	Q1 2023
Operating profit	220,823	411,538
Depreciation and amortization	199,890	187,554
EBITDA	420,713	599,092
ESOP related costs	67,023	82,813
M&A costs1	644	1,536
Adjusted EBITDA	488,380	683,441

ADJUSTED NET PROFIT RECONCILIATION

In CZK '000	Q1 2024	Q1 2023
Earnings before tax	374,623	734,657
Tax expenses	(71,360)	(146,838)
Net income	303,263	587,819
Earn-out related costs	-	41,279
ESOP related costs	67,023	82,813
M&A costs1	644	1,536
One-off expenses related to the bond issue	2,339	2,003
Adjusted earnings before tax (Adj. EBT)	444 629	862,287
Effective tax rate on Adj. EBT (Q1 2024 ~19%; Q1 2023 ~20%)	(84,695)	(172,348)
Adjusted Net Income	359,934	689,939

CONSOLIDATED PROFIT AND LOSS STATEMENT

In '000 CZK	31 Mar 2024	31 Mar 2023
Revenues from the sale of own products, goods and services	3,667,086	3,012,556
Other operating income	13,970	20,368
Change in inventories developed internally	13,296	335,838
Own work capitalized	50,647	41,402
Raw materials and consumables used	(1,898,421)	(1,560,669)
Services	(492,223)	(380,581)
Personnel costs	(896,012)	(762,542)
Depreciation and amortization	(199,890)	(187,554)
Other operating expenses	(64,203)	(69,117)
Allowances	26,573	(38,163)
Operating profit	220,823	411,538
Interest income	391,945	363,043
Interest expense	(350,472)	(235,250)
Other financial income	126,843	86,110
Other financial expenses	(17,494)	(145,436)
Gains or losses from derivative transactions	2,343	253,452
Share in the profit of associates after tax	635	1,200
Profit before tax	374,623	734,657
Income tax	(71,360)	(146,838)
Profit for the period	303,263	587,819
Items that may be subsequently reclassified to the statement of profit or loss
Cash flow hedges – remeasurement of effective portion of hedging instruments	(248,994)	40,338
Foreign currency translation of foreign operations	73,169	(4,474)
Other comprehensive income	(175,825)	35,864
Comprehensive income for the period	127 438	623,683
Profit for the period attributable to:
Owner of the parent company	303,263	587,819
Non-controlling interests	-	-
Comprehensive income for the period attributable to:
Owner of the parent company	127,438	623,683
Non-controlling interests	-	-
Net earnings per share attributable to the owner of the parent company (CZK per share)
Basic	8	17
Diluted	6	17

CONSOLIDATED BALANCE SHEET 1/2

In CZK '000	31 Mar 2024	31 Dec 2023
ASSETS
Non-current assets
Intangible assets	3,466,466	3,413,881
Goodwill	2,609,325	2,547,480
Property, plant and equipment	4,289,614	4,281,449
Advance payment for financial investment	2,692,051	2,690,040
Equity-accounted securities and investments	45,207	40,795
Financial derivatives	618,803	1,013,168
Provided loans	18,979	-
Trade and other receivables	30,331	61,891
Other receivables	2,576	2,556
Deferred tax assets	9,097	21,245
Total non-current assets	13,782,449	14,072,505
Current assets
Inventories	5,570,854	5,298,077
Trade and other receivables	1,992,092	1,774,947
Provided loans	183	-
Other financial assets	-	908,580
Financial derivatives	144,541	149,047
Other receivables	468,945	351,165
Tax receivables	145,071	93,751
Cash and cash equivalents	3,582,974	3,328,684
Total current assets	11,904,660	11,904,251
Total assets	25,687,109	25,976,756

CONSOLIDATED BALANCE SHEET 2/2

In CZK '000	31 Mar 2024	31 Dec 2023
EQUITY AND LIABILITIES
Capital and reserves
Share capital	3,516	3,516
Share premium	1,942,818	1,942,818
Capital funds	1,641,512	1,641,512
Cash flow hedge reserve	350,822	599,816
Foreign exchange translation reserve	-69,519	-142,688
Accumulated profits	5,595,819	5,229,872
Equity attributable to the owner of the Company	9,464,968	9,274,846
Equity attributable to the owner of the Company	9,464,968	9,274,846
Total equity	9,464,968	9,274,846
Non-current liabilities
Bonds, bank loans and borrowings	9,031,023	9,040,540
Financial derivatives	227,025	244,169
Lease liabilities	56,439	62,052
Trade and other payables	49,542	42,022
Other payables	10,723	14,569
Provisions	79,865	76,188
Deferred tax liability	674,817	722,783
Employee benefit liabilities	251,178	255,721
Total non-current liabilities	10,380,612	10,458,044
Current liabilities
Bonds, bank loans and borrowings	2,489,675	2,573,744
Financial derivatives	20,874	11,038
Lease liabilities	25,196	25,619
Other financial liabilities	45,986	44,580
Trade and other payables	1,445,510	1,746,796
Other payables	1,665,687	1,655,094
Provisions	36,539	30,084
Tax liabilities	96,590	142,084
Employee benefit liabilities	15,472	14,827
Total current liabilities	5,841,529	6,243,866
Total liabilities	16,222,141	16,701,910
Total equity and liabilities	25,687,109	25,976,756

CONSOLIDATED CASH FLOW STATEMENT

In '000 CZK	31 Mar 2024	31 Mar 2023
Cash flows from principal economic activity (operating activity)
Profit from ordinary activity before tax	374,623	734,657
Depreciation/amortization of non-current assets	199,890	187,554
Change in allowances and provisions	(15,914)	40,233
Interest expense and interest income	(41,473)	(127,793)
Share in the profit of associates	(635)	(1,200)
Unrealized foreign exchange gain and losses	(157,065)	278,635
Contingent consideration – remeasurement	-	41,284
Other financial assets – remeasurement	(113,402)	(86,110)
Cash flow hedging – remeasurement of the effective portion of hedging instruments	(248,994)	40,338
Share-based payments	62,684	77,596
Adjustments for other non-cash transactions	7,505	220
Net operation cash flows before changes in working capital	66,843	1,185,414
Change in working capital
Change in receivables and deferrals	37,398	(377,115)
Change in liabilities and accruals	(317,599)	(90,447)
Change in inventories	(142,325)	(658,053)
Cash flow from operating activities	(355,683)	59,799
Paid interest	(488,415)	(398,070)
Interest received	460,017	432,635
Income tax paid for ordinary activity	(171,269)	(56,434)
Net cash flow from operating activities	(555,350)	37,930
Cash flows from investing activities
Acquisition of non-current assets	(183,073)	(153,891)
Income from the sale of non-current assets	376	-
Advance for acquisitions of financial investment	(2,011)	-
Acquisition of equity-accounted securities and investments	(3,777)	-
Proceeds from sale of other financial assets	1,021,982	-
Provided loans – repayments received	18,979	7,700
Net cash flow from investing activities	814,518	(146,191)
Cash flows from financing activities
Proceeds from loans	11,613	2,956
Repayment of loans	(34,335)	(1,560)
Repayment of leases	(8,778)	-
Net cash flow from financing activities	(31,500)	1,396
Net change in cash and cash equivalents	227,668	(106,865)
Opening balance of cash and cash equivalents	3,328,684	2,825,781
Effect of exchange rate on cash and cash equivalents	26,622	(37,229)
Closing balance of cash and cash equivalents	3,582,974	2,681,687

COLT CZ GROUP STRUCTURE AS OF 31/03/2024

Notes: Group structure as of 31/03/2024

COLT CZ GROUP STRUCTURE AS OF 16/05/2024

Holding companies No asset companies

Notes: Group structure as of 31/03/2024

THANK YOU

Colt CZ Group SE

náměstí Republiky 2090/3a 110 00 Prague 1, Czech Republic www.coltczgroup.com info@coltczgroup.com