Prima Industrie — Interim / Quarterly Report 2019

Nov 8, 2019

BORSA ITALIANA - segmento STAR

COMUNICATO STAMPA

INTERIM REPORT AS AT SEPTEMBER 30, 2019 (in brackets results as at 30/09/2018)

• Consolidated REVENUES at € 307.0 million (-3.6% compared to € 318.3 million);

• EBITDA at € 28.5 million, equal to 9.3% on revenues (substantially stable compared to € 29.3 million, equal to 9.2%);

• EBIT at € 10.7 million (compared to € 17.3 million), down due to impairment and higher amortization;

• NET PROFIT at € 4.1 million, penalized by impairment for €1.2 million (compared to €14.4 million, influenced by the capital gain of €7.2 million for the sale of EPS);

• NET FINANCIAL DEBT at - € 116.0 million, net of € 25.7 million effect from the application of IFRS 16 (compared to € 94.8 million); confirmed is the target of significant reduction within the current year;

• ORDER ACQUISITION at € 299.9 million (-11.7% compared to € 339.5 million, recovering versus the reduction of 21% at 30/06/2019), in particular in the third quarter order acquisition recorded an increase by 11% as against the third quarter of 2018.

* * * * *

Collegno (TO), November 8, 2019 – The Board of Directors of Prima Industrie S.p.A, a company leader in the high technology sector of laser systems and sheet metal processing and electronic components for industrial applications, met today to approve the Interim Report at 30/09/2019.

As at 30/09/2019 Prima Industrie Group had consolidated revenues of 306,951 thousand euro, slightly down (-3.6%) compared with 30/09/2018.

The main economic indicators of the Group, split by Division, are shown below, compared with the corresponding period of the previous year.

It is recalled that data for the first nine months of 2019 include the application of the new "Leases" IFRS16 accounting standard, adopted by the Group applying the simplified retrospective method without restatement of the comparative data.

Values in Euro thousand

Values in Euro thousand
30/09/19	Revenues	Gross Margin	Gross Margin %	EBITDA	EBITDA %	EBIT (*)	EBIT %	NET RESULT (*)
PRIMA POWER	284.674	64.165	22,5%	24.323	8,5%	11.649	4,1%	5.216
PRIMA ELECTRO	38.803	8.416	21,7%	3.614	9,3%	(413)	-1,1%	(453)
CONSOLIDATION	(16.526)	199	1,2%	513	3,1%	(500)	-3,0%	(742)
GROUP	306.951	72.780	23,7%	28.450	9,3%	10.736	3,5%	4.021

( % calculated over the revenues)

(*): for a better comparability of the results, the economic effect deriving from the Goodwill Impairment of the Prima Electro Laser BU (€ 1,014 thousand) was classified under the item "consolidation".

Laser BU (€ 1,014 thousand) was classified under the item "consolidation".
Values in Euro thousand
30/09/18	Revenues	Gross Margin	Gross Margin %	EBITDA	EBITDA %	EBIT	EBIT %	NET RESULT
PRIMA POWER	294.561	68.853	23,4%	26.796	9,1%	17.233	5,9%	7.547
PRIMA ELECTRO	42.853	9.516	22,2%	3.138	7,3%	692	1,6%	7.306
CONSOLIDATION	(19.110)	(563)	-2,9%	(593)	-3,1%	(593)	-3,1%	(431)
GROUP	318.304	77.806	24,4%	29.341	9,2%	17.332	5,4%	14.422

( % calculated over the revenues)

Here follows the consolidated revenues geographical break down at 30/09/2019 compared with the same period of previous year:

Revenues	30/09/19		30/09/18
	Euro thousand	%	Euro thousand	%
EMEA	188.183	61,3	195.804	61,5
AMERICAS	76.873	25,0	77.115	24,2
APAC	41.895	13,7	45.385	14,3
TOTAL	306.951	100,0	318.304	100,0

The table above shows that the Group's sales as at 30/09/2019 (compared with the corresponding period of the previous year) decreased in EMEA (-3.9%) and APAC (-7.7%) while it remained substantially stable in the AMERICAS (-0.3%).

In particular, the Group generated consolidated revenues in the EMEA area for 188,183 thousand euro; the main destination countries were Italy (19.2% of consolidated revenues), Russia and Eastern Europe (9.1% of consolidated revenues), Northern European countries (7.1% of consolidated revenues), Spain and Portugal (6.5% of consolidated revenues) and Germany (6.0% of consolidated revenues).

The share of revenues realized in AMERICAS remained substantially stable compared to 2018.

As far as APAC countries are concerned, revenues decreased compared to 2018, going from € 45,385 thousand to € 41,895 thousand (-7.7%); to note, however, the growth of the Chinese market (10.8% of consolidated revenues).

* * * * *

The EBITDA of the Group at 30/09/2019 is equal to 28,450 thousand euro, equal to 9.3% of revenues (24,384 thousand euro excluding the effects deriving from the application of IFRS 16) against 29,341 thousand euro, equal to 9.2% of revenues at 30/09/2018.

It should be noted that the EBITDA was negatively affected by non-recurring costs equal to 1,640 thousand euro (at 30/09/2018 they amounted to 1,933 thousand euro); therefore the adjusted EBITDA amounts to 30,090 thousand euro (9.8% of revenues). In particular, in the third quarter of the year the adjusted EBITDA amounted to 10,355 thousand euro (approximately 11.2% of the quarter's turnover).

The EBIT of the Group at 30/09/2019 is equal to 10,736 thousand euro, equal to 3.5% of revenues (10,599 thousand euro excluding the effects deriving from the application of IFRS 16) against the 17,332 thousand euro, equal to 5.4% of revenues in the corresponding period of the previous year. This result is affected by:

• amortization of intangible assets of 8,922 thousand euro (of which relating to development costs of 6,827 thousand euro and the trademark entered under the FINN-POWER business combination for 1,385 thousand euro);

• depreciation of tangible assets of 7,643 thousand euro (of which 3,929 thousand euro relating to rights of use recognized in application of the new IFRS 16);

• the impairment of PRIMA ELECTRO's goodwill for 1,014 thousand euro;

• the impairment of a development project previously capitalized by FINN-POWER OY for 135 thousand euro.

The EBIT at 30/09/2019 is penalized by non-recurring costs mainly related to the aforementioned impairment; consequently the adjusted EBIT amounted to 13,525 thousand euro (4.4% of revenues). In particular, in the third quarter the adjusted EBIT amounted to 4,746 thousand euro (5.1% of turnover for the quarter).

The EBT of the Group at 30/09/2019 is positive for 6,039 thousand euro (6,595 thousand euro excluding the effects deriving from the application of IFRS 16) against the 16,594 thousand euro at 30/09/2018.

It should be noted that the EBT at 30/09/2018 included a capital gain deriving from the full disposal of the investment in EPS SA for 7,179 thousand euro and non-recurring charges for 1,885 thousand euro incurred for the refinancing of the Bond and the Club Deal loan.

The EBT of the Group discounts net charges deriving from financial management (including foreign exchange profits and losses) for 4,655 thousand euro (as at 30/09/2018 these were equal to 7,917 thousand euro); it should be noted that financial charges include 692 thousand euro deriving from the application of the new accounting standard IFRS16.

The NET PROFIT of the Group at 30/09/2019 is positive for 4,021 thousand euro (4,442 thousand euro excluding the effects deriving from the application of IFRS 16) against 14,422 thousand euro at 30/09/2018; the Net Result attributable to the Parent Company is 4,113 thousand euro.

* * * * *

At 30/09/2019 the Group's Net Financial Debt is equal to 116,011 thousand euro (net of 25,715 thousand euro deriving from the application of the new accounting standard IFRS 16), compared to 94,797 thousand euro at 30/09/2018 and 74,639 thousand euro at 31/12/2018.

The increase in the debt was caused by the increase in net working capital, which is expected to significantly recover in the coming months.

Below is a breakdown of net financial position:

Values expressed in Euro thousand	30/09/19	31/12/18	30/09/18
NON CURRENT FINANCIAL ASSETS	(4.243)	(4.876)	(3.495)
CASH & CASH EQUIVALENTS	(28.279)	(71.078)	(59.668)
CURRENT FINANCIAL ASSETS	(766)	(367)	(165)
CURRENT FINANCIAL LIABILITIES	47.080	35.846	37.733
CURRENT LEASING LIABILITIES	1.244	1.298	1.247
NON CURRENT FINANCIAL LIABILITIES	94.280	106.405	111.575
NON CURRENT LEASING LIABILITIES	6.695	7.411	7.570
NET FINANCIAL INDEBTEDNESS (before IFRS16)	116.011	74.639	94.797
LEASING LIABILITIES DERIVING FROM IFRS16 FIRST TIME ADOPTION	25.715	-	-
NET FINANCIAL INDEBTEDNESS	141.726	74.639	94.797

During the first nine months of 2019 the Group's order acquisition (including after-sale services) amounted to 299.9 million euro, down 11.7% compared to the 339.5 million euro at 30/09/2018. An improvement in this indicator is therefore evident with respect to the situation at 30/06/2019, where the reduction compared to the corresponding period of the previous year was 21%. In particular, the acquisition of the third quarter showed an increase of 10,8% compared to the third quarter of 2018. Against a marked slowdown in the automotive market, there was a good trend in orders from the aerospace segment and a positive trend in the after-sales market.

The consolidated order backlog (not including the after-sale service) at 30/09/2019 amounted to 153.4 million euro (compared to 188.0 million euro at 30/09/2018).

The Executive Chairman, Gianfranco Carbonato, commented: ""The past nine months were marked by a significant slowdown in the capital goods market which reflected the cyclical trend of the business in which the company operates. Authoritative external sector researches show that the current economic phase, which began in mid-2018, should show signs of recovery starting from the middle of next year. In this context, however, the Group is implementing important cost containment and efficiency recovery measures aimed at giving results starting from the last quarter of the current year and above all in the medium term, without however affecting its own development plans and investment".

"The manager responsible for preparing the company financial reports, Davide Danieli, declares, pursuant to paragraph 2 of Article 154-bis of the Consolidated Finance Law, that the accounting information contained in this press release corresponds to the document results, books and accounting records".

The document containing the Interim Report as at 30/09/2019 shall be filed and made available at the Company registered offices and on the internet site www.primaindustrie.com as well as on the authorized storage mechanism , , within the prescribed time.

* * * * *

The alternative performance indicators used and accompanied by an explanation which reflects their content and basis of calculation are as follows:

• - Revenues at constant currency are determined by applying the prior year average exchange rates to current year's revenues expressed in local currency;
• - EBIT (which corresponds to "Operating income");
• - EBITDA ( "Earnings before interest, taxes, depreciation and amortization"), which is determined by adding to the "Operating Profit" in the financial statements the "Amortization" and the "Impairment and write-downs";
• - EBT (which corresponds to the "Profit before tax");
• - EBITDA, EBIT and EBT Adjusted correspond to the mentioned alternative performance indicators net of non-recurring items;
• - Net Financial Indebtness, includes cash, financial receivables (current and non-current), net of (current and noncurrent) loans and borrowings and of the fair value of derivative The reconciliation with the net financial position required by the Consob communication no. DEM/6064293 of 28 July 2006 is reported in the Explanatory Notes of the Interim Financial Report.

PRIMA INDUSTRIE heads a leading Group in developing, manufacturing and marketing of laser systems for industrial applications, sheet metal processing machinery, as well as industrial electronics and laser technologies.

The parent company Prima Industrie S.p.A. is listed on the Italian Stock Exchange since 1999 (MTA- STAR segment). With over 40 years of experience the Group can count on about 13,000 machines installed in more than 80 countries worldwide and is among the main worldwide manufacturers in its own reference market.

The Group has about 1,850 employees and manufacturing sites in Italy (PRIMA INDUSTRIE S.p.A, PRIMA ELECTRO S.p.A), Finland (FINN-POWER Oy), USA (Convergent Photonics Llc, PRIMA POWER LASERDYNE Llc.) and China (PRIMA POWER SUZHOU Co. Ltd.). Remarkable is as well its direct commercial and after-sales presence in BRIC, NAFTA, European Union and other emerging Asian countries.

The Prima Industrie Group is structured on 3 Business Units:

Laser and sheet metal processing machines (Prima Power): including design, manufacturing and marketing of:

• Laser machines for cutting, welding and drilling of 3D and 2D components.

• Machines for sheet metal treatment by means of mechanical tools (punching machines, combined punching/shearing systems, combined punching/laser cutting systems, panel benders and automation systems).

Industrial electronics and laser technologies (Prima Electro): including development, manufacturing and marketing of power and control electronics, and of high-power laser sources for industrial applications, destined both to the Group machines and to third parties.

Additive Manufacturing (Prima Additive): dedicated to the design, production and marketing of turnkey solutions for the main technologies in the field of Additive Manufacturing; Prima Additive's product range includes both Additive Manufacturing technologies: Powder Bed Fusion - PBF (powder bed fusion) and Direct Metal Deposition - DMD (direct deposition of metals), as well as the related application support and services.

For further information:

PRIMA INDUSTRIE S.p.A.	Studio Mailander
Chiara Roncolini Investor Relator tel. 011 4103204 ir@primaindustrie.com	Press Office tel. 011 5527311 Bruno Caprioli 335 5901402 – caprioli@mailander.it Carlo Dotta 333 2306748 – c.dotta@mailander.it

CONSOLIDATED BALANCE SHEET

Values in thousand euro	30/09/2019	31/12/2018
Property, plant and equipment	63.580	36.749
Intangible assets	141.534	145.000
Investments accounted for using the equity method	299	-
Other investments	6.492	6.613
Non current financial assets	4.243	4.876
Deferred tax assets	13.789	11.973
NON CURRENT ASSETS	229.937	205.211
Inventories	153.142	135.863
Trade receivables	93.198	110.757
Other receivables	9.134	8.929
Current tax receivables	4.863	9.667
Derivatives	-	26
Financial assets	766	341
Cash and cash equivalents	28.279	71.078
CURRENT ASSETS	289.382	336.661
Assets held for sale	229	1.234
TOTAL ASSETS	519.548	543.106
Capital stock	26.208	26.208
Legal reserve	5.213	4.992
Other reserves	68.600	69.154
Currency translation reserve	5.522	2.706
Retained earnings	58.954	39.322
Net result	4.113	24.056
Stockholders' equity of the Group	168.610	166.438
Minority interest	3.284	3.334
STOCKHOLDERS' EQUITY	171.894	169.772
Interest-bearing loans and borrowings	121.440	113.180
Employee benefit liabilities	7.571	7.570
Deferred tax liabilities	5.375	5.333
Provisions	197	198
Derivatives	940	636
NON CURRENT LIABILITIES	135.523	126.917
Trade payables	79.188	115.141
Advance payments	31.884	40.545
Other payables	22.230	23.664
Interest-bearing loans and borrowings	52.634	37.028
Current tax payables	5.173	7.117
Provisions	21.022	22.806
Derivatives	-	116
CURRENT LIABILITIES	212.131	246.417
TOTAL STOCKHOLDERS' EQUITY AND LIABILITIES	519.548	543.106

Figures as at 30/09/2019 include the application of the new accounting principle IFRS 16 "Leases" adopted by the Group applying the retrospective semplified approach with no restatement of comparative figures.

CONSOLIDATED INCOME STATEMENT

Values in euro thousand	30/09/2019	30/09/2018
Net revenues	306.951	318.304
Cost of goods sold	(234.171)	(240.498)
GROSS MARGIN	72.780	77.806
Research and Development costs	(19.704)	(18.479)
Sales and marketing expenses	(22.422)	(21.767)
General and administrative expenses	(19.918)	(20.228)
OPERATING PROFIT (EBIT)	10.736	17.332
Financial income	2.131	4.411
Financial expenses	(6.737)	(11.178)
Net exchange differences	(49)	(1.150)
Net result of investments accounted for using the equity method	(19)	-
Net result of other investments	(23)	7.179
RESULT BEFORE TAXES (EBT)	6.039	16.594
Taxes	(2.018)	(2.172)
NET RESULT	4.021	14.422
- Attributable to Group shareholders	4.113	14.652
- Attributable to minority shareholders	(92)	(230)
RESULT PER SHARE - BASIC (in euro)	0,40	1,40
RESULT PER SHARE - DILUTED (in euro)	0,39	1,40
EBITDA	28.450	29.341

Figures as at 30/09/2019 include the application of the new accounting principle IFRS 16 "Leases" adopted by the Group applying the retrospective semplified approach with no restatement of comparative figures.

CONSOLIDATED STATEMENT OF CASH FLOWS

Values in Euro thousand	30/09/2019	30/09/2018
Net result	4.021	14.422
Adjustments (sub-total)	(30.198)	(26.704)
Depreciation, impairment & write-off	17.714	12.009
Gain from sales of shares in other investments	-	(7.179)
Net change in deferred tax assets and liabilities	(1.774)	(1.625)
Change in employee benefits	1	(108)
Change in inventories	(17.279)	(34.673)
Change in trade receivables	17.559	16.820
Change in trade payables and advances	(44.614)	(4.879)
Net change in other receivables/payables and other assets/liabilities	(1.805)	(7.069)
Cash Flows from (used in) operating activities	(26.177)	(12.282)
Cash flow from investments
Acquisition of tangible fixed assets (*)	(5.391)	(4.932)
Acquisition of intangible fixed assets	(637)	(923)
Capitalization of development costs	(4.477)	(4.724)
Net disposal of fixed assets (**)	1.151	62
Investment in Lead Laser	-	(6.131)
Change in investments accounted for using the equity method	(138)	-
Net result of investments accounted for using the equity method	19	-
Write-off/Write-up Other Investments	23	-
Change in Other investments	(5)	7.906
Cash Flows from (used in) investing activities	(9.455)	(8.742)
Cash flow from financing activities
Change in other financial assets/liabilities and other minor items	235	(2.330)
Increases in loans and borrowings (including bank overdrafts)	23.610	108.316
Repayment of loans and borrowings (including bank overdrafts)	(24.690)	(91.147)
Repayments in financial lease liabilities	(3.786)	(1.265)
Dividends paid	(4.569)	(4.193)
Other variations	-	(41)
Cash Flows from (used in) financing activities	(9.200)	9.340
Cash Flows from (used in) change of minority shareholders	-	-
Foreign exchange translation differences	2.033	831
Net change in cash and equivalents	(42.799)	(10.853)
Cash and equivalents beginning of period	71.078	70.521
Cash and equivalents end of period	28.279	59.668

Additional Information to the Consolidated Statement of Cash-Flow	30/09/2019	30/09/2018
Values in euro thousand
Taxes paid	3.966	1.984
Interests paid	2.282	4.617

Figures as at 30/09/2019 include the application of the new accounting principle IFRS 16 "Leases" adopted by the Group applying the retrospective semplified approach with no restatement of comparative figures.

(*) Not included leases and included assets held for sale.

(**) Included assets held for sale.