Interpump Group — Earnings Release 2019

Nov 8, 2019

Informazione Regolamentata n. 0159-57-2019		Data/Ora Ricezione 08 Novembre 2019 11:11:48	MTA - Star
Societa'	:	INTERPUMP GROUP
Identificativo Informazione Regolamentata	:	124445
Nome utilizzatore	:	INTERPUMPN03 - MIRABELLI
Tipologia	:	REGEM
Data/Ora Ricezione	:	08 Novembre 2019 11:11:48
Data/Ora Inizio Diffusione presunta	:	08 Novembre 2019 11:11:49
Oggetto	:	Q3 2019 Results
Testo del comunicato

Vedi allegato.

PRESS RELEASE

INTERPUMP GROUP APPROVES THE CONSOLIDATED RESULTS AT 30 SEPTEMBER 2019

Chairman Fulvio Montipò: "Interpump's 2019 goes on under the sign of growth, despite the challenging circumstances in global markets"

IN THE FIRST NINE MONTHS OF 2019:

NET SALES: € 1,026.1 million (+7.6% compared to 9M 2018)

EBITDA* : € 240.3 million (€ 219.8 million in 9M 2018)

EBITDA/SALES*: 23.4% (23.0% in 9M 2018)

CONSOLIDATED NET PROFIT: € 135.5 million

(+8.1% compared to the normalized result for 9M 2018)

FREE CASH FLOW: € 76.0 million (€ 66.1 million in 9M 2018)

NET DEBT*: € 382.9 million (€ 287.3 million at 31/12/2018)

after € 30.2 million in acquisitions, dividends for €23.8 million and purchase of treasury shares for € 48.8 million, bringing the market value of treasury shares at 30/09 to € 142.3 million.

IN THE THIRD QUARTER OF 2019:

NET SALES: € 322.9 million (+4.1% compared to Q3 2018)

EBITDA* : € 78.1 million (€ 73.0 million in Q3 2018)

EBITDA/SALES*: 24.2% (23.5% in Q3 2018)

CONSOLIDATED NET PROFIT: € 43.3 million (+0.7% compared to Q3 2018)

^* 2019 data is affected by the adoption of IFRS16 accounting principle. With the reporting standards used until 2018, EBITDA for the first nine months would amount to € 228.8 million (€ 74.2 million in Q3), and net debt as at 30/09/2019 would amount to € 316.6 million.

S. Ilario d'Enza, 8 November 2019 – The Board of Directors of Interpump Group S.p.A. met today and approved the Consolidated results for the first nine months of 2019.

9M 2019 RESULTS

Net Sales for the first nine months of 2019 totaled 1,026.1 million euro, an increase of 7.6% over the 953.6 million euro in the corresponding period of 2018.

Sales by business sector and geographical area were as follows:

		Rest of	North	Pacific	Rest of the
(€/000)	Italy	Europe	America	Area	World	Total
9M 2019
Hydraulics	137,819	245,069	168,701	63,170	66,472	681,231
Water-Jetting	30,990	128,143	110,518	46,772	28,479	344,902
Total	168,809	373,212	279,219	109,942	94,951	1,026,133
9M 2018
Hydraulics	126,821	237,166	136,860	62,040	67,177	630,064
Water-Jetting	30,332	117,220	106,110	46,043	23,807	323,512
Total	157,153	354,386	242,970	108,083	90,984	953,576
Change, 2019/2018
Hydraulics	+8.7%	+3.3%	+23.3%	+1.8%	-1.0%	+8.1%
Water-Jetting	+2.2%	+9.3%	+4.2%	+1.6%	+19.6%	+6.6%
Total	+7.4%	+5.3%	+14.9%	+1.7%	+4.4%	+7.6%

Organic growth, at unchanged perimeter and before the currency exchange, was +4.3% in Hydraulics, +1,7% in Water-Jetting, and +3.4% in total sales. Thanks to a +1.6% contribution from the currency exchange, organic growth expressed in euro is +5.0%

EBITDA amounted to 240.3 million euro (23.4% of sales) compared to 219.8 million euro in the first nine months of 2018 (23.0% of sales), an increase of 9.3%. The following table sets out EBITDA by business sector:

	9M 2019	% on	9M 2018	% on
	€/000	sales	€/000	sales	Change
Hydraulics	144,598	21.2%	129,853	20.6%	+11,4%
Water-Jetting	95,687	27.6%	89,917	27.7%	+6,4%
Total	240,285	23.4%	219,770	23.0%	+9,3%

Effective from 1 January 2019 the Group has adopted IFRS16, which changed the accounting of operating leases to the same rules used for financial leases. EBITDA for the first nine months of 2019, calculated with the same accounting principles used in 2018, would have amounted to 228.8 million euro.

Operating income (EBIT) was not significantly affected by IFRS16 adoption: it amounted to 189.1 million euro (18.4% on sales) compared to 182.1 million euro (19.1% on sales) in the first nine months of 2018, an increase of 3.8%.

Consolidated Net Profit for the first nine months was 135.5 million euro (was 137.3 million euro in 9M 2018, including 11.9 million euro in one-off earnings resulting from the GS-Hydro acquisition). The increase versus the normalized result for last year is +8.1%.

Basic earnings per share rose from 1.166 euro (normalized) in the first nine months of 2018 to 1.280 euro in the first nine months of 2019, with a 9.8% increase.

Net cash flow from operating activities was 195.3 million euro (176.1 million euro in 9M 2018), with a 10.9% increase. Free cash flow in the first nine months of 2019 amounted to 76.0 million euro (66.1 million euro in the same period last year).

Net debt was 382.9 million euro (287,3 million euro at 31 December 2018). Most of the change is due to the adoption of IFRS 16, which involved an initial adjustment of 68.4 million euro as at 1 January 2019, corresponding to the current value of future leasing payments for the whole duration of outstanding contracts. Additionally, at the end of September the Group had commitments for the acquisition of stakes in subsidiaries for a total of 40.4 million euro (44.5 million euro at 31/12/2018).

Capital employed rose from 1,200.1 million euro at 31 December 2018 to 1,375.3 million euro at 30 September 2019, following the acquisition of Hydra Dyne Tech, the IFRS16-related adjustment, and the increase in net working capital resulting from growth of sales. Non-annualized ROCE was 13.7% (compared to 15.6% in 9M 2018). Non-annualized ROE was 14.2% (from the normalized 15.0% in 9M 2018).

At 30 September 2019 Interpump Group S.p.A. had 4,931,314 treasury shares in its portfolio, representing 4.529% of total share capital, purchased at an average cost of € 23.12.

Q3 2019 RESULTS

Net Sales for the third quarter of 2019 totaled 322.9 million euro, an increase of 4.1% over the 310.1 million euro in the corresponding period of 2018.

Sales by business sector and geographical area were as follows:

Q3 2019
(€/000)	Italy	Rest of Europe	North America	Pacific Area	Rest of the World	Total
Hydraulics	39,320	72,772	56,366	19,408	18,962	206,828
Water-Jetting	9,901	42,422	36,168	18,955	8,656	116,102
Total	49,221	115,194	92,534	38,363	27,618	322,930
Q3 2018
Hydraulics	36,853	75,165	46,281	21,099	22,729	202,127
Water-Jetting	9,456	42,170	34,055	14,633	7,707	108,021
Total	46,309	117,335	80,336	35,732	30,436	310,148
Change, 2019/2018
Hydraulics	+6.7%	-3.2%	+21.8%	-8.0%	-16.6%	+2.3%
Water-Jetting	+4.7%	+0.6%	+6.2%	+29.5%	+12.3%	+7.5%
Total	+6.3%	-1.8%	+15.2%	+7.4%	-9.3%	+4.1%

Organic growth, at unchanged perimeter and before the currency exchange, was -2.0% in Hydraulics, +2.5% in Water-Jetting, and -0.4% in total sales. Thanks to a +1.4% contribution from the currency exchangem, organic growth expressed in euro was +1.0%.

The "Rest of the World" area was strongly penalized by the unforeseeable - but now widely known - situation of the economy in India, where quarterly sales suffered from a sharp drop (equivalent to approximately 5.5 million euro). Excluding India, sales in the quarter registered positive growth in both Hydraulics and total, despite the exceptionally tough comparison base represented by Q3 2018.

However, Interpump believes the development perspectives for its business in India remain intact.

EBITDA amounted to 78.1 million euro (24.2% of sales) compared to 73.0 million euro in the third quarter of 2018 (23.5% of sales), an increase of 7.1%. EBITDA for the third quarter of 2019, calculated with the same accounting principles used in 2018, would have amounted to 74.2 million euro.

Consolidated Net Profit for the third quarter of 2019 was 43.3 million euro, an increase of 0.7% with respect to Q3 2018.

Basic earnings per share rose from 0.402 euro in the third quarter of 2018 to 0.411 euro in the third quarter of 2019.

Pursuant to Article 65-bis, paragraph 2 of Consob Deliberation 11971/1999 as modified and supplemented, the Interim Report at 30 September 2019 is available to the public at the Group's registered office and may be also be consulted on the "Financial Statements and Reports" page in the "Investor relations" section of the Group's website www.interpumpgroup.it, as well on the repository.

S. Ilario d'Enza (RE), 8 November 2019 On behalf of the Board of Directors

Fulvio Montipò, Chairman

Carlo Banci, the manager responsible for drafting the company's accounting documents, declares - pursuant to the terms Article 154-bis, paragraph 2 of the Consolidated Financial Services Act - that the accounting disclosures in the present release correspond to the contents of the underlying documents, the accounting books and the accounting entries.

Sant'Ilario d'Enza (RE), 8 November 2019 Carlo Banci

Manager responsible for drafting the company's accounting documents

Media Relations: Investor Relations: Moccagatta Associati Luca Mirabelli Tel. 02 8645,1695 Tel. 0522-904433 segreteria@moccagatta.it lmirabelli@interpumpgroup.it

Consolidated Statement of financial position

(€/000)	30/09/2019	31/12/2018
ASSETS
Current assets
Cash and cash equivalents	145,744	118,140
Trade receivables	281,875	270,364
Inventories	397,138	366,480
Tax receivables	25,416	24,596
Other current assets	12,777	10,931
Total current assets	862,950	790,511
Non-current assets
Property, plant and equipment	458,958	355,488
Goodwill	451,708	434,699
Other intangible assets	33,158	34,731
Other financial assets	4,052	2,319
Tax receivables	1,654	1,664
Deferred tax assets	31,796	29,776
Other non-current assets	2,115	2,177
Total non-current assets	983,441	860,854
Total assets	1,846,391	1,651,365

(€/000)	30/09/2019	31/12/2018
LIABILITIES
Current liabilities
Trade payables	142,163	177,782
Payables to banks	19,447	21,404
Interest bearing financial payables (current portion)	174,870	151,917
Taxes payable	37,087	19,204
Other current liabilities	80,819	72,297
Provisions for risks and charges	3,889	3,807
Total current liabilities	458,275	446,411
Non-current liabilities
Interest-bearing financial payables	334,322	232,158
Liabilities for employee benefits	19,352	19,377
Deferred tax liabilities	41,997	41,832
Other non-current liabilities	37,240	39,521
Provisions for risks and charges	3,213	3,161
Total non-current liabilities	436,124	336,049
Total liabilities	894,399	782,460
SHAREHOLDERS' EQUITY
Share capital	54,052	54,842
Legal reserve	11,323	11,323
Share premium reserve	28,452	71,229
Remeasurement reserve for defined benefit plans	(5,965)	(5,965)
Translation reserve	17,887	3,142
Other reserves	840,748	729,373
Group shareholders' equity	946,497	863,944
Minority interests	5,495	4,961
Total shareholders' equity	951,992	868,905
Total shareholders' equity and liabilities	1,846,391	1,651,365

Consolidated income statement for the first nine months

(€/000)	2019	2018
Net sales	1,026,133	953,576
Cost of sales	(648,922)	(597,048)
Gross industrial margin	377,211	356,528
% of net sales	36,8%	37,4%
Other operating income	14,492	14,485
Distribution expenses	(91,563)	(86,896)
General and administrative expenses	(107,111)	(99,901)
Other operating costs	(3,965)	(2,103)
EBIT	189,064	182,113
% of net sales	18.4%	19.1%
Financial income	9,356	7,598
Financial charges	(10,941)	(12,316)
Negative goodwill	-	11,907
Equity method contribution	23	(225)
Profit for the period before taxes	187,502	189,077
Income taxes	(51,993)	(51,809)
Consolidated profit for the period	135,509	137,268
% of net sales	13.2%	14.4%
Attributable to:
Shareholders of Parent	134,575	136,583
Minority shareholders of subsidiaries	934	685
Consolidated profit for the period	135,509	137,268
EBITDA	240,285	219,770
% of net sales	23.4%	23.0%
Shareholders' equity	951,992	845,279
Net debt	382,895	276,945
Payables for purchase of shareholdings	40,376	43,060
Capital employed	1,375,263	1,165,284
Non-annualized ROCE	13.7%	15.6%
Non-annualized ROE	14.2%	16.2%
Basic earnings per share	1.280	1.277

Consolidated statement of comprehensive income for the first nine months

(€/000)	2019	2018
Consolidated profit for the first nine months (A)	135,509	137,268
Other comprehensive income which will subsequently be reclassified to consolidated profit or loss
Gains (losses) on translating the financial statements of foreign companies	14,872	722
Gains (losses) from companies accounted for using the equity method	20	(17)
Applicable taxes	-	-
Total other consolidated income (losses) which will subsequently be reclassified to consolidated profit for the
period, net of the tax effect (B)	14,892	705
Consolidated comprehensive income for the period (A)+(B)	150,401	137,973
Attributable to:
Shareholders of Parent	149,320	137,445
Minority shareholders of subsidiaries	1,081	528
Consolidated comprehensive income for the first nine months	150,401	137,973

Consolidated income statement for the third quarter

(€/000)	2019	2018
Net sales	322,930	310,148
Cost of sales	(202,335)	(194,126)
Gross industrial margin	120,595	116,022
% of net sales	37.3%	37.4%
Other operating income	4,368	5,011
Distribution expenses	(28,716)	(28,002)
General and administrative expenses	(34,659)	(32,033)
Other operating costs	(805)	(546)
EBIT	60,783	60,452
% of net sales	18.8%	19.5%
Financial income	3,196	1,967
Financial charges	(3,779)	(3,584)
Negative goodwill	-	284
Equity method contribution	26	(67)
Profit for the period before taxes	60,226	59,052
Income taxes	(16,930)	(16,043)
Consolidated profit for the period	43,296	43,009
% of net sales	13.4%	13.9%
Attributable to:
Shareholders of Parent	43,064	42,768
Minority shareholders of subsidiaries	232	241
Consolidated profit for the period	43,296	43,009
EBITDA	78,109	72,957
% of net sales	24.2%	23.5%
Shareholders' equity	951,992	845,279
Net debt	382,895	276,945
Payables for purchase of shareholdings	40,376	43,060
Capital employed	1,375,263	1,165,284
Non-annualized ROCE	4.4%	5.2%
Non-annualized ROE	4.5%	5.1%
Basic earnings per share	0.411	0.402

Consolidated statement of comprehensive income for the third quarter

(€/000)	2019	2018
Consolidated profit for the third quarter (A)	43,296	43,009
Gains (losses) on translating the financial statements of foreign companies	12,186	(2,230)
Gains (losses) from companies accounted for using the equity method	2	(23)
Applicable taxes	-	-
Total other consolidated income (losses) which will
subsequently be reclassified to consolidated profit for the period, net of the tax effect (B)	12,188	(2,253)
Consolidated comprehensive income for the period (A)+(B)	55,484	40,756
Attributable to:
Shareholders of Parent	55,229	40,650
Minority shareholders of subsidiaries	255	106
Consolidated comprehensive income for the third quarter	55,484	40,756

Consolidated cash flow statement for the first nine months

(€/000)	2019	2018
Cash flows from operating activities
Profit before taxes	187,502	189,077
Adjustments for non-cash items:
Losses (gains) on the sale of fixed assets	(2,028)	(2,052)
Amortization and depreciation	50,341	36,399
Costs recognized in the income statement relative to stock options that do not involve
monetary outflows for the Group	1,761	1,407
Losses (profits) from investments	(23)	225
Net change in risk provisions and allocations to employee benefit provisions	(89)	269
Expenditures for tangible assets to be leased	(4,450)	(5,843)
Proceeds from the disposal of leased tangible assets	6,702	5,980
Net financial charges (revenues)	1,585	(7,189)
	241,301	218,273
(Increase) decrease in trade receivables and other current assets	(9,009)	(35,245)
(Increase) decrease in inventories	(18,552)	(51,611)
Increase (decrease) in trade payables and other current liabilities	(26,156)	21,186
Interest paid	(4,178)	(2,406)
Realized exchange differences	799	(1,363)
Taxes paid	(42,660)	(38,428)
Net cash from operating activities	141,545	110,406
Cash flows from investing activities
Payments for the purchase of investments net of cash received
including treasury shares used	(26,413)	(11,201)
Capital expenditure on property, plant and equipment	(54,305)	(42,734)
Proceeds from the sale of tangible fixed assets	1,155	978
Proceeds from the sale of available-for-sale assets	-	785
Increase in intangible assets	(1,974)	(2,973)
Financial income received	706	402
Other	217	571
Net cash (used in) investing activities	(80,614)	(54,172)
Cash flows from financing activities
Disbursements (repayments) of loans	49,485	1,058
Dividends paid	(23,752)	(23,052)
Disbursements for purchase of treasury shares	(48,764)	(36,319)
Transfer of treasury shares as payment for investments	-	-
Proceeds from the sale of treasury shares to stock option beneficiaries	3,436	539
Repayment (grant) of leases to subsidiaries not consolidated line-by-line	(384)	(200)
Change in other financial assets	(48)	(43)
Payment of finance lease installments (principal)	(12,538)	(1,602)
Net cash generated by (used in) financing activities	(32,565)	(59,619)
Net increase (decrease) in cash and cash equivalents	28,366	(3,385)

(€/000)	2019	2018
Net increase (decrease) in cash and cash equivalents	28,366	(3,385)
Translation differences for cash held by non-EU companies	1,229	71
Opening cash and cash equivalents of companies consolidated on a line-by-line basis for the first time	(34)	(7)
Cash and cash equivalents at the beginning of the period	96,736	135,983
Cash and cash equivalents at the end of the period	126,927	132,662

Cash and cash equivalents consist of the following:

	30/09/2019 €/000	31/12/2018 €/000
Cash and cash equivalents as per the consolidated statement of financial position	145,744	118,140
Bank payables (overdrafts and subject to collection advances)	(19,447)	(21,404)
Cash and cash equivalents as per the consolidated cash flow statement	126,297	96,736

Consolidated statement of changes in shareholders' equity

	Share capital	Legal reserve	Share premium reserve	Remeasure ment reserve for defined benefit plans	Translation reserve	Other reserves	Group shareholders' equity	Non controlling interests	Total
At 1 January 2018	55,805	11,323	121,228	(5,722)	(2,475)	579,006	759,165	5,564	764,729
Recognition in income statement of fair value of stock options
granted and exercisable	-	-	1,407	-	-	-	1,407	-	1,407
Purchase of treasury shares	(686)	-	(35,633)	-	-	-	(36,319)	-	(36,319)
Transfer of treasury shares to stock option beneficiaries	47	-	492	-	-	-	539	-	539
Transfer of treasury shares as payment for equity investments	32	-	1,731	-	-	-	1,763	-	1,763
Merger of Russian Inoxpa subsidiaries	-	-	-	-	-	(100)	(100)	100	-
Purchase of residual interest in subsidiaries	-	-	-	-	-	(869)	(869)	(894)	(1,763)
Dividends paid	-	-	-	-	-	(22,526)	(22,526)	(518)	(23,044)
Dividends resolved	-	-	-	-	-	(6)	(6)	-	(6)
Comprehensive income (loss) for first nine months of 2018	-	-	-	-	862	136,583	137,445	528	137,973
At 30 September 2018	55,198	11,323	89,225	(5,722)	(1,613)	692,088	840,499	4,780	845,279
Recognition in income statement of fair value of stock options
granted and exercisable	-	-	474	-	-	-	474	-	474
Transfer of treasury shares to stock option beneficiaries	-	-	48	-	-	(47)	1	-	1
Transfer of treasury shares as payment for equity investments	-	-	32	-	-	(32)	-	-	-
Purchase of treasury shares	(356)	-	(18,550)	-	-	1,042	(17,864)	-	(17,864)
Dividends distributed	-	-	-	-	-	-	-	(66)	(66)
Comprehensive income (loss) for the fourth quarter of 2018	-	-	-	(243)	4,755	36,322	40,834	247	41,081
At 31 December 2018	54,842	11,323	71,229	(5,965)	3,142	729,373	863,944	4,961	868,905
Recognition in income statement of fair value of stock options granted and exercisable	-	-	1,761	-	-	-	1,761	-	1,761
Purchase of treasury shares	(945)	-	(47,819)	-	-	-	(48,764)	-	(48,764)
Transfer of treasury shares to stock option beneficiaries	155	-	3,281	-	-	-	3,436	-	3,436
Dividends paid	-	-	-	-	-	(23,200)	(23,200)	(547)	(23,747)
Comprehensive income (loss) for first nine months of 2019	-	-	-	-	14,745	134,575	149,320	1,081	150,401
At 30 September 2019	54,052	11,323	28,452	(5,965)	17,887	840,748	946,497	5,495	951,992