NORMA Group SE — Interim / Quarterly Report 2015

Aug 5, 2015

NORMA Group

Second Quarter Results 2015

Sales	Strong Q2 2015 with 32.9% y-o-y growth leads to H1 2015 growth of 28.7% y-o-y Sales at EUR 232.9 million in Q2 2015 (Q2 2014: EUR 175.2 million)
EBITA	Record adjusted EBITA of EUR 42.1 million resp. +38.3% y-o-y (Q2 2014: EUR 30.5 million)
Margin	Strong adjusted EBITA margin of 18.1% of sales (Q2 2014: 17.4%)
Equity	Stable equity ratio of 34.2% (31 Dec. 2014: 34.1%) despite dividend payment in May
Operating net cash flow	Excellent operating net cash flow of EUR 37.7 million in Q2 2015 (Q2 2014: EUR 26.4 million)
Guidance	Guidance 2015 confirmed

	Sales Development in EUR million
Sales	2014	2015	Change	Change in %	thereof organic	thereof acquistions	thereof currency
Q1	177.8	221.5	43.7	24.6%	-0.5%	16.8%	8.3%
Q2	175.2	232.9	57.6	32.9%	0.5%	22.7%	9.7%
H1	353.0	454.3	101.3	28.7%	0.0%	19.7%	9.0%

• Flat organic growth as expected due to strong base in H1 2014 (H1 2014: +10.3%)
• Acquisitive growth of 19.7% in H1 2015 from 2014 acquisitions of National Diversified Sales, Inc. and Five Star in USA includes strong organic growth at NDS
• Positive currency effect of 9.0% in H1 2015 will ease off in H2 2015
• Strong organic growth expected in H2 2015: full year guidance confirmed

Shift by region and by way-to-market mainly due to NDS acquisition

• Material costs ratio improved by 130 basis points in Q2 2015 y-o-y and 190 basis points in H1 2015
• Personnel expense ratio improved by 130 basis points in Q2 2015 y-o-y, which leads to flat H1 2015 development

• Change of cost ratios also due to NDS with lower material costs and personnel expenses, but higher OPEX

• Operational adjustments due to acquisition of National Diversified Sales (NDS)

• Total adjustments of EUR 0.26 on EPS level include PPA

in EUR million	Reported	Adjustments*	Adjusted
Sales	454.3		454.3
EBITDA	89.2	2.8 (incl. EUR 0.3 million integration costs & EUR 2.5 million inventory step-ups)	92.0
EBITDA margin (in %)	19.6		20.2
EBITA	77.4	3.9 (incl. EUR 1.1 million depreciation PPA)	81.4
EBITA margin (in %)	17.0		17.9
EBIT	65.1	12.7 (incl. EUR 8.8 million amortization PPA)	77.8
EBIT margin (in %)	14.3		17.1
Net Profit	37.9	8.5 (Post Tax Effect)	46.4
Net Profit margin (in %)	8.3		10.2
EPS (in EUR)	1.19	0.26	1.45

Operating net cash flow
in EUR million	H1/2014	H1/2015	Variance	Q2/2014	Q2/2015	Variance
Adjusted EBITDA	71.2	92.0	+29.2%	34.5	47.5	+37.7%
Δ ± Working capital*	-14.7	-24.0	-62.7%	-2.4	-1.6	+35.3%
Operating net cash flow before investments from operating business	56.5	68.0	+20.4%	32.1	45.9	+43.3%
Δ ± Investments from operating business	-12.1	-18.7	-54.3%	-5.7	-8.2	-42.7%
Operating net cash flow	44.4	49.3	+11.2%	26.4	37.7	+43.5%

• Q2 2015: Strong increase in EBITDA as well as stable working capital and investments lead to excellent increase of operating net cash flow by 43.5%
• H1 2015: Very disciplined working capital management limits outflow despite strong sales growth

• Investments in Q2 2015 mainly for manufacturing facilities in Brazil, China, Germany, Serbia and USA

• Stable net debt* compared to 31 Mar. 2015 despite dividend payment due to excellent cash flow

• Stable equity ratio compared to 31 Dec. 2014 after dividend payment
• Leverage continues to improve post NDS acquisition to 2.2x** (Net debt / LTM EBITDA) due to generated cash flow

* excl. derivative financial liabilities of EUR 23.0 million (31 Dec. 2014: EUR 20.2 million, 31 Mar. 2015: EUR 35.3 million); leverage incl. derivatives: 2.3x; gearing incl. derivatives: 1.0x

** LTM EBITDA includes full year EBITDA from NDS

Sales	Solid organic growth of approx. 4% to 7%, plus approx. EUR 110 million from recent acquisitions
Adjusted EBITA margin	Sustainable margin level as in previous years of more than 17.0%
Dividend	Approx. 30% to 35% of Group adjusted net profit

Appendix Strategy

NORMA Group products		Specific customer requirements driven by megatrends
NORMACLAMP® ~ 45% of sales	Emission reduction	Next global level of emission reduction ramps up in 2013 / 2014 with EURO 6 in Europe and 2014 in USA (EPA 15)
NORMA VPP 138	Weight reduction	Ongoing trend in many industries especially addressed by NORMA Fluid products
NORMACONNECT® ~ 24% of sales	Assembly time reduction	Easy to assemble NORMA Group products help lowering production costs for customers
NORMACONNECT FGR	Leakage reduction	Safely sealed products minimise warranty costs for customers through leak free joints
NORMAFLUID® ~ 31% of sales	Product portfolio	Comprehensive national product portfolio: One-Stop Shopping
FISH Compression Fitting PVC Coupling	Product availability	Superior service level through worldwide presence and regional sales hubs

• Environmental awareness continues to drive tightening emission regulations globally
• Increasingly tighter emission regulations, including in emerging markets

Low-emission alternatives require significantly higher joining technology content at a substantially increased complexity compared to existing/past technologies

EU legislation required CO² fleet average limits

• Low emitting cars (below 50 g/km CO² ) will count as 1.5 vehicles in 2015
• During second stage from 2020 onwards low-emitting cars will be counted as 2 (1.67) in 2020 (2021)

Global Comparison of Fuel Economy
Region Target year		Target year	Duration in years	Fleet Target year 1		Fleet Target year 2		Change in %	CAGR in %
	1	2		according to national law	converted**	according to national law	converted**
EU	2015	2021	6	130 g/km	~130 g/km	95 g/km	~95 g/km	~ -27%	-5.1
US	2016	2025	9	37.8 mpg	~151 g/km	56.2 mpg	~97 g/km	~ -36%	-4.8
China	2015 183 g/km	2020	5	6.9 l/100km	~161 g/km	5.0 l/100km	~117 g/km	~ -27%	-6.2
Japan	2015	2020	5	16.8 km/l	~143 g/km	20.3 km/l	~122 g/km	~ -15%	-3.2
India	2016	2020	4	130 g/km	131 g/km ~130 g/km	113 g/km	~113 g/km	~ -13%	-3.4

* Chart shows emission regulation roadmap for passenger vehicles calculated for gasoline cars (Source: European Commission, ICCT, NORMA Group) ** Fuel economic data is normalized to NEDC gCO² /km

1997 to 2014: 18 years of a successful growth story

NORMA Group expects to grow even faster than its end-markets

Clear global market leader in clamp/connect Excellent growth outlook across EJT market

	Additional growth for Joining Technology market above market growth
Passenger vehicles	add. 2- 4%
Commercial vehicles	add. 2- 4%
Agricultural equipment	add. 2- 4%
Construction equipment	add. 2- 4%
Engines	add. 2- 4%
White goods	Same level
Water management	add. 2- 4%

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	Mission-criticality: Small relative cost –	high impact		Ability to achieve premium pricing
Example: Harvester	Approx. value of joining technology content		 	Basis for premium pricing: Market leadership
Cooling water	c. € 21-26		Technology 
Charged air	c. € 20-25		Quality  Innovation 
Fuel and oil system	c. € 49-60			Tailor-made solutions
Exhaust system	c. € 62-101		 	High switching costs for customers Savings potential for customer
Standard clamps and connectors	c. € 36-44		supplier	mismatches risk of switching
	Total c. € 188-256 (< 0.1%)	Price of harvester: € 350,000

More than 35,000 products, manufactured in 22 locations and sold to more than 10,000 customers in 100 countries Top 5 customers account for only ~17% of 2014 sales

Unique business model with two distinct ways-to-market

• Significant economies of scale in production
• Resident engineers with close contact to international EJT customers
• No. 1 national and international DS service level and DS product portfolio

Engineered Joining Technology (EJT) ~70% of 2014 sales

Innovation and product solution partner for customers, focused on engineering expertise with high value-add

Distribution Services (DS) ~30% of 2014 sales

High quality, branded and standardised joining products provided at competitive prices to broad range of customers

Customised, engineered solutions Patents in nearly 200 patent families B2B

• High quality, standardised joining technology products
• No. 1 product portfolio & service level
• B2C

A world without NORMA Group Customer impact

Sales consolidation effects in EUR million	Date of acquisition		Total	2014	2015
Connectors Verbindungstechnik AG, Switzerland	04/12	Market entry in connecting technology in Pharma & Biotec	16.6	-	-
Nordic Metalblok S.r.l., Italy	07/12	Market consolidation heating and air conditioning clamps	5.2	-	-
Chien Jin Plastic Sdn. Bhd., Malaysia	11/12	Market entry joining elements for water distribution	7.7	-	-
Groen Bevestigingsmaterialen B.V., Netherlands*	12/12	Securing market with national dealer	3.4	-	-
Davydick & Co. Pty. Limited, Australia	01/13	Enforce market position with distribution of water & irrigation systems	3.4	0.1	-
Variant SA, Poland*	06/13	Securing market with national dealer	2.3	1.1	-
Guyco Pty. Limited, Australia	07/13	Enforce market position with distribution of water & irrigation systems	7.2	3.6	-
Five Star Clamps Inc., USA**	05/14	Consolidation of multi industrial engineered clamps	~4.0	3.3	~0.7
National Diversified Sales, Inc., USA**	10/14	Expanding water management product portfolio	~123	13.9	~109
Total			~172.8	22.0	~110

* External Sales

** depending on FX movement USD / EUR

M&A	Acquisition of National Diversified Sales, Inc. (NDS) in October 2014
Business Model	A leading supplier of water management solutions, including products for storm water management, efficient landscape irrigation and flow management
History	In the market for more than 40 years. Based in Woodland Hills, CA, USA
Sales	Approx. USD 127.6 million sales in financial year 2013 (EUR ~ 96 million)
Consoli dation	First time consolidation into NORMA Group after closing in November 2014
Adjustments	M&A related adjustments of EUR 6.9 million within EBITDA plus PPA adjustments of EUR 11.4 million
Margin	Excellent EBITDA margin of NDS comparable to excellent NORMA Group margin

• One of the US-market leaders in innovative water management solutions, headquartered in Woodland Hills, CA, USA
• Robust business model due to broad diversification in terms of end industries, customers and products
• Sustained financial performance and tangible organic growth
• Regulatory initiatives due to increasing environmental concerns, water scarcity and pollution drive demand for water management products

Highly differentiated national distribution and service model specifically tailored to address customers' needs

Large target markets for all NDS application areas nationwide and international

International expansion with mid-term focus

Highly differentiated distribution and service model

• More than 5,000 products
• Over 7,700 customer locations (retail and wholesale customers)
• Two production sites (CA), six warehouses in the US, more than 500 employees
• Overnight shipment for wholesale orders
• 98% on-time delivery

Over 7,700 customer locations Nation-wide presence

• Water management to become a strong column within the NORMA Groups DS business
• Including Malaysia & Australia water management is expected to yield approx. EUR 121 million of Group sales

• Driven by megatrends NORMA Group aims to a mid-term 5 % to 7 % organic growth

• Excellent margin profile comparable to Group margin

• Up to EUR 5 million integration costs within the first 4 quarters expected
• PPA to be published with Q4/2014 results of NORMA Group

* 2013 in brackets; graphic includes full NDS sales for 2014

** NDS, Malaysia & Australia

P = production

D = distribution, sales, competence center

1 Market leader in attractive engineering niche markets with strong growth prospects

• 2 Enhanced stability through broad diversification across products, end-markets and regions
• 3 Engineered products with premium pricing through technology and innovation leadership in mission-critical components
• 4 Strong global distribution network with one-stop-shopping service to specialized dealers
• 5 Significant growth and value creation opportunity through synergistic acquisitions
• 6 Proven track record of operational excellence

1	Continue international expansion of sales network
2	Continue to explore business opportunities in APAC including emission standard change in China
3	Ramp up of second China plant to enable further expansion into domestic and APAC markets
4	Continuous ramp up of plant in Brazil according to volume needs to serve local customers
5	Integration of NDS acquisition and start of exploring cross selling opportunities
6	Continue dialogue with potential M&A targets

Appendix Full Year 2014

Sales	Record sales of EUR 694.7 million (2013: EUR 635.5 million) lead to growth of 9.3%
Adjusted EBITA	Record adjusted EBITA of EUR 121.5 million (2013: EUR 112.6 million)
Margin	th 5 year of high and sustainable adjusted EBITA margin of 17.5% (2013: 17.7%)
Financial Result	Successful refinancing leads to improved interest rate structure and healthy maturity profile
EPS	Strong adjusted EPS of EUR 2.24 (2013: EUR 1.95) Reported EPS incl. one-off acquisition costs on same level as prior year of EUR 1.72 (2013: EUR 1.74)

Equity	Strong balance sheet with an equity ratio of 34.1% (2013: 38.8%) despite dividend payment and higher debt level after two US acquisitions
Net Debt	Net debt* increased to EUR 352.8 million from EUR 138.2 million mainly due to acquisitions
Leverage	Net debt* / adj. EBITDA leverage with 2.5 x (2013: 1.1 x) back to IPO level
Cash Flow	Again record net operating cash flow of EUR 103.2 million (2013: EUR 103.9 million)
Dividend	Dividend proposal to the AGM of EUR 0.75 per share – increase of 7.1% compared to 2013 33.4% or EUR 23.9 million of adjusted net income of EUR 71.5 million
Guidance	Solid organic sales growth of around 4% to 7% plus approx. EUR 110 million from recent acquisitions Sustainable adjusted EBITA margin on the level of the last years of above 17.0%

Page ³⁶ * Net debt excluding non-cash / non-P&L derivative financial liabilities of EUR 20.2 million (2013: EUR 15.3 million)

• EMEA: flat European environment and shrinking heavy truck production is outperformed by higher content due to EURO 6 introduction while DS sales were slightly soft in difficult economies - this leads to a growth of +1.7%
• Americas reported favourable growth of +24.1% including strong organic growth of +15.3%

• Asia-Pacific recorded strongly increased direct sales (+11.6%) which represents 9% of total sales in 2014 or ~ 12% including all NORMA Group exports into the region (sales by destination)

• Organic growth slowed down during the year as expected due to higher previous year comparables

• NDS contributed already with EUR 13.9 million in Q4 2014
• Weakening of the Euro during the year leads to flat full year FX effects after headwinds in H1

	Sales Development in EUR million
Sales	2013	2014	Change	Change in %	thereof organic	thereof currency	thereof acquisitions
Q1	159.3	177.8	+18.5	+11.6%	+12.6%	-2.6%	+1.6%
Q2	163.5	175.2	+11.7	+7.2%	+8.0%	-2.8%	+1.9%
Q3	159.9	165.5	+5.6	+3.5%	+2.4%	+0.2%	+0.9%
Q4	152.8	176.2	+23.4	+15.3%	+2.8%	+2.8%	+9.7%
FY	635.5	694.7	59.2	9.3%	+6.5%	-0.6%	+3.5%

• Strong Q1 2014 as high base for first quarter 2015

• Full year guidance 2015 of approx. 4% to 7% organic growth plus consolidation impacts

• Investments into regions, products and plants lead to slightly higher personnel costs in 2014

• Improved material costs compensates higher personnel expenses in 2014
• Cost ratios expected to stay approx. on level of previous years in 2015

First time operational adjustments after large NDS acquisition in 2014

in EUR million	2010	2011	2012	2013	2014
Reported EBITA	64.9	84.7	105.2	112.1	113.3
+ Restructuring Costs	1.3	1.8	0	0	0
+ Non-recurring/non-period-related items*	15.5	14.8	0	0	6.9
+ Other group and normalized items	0.7	0.2	0	0	0
+ PPA depreciation	3.0	1.2	0.2	0.5	1.3
Adjusted EBITA	85.4	102.7	105.4	112.6	121.5

• First time operational adjustments due to acquisition of National Diversified Sales, Inc.
• Ongoing PPA adjustments plus one offs from NDS acquisition leads to EUR 0.52 adjustments on EPS level

in EUR million	Reported	Adjustments	Adjusted
Sales	694.7	0	694.7
EBITDA	131.5	6.9 (incl. M&A adjustments EUR 4.7 million & Inventory-Step-Ups EUR 2.2 million)	138.4
EBITDA margin	18.9%		19.9%
EBITA	113.3	8.2 (incl. EUR 1.3 million depreciation PPA)	121.5
EBITA margin	16.3%		17.5%
EBIT	97.8	18.3 (incl. EUR 10.1 million amortization PPA)	116.2
EBIT margin	14.1%		16.7%
Financial result	-14.5	5.4 (Partial SFA repayment in January 2014)	-9.1
Net Profit	54.9	16.6 (Post Tax Impact)	71.5
Net Profit margin	7.9%		10.3%
EPS (in EUR)	1.72	0.52	2.24

in EUR million	FY 2014	FY 2015*	FY 2016*
EBITDA level	6.9 (incl. M&A adjustments EUR 4.7 million & Inventory-Step-Ups EUR 2.2 million)	~ 5 (incl. M&A adjustments / Integration costs & Inventory-Step-Ups ~ EUR 2.5 million)	0
EBITA level	8.2 (incl. EUR 1.3 million depreciation PPA)	~ 7 (incl. ~ EUR 2 million depreciation PPA)	~ 2 (incl. depreciation PPA)
EBIT level	18.3 (incl. EUR 10.1 million amortization PPA)	~ 22 (incl. ~ EUR 15 million amortization PPA)	~ 17 (incl. ~ EUR 15 million amortization PPA)
Financial result	5.4 (Partial SFA repayment in January 2014)	0	0
Net Profit	16.6	~ 15	~ 12
EPS (in EUR)	0.52	~ 0.47	~ 0.38

in EUR million	2013			2014
	reported	adjusted	reported	adjusted
Sales	635.5	635.5	694.7	694.7
Gross Profit	371.4	371.4	403.4	405.6
EBITDA	129.3	129.3	131.5	138.4
EBITA	112.1	112.6	113.3	121.5
in %	17.6	17.7	16.3	17.5
EBIT	99.5	107.7	97.8	116.2
in %	15.7	16.9	14.1	16.7
Financial Result	-15.6	-15.6	-14.5	-9.1
Profit before Tax	83.9	92.1	83.4	107.1
Taxes	-28.3	-30.0	-28.5	-35.7
Net Profit	55.6	62.1	54.9	71.5

• Dividend proposal to the shareholders at the AGM on 20 May 2015: EUR 0.75 per share (2014: EUR 0.70)
• Pay-out of EUR 23.9 million for 31,862,400 shares equals 33.4% of adjusted net income of EUR 71.5 million

• General dividend policy of 30% to 35% of adjusted net income

• Higher distribution inventory of NDS

• Improvement in 'old' working capital structure (reverse factoring etc.) lowest level ever
• TWC including higher NDS inventories again on a good level of 18.1%

* in % of sales run rate of EUR 784 million

** excluding NDS = old NORMA Group structure

Equity ratio still solid even on higher balance sheet total after NDS acquisition

* Exchange differences on translation of foreign operations, cash flow hedges and stock options

Targets achieved

• Maturity: Long-term oriented well balanced repayment schedule
• Balanced fixed and floating tranches
• Significant portion issued in USD Natural hedge of USD-based National Diversified Sales-Deal
• Highest interest of European based lenders

Terms

• Volume EUR 209 million
• Tenor 3, 5, 7 and 10 years
• 4fold oversubscribed
• BBB+ / A- internal bank rating achieved
• Average interest rate incl. USD approx. 2.5%
• Average interest terms of the Group at approx. 3%

Lenders

Small European banks (e.g. German Sparkassen, Insurance institutions and European saving banks)

Usage of the funds

General company purpose incl. financing of acquisition of National Diversified Sales in the US

Equity / Debt Ratios
	31.12.2013	31.12.2014	excluding derivatives*	31.12.2013	31.12.2014
Equity Ratio	38.8%	34.1%	Leverage (Net debt* / adjusted LTM EBITDA)	1.1 x	2.5 x
(Equity / Balance Sheet Total)			Gearing (Net debt* / equity)	0.4 x	1.0 x

Pro Forma Maturity Profile (in EUR million) net of SFA repayment

* excludes non cash / non P&L derivative financial liabilities of EUR 20.2 million (31.12.2013: EUR 15.3 million): including leverage = 2.7x; gearing = 1.0x ** SFA 5+1+1 years – repayment earliest 2019

(all amounts in EUR million)	31 Dec 2013	31 Dec 2014	(all amounts in EUR million)	31 Dec 2013	31 Dec 2014
Assets			Equity and liabilities
Non-current assets			Equity
Goodwill / Other intangible assets / Property, plant & equipment	441.5	741.5	Total equity	319.9	368.0
Other and derivative financial			Non-current and current Liabilities
assets / Income tax assets / Deferred income tax assets	9.1	12.8	Retirement benefit obligations / Provisions	24.5	26.6
Total non-current assets	450.6	754.3
Current assets			Borrowings and other financial	332.4	437.2
Inventories	79.8	114.9	liabilities
Other non-financial assets / Income tax assets	9.0	17.2	Other non-financial liabilities	23.8	27.8
Trade and other receivables	90.1	107.7	Tax liabilities and derivative financial liabilities	64.1	138.0
Cash and cash equivalents	194.2	84.3	Trade payables	59.0	80.8
Total current assets	373.1	324.1	Total liabilities	503.8	710.4
Total assets	823.7	1,078.4	Total equity and liabilities	823.7	1,078.4

Operating net cash flow
in EUR million	2011	2012	2013	2014	Variance
EBITDA	117.0	120.8	129.3	138.4	+7.1%
Δ ± Working capital	-19.5	-9.8	5.1	4.4	-13.6%
Operating net cash flow before investments from operating business	97.5	111.0	134.4	142.8	+6.3%
Δ ± Investments from operating business	-30.7	-30.0	-30.5	-39.6	+29.9%
Operating net cash flow	66.8	81.0	103.9	103.2	-0.7%

• Operating net cash flow before investments increased by EUR 8.4 million to a total of EUR 142.8 million in 2014 due to higher EBITDA
• 2014 CAPEX spending extended due to opening of two new plants in China and Brazil and purchase of formerly rented plant and US headquarters at Auburn Hills, in total another excellent cash flow of EUR 103.2 million

Adjusted Operating Net Cash Flow (in EUR million)

Trade working capital (in EUR million)

* in % of sales run rate of EUR 784 million (without NDS acquisition 15.8%)

Free float per July 31, 2015 includes
Ameriprise, USA	9.96%	Mondrian, UK	5.34%
Allianz Global Investors, Germany	5.02%	Select Equity Group, USA	3.27%
BNP Paribas Investment Partners, France	3.15%	The Capital Group Companies, USA	3.05%
BNP Paribas Asset Management, France	3.01%	AXA, France	3.01%
Black Rock, USA	2.99%	T. Rowe Price International, USA	2.89%
NORMA Group Management*	~2.3%

* as of 30 June 2015

Event	Date
Publication Interim Results Q3 2015	04 November 2015
Annual General Meeting in Frankfurt/Main	02 June 2016

Contact
Andreas Troesch
	Vice President Investor Relations
Phone:	+49 6181 6102-741
Fax:	+49 6181 6102-7641
Email:	Andreas.Troesch@normagroup.com
Website:	http://investors.normagroup.com/

This presentation contains certain future-oriented statements. Future-oriented statements include all statements which do not relate to historical facts and events and contain future-oriented expressions such as "believe", "estimate", "assume", "expect", "forecast", "intend", "could" or "should" or expressions of a similar kind. Such future-oriented statements are subject to risks and uncertainties since they relate to future events and are based on the Company's current assumptions, which may not in the future take place or be fulfilled as expected.

The Company points out that such future-oriented statements provide no guarantee for the future and that actual events including the financial position and profitability of the NORMA Group SE and developments in the economic and regulatory fundamentals may vary substantially (particularly on the down side) from those explicitly or implicitly assumed or described in these statements.

Even if the actual results for the NORMA Group SE, including its financial position and profitability and the economic and regulatory fundamentals, are in accordance with such future-oriented statements in this presentation, no guarantee can be given that this will continue to be the case in the future.

Non audited data is based on management information systems and/or publicly available information. Both sources of data are for illustrative purposes only.