Intercos — Interim / Quarterly Report 2023

Nov 6, 2023

1

November 6TH 2023

9M23 RESULTS

Disclaimer

IMPORTANT NOTICE

This presentations is being furnished to you solely for your information and may not be reproduced or redistributed to any other person. This presentation might contain certain forward-looking statements that reflect the Company's management 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 Intercos 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 Intercos to control or estimate. 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. Intercos 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.

Any reference to past performance or trends or activities of Intercos shall not be taken as a representation or indication that such performance, trends or activities continue in the future.

This presentation does not constitute an offer to sell or the solicitation of an offer to buy the Group's securities, nor shall the document form the basis of or be relied on in connection with any contract or investment decision relating thereto, or constitute a recommendation regarding the securities of Intercos.

Intercos securities referred to in this document have not been and will not be registered under the U.S. Securities Act of 1933 and may not be offered or sold in the United States absent registration or an applicable exemption from registration requirements.

Pietro Oriani, the Manager in charge of preparing the corporate accounting documents, declares that, pursuant to art. 154-bis, paragraph 2, of the Legislative Decree no.58 of February 24, 1998, the accounting information contained herein correspond to document results, books and accounting records.

Agenda

9M23 and 3Q23 Results overview

	9M23 and 3Q23 Results overview
	€m	9M23	9M22		% vs. 9M22
	Revenues	735.0	597.1	Rep FX 23%	c FX 25%
M	Adj. EBITDA	102.3	84.4	21%
9	Adj. EBITDA %	13.9%	14.1%
	Net Debt	123.5	116.2
	Net Debt/EBITDA	0.89x	1.01x
	€m	3Q23	3Q22		% vs. 3Q22
Q	Revenues	246.7	229.1	Rep FX	c FX
3	Adj. EBITDA	34.9	35.8	8% (2%)	11%
	Adj. EBITDA %	14.2%	15.6%

• exceptional growth recorded in 3Q22 (+34%), 3Q23 also reported solid sales growth (+8% at reported FX and +11% at constant FX), thanks to the marked diversification of Intercos' business model.
• Group level), together with a temporary change in mix that mainly affected the Business unit make-up.
• consistently below the level of 1x and below the one of a year ago, despite the 9M23 non-cash IFRS16 impact of €19.7m recorded at net debt level.

9M23 and 3Q23 Revenues by BU's

	Skincare	60,7% 15,2%	Make Up	Skincare	14,9%
M 9						China continued.
	€m	3Q23	3Q22	% vs. 3Q22
	Revenues	246.7	229.1	8%
Q 3	Make Up	149.8	154.4	(3%)
	Skincare	37.6	31.3	20%
	Hair & Body	59.3	43.4	37%

	€m	3Q23	3Q22	% vs. 3Q22
Q 3

• Make-up 9M23 net sales amounted to €454m (+16% vs. 9M22). YTD growth characterized all geographical areas and all types of customers. 3Q reported a slight decline in Western markets, especially multinationals, while the good performances of Emerging Brands and China continued.
• Skincare closed 9M23 with net sales of €109.6m, up by +13%. The performance was driven by the good performance of North American and European customers. Both Multinationals and Emerging Brands performed well. The excellent performance accelerated further in 3Q
• (+20%) Hair & Body recorded net sales of €171.4m, up by +57% vs. 9M22. The new commercial agreements signed with some brands continue to support the evolution of sales, as also confirmed by the excellent results reported in 3Q (+37%). Capex made at the end of FY22 and at the beginning of FY23 in order to increase capacity, are allowing the Group to benefit from the excellent performance of the fragrance market.

9M23 and 3Q23 Revenues by Region (Commercial Company)

		33,5% Americas	EMEA 49,6%	Americas	31,8%	51,8% EMEA
M 9
	Asia	120.5	104.5	15%
	€m	3Q23	3Q22	% vs. 3Q22
	Revenues	246.7	229.1	8%
Q 3	EMEA	122.3	106.4	15%
	Americas	82.6	84.9	(3%)
	Asia	41.8	37.8	11%

Q 3	€m	3Q23	3Q22	% vs. 3Q22

• EMEA continues to be the geographical area with the best performances, both in 9M23 (€380.5m, up by +34% vs. 9M22) and in 3Q (€122.3m, up by +15% vs. 3Q22). All Business Units, types of customers and market segments (mass and prestige) grew in 9M23. 3Q23 growth was mainly driven by the good performances of Hair & Body and Skincare.
• Americas net sales amounted to €234m, up by +12% vs. 9M22. The growth was supported by the excellent results reported by Make-up and Skincare, achieved thanks to the good performances of Emerging Brands and Multinationals. 3Q23 reported sales closed to the ones of 3Q22, with Emerging Brands and Skincare balancing slightly declining trends in
• Multinationals. Asia 9M23 net sales were equal to €120.5m, up by +15% vs. 9M22. The trend was excellent also in 3Q23 (+11%). Both China and Korea contributed positively to this result, particularly in the Make-up segment.

9M23 and 3Q23 Revenues by Customer Type

	43,0% Emerging Brands			39,9% Emerging Brands	50,5%		Multinationals
M 9
	Retailers	70.8	65.3	8%
	€m	3Q23	3Q22	% vs. 3Q22
	Revenues	246.7	229.1	8%			driven by USA and EMEA.
Q 3	Multinationals	116.4	129.5	(10%)
	Emerging Brands	106.0	77.5	37%
	Retailers	24.3	22.2	10%			business unit.

	€m	3Q23	3Q22	% vs. 3Q22
Q 3
					business unit.

• Multinationals revenues amounted to €371.1m, up by +9% vs. 9M22, thanks to good performances reported by all business units, mainly in Europe and USA. 3Q23 reported a decline of - 10%, mainly driven by prestige brands in make-up, following the expected temporary realignment of customers' inventories.
• Emerging Brands customers confirmed to be once again the main growth driver, reaching revenues of €293.1m (+52% vs. 9M22). The increase characterized both mass and prestige segments also in the last quarter (+37%), and it was mainly driven by USA and EMEA.
• Retailers recorded similar growth both in 9M23 and in 3Q23 (+8% and +10% respectively), supported by the Make-up business unit.

Outlook and Guidance

Outlook and Guidance
Topic	Update
Current environment	The Beauty market in both EMEA and in the US continues to report good growth rates, with EMEA sustained by both prices and volumes, and US continuing to be mostly driven by price. Also, no noticeable consumers trade down from Prestige to Mass is taking place in the Western World. Conversely, Asia, and in particular China, still shows a below expectations recovery trend , with local brands performing better than imported/prestige brands. At the same time, retailers and brands are still in the process of adjusting their inventory coverage, which is likely going to last a few more months.
Medium-term Future	In this context of continued positive beauty consumption, we remain optimistic about the future and convinced that our Group is well positioned to perform above market thanks to our Innovation strength and to the diversification of the categories and geographies we serve: (i) The temporary and expected realignment of the Prestige Retailers and Brands inventories, especially affecting multinationals, that started in 2Q23 will inevitably end in a few months. At the same time, the worries about softer future growth paces are accelerating brands quest for new and better products. In other words, Brands know their future growth will have to come mostly from market share gains. This represents a positive factor for Intercos, who is recognized by all players in the market as the point of reference for innovation and for its ability to anticipate beauty trends, developing high performance sustainable products. The strong growth Intercos is registering in New Projects Orders since the beginning of 2023 is the proof this process is already happening (ii) Also the increasingly stringent regulations (like Chinese CSAR, US MOCRA etc) as well as the need for clean/"free of" products will also be a factor playing in Intercos favour, since it will increase complexity for clients (hence increasing the chances of outsourcing) and difficulty for Intercos smaller competitors. (iii) Finally, we expect Asia to fully recover its role of global beauty growth engine thanks to India development, the success of Korean Beauty products - not only in Asia but also in US - and the full recovery of China. In this market, we expect a business phase favourable to local brands which will inevitably try to penetrate more and more masstige and prestige segments, which is where Intercos competes and excels. Hence, we expect the Chinese market to progressively become more and more favourable to Intercos subsidiaries.
Guidance for FY23	Looking at the short-term, we expect the temporary stock re-alignment of prestige retailers and brands to continue especially in the Make-up market. Our diversified business model will allow us to offset this impact, although with a different mix of clients and products than last year (more mass market skewed). This makes us expect another quarter (4Q23) of single digit top line growth, despite the tough 4Q22 comps, and an EBITDA overall aligned to 4Q22 in absolute terms.

Outlook and Guidance - Good order-in-take continues, boosted by new projects

Total firm order book evolution by business unit (€m) — excluding contract manufacturing business units (e.g. Hair & Body) Outlook and Guidance – Supply chain recovery allowed to reduce order book, normalizing lead times

Skincare Make Up

Definitions

For the purpose of providing information in line with the performance analysis and control parameters of the Group, non-IFRS alternative performance measures are used by management to provide information for a better assessment of the results of operations and the financial position of the Group as described below. Such performance measures should not be interpreted as a substitute for the conventional performance measures established by IFRS. The details of the content of the alternative performance measures not arrived at directly from the financial statements are defined as follows: • EBITDA: is defined as the sum of profit for the year plus income taxes, financial income and expenses and the effects of the valuation of

• investments using the equity method net of equity investments held for financial investment purposes and amortization, depreciation and writedowns.
• Adjusted EBITDA: is given by EBITDA less items of a non-recurring nature, that is, by particularly significant events that are not in the ordinary course of business or that have no effect on cash flows and/or changes in equity.
• Adjusted Net income: is given by Net income less items of a non-recurring nature, that is, by particularly significant events that are not in the ordinary course of business or that have no effect on cash flows and/or changes in equity net of the related tax impacts.
• Net indebtedness (cash) or net financial position/net debt: is given by the sum of current and non-current financial payables net of current and non-current financial receivables, including cash and cash equivalents.
• Order-in-take: indicates the aggregate of legally placed and processed orders by a company during the reporting period.
• Order Book: is the order backlog opened at any one given date.