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Gvs Investor Presentation 2023
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Investor Presentation
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• FULL YEAR 2022 RESULTS PRESENTATION
• March 21st, 2023
Executive Summary
GVS – FY 2022 Results At-a-Glance
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Flat organic growth in a post COVID environment, pressure on margins
- 14.6% Y-o-Y Sales increase driven by M&A - Haemotronic ("HT") and STT
- 35.0% sales growth excluding the effect of disposable masks in 2021
- Flat organic growth impacted by the post COVID volume normalization (disposable mask sales from €51m in FY2021 to zero in FY2022)
- Margin dilution caused by:
- normalization of profitability post extraordinary COVID effect (on top of disposal masks effect)
- time leg in passing on the sharp cost inflation via pricing increase
- Net financial position increase in FY 2022 linked to M&A financing
- Q4 net financial position in reduction at €375m as of 31st December 2022 thanks to NWC control and operating cash generation
- €75mn loan by the controlling shareholder to assure the respect of financial covenants and offer a further liquidity buffer for potential operational needs
(2) Leverage ratio calculated as NFP/Pro forma EBITDA. i.e. including 12M contribution by the newly acquired companies (STT and Haemotronic for FY 2022)
(3) Pro-forma EBITDA including 12 months contribution of Haemotronics and STT
(1) NFP adjusted does not include the €75m shareholder loan as financial debt
GVS – 4Q 2022 Results At-a-Glance On the recovery path post 3Q lows, profitability on its way back
- €7.2m sales increase driven by Healthcare & Life Science division (+9.35%) and Health & Safety (+7.6%)
- Good performance of Haemotronic, with c.€3mn sales increase Q-on-Q (+11.9%)
- Strong recovery on profitability, with EBITDA up 30.0% Q-on-Q to €22.1m and EBIT up 48.2% to €15.5m
- 3.5 percentage points of margin increase at EBITDA level driven by the initial price increase introduced in Q3 and operating leverage
4Q and Full Year 2022 Financials Review
4Q 2022 Results Review – Focus on EBITDA and NFP
EBITDA driven by sales increase, NFP by NWC control
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NET FINANCIAL POSITION – Q3 2022 TO Q4 2022 BRIDGE
- NFP reduction in the Q4 2022 mainly linked to operative cash-flow generation and NWC optimization
- Operating cash flow calculated as EBITDA reported + noncash items
FY 2022 Results Review – Focus on Sales
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Despite flat performance in FY22, solid 6.7% organic 2019-22 sales CAGR
- Solid 6.7% organic sales CAGR 2019-2022, not impacted by disposable masks and M&A
- Flat organic FY2022 Y-o-Y growth (+0.8%) excluding disposable masks and M&A (HT, STT)
- €6.0m of negative sales volume effect includes the loss of a Air&Gas client (Client 2, internalization of filter production)
- COVID volume effect related to the closure of 2021 take-or-pay contracts by an Air&Gas client (€10m) and a Labs client (€4m)
FY 2022 Results Review – Focus on Sales
Sound organic growth across divisions
- Sound organic growth in all the sub-divisions, except in the Healthcare Air&Gas (large client loss and reduction of Covid related order) and small reduction in Air Safety
- High-single digit growth in Healthcare Liquid (ex-M&A) and Labs
- Strong performance in Personal safety, driven by cross-selling of RBP products to GVS clients
- Solid organic growth in the Energy & Mobility division
FY 2022 Results Review – Focus on Profitability Loss of volumes and lower fixed costs absorption led to margin dilution
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82.0 47.2 4.0 31.8 22.0 108.0 79.0 FY 2021A FY 2022A Organic M&A Disposable Masks ADJ. EBITDA BREAKDOWN – ORGANIC VS. M&A AND DISP. MASKS ADJ. EBITDA – PRO-FORMA BRIDGE €m €m
- Organic EBITDA ex-impact of M&A and disposable masks drops c. €35mn, due to:
- Client 1 take-or-pay contract
- Client 2 volumesinternalization
- Loss of COVID related volumes (Client 3 and Client 4)
- Negative margin performance due to increase of production costs
- Other, incl. lower fixed costs absorption as legacy of the COVID period and the strengthening of the sales team
FY 2022 Results Review – Focus on Debt Deleverage in progress. Shareholder loan as additional liquidity buffer
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107.0 396.0 404 375.5 300.5 1.00x 4.27x 4.60x 4.35x 3.48x FY 2021A 1H 2022 9M 2022 FY 2022A FY 2022A NFP 2022A NFP 2022A Adj.(1) Leverage (2) Net Debt Evolution and Leverage Shareholder Loan Details SHL cost for GVS If used (for general corporate purposes) 0% If not used 2.50% per year SHL remuneration if not used Asset type Time depot Remuneration 3.0%+ per year €m €m
NET FINANCIAL POSITION – FY 2021 TO FY 2022 BRIDGE
- Net financial position increase in FY 2022 linked to M&A financing
- Net financial position in reduction at €375m as of 31st December 2022 thanks to NWC control and operating cash generation
- €75mn loan by the controlling shareholder to assure the respect of financial covenants and offer a further liquidity buffer for potential operational needs
(1) NFP adjusted does not include the €75m shareholder loan as financial debt
(2) Leverage ratio calculated as NFP/Pro forma EBITDA. i.e. including 12M contribution by the newly acquired companies (STT and Haemotronic for FY 2022)
Focus on FY 2022 M&A: STT and Haemotronic
Focus on FY2022 M&A: STT
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The gateway to the attractive Chinese hospital market
(1) FY 2022 pro-forma figures, including 12 months contribution
Focus on FY2022 M&A: Haemotronic
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FY 2021 FY 2022A Italy Mexico
New products and technologies in the strategic infusion segment
FY 2021 FY 2022A EBITDA Adj. margin %
(1) (1)
(1) FY 2022 pro-forma figures, including 12 months contribution
(2) Normalised EBITDA as per HT sale purchase agreement definition
Strategic considerations
Roadmap for Profitability Recovery
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Key issues and remedial actions
Roadmap for Profitability Recovery
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Special projects
| Project | Activities | Description | BUs involved |
|---|---|---|---|
| Findlay // Bloomer relocation |
Production relocation | ▪ Findlay rationalization: part of Findlay production will be relocated to GVS Mexico and Romania ▪ Bloomer production will be gradually relocated to Findlay and Mexico plants |
▪ Findlay ▪ Bloomer ▪ GVS Mexico ▪ GVS Romania |
| RPB mold // lenses |
Internalization of production // Make or Buy |
▪ Currently RPB purchases mold and lenses from a third party supplier ▪ The project provides the insourcing of mold and lenses production in Findlay, that will sell the mentioned products to RPB ▪ RPB will purchase at the same current price |
▪ Findlay ▪ RPB |
| External supplier HT Mexico |
Internalization of production // Make or Buy |
▪ HT Mexico currently purchases semi-finished products by an external supplier and sell assembled finished goods to a German client ▪ GVS Mexico Monterrey will insource the molding production currently performed by the external supplier and supply HT Mexico with semi-finished products |
▪ HT Mexico ▪ GVS Mexico |
| Puerto Rico relocation |
Production relocation | ▪ Part of Puerto Rico production will be moved to GVS Mexico starting from 2H 2023 |
▪ Puerto Rico ▪ GVS Mexico |
2023 Outlook and Guidance
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Growth and profitability recovery set to continue, despite challenges
CURRENT TRADING AND 2023 OUTLOOK Market environment remains uncertain, on the back of geopolitical instability and upwards pressure on interest rates by central banks to contrast inflation 2023 GUIDANCE FY 2023 Sales €440-460m FY 2023 EBITDA Adjusted € 95-105m FY 2023 NFP € 340-360m c. €15m of extraordinary CAPEX in FY 2023 related to the new plant in China GVS has been gradually introducing the price increase, that will be fully implemented by Q2 2023, and is focused on implementation of special projects and synergies
Our commitment for delivery FY 2022 Results Presentation – Final Takeaways
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GVS confirmed the resiliency of its organic business, but the profitability was hit by post-COVID normalization
M&A confirmed as key lever for GVS growth – Company focus is now on integration and value creation
Recovery of profitability is the key target for the Management – remedial actions already identified and in progress
Debt discipline and deleverage as priority going forward – shareholder loan provides liquidity buffer in the between
Updated 2023-25 Business Plan to be presented in mid 2023
Appendix – Support Material
FY 2022 Results Review FY 2021 and 2022 P&L – Statutory Adjusted View
| €m | FY2021 | of which non-recurring |
FY 2021 Adjusted |
% | FY2022 | of which non-recurring |
FY 2022 Adjusted |
% |
|---|---|---|---|---|---|---|---|---|
| Revenues from sales and services | 338.1 | 338.1 | 100.0% | 387.6 | 387.6 | 100.0% | ||
| Other revenues and proceeds | 4.9 | 3.6 | 1.3 | 0.39% | 4.4 | 4.4 | 1.15% | |
| Total revenues | 343.1 | 3.6 | 339.4 | 100.0% | 392.0 | - | 392.0 | 100.0% |
| Cost of raw materials, purchases and variations in inventories |
(96.1) | (1.5) | (94.5) | -28.0% | (141.2) | (6.7) | (134.5) | -34.7% |
| Cost of labour | (98.6) | (98.6) | -29.2% | (123.5) | (2.9) | (120.6) | -31.1% | |
| Services | (36.7) | (2.1) | (34.6) | -10.2% | (54.6) | (2.0) | (52.6) | -13.6% |
| Other operating costs | (5.4) | (1.6) | (3.8) | -1.1% | (5.3) | (5.3) | -1.4% | |
| EBITDA | 106.3 | (1.6) | 107.9 | 31.9% | 67.4 | (11.6) | 79.0 | 20.4% |
| Provisions and writedowns | (0.5) | (0.5) | -0.1% | (0.5) | (0.5) | -0.1% | ||
| Amortisation and depreciation | (23.5) | (5.4) | (18.1) | -5.4% | (38.0) | (14.2) | (23.8) | -6.1% |
| EBIT | 82.3 | (6.9) | 89.3 | 26.4% | 29.0 | (25.8) | 54.8 | 14.1% |
| Financial proceeds | 10.5 | 10.5 | 3.1% | 15.1 | 15.1 | 3.9% | ||
| Financial charges | (3.1) | (0.6) | (2.5) | -0.7% | (9.5) | (2.6) | (6.9) | -1.8% |
| Pre-tax results | 89.8 | (7.6) | 97.3 | 28.8% | 34.6 | (28.4) | 63.0 | 16.3% |
| Income tax | (22.2) | (0.2) | (22.0) | -6.5% | (10.5) | 6.0 | (16.5) | -4.3% |
| Net profit | 67.6 | (7.8) | 75.4 | 22.3% | 24.1 | (22.4) | 46.5 | 12.0% |
FY 2022 Results Review Reclassified Balance Sheet - FY 2021 – FY 2022
| FY2021 | FY2022 | |
|---|---|---|
| €m | ||
| Net intangible fixed assets | 227.7 | 494.8 |
| Net usage rights | 10.4 | 23.0 |
| Net tangible fixed assets | 77.6 | 120.4 |
| Financial fixed assets | 1.0 | 3.6 |
| Other fixed assets | 2.0 | 12.0 |
| Fixed capital (A) | 318.7 | 653.8 |
| Net trade receivables | 53.0 | 72.9 |
| Inventories | 72.4 | 106.9 |
| Payables to suppliers | (23.8) | (57.9) |
| Net commercial working capital (B) | 101.5 | 121.9 |
| Other current assets | 19.3 | 19.4 |
| Other current liabilities | (21.6) | (32.1) |
| Total current assets/liabilities (C) | (2.4) | (12.7) |
| Net working capital (D)= (B) + (C) | 99.2 | 109.3 |
| Other non-current liabilities (E) | (5.7) | (46.1) |
| Employee termination indemnity and end of service indemnity (F) | (4.4) | (4.6) |
| Provisions for risks and charges (G) | (4.7) | (9.2) |
| Net invested capital (H) = (A+D+E+F+G) | 403.2 | 703.1 |
| Shareholders' equity | (295.3) | (327.7) |
| Consolidated shareholders' equity (I) | (295.3) | (327.7) |
| Short-term financial indebtedness)/Liquidity | 79.1 | (306.6) |
| (Net medium/long term financial indebtedness) | (186.9) | (68.9) |
| Net financial indebtedness (L) | (107.8) | (375.5) |
| Own funds and net financial indebtedness (M) = (I+L) | (403.2) | (703.1) |
FY 2022 Results Review Cash Flow Statement - FY 2021 – FY 2022
| €m | FY2021 | FY2022 |
|---|---|---|
| Pre-tax result | 89.8 | 34.6 |
| Amortisation, depreciation and writedowns | 23.5 | 38.0 |
| Capital losses / (capital gains) from sale of assets | (2.9) | 0.0 |
| Financial charges / (proceeds) | (7.4) | (5.7) |
| Other non-monetary variations | 6.7 | 6.8 |
| Cash flow generated operations before delta NWC | 109.6 | 73.7 |
| Variation in inventories | (9.5) | 3.1 |
| Variation in trade receivables | (4.7) | (11.9) |
| Variation in trade payables | (6.4) | 13.8 |
| Variation in other assets and liabilities | (0.9) | 7.2 |
| Taxes paid | (32.6) | (9.8) |
| Net cash flow by operations | 55.5 | 76.1 |
| Investments in tangible assets | (19.4) | (17.8) |
| Investments in intangible assets | (3.8) | (5.0) |
| Disposal of tangible assets | 7.2 | 0.1 |
| Investment in financial assets | (3.4) | (4.1) |
| Disinvestment in financial assets | 0.4 | 6.5 |
| Payment for purchase of businesses, net of cash on hand acquired | (129.2) | (236.0) |
| Net cash flow by investment | (148.2) | (256.4) |
| Opening of long-term financial payables | 150.2 | 232.5 |
| Repaymentof long-term financial payables | (18.5) | (43.9) |
| Repayment of leasing liabilities | (2.3) | (5.4) |
| Financial charges paid | (2.9) | (4.9) |
| Financial proceeds collected | 0.5 | 1.8 |
| Treasury shares | (3.4) | (1.4) |
| Dividends paid | (22.7) | - |
| Net cash flow by financial assets | 100.7 | 178.8 |
| Total variation in cash on hand | 8.0 | (1.5) |
| Cash on hand at the start of the year | 125.1 | 136.9 |
| Conversion differences on cash on hand | 3.9 | (0.2) |
Cash on hand at the end of the year 136.9 135.2
Disclaimer
Pursuant to art. 154-bis, paragraph 2, of the Italian Unified Financial Act of February 24, 1998, the executive in charge of preparing the corporate accounting documents at GVS S.p.A., Emanuele Stanco, declares that the accounting information contained herein correspond to document results, books and accounting records.
ibdroot\projects\IBD-LN\fiberglass2019\643420_1\7. Marketing Materials\03 Analyst Presentation\Project Vicky_Analyst Presentation_ v55.pptx
This presentation contains certain forward-looking statements that reflect the Company's management's current views with respect to future events and financial and operational performance of the Company and its subsidiaries. These forward-looking statements are based on GVS S.p.A.'s current expectations and projections about future events. Because these forward-looking statements are subject to risks and uncertainties, actual future results or performance may differ materially from those expressed in or implied by these statements due to any number of different factors, many of which are beyond the ability of GVS S.p.A. to control or estimate precisely, including changes in the regulatory environment, future market developments, fluctuations in the price, and other risks. You are cautioned not to place undue reliance on the forward-looking statements contained herein, which are made only as of the date of this presentation. GVS S.p.A. does not undertake any obligation to publicly release any updates or revisions to any forward-looking statements to reflect events or circumstances after the date of this presentation.
This presentation does not constitute a recommendation regarding the securities of the Company. This presentation does not contain an offer to sell or a solicitation of any offer to buy any securities issued by GVS S.p.A. or any of its subsidiaries, in Italy pursuant to Section 1, let t) letter (t) of Legislative Decree no. 58 of February 24, 1998, or in any other country or state.
The information contained in this presentation does not purport to be comprehensive and has not been independently verified by any independent third party. The reader should consult any further disclosures GVS may make in documents it files with the Italian Securities and Exchange Commission and with the Italian Stock Exchange.