Emak — Investor Presentation 2018

Mar 27, 2018

Star Conference 2018, Milan March 27-28, 2018

Emak at a glance

Global presence

Direct presence in 13 countries Distribution network in five continents Efficient production footprint ≈ 2,000 employees

Outdoor Power Equipment

Main brands	Product range	End-users	Distribution channel	Strategic priorities
	• Hand held products: trimmers, chainsaws, blowers. • Wheeled products: lawnmowers, garden tractors, tillers, transporters. • Accessories and spare parts	• Professional users • High demanding private users (prosumer)	• Specialised dealers	• Product innovation • Distribution network • Efficiency

Pumps & High Pressure Water Jetting

Main brands	Product range	Application / End user	Clients / distribution channel	Strategic priorities
	• Agriculture products: diaphragm, centrifugal and piston pumps	• Agriculture: spraying and weeding	• Manufacturers of spraying and weeding machines	• Product innovation • Cost and efficiency improvements
	• Industrial products: piston pumps, hydrodynamic units and urban cleaning equipment.	• Several industries:  Oil & gas  Sugar cane  Shipyard  Cleaning	• Manufacturers of hydrodynamic units and high pressure washers, contractors, independent distributors	• Maximize synergies from acquisitions • Focus on key attractive segments
	• Cleaning products:	• Professional	• Specialised dealers and
	complete range of high pressure washers, floor care equipment	• Hobby	DIY

Components & Accessories

Main brands	Product range	End-users	Distribution channel	Strategic priorities
	• Nylon line and heads for trimmers • Chain grinders • Spray guns • Nozzles • Control systems	• Professional users • High demanding private users (prosumers)	• Outdoor Power Equipment manufacturers • Manufacturers of spraying and weeding machines • Manufacturers of hydrodynamic units and high pressure washers • Specialised dealers and DIY	• Product innovation • Strengthening of OEM relations • Focus on key attractive segments

Star Conference, Milan 2018 6

Our strategy

Innovation

• Continuous product and process innovation.
• Focus on: new technologies, new applications, safety, comfort, emissions control.

Distribution

• Strengthen the position in the markets with direct presence.
• Expand distribution network in markets with high growth potential.

Efficiency

• Improve lean manufacturing system .
• Exploit supply chain efficiencies.

Acquisitions

• Access new technologies.
• Complete product range.
• Penetrate new markets.

Emak strengths

2017 financial highlights

€m	FY 2017	%	FY 2016	%	Δ %
Net sales	422.2	100	391.9	100	7.7
Ebitda Adj (*)	45.6	10.8	40.5	10.3	12.7
Ebitda	43.4	10.4	39.5	10.1	11.3
Ebit	30.0	7.1	21.9	5.6	37.1
Profit before taxes	23.1	5.5	26.5	6.8	(12.9)
Net profit	16.4	3.9	17.7	4.5	(7.1)

(*) Excluding items affecting comparability

€m	31.12.2017	31.12.2016
Net non-current assets	151.0	116.1
Net working capital	161.8	145.6
Net capital employed	312.8	261.8
Total Equity	187.5	181.7
Net debt	(125.3)	(80.1)

• Sales: positive contribution of newly acquired Lavorwash Group for 29.6€m.
• EBITDA: positive leverage for higher sales; favorable sales mix among businesses and contribution of Lavorwash Group.
• Financial items
• Decrease of financial expenses linked to lower cost of debt
• Net profit
• Lower cost of debt
• Negative forex for 4.2€m (positive for 3.4€m in 2016)
• Lower tax rate: 29% vs 33%.
• Net debt: change in scope of consolidation accounted for 51.8 €m. Figure includes commitments of 23.9 €m to acquire minority interests in subsidiaries
• Capex: 17.4 €m, mostly concentrated in product and process innovation, construction of the new R&D center in Emak S.p.A. and in the ERP transformation project.

Outdoor Power Equipment

€m	2017	2016	Δ %
Europe	141,0	148,7	-5,2
Americas	8,1	7,2	12,7
Asia, Africa and Oceania	19,3	21,1	-8,5
Sales to third parties	168,4	177,0	-4,9
Intersegment sales	1,9	1,5
Revenues from sales	170,3	178,5	-4,6
Ebitda*	9,4	11,0
% on Revenues from sales**	5,5%	6,2%

* Figure doesn't include common costs for shared functions of management and coordination.

** Total net sales also include sales to other Group companies, for the purposes of comparability the percentage is calculated on total sales.

• SALES:

• Europe: good performance in Eastern countries; signs of recovery during 4Q in Western markets
• Americas: positive performance in Latin American markets
• Asia, Africa, Oceania: negative trend in the Middle East
• EBITDA:
• Negative impact of lower sales
• Recovery in contribution margin
• Lower fixed costs
• Non recurring costs for € 0.4 million

Pumps and High Pressure Water Jetting

€m	2017	2016	Δ %
Europe	64,8	44,6	45,3
Americas	57,1	47,8	19,5
Asia, Africa and Oceania	16,9	10,6	60,0
Sales to third parties	138,8	102,9	34,8
Intersegment sales	1,5	1,4
Revenues from sales	140,2	104,3	34,4
Ebitda*	19,5	14,0
% on Revenues from sales**	13,9%	13,4%

* Figure doesn't include common costs for shared functions of management and coordination.

** Total net sales also include sales to other Group companies, for the purposes of comparability the percentage is calculated on total sales.

• SALES:
• Contribution of Lavorwash from July for € 29.6 million
• Europe: organic growth driven by Eastern countries
• Americas: general increase in all markets
• Asia, Africa, Oceania: good performance especially in Middle East and the Far East.
• EBITDA:
• Increase in sales
• Expansion of the scope of consolidation
• M&A costs for € 1.2 million

Components and Accessories

€m	2017	2016	Δ %
Europe	76,5	72,2	6,0
Americas	25,8	28,7	-10,1
Asia, Africa and Oceania	12,7	11,1	14,3
Net sales external to the Group	115,0	112,0	2,7
Sales between sectors	7,8	6,7
Total net sales	122,8	118,6	3,5
Ebitda*	17,4	17,0
% on total net sales**	14,2%	14,3%

* Figure doesn't include common costs for shared functions of management and coordination.

** Total net sales also include sales to other Group companies, for the purposes of comparability the percentage is calculated on total sales.

• SALES:
• Europe: overall growth
• Americas: increase in South America, slow down in 4Q in North America
• Asia, Africa, Oceania: increase mainly in Far East, Australia and South Africa
• EBITDA:
• Positive volume effect
• Increase in the cost of raw materials

Sale of 100% of Raico S.r.l.

• On March 6, 2018 the parent company Emak S.p.A. has signed a binding agreement for the sale of 100% of the share capital of Raico S.r.l. for a consideration of 5.5 €m. The closing of the transaction, with payment and transfer of shares, is expected by the end of March.
• Raico is specialised in the distribution of spare parts and accessories for agricultural tractors, industrial and construction machines, with a turnover of around 12.8 €m, EBITDA of 0.5 €m and a net negative financial position of 0.7 €m at 31 December 2017.

Synthesis of results

€/mln	1998	1999	2000	2001	2002	2003	2004	2005	2006	2007	2008	2009	2010	2011	2012	2013	2014	2015	2016	2017
Sales	84.4	89.5	133.0	146.7	147.0	152.7	163.2	183.4	208.4	217.8	243.4	194.9	206.8	204.4	354.8	355.0	354.8	381.6	391.9	422.2
EBITDA adj	12.9	12.8	16.0	20.6	22.9	23.9	22.6	22.3	25.1	30.0	31.7	21.7	21.3	19.6	31.7	34.2	33.1	37.5	40.5	45.6
margin	15.3%	14.3%	12.0%	14.1%	15.6%	15.7%	13.9%	12.1%	12.1%	13.8%	13.0%	11.1%	10.3%	9.6%	8.9%	9.6%	9.3%	9.8%	10.3%	10.8%
EBIT adj	9.3	8.1	10.6	14.8	16.8	17.5	16.3	17.0	19.8	24.5	24.9	14.9	13.9	12.5	19.6	22.4	21.7	25.0	22.9	31.7
margin	11.1%	9.0%	8.0%	10.1%	11.4%	11.5%	10.0%	9.3%	9.5%	11.2%	10.2%	7.6%	6.7%	6.1%	5.5%	6.3%	6.1%	6.5%	5.8%	7.5%
Net profit	5.5	3.9	6.2	7.9	9.0	9.6	9.0	9.6	11.3	15.2	14.9	9.4	11.6	5.8	8.6	10.5	10.2	9.0	17.7	16.4
margin	6.5%	4.4%	4.7%	5.4%	6.1%	6.3%	5.5%	5.2%	5.4%	7.0%	6.1%	4.8%	5.6%	2.8%	2.4%	3.0%	2.9%	2.4%	4.5%	3.9%
FCF from operations	9.1	8.6	11.6	13.7	15.1	16.0	15.3	14.8	16.7	20.8	21.6	16.2	19.0	12.9	20.8	22.4	21.7	21.5	35.3	30.4
Net Equity	42.1	44.8	48.8	53.8	59.3	65.1	69.8	75.4	81.9	91.4	99.4	104.6	114.0	140.1	145.0	150.8	160.1	168.5	181.7	187.5
Net financial debt	3.2	5.5	14.3	26.4	19.1	21.1	16.4	25.8	37.9	31.0	61.8	38.0	27.4	97.3	99.9	76.4	79.0	99.4	80.1	125.3
Net capital employed	45.3	50.3	63.1	80.3	78.5	86.2	86.3	101.2	119.7	122.5	161.2	142.6	141.4	237.4	244.9	227.2	239.1	267.9	261.8	312.8
Net working capital	27.5	32.1	43.7	55.6	54.2	60.2	59.3	66.4	81.8	81.1	103.2	82.9	83.7	157.5	155.9	142.2	148.6	154.6	145.6	161.8
Debt/Equity	0.1	0.1	0.3	0.5	0.3	0.3	0.2	0.3	0.5	0.3	0.6	0.4	0.2	0.7	0.7	0.5	0.5	0.6	0.4	0.7
Debt/EBITDA
adj	0.2	0.4	0.9	1.3	0.8	0.9	0.7	1.2	1.5	1.0	2.0	1.8	1.3	5.0	3.1	2.2	2.4	2.7	2.0	2.7

1998-1999: Creation of 5 commercial branches in Western Europe. 2004: Establishment of Emak Jiangmen, production plant in China. 2005: Creation of Victus, commercial branch in Poland. 2006: Creation of Emak U.S.A. commercial branch in USA. 2008: Aacquisition of Bertolini and Tailong (cylinder manufacturer) 2011: Acquisition of Epicenter (Ukraine), Tecomet, Comet, Sabart and Raico 2012: Start-up of Emak do Brazil, acquisition of Valley in USA 2014: Acquisition of Speed Industrie Sarl (Marocco), S.I.Agro Mexico, Geoline Electronic, Master Fluid; Speed South America (Chile) 2015: Acquisition of Lemasa (Brazil) 2016: Acquisition of 30% of Cifarelli S.p.A. 2017: Acquisition of Lavorwash Group 2018: signed agreement for sale of Raico

Appendix

Emak Group – Our History

Shareholders' structure

Aimone Burani, the executive responsible for the preparation of the corporate accounting documents, declares and certifies in accordance with article 154 bis, paragraph 2, of the Consolidated Finance Act, that the financial statements contained in this presentation correspond to the underlying accounting documents, records and accounting entries.

Emak S.p.A 42011 Bagnolo in Piano (RE) Italy www.emakgroup.com www.linkedin.com/company/emap-s-p-a-

Speakers

Mr. Fausto Bellamico – Chairman and CEO Mr. Aimone Burani – Deputy Chairman and CFO Mr. Andrea La Fata – Investor Relator alafata@emak.it - 0039-0522.956.332