Envipco Holding N.V.

Investor Presentation • Nov 16, 2023

Q3 23 Results presentation | November 16, 2023

Disclaimer

THIS PRESENTATION may contain forward looking statements. These statements are based on current expectations, estimates and projections of Envipco's management and information currently available to the company. Envipco cautions that such statements contain elements of risk and uncertainties that are difficult to predict and that could cause actual performance and position to differ materially from these statements. Envipco disclaims any obligation to update or revise any statements made in this presentation to reflect subsequent events or circumstances, except as required by law. Certain figures in this presentation, including financial data, have been rounded. Accordingly, figures shown for the same category presented in different tables may vary slightly and figures shown as totals in certain tables may not be an exact arithmetic aggregation of the figures which precede them.

Highlights Q3 23

• Record group revenues of EUR 25.3m
• Delivering on European growth strategy with record revenues of EUR 16.9m (+133%)
• Growth in existing markets and initial revenues from Hungary and Romania
• Greece building momentum with 140+ recycling centers delivered to date
• Gross profits up 67% y/y on wider gross margin of 34.9%
• Leveraging on operational investments leading to all-time high EBITDA of EUR 3.8m (15.2%)

Revenue development

Gross profit Gross margin (%)

Gross profit development

8.8

34.9 %

Delivering on our growth strategy

Revenue development EUR million

What we have said

• Envipco will challenge incumbents and capture market share in North America
• Envipco will capture a significant share of new market opportunities from the second wave of DRS legislation in Europe

What we have done

• ✓ Built important position in North America gaining ~40% market share up from 24% in 2012
• ✓ Captured leading position in European growth markets winning major contracts with Tier 1 retailers. Europe representing 2/3 of revenue in Q3 2023, up from 10% three years ago
• ✓ Established European organization to support growth in new markets
• ✓ Invested in ample production capacity to support growth in new and existing markets
• ✓ Expanded product portfolio through relentless focus on innovation and quality

Creating a cleaner world for future generations through recycling technology

Ambitious and clear strategy to deliver value to all our stakeholders

• Capturing growth markets
• Innovative and superior products
• Tailoring outstanding solutions for our customers
• Ambitious and talented people
• Relentlessly improve performance

Addressing significant growth opportunities

EUR 18 – 25k

Average Reverse Vending Machine price

Engaging a vast market opportunity… … driven by legislation and industry incentives

EU Legislation driving deposit return schemes in all EU countries

Strong Consumer push to address plastic pollution

Beverage brand holders needing clean feedstock to put back into new packaging

Industry acknowledgment that deposit return schemes work and serves the interest of all stakeholders

Threat avoidance on PET packaging bans

Ready to capture new markets as they mature

Anticipated maturation of European markets

Legislative considerations and planning

Preparations and implementation

Execution

Anticipated Go-Live

Sources: Reloop, European Studies, Eunomia

Why we are winning with our customers

Broad and proven product portfolio addressing all customer segments

Proven track record with world leading retailers showing our quality and

commitement

Ample production capacity in USA, Germany and Romania with the capacity to serve large Tier 1 retailers

Consultative approach addressing customers' unique needs first and then designing a solution

Differentiating Envipco from our competitors

High quality products and software support for all customer segments

Schools

Ready to deliver on upcoming market growth

Sebes, Romania

Invested in production capacity to support expected growth

• Distributed manufacturing in North America and Europe, reducing time of delivery and shipping cost
• Increasing scale to increase utilization and reduce production cost over time
• Ability to serve Tier 1 customers in any location

30,000 RVM production capacity per year

3,000

Quantum /Modula production capacity per year

Making strong headways in new growth markets

• 140+ recycling centres (Quantum)

• Project continuing into 2024/25 with significant potential

• Installed 200 RVMs with MOL group

• +4,000 units to be delivered over the next two years

• Secured preferred supplier agreement with largest independent network in Ireland

• Ongoing commercial discussions with other retailers
• Installed 250 RVMs
• Follow-on order of 100+ RVMs awarded in Q4 23
• Installation of 30 Modula & Quantum machines has commenced

Operational and financial review Operations

At the inflection point of our growth trajectory

in EUR millions	Q3 23	Q3 22	9M 23	9M 22
Revenues	25.3	16.9	52.2	43.0
- Europe	16.9	7.2	27.5	13.5
North America2 -	8.4	9.7	24.6	29.5
Gross Profit	8.8	5.3	18.0	14.3
Gross profit %	34.9%	31.2%	34.5%	33.2%
Operating Expenses	6.6	6.1	19.5	16.6
EBIT	2.2	1.21	(1.5)	(0.4)1
Net profit/(loss) after taxes after
minority	1.7	(0.2)1	(2.7)	(2.2)1
EBITDA	3.8	2.51	2.9	3.31

1) Including other income 2022 of EUR 2.0 million (PPP forgiveness).

2) Includes Rest of the World (RoW).

Q3 23

• Record group revenue up 49% y/y
• Europe comprising 2/3 of group revenues
• Gross margin 34.9%, up from 31.2% in Q3 2022
  • Manufacturing efficiencies
  • Normalization of supply chains
• Operating expenses reduced to 26% share of sales from 36% in Q3 2022
  • Leveraging on investments in organisation
• EBITDA margin of 15.2%, up from adjusted 3.5% in Q3 2022

Europe

Q3 23

• Q3 revenues up 133% y/y to record EUR 16.9m
  • YTD revenues +104% to EUR 27.5m
• Revenue growth driven by strong machine sales increasing 137% y/y to EUR 16.6m
  • Greece EUR 7.9m (+351% y/y)
  • Initial sales EUR 3.8m in Hungary on MOL deliveries
  • First sales to Romania EUR 2.9m
• Program services EUR 0.3m flat with Q3'22

Business development

• Follow-on order of 100+ RVMs in Romania
• Up to 800 Flex and Optima RVMs to be deployed with market leading Irish retailer
• Accelerated Quantum placements in Greece
• Continued order delivery in Hungary

Quarterly development (EUR million, Unaudited)

North America

Q3 23

• Revenues of EUR 8.4m down 13% y/y
  • YTD revenues EUR 24.6m, down 17% y/y
• Program services revenues down 9% y/y despite flat container volumes, variance tied to unusually high commodity values in Q3 22
• Machine sales of EUR 0.8m in vs EUR 1.1m in Q3 22

Business development

• CT doubling of deposit to \$.10 effective January 2024 will have positive impact on program services
• MA and NY legislative activity building to modernize their deposit schemes
• Continued focus on CA with proof-of-concept pilots being developed
• Oregon Technology agreement progressing as planned

Quarterly development

Selective organizational investments to support growth

Operating costs up 9% y/y, sequentially down

• Includes D&A of EUR 0.6m related to amortization on activated R&D and fixed asset depreciation
• Selling and distribution cost EUR 0.5m (1.1m)
• General and administrative expenses EUR 5.5m (4.7m)
• R&D expenses EUR 0.6m vs EUR 0.3m Q3 22
• Opex as percentage of sales down to 26% from 36% in the year-earlier period.
• 380 employees vs 279 at y/e 2022

Operating expenses

(EUR million)

Financial position

• Total assets EUR 89.6m up from EUR 66.7m y/y
• Non-current assets EUR 27.2m, slightly up y/y from EUR 24.1m
  • Primarily PPE and intangible assets from activated development expenses
• Gross working capital up to EUR 58.4m from EUR 41.9m in Q3 22
  • Increase in receivables and inventories on higher activity level
• Total borrowings EUR 20.1m (13.6m)
  • Net debt EUR 16.1m
• Total equity of EUR 39.8m (31.9m)
  • Equity ratio 44% (49%)

Balance sheet

EUR million

Cash Flow

• Cash from operating activities EUR -12.6m
  • Positive EBITDA EUR 2.9m
  • WC build-up of EUR 15.5m related to higher activity, driving receivables and inventory
• Cash flow from investing activities EUR -3.6m
  • Investments in PP&E and R&D
• Cash flow from financing of EUR 4.1m
  • Mainly related to net increase in borrowings
• Cash of EUR 4.0m at the end of Q3 23
  • Expect cash collection to materialize in Q4 23 from receivables from Romania and Hungary

Cash flow YTD 23

Summary and outlook

• Envipco is delivering on its growth strategy

• Securing leading market position in key new growth markets
• Europe revenues +133% y/y in Q3 23 and +104% YTD 23 from eight markets
• Scaling on significant investments in organization, market and production in recent years, generating record EBITDA

• Expect improved gross margins and operational gearing

• Committed to achieving 40% gross margin target
• Revenue growth to exceed organizational investments
• Liquidity requirements next quarters met by operating profits combined with increased cash collection and monetization of existing RVM inventory

• Expect continued revenue uplift in Q4 23 and beyond

• Positive near-term momentum in Greece, Hungary and Romania including follow-on order of 100+ RVMs in Romania
• Progressing in Ireland as the preferred RVM provider with a marketleading retailer to deploy up to 800 RVMs
• Positive DRS momentum in new markets

Ambition towards 2025

Market share in new markets 30+%

Growth 4x – 6x

Gross margin 40%

Q&A

Next event: March 7, 2024 - Full year and Q4 2023 results

Profit & Loss

Revenues 25 274 16 942 52 159 43 018 56 373 Cost of sales (16 444) (11 648) (34 122) (28 723) (37 911) Gross Profit 8 830 5 294 18 037 14 294 18 462 Selling and distribution expenses (542) (1 061) (1 791) (2 413) (3 437) General and administrative expenses (5 503) (4 675) (16 588) (13 210) (18 342) Research and development expenses (559) (317) (1 168) (1 015) (1 351) Other income 0 1 957 2 1 957 1 958 Operating Results 2 228 1 198 (1 509) (386) (2 710) Financial expense (460) (1 018) (882) (1 345) (1 341) Financial income 20 (26) 44 20 97 Net finance (cost) and or income (440) (1 044) (839) (1 324) (1 244) Results before tax 1 788 154 (2 348) (1 710) (3 954) Income taxes (94) (370) (329) (498) (224) Net Results 1 694 (216) (2 676) (2 209) (4 178) Other comprehensive income Items that will be reclassified subsequently to profit and loss Exchange differences on translating foreign operations 750 2 195 53 5 602 1 625 Total other comprehensive income 750 2 195 53 5 602 1 625 Total comprehensive income 2 443 1 979 (2 623) 3 393 (2 553) Profit attributable to: Owners of the parent 1 694 (218) (2 677) (2 203) (4 182) Non-controlling interests (1) 2 1 (6) 4 Total Profit/(loss) for the period 1 694 (216) (2 676) (2 209) (4 178) Total comprehensive income attributable to: Owners of the parent 2 444 1 976 (2 624) 3 399 (2 556) Non-controlling interests (1) 2 1 (6) 4 2 443 1 979 (2 623) 3 393 (2 553) Number of weighted average (exclude treasury shares) shares used for calculations of EPS 51 690 46 051 51 690 46 051 46 051 Earnings/(loss) per share for profit attributable to the ordinary equity holders of the parent during the period - Basic (euro) 0.03 (0.00) (0.05) (0.05) (0.09)	in EUR thousands	Note	Q3 23	Q3 22	YTD 23	YTD 22	FY 22

Balance Sheet

in EUR thousands	Note	30.09.23	30.09.22	31.12.22
Assets
Non-current assets
Development Costs Etc		7 827	-	7 575
Intangible assets		9 380	7 393	8 595
Property, plant and equipment		15 589	14 126	14 175
Financial assets		222	17	830
Deferred tax assets		1 986	2 237	2 081
Restricted cash		-	340	-
Total non-current assets		27 176	24 114	25 681
Current assets
Inventory		32 876	25 182	24 114
Trade and other receivables		25 538	16 740	12 633
Cash and cash equivalents		4 008	699	16 121
Restricted cash		-	-	340
Total current assets		62 422	42 622	53 208
Total assets		89 598	66 735	78 889

in EUR thousands	Note	30.09.23	30.09.22	31.12.22
Equity
Share capital		2 585	2 303	2 303
Share premium		70 919	57 428	56 939
Translation reserves		5 644	8 494	5 591
Legal reserves		7 827	7 086	7 575
Retained earnings		(47 187)	(41 470)	(44 511)
Equity attributable to owners of the parent		39 788	33 841	27 897
Non-controlling interests		44	45	43
Total equity		39 831	33 886	27 940
Liabilities
Non-current liabilities
Borrowings		16 544	11 157	10 930
Lease liabilities		2 313	1 104	1 233
Other liabilities		120	120	120
Deferred tax liability		-	-	50
Total non-current liabilities		18 977	12 381	12 333
Current liabilities
Borrowings		3 537	2 449	3 620
Trade creditors		13 217	10 273	10 055
Share lending liability		-	-	15 000
Accrued expenses		9 024	6 360	7 458
Provisions		1 009	210	680
Lease liabilities		1 080	579	620
Tax and social security		2 922	598	1 182
Total current liabilities		30 789	20 468	38 616
Total liabilities		49 767	32 849	50 949
Total equity and liabilities		89 598	66 735	78 889

Cash Flow Statement

in EUR thousands Note	YTD 23	YTD 22	FY 22
Cashflow from operating activities
Operating results	(1 509)	(386)	(2 710)
Adjustment for:
Depreciation & Amortization	4 388	3 715	4 969
PPP loan forgiveness	-	(1 948)	(1 948)
Changes in:
Changes in trade and other receivables	(12 143)	(1 367)	807
Changes in inventories	(9 028)	(8 412)	(8 424)
Changes in provisions	327	29	499
Changes in trade and other payables	6 331	3 290	5 572
Cash generated from operations	(11 634)	(5 079)	(1 236)
Interest received and paid	(613)	(352)	(249)
Income taxes paid	(329)	(498)	(278)
Net cash flow from operating activities	(12 576)	(5 928)	(1 763)
Investing activities
Development expenditure, patents	(1 555)	(1 156)	(2 462)
Investments in property, plant & equipment	(2 085)	(2 088)	(5 944)
Restricted cash (non -current)	-	-	-
Net cash flow used in investing activities	(3 640)	(3 244)	(8 406)
Financial activities
Proceeds of share issue	14 514	-	-
Proceeds share lending	(15 000)	-	15 000
Changes in borrowings – proceeds	9 000	9 056	13 696
Changes in borrowings – repayments	(3 541)	(1 745)	(4 779)
Changes in lease liabilities	(858)	(514)	(648)
Net cash flow from financing activities	4 115	6 798	23 269
Net increase/(decrease) in cash and cash equivalents	(12 100)	(2 375)	13 101
Opening position	16 121	3 061	3 061
Foreign currency differences on	(13)	13	(41)
cash and cash equivalents
Closing position	4 008	699	16 121
The closing position consists of:
Cash and cash equivalents	4 008	699	16 121
Total closing balance in cash and cash equivalents	4 008	699	16 121

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