Jacquet Metals — Interim / Quarterly Report 2017

Nov 14, 2017

Third quarter 2017 earnings

9 months

>	Sales	€1,323 m	(+8.6% vs. September 30, 2016)
>	Doubled EBITDA	€83 m	(6.3% of sales)

On November 14, 2017 the Board of Directors chaired by Éric Jacquet examined the consolidated financial statements for the period ended September 30, 2017.

€m	Q3 2017	Q3 2016	30.09.17 9 months	30.09.16 9 months
Sales	412.5	379.2	1 323.2	1 218.8
Gross margin	99.2	95.2	335.2	290.8
% of sales	24.1%	25.1%	25.3%	23.9%
EBITDA1	22.1	15.9	82.8	40.1
% of sales	5.4%	4.2%	6.3%	3.3%
Operating income before non-recurring items 1	16.6	11.7	66.7	25.7
% of sales	4.0%	3.1%	5.0%	2.1%
Operating income	16.8	12.1	66.0	26.6
Net income (Group share)	9.4	5.4	37.1	7.8

¹ Adjusted for non-recurring items. The activity report includes a definition of non-IFRS financial indicators and explains the methods used to calculate them.

Sales and earnings for the period ended September 30, 2017

Group sales amounted to €1,323 million, +8.6% compared to September 30, 2016 (Q3: +8.8%), including the following effects:

Volumes sold -0.7% (Q3: +1,9%),

Price: +9.3% (Q3: +6.9%).

Gross margin amounted to €335 million, representing 25.3% of sales (Q3: 24.1%) compared to 23.9% as of September 30, 2016.

Operating expenses excluding non recurring items have been controlled : +1.3% compared to September 30, 2016 (Q3: -1.1%).

EBITDA came to €82.8 million (Q3: €22.1 million), amounting to 6.3% of sales compared to €40.1 million (3.3% of sales) as of September 30, 2016.

Operating income before non-recurring items amounted to €66.7 million (5% of sales) and net income (Group share) amounted to €37.1 million (2.8% of sales) compared to €25.7 and €7.8 million as of September 30, 2016 respectively.

Financial position

As of September 30, 2017, operating working capital amounted to €394 million, including inventories of €389 million, and represented 23.3% of sales, stable compared to the 2016 year-end and June 30, 2017. Operating cash flow generated by the Group since the beginning of the year amounted to €58 million (compared to €33 million as of September 30, 2016) and capital expenditure amounted to €20 million.

Group net debt stood at €189 million, compared to shareholders' equity of €322 million, resulting in a net debt to equity ratio (gearing) of 59% (69% as of December 31, 2016).

Earnings as of September 30, 2017 by division

	Stainless steel and wear resistant quarto plates		Stainless steel long products		Engineering steels
€m	Q3 2017	30.09.17 9 months	Q3 2017	30.09.17 9 months	Q3 2017	30.09.17 9 months
Sales	90.6	286.6	111.1	351.7	208.5	681.2
Change vs 2016	17.1%	16.3%	7.3%	9.8%	5.8%	4.6%
Price effect	1.3%	9.7%	7.2%	13.4%	8.9%	7.2%
Volume effect	15.8%	6.6%	0.1%	-3.6%	-3.2%	-2.5%
EBITDA 1 2	4.2	17.7	5.5	22.2	8.8	35.3
% of sales	4.6%	6.2%	4.9%	6.3%	4.2%	5.2%
Operating income before non-recurring items 2	2.0	10.9	4.9	20.7	6.9	29.5
% of sales	2.2%	3.8%	4.4%	5.9%	3.3%	4.3%

¹ Non-division operations contributed €3.6 million to Q3 2017 EBITDA, and €7.6 million as of September 30, 2017.

Adjusted for non-recurring items. The activity report includes a definition of non-IFRS financial indicators and explains the methods used to calculate them.

JACQUET – Abraservice This division specializes in the distribution of stainless steel and wear-resistant quarto plates. JACQUET and Abraservice have separate sales networks. The division generates 74% of its sales in Europe and 18% in North America.

Sales amounted to €286.6 million compared to €246.5 million as of September 30, 2016, an increase by +16.3%: Volumes sold rose +6.6% (Q3: +15.8%), prices rose +9.7% (Q3: +1.3%).

The gross margin rate rose 0.3 percentage point to 30.3% of sales (Q3: 29.1%) and came to €86.8 million compared to €74 million as of September 30, 2016.

EBITDA amounted to €17.7 million (Q3: €4.2 million), representing 6.2% of sales, compared to €7.6 million (3.1% of sales) as of September 30, 2016.

STAPPERT This division specializes in the distribution of long stainless steel products in Europe. It generates 41% of its sales in Germany, the largest European market.

Sales amounted to €351.7 million, +9.8% from €320.3 million as of September 30, 2016, an increase by +9.8% : Volumes sold decreased by -3.6% (Q3: +0.1%), prices rose +13.4% (Q3: +7.2%).

The gross margin rate rose 1.1 percentage point to 22.6% of sales (Q3: 20.9%), while the gross margin came to €79.3 million compared to €68.7 million as of September 30, 2016.

EBITDA amounted to €22.2 million (Q3: €5.5 million), representing 6.3% of sales, compared to €13.2 million as of September 30, 2016 (4.1% of sales).

IMS group This division specializes in the distribution of engineering steels, mostly in the form of long products. It generates 48% of its sales in Germany, the largest European market.

Sales amounted to €681.2 million compared to €650.9 million as of September 30, 2016, an increase by +4.6%: Volumes sold decreased by -2.5% (Q3: -3.2%), prices increased +7.2% (Q3: +8.9%).

The gross margin rate rose 2 percentage points to 24.2% of sales (Q3: 23%), while the gross margin came to €164.6 million compared to €144.5 million as of September 30, 2016.

EBITDA amounted to €35.3 million (Q3: €8.8 million), representing 5.2% of sales, compared to €13.8 million (2.1% of sales) as of September 30, 2016. S+B Distribution (the distribution activity acquired from Schmolz+Bickenbach group in July 2015) contributed €13.7 million (3.5% of sales) to EBITDA, compared to €2.1 million as of September 30, 2016.

Key financial information

Income statement

€m	30.09.17 9 months	30.09.16 9 months
Sales	1,323.2	1,218.8
Gross margin	335.2	290.8
% of sales	25.3%	23.9%
EBITDA 1	82.8	40.1
% of sales	6.3%	3.3%
Operating income before non-recurring items 1	66.7	25.7
% of sales	5.0%	2.1%
Operating income	66.0	26.6
Net income (Group share)	37.1	7.8
1 Adjusted for non-recurring items. The activity report includes a definition of non-IFRS financial indicators and explains the methods used to calculate them.

Balance sheet

€m	30.09.17	31.12.16
Goodwill	68.4	68.5
Net non-current assets	151.6	147.6
Net inventory	389.4	376.2
Net trade receivables	209.6	171.3
Other assets	87.9	91.7
Cash	66.0	73.0
Total assets	972.8	928.3
Shareholders' equity	322.1	296.5
Provisions (including provisions for employee benefit obligations)	104.5	112.3
Trade payables	205.1	176.4
Borrowings	258.9	281.2
Other liabilities	82.1	61.8
Total equity and liabilities	972.8	928.3

Cash flow

€m	30.09.17 9 months	31.12.16 12 months
Operating cash flow before change in working capital	67.2	45.3
Change in working capital	(8.8)	(2.2)
Cash flow from operating activities	58.4	43.1
Capital expenditure	(20.2)	(18.3)
Asset disposals	0.9	1.2
Dividends paid to shareholders of Jacquet Metal Service SA	(11.8)	(9.5)
Interest paid	(7.5)	(9.6)
Other movements	(4.0)	1.3
Change in net debt	15.8	8.3
Net debt brought forward	205.3	213.5
Net debt carried forward	189.5	205.3

The activity report may be downloaded from: www.jacquetmetalservice.com

2017 Full year results: March 7, 2018 after close of trading

Jacquet Metal Service is a European leader in the distribution of specialty steels. The Group operates and develops a portfolio of four brands: JACQUET (stainless steel quarto plates), Stappert (long stainless steel products), Abraservice (wear-resistant quarto plates) and IMS group (engineering steels). Jacquet Metal Service employs 3 317 people and has a network of 109 distribution centers across 26 countries spanning Europe, China and North America.

Jacquet Metal Service Thierry Philippe comfi@jacquetmetals.com

NewCap - Investor relations Julien Perez Tel. : +33 1 44 71 94 94 jacquetmetalservice@newcap.fr

Compartment B ISIN : FR0000033904 Reuters : JCQ.PA Bloomberg : JCQ FP