Intercos — Investor Presentation 2023

Mar 14, 2023

March 14TH 2023

FY22 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

FY22 Executive Summary

Net Sales	Adj. EBITDA	Adj. Net Income
€835.6m	€121.7m	€51.3m
+24% Rep FX +19% c.FX	14.6% on Net Sales +20.3% or +€20.6m vs. FY21	+24.6% or +€10.1m vs. FY21
Net Debt	ESG Rating	Dividends
€90.7m 0.74x Net Debt to Adj. EBITDA ratio (-0.51x vs.31Dec22)	Platinum medal awarded by EcoVadis Intercos within the Top 1% of	€16m Approx. €0.17 per share payout ratio of approx. 36% of consolidated net profit
€36m FY22 Cash Flow	companies in its sector for the second year in a row	The Board of Directors has resolved to Propose to the shareholders' meeting the payment of dividends for 2022

Highest Full Year Sales and EBITDA ever

	FY22 Executive Summary –	FY22 and 4Q22 Results overview
	€m	4Q22	4Q21	% vs 4Q21
				Rep FX	c FX
Q 4	Revenues	238,5	188,3	27%	22%
	Adj. EBITDA	37,3	30,6	22%
	Adj. EBITDA %	15,6%	16,2%
	€m	FY22	FY21	% vs FY21
				Rep FX	c FX
	Revenues	835,6	673,7	24%	19%
	Adj. EBITDA	121,7	101,1	20%
Y F	Adj. EBITDA %	14,6%	15,0%
	Adj. Net Income	51,3	41,2	25%
	Adj. Net Income %	6,1%	6,1%
	Net Debt	90,7	126,6
	Net Debt/Adj. EBITDA	0,74x	1,25x

FY22 and 4Q22 Revenues by BU's

	Skincare	14,3%	65,6%	Make Up	15,7% Skincare	65,5%	Make Up
	€m	4Q22	4Q21	% vs 4Q21	% vs 4Q19
Q 4							followed by Multinationals.
	€m	FY22	FY21	% vs FY21	% vs FY19
	Revenues	835,6	673,7	24%	17%
Y F	Make Up	547,4	417,5	31%	16%
	Skincare	130,8	128,9	2%	35%
	Hair & Body	157,4	127,3	24%	9%

Y F

• Make-up FY22 net sales grew significantly at +31% (+30% in 4Q). The growth came from all commercial areas and type of clients, with excellent performance of EMEA, followed by the Americas, and of Emerging Brands, followed by Multinationals.
• Skincare was quite stable vs.FY22 (+2% only). Like in Q2 and Q3, Q4 flat performance was impacted by the negative Chinese market performance. - Hair & Body net sales continued to accelerate also in 4Q.
• 1H22 Inventory build up allowed to improve production feasibility. On top of this, 4Q benefited from the first productions for D&G Beauty. - All BU's were well above 2019 levels

FY22 and 4Q Revenues by Region (Commercial Company)

			33,5%			34,6%
		Americas			Americas
	€m		4Q22	4Q21	% vs 4Q21
Q 4								Brands outstanding.
	€m		FY22	FY21	% vs FY21
	Revenues		835,6	673,7	24%
Y F	EMEA		402,7	327,0	23%
	Americas		289,2	216,1	34%
	Asia		143,7	130,6	10%				skincare performance.

Y F

• driven by all type of clients, with European Emerging Brands outstanding.
• Americas performance (+34% vs. FY21) was supported by strong results from both Multinationals and Emerging Brands and in both prestige and mass segments. All Business Units contributed to the increase in sales.
• Asia FY22 good results (+10% vs. FY21) mainly came from Korea Make-up sales, which more than offset China's poor skincare performance.

FY22 and 4Q Revenues by Customer Type

Q 4					- Multinationals sales grew by +19% vs. FY21, mainly thanks to
					US, Korea and EMEA markets, especially in Make-up.
					- Emerging Brands (+45% vs. FY21) continued to be the main
					driver of growth. Sales increased particularly in EMEA and in the
	€m	FY22	FY21	% vs FY21	Americas, both in mass and prestige segments.
	Revenues	835,6	673,7	24%
Y F	Multinationals	398,6	335,3	19%	- Retailers were overall stable in FY22 (+2%). Last quarter was still impacted by Chinese retailers.
	Emerging Brands	305,6	210,3	45%
	Retailers	131,4	128,2	2%

Y F

• Multinationals sales grew by +19% vs. FY21, mainly thanks to
• US, Korea and EMEA markets, especially in Make-up. Emerging Brands (+45% vs. FY21) continued to be the main driver of growth. Sales increased particularly in EMEA and in the Americas, both in mass and prestige segments.
• Retailers were overall stable in FY22 (+2%). Last quarter was still impacted by Chinese retailers.

8

FY22 and 4Q22 Results overview

• FY22 Net Sales amounted to €835.6m (+24% at reported FX, and +19% at constant FX), increasing by €161.9m compared to FY21. In 4Q22, sales growth accelerated even further vs. 4Q21, to €238.5m (+27% at reported FX, and +22% at constant FX). FY22 sales growth at constant FX was mainly driven by volumes, and characterized all geographical areas and business units, with results well above the pre-pandemic levels of 2019. - FY22 Adjusted EBITDA was equal to €121.7m (+20.3% vs. FY21), - FY22 Adjusted Net income stood at €51.3m (+24.6%), growing
  • growing by €20.6m vs. last year, while 4Q22 Adjusted EBITDA grew by €6.7m. 2H22 profitability recovered significantly vs. 1H22 (15.6% vs. 13.2%), with 4Q22 Adj. EBITDA on net sales in line with expectations.
• by €10.1m vs. FY21. The increase was driven by the growth at EBITDA level, partially offset by higher D&A and taxes. Financial expenses remained flat vs. FY21 despite the higher cost of money thanks to favourable conditions of credit lines in place (mainly expiring at the end of FY24). - 31Dec22 Net Debt amounted to €90.7m, reflecting €36m
  • improvement vs. 31Dec21. Leverage ratio (Net Debt on FY22 Adj. EBITDA) was equal to 0.74x, thanks to strong cash generation and continuous EBITDA growth. Cash conversion on EBITDA stood at 30%.

			Var. vs	% vs
€m	FY22	FY21	FY21	FY21
Net Sales	835,6	673,7	161,9	24,0%
Gross Margin	178,6	144,9	33,6	23,2%
Gross Margin %	21,4%	21,5%	(14Bps)
Adj. EBITDA	121,7	101,1	20,6	20,3%
Adj. EBITDA %	14,6%	15,0%	(45Bps)
EBITDA (*)	115,9	82,9	32,9	39,7%
EBIT (*)	70,9	42,8	28,0	65,5%
PBT (*)	66,7	39,7	27,0	68,1%
Net Income (*)	45,0	26,5	18,4	69,5%
Adj. Net Income	51,3	41,2	10,1	24,6%
Adj. Net Income %	6,1%	6,1%	+3Bps
(*) Includes non recurring items
			Var. vs
€m	31Dec22	31Dec21	31Dec21
Net Debt	90,7	126,6	(36,0)
Net Debt/Adj. EBITDA	0,74x	1,25x	(0,51x)

FY22 Group Adj. EBITDA stood at €121.7m, increasing by +20.3% (or+€20.6m,) vs. FY21, thanks to the strong increase in sales together with the closing part of the gap generated in 1H22 (-79Bps reported in June vs. -45Bps at YE). Adj. EBITDA on value added sales (excluding the cost of packaging) amounted to 17.9%, down by 38bps compared to FY21.

Make-Up Adj. EBITDA was equal to €85.7m, growing by 34% (or +€21.9m) vs. FY21. Despite inflation and supply chain inefficiencies, strong sales performance allowed to benefit from operating leverage. FY22 Adj. EBITDA on net sales increased by 38Bps vs. LY.

Skincare Adj. EBITDA amounted to €20m, flat vs. FY21. The performance was in line with the one reported at top line level.

model, thus being more exposed to variations in the product mix, production efficiency, as well as the price of energy. For the reason, 1H22 was highly impacted by external factors. As expected, 2H22 improved (+€1.1m vs. 2H21), reducing the gap reported in 1H22 (-€2.5m vs.1H21).

FY22 Financials – Cash Flow & Net Debt

FY22 Cash Flow amounted to €36m, up by €6.1m vs. FY21, before IPO proceeds.

Higher cash generation was reached despite (i) higher capex (+€12.5m vs. FY21) and (ii) higher inventory (+€50.9 vs. 31Dec22). The inventory increase allowed the Group to increase deliveries to customers given the high level of orders in a context of supply chain disruption that affected almost all FY22. Good Trade Receivables and Trade Payables management allowed to partially offset the cash absorption at inventory level (TWC increased by €35.7m).

31Dec22 Net Debt amounted to €90.7m, improving by €36m compared to that of 31Dec21. The constant growth achieved at the Adjusted EBITDA level together with the reduction in Net Debt, further reduced the leverage ratio, which is now equal to 0.74x (-0.51x vs. LY).

€m	FY22	FY21	Var. vs FY21
Adjusted EBITDA	121,7	101,1	20,6
Adjustments (*)	(2,6)	(5,9)	3,3
Change in TWC	(35,7)	(19,5)	(16,2)
Other Chg. in NWC	16,6	(0,1)	16,8
Capex	(51,6)	(39,1)	(12,5)
Operating Cash Flow	48,4	36,5	11,9
Changes L/T Assets & Liab.	2,4	5,9	(3,5)
Fin. Expenses	(3,6)	(3,7)	0,1
Taxes	(21,7)	(13,1)	(8,6)
M&A		(2,4)	2,4
Chg in Equity & Others	10,5	6,6	3,9
Cash Flow before IPO	36,0	29,8	6,1
IPO proceeds net		37,5	(37,5)
Cash Flow post IPO proceeds	36,0	67,4	(31,4)
Net Debt Opening	126,6	194,0
Net Debt Closing	90,7	126,6

Outlook and Guidance

	Outlook and Guidance
Topic	Update
Current environment	(i) Scenarios are now opening up for possible faster and less intense recessions in US and Europe than previously expected, as the combination of rising employment, increasing wages and a slight slowdown in inflation, has moderated some of the previous forecasts. (ii) High inflation in raw materials and energy, especially in the USA and Europe, seem to have reached its peak. Further wages inflation is expected in 2023, especially in EMEA and US. (iii) The great absentee of 2022, China, could be the protagonist of a recovery in consumption, especially in the second part of 2023.
Intercos	(i) We believe that we operate in an industry that has always shown resilience in times of economic distress and our diversification in terms of market segments covered, customers and geographies served, should allow us to be able to benefit from this resilience. (ii) Thanks to the uniqueness of the products we sell, already in 2022 the Group showed good pricing power, increasing prices twice. On top of this, we recently concluded a new round of price increase with our customers which will be effective starting from 2Q23. This will allow us to make permanent the energy surcharge as well as offset the expected wages inflation. (iii) Intercos presence in China in terms of direct sales, is still relatively modest if compared to the Beauty market as a whole. Intercos could benefit from China recovery also through the expansion of some emerging Western brands which still have to make tangible their Asian presence.
FY23 Guidance	We ended FY22 with a robust Order Book. Also based on the above, we expect FY23 Net Sales at constant currency to grow between +8% and +11% vs. FY22. The slowdowns on the supply chain side that characterized most of FY22, combined with an always very solid order entry during all the months of the year, have led to an extension in delivery times to our customers. For this reason we continue to expect, as repeatedly anticipated, a short period of decrease in order entries that will allow us to slightly decrease the Order Book, accelerating deliveries, without however leading to a decrease in FY23 expected sales.

Outlook and Guidance- Strong Firm order-in-take continues

Series1 Series2

Outlook and Guidance - Strong firm order book continues, above previous years Total firm order book evolution by business unit (€m) — excluding contract manufacturing business units (e.g. Hair & Body)

Skincare Make Up

P&L and related adjustments

	2022	2021	Delta	Var.%
€/mln Net Sales	835,6	673,7	161,9	24,0%
	(657,0)	(528,8)	(128,3)	24,3%
Industrial gross profit % on net sales	178,6 21,4%	144,9 21,5%	33,6	23,2%
Research & Development and innovation costs	(37,2)	(31,9)	(5,3)	16,7%
Selling expenses	(28,9)	(22,6)	(6,3)	27,9%
General and administrative expenses	(48,8)	(36,1)	(12,8)	35,4%
Other operating income (expenses)	7,3	(11,6)	18,8	(162,7%)
Operating Profit (EBIT)	70,9	42,8	28,0	65,5%
% on net sales	8,5% (45,0)	6,4% (40,1)	(4,9)	12,2%
EBITDA	115,9	82,9	32,9	39,7%
Adjustements (*)	(5,8)	(18,2)	12,4
Adjusted EBITDA	121,7	101,1	20,6	20,3%
% on net sales	14,6%	15,0%
Financial income (expenses) Incomes/(losses) from investments	(3,6) (0,6)	(3,7) 0,5	0,1 (1,1)	(1,6%) (221,9%)
Profit before taxes (EBT)	66,7	39,7	27,0	68,1%
Income taxes	(21,7)	(13,1)	(8,6)	65,4%
Net income	45,0	26,5	18,4	69,5%
Adjustments (**)	(6,3)	(14,6)	8,3
Adjusted Net income	51,3	41,2	10,1	24,5%
	2022	2021
IPO costs	(0,7)	(5,6)
Costs related to M&A transactions Management Long Term Incentive Plan	(3,0)	(0,4) (5,5)
One-off costs related to re-organizations (mainly personal costs)	(1,2)	(6,7)
Contrubution to the Ukrainan population and one-off welfare	(0,9)
Other minor one-off costs	(0,1)
Adjustments (*) at EBITDA level	(5,8)	(18,2)
Accrual regarding previous years taxes Write-off regarding a company in liquidation and a fiscal asset	(2,8)	(5,1)
Tax impact mainly arising from above adjustments and assets realignment (2021)	2,4	8,7

Financial income (expenses)	(3,6)	(3,7)	0,1	(1,6%)
Other minor one-off costs	(0,1)
Adjustments (*) at EBITDA level	(5,8)	(18,2)
Accrual regarding previous years taxes		(5,1)
Write-off regarding a company in liquidation and a fiscal asset	(2,8)
Tax impact mainly arising from above adjustments and assets realignment (2021)	2,4	8,7
Adjustments (**) at Net Income level	(6,3)	(14,6)

Balance Sheet and Cash Flow

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.