Colt CZ Group SE

Investor Presentation • Nov 21, 2024

COLT CZ GROUP SE FINANCIAL RESULTS 9M 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

RADEK MUSIL

Member of the Board of Directors CEO of Sellier & Bellot a.s.

DENNIS VEILLEUX

Member of the Board of Directors President of Colt CZ North America

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

JANA MATOUŠKOVÁ

Head of Group Finance Colt CZ Group SE

RECORD 9M 2024 AT A GLANCE

REVENUES

CZK 14,972 m ↑ 51.1% vs 9M 2023 ADJUSTED EBITDA CZK 3,021 m ↑ 56.1% vs 9M 2023

ADJUSTED NET PROFIT

CZK 1,293 m

↓ 12.8% vs 9M 2023

ADJUSTED EPS1 CZK 29 ↓ 32.1% vs 9M 2023

REVENUES – REGIONAL BREAKDOWN IMPACTED BY S&B SALES

REVENUE BREAKDOWN1 BY GEOGRAPHY REVENUE BREAKDOWN1 BY GEOGRAPHY – SEGMENTS

COMMENTS

• Sellier & Bellot consolidation impacted the regional distribution of revenues higher sales in Europe, in the Czech Republic and partially in the US
• US market remains largest for firearms segment; yoy revenues growth of around 38.5%

9M 2024 CUSTOMER SEGMENTS SPLIT 50:50

Commercial Military and Law Enforcement

Q3 2024 WAS THE STRONGEST THIRD QUARTER EVER

In '000 units In CZK m

BREAKDOWN BY UNITS SOLD QUARTERLY REVENUES & ADJ . EBITDA SEASONALITY

COMMENTS

• Growth fueled by M&LE sales, S&B consolidation, US commercial market staying relatively stable/soft in some segments
• Seasonality impacted the performance in Q3 2024, the last quarter of the year expected to be strong again
• Q3 2024 was the strongest third quarter ever, growing 14% yoy organically. Yet, it did not exceed the strong Q2 2024
• 9M 2024 units sold up 3.2% yoy vs. organic revenue growth firearms up 23% yoy, confirming the focus on products with a higher added value

9M 2024 NET PROFIT AFFECTED BY FINANCIAL RESULT AND ONE-OFF ADJUSTMENTS

ADJUSTED NET PROFIT ¹

ADJUSTED EARNINGS PER SHARE ²

COMMENTS

• 9M 2024 net profit impacted by negative financing result (interest payment on acquisition financing from May 16, 2024, lower interest rates from deposits and relatively weaker CZK vs. USD and EUR)
• Net profit adjusted for one-off items e.g. ESOP related expenses, inventory step up from S&B acquisition, bank fee from acquisition loan & bonds
• EPS additionally impacted by stock dilution in 2024, appr. 52 m shares @ 30/9/2024 vs. 35 m shares @ 30/9/2023

Notes: Financial results are unaudited

CAPEX IN LINE WITH 2024 GUIDANCE

COMMENTS

• 9M 2024 CAPEX in line with FY CAPEX guidance (i.e. up to 5% of revenues)
• Major investments in 2024 in production lines in both segments
• FY 2024 CAPEX guidance includes the new acquisition Sellier & Bellot

Notes: Financial results are unaudited 1 – Corresponds to the paid acquisition of non-current assets 2 – Guidance is based on the management expectations as of the date of presentation

NET LEVERAGE DOWN POST ABB TRANSACTION IN OCTOBER

EXPECTED DEBT MATURITY PROFILE

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

COMMENTS

Post ABB net leverage significantly below 3x

Cash generative business of combined businesses will allow leverage reduction going forward, with expected acquisition loan repayment by 2029

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

COMMENTS

• FY guidance confirmed after the solid performance in 9M 2024
• Q4 2024 is expected to be stronger than Q3 2024

ACQUISITION OF SELLIER & BELLOT – D&A IMPACT

D&A IMPACT

In CZK m

COMMENTS

• Increase in Amortization due to Purchase Price Allocation of S&B acquisition significantly affecting Net profit/EPS (impact o n EPS in 9M 2024 approx. CZK 318)
• Significant impact on net profit and EPS in the next 3 years, approximately CZK 600 m per year

ABB CAPITAL INCREASE OF COLT CZ GROUP

TRANSACTION DETAILS

Name of Company	Colt CZ Group SE
Offering type	Capital Increase by way of an Accelerated Bookbuild (ABB)
Existing shareholders pre transaction	CZ Partners SE: 53.3% CBC: 26.3% Free float: 20.4%
Shares pre-cap increase	52,563,028
Shares offered	3,900,000 (7.4% of issued share capital)
Transaction size	CZK 2.24 bn or EUR 90 m
Offer Price	CZK 575
Discount	7.10%
Offering structure	Private placement to institutional investors outside the US pursuant to Reg S Private placement to US QIBs pursuant to Rule 144A
Lock-up	Company: 180 days
Listing	Prague Stock Exchange

TIMELINE

14-Oct	Start of ABB (after market-close)
15-Oct	Close of books (17:15 CET) & Pricing
16-Oct	Allocation & Trade Date
18-Oct	Settlement

ALLOCATION BY GEOGRAPHY

KEY HIGHLIGHTS

• The Company plans to use the net proceeds for strengthening the Company's equity & accelerate debt reduction after the acquisition of S&B as well as modernization of production capacities and potential acquisitions
• The deal was launched following non-deal roadshow without wall crossing
• The transaction was strongly supported by majority shareholder participation in the transaction
• Driven by the majority shareholder commitment and strong demand from local and regional investors, the deal was priced at CZK 575, representing a discount of app. 7%
• The deal represented the largest capital increase in the Czech Republic since 2007 and the largest ABB since 2016

OTHER NOTABLE DEVELOPMENTS

President Volodymyr Zelenskyj awarded Colt CZ Group the Order of Merit for its support of Ukraine, recognizing the Group's strategic projects, including the technology transfer for assembling CZ BREN 2 rifles by Česká zbrojovka and the production of NATO-standard small-caliber ammunition in Ukraine, overseen by Sellier & Bellot.

Successful transfer of technology for the production of hand grenades from Rheinmetall Arges to the Czech Republic via Colt CZ Defence Solutions, with 60% domestic industry participation – 2024 order of 100,000 pieces for the Czech Army will be completed by the end of November.

Support of Czech Army war veterans – donation of poppies to support the Military Solidarity Fund

THANK YOU FOR YOUR ATTENTION

APPENDIX

ADJUSTED EBITDA RECONCILIATION

In CZK '000	9M 2024	9M 2023
Operating profit	1,241,021	1,124,155
Depreciation and amortization	1,003,325	582,526
EBITDA	2,224,346	1,706,681
ESOP related costs	402,456	228,475
M&A costs1	962	268
S&B inventory step up	330,000	-
S&B commodity hedging	43,193	-
Adjusted EBITDA	3,020,957	1,935,424

Notes: Financials are based on consolidated unaudited results 1 – Related to the unrealized acquisitions in the defence sector

ADJUSTED NET PROFIT RECONCILIATION

In CZK '000	9M 2024	9M 2023
Earnings before tax	920,864	1,891,596
Tax expenses	(212,207)	(353,991)
Net income	708,657	1,537,605
Earn-out revaluation	-	17,807
ESOP related costs	402,456	228,475
M&A costs1	962	268
S&B inventory step up	330,000	-
S&B commodity hedging	43,193	-
S&B commodity hedging reclass	(43,193)	-
Negative goodwill	-	(320,842)
Bank fee – acquisition loan S&B	18,136	-
One-off expenses related to the bond issue	7,391	6,317
Adjusted earnings before tax (Adj. EBT)	1,679,809	1,823,621
Effective tax rate on Adj. EBT (9M 2024 ~23.0%; 9M 2023 ~18,7%)	(387,101)	(341,270)
Adjusted Net Income	1,292,708	1,482,351

CONSOLIDATED PROFIT AND LOSS STATEMENT

In '000 CZK	30 Sep 2024	30 Sep 2023
Revenues from the sale of own products, goods and services	14,971,895	9,910,546
Other operating income	72,291	73,006
Change in inventories developed internally	67,498	981,675
Own work capitalized	161,289	129,248
Raw materials and consumables used	(7,768,744)	(5,613,904)
Services	(1,708,542)	(1,292,710)
Personnel costs	(3,345,775)	(2,246,009)
Depreciation and amortization	(1,003,325)	(582,526)
Other operating expenses	(202,881)	(174,769)
Allowances	(2,685)	(60,403)
Operating profit	1,241,021	1,124,155
Interest income	630,514	717,015
Interest expense	(990,477)	(737,325)
Other financial income	84,328	379,133
Other financial expenses	(202,409)	(59,233)
Gains or losses from derivative transactions	157,362	144,338
Bargain purchase gain	-	320,842
Share in the profit of associates after tax	525	2,671
Profit before tax	920,864	1,891,596
Income tax	(212,207)	(353,991)
Profit for the period	708,657	1,537,605
Items that may be subsequently reclassified to the statement of profit or loss
Cash flow hedges – remeasurement of effective portion of hedging instruments	(503,809)	(156,142)
Foreign currency translation of foreign operations	36,444	43,472
Other comprehensive income	(467,365)	(112,670)
Comprehensive income for the period	241,292	1,424,935
Profit for the period attributable to:
Owner of the parent company	708,657	1,537,605
Comprehensive income for the period attributable to:
Owner of the parent company	241,292	1,424,935
Net earnings per share attributable to the owner of the parent company (CZK per share)
Basic	16	44
Diluted	16	44

CONSOLIDATED BALANCE SHEET 1/2

In CZK '000	30 Sep 2024	31 Dec 2023
ASSETS
Non-current assets
Intangible assets	10,460,885	3,413,881
Goodwill	8,411,526	2,547,480
Property, plant and equipment	9,483,650	4,281,449
Advance payment for financial investment	-	2,690,040
Equity-accounted securities and investments	44,096	40,795
Financial derivatives	782,958	1,013,168
Provided loans	18,885	-
Trade and other receivables	26,890	61,891
Other receivables	2,559	2,556
Deferred tax assets	7,360	21,245
Total non-current assets	29,238,809	14,072,505
Current assets
Inventories	8,143,123	5,298,077
Trade and other receivables	2,428,214	1,774,947
Provided loans	811	-
Other financial assets	-	908,580
Financial derivatives	176,495	149,047
Other receivables	357,763	351,165
Tax receivables	122,488	93,751
Cash and cash equivalents	5,280,756	3,328,684
Total current assets	16,509,650	11,904,251
Total assets	45,748,459	25,976,756

CONSOLIDATED BALANCE SHEET 2/2

In CZK '000	30 Sep 2024	31 Dec 2023
EQUITY AND LIABILITIES
Capital and reserves
Share capital	5,256	3,516
Share premium	11,221,066	1,942,818
Capital funds	1,641,512	1,641,512
Cash flow hedge reserve	96,007	599,816
Foreign exchange translation reserve	(106,244)	(142,688)
Accumulated profits	4,801,395	5,229,872
Equity attributable to the owner of the Company	17,658,992	9,274,846
Non-controlling interest	-	-
Total equity	17,658,992	9,274,846
Non-current liabilities
Bonds, bank loans and borrowings	18,696,923	9,040,540
Financial derivatives	390,454	244,169
Lease liabilities	54,119	62,052
Trade and other payables	56,170	42,022
Other payables	9,844	14,569
Provisions	117,339	76,188
Deferred tax liability	2,778,808	722,783
Employee benefit liabilities	248,325	255,721
Total non-current liabilities	22,361,982	10,458,044
Current liabilities
Bonds, bank loans and borrowings	1,658,349	2,573,744
Financial derivatives	7,130	11,038
Lease liabilities	23,612	25,619
Other financial liabilities	-	44,580
Trade and other payables	1,863,214	1,746,796
Other payables	1,931,332	1,655,094
Provisions	56,486	30,084
Tax liabilities	169,987	142,084
Employee benefit liabilities	17,375	14,827
Total current liabilities	5,727,485	6,243,866
Total liabilities	28,089,467	16,701,910
Total equity and liabilities	45,748,459	25,976,756

CONSOLIDATED CASH FLOW STATEMENT

In '000 CZK	30 Sep 2024	30 Sep 2023
Cash flows from principal economic activity (operating activity)
Profit from ordinary activity before tax	920,864	1,891,596
Depreciation/amortization of non-current assets	1,003,325	582,526
Change in allowances and provisions	56,847	55,663
Gain/Loss on sale of fixed assets	-1,922	-1,877
Interest expense and interest income	359,963	20,310
Share in the profit of associates	-525	-2,671
Unrealized foreign exchange gain and losses	192,871	-118,108
Contingent consideration – remeasurement	-	17,807
Partial earnout settlement	-	213,695
Other financial assets – remeasurement	-113,402	-350,994
Cash flow hedging – remeasurement of the effective portion of hedging instruments	-503,809	-156,142
Bargain purchase gain	-	-320,842
Share-based payments	374,107	213,835
Adjustments for other non-cash transactions	-11,464	18,422
Net operation cash flows before changes in working capital	2,276,855	2,063,220
Change in working capital	148,308	-965,737
Change in receivables and deferrals	768,379	723,762
Change in liabilities and accruals	-320,169	-423,312
Change in inventories	-299,902	-1,266,187
Cash flow from operating activities	2,425,163	1,097,483
Paid interest	-1,124,160	-624,322
Interest received	732,813	769,760
Income tax paid for ordinary activity	-618,852	-600,968
Net cash flow from operating activities	1,414,964	641,953
Cash flows from investing activities
Acquisition of non-current assets	-655,634	-424,376
Proceeds from the sale of non-current assets	1 922	1,934
Acquisition of subsidiaries – opening balance	-5 231,350	-728,687
Acquisition of subsidiaries – cash and cash equivalents	443,521	150,863
Acquisition of equity-accounted securities and investments	-3,776	-1,212
Proceeds from sale of other financial assets	1,021,982	-
Provided loans	-18,979	7,700
Net cash flow from investing activities	-4,442,314	-993,778
Cash flows from financing activities
Proceeds from bonds	468,000	1,917,756
Proceeds from share	-	169,623
Dividends paid to owners	-260,445	-1,034,016
Proceeds from loans	10,799,270	13,480
Loan repayment	-6,021,995	-214,931
Leases repayment	-21,869	-
Net cash flow from financing activities	4,962,961	851,912
Net change in cash and cash equivalents	1,935,611	500,087
Opening balance of cash and cash equivalents	3,328,684	2,825,781
Effect of exchange rate on cash and cash equivalents	16,461	24,104
Closing balance of cash and cash equivalents	5,280,756	3,349,972

COLT CZ GROUP STRUCTURE AS OF 30/09/2024

Notes: Group structure as of 30/09/2024

THANK YOU

Colt CZ Group SE

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