Intercos

Investor Presentation • Aug 1, 2024

Disclaimer

IMPORTANT NOTICE

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.

This presentations is being furnished to you solely for your information and may not be reproduced or redistributed to any other person. 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 forwardlooking 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.

Executive Summary - 2Q24 & 1H24

Executive Summary -
		2Q24 & 1H24
€m	2Q24	2Q23		% vs 2Q23
			Rep FX	c FX
Revenues	278.9	253.8	9.9%	10.2%	Despite 2Q23 tough
Adj. EBITDA	43.2	37.5	15.0%		comps, 2Q24 Net sales
Adj. EBITDA %	15.5%	14.8%			increased by +10.2%
					at c.FX. Adjusted EBITDA growth of
€m	1H24	1H23		% vs 1H23	+15% allowed to close
Q 2			Rep FX	c FX	most of the gap
Revenues	499.9	488.4	2.4%	3.0%	reported in 1Q24.

			% vs 2Q23
Q 2					Despite 2Q23 tough
					comps, 2Q24 Net sales
					increased by +10.2% at c.FX. Adjusted
					EBITDA growth of
€m	1H24	1H23	% vs 1H23		+15% allowed to close
Revenues	499.9	488.4	Rep FX	c FX	most of the gap reported in 1Q24.
			2.4%	3.0%
Adj. EBITDA	64.0	67.4	(5.0%)
H Adj. EBITDA % 1	12.8%	13.8%
Adj. Net Income	22.9	26.9	(14.9%)		Strong increase in 2Q24 profitability at
Adj. Net Income %	4.6%	5.5%
Net Debt	114.1	122.7
Net Debt/Adj. EBITDA	0.85x	0.87x

Strong increase in 2Q24 profitability at 15.5%

2Q24 saw the Company come back to its double-digit sales growth pace. This allowed the Group to offset the decline registered in 1Q as a consequence of the heavy impacts of the Cyber-attack. To note that, the long tail of the Cyber-attack consequences also had an impact in the first phase of 2Q, especially for the Make-up Business Unit.

-

• customers.

Skincare	Hair & Body 23,0% 14,8%	62,3% Make Up
	€m	2Q24	2Q23	% vs 2Q23
Q	Revenues	278.9	253.8	10%
2	Make Up	155.5	156.4	(1%)
	Skincare Hair & Body	43.6 79.8	39.9 57.5	9% 39%
	€m	1H24	1H23	% vs 1H23
	Revenues	499.9	488.4	2%
H 1	Make Up	283.4	304.2	(7%)

Hair & Body 23,0% 14,8% Skincare	62,3% Make Up
			% vs 2Q23
Hair & Body	79.8	57.5	39%
€m	1H24	1H23	% vs 1H23
Revenues	499.9	488.4	2%
Make Up	283.4	304.2	(7%)
Skincare	83.0	72.1	15%
Hair & Body	133.5	112.1	19%
	€m	2Q24	2Q23

2Q24 confirmed the momentum of our Asian business, with both China and Korea continuing to post double digit increases. Also, it marked the strong comeback of Europe which also posted double digit increases. Americas was the only soft spot, still paying the toll of the Cyber-attack plus a softening overall market trend.

-

-

• sales was significant in this cluster of clients.

2Q24 1H24		1H23
Retailers Retailers 6,3% 6,7% Multinationals Multinationals 44,7% 45,9% 47,4% 48,9% Emerging Brands Emerging Brands	Emerging Brands	Retailers 9,1% 52,2% 38,7%	Multinationals
The long tail of the Cyber-attack in the first phase of 2Q, especially for the Make-up Business Unit, had an impact on		€m	2Q24	2Q23	% vs 2Q23
multinational customers, whose 2Q24 performance didn't allow to close the 1Q24 gap reported. Asian Emerging Brands contributed to the growth of the relative cluster of clients.		Revenues	278.9	253.8	10%
Multinational customers closed 2Q24 with revenues of €124.7m, in line with the excellent performance of 2Q23	Q 2	Multinationals	124.7	127.6	(2%)
(+22% vs. 2Q22). The performance of this type of customer was affected in 2Q24 by the slowdown in the Make up production due to inefficiencies in the raw materials procurement process, as well as the softening trend of		Emerging Brands	136.5	101.7	34%
the US market. 1H24 therefore closed with revenues of €229.3m, down by -10% on 1H23, reflecting the decrease reported in 1Q24.		Retailers	17.6	24.5	(28%)
Emerging Brands reported significant growth, with 2Q24 net sales of €136.5m (+34.2% vs. 2Q23). 1H24		€m	1H24	1H23	% vs 1H23
amounted to €237.1m (+25.5%). The growth characterized all business units and all geographies, including China, supported by the excellent performance of local brands, both in the mass and prestige segments.		Revenues	499.9	488.4	2%
Retailers 2Q24 revenues amounted to €17.6m, down by -28.1% (or €33.4m in 1H24). The weight of business	H 1	Multinationals	229.3	254.8	(10%)
with Retailers is significantly lower than with others (approx. 7% of total Group revenues), therefore short-term		Emerging Brands	237.1	189.0	25%
performance may be subject to greater volatility. In particular, 1H24 decrease was the consequence of the Cyber

2Q24 & 1H24 Financials – P&L

- 1H24 Net Sales of €499.9m, up by +2.4% (+3% at constant exchange rates) compared to 1H23, despite 1Q24 was strongly affected by the Cyber-attack (-5.8% vs.

• year.

2Q24 & 1H24 Financials – P&L
• 1H24 Net Sales of €499.9m, up by +2.4% (+3% at constant exchange rates)
compared to 1H23, despite 1Q24 was strongly affected by the Cyber-attack (-5.8% vs. 1Q23). The recovery was achieved thanks to 2Q24 growth of +9.9%, with Make-up holding the same sales level of 2Q23 which was particularly strong (+22.8% vs. 2Q22),	€m	1H24	1H23	Var. vs 1H23	% vs 1H23
and the growth reported by both Skincare and Hair&Body business units.	Net Sales	499.9	488.4	11.5	2.4%
	Gross Margin	99.9	100.9	(1.0)	(1.0%)
• 1H24 Adj. EBITDA stood at €64m, slightly down on last year (-5% or -€3.4m). Strong	Gross Margin %	20.0%	20.7%	(67Bps)
sales performance and increasing profitability in 2Q24 allowed to recover most of the	Adj. EBITDA	64.0	67.4	(3.4)	(5.0%)
1Q24 EBITDA shortfall following the Cyber- attack. 2Q24 reached record levels in both sales and EBITDA, with the latter growing by +15% (or +€5.6m) compared to 2Q23.	Adj. EBITDA/Net Sales	12.8%	13.8%	(99Bps)
2Q24 EBITDA margin returned well above 15%, reaching 15.5%, up by +70Bps over	Adj. EBITDA/Value Added Sales	16.5%	17.2%	(72Bps)
2Q23. The increase in profitability was a consequence of (i) higher absorption of costs	EBITDA (*)	58.5	64.8	(6.3)	(9.7%)
thanks to the increase in volumes sold and (ii) the first impacts deriving from the rebalancing of the mix of products sold. In the semester, EBITDA margin on value	EBIT (*)	35.1	42.9	(7.8)	(18.1%)
added sales (sales net of the cost of packaging) was equal to 16.5%, slightly down	PBT (*)	30.7	35.6	(5.0)	(13.9%)
compared to 1H23 (-72Bps), but with an important recovery posted in 2Q24.	Net Income (*)	17.9	25.0	(7.1)	(28.5%)
	Adj. Net Income	22.9	26.9	(4.0)	(14.9%)
• 1H24 Adj. Net Income amounted to €22.9m, down on last year -14.9% (or -€4m) following the decrease in 1Q24 EBITDA and higher D&A and Taxes. In particular, 1H24 Tax rate was temporarily above the one of 1H23 but we expect it will progressively re	Adj. Net Income % (*) Includes non recurring items	4.6%	5.5%	(93Bps)
align to historical levels in 2H24. Net financial charges decreased compared to last year.

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-

2Q24 & 1H24 Financials – Cash Flow & Net Debt

1H24 Operating cash flow amounted to €23.2m, up by +€15.7m compared to last year. Good management of Trade Working capital allowed to absorb less cash than LY (+€1.8m), despite the significant 1H24 increase in inventories (+€47m), mainly due to the material caused extra capitalizations for €23.5m. improved by +€21.5m, ending the period positive and equal to €3.8m. €70.2m, decreasing by €6.3m vs. LY.

2Q24 & 1H24 Financials – Cash Flow & Net Debt
1H24 Operating cash flow amounted to €23.2m, up by +€15.7m compared to last year.
Good management of Trade Working capital allowed to absorb less cash than LY (+€1.8m),
despite the significant 1H24 increase in inventories (+€47m), mainly due to the material
increase of order book vs. 31Dec23. In addition to this, 1H23 capex were impacted by the one
off renewal of some lease contracts, which according to the IFRS16 accounting principle caused extra capitalizations for €23.5m.
Mainly thanks to the improvement in operating cash flow, cash flow before dividends
improved by +€21.5m, ending the period positive and equal to €3.8m.
30Jun24 Net Debt was therefore equal to €114.1m, improving by €8.6m compared to
30Jun23, with financial leverage remaining essentially unchanged at 0.85x. 30Jun24 Net Debt excluding the accounting impact deriving from the application of IFRS16, was equal to
€70.2m, decreasing by €6.3m vs. LY.
€m
114.1 +€26.2m
100.2 17.7
5.2
12.8 4.4
64.0 23.8
14.0

(*) Refers to the cash impact only of the adjustments at EBITDA level (€3.1m out of €5.5m of total 1H24 Adjustments).

paid 30Jun24 (**) Investments also consider the portion of capex deriving from the impact of IFRS16, which following the renewal of some lease contracts, led to an increase in capex of €23.5m in 1H23 (€1.5m in 1H24).

(***) Calculated as Net Debt/Adj. LTM EBITDA

Outlook and Guidance

	Outlook and Guidance
Market Overview	The trends of the Beauty market at a global level were so far in line with our expectations: (i) EMEA market - we expect will continue to be characterized by good trends, especially for what concerns the prestige segment; (ii) Asia, and particularly China, although the growth of the market in general is rather soft, we think that the expansion of local brands will continue in the medium term: these brands are now more mature and sophisticated than in the past, offering to the local market more innovative products. Also for this reason, they now enjoy greater credibility to the eyes of local consumers, which allows them to position themselves in higher price segments than in the past. In addition, the regulation put in place by the Chinese Government for the introduction of new cosmetic products into the market has become significantly more stringent and it requires deep know-how from producers and formulators, thus significantly raising the barriers to entry for new competitors; (iii) America, and in particular US, recorded fluctuating trends in 1H24, after being supported by a quite significant inflation and being characterized by rather soft volume trends for several months in a row. We see some possibilities of recovery in 2H24, even if private consumption might be penalized during periods preceding Presidential elections.
Where we Stand	In this context, we are confident that our Group will continue its growth trajectory. Order book is significantly higher than last year (+12.5%) and more exposed to prestige customers compared to a year ago. We expect Intercos will continue to benefit from the dynamics of the Chinese market, while we remain optimistic about the growth of South Korea, where the Group's second most important R&D centre is continuing to develop new successful formulations, also for the Western markets. In both countries, we have started plants expansion works. Regarding the Western world, the consolidated relationships with our customers will allow us to continue to benefit from the expansion of outsourcing also underway among Multinationals, while we will continue to collaborate with Emerging Brands, not only in Make-up, but also in Skincare and Hair&Body.
2H24 Guidance	Considering all the above, we confirm the FY24 guidance already communicated at the beginning of the year which sees an increase in sales between +6 and +8% vs. FY23: in particular we expect sales in 2H24 to increase in a range between approx. +10% and +13%, a strong growth compared to 2H23, and well above the expected growth of the beauty market as a whole.

Outlook & Guidance – Order entry and Order in-take

Total firm order-in-take by business unit excluding contract manufacturing (e.g. Hair & Body).

The excellent trend in order-in-take continues, growing compared to the same period 2023 (May-June), after the records posted in the previous six months.

Total firm order book evolution by business unit excluding contract manufacturing business units (e.g. Hair & Body)

Order Book

New record reached at the end of June24 despite strong 2Q24 sales

P&L and Related Adjustments

	1H24	1H23	Var. vs 1H23	% vs 1H23
Net Sales	499.9	488.4	11.5	2.4%
COGS	(400.0)	(387.5)	(12.5)	3.2%
Industrial gross profit	99.9	100.9	(1.0)	(1.0%)
Research & Development and innovation costs	20.0% (21.3)	20.7% (20.0)	(1.3)	6.6%
Selling expenses	(15.1)	(15.3)	0.2	(1.5%)
General and administrative expenses	(26.2)	(24.4)	(1.8)	7.4%
Other operating income (expenses)	(2.2)	1.7	(3.9)	(232.0%)
Operating Profit (EBIT)	35.1	42.9	(7.8)	(18.1%)
	7.0%	8.8%
D&A (***)	(23.4)	(21.9)	(1.5)	6.8%
EBITDA	58.5	64.8	(6.3)	(9.7%)
Adjustements (*)	(5.5)	(2.6)	(2.9)
Adjusted EBITDA	64.0	67.4	(3.4)	(5.0%)
	12.8%	13.8%	0.0
	(4.4)	(7.2)	2.8	(39.0%)
Financial income (expenses)	30.7	35.6	(5.0)	(13.9%)
Profit before taxes (EBT)		(10.6)	(2.2)	20.4%
Income taxes	(12.8)		(7.1)	(28.5%)
Net income	17.9	25.0
Adjustments (**)	(5.0)	(1.9)	(3.1)
Adjusted Net income	22.9	26.9	(4.0)	(14.9%)
	1H24	1H23
Management Long Term Incentive Plan	(1.0)	(1.8)
One-off costs related to re-organizations (mainly personnel costs and layoff)	(0.5)	(0.5)
Cyber Cost	(2.1)	0.0
Costs for general and legal consultancies	(3.8)	(0.3)
Write-Off Bad Debt Provision related to "The Body Shop" customer Sale of asset	(1.4) 3.3	0.0 0.0

Management Long Term Incentive Plan	(1.0)	(1.8)
One-off costs related to re-organizations (mainly personnel costs and layoff)	(0.5)	(0.5)
Cyber Cost	(2.1)	0.0
Costs for general and legal consultancies	(3.8)	(0.3)
Write-Off Bad Debt Provision related to "The Body Shop" customer	(1.4)	0.0
Sale of asset	3.3	0.0
Adjustments (*) at EBITDA level	(5.5)	(2.6)
Tax impact arising from above adjustments	1.5	0.7
Taxes related to prior year	(1.0)	0.0
Adjustments (**) at Net Income level	(5.0)	(1.9)

(***) All functional areas include amortization which are deducted for the construction of the EBITDA

Balance Sheet and Cash Flow

			Var. vs
€m	30Jun24	31Dec23
			31Dec23
Tangible Assets Intangible Assets	235.9 57.6	239.0 56.2	(3.1) 1.5
Goodwill	133.3	134.0	(0.7)
Investments	1.5	1.5	0.0
Deferred tax assets	27.3	25.7	1.6
Other non-current Assets/Liab.	(11.5)	(10.9)	(0.5)
Non-current Assets	444.1	445.4	(1.3)
Inventory	215.6	168.5	47.1
Trade Receivables	171.1	167.7	3.4
Trade Payables	(211.1)	(183.5)	(27.6)
Other current Assets/Liab.	(57.3)	(48.3)	(9.0)
Net Working Capital	118.3	104.4	14.0
Capital Employed	562.4	549.8	12.7
Net Debt	114.1	100.2	13.9
Equity	448.3	449.5	(1.2)
€m	1H24	1H23	Var. vs 1H23
Cash flows provided by (used in) operating activities	32.4	40.4	(8.0)
Cash flows provided by (used in) investing activities Cash flows provided by (used in) financing activities	(20.3) (15.5)	(24.8) (41.4)	4.4 25.8
Net increase (decrease) in cash and cash equivalents	(3.4)	(25.7)	22.3
Dividends distribution	(17.7)	(14.4)	(3.4)
Cash and cash equivalents, at beginning of the year	152.8	183.2	(30.4)
Of which, change in exchange differences Cash and cash equivalents, at end of the year	(0.2) 131.9	2.6 140.6	(2.8) (8.7)
Net increase (decrease) in cash and cash equivalents	(21.2)	(40.1)	18.9

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: • c.FX: Constant exchange rates • 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 write-downs. • VAS: Value Added Sales (Net Sales – cost of packaging)
• 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.