Interpump Group — Investor Presentation 2020

Sep 1, 2020

Second Quarter 2020 & Half-Year 2020 Consolidated Results Interpump Group S.p.A.

Table of Contents

Welcome! OurQ2 2020 & H1 2020 Results start on page	3
use an Introduction? See New to the company and could page	8
update on Markets and Diversification Our yearly is on page	17
More information on Growth Strategy Recent M&A and on page	21
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

-9.1% Consolidated Sales:

contained Covid-19 impact also thanks to acquisitions

21.8% EBITDA Margin confirmed top-class resilience in adverse times

Excellent cash generation, mostly due to active reduction of net working capital: € 98 mn Free Cash Flow in six months € 26.6 mn reduction in net debt

€ mn

	H1 19	H120 FY 2018	y/y
Organic growth in sales FX contribution Increase in perimeter			-18.7% -0.1% +9.7%
TOTAL REPORTED SALES	703.2	639.5	-9.1%
EBITDA	162.2	139.2	-14.1%
EBITDA / SALES	23.1%	21.8%
NET INCOME (as reported) Tax rate	92.2 27.5%	63.5 27.1%	-31.2%
NET DEBT	391.0	344.2	- 46.8 mn
COMMITMENTS FOR PURCHASE OF SUBSIDIARIES	40.2	62.4	+ 22.2 mn
TREASURY SHARES (as at 30/06)	3,903,489	1,430,006

€ mn

	Q2 19	Q220 FY 2018	y/y
Organic growth in sales FX contribution Increase in perimeter			-25.9% -0.6% +8.7%
TOTAL REPORTED SALES	359.6	295.6	-17.8%
EBITDA	83.5	64.9	-30.7%
EBITDA / SALES	23.2%	22.0%
NET INCOME (as reported) Tax rate	46.9 27.2%	30.2 26.0%	-35.7%

Quarterly & Half-Year Results by Sector

€ mn

WATER-JETTING	Q220 Q4 18	y/y	H120 FY 2018	y/y
Organic growth in sales FX contribution Increase in perimeter		-14.4% -0.2% --		-8.7% +0.3% +0.1%
TOTAL REPORTED SALES	100.9	-14.6%	209.9	-8.3%
EBITDA	24.9	-22.4%	53.1	-12.5%
EBITDA / SALES net of IFRS16 effect, for comparison only	24.5%		25.2%
HYDRAULICS	Q220 Q4 18	y/y	H120 FY 2018	y/y
Organic growth in sales FX contribution Increase in perimeter		-31.6% -0.7% +12.9%		-23.6% -0.2% +14.4%
TOTAL REPORTED SALES	194.7	-19.4%	429.6	-9.4%
EBITDA	40.0	-22.3%	86.1	-15.1%
EBITDA / SALES	20.5%		20.0%

Sales & EBITDA Trend

€ mn

FINANCIALS

net of Electric Motors (dismissed in 2011) for consistency with current business

Prudent debt policy and satisfactory return on capital employed

Net Debt / EBITDA (12 M)

Net of treasury stock (at book value) and including commitments for purchase of investments

Return On Capital Employed (12M)

Interpump Group

an Italy-based, international industrial manufacturing group

Two business sectors: and

• World leader in high-pressure plunger piston pumps (historical core business)
• Also included in this sector: flow handling components for food, cosmetic and pharmaceutical industry

WATER-JETTING HYDRAULICS

• Wide range of components for mobile and non-mobile hydraulics: PTOs, cylinders, gear pumps, valves, hoses, fittings…
• Also included in this sector: reduction gears, hoses, fittings and piping systems for nonhydraulic applications

STOCK MARKET

• Public company (~75% free float) listed at the Milan Stock Exchange since 1996 (ticker: IP.MI)
• Unique and successful growth story complementing organic growth with numerous bolt-on acquisitions
• Among the largest market caps in the STAR segment
• Constituent of main FTSE MIB index since June 2020

Interpump's distinctive features

• Vertically-integrated manufacturing wherever possible
• Use of general-purpose programmable machine tools; No rigid production lines

• Across the widest possible range of applications, products,

• Standard metal-working processes facilitate outsourcing if needed

Product mix and sales strategies can quickly adapt to actual signals picked from the markets

Standardization and mergers are not absolute goals. They are only pursued when an advantage is evident

• High share of local-for-local production

customers, geographies

• High diversity of business models, corporate structures, geographical extension
• Very decentralized structure, backed by centralized allocation of resources and tight monitoring & control

Preserving identity, brand, local supply chain, sales and workforce; preferably, seller is taken onboard as a minority shareholder

• M&A
• Not just transactions: a joint effort to write the next chapter of a company's story
• Reasonable, "Industrial" multiples paid
• No restructuring costs or related execution risk

• Retention of soft skills and talents

• Exposure to multiple cycles reduces volatility

• Quick and optimal reaction to unexpected growth or adversities

• Acquired companies maintain their identity but shift from entrepreneurial to industrial

• Positive influence on margins

WATER

JETTING High-pressure application examples

FOOD, COSMETICS, PHARMACEUTICAL (in addition to flow handling components) High-pressure homogenizers Water-jet food cutting, slicing, meat separation High-pressure sterilization

CONSTRUCTION Hydro-demolition * Surface preparation * Renewal of armored concrete infrastructures*

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

An asterisk (* ) indicates applications where some Interpump subsidiaries are also able to supply complete turnkey systems

JETTING Main products, companies, brands & websites

June 2020 – Total employees: 1,873

WATER

HYDRAULICS DESCRIPTION OF PRODUCTS Power Take-Offs, Cylinders, Hydraulic motors and gear pumps, Valves (including Directional Control Valves). Rubber hoses, flexible metal hoses, rigid pipes, pipe system design and connection flanges (also for non-hydraulics applications) Linear, Orthogonal and Planetary Reduction Gears for lightweight to very large-scale applications ADDRESSABLE MARKET (est.) > € 50 bn / yr MARKET FEATURES Large and efficient, no room for premium pricing Large share of smaller and/or very specialized players MARKET GROWTH DRIVERS Long-term growth proportional to world GDP, with strong YoY volatility. Very few examples of new or obsolete applications ACQUISITION OPPORTUNITIES Countless one-country or one-product companies that could immediately benefit from becoming part of a larger, international group INTERPUMP COMPETITIVE ADVANTAGES Product range and geographical production footprint allow Interpump to supply the largest OEMs in earth-moving, trucks, agriculture, lifting and handling machinery Diversification reduces YoY volatility; flexibility helps making the most from every market phase. Enlargement of product range through M&A increases visibility and creates cross-selling opportunities 66% of Group sales and 59% of EBITDA in 2019 Business sector overview €

Manufacturing of key components such as Directional Control Valves ensures sticky and long-lasting business relationships

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 Automated assembly lines

LIFTING Mobile and fixed cranes Elevators Forklifts Conveyor belts

DRILLING / TUNNELING Tunnel-boring machines

HYDRAULICS Main products, companies, brands & websites

June 2020 – Total employees: 5,484

Italy, USA, UK, France, Spain, Bulgaria, Slovakia, Mexico, 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

Diversified across every dimension

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

Diversification by application field

2019 Total Turnover: Euro 1,369 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

Geographical breakdown of sales and costs (2019)

Sales Total Costs

International Profile

Focus on emerging markets: a well-balanced presence

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

Different purposes for 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

Thanks to Interpump's approach to M&A, the cost of acquisitions in terms of capital employed is comparable to the one of organic growth...

WATER JETTING

Acquisition & Diversification Timeline

Applications: from cleaning to countless

2020		Servizi Industriali (Macfuge): High-performance centrifugal	separators for fluid purification and clarification
2018		Ricci Engineering: beer-brewing and winemaking equipment and plant design.	Fluinox: flow handling for food cosmetics & pharma with a specific expertise in powders and pastes
2017		Inoxpa: rotative pumps, mixers, blenders, and components for food, pharma & cosmetics. Direct presence in 7 new markets	Mariotti & Pecini: mixers and agitators, including Magna-Safe magnetic transmission
2015		Inoxihp: specific know-how on steel and mining applications.	Bertoli homogenizers: Interpump's first product for the food, cosmetics, and pharma industries.
		NLB: selling and renting high pressure systems to a large and diversified community of customers and contractors
2007		Hammelmann: focus on higher-pressure pumps. Small volumes, higher margins, stronger barriers to entry.
2005	Dismissal of x consumer-oriented cleaning division	Cleaning remains as an application, but focus is concentrated on high-pressure pumps and the development of new applications
2004
…	IPO	High-pressure pumps, pressure washers, and other machines and accessories for household and industrial cleaning
			23

HYDRAULICS

Acquisition & Diversification Timeline

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

2020	Transtecno reduction gears
2019	Hydra Dyne Tech rotary swivels and cylinders Reggiana Riduttori planetary reduction gears
2018	GS-Hydro World leader in non-welded piping systems (design, realization, and maintenance)
2017	Bristol Hose retail & on-site quick service Fluid System 80 hydraulic power packs
2016	Endeavour crimping machines - Tubiflex flexible metal hoses Tekno Tubi shaped rigid pipes - Mega Pacific distribution
2015	Walvoil Valves & DCVs Osper PTOs and cylinders
2013- 2014	Hydrocontrol directional Control Valves (DCV) IMM: flexible rubber hoses and fittings
2011- 2012	Galtech, MTC valves - Takarada PTOs American Mobile Power hydraulic tanks
2008- 2009	Contarini, Modenflex, Cover, Panni, Penta hydraulic cylinders
1999- 2001	Muncie: PTOs Hydroven hydraulic power packs
1997-1998	PZB & Hydrocar, Italian manufacturers of power take-offs (PTO).
		24

Designer and manufacturer of reduction gears and gear motors for light to midpower applications with top-class margins

One step further towards our goal of creating an industrial hub of international relevance in reduction gears

• Headquartered in Bologna, Italy; subsidiaries in China, Netherlands, Spain, USA, Mexico
• Broad range of applications including specific product lines for poultry farming, car wash, and renewable energies
• Unique modular approach to design and distribution reduce the needs for large inventories simplifying the activity of dealers

FY2018 Data
SALES	EUR 45 mn
EBITDA	EUR 8.7 mn (19% of sales)
NET CASH	> EUR 2 mn
TOTAL PRICE PAID (for a 60% stake)	EUR 22 mn + 488,533 Interpump treasury shares

JETTING 2020 Acquisitions: Servizi Industriali

Acquired July 2020

• Designer and manufacturer of centrifugal separators since 1988
• Enhancing the purity of fluids in the food, chemical and pharmaceutical industries, as well as in the energy sector
• Better recycling and disposal of waste products in many industries, improving their environmental impact
• Also employed in biofuel production.

A new, significant addition to our range of fluid handling systems and components

FY2019 Data
SALES	EUR 8 mn (+40% vs. 2018)
EBITDA MARGIN	22%
NET CASH	EUR 0.5 mn
TOTAL PRICE PAID (for an 80% stake)	EUR 4 mn

Updated 31/08/2020

Interpump Stock Performance

Total return to shareholders since the IPO (December 1996): 13.4% per year (assuming dividend reinvestment and participation to the '09 capital increase)

Share price	29.30
Market Capitalization	€ 3.2 bn
Performance 3 M:	+9.0%
Performance 1 Y:	+13.0%
Performance 2 Y:	+8.0%

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

Board of Directors	= independent
Fulvio Montipò	Chairman and CEO
Giovanni Tamburi	Deputy Chairman
Marcello Margotto	Lead Independent Director
Angelo Busani	Minority Director
Antonia Di Bella
Victor Gottardi
Fabio Marasi
Federica Menichetti
Stefania Petruccioli
Paola Tagliavini

Board of Statutory Auditors

Anna Maria Allievi Chair

Roberta De Simone

Mario Tagliaferri

Chief Financial Officer

Carlo Banci

Independent Auditors

EY S.p.A.

Head of Investor Relations

Luca Mirabelli

Synthesis of results

2008	2009	2010	2011	2012	2013	2014	2015	2016	2017	2018	2019	2019 ex-IFRS16
424.5	342.9	424.9	472.3	527.2	556.5	672.0	894.9	922.8	1,086.6	1,279.2		1,368.6
87.0	46.9	74.1	94.7	105.8	105.2	136,1	180.3	198.5	248.6	288.5	317.9	302.4
20.5%	13.7%	17.4%	20.0%	20.1%	18.9%	20.3%	20.1%	21.5%	22.9%	22.6%	23.2%	22.1%
75.7	29.2	54.7	75.7	84.1	79.2	104.4	136.9	153.5	198.9	236.5		247.2
17.8%	8.5%	12.9%	16.0%	15.9%	14.3%	15.5%	15.3%	16.6%	18.3%	18.5%		18.1%
40.2	14.0	27.4	42.6	53.2	44.1	57.7	118.3	94.5	135.7	173.2		180.6
9.5%	4.1%	6.4%	9.0%	10.1%	7.9%	8.6%	13.1%	10.2%	12.5%	13.5%		13.2%
22.1												124.8
200.5	186.5	134.9	121.6	66.1	100.3	178.8	265.1	271.5	304.3	260.1	370.7	298.3
178.0	242.8	291.5	315.2	396.9	432.9	466.6	622.6	677.5	764.7	868.2		1,055.2
1.13	0.77	0.46	0.39	0.16	0.23	0.38	0.42	0.40	0.40	0.30	0.35	0.28
		63.1	57.0	30.9	38.6 (net of treasury stock and including commitments for purchase of investments)	34.3	38.3	85.2	89.9	93.6	82.2

Continuing operations only

Appendix

Free Cash Flow (12 Months)												H1
(euro/million)	2009	2010	2011	2012	2013	2014	2015	2016	2017	2018	2019	2020
Cash Flow from Operations	25.2	54.6	60.8	65.6	65.3	95.8	120.2	138.0	172.4	209.8	233.4	117.3
Adjustment for leases	paid (IFRS16)										(15.3)	(9.5)
Change in Trade Working Capital	44.4	10.1	(21.8)	(12.3)	(1.7)	(23.7)	(6.6)	(12.2)	(30.8)	(60.9)	(20.9)	20.3
Capex	(9.2)	(8.7)	(11.8)	(15.8)	(29.8)	(34.1)	(28.9)	(36.5)	(47.8)	(68.2)	(73.7)	(29.6)
Other	2.7	1.0	3.7	3.6	0.5	0.3	0.5	0.7	(0.3)	1.5	1.3	(0.2)
Free Cash Flow	63.1	57.0	30.9	38.6	34.3	38.3	85.2	89.9	93.6	82.2	124.8	98.3

Procurement costs are well under control and do not reflect increases in raw material prices Long-term trend of purchases on sales reflects increases in efficiency and acquisition of more / 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, September 1, 2020

Carlo Banci

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