Avgol Industries 1953 Ltd.

Investor Presentation • Feb 25, 2021

© AVGOL Nonwovens 2020 Analyst Conference call Q4/2020

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.

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

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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

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© AVGOL Nonwovens 2020

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

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- 2020 was defined as a year in which maintaining business continuity was essential, both for us globally and for our customers. At the beginning of 2021 Avgol continued to observe a continuous high demand for our fabrics. At the same time due to the high demand for PP based fabrics, and certain weather events, there are global PP supply events that create price increase that begun in the fourth quarter of 2020 and continue in an extensive way on January and February 2021, which the highest increase happens in US. The company continue to follow on a daily basis to ensure that the lines will continue to work continuously. During 2021 Avgol plan to conclude the relocation of a production line from Israel to India in order to support a fast-growing market for our fabrics. The company approved yesterday an investment in Avgol plant in Russia of a new and most advanced production line, as well as other equipment which will enhance the company capabilities in the fabric production to the medical market. Russia is another growing market in which we already have a strong footprint in. With this new technology and our dominance in the Russian market, Avgol expect to continue to lead and to support Russia the CIS market with the newest and most developed products.

© AVGOL Nonwovens 2020

- The Company's revenues in FY2020 and for the fourth quarter includes revenues from fabrics for medical products with higher profitability than the average profitability from fabrics of hygiene products. Excluding Barkan (the downsizing of the operations at the Company's site in Barkan during FY2020) the quantity sold in FY2020 and for the fourth quarter increased compared to corresponding periods. Gross profit for Q4-2020 totalled USD 19.3 million and constitutes approximately 20.1% of the total income, compared to a gross profit of USD 18.7 million for the corresponding period last year, which constituted

• approximately 18.3% of the total income for that period. The gross profit during the quarter as compared to the corresponding period last year, and after neutralizing the impact of changes in the raw materials price indices between the periods, is higher by approximately USD 4.9 million. As a result of the increase in the raw materials prices, a loss of approximately USD 3.6 million was recorded in the spread in the raw materials price indices, net compared to a profit of approximately USD 0.7 million during the corresponding quarter last year (total negative impact of approximately USD 4.3 million compared to the corresponding period last year).

© AVGOL Nonwovens 2020

- The increase in the gross profit for the fourth quarter of 2020 compared to the corresponding period last year, after neutralizing the impact of the raw materials price indices, derived mainly from the high gross profit that 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 second half of 2020, the volume of demands and the prices and/or the profitability of these products have been stabilizing downward.

- In 2020 the Company recorded gross profitability that is higher than the average profitability for other years , which derived mainly from sales of fabrics that are used in the manufacture of medical products that were executed as of the second quarter of 2020. These sales were achieved through the Company's rapid response to the growing demand for its products as a result of the global spread of the coronavirus and the significant increase in the global prices of these products during the coronavirus crisis. Sustaining these profit margins depends largely on the conduct of the markets and the volumes of supply and demand. EBITDA in Q4-2020 was approximately USD 17.6 million, 1.5M\$ 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 Q4-2020 amounts to approximately USD 21.2 million, 5.8M\$ more than the corresponding period last year. EBITDA in FY2020 totaled at approximately USD 89.4 million, 25.4M\$ more than the corresponding period last year. After neutralizing the changes in the raw materials prices, the Underlying EBITDA in FY2020 amounts to USD 89.8 million, 32.9M\$ more than the corresponding period last year.

- Net Financing Expenses- in Q4-2020 totalled USD 6. 6 million, compared to USD 4.1 million in the corresponding period last year. The increase in the net financing expenses during the fourth quarter derived mainly from net exchange-rate differential expenses of approximately USD 3.9 million, compared to net exchange-rate differential expenses of USD 0.5 million during the corresponding quarter last year. The exchange-rate differentials as stated are largely attributed to the unhedged portion of the Series C bonds. This increase was partially offset by the reduction of approximately USD 0.7 million in financing expenses in respect of long-term loans and bonds 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). Net Profit for Q4-2020 totalled USD 2.4 million, compared to net profit of USD 3.6 million for the corresponding quarter last year. Net Profit for FY2020 totalled USD 36.9 million, compared to a net profit of USD 12.3 million for the corresponding period last year.

Analyst Conference I Quarterly Financials Highlights

Analyst Conference I Quarterly Financials Highlights
USD Mln	Q4/20	Q3/20	Q2/20	Q1/20	Q4/19	Q3/19	Q2/19	12M/20	12M/19
Revenue, net	96.0	93.4	103.0	90.6	102.2	102.9	101.5	383.0	413.9
	19.3	23.4	34.5	17.9	18.7	17.6	17.6	95.1	73.4
Gross Profit	20.1%	25.1%	33.4%	19.8%	18.3%	17.1%	17.3%	24.8%	17.7%
	2.4	8.3	18.0	8.3	3.6	2.2	2.5	36.9	12.3
Net Profit	2.5%	8.9%	17.5%	9.1%	3.5%	2.1%	2.5%	9.6%	3.0%
	17.6	22.0	33.5	16.3	16.1	15.8	15.2	89.4	64.0
EBITDA	18.4%	23.6%	32.5%	18.0%	15.8%	15.4%	15.0%	23.3%	15.5%
	21.2	23.5	31.1	14.0	15.4	15.2	14.1	89.8	56.9
EBITDA Underlying	22.1%	25.1%	30.2%	15.5%	15.1%	14.8%	13.9%	23.5%	13.7%
EBITDA Underlying	21.2	23.5	31.1	14.0	16.6	15.4	14.8	89.8	59.9

Analyst Conference I Balance Sheet Highlights

NON-CURRENT ASSETS

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Analyst Conference I Balance Sheet Highlights
	As on Dec 31	As on Dec 31		As on Dec 31	As on Dec 31
	2020	2019		2020	2019
	USD thousands	USD thousands		USD thousands	USD thousands
CURRENT ASSETS			CURRENT LIABILITIES
Cash and cash equivalents	75,471	36,497	Short-term credit and current maturities of long-term loans
Trade receivables	31,744	58,245	from banking corporations	10,866	30,333
Other receivables and debit balances	4,132	6,463	Current maturities of long-term bonds	36,481	23,867
Current tax assets	5,042	2,806	Trade payables	27,309	28,413
Derivatives	2,547	1,945	Current tax liabilities	1,565	1,517
Inventories	41,453	44,177	Other payables and credit balances	24,545	19,976
Total Current Assets	160,389	150,133	Total Current Liabilities	100,766	104,106
			NON-CURRENT LIABILITIES
NON-CURRENT ASSETS			long term payables	5,386	6,111
			Long-term loans from banking corporations	41,869	52,734
Property, plant and equipment, net	292,463	315,454	Bonds	120,658	149,907
Derivatives	7,031	7,034	Employee benefit liabilities	172	183
Deferred tax assets	555	1,513	Deferred tax liabilities	20,188	21,165
Intangible assets	2,836	2,916	Total Non-current Liabilities	188,273	230,100
Long-term debit balances	557	681
Total Non-current Assets	303,442	327,598	EQUITY
			Equity attributable to shareholders of the parent company	174,385	143,112
TOTAL ASSETS	463,831	477,731	Noncontrolling interests	407	413
			Total Equity	174,792	143,525
			Total LIABILITIES AND EQUITY	463,831	477,731

Analyst Conference I Cash Flow

Analyst Conference I Cash Flow
	Q4/20	Q4/19
	USD thousands	USD thousands
		11,143
Net cash provided by (used for) operating activities	6,487
Net cash used for investing activities	(2,041)	(3,010)
Net cash, provided by (used for) financing activities	(28,061)	(17,738)
Increase (decrease) in cash and cash equivalents	(23,615)	(9,605)
Balance of cash and cash equivalents at the end of the period	75,471	36,497

© AVGOL Nonwovens 2020