Intercos — Investor Presentation 2024

Feb 29, 2024

FY23 RESULTS February 29th 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.

Agenda FY23 Financials Outlook & Guidance FY23 Executive Summary

FY23 Executive Summary

Net Sales

€988.2m

+18.3% Rep FX vs. FY22 +20.0% c.FX vs. FY22

Adj. EBITDA

€137.5m

+13.0% or +€15.8m vs. FY22 17.4% on Value Added Sales 13.9% on Net Sales

Adj. Net Income

€56.5m

+10.1% or +€5.2m vs. FY22

Net Debt

0.73x Net Debt to Adj. EBITDA ratio €54.3m excluding IFRS16

Scope 3 Emissions

€100.2m After a long project that involved all the Group's subsidiaries and all the 16 production plants, adequate information regarding the emissions of the entire value chain is now available, monitoring not only GHG Scope 1 and 2 emissions, but also Scope 3.

For further information and a methodological note, please refer to the publication of the 2023 Sustainability Report which will be made available at the following link: https://www.intercos-investor.com/en/investors/.

Dividends

€18m

Approx. €0.19 per share Payout Ratio of approx. 34% of consolidated Net Profit

	FY23 Executive Summary
			–		FY23 and 4Q23 Results overview
€m	FY23	FY22	% vs FY22
Revenues	988.2	835.6	Rep FX	c FX
			18%	20%	FY Group record in
Adj. EBITDA	137.5	121.7	13%		terms of Revenues,
Y Adj. EBITDA % F	13.9%	14.6%			EBITDA, Net Income
Adj. Net Income	56.5	51.3	10%		Lowest leverage ratio
Adj. Net Income %	5.7%	6.1%			ever since listed
Net Debt	100.2	90.7
Net Debt/Adj. EBITDA	0.73x	0.74x
€m	4Q23	4Q22	% vs 4Q22		4Q top line at c.FX
			Rep FX	c FX	above expectations
Revenues Q 4	253.2	238.5	6.1%	8.0%	Profitability vs. LY
	35.2	37.3	(6%)		reflecting the
Adj. EBITDA	13.9%	15.6%			expected temporary change in mix

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	Hair & Body 18,8% 15,7% Skincare	65,5% Make Up
	€m	FY23	FY22	% vs FY22
	Revenues	988.2	835.6	18%
Y F	Make Up	599.4	547.4	9%
	Skincare	157.5	130.8	20%
	Hair & Body	231.3	157.4	47%
	€m	4Q23	4Q22	% vs 4Q22
	Revenues	253.2	238.5	6%
Q 4	Make Up	145.4	156.4	(7%)
	Skincare	47.9	34.2	40%
	Hair & Body	59.9	47.9	25%

	€m	4Q23	4Q22	% vs 4Q22
Q 4

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	Asia 17,2% 34,6% Americas	EMEA 48,2%
	€m	FY23	FY22	% vs FY22
	Revenues	988.2	835.6	18%
Y F	EMEA	507.2	402.7	26%
	Americas	310.5	289.2	7%
	Asia	170.5	143.7	19%
	€m	4Q23	4Q22	% vs 4Q22
	Revenues	253.2	238.5	6%
	EMEA	126.6	119.6	6%
Q	Americas	76.5	79.8	(4%)
4			39.1	28%

	€m	4Q23	4Q22	% vs 4Q22
Q 4

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	Retailers 10,9% 33,2% Emerging Brands	55,9% Multinationals
	€m	FY23	FY22	% vs FY22
	Revenues	988.2	835.6	18%
Y F	Multinationals	485.2	466.7	4%
	Emerging Brands	405.9	277.7	46%
	Retailers	97.1	91.2	6%
	€m	4Q23	4Q22	% vs 4Q22
	Revenues	253.2	238.5	6%
Q 4	Multinationals	114.1	127.8	(11%)
	Emerging Brands	112.8	84.9	33%
	Retailers	26.3	25.9	2%

FY23 Financials – Results Overview

- FY23 Net Sales reached the record level of €988.2m (+18.3% at reported FX, and +20% at constant FX), increasing by +€152.6m compared to FY22. The new record was achieved despite the challenging base of LY (FY22 sales were up by +19% at c.FX vs. FY21), and

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FY23 Net Sales reached the record level of €988.2m (+18.3% at reported FX, and +20%
constant FX), increasing by +€152.6m compared to FY22. The new record was achieved					% vs
the challenging base of LY (FY22 sales were up by +19% at c.FX vs. FY21), and	€m	FY23	FY22	Var. vs FY22	FY22
some prestige brands having entered a phase of decreasing inventories starting	Net Sales	988.2	835.6	152.6	18.3%
first part of 1H23. Worth mentioning that China, also thanks to local brands, have to achieve this result.	Gross Margin	199.4	178.6	20.8	11.7%
contributed	Gross Margin %	20.2%	21.4%	(119Bps)
Adjusted EBITDA was equal to €137.5m (+13% vs. FY22), growing by +€15.8m vs.	Adj. EBITDA	137.5	121.7	15.8	13.0%
Despite the temporary impact deriving from the decrease in inventories of prestige	Adj. EBITDA/Net Sales	13.9%	14.6%	(65Bps)
brands, which caused pressure on margins, the excellent sales performance together with tight cost control of opex allowed the EBITDA to close the year with double digit	Adj. EBITDA/Value Added Sales	17.4%	17.9%	(46Bps)
growth again. The incidence of adjusted EBITDA on Group net sales was 13.9%. Adjusted	EBITDA (*)	130.9	115.9	15.1	13.0%
EBITDA on revenues net of packaging costs (value-added sales), was equal to 17.4%,	EBIT (*)	85.5	70.9	14.6	20.6%
slightly down compared to FY22 (-46Bps), a consequence of the announced change in the of	PBT (*)	72.4	66.7	5.7	8.6%
products sold which characterized 2H23.	Net Income (*)	52.4	45.0	7.4	16.5%
Adjusted Net income stood at €56.5m (+10.1%), growing by +€5.2m vs. FY22. The	Adj. Net Income	56.5	51.3	5.2	10.1%
was entirely due to the growth of EBITDA together with a decrease in the tax rate.
partially offset by slightly increased D&A and higher costs related to exchange	Adj. Net Income % (*) Includes non recurring items	5.7%	6.1%	(42Bps)
impact. The financial costs of debt of the main credit lines remained in line with the thanks to the rates protection negotiated.
FY22,	€m	31Dec23	31Dec22	Var. vs
Net Debt amounted to €100.2m, up by €9.6m vs. LY. Leverage ratio (Net Debt				31Dec22
Adj. EBITDA) was stable vs. 31Dec22 at 0.73x, despite: (i) €16m of dividends paid,	Net Debt	100.2	90.7	9.6
(ii) €19.6m of new financial liabilities booked in accordance with the IFRS16 accounting principle, following some rents renewals that took place in FY23. 31Dec23 Net	Net Debt/Adj. EBITDA	0.73x	0.74x	(0.02x)
excluding IFRS16 liability amounted to €54.3m, down by €10m vs. 31Dec22.

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- recovery.

FY23 Financials – Cash flow and Net Debt

- FY23 Operating Cash Flow amounted to €58.2m, up +€9.8m on LY, despite a significant increase in fixed assets (+€31.4m) partly due to the accounting impact arising from IFRS16, which caused an increase in capitalized assets of €28.1m in FY23 alone (€6.5m in FY22) following the extension of the duration of some lease contracts already in place. The higher operating cash flow was achieved thanks to higher EBITDA together with the good management of trade working capital, which increased by only €3.1m despite the significant increase in business volumes. The performance was achieved thank to a marked

significant increase in business volumes. The performance was achieved thank to a marked decrease of inventory (-€25.2m), stable DSO (+€26.7m of trade receivables) and flat trade payables vs. 31Dec22.	Other Chg. in NWC Capex (**) Operating Cash Flow	8.8 (83.0) 58.2	16.6 (51.6) 48.4	(7.9) (31.4) 9.8
• FY23 net cash flow was negative by -€9.6m, mainly due to (i) €16m of dividends distributed, and (ii) higher financial costs due to the negative impact of exchange rates differences. Once the IFRS16 accounting impact is excluded, net cash flow before dividends was positive and equal to +€26m.	Changes L/T Assets & Liab. Fin. Expenses Taxes	(11.6) (13.1) (20.0)	2.4 (3.6) (21.7)	(14.0) (9.5) 1.7
• 31Dec23 Net Debt was thus equal to €100.2m. Despite the slight increase vs. 31Dec22, leverage slightly decreased, being now equal to 0.73x. If we exclude the accounting impact deriving from the IFRS16 accounting standard, 31Dec23 Net Debt is equal to €54.3m,	Chg in Equity & Others Cash Flow before Div. Dist. Dividends Distribution	(7.0) 6.4 (16.0)	10.5 36.0	(17.6) (29.6) (16.0)
decreasing by €10m compared to LY.	Cash Flow post Div. Dist.	(9.6)	36.0	(45.6)
€m (100,2) (90,7) (19,6) 26,0	€m	FY23	FY22	Var. vs FY22
(16,0)	Net Debt	100.2	90.7 0.74x	9.6 (0.02x)

Outlook & Guidance

	Outlook & Guidance
showed how, even in conditions of exogenous pressure on margins due to temporary inventory policies of some of customers, the Group has been able to generate value thanks to its unique diversification in terms of customers, geographical areas, market segments served, and the extended variety of product categories offered. this context, the focus on innovation has never stopped and indeed, investments made over the last year to anticipate the new needs of consumers have intensified. At the same time, looking at operations, many initiatives have also been launched in FY23 simplify processes, increase controls and reduce production waste. All activities whose benefits are not yet visible in terms profitability but which we believe will be progressively visible once the historical sales mix will be re-established.	Where we stand
therefore look at 2024 with optimism. We expect the global Beauty market to grow in a range between +4%/+5%, reflecting normalized growth rate compared to the post-covid period. We believe that growth in the Western market will be less sustained last year in 1H24 and accelerating in the second part of the year. Asia, and in particular China, will continue its growth thanks above all to the good performance of local brands, continuing to gain market shares.	Expected FY24 market evolution
expected, starting from the second half of December 2023, we have seen the first signs of re-orders from prestige customers, evidence that for some of those, the phase of stock realignment is coming to an end. On top of that, in the last two months of FY23, hit the new record of order entry at Group level (€127m), thanks to the make-up all time high order entry. All this gives us to expect once again a FY24 top line performance above the one of the Beauty Market, and therefore in a range between	FY24 Guidance

Outlook & Guidance – Order entry and Order in-take

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

New record reached in

Order Entry

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

Supply chain recovery allowed to reduce order book vs. LY, normalizing lead times

P&L and Related Adjustments

€m	FY23	FY22	Var. vs FY22	% vs FY22
Net Sales	988.2	835.6	152.6	18.3% 20.1%
COGS Industrial gross profit	(788.8) 199.4	(657.0) 178.6	(131.8) 20.8	11.7%
% on net sales	20.2%	21.4%
Research & Development and innovation costs	(38.0)	(37.2)	(0.8)	2.2%
Selling expenses	(29.4)	(28.9)	(0.5)	1.9%
General and administrative expenses	(49.1)	(48.8)	(0.3)	0.5%
Other operating income (expenses)	2.7 85.5	7.3 70.9	(4.6) 14.6	(63.3%)
Operating Profit (EBIT) % on net sales	8.7%	8.5%		20.6%
D&A (***)	(45.4)	(45.0)	(0.4)	1.0%
EBITDA	130.9	115.9	15.1	13.0%
Adjustements (*)	(6.5)	(5.8)	(0.7)
Adjusted EBITDA	137.5	121.7	15.8	13.0%
% on net sales Financial income (expenses)	13.9% (13.1)	14.6% (3.6)	0.0 (9.5)	263.8%
Incomes/(losses) from investments	0.0	(0.6)	0.6	(100.0%)
Profit before taxes (EBT)	72.4	66.7	5.7	8.6%
Income taxes	(20.0)	(21.7)	1.7	(8.0%)
Net income	52.4	45.0	7.4	16.5%
Adjustments (**)	(4.0)	(6.3)	2.2
Adjusted Net income	56.5	51.3	5.2	10.1%
€m	FY23	FY22
IPO costs		(0.7)
Management Long Term Incentive Plan	(1.5)	(3.0)
One-off costs related to re-organizations (mainly personnel costs and layoff)	(1.1)	(1.9)
Other minor one-off costs (incl. Consultancy)	(1.5)	(0.3)
Write-Off Bad Debt Provision related to "The Body Shop" customer (****)	(2.4)		EBITDA		(***) All functional areas include amortization which deducted for the construction of the
Adjustments (*) at EBITDA level Write-off regarding a company in liquidation	(6.5)	(5.8) (0.6)			(****) After the closing of the financial statements as of 31.12.2023, "The Body Shop", a
Write-off tax asset & other tax assets realignment	0.7	(2.2)			customer of the Group, appointed an Administrator following the start of the Crisis
Tax impact arising from above adjustments	1.8	2.4			Procedure ("Adiministration" according to English law). For this reason, it was necessary to write-off the portion of the related trade receivable as of 31.12.2023 not collected as
Adjustments (**) at Net Income level	(4.0)	(6.3)			of 29 February 2024, for a total amount of €2.4 million.

IPO costs	(0.7)

Balance Sheet and Cash Flow

€m	FY23	FY22	Var. vs FY22
Tangible Assets	239.0	214.3	24.6
Intangible Assets	56.2	46.7	9.4
Goodwill	134.0	132.9	1.1
Investments Deferred tax assets	1.5 25.7	1.4 17.7	0.1 8.0
Other non-current Assets/Liab.	(10.9)	(14.6)	3.7
Non-current Assets	445.4	398.5	46.9
Inventory	168.5	193.7	(25.2)
Trade Receivables	167.7	141.1	26.6
Trade Payables	(183.5)	(185.1)	1.6
Other current Assets/Liab.	(48.3)	(39.6)	(8.8)
Net Working Capital	104.4	110.1	(5.8)
Capital Employed	549.7	508.7	41.1
Net Debt	100.2	90.7	9.6
Equity	449.5	418.0	31.5
€m	FY23	FY22	Var. vs FY22
Cash flows provided by (used in) operating activities	103.2	77.2	26.0
Cash flows provided by (used in) investing activities	(53.7)	(42.0)	(11.7)
Cash flows provided by (used in) financing activities	(61.6)	(58.9)	(2.7)
Net increase (decrease) in cash and cash equivalents	(12.1)	(23.7)	11.6
Dividends distribution	(16.0)		(16.0)
Cash and cash equivalents, at beginning of the year	183.2	207.0	(23.7)

Inventory	168.5	193.7	(25.2)
Trade Receivables	167.7	141.1	26.6
Trade Payables	(183.5)	(185.1)	1.6
Cash flows provided by (used in) financing activities	(61.6)	(58.9)	(2.7)
Net increase (decrease) in cash and cash equivalents	(12.1)	(23.7)	11.6
Dividends distribution	(16.0)		(16.0)
Cash and cash equivalents, at beginning of the year	183.2	207.0	(23.7)
Of which, change in exchange differences	2.3	0.0	2.3
Cash and cash equivalents, at end of the year	152.8	183.2	(30.4)
Net increase (decrease) in cash and cash equivalents	(28.1)	(23.7)	(4.4)

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.
• 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. • VAS: Value Added Sales (Net Sales – cost of packaging)
• 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 noncurrent 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.