Avgol Industries 1953 Ltd.

Investor Presentation • Nov 8, 2020

© AVGOL Nonwovens 2020 Analyst Conference call Q3/2020

Analyst Conference | Disclaimer

• 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 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 הנתונים והחברה אינה חייבת להמשיך לתת את הנתונים ו/או לעדכנם. האמור במצגת בכלהקשור 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. 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. 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.
• 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 שונותמאלו שהוצגו במידע צופה פני עתיד.

2

Analyst Conference | Presenters

CFO and VP Operations Mr. Itzik Eliav

Mr. Shachar Rachim

CEO CCO Mr. Tommi Bjornman

Analyst Conference | Who We Are

© AVGOL Nonwovens 2020

4

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

Analyst Conference | What We Do

Targeting the Hygiene market, covering Baby, Feminine Care and the growing Adult Incontinence markets Hygiene Market

5

Technology Main raw material, Polypropylene Raw material

Spunmelt

Working together with our customer to bring innovative solutions to the consumers mainly in the hygiene market Consumer Focus

- field which are synergetic to our current expertise and technology as the medical arena.

Analyst Conference I Global Footprint

-

- The volume of the demands and the prices and/or the profitability of these products moderated during the third quarter of 2020, as a result of a substantial ramp-up in the global manufacturing of fabrics used in the manufacture of medical products. Nevertheless, the demands for hygiene and medical products are still high, and the Company is taking action to continue and maximize its profits by improving and expanding the supply and variety of products that it manufactures at its sites worldwide during this period. Avgol continues to demonstrate in the third quarter its resilience and strength during the crisis period. Avgol's main goal is to continue and maximize value to its shareholders and to commit for stability and growth in different market conditions. Avgol is aiming to continue to be one of the Hygiene market leaders and to keep exploring new strategic segments and markets to create diversification and establish adjacent expertise.

9

• Avgol entered into the production of fabrics for PPE applications along with other segments for medical field,
• with the intention to continue and focus on Hygiene but to further develop our offering to the medical market. Avgol is facing, along with other businesses and industries, the market uncertainties and unpredictable dynamics, and using all its resources and efforts to react fast accordingly. This approach will enhance the Company's penetration into new markets, will strengthen the relationship with its legacy customers, and will create new possibilities with new potential local and global leading companies.

• The company strategy is to secure our customers business continuity, during regular and crisis time and we are demonstrating it continuously, and will continue to demonstrate it in the coming years by growing with our
• customers through supporting their market share growth in the end market. The long-term partnerships are based, strongly on Avgol innovation activities to allow our customers competitiveness in the sustainability arena (bio-degradable, circularity and other friendly environmental solutions, antibacterial/viral products) as well as improving current products characteristics to allow superiority.

• The revenues for Q3-2020 totalled approximately USD 93.4 million, compared to approximately USD 102.9 million for the corresponding period last year. The revenues during the period include revenues from fabrics for Medical
• Products at profitability that is higher than the average profitability from fabrics for hygiene products. During the period, the average selling prices decreased as a result of the decrease in the raw materials price indices, and discounts given to the Company's principal customers which also affected the Company's revenues. During the quarter, the quantity sold decreased by about 1.3% compared to corresponding period. The decrease in the quantity sold during the period derived mainly from the downsizing of the operations at the Company's site in Barkan. During the first quarter, Avgol signed supply agreement renewals with its principal customers. Some of the
• agreements are for a one-year period and others are for a two-year period. The agreements include expected growth in the volume of sales, in exchange for discounts. The Company succeeded in offsetting a portion of this impact by improving the raw materials purchase agreements that were signed for 2020 and by the continuing improvement in the Company's operating efficiency.

• Gross profit for Q3-2020 totalled USD 23.4 million, and constitutes about 25.1% of the total income, compared to a gross profit of approximately USD 17.6 million for the corresponding period last year, which
• constituted about 17.1% of the total income for that period. The gross profit during the quarter as compared to the corresponding period last year, after neutralizing the impact of changes in the raw materials price indices between the periods, is higher by about USD 7.9 million. It derived from sales of fabrics for Medical Products, as well as from the increase in profitability from hygiene products in China from spot business customers, coupled with the continuing trend of improvement in operating efficiency at the Company's sites. The increase in profitability as stated, was offset mainly by price discounts given to the Company's principal customers.

- Most of the increase in the gross profit resulted from excess demands at high prices for nonwoven fabrics used to manufacture medical and hygiene products that are used to contend with the coronavirus crisis. The Company identified the potential and the manufacturing shortage of nonwoven fabrics used to manufacture these products and took action accordingly to adjust its production lines to provide the market needs. It should be noted that, as of the third quarter of 2020, the volume of demands and the prices and/or the profitability of these products have been moderating. During the fourth quarter of 2020 and correct to the publication date of this report, the raw materials price indices began to rise. Insofar as this trend does not change, the Company expects this to have a negative impact on the results of the fourth quarter of 2020.

- EBITDA in Q3-2020 totaled USD 22 million, 6.2M\$ more than the corresponding period last year. After neutralizing the changes in the raw materials prices (both the purchase prices and the selling-price adjustments), the Underlying EBITDA in Q3-2020 amounts to USD 23.5 million, 8.3M\$ more than the corresponding period last year. EBITDA in 9M-2020 totaled USD 71.8 million, USD 23.9 million more than the corresponding period last year. After neutralizing the changes in the raw materials prices the Underlying EBITDA in 9M-2020 sums up to USD 68.6 million, 27.1M\$ more than the corresponding period last year.

• The cash flow provided by operating activities during the third quarter totalled about USD 11.8 million,
• compared to about USD 17.5 million during the corresponding quarter last year. The decrease derived mainly from the increase in the balance of the Company's trade receivables as a result of the decrease in the nonrecourse factoring in respect of the Company's other trade receivables by about USD 3.1 million during the period (during the corresponding period last year, the balances of factoring increased by about USD 2.9 million). Upon neutralizing the changes in the volumes of factoring of the balance of trade receivables during the period and during the corresponding period last year, the cash flow provided by operating activities during the period totalled about USD 14.9 million, compared to about USD 14.6 million during the corresponding period last year.

- Net Financing Expenses in Q3-2020 totalled USD 3.2 million, compared to USD 6.3 million in the corresponding period last year. During the third quarter of 2020, the financing expenses in respect of long-term loans and bonds were reduced by about USD 0.7 million compared to the corresponding quarter last year (repayments of principal according to the repayment schedule; the Company did not obtain new long-term loans and/or bonds). Additionally, during the corresponding quarter last year, the Company incurred exchange-rate differential expenses totalling about USD 2.5 million, mainly as a result of the strengthening of the shekel versus the dollar, which affected the valuation of half of the Series C shekel bonds, which were not hedged against the Company's functional currency, which is the USD, while during the current quarter, the Company incurred exchange-rate differential expenses in respect of this valuation totalling only about USD 0.4 million. Net Profit for Q3-2020 totalled USD 8.3 million, compared to net profit of USD 2.2 million for the corresponding quarter last year. Net Profit for 9M-2020 totalled USD 34.5 million, compared to a net profit of USD 8.7 million for the corresponding period last year.

Analyst Conference I Quarterly Financials Highlights

							Analyst Conference I Quarterly Financials Highlights
USD Mln	Q3/20	Q2/20	Q1/20	Q4/19	Q3/19	9M/20	9M/19
Revenue, net	93.4	103.0	90.6	102.2	102.9	287.0	311.7
			17.9	18.7	17.6	75.8	54.7
	23.4	34.5
	25.1%	33.4%	19.8%	18.3%	17.1%	26.4%	17.5%
	8.3	18.0	8.3	3.6	2.2	34.5	8.7
	8.9%	17.5%	9.1%	3.5%	2.1%	12.0%	2.8%
	22.0	33.5	16.3	16.1	15.8	71.8	47.9
	23.6%	32.5%	18.0%	15.8%	15.4%	25.0%	15.4%
Gross Profit Net Profit EBITDA Underlying EBITDA	23.5	31.1	14.0	15.4	15.2	68.6	41.5
	25.1%	30.2%	15.5%	15.1%	14.8%	23.9%	13.3%
Underlying EBITDA	23.5	31.1	14.0	16.6	15.4	68.6	43.3
exl. one timers	25.1%	30.2%	15.5%	16.3%	15.0%	23.9%	13.9%

Analyst Conference I Balance Sheet Highlights

Analyst Conference I Balance Sheet Highlights
	As on Sep 30	As on Dec 31
	2020	2019
	000' USD	000' USD
CURRENT ASSETS			CURRENT LIABILITIES
Cash and cash equivalents	97,799	36,497	Short-term credit and current maturities of long-term
Trade receivables	28,515	58,245
Other receivables and debit balances	5,137	6,463
Current tax assets	3,875	2,806
Derivatives	1,711	1,945
Inventories	36,458	44,177
Total Current Assets	173,495	150,133
NON-CURRENT ASSETS
Property, plant and equipment, net	291,107	315,454
Derivatives	5,588	7,034	NON-CURRENT LIABILITIES
Deferred tax assets	2,606	1,513
Intangible assets	3,094	2,916
Long-term debit balances	625	681
Total Non-current Assets	303,020	327,598
TOTAL ASSETS	476,515	477,731

As on Sep 30	As on Dec 31		As on Sep 30	As on Dec 31
2020	2019		2020	2019
000' USD	000' USD		000' USD	000' USD
		CURRENT LIABILITIES
		Short-term credit and current maturities of long-term	11,233	30,333
		loans from banking corporations
		Current maturities of long-term bonds	23,992	23,867
		Trade payables	24,603	28,413
		Current tax liabilities	2,977	1,517
		Other payables and credit balances	26,492	19,976
		Total Current Liabilities	89,297	104,106
		NON-CURRENT LIABILITIES
		long term payables	5,375	6,111
		Long-term loans from banking corporations	45,000	52,734
		Bonds	150,554	149,907
		Employee benefit liabilities Deferred tax liabilities	159 20,876	183 21,165
		Total Non-current Liabilities	221,964	230,100
		EQUITY
		Equity attributable to shareholders of the parent	164,823	143,112
		company
		Noncontrolling interests	431	413
		Total Equity	165,254	143,525
		Total LIABILITIES AND EQUITY	476,515	477,731

© AVGOL Nonwovens 2020

21

Analyst Conference I Cash Flow
	Q3/20	Q3/19	9M 2020	9M 2019
			USD thousands	USD thousands
	USD thousands	USD thousands
Net cash provided by (used for) operating activities	11,786	17,507	95,063	9,700
Net cash used for investing activities	2,459	(1,877)	(3,980)	(6,047)
Net cash, provided by (used for) financing activities	(2,586)	(2,181)	(28,747)	446
Increase (decrease) in cash and cash equivalents	11,659	13,449	62,336	4,099

Analyst Conference I Cash Flow

Q3/20	Q3/19
USD thousands	USD thousands

© AVGOL Nonwovens 2020