Interpump Group — Investor Presentation 2019

Nov 8, 2019

Third Quarter 2019 Consolidated Results Interpump Group S.p.A.

Table of Contents

Welcome! OurQ3, 9M 2019 & FY 2018 Results start on page	2
Who we are on page New to the company and could use an Introduction? See	8
update on Markets and Diversification Our yearly is on page	16
More information on Growth Strategy Recent M&A and on page	22
Shareholder Information on page You will find	27
in the Appendix Some useful time series are included on page	29

Disclaimer

This document has been prepared by Interpump Group S.p.A for use during meetings with investors and financial analysts and is solely for information purposes. The information set out herein has not been verified by an independent audit company.

Neither the Company nor any of its subsidiaries, affiliates, branches, representative offices (the "Group"), as well as any of their directors, officers, employees, advisers or agents (the "Group Representatives") accepts any responsibility for/or makes any representation or warranty, express or implied, as to the accuracy, timeliness or completeness of the information set out herein or any other related information regarding the Group, whether written, oral or in visual or electronic form, transmitted or made available.

This document may contain forward-looking statements about the Company and/or the Group based on current expectations and opinions developed by the Company, as well as based on current plans, estimates, projections and projects of the Group. These forward-looking statements are subject to significant risks and uncertainties (many of which are outside the control of the Company and/or the Group) which could cause a material difference between forward-looking information and actual future results.

The information set out in this document is provided as of the date indicated herein. Except as required by applicable laws and regulations, the Company assumes no obligation to provide updates of any of the aforesaid forwardlooking statements.

Under no circumstances shall the Group and/or any of the Group Representatives be held liable (for negligence or otherwise) for any loss or damage howsoever arising from any use of this document or its contents or otherwise in connection with the document or the aforesaid forward-looking statements. This document does not constitute an offer to sell or a solicitation to buy or subscribe to Company shares and neither this entire document or a portion of it may constitute a recommendation to effect any transaction or to conclude any legal act of any kind whatsoever.

This document may not be reproduced or distributed, in whole or in part, by any person other than the Company. By viewing and/or accepting a copy of this document, you agree to be bound by the foregoing limitations.

€ mn

	9M 18	9M19 FY 2018	y/y
Organic growth in sales FX contribution Increase in perimeter			+3.4% +1.6% +2.6%
TOTAL REPORTED SALES	953.6	1,026.1	+7.6%
EBITDA net of IFRS16 effect, for comparison only	219.8	240.3 228.8	n.s. +4.1%
EBITDA / SALES net of IFRS16 effect, for comparison only	23.0%	23.4% 22.3%
EBIT	182.1	189.1	+3.8%
EBIT / SALES	19.1%	18.4%
NET INCOME (as reported) Tax rate NET INCOME (adjusted*) Tax rate	137.3 27.4% 125.4 29.2%	135.5 27.7%	-1.3% +8.1%
* 9M18 reported net income included a €11.9 million one-off from recognition of the GS-Hydro badwill
NET DEBT net of IFRS16 effect, for comparison only	276.9	382.9 316.6	n.s. +39.7 mn
COMMITMENTS FOR PURCHASE OF SUBSIDIARIES	43.1	40.4	- 2.7 mn
TREASURY SHARES (as at 30/09)	2,728,489	4,931,314

	Q3 18	Q319 FY 2018	y/y
Organic growth in sales FX contribution Increase in perimeter			-0.4% +1.4% +3.1%
TOTAL REPORTED SALES	310.1	322.9	+4.1%
EBITDA net of IFRS16 effect, for comparison only	73.0	78.1 74.2	n.s. +1.7%
EBITDA / SALES net of IFRS16 effect, for comparison only	23.5%	24.2% 23.0%
EBIT	60.5	60.8	+0.5%
EBIT / SALES	19.5%	18.8%
NET INCOME (as reported) Tax rate NET INCOME (adjusted*) Tax rate	43.0 27.2% 42.7 27.3%	43.3 28.1%	+0.7% +1.3%
* Q318 reported net income included a €0.3 positive one-off resulting from the adjustment of GS-Hydro badwill

Quarterly & YTD Results by Sector

€ mn

WATER-JETTING	Q319 Q4 18	y/y	9M19 FY 2018	y/y
Organic growth in sales FX contribution Increase in perimeter		+2.5% +1.7% +3.3%		+1.7% +2.1% +2.8%
TOTAL REPORTED SALES	116.1	+7.5%	344.9	+6.6%
EBITDA net of IFRS16 effect, for comparison only	34.9 33.7	n.s. +6.9%	95.7 92.1	n.s. +2.4%
EBITDA / SALES net of IFRS16 effect, for comparison only	30.0% 28.9%		27.6% 26.6%
HYDRAULICS	Q319 Q4 18	y/y	9M19 FY 2018	y/y
Organic growth in sales FX contribution Increase in perimeter		-2.0% +1.3% +3.0%		+4.3% +1.4% +2.4%
TOTAL REPORTED SALES	206.8	+2.3%	681.2	+8.1%
EBITDA net of IFRS16 effect, for comparison only	43.2 40.5	n.s. -2.2%	144.6 136.8	n.s. +5.3%
EBITDA / SALES net of IFRS16 effect, for comparison only	20.9% 19.6%		21.2% 20.1%

FY2018 Consolidated Results

€ mn

	FY 17	FY18 FY 2018	y/y
Organic growth in sales FX contribution Increase in perimeter			+13.7% -2.6% +6.6%
TOTAL REPORTED SALES	1,086.5	1,279.2	+17.7%
EBITDA	248.6	288.5	+16.0%
EBITDA / SALES	22.9%	22.6%
EBIT	198.9	236.5	+18.9%
EBIT / SALES	18.3%	18.5%
NET INCOME (as reported) Tax rate NET INCOME (adjusted*) Tax rate	135.7 29.4% 130.0 32,3%	173.9 27.5% 162.5 28.9%	+28.1% +25.0%
* FY17 reported net income included a €5.7 million positive effect of reassessment of deferred tax assets & liabilities in the US. FY18 reported net income includes a €11.4 million positive effect of recognition of GS-Hydro badwill
NET DEBT	273.5	287.3	+13.8 mn
COMMITMENTS FOR PURCHASE OF SUBSIDIARIES	46.8	44.5	- 2.3 mn
TREASURY SHARES (as at 31/12)	1,561,752	3,413,489

Sales & EBITDA Trend

€ mn

FINANCIALS

Sales & EBITDA net Electric Motors (dismissed in 2011) for consistency with current business

FINANCIALS Financial Ratios

Prudent debt policy and satisfactory return on capital employed

Net Debt / EBITDA (12 M)

Net of treasury stock and including commitmentsfor purchase of investments

Return On Capital Employed (12M)

Operating profit / (consolidated shareholder's equity + net debt)

INTERPUMP GROUP

• Public company (~75% free float)
• Listed at the Milan Stock Exchange since 1996 (ticker: IP.MI)
• Among the largest market caps in the STAR segment
• Stock is eligible for PIRs (government-sponsored saving investment plans for Italian households with significant tax advantages)

WATER-JETTING HYDRAULICS

• World leader in the niche market of highpressure plunger piston pumps for water and other fluids. Premium-price, reputable brands
• Growing range of applications:
  • •Industrial Cleaning
  • Chemical, Food, Pharma, Cosmetic processing
  • Automotive, Marine, Oil&Gas, Tunneling, Mining, Steel Industry

• Not only piston pumps: entered the wider universe of fluid handling with the acquisition of Inoxpa and Mariotti&Pecini (2017)

• Global supplier of hydraulic parts and complete systems

• Co-design and direct sales to all major OEMs, plus an extensive network of distributors
• Main applications are Trucks, Industrial Vehicles, Earth-moving, Agriculture, Construction, Lifting, Machine tools, Tunneling

Diversified across every dimension

Diversification of our business is the key to our resilience and low overall cyclicality

Both divisions have moved from the initial 100% concentration in one sector to a wide range of applications across different industries

Hydraulics: ongoing enlargement of product range through acquisitions. Water-Jetting: expansion from the historical niche of high-pressure pumps into the wider world of fluid handling.

Our 20 largest customers amount for about 10% of consolidated sales. No single customer above 1%.

We sell our products all over the world, either through our increasing direct presence, or through distributors.

Most goods sold are produced locally or at least in the same currency. Our FX impact is mostly relative to the translation of financial statements. No currency hedging is necessary.

Stainless steel, aluminum, brass, cast iron, copper, and countless other alloys. Smart, forwardlooking buying policy keeps us safe from price volatility.

All classes of customers are serviced directly, through a local subsidiary, or through a distributor according to their size and importance: from the world's largest OEMs to small retail customers.

Competitive Scenario

Niche of Very High Pressure Plunger Pumps (estimated market size: <1bn/yr)

Flow Handling Food, Cosmetics & Pharma (estimated market size: € 8 bn/yr)

HYDRAULICS Competitive Scenario

A fast-growing global player in a huge market (est. € 40 bn/yr) with countless opportunities for acquisitions

JETTING Main Companies, Brands and Products

September 2019 – Total employees: 1,900

WATER

HYDRAULICS Main Companies, Brands and Products

September 2019 – Total employees: 5,071 (Reggiana Riduttori not included)

International presence (plants and subsidiaries)

Italy, USA, UK, France, Bulgaria, Brazil, Chile, Peru, China, India, Australia, New Zealand, South Africa, UAE

Italy, USA, Canada, France, India, China, Korea, Australia

Italy, France, Germany, Romania, UK, South Africa, Sweden, Denmark, Austria, Poland, Spain, Netherlands, USA, China, Korea, Singapore, Brazil

WATER

JETTING Application examples

TRUCKS

Other utility vehicles

Hydro-demolition Surface preparation Renewal of armored concrete infrastructures

Lightweight high pressure pumps for sewer trucks

INDUSTRY Machine drilling & cutting Pulp & paper Intertwining of fibers in non-vowen textiles production Overspray removal from painting booth grids

STEEL / ALUMINUM Descaling of steel bars Cleaning of tanks & vessels used in aluminum processing

CLEANING Mid- to high-power professional & industrial cleaning Car washing systems Airport tarmacs Fish-farming nets

AUTOMOTIVE

Deburring of common-rail engine heads Cutting of bodywork and other materials Cleanup of welded seals

MARINE / SHIPYARDS Water-blasting paint removal Hull cleaning Fuel pumps for methanol-converted marine engines

WATER PROCESSING Misting Reverse-osmosis desalination

CONTRACTORS

Service companies who buy or rent general-purpose highpressure systems and offer various industrial cleaning and maintenance services to third parties across different industries (typical of the U.S. market)

OIL & GAS

~1/3 of revenues in Water-Jetting come from after-sales (maintenance, parts & service)

HYDRAULICS Application examples

EARTH-MOVING Excavators and mini-excavators Backhoe loaders Skid-steer loaders

TRUCK OUTFITTERS

Tipping trucks Trash collection - Sewer cleaning Firefighting - Snow plowing Towing - Car Carriers Crane trucks

TRUCK MANUFACTURERS Factory-fitted PTOs

AGRICULTURE Farm tractors Front loaders Harvesting machines

CONSTRUCTION Concrete mixing Telescopic handlers Conditioning/refrigeration/ventilation

INDUSTRIAL Machine tools Hydraulic power packs

LIFTING Mobile and fixed cranes Elevators Forklifts Theme park attractions

DRILLING / TUNNELING Tunnel-boring machines

Diversification by application field

2018 Total Turnover: Euro 1,279 million

Diversification of our business is the key to our resilience and low overall cyclicality.

Diversification is a never-ending journey

Significant reduction of cyclicality and correlation achieved over the past decade

International Profile: Interpump in Europe

International Profile: Interpump in the World

International Profile

Geographical breakdown of sales and costs (2018)

International Profile

Focus on emerging markets: a well-balanced presence

Water-Jetting Hydraulics

40+ companies acquired since the IPO in 1996 representing roughly 2/3 of each year's growth

3 kinds of acquisitions: Completing the product range, reinforcing competitive positioning, enhancing distribution

Bolt-on acquisitions: no disruption in activity, immediate synergies

Soft integration policy: existing management, brands, IT systems are preserved

Reasonable multiples paid, based on EV/EBITDA ratio

Remarkable increase in EBITDA margins of acquired companies

Frequent acquisition of a control stake with agreements for acquiring the minority interest in a few years

Use of Interpump treasury shares as full or partial payment for some acquisitions

WATER JETTING

Acquisition & Diversification Timeline

Applications: from cleaning to countless

expertise in powders and pastes

with Magna-Safe® magnetic transmission agitators

HYDRAULICS Acquisition & Diversification Timeline

Products: from PTOs only to integrated hydraulic kits, systems and services

HYDRAULICS 2019 Acquisitions: Hydra Dyne Tech

Acquired March 2019

• Headquartered in Ontario, Canada
• Manufacturer of best-in-class rotary manifolds, valves and hydraulic cylinders, using the proprietary patented LocSealTM technology. Rotary manifolds represent an addition to Interpump's product range.
• Products designed and customized according to the needs of some of the largest OEMs in the agricultural machinery, earth moving, and forestry sectors.
• Significant expansion of Interpump's Canadian and North-American business
• New application sector: forestry machinery

FY2018 Data (year ending August 31)
SALES	CAD 36 mn
EBITDA	CAD 6.1 mn
NET DEBT	CAD 7.2 mn
PRICE PAID (for a 75% stake)	EUR 15.2 mn

HYDRAULICS 2019 Acquisitions: Reggiana Riduttori

Acquired October 2019

• A world leader in design and manufacturing of reduction gears with the most versatile, lightweight and high-performance technology

• Headquartered in Reggio Emilia, Italy; subsidiaries in Australia, Brasil, Canada, China, France, India, the Netherlands, Slovakia, USA
• Countless applications in heavy industry, lifting, marine, agriculture, forestry, mining, wind energy
• Extends and complements Interpump's activity in power transmission systems (previously focused on truck PTOs)
• Excellent overlap of international presence and sector mix allow for strong technical and sales synergies with all other subsidiaries of Interpump

FY2018 Data
SALES	EUR 88 mn
EBITDA	EUR 17.2 mn (20% of sales)
ENTERPRISE VALUE PAID (100% stake)	EUR 125 mn
Plus net cash acquired at cost (~EUR 15 mn)

Updated 05/11/2019

Analyst Coverage

Alantra	Simone Pozzi
Banca Akros	Paola Saglietti
Equita SIM	Domenico Ghilotti
Exane BNP Paribas	Michele Baldelli
Intermonte	Carlo Maritano
Intesa Sanpaolo	Bruno Permutti
Kepler Cheuvreux	Matteo Bonizzoni
Mediobanca	Alessandro Tortora

Interpump Stock Performance

Total return to shareholders since the IPO: 13.3% per year (assuming dividend reinvestment and participation to the '09 capital increase)

Share price	26.28
Market Capitalization	€ 2.9 bn
Performance 3 M:	+0.6%
Performance 1 Y:	+3.6%
Performance 2 Y:	-6.8%

as of 31 December 2018

Board of Directors	= independent
Fulvio Montipò	Chairman and CEO
Paolo Marinsek	Deputy Chairman
Franco Garilli	Lead Independent Director
Angelo Busani	Minority Director
Antonia Di Bella
Marcello Margotto
Stefania Petruccioli
Paola Tagliavini
Giovanni Tamburi

Board of Statutory Auditors

Fabrizio Fagnola Chairman

Federica Menichetti

Alessandra Tronconi

Chief Financial Officer

Carlo Banci

Independent Auditors

EY S.p.A.

Head of Investor Relations

Luca Mirabelli

Synthesis of results

Euro/million	2008	2009	2010	2011	2012	2013	2014	2015	2016	2017	2018
Net Sales	424.5	342.9	424.9	472.3	527.2	556.5	672.0	894.9	922.8	1086.6	1279.2
EBITDA	87.0	46.9	74.1	94.7	105.8	105.2	136,1	180.3	198.5	248.6	288.5
Margin	20.5%	13.7%	17.4%	20.0%	20.1%	18.9%	20.3%	20.1%	21.5%	22.9%	22.6%
EBIT	75.7	29.2	54.7	75.7	84.1	79.2	104.4	136.9	153.5	198.9	236.5
Margin	17.8%	8.5%	12.9%	16.0%	15.9%	14.3%	15.5%	15.3%	16.6%	18.3%	18.5%
Net Profit	40.2	14.0	27.4	42.6	53.2	44.1	57.7	118.3	94.5	135.7	173.2
Margin	9.5%	4.1%	6.4%	9.0%	10.1%	7.9%	8.6%	13.1%	10.2%	12.5%	13.5%
Free Cash flow	22.1	63.1	57.0	30.9	38.6	34.3	38.3	85.2	89.9	93.6	82.2
Net Fin. Debt	200.5	186.5	134.9	121.6	66.1	100.3	178.8	265.1	271.5	304.3	260.1
(net of treasury stock and including commitments for purchase of investments)
Shareholder's Equity	178.0	242.8	291.5	315.2	396.9	432.9	466.6	622.6	677.5	764.7	868.2
Debt/Equity	1.13	0.77	0.46	0.39	0.16	0.23	0.38	0.42	0.40	0.40	0.30

Continuing operations only

Free Cash Flow (12 Months)
(euro/million)	2009	2010	2011	2012	2013	2014	2015	2016	2017	2018
Cash Flow from Operations	25.2	54.6	60.8	65.6	65.3	95.8	120.2	138.0	172.4	210.2
Change in Trade Working Capital	44.4	10.1	(21.8)	(12.3)	(1.7)	(23.7)	(6.6)	(12.2)	(30.8)	(61.4)
Capex	(9.2)	(8.7)	(11.8)	(15.8)	(29.8)	(34.1)	(28.9)	(36.5)	(47.8)	(68.2)
Other	2.7	1.0	3.7	3.6	0.5	0.3	0.5	0.7	(0.3)	1.6
Free Cash Flow	63.1	57.0	30.9	38.6	34.3	38.3	85.2	89.9	93.6	82.2

Purchases as a % of sales (yearly figures)

Procurement costs are well under control and do not reflect increases in raw material prices Long-term decrease of purchases on sales reflects increases in efficiency and acquisition of less material-intensive businesses

The Manager in charge of preparing the company's financial reports declares, pursuant to paragraph 2 of Article 154-bis of the Consolidated Law on Finance, that the accounting information contained in this presentation corresponds to the document results, books and accounting records.

S.Ilario d'Enza, November 8, 2019

Carlo Banci

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