Aquafil — Earnings Release 2018

Mar 14, 2019

Aquafil Group

Financial Results Full Year and IV Quarter 2018

14th March 2019

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Index

1. Full Year and IV Quarter 2018 Highlights

	REVENUES (€/mil)		EBITDA (€/mil)			NET RESULT (€/mil)				N.F.P. (€/mil)
	FY18	Q4		FY18	Q4		FY18	Q4
Act18	555,2	124,4	Act18	77,9	17,0	Act18	30,1	5,7	Dic18	157,3
Act17	528,3	125,1	Act171	73,8	16,4	Act17	25,2	7,5	Q3YTD	165,0
% Var 18 to 17	5,1%	(0,6)%	% Var 18 to 17	5,6%	3,6%	% Var 18 to 17	19,5%	(23,0)%	Dic17	112,1
	Revenues FY18 Product Line BCF Area Asia Pacific + 49,6% thank to full consolidation of Invista acquisition					Revenues FY18 Product Line BCF Area North America + 14,1% thank to the growth of automotive sector			Revenues FY18 Product Line BCF Area EMEA - 4,7% due to market slowdown in second half of 2018
	North American Market supported by European Operation of ca 3,2 k/t Impact on marginality	estimated in ca -2,7 €/mil				ECONYL® branded products + 6,5% vs 2017 and equal to 37% of fiber turnover			AQUALEUNA (Germany) RESTRUCTURING Relocated of reprocessing activity in Slovenia Reduction of 35 FTE No-recurring cost of 2,3 €/mil

¹ EBITDA 2017 used for comparison is adjusted versus EBITDA reported in 2017 Consolidated Financial Statement for an economical reclassification of 1,2 €/mil on FY base and 0,3 €/mil on fourth quarter

3. Key Performance Indicators

The Key Performance Indicators of Aquafil Group of FY2018 compared with same period of 2017 are here reported:

KPI	FY	FY	Δ
	2018	2017	%
Revenues €/mil	555,2	528,3	5,1%
EBITDA €/mil	77,9	73,8	5,6%
EBITDA Margin %	14,0%	14,0%
EBIT Adj €/mil EBIT Adj Margin %	51,2 9,2%	48,4 9,2%	5,8%
EBIT €/mil	41,2	38,8	6,1%
EBIT Margin %	7,4%	7,3%
EBT €/mil	37,1	28,0	32,4%
EBT Margin %	6,7%	5,3%
Net Result €/mil	30,1	25,2	19,4%
Net Result Margin %	5,4%	4,8%
NFP €/mil	(157,1)	(112,1)	40,2%
NPF/EBITDA LTM	(2,02)	(1,52)

• a) Revenues grew 5.1%, amounting to €555,2 million compared to €528,3 million of 2017, mainly as a result of sale increase of BCF product in Asia and USA.
• b) EBITDA increased from €73,8 ¹ million to €77.9 million, up by 5,6% and increase is mainly related with increase of Revenues. EBITDA margin remain unchanged versus 2017 also if negatively impacted by the US market support from European operations.
• c) Net Result of FY 2018 amounted to €30,1 million, up by 19,4% compared to FY2017 (€25.2 million). Variation is related with EBITDA growth, lower Financial Cost and higher no-recurring costs mainly due to Aqualeuna Restructuring.
• d) Net Financial Position grew to €152.1 million, compared to €112.1 million at December 31, 2017. The increase was mainly attributable to:
• 1. the net investments (ca 70,5 €/mil) that include (a) Invista acquisition, (b) investment program in capacity increase in US and China, (c) acceleration of ECONYL® investment program including ACR#s;
• 1. an higher level of Working Capital ca (20,0 €/mil), as a result of sales growth also related to Invista acquisition, and also the increase of good in transit to support US market from European operation.
• 1. the dividend distribution of €12,2 millions.

The Key Performance Indicators of Aquafil Group of Q4 2018 compared with same period of 2017 are here reported:

KPI	Q4	Q4	Δ
	2018	2017	%
Revenues €/mil	124,3	125,1	-0,6%
EBITDA €/mil	17,0	16,4	3,6%
EBITDA Margin %	13,7%	13,1%
EBIT Adj €/mil	10,7	9,1	18,0%
EBIT Adj Margin %	8,6%	7,3%
EBIT €/mil	6,8	4,7	45,9%
EBIT Margin %	5,5%	3,7%
EBT €/mil	6,5	1,8	256,0%
EBT Margin %	5,3%	1,5%
Net Result €/mil	5,7	7,5	-23,0%
Net Result Margin %	4,6%	6,0%
NFP €/mil	(157,3)	(112,1)	40,3%
NPF/EBITDA LTM	(2,02)	(1,52)

• a) Revenues slightly decrease by 0,6%, amounting to €124.3 million compared to €125.1 million for Q4 2017, mainly as a of a reduction of polymer sold.
• b) EBITDA increased from €16.4 ¹ million to €17.0 million, up by 3,6%. EBITDA margin increase from 13,1% to 13.7% also if negatively impacted by the US market support from European operations mainly due to a better mix of Product sold in period (fiber vs polymers).
• c) Net Result decrease from €7,5 million to €5,7 million. Net Result increases thanks to EBITDA growth and exchange gain (loss in 2017). Remain variation is mainly related to incomes tax that in 2017 were impacted by no ordinary effects derived form business combination.
• d) Net Financial Position grew to €152.1 million, compared to €112.1 million at December 31, 2017. The increase was mainly attributable to:
• 1. the net investments (ca 70,5 €/mil) that include (a) Invista acquisition, (b) investment program in capacity increase in US and China, (c) acceleration of ECONYL® investment program including ACR#s;
• 1. an higher level of Working Capital ca (20,0 €/mil), as a result of sales growth also related to Invista acquisition, and also the increase of good in transit to support US market from European operation.
• 1. the dividend distribution of €12,2 millions.

2a. Focus on Sales

11

The comparison of amount and percentage of Revenues, broken down by Line of Product realized in Full Year and Fourth Quarter 2018 vs the same period of 2017 is here reported:

Revenues (€/mil)	FY	FY	Δ	Q4	Q4	Δ
by Product Line	2018	2017	%	2018	2017	%
BCF	408,0	381,9	6,9%	90,8	88,3	2,8%
NTF	94,8	94,7	0,1%	23,6	22,7	3,9%
Polymers	52,4	51,8	1,2%	9,9	14,0	-29,6%
TOTAL	555,2	528,3	5,1%	124,3	125,1	-0,6%

BCF Product line's sales increase both in FY2018 (6,9%) and Q4 2018 (2,8,%) compared to the same periods of 2017 as effect of growth of quantity sold (a) in Asia Pacific area mainly derived from Invista acquisition and (b) in US in for the increase of the BCF automotive fiber.

Polymers line's sales increase in FY2018 (1,2%) and decrease in Q4 2018 (-29,6%), due to the in-house use of polymers to produce fiber for US market.

The comparison of amount and percentage of Revenues, broken down by Geographical Area realized in Full Year and Fourth Quarter 2018 vs the same period of 2017 is here reported:

Revenues (€/mil)	FY	FY	Δ	Q4	Q4	Δ
Geographical Area	2018	2017	%	2018	2017	%
Italy	113,3	112,2	1,0%	28,5	27,0	5,2%
EMEA(*)	239,5	254,7	-6,0%	48,1	59,4	-19,1%
North America	103,7	90,5	14,6%	27,1	21,6	25,5%
Asia e Oceania	98,3	70,1	40,3%	20,7	16,7	23,5%
RoW	0,4	0,9	-56,1%	0,0	0,3	-98,1%
TOTAL	555,2	528,3	5,1%	124,3	125,1	-0,6%

Italian revenues remain unchanged on annual base and grew (+5,2%) in the Fourth Quarter 2018 compared with same period of 2017 to the increase of NTF Product Line.

EMEA revenues, excluding Italy, decreased both in FY 2018 (-6,0%) and in Fourth Quarter 2018 (-19,1%) compared with same period of 2017 due to the slow down of BCF Product Line European market in the second part of 2018 and also, in the Fourth Quarter for the reduction of revenues of Polymers Product Line due to the in-house use to produce fiber for US market.

North American revenues compared with same period of 2017, grew both on annual basis (+14,6%) and in Fourth Quarter 2018 (+25,5%) driven by the BCF Product Line increase in automotive application due to a competitor disengagement.

Asia and Oceania revenues grew both on annual basis (+40,3%) and in Fourth Quarter 2018 (+23,5%) compared with same period of 2017 for growing for BCF Product Line derived from Invista acquisition.

The Group's revenues of ECONYL® branded products are growth of 6,5% in FY 2018 and of 5,3% in Fourth Quarter 2017 compared to same periods of 2017

The Group's revenues of ECONYL® branded products in FY 2018 has been equal to the 36,9% of fiber revenues

3. Aquafil Group at Glance

• Market Leader in Nylon Fibers and Polymers:
• Flooring solutions;
• Fashion and sportswear textile applications;
• Polymers for engineering plastics solutions;
• Technologies, processes and continuous innovation key to a successful business model
• R&D focus for a uniquely diversified commercial offer;
• Manufacturing and operational excellence;
• Focus on high-end segments for a premium positioning;
• Pioneers of circularity
• A true regeneration Group with 37% of fiber revenue coming from Nylon 6 waste regeneration;
• ECONYL® Regeneration System: high barriers to entry and cost effectiveness (www.econyl.com);
• Substantial opportunities ahead;
• A global company with a dedicated, local supply system
• Manufacturing presence in 8 countries
• 2.813 employees at the 31st December 2018;
• €555,2m of Revenues in FY2018 - 528,3m FY17;
• €77,9m EBITDA in FY2018 - 73,8m EBITDA in FY17:
• Entrepreneurial talent and strong management team

USA

Cartersville (Georgia) Aquafil USA 1 & 2

Phoenix (Arizona) Aquafil Carpet Recycling #1

Sacramento (California) Aquafil Carpet Recycling #2

ITALY

Arco (TN) Aquafil (Headquarter)

Cares (TN) Rovereto (TN) Tessilquattro

CHINA

Jiaxing Aquafil Jiaxing

THAILAND

Rayong Aquafil Asia Pacific

GERMANY

Leuna Aqualeuna

UK

Kilbirnie Aquafil UK

SLOVENIA

Ljubljana AquafilSLO Ljubljana

Senozece AquafilSLO Senožeče

Store AquafilSLO Štore

Ajdovščina AquafilSLO Ajdovščina

CROATIA

Oroslavje Aquafil CRO

4. Full Year and IV Quarter 2018 Financial Statement

RECONCILIATION FROM NET PROFIT TO	At December 31,	At December 31,	Fourth	Fourth
EBITDA €/000	2018	2017	Quarter 2018	Quarter 2017
Net Profit (Including Portion Attr. to Minority )	30.097	25.216	5.742	7.460
Income Taxes	6.986	2.796	784	(5.627)
Investment income and charges	-	(50)	-	-
Amortisation & Depreciation	26.361	24.229	7.438	6.684
Write-downs & Write-backs of intangible and tangible assets	285	1.103	(1.148)	655
Financial items (*)	7.793	14.670	1.187	3.791
No recurring items (**)	6.373	5.788	3.004	3.462
EBITDA	77.896	73.751	17.008	16.424
Revenue	555.220	528.333	124.288	125.100
EBITDA Margin	14,0%	14,0%	13,7%	13,1%

RECONCILIATION FROM EBITDA TO	At December 31,	At December 31,	Fourth	Fourth
EBIT ADJUSTED €/000	2018	2017	Quarter 2018	Quarter 2017
EBITDA	77.896	73.751	17.008	16.424
Amortisation & Depreciation	26.361	24.229	7.438	6.684
Write-downs & Write-backs of intangible and tangible assets	285	1.103	(1.148)	655
EBIT Adjusted	51.250	48.419	10.718	9.086
Revenue	555.220	528.333	124.288	125.100
EBIT Adjusted Margin	9,2%	9,2%	8,6%	7,3%

(*) The financial items include: (i) financial income of Euro 0.045 million at the end of December 2018, compared to Euro 0.2 million at the end of December 2017 (ii) financial charges of Euro 5.8 million at the end of December 2018, compared to Euro 6.3 million at the end of December 2017, (iii) cash discounts of Euro 3.7 million at the end of December 2018, compared to Euro 3.8 million at the end of December 2017, and (iv) exchange gains of Euro 1.7 million, against losses of Euro 4.8 million.

(**) This includes (i) non-recurring charges related to the expansion of the Aquafil Group and other corporate transactions for Euro 3 million and 1.6 million respectively in the periods ending December 31, 2018 and December 31, 2017, (ii) listing charges for Euro 2.3 million in the periods ending December 31, 2017, (iii) mobility and incentive charges for Euro 2.8 million and Euro 1.6 million respectively in the periods ending December 31, 2018 and December 31, 2017 (iv) other non-recurring charges of Euro 0.6 million and Euro 0.3 million respectively in the periods ending December 31, 2018 and December 31, 2017.

20 Note: The EBITDA 2017 used for comparison is adjusted versus the EBITDA reported in 2017 Consolidated Financial Statement for an economical reclassification of 1,2 €/mil on annual base

CONSOLIDATED INCOME STATEMENT	December	of wich	December	of wich	Forth Quarter	of wich	Fourth	of wich
€/000	2018	non-current	2017	non-current	2018	non-current	Quarter 2017	non-current
Revenue	555.220		528.333		124.288	-	125.100	-
of which related parties	218		297		13	-	53	-
Other Revenue	2.591	856	1.431	260	2.172	437	510	217
Total Revenue and Other Revenue	557.811	856	529.764	260	126.461	437	125.609	217
Raw Material	(282.266)	(118)	(268.171)	(1.131)	(58.136)	93	(63.664)	(1.131)
Services	(100.935)	(2.918)	(94.096)	(2.840)	(27.296)	(637)	(24.518)	(1.964)
of which related parties	(3.586)		(3.668)		(901)	-	(949)	-
Personel	(106.410)	(3.983)	(101.304)	(1.975)	(29.174)	(2.800)	(24.736)	(534)
of which related parties			(797)		-	-	(83)	-
Other Operating Costs	(2.438)	(211)	(2.575)	(102)	(720)	(97)	(745)	(50)
of which related parties	(70)		(70)		(18)	-	(19)	-
Depreciation and Amorti zation	(26.361)		(24.229)		(7.438)	-	(6.684)	-
Provi s ions and Write-downs	(285)		(1.103)		1.149	-	(655)	-
Capitalization of Internal Construction Costs	2.071		533		1.948	-	48	-
EBIT	41.187	(6.373)	38.819	(5.788)	6.794	(3.005)	4.655	(3.462)
Income (loss) from Investments	-		50		-	-	0	-
Other Financial Income	45		219		14	-	50	-
of which related parties	-		144		-	-	0	-
Interest Expenses	(5.816)		(6.276)		(1.547)	-	(1.489)	-
FX Gains and Losses	1.668		(4.800)		1.267	-	(1.384)	-
Profit Before Taxes	37.084	(6.373)	28.013	(5.788)	6.528	(3.005)	1.833	(3.462)
Income Taxes	(6.986)		(2.796)	2.721	(785)	-	5.628	2.721
Net Profit (Including Portion Attr. to Minority )	30.097	(6.373)	25.216	(3.067)	5.743	(3.005)	7.461	(741)
Net Profit Attributable to Minority Interest	0		99		-	-	-	-
Net Profit Attributable to the Group	30.097		25.117		5.743	(3.005)	7.461	(741)
Basic earnings per share	0,59		0,55
Diluted earnings per share	0,59		0,55

CONSOLIDATED BALANCE SHEET	Al 31 December	At December 31,
€/000	2018	2017
Intangible Assets	15.992	7.782
Tangible Assets	189.661	153.927
Financial Assets	404	408
of which related parties	79	79
Other Assets	2.189	-
Deferred Tax Assets	7.841	11.356
Total Non-Current Assets	216.087	173.472
Inventories	189.678	153.499
Trade Receivable	34.046	34.870
of which related parties	66	116
Financial Current Assets	2.878	988
Current Tax Receivables	451	524
Other Current Assets	14.297	12.517
of which related parties	1.859	1.688
Cash and Cash Equivalents	103.277	99.024
Total Current Assets	344.627	301.422
Total Current Assets	560.714	474.895
Share Capital	49.722	49.673
Reserves	62.969	54.772
Group Net Profit for the year	31.119	20.569
Group Shareholders Equity	143.810	125.014
Net Equity attributable to minority interest	1	386
Net Profit for the year attributable to minority interest	0	99
Total Sharholders Equity	143.811	125.499
Employee Benefits	5.702	5.876
Non-Current Financial Liabilities	224.345	159.973
Provisions for Risks and Charges	1.169	1.516
Deferred Tax Liabilities	3.582	3.533
Other Payables	11.833	7.858
Total Non-Current Liabilities	246.631	178.755
Current Financial Liabilities	39.090	52.111
Current Tax Payables	2.270	5.134
Trade Payables	106.895	94.477
of which related parties	762	716
Other Liabilities	22.017	18.919
of which related parties	230	457
Total Current Liabilities	170.272	170.641
Total Equity and Liabilities	560.714	474.895

CONSOLIDATED BALANCE SHEET	Al 31 December	At December 31,
€/000	2018	2017
Intangible Assets	15.992	7.782
Tangible Assets	189.661	153.927
Financial Assets	404	408
of which related parties	79	79
Other Assets	2.189	-
Deferred Tax Assets	7.841	11.356
Total Non-Current Assets	216.087	173.472
Inventories	189.678	153.499
Trade Receivable	34.046	34.870
of which related parties	66	116
Financial Current Assets	2.878	988
Current Tax Receivables	451	524
Other Current Assets	14.297	12.517
of which related parties	1.859	1.688
Cash and Cash Equivalents	103.277	99.024
Total Current Assets	344.627	301.422
Total Current Assets	560.714	474.895
Share Capital	49.722	49.673
Reserves	62.969	54.772
Group Net Profit for the year	31.119	20.569
Group Shareholders Equity	143.810	125.014
Net Equity attributable to minority interest	1	386
Net Profit for the year attributable to minority interest	0	99
Total Sharholders Equity	143.811	125.499
Employee Benefits	5.702	5.876
Non-Current Financial Liabilities	224.345	159.973
Provisions for Risks and Charges	1.169	1.516
Deferred Tax Liabilities	3.582	3.533
Other Payables	11.833	7.858
Total Non-Current Liabilities	246.631	178.755
Current Financial Liabilities	39.090	52.111
Current Tax Payables	2.270	5.134
Trade Payables	106.895	94.477
of which related parties	762	716
Other Liabilities	22.017	18.919
of which related parties	230	457
Total Current Liabilities	170.272	170.641
Total Equity and Liabilities	560.714	474.895

NET FINANCIAL DEBT	At December,	At December 31,
€/000	2018	2017
A. Cash	103.277	99.024
B. Other cash equivalents	-	-
C. Securities held-for-trading	-	-
D. Liquidity ( A + B + C)	103.277	99.024
E. Current financial receivables	2.878	988
F. Current bank loans and borrowing	(96)	(72)
G. Current portion of non-current loans and borrowing	(35.496)	(50.199)
H. Other current loans and borrowing	(3.498)	(1.840)
I. Current financial debt ( F + G + H )	(39.090)	(52.111)
J. Net current financial debt (I + E+ D)	67.066	47.901
K. Non-current bank loans and borrowing	(159.492)	(91.597)
L. Bonds issued	(53.578)	(53.820)
M. Other non-current loans and borrowing	(11.265)	(14.556)
N. Non-current financial debt ( K + L + M )	(224.335)	(159.973)
O. Net financial debt (J+N)	(157.269)	(112.071)

AQUAFIL INVESTORS CONTACT

Karim Tonelli Investor Relations and Performance Management Director investor.relations@aquafil.com - mob: +39 348 6022.950

Barabino & Partners IR T: +39 02 72.02.35.35 Stefania Bassi - s.bassi@barabino.it - mob: +39 335 6282.667 Agota Dozsa - a.dozsa@barabino.it - mob: +39 338 7424.061