Prima Industrie — Investor Presentation 2018

Jul 3, 2018

1977-2017 : 40 SPARKLING YEARS

Company profile

July 2018

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
• 1,781 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

Prima Group business sectors: Prima Power

LASER MACHINES

SHEET METAL MACHINERY

Prima Group business sectors: Prima Electro

ELECTRONICS

LASER SOURCES

Our presence in the world

OTHER 50+ COUNTRIES SERVED WITH AGENTS & DISTRIBUTORS

2015-2019: 5 years of strong investments

#	INVESTMENT	LOCATION	OPENING DATE	TOTAL AMOUNT
1	New Plant in China	Suzhou (PRC)	March 2015	(1) 6,8 M€
2	Diode Fab for Fiber Lasers	Torino (ITA)	October 2015	7,5 M€
3	HQ and Technology Center	Torino (ITA)	May 2016	(2) 15,0 M€
4	Investment in Lead Laser	Cangzhou (PRC)	June 2018	(3) 6,7M€
5	New Facility in Germany	Munich (GER)	June 2018	(4) 4,0 M€
6	R&D + Additive Manufacturing facility	Torino (ITA)	December 2018	6,0 M€
7	New Plant in Finland	Seinajoki (FIN)	March 2019	(5) 21,0 M€
	TOTAL			67 M€

(1)= 6,8 M€ (equal to the share capital of the newly incorporated company, Prima Power Suzhou) were subscribed for 70% by Prima Industrie and for the remaining 30% by Leeport Machine Tool Co. Ltd.

(2) = Including 5 M€ of machines in the Show Room.

(3) = The investment is carried out through Prima Power Suzhou, so Prima Group cash out is limited to 4,7 M€.

(4) = Including 2 M€ of machines in the Show Room.

(5) = The investments has been financed by the financial company belonging to the city of Seinajoki; Finn-Power Oy will sign a 9-year leasing contract to use the new plant.

Mar 2015 - New Plant in Suzhou (China) – 6.8 M€

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) – 7.5 M€

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

May 2016 - New HQ and Technology Center in Torino – 15.0 M€

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) – 6.7 M€

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) – 4.0 M€

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 – 6.0 M€

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.

Mar 2019 – Finn-Power Oy new Plant in Seinäjoki (Finland) – 21.0 M€

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.

Market trends: machine tool market – by Oxford Economics (update Spring 2017)

Market trends: laser systems market – by Optech Consulting

REVENUE DRIVERS

• Machine Tool market expected growth (Oxford Economics) – cagr 2016-2020: 2%
• Laser market expected growth (Optech Consulting) – cagr 2018-2025: 7.2%
• Success of newly released products
• Strengthening of market coverage in China & Asia

• New HQTC (Headquarters &Tech Center) boosting order intake

• Higher volumes = Operational leverage

• Progressive increase in fiber laser in sourcing
• Diode Fab success in diodes development
• New Additive Manufacturing Division

Net financial position trend

M/L term debt refinancing on main operations

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

Quarterly order intake since 2011

3D CUTTING AREA AT CECOMP CUSTOMER (TURIN AREA)

		2018			2019
	B. IMI	Mediobanca	B. Akros	Consensus	B. IMI	Mediobanca	B. Akros	Consensus	Company
	46,4	39,4	40,0		46,4	39,4	40,0		Business Plan
REVENUES	485	478,5	477	480,2	510	503,5	510,5	508,0	500
EBITDA	54,81	52,3	57	54,7	61,2	60,2	65,4	62,3	60
EBIT	37,95	34,2	41	37,7	44,34	41,2	49,9	45,1	-
NET RESULT	32,77	29	27	29,6	31,69	30,4	33,9	32,0	-
NFP	-54,2	-56,5	-63	-57,9	-34,8	-33,8	-40,4	-36,3	-

Released May 8, 2018 – June 5, 2018

Released May 11, 2018

Released March 27, 2018

Machine revenues by application (2017)

Regional Highlights (2017)

Revenues by technology (2017)

Group Employees

Competitive & Comprehensive product range

State-of-the-art laser and electronic technologies

Focus on CF fiber laser family

CF power available (kW)

A selection from our 2,000 customers ww

• ‣ 5÷6% OF REVENUES INVESTED IN R&D
• ‣RANKED BY EU IN THE TOP 500 KNOWLEDGE-BASED COMPANIES IN THE CONTINENT
• ‣LONG HISTORY OF INNOVATION, 1ST LASER MACHINE FOR AUTOMOTIVE APPLICATION IN 1979
• ‣PIONEERS IN SERVO-ELECTRIC PUNCHING AND BENDING SYSTEMS- EFFICIENCY AND SUSTAINABILITY
• ‣ABOUT 15% OF GROUP STAFF EMPLOYED IN R&D
• ‣PRODUCT RANGE ALWAYS AT THE CUTTING EDGE OF TECHNOLOGY

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.

New Additive Manufacturing division

Metal Additive manufacturing systems

New Additive Manufacturing division

Metal Additive manufacturing main technologies

Direct energy deposition - LENS

Financial statements as at Dec. 31, 2017: Balance sheet

Values in Euro	31/12/2017	31/12/2016
Property, plant and equipment	35.627.751	35.281.369
Intangible assets	149.603.479	155.713.399
Investments accounted for using the equity method	-	1.009.341
Other investments	355.004	139.051
Non current financial assets	9.578	9.578
Deferred tax assets	11.340.432	11.555.324
NON CURRENT ASSETS	196.936.244	203.708.062
Inventories	113.035.328	98.561.165
Trade receivables	113.649.234	88.376.748
Other receivables	8.018.722	6.425.617
Current tax receivables	9.380.123	5.053.888
Derivatives	57.536	-
Financial assets	791.509	791.509
Cash and cash equivalents	70.520.659	62.679.901
CURRENT ASSETS	315.453.111	261.888.828
Assets held for sale	1.111.136	318.812
TOTAL ASSETS	513.500.491	465.915.702

Capital stock	26.208.185	26.208.185
Legal reserve	4.652.958	4.565.082
Other reserves	69.311.022	70.738.752
Currency translation reserve	1.360.295	6.848.598
Retained earnings	27.620.077	19.276.926
Net result	18.515.392	10.102.304
Stockholders' equity of the Group	147.667.929	137.739.847
Minority interest	1.285.839	1.212.065
STOCKHOLDERS' EQUITY	148.953.768	138.951.912
Interest-bearing loans and borrowings	98.396.076	111.675.762
Employee benefit liabilities	7.693.863	8.100.353
Deferred tax liabilities	5.997.482	8.340.653
Provisions	172.119	162.684
Derivatives	80.445	220.866
NON CURRENT LIABILITIES	112.339.985	128.500.318
Trade payables	110.465.363	88.448.383
Advance payments	43.620.216	26.029.170
Other payables	24.950.838	22.076.067
Interest-bearing loans and borrowings	42.524.711	34.894.444
Current tax payables	6.071.926	7.695.264
Provisions	24.573.684	18.424.370
Derivatives	-	895.774
CURRENT LIABILITIES	252.206.738	198.463.472
TOTAL STOCKHOLDERS' EQUITY AND LIABILITIES	513.500.491	465.915.702

Financial statements as at Dec. 31, 2017: P & L

Values in Euro	31/12/2017	31/12/2016
Net revenues	449.503.244	393.885.774
Cost of goods sold	(340.096.252)	(297.902.746)
GROSS MARGIN	109.406.992	95.983.028
Research and Development costs	(12.563.644)	(10.932.964)
Sales and marketing expenses	(29.630.518)	(27.903.449)
General and administrative expenses	(24.034.482)	(21.737.648)
OPERATING GROSS MARGIN (EBITDA)	43.178.348	35.408.967
of which: non recurring items	(1.885.086)	(725.313)
Impairment - Write-off	(23.299)	(1.027.682)
Depreciation	(16.858.918)	(15.853.684)
OPERATING PROFIT (EBIT)	26.296.131	18.527.601
of which: non recurring items	(1.908.385)	(1.752.995)
Financial income	2.760.000	626.831
Financial expenses	(6.786.647)	(8.507.194)
Net exchange differences	(2.973.478)	(349.409)
Net result of investments accounted for using the equity method	-	1.057.207
Net result of other investments (*)	2.555.677	(7.729)
RESULT BEFORE TAXES (EBT)	21.851.683	11.347.307
of which: non recurring items	521.291	(703.517)
Taxes	(3.183.842)	(1.187.184)
NET RESULT	18.667.841	10.160.123
- Attributable to Group shareholders	18.515.392	10.102.304
- Attributable to minority shareholders	152.449	57.819
RESULT PER SHARE - BASIC (in euro)	1,77	0,96
RESULT PER SHARE - DILUTED (in euro)	1,77	0,96

(*) It must be outlined that this figure includes a financial gain deriving from EPS SA sale of share for 2.560 thousand euro. In the Balance Sheet the EPS SA investment is classified in the

Highlights from financial statements as at Mar. 31, 2018

Values in €/thousand	ACT 31.03.18	ACT 31.03.17	Change	Change %
Order Intake	120.510	112.242	8.268	7,4%
Backlog	192.488	164.150	28.338	17,3%
Revenues	95.534	89.483	6.051	6,8%
EBITDA	6.329	6.278	51	0,8%
EBITDA%	6,6%	7,0%	(0,4%)	-
EBIT	2.243	1.979	264	13,3%
EBIT%	2,3%	2,2%	0,1%	-
Net Result	4.659	770	3.889	505,3%
FCF	(20.910)	(16.426)	(4.484)	27,3%
Net Financial Position	(84.659)	(101.122)	16.463	16,3%
Headcount	1.812	1.702	110	6,5%

( % calculated over the revenues)

(headcount in units)

Values in €/thousand	ACT 31.03.18	ACT 31.03.17	Change	Change %
Revenues constant FX	99.628	89.483	10.145	11,3%
EBITDA adj	6.912	6.278	634	10,1%
EBITDA adj %	7,2%	7,0%	0,2%	-
EBIT adj	3.135	1.979	1.156	58,4%
EBIT adj %	3,3%	2,2%	1,1%	-

( % calculated over the revenues)

• Revenues up +11,3% at constant exchange rates
• Prima Electro recovery in revenues and margins
• EBIT (adjusted) improvement (+58%)
• Sustained Net Profit growth thanks to EPS gain but negatively affected by refinancing costs

Shareholding structure

Source: latest dividend payment (May 2017) + official communications to Consob

OLYMPIC TORCHES MADE BY CUSTOMERS WITH PRIMA LASER MACHINES