Avgol Industries 1953 Ltd. — Earnings Release 2023

Aug 10, 2023

Financial Results Financial Results Q2/2023

Sivan Yedidsion – CFO Sivan Yedidsion – Interim CEO and CFO

למסמך נגיש

Q1/2023

Analyst Conference | Disclaimer

• מצגת זו הוכנה ע"י חברת אבגול תעשיות 1953 בע"מ )להלן "החברה"(. המידע הכלול במצגת וכל מידע אחר שיימסר במהלך הצגת המצגת )להלן "המידע"( אינו מהווה בסיס לקבלת החלטת השקעה, ואינו מהווה המלצה או חוות דעת, וכן לא מהווה תחליף לשיקול דעת של משקיע פוטנציאלי. המידע ניתן לצורך הנוחות בהצגת הנתונים והחברה אינה חייבת להמשיך לתת את הנתונים ו/או לעדכנם. האמור במצגת בכל הקשור לניתוח הפעילות של החברה הינו תמצית בלבד, ועל מנת לקבל תמונה מלאה של פעילות החברה ושל הסיכונים עימם מתמודדת החברה, יש לעיין בדיווחים המלאים של החברה לרשות לני"ע ולבורסה.
• המצגת כוללת מידע צופה פני עתיד, כהגדרתו בחוק ניירות ערך, של תחזיות, מטרות, הערכות ואומדנים המתייחסים לאירועים או עניינים עתידיים, אשר התממשותם אינה ודאית ואינה בשליטת החברה, והוא מבוסס רק על הערכתה הסובייקטיבית של החברה.
• התממשותו ו/או אי התממשותו של המידע הצופה פני עתיד תושפע מגורמים אשר לא ניתן להעריכם מראש והם אינם מצויים בשליטת החברה ולפיכך על אף שהחברה מאמינה שציפיותיה, כמוצג במצגת, הינן סבירות, הרי שאין כל וודאות כי תוצאותיה בפועל של החברה בעתיד תהיינה בהתאם לציפיות אלה והן עשויות להיות שונות מאלו שהוצגו במידע צופה פני עתיד.
• This information is forward-looking information, which is based on the information known by the Company at the time of this report is being published. This information might not materialize or might materialize in a way that differs from that anticipated, inter alia, if a material change in trend occurs, or due to other parameters that affect the Company's manufacturing costs or the Company's selling prices.
• This presentation is based on the Company financial reports.

© AVGOL Nonwovens 2020

• There is no data in this presentation that isn't presented in the public financial reports.
• If there is any discrepancy between this presentation and the data in the financial report that was issued to the Israeli SEC and the TASE, the valid data is the one which appears in the formal reports.
• This presentation is provided for information and as a matter of record only. It does not constitute an offer to sell or a solicitation of an offer to buy or sell securities or other financial instruments in any jurisdiction or any advice or recommendation with respect to such securities or other financial instruments of the company.

AVGOL Market

Analyst Conference I Who We Are

AVGOL is a world leader in the development, manufacturing and marketing of nonwoven fabrics for diapers, adult incontinence products, disposable feminine hygiene products, disposable medical products, wipes, fabrics used to produce masks, gowns and additional medical products.

The Company also manufactures nonwoven fabrics used as raw or component materials in various non-hygiene products.

Our products are based on polyolefin resins, specifically those in the Polypropylene (PP) family.

Analyst Conference | Who We Are

Our Vision: We Aspire to Create Nonwoven Innovations to Enhance Quality of Life

Our team

~800 employees in the Global commercial and technical team

Global

6 production sites in Israel, USA, China, Russia and India supplying more than 30 countries.

Quality

Committed to serve our customers with on-time, in full supply of materials to specification

Strategy

=

Global leader in the Nonwovens industry, with broad application and end-use touch points

The Public 34.03%

Analyst Conference | Who we are

Covering Baby diapers , Feminine Care, Adult Incontinence, PPE and medical

Mainly Polypropylene Spunmelt / Meltblown Biodegradable NW

We aspire to:

• Grow and strengthen our position by expanding production capacity to meet the continuous growth in the hygiene market
• Bring innovative nonwoven products that will bring better solutions to regional trends and preferences
• Be the definitive leader in the commercialization of nonwoven spunlaid materials that have reduced impact on the environment

Analyst Conference | What We Do

6

Spunbond Meltblown

Provides strength and base performance Structure useful in filtration and wipe materials

Combination of one or more Spunbond beams and one or more Meltblown beams

© Avgol Industries 1953 Ltd. 2022

USA Expansion | Project Update

In December 2022, the company's Board of Directors decided to establish a new production line in our North Carolina, USA facility, as an alternative to the originally planned expansion in Russia.

The addition of this new Reicofill 5 machine will expand the company's existing production capacity by 20KMT annually, offering better efficiency and more advanced products to serve the growing North American market.

Total planned investment : USD 90 million

Commissioning planned during Q4/2024

Financial Results Q2-2023

Analyst Conference I Quarterly Financials Highlights

USD Mn	Q2'23	Q1'23	Q4'22	Q3'22	Q2'22
Revenues, net	78	80	103	110	100
Gross Profit	11	12	19	18	13
	13.9%	14.8%	18.6%	16.8%	13.4%
EBIT	3.4	4	9.7	9	5
	4.4%	5%	9.5%	7.8%	5.3%
	1.5	1	5	6	5
Net Profit	1.9%	1.0%	4.6%	5.0%	5.1%
	10	11	18	16	12
EBITDA	13.1%	13.1%	17.1%	14.7%	12.0%
	12	10	9	9	14
EBITDA Underlying	15.3%	12.5%	9.2%	7.9%	14.4%
Net Debt/EBITDA	2.29	2.20	1.82	1.87	2.15

9 © Avgol Industries 1953 Ltd. 2022

Raw Material | Polypropylene Index

\$/Ton

During the second quarter of 2023 and correct to the publication date of this report, the downtrend in the raw materials price indices is continuing. The Company expects it to have a positive impact on its results during the third quarter of 2023.

This information is forward-looking information, which is based on the information known by the Company at the time this report is being published. This information might not materialize or might materialize in a way that differs from that anticipated, inter alia, if a material change in trend occurs, or due to other parameters that affect the Company's manufacturing costs or the Company's selling prices

Financial Results

PL Results	Q2'23	Key highlights
Revenues	\$78.3M vs \$99.8M in Q2'2022	• Drop in polypropylene prices, to which our sales prices are linked. • A decrease of 2.5% in sales volumes .
Gross Profit	\$10.9M vs \$13.4M in Q2'2022	The Gross Profit in Q2'23 includes a negative impact of about \$1.7M in lag • effect, compared to a negative impact of \$2.3M in Q2'22. • The gross profit was impacted mainly by lower sales volumes.
SG&A expenses	\$7.4M vs \$8.0M in Q2'2022	Driven by significant decrease in logistic costs. •

\$27

Financial Results

PL Results	Q2'23	Key highlights
EBITDA	\$10.3M vs \$12.0M in Q2'2022	EBITDA includes a negative impact of about \$1.7M in lag, compared to a • negative impact of \$2.3M in Q2'22.
Underlying EBITDA	\$12.0M vs \$14.3M in Q2'2022	• Global economic slowdown together with decline in sales quantities.
Net Financing ,Expense (Revenue)	\$1.3M vs (\$1.2M) in Q2'2022	Sharp interest rate hikes compensated by decrease in exchange-rate • differential leads to financing expenses as compared to financing income during the corresponding period last year.

Financial Results

PL Results	Q2'23	Key highlights
Net Profit	\$1.5M vs \$5.0M in Q2'2022	• Mainly affected by the decrease in the operating profit and an increase an in-financing expense , partially offset by lower income tax expenses.
Operating Cash Flow	\$2.8M vs \$17.5M in Q2'2022	• Mainly affected by changes in working capital and the decrease in profit.
Net Working Capital	\$44M vs \$67M in Q2'2022	Mainly as a result of decrease in the balances of trade • receivables and Inventory value.
Leverage Ratio	2.3 vs 1.8 in Q4'2022	• Net debt / EBITDA

Analyst Conference I Balance Sheet

	As on June 30	As on Dec 31
	2023	2022
	K'USD	K'USD
CURRENT ASSETS
Cash and cash equivalents	52,867	61,511
Trade receivables	30,886	47,719
Other receivables and debit balances	3,458	3,913
Current tax assets	786	64
Derivatives	587	1,267
Inventories	37,704	29,918
Total Current Assets	126,288	144,392
NON-CURRENT ASSETS
Property, plant and equipment, net	302,037	310,077
Derivatives	550	1,212
Deferred tax assets	1,084	489
Long –term Tax balances	4,192	4,346
Intangible assets	2,000	1,910
Long-term debit balances	3,777	3,255
Total Non-current Assets	313,640	321,289
TOTAL ASSETS	439,928	465,681

14

	As on June 30	As on Dec 31
	2023	2022
	K'USD	K'USD
CURRENT LIABILITIES
Short-term credit and current maturities of	13,549	13,017
long-term loans from banking corporations
Nonbank short-term credit	26,959	27,671
Liabilities in respect of derivatives	89	22
Current maturities of long-term bonds	33,256	34,382
Trade payables	25,385	23,450
Current tax liabilities	409	1,288
Other payables and credit balances	19,465	21,856
Total Current Liabilities	119,112	121,686
NON-CURRENT LIABILITIES
long term payables	2,301	2,679
Long-term loans from banking corporations	58,869	66,217
Bonds	44,131	45,244
Employee benefit liabilities	167	161
Deferred tax liabilities	18,001	19,844
Total Non-current Liabilities	123,469	134,145
EQUITY
Equity attributable to shareholders of the parent company	197,006	209,484
Noncontrolling interests	341	366
Total Equity	197,347	209,850
Total LIABILITIES AND EQUITY	439,928	465,681

© Avgol Industries 1953 Ltd. 2022

SAY HELLO!

Avgol is proud to support our clients with outstanding technical service and support

To find out more about how Avgol can support your baby care diaper range developments, please visit avgol.com or contact us at: avgolinfo@avgol.com

We Aspire to Create Nonwoven Innovations to Enhance the Quality of Life

Avgol Industries 1953 Ltd.

9 Shimshon St. Lexus House, 7th floor, Petah Tikva, 4952707 Israel