Prima Industrie — Investor Presentation 2018

Nov 23, 2018

One day in Venice 2018 – November 23rd

Prima Group at a glance

• Founded in 1977, Prima Industrie is a global leader in high technology laser and sheet metal processing systems and electronic components for industrial applications
• Over 13,000 machines installed in more than 80 countries
• ≈1,800 employees worldwide (~50% in Italy)
• Manufacturing sites in Italy, Finland, USA and China.
• Broad direct commercial and after-sales presence in EU, NAFTA, BRIC and other emerging markets.
• 2017 sales were € 449.5 millions (+14%), of which 85% outside Italy.
• Strong commitment to innovation (R&D is 5.2% of turnover)
• Listed on Italian Stock Exchange (STAR segment) since 1999

Business sectors: Prima Power

Business sectors: Prima Electro

Business sectors: Prima Additive

Sales & service network: EMEA

Sales & service network: APAC & Americas

2015-2019: STRATEGIC ACTIVITIES

Mar 2015 - New Plant in Suzhou (China)

The plant, which covers a surface equal to 8.000 square meters, hosts manufacturing, sale and after-sale activities for a wide set of metal sheet processing machines. in addition to manufacturing area and HQ offices, the plant hosts a large show room destined to welcome Chinese and Asian customers.

Oct 2015 – Diode Fab for Fiber Lasers (Torino)

The high tech laboratories host research activities focused on the field of high power optoelectronic semiconductors for the latest generation of lasers

Focus on CF fiber laser family

May 2016 - New HQ and Technology Center in Torino

The HQTC it is structured in 5000 square meters of which 2500 are dedicated to the corporate offices and 2500 dedicated to the Demo Room and to the hospitality of the customers. The Demo Room hosts 10-12 Prima Power machines, including a whole production line.

Jun 2018 – Investment in Lead Laser Cangzhou (China)

Prima Industrie, through Prima Power brand, already holds a significant share of the Chinese market of high-end machines (3D laser, systems, panel benders), while it still has a limited presence in the market of 2D laser machines. This investment is aimed at increasing the Group's market share in the Chinese market of 2D laser machines, the largest in the world in terms of size and growth rate.

Jun 2018 – New facility in Munich (Germany)

The new location features a large Show Room and well organized areas dedicated to demonstrations, applications, cycle time studies, training, and conferences.

The new location is in the heart of the D-A-CH area, which is strategic for the Group, as it represents the second most important market in Europe after Italy, with 5% of revenues and an installed base of over 1000 machines.

Dec 2018 – R&D + Additive Manufacturing facility in Torino

The facility, structured on approx. 3,300 sqm, represents an extension of the HQTC to host the new Prima Additive division in addition to the R&D employees of laser machines development and relevant labs.

New Additive Manufacturing division

Nov 2018 – Finn-Power Oy new Plant in Seinäjoki (Finland)

Finn-Power OY is constructing a new, modern and more efficient building (factory & offices) in the City of Seinäjoki, replacing current location in Kauhava. The new plant is being builtto-suit by a local municipality finance company and will be rented to Finn-Power. Seinajoki offers a more convenient location in terms of infrastructures, accommodations and hosts several schools and a university.

A history of growth

Revenues

(*) = LTM @ 30/9/18 includes 12 months from 1 Oct 2017 through 30 Sep 2018

Growth is slowing down

In 2017, the global industrial economy was in its strongest position for at least three years, supported by buoyant global trade. But growth has now peaked, and rising trade tensions come at a time when global industrial activity is already slowing. Despite the global industry slowdown, economic fundamentals remain solid, and will support some growth even amid the intensifying trade frictions.

The weakening of the internal and external growth consensus is confirmed: uncertainties related to the American commercial policy, slowing of growth in various European economies, progressive increase in interest rates, generalized climate of mistrust of companies and families. The slowdown in Italian exports is more pronounced than in other European countries. This can be attributed to the less positive performance in some specific sectors (automotive, agricultural machinery, ..) and destination markets (China, Japan, Russia).

IPG Photonics announced that it expects revenue for the 3Q18 to be approximately USD355- 356m vs old estimates of USD360-390m. In addition, the company added that it expects FY revenue growth to be below the 7-9% range provided on July 31, 2018. Management mentioned that the tariff and trade-related headwinds were the primary driver of weaker than expected performance for business in China and Europe.

Customers in China were more cautious due to heightened political and macroeconomic uncertainties, while order intake in the Americas continued to grow.

We are monitoring the global economy's development very closely. There are increasing signs that this long phase of recovery could soon be over. We want to be prepared for that. In the current fiscal year, despite the general slowdown of the global economy, TRUMPF expects to generate business with a similar level of profitability.

COMMON FACTORS HIGHLIGHTED

• Slow-down of investments in China / Trade war effects
• Uncertainty scenario in Italy
• Slow-down of investments of automotive sector

RESILIENCE PHASE THANKS TO DIVERSIFICATION IN:

• Geographic markets
• Industries addressed
• Product portfolio

INTERNAL GROWTH ENGINES

• Fiber laser & Diodes investments: boost in profitability expected
• Lead Laser investment: fully exploit the relationship
• Additive Manufacturing: add on to turnover and profitability

Net financial position trend

€/mio

NFP

M/L term debt refinancing on main operations

Type	Counterparty	Amount (M€)	Interest rate %	Maturity	Timing for reimbursement	Type	Counterparty	Amount (M€)	Interest rate %	Maturity
	INSTITUTIONAL						INSTITUTIONAL
BOND	INVESTOR 1	40	5,875	2022	March 2018	BOND	INVESTOR 2	25	3,50	2025
	IT BANKS
TERM LOAN	CLUB DEAL	23	3,03	2021	March 2018	TERM LOAN	BANK 1	25	2,08	2022
TERM LOAN	FINN BANKS CLUB DEAL	20	Euribor +2,50	2020	December 2017	TERM LOAN	BANK 2	20	1,75	2022
TERM LOANS	SEVERAL BANKS INSTALMENTS	25	Euribor +1,75 average	2018/19	2018/2019	TERM LOANS	SEVERAL BANKS	45	1,50	2022/2023
TOTAL		108	3,70	2018/2022			TOTAL	115	2,10	2022/2025

Banks involved:

Quarterly order intake since 2011

Quarterly backlog since Dec. 2015

	2018				2019					2020
	B. IMI	Mediobanca	B. Akros	Consensus	B. IMI	Mediobanca	B. Akros	Consensus	Company	Mediobanca
	42 (*)	30,5	33,0		42 (*)	36,0	40,0		Business Plan	36,0
	ADD	NEUTRAL	NEUTRAL		ADD	NEUTRAL	NEUTRAL			NEUTRAL
REVENUES	485	475	478	479,3	510	488	497	498,3	500	497
EBITDA	54,81	46	46	48,9	61,2	55	57	57,7	60	57
EBIT	37,95	30	29	32,3	44,34	38	39	40,4	-	39
NET RESULT	32,77	25	23	26,9	31,69	28	26	28,6	-	27
NFP	-54,2	-67	-50	-57,1	-34,8	-46	-42	-40,9	-	-24

(*) = new risk free rate resolved by Banca IMI (3%) would bring new TP to between 30,5 and 39,8 Euros

Released November 6, 2018

Released August 3, 2018

Released November 6, 2018

Machine revenues by application (2017)

Regional Highlights (2017)

Revenues by technology (2017)

A selection from our 2,000 customers ww

A selection from our 2,000 customers ww

Prima Power Solutions for Industry 4.0 and Smart Manufacturing

Ready for today's production needs… and for tomorrow

Intelligent machines and automated factories collecting real-time and historical data through sensors and cameras

Prima Power software comprehensive portfolio of modular software-based systems

INTELLIGENT MACHINES & FACTORIES SMART SOFTWARE REMOTE DIAGNOSTICS & MAINTENANCE

Data-driven machine diagnostics and predictive maintenance services. Production performance analysis, monitoring of machines status and condition.

Highlights from financial statements as at Sep. 30, 2018

Values in €/thousand	ACT 30.09.18	ACT 30.09.17	Change	Change %
Order Intake	339.489	350.977	(11.488)	-3,3%
Backlog	188.041	188.130	(89)	0,0%
Revenues	318.304	300.306	17.998	6,0%
EBITDA	29.341	29.652	(311)	-1,0%
EBITDA%	9,2%	9,9%	-0,7%	-
EBIT	17.332	17.032	300	1,8%
EBIT%	5,4%	5,7%	-0,3%	-
Net Result	14.422	12.131	2.291	18,9%
FCF	(27.754)	(11.760)	(15.994)	-136,0%
Net Financial Position	(94.797)	(103.122)	8.325	8,1%
Headcount	1.846	1.743	103	5,9%

( % calculated over the revenues)

(headcount in units)

Values in €/thousand	ACT 30.09.18	ACT 30.09.17	Change	Change %
Revenues constant FX	327.894	300.306	27.588	9,2%
EBITDA adj	31.274	30.196	1.078	3,6%
EBITDA adj %	9,8%	10,1%	-0,3%	-
EBIT adj	19.574	17.599	1.975	11,2%
EBIT adj %	6,1%	5,9%	0,2%	-

( % calculated over the revenues)

• Revenues up +9,2% at constant exchange rates
• Prima Electro recovery in revenues and margins
• EBIT Adj at 6,1% slightly better than Sep 2017
• Net Profit growth thanks to EPS gain but negatively affected by non recurring costs and refinancing expenses
• Improvement of the NFP; + €8,3 mil compared with Sep'17

Source: company info + official communications to Consob

THANK YOU !