Orthex Oyj — Earnings Release 2021

May 11, 2021

Orthex Q1: Excellent growth in all product categories and market areas

Orthex Q1: Excellent growth in all product categories and market areas

Orthex Corporation, Stock exchange release, May 11, 2021 at 9.00 a.m. EEST

This release is a summary of Orthex Corporation’s Interim Report January–March
2021. The complete report is attached to this release as a pdf-file. It is also
available on Orthex’s website at https://investors.orthexgroup.com/.

January–March 2021 in Brief

· Invoiced sales increased by 33.5% and was EUR 22.4 million (16.8)
· Net sales increased by 32.4% to EUR 21.6 million (16.3)
· Adjusted EBITDA was EUR 4.3 million (3.0) (adjusted for IPO related costs
EUR 1.3 million)
· EBITA was EUR 2.0 million (1.9)
· Adjusted EBITA was EUR 3.3 million (1.9)
· Adjusted EBITA margin was 15.3% (11.9)
· Operating profit was EUR 2.0 million (1.9)
· Adjusted operating profit increased by 69.5% to EUR 3.3 million (1.9)
· Net cash flows from operating activities were EUR 3.2 million (2.6)
· Earnings per share, basic was EUR 0.08 (0.05)
· Orthex was listed on Nasdaq Helsinki, and the number of shareholders in
Orthex increased to more than 21,400 shareholders after the initial public
offering. Trading in Orthex’s shares started on the pre-list of Nasdaq Helsinki
Ltd on 25 March 2021 and on the official list on 29 March 2021.

Long-Term Financial Targets

As long-term financial targets the company has adopted to an average annual
organic Net sales growth to exceed 5 percent at the Group level and to exceed 10
percent outside the Nordics (growth in local currencies), EBITA margin (adjusted
for items affecting comparability) to exceed 18 percent over time and net debt
to adjusted EBITDA ratio to stay below 2.5x. Leverage may temporarily exceed the
target range (for example, in conjunction with acquisitions).

The company aims to distribute a stable and over time increasing dividend with a
pay-out of at least 50 percent of net profit, in total, on a biannual basis.

Orthex does not publish a short-term outlook.

Key Performance
Indicators
EUR million 1–3/2021 1–3/2020 Change 1–12/2020
Invoiced sales 22.4 16.8 33.5% 77.9
Net sales 21.6 16.3 32.4% 75.9
Gross margin 6.8 4.9 38.2% 24.6
Gross margin, % 31.3% 30.0% 32.4%
EBITDA 2.9 3.0 -1.3% 16.5
EBITDA margin, % 13.6% 18.3% 21.7%
Adjusted EBITDA 4.3 3.0 42.7% 17.1
Adjusted EBITDA 19.7% 18.3% 22.5%
margin, %
EBITA 2.0 1.9 2.6% 12.3
EBITA margin, % 9.2% 11.9% 16.3%
Adjusted EBITA 3.3 1.9 70.0% 12.9
Adjusted EBITA margin, 15.3% 11.9% 17.0%
%
Operating profit 2.0 1.9 1.7% 12.3
Operating profit 9.1% 11.8% 16.2%
margin, %
Net cash flows from 3.2 2.6 21.6% 12.7
operating activities
Net debt / Adjusted 1.5x n/a 2.3x
EBITDA
Adjusted return on 10.4% 6.2% 40.3%
capital employed
(ROCE), %
Equity ratio, % 31.1% 19.3% 22.6%
Earnings per share, 0.08 0.05 60.4% 0.47
basic (EUR)
FTEs 314 277 13.4% 285

Alexander Rosenlew, CEO:

I am happy that Orthex’s first quarter as a listed company was particularly
strong. Demand for our products was high throughout the period and led to very
strong growth both in sales and results on all our key markets. Net sales for
the first quarter was up by 32.4% and amounted to EUR 21.6 million compared to
EUR 16.3 million in quarter one 2020. Strong growth in many of our European key
customers outside the Nordic countries was accomplished by successful roll-out
of our products assortment and product innovations. In this area the invoiced
sales growth was as high as 42.5%. Overall, all our key product categories
performed strongly and our biggest category Storage with the brand SmartStore
continued to deliver fast growing sales. Our second largest category Kitchen
with the GastroMax brand also performed at a convincing 16.7% growth rate. The
smaller categories Home & Yard grew by 31.0% and the Plant Care category fuelled
by good growth in flowerpots made of recycled plastic grew by 69.1%.

Our EBITA development was strong. This is due to strong sales growth, the
scalability of our business model and our efficiency measures. The adjusted
EBITA was EUR 3.3 million compared to EUR 1.9 million in the first quarter of
2020. Tightness of supply of our main raw materials on the market resulted in
fast increasing raw material prices towards the end of the quarter. However, the
increased price level has not yet had a significant impact on gross margin in
the first quarter.

As part of our sustainability strategy we are continuously aiming to reduce our
carbon footprint, and this includes increasing the use of recycled and bio-based
raw materials. Our innovations performed well during quarter one. Especially the
all new stylish series of SmartStore products for recycling and sorting of waste
at home called SmartStore Collect should be mentioned as one of the stars of the
year so far. We published our yearly sustainability report in April where more
details of the development in this important part of our strategy can be read.

During the COVID-19 pandemic, our priority has been to take all necessary
precautions to ensure the safety of our employees. COVID-19 has influenced us,
some major export customers have been closed due to restrictions and that has
limited our amount of sales to these areas for the duration of the store
closures. Customer meetings have been harder to organise and in-store activities
more challenging to implement. We have seen increased demand in the Nordic
countries, probably driven by consumers spending more time at home and less time
and money on travelling. We can also see increase in the development of e
-commerce activities. Measures to keep our employees safe and our factories
operational, have resulted in higher sick absence in production for
precautionary reasons. This comes at an increased cost in the form of over-time
work and temporary personnel. I am happy that our personnel have not been
severely hit by COVID-19 and our safety measures seem to have limited the
spreading of the disease in the organisation. I am especially thankful for all
the positive efforts shown by our personnel during these unusual and
unpredictable circumstances.

Our ambition is to be the best partner for our customers and our highest
priority is to ramp up the capacity in the fastest growing areas of the
assortment. We have sped up the investment pace in new plastic injection
machines, automation, and duplicate moulds. We have already received a total of
3 new injection moulding machines, and there are at least 4 more arriving this
year. The increase in capacity investment is about EUR one million more than
originally planned for the year. Overall, the start of the year has been
positive, but we have to prepare for unpredictable and rising raw material cost
level.
Press conference on financial results

Orthex’s CEO Alexander Rosenlew and CFO Saara Mäkelä will present the Interim
Report on 11 May 2021 at 11:00 a.m. EEST in a webcast.  The webcast can be
joined through this link. (https://orthex.videosync.fi/2021-q1-tulos)  The
webcast presentation will be held in English.

Q&A

Questions to the management can be sent through the meeting chat.

Presentation material

The presentation material will be shared in the online meeting and it can be down
loaded the same day on Orthex’s website at: https://investors.orthexgroup.com/.

Recording of the event

After the event a recording will be available on the company’s
website https://investors.orthexgroup.com/.

Further enquiries

Alexander Rosenlew, CEO, Orthex Corporation
Tel. +358 (0)40 500 3826
alexander.rosenlew@orthexgroup.com

Saara Mäkelä, CFO, Orthex Corporation
Tel. +358 (0)40 083 8782
saara.makela@orthexgroup.com
Orthex in brief

Orthex is a leading Nordic houseware producer that strives to make consumers’
everyday life easier with its products that are presented under the consumer
brands SmartStore™ in storage products, GastroMax™ in kitchenware and Orthex™ in
home and plant care categories. Orthex aims to be the industry forerunner in
sustainability.

Orthex’s net sales in 2020 was 75.9 million euros and operating profit 12.3
million euros. The company has customers in more than 40 countries and local
sales offices in Finland, Sweden, Norway, Denmark, Germany, France, and the
United Kingdom. Orthex is listed on the Nasdaq Helsinki stock exchange.

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