TOMRA Systems — Earnings Release 2018

Feb 21, 2019

4 TH QUARTER 2018 RESULTS ANNOUNCEMENT

TOMRA SYSTEMS ASA 4 th Quarter Results 21.02.2019

HIGHLIGHTS FROM 2018

	• Revenues of 8,596 MNOK (7,432 MNOK in 2017) – up 16% Adjusted for currency and acquisitions, revenues were:
Revenues	- Up 11% for TOMRA Group - Up 9% in TOMRA Collection Solutions - Up 14% in TOMRA Sorting Solutions
Gross margin	• Gross margin 43%, up from 42% in 2017 - Stable margins in TOMRA Collection Solutions - Improved margins in TOMRA Sorting Solutions
Operating expenses	• Operating expenses of 2,429 MNOK (2,073 MNOK in 2017) - Higher activity in both business areas + BBC acquisition
EBITA	• EBITA of 1,253 MNOK – up 20% from 2017 adjusted for currencies
Cashflow	• Cash flow from operations of 1,025 MNOK (1,023 MNOK in 2017)
Dividend	• Ordinary dividend of NOK 2.50 plus extraordinary dividend of NOK 2.00, in total NOK 4.50

HIGHLIGHTS FROM THE QUARTER

•	Revenues of 2,467 MNOK (2,041 MNOK in fourth quarter 2017) – up 21% Adjusted for currency and acquisitions, revenues were:
Revenues	- Up 15% for TOMRA Group
	- Up 14% in TOMRA Collection Solutions
	- Up 17% in TOMRA Sorting Solutions
• Gross margin	Gross margin 43%, unchanged from fourth quarter 2017
	- Stable margins in both business areas
•	Operating expenses of 653 MNOK (574 MNOK in fourth quarter 2017)
Operating expenses	- Higher activity in both business areas
	- BBC acquired in 2018
• EBITA	EBITA of 396 MNOK – up 32% from fourth quarter 2018
• Cashflow	Cash flow from operations of 346 MNOK (356 MNOK in fourth quarter 2017)
TOMRA •	Higher activity in all geographies
Collection • Solutions	Queensland live from 1st November 2018
• TOMRA	Order intake of 1,146 MNOK, up from 967 MNOK same period last year (up 14% organic)
Sorting • Solutions	Order backlog of 1,399 MNOK, up from 1,147 MNOK at the end of fourth quarter 2017

UPDATE ON EU SINGLE-USE PLASTICS DIRECTIVE - REINFORCING EU'S LEADERSHIP ROLE ON ENVIRONMENT

Collaboration across plastics value chain

4

CURRENCY

Revenues and expenses per currency:

	EUR*	USD	NOK	NZD	OTHER	TOTAL
Revenues	45 %	45 %	0 %	0 %	10 %	100 %
Expenses	40 %	30 %	5 %	5 %	20 %	100 %
EBITA	50 %	100 %	- 20 %	- 20 %	-10 %	100 %
* EUR includes DKK						NOTE: Rounded figures

FINANCIAL HIGHLIGHTS P&L STATEMENT

	th 4 Quarter			Full year
Amounts in NOK million	2018	2017	17 Adj*	2018	2017	17 Adj*
Revenues	2,467	2,041	2,066	8,596	7,432	7,470
• Collection Solutions	1,141	995	1,004	4,265	3,871	3,901
• Sorting Solutions	1,326	1,046	1,062	4,331	3,561	3,569
Gross contribution	1,049	875	890	3,682	3,141	3,148
in %	43%	43%	43%	43%	42%	42%
Operating expenses	653	574	581	2,429	2,073	2,101
EBITA	396	301	309	1,253	1,068	1,047
in %	16%	15%	15%	15%	14%	14%

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FINANCIAL HIGHLIGHTS BALANCE SHEET, CASH FLOW AND CAPITAL STRUCTURE

	31 Dec	31 Dec
Amounts in NOK million	2018	2017
ASSETS	9,595	8,437
• Intangible non-current assets	3,821	3,412
• Tangible non-current assets	1,276	998
• Financial non-current assets	340	349
• Inventory	1,447	1,197
• Receivables	2,314	1,887
• Cash and cash equivalents	397	594
LIABILITIES AND EQUITY	9,595	8,437
• Equity	5,077	4,594
• Minority interest	159	143
• Interest bearing liabilities	1,524	1,280
• Non-interest bearing liabilities	2,835	2,420

Ordinary cashflow from operations

• 346 MNOK (356 MNOK in fourth quarter 2017)

Solidity

• 53% equity
• NIBD/EBITDA = 0.7x (Rolling 12 months)

IFRS 16 leases: Implementation effect of IFRS 16 expected to be ~1.2 BNOK on the B/S as of first quarter 2019

DIVIDEND

• Target to distribute 40%-60% of EPS as dividend
• Strong cashflow generation from recurring business
• Solid balance sheet

• Easy access to financing

• Board proposal to the Annual General Meeting:

• Ordinary dividend of NOK 2.50
• Extraordinary dividend of NOK 2.00
• Total dividend NOK 4.50

TOMRA COLLECTION SOLUTIONS

HIGHLIGHTS COLLECTION SOLUTIONS

• Deposit introduced 1st November 2018 in Queensland
• Tomra operates 10 Collection Refund Points

INITIATIVES ON NEW CONTAINER DEPOSIT MARKETS

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COLLECTION SOLUTIONS FINANCIALS

	4th Quarter			Full year
Amounts in NOK million	2018	2017	17 Adj*	2018	2017	17 Adj*
Revenues	1,141	995	1,004	4,265	3,871	3,901
• Northern Europe	154	180		611	614
• Europe (ex Northern)	465	407		1,710	1,671
• North America	403	377		1,605	1,520
• Rest of the world	119	31		339	66
Gross contribution	452	401	403	1,751	1,601	1,614
in %	40%	40%	40%	41%	41%	41%
Operating expenses	273	266	271	1,025	895	909
EBITA	179	135	132	726	706	705
in %	16%	14%	13%	17%	18%	18%

TOMRA SORTING SOLUTIONS

HIGHLIGHTS SORTING SOLUTIONS

• Revenues equaled 1,326 MNOK in fourth quarter 2018, up from 1,046 MNOK in fourth quarter 2017

– Adjusted for currency and acquisitions, revenues were up 17%

– Includes BBC revenues of 84 MNOK in fourth quarter 2018

Gross margin

Revenues

• Gross margin 45%
• Unchanged from fourth quarter 2017

EBITA

• EBITA of 237 MNOK (182 MNOK in fourth quarter 2017)

Orders

• Order intake of 1,146 MNOK, up from 967 MNOK same period last year (+14% organic)
• Order backlog of 1,399 MNOK, up from 1,147 MNOK at the end of fourth quarter 2017

BUSINESS STREAM UPDATE

FOOD

• Revenues in 4Q18 improved significantly compared to 4Q17
• Order intake up quarter over quarter
• BBC consolidated from 1 March 2018, ending fourth quarter with a backlog of 53 MNOK

RECYCLING

• Revenues in 4Q18 stable compared to 4Q17,
• Order intake stable quarter over quarter
• Order backlog significantly up from end of 4Q17

MINING

• Both revenues, order intake and backlog improved in Mining

SORTING SOLUTIONS FINANCIALS

	4th Quarter			Full year
Amounts in NOK million	2018	2017	17 Adj*	2018	2017	17 Adj*
Revenues	1,326	1,046	1,062	4,331	3,561	3,569
• Europe	401	302		1,508	1,182
• North America	442	354		1,466	1,282
• South America	111	51		253	140
• Asia	152	128		491	419
• Oceania	129	117		383	329
• Africa	91	94		230	209
Gross contribution	597	474	487	1,931	1,540	1,534
in %	45%	45%	46%	45%	43%	42%
Operating expenses	360	292	294	1,324	1,114	1,126
EBITA	237	182	193	607	426	408
in %	18%	17%	18%	14%	12%	11%

DEVELOPMENT IN ORDER INTAKE AND ORDER BACKLOG

REVENUES

ORDER INTAKE ORDER BACKLOG

• TOMRA Sorting Solutions (TSS):

• Revenues of 1,326 MNOK, up from 1,046 MNOK last year
• Order intake of 1,146 MNOK in the quarter, compared to 967 MNOK last year
• Despite all time high revenues in the quarter, a strong order intake led to healthy order backlog of 1,399 MNOK by the end of fourth quarter
• Estimated backlog conversion ratio in 1Q19: 75%*

OUTLOOK

Collection Solutions

• Overall stable business
• Increased operating expenses due to preparation for new markets

Sorting Solutions

Currency

• Currently positive momentum in all business streams

• Reporting in NOK and with some NOK cost base, TOMRA will in general benefit from a weak NOK, particularly measured against EUR.
• With significant revenues in USD and costs in EUR and NZD, TOMRA Sorting is exposed to USD/EUR and USD/NZD.

Copyright

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Disclaimer

This Document (which may be a presentation, video, brochure or other material), hereafter called Document, may include and be based on, inter alia, forward-looking information and statements that are subject to risks and uncertainties that could cause actual results to differ. The content of this Document may be based on current expectations, estimates and projections about global economic conditions, including the economic conditions of the regions and industries that are major markets for TOMRA Systems ASA and its subsidiaries and affiliates. These expectations, estimates and projections are generally identifiable by statements containing words such as "expects", "believes", "estimates" or similar expressions, if not part of what could be clearly characterized as a demonstration case. Important factors that could cause actual results to differ materially from those expectations include, among others, changes in economic and market conditions in the geographic areas and industries that are or will be major markets for TOMRA Systems ASA. Although TOMRA Systems ASA believes that its expectations and the Document are based upon reasonable assumptions, it can give no assurance that those expectations will be achieved or that the actual results will be as set out in the Document. TOMRA Systems ASA does not guarantee the accuracy, reliability or completeness of the Document, and TOMRA Systems ASA (including its directors, officers and employees) accepts no liability whatsoever for any direct or consequential loss arising from the use of this Document or its contents. TOMRA Systems ASA consists of many legally independent entities, constituting their own separate identities. TOMRA is used as the common brand or trade mark for most of these entities. In this Document we may sometimes use "TOMRA", "TOMRA Systems", "we" or "us" when we refer to TOMRA Systems ASA companies in general or where no useful purpose is served by identifying any particular TOMRA Company