TOMRA Systems — Earnings Release 2022

Jul 15, 2022

2 nd quarter 2022 results announcement

Click to enter name Place dd.mm.yy TOMRA Systems ASA 15 July 2022 © TOMRA

Financial highlights

e

Revenues	• All-time high revenues of 3,054 MNOK (2,685 MNOK in second quarter 2021) Adjusted for currency, revenues were: - Up 10% for TOMRA Group - Up 6% in Collection - Up 25% in Recycling - Up 7% in Food
Gross margin	• Gross margin 42% (down from 45% in second quarter 2021) - Lower margins in Collection and Recycling, and higher margins in Food
Operating expenses	• Operating expenses of 841 MNOK (746 MNOK in second quarter 2021) - Business expansion and continued investment in future oriented activities
EBITA	• EBITA of 438 MNOK – down from 465 MNOK in second quarter 2021
Cash flow	• Cash flow from operations of 310 MNOK – compared to 286 MNOK in second quarter 2021
Order intake	• All time-high order intake of 1,718 MNOK in Recycling and Food - Up 15% currency adjusted compared to second quarter 2021, - Continued good momentum in both divisions, with Recycling up 19% and Food up 12% in comparable currencies - All-time high order backlog of 2,360 MNOK, up 14% currency adjusted compared to end of second quarter 2021
Other	• Inflation and supply chain challenges have continued to be a pressure point • Good pipeline building from trade shows and sales events

Collection Business update

Contract extension in New South Wales, Australia, until late 2026

• Duration of the contract extension is 4 years
• Commitment to increase collection points across NSW
• Over 7 billion containers collected since launch
• 69% collection rate in 1Q22

Highlights

• Good momentum in second quarter
• European sales were close to last year levels, where new sales in Romania contributed positively
• Positive volume development in North America, volume ramp-up in Latvia, while some challenges in Australia due to heavy rainfall
• Established subsidiaries in Türkiye, Hungary, Poland, Bulgaria, and Serbia

The Netherlands – 1 January 2023 (expansion)

From January 1, 2023, The Netherlands will extend their deposit system to include cans, which are planned to be collected via retail (link).

Romania – 2022-2023

Romania passed the government decision to introduce a deposit system, the implementation timeline being 2022-2023 (link).

Scotland – 16 August 2023

In May 2020, Scotland approved deposit regulations and in Dec 2021, the implementation date was set to August 16th, 2023 (link).

Victoria and Tasmania – mid 2023

In April 2021, Victoria announced DRS introduction. In March 2022, the Tasmanian bottle bill passed the Parliament and became law (link and link).

Quebec – 1 November 2023

On June 14th, 2022, the state of Quebec approved the final regulations for the expansion and modernization of the current deposit system (link).

Ireland – 2023

On November 17th, 2021, Ireland approved DRS regulations. The start date and deposit value have not yet been communicated (link).

Connecticut – 2023 and 2024 (expansion)

In Jun 2021, Connecticut decided to expand their deposit system to include most carbonated beverages from 2023 and raise the deposit value to 10¢ from 2024 (link).

Austria – January 2025

In November 2021, Austria announced the introduction of deposit on single-use beverage containers, with start date January 1st, 2025 (link).

in comparable currencies Recycling Business update

Highlights

• Continued high demand levels for recycled material
• Recycled polymer prices decoupling from the virgin material market
• Successful IFAT 2022 held in May in Munich largest trade fair for environmental technologies

All-time high order intake, up 19%*

^*growth rate expressed in comparable currencies

Product launch: new X-TRACT for aluminum recovery and processing

Illustration1) of price development of virgin PET and recycled PET (rPET)

PET = virgin-derived polyethylene terephthalate rPET= recycled polyethylene terephthalate (comparable to virgin PET)

Food Business update ^{713 748}

Order intake up 12%* compared to same quarter last year

• Good demand signals both in Fresh Food and Processed Food
• Strong order intake development in the Citrus category for the quarter and first half year
• Good investment level in vegetables and fresh cut within the Processed Food segment

Highlights

• All-time high order intake and order backlog in second quarter 2022
• Customer delivery timelines stabilized
• Good pipeline building with the return of trade fairs and physical marketing activities
• Support for investment in the food supply chain

*growth rate expressed in comparable currencies

Group P&L Highlights

	nd 2 Quarter			st 1 Half Year
Amounts in NOK million	2022	2021	2021 Adj*	2022	2021	2021 Adj*
Revenues	3,054	2,685	2,781	5,555	4,976	5,062
Collection	1,519	1,379	1,427	2,913	2,743	2,783
Recycling	552	439	440	1,041	757	751
Food	983	867	915	1,601	1,476	1,527
Gross contribution in %	1,279 42%	1,211 45%	1,255 45%	2,275 41%	2,184 44%	2,230 44%
Operating expenses	841	746	757	1,600	1,479	1,485
EBITA in %	438 14%	465 17%	498 18%	675 12%	705 14%	745 15%

Collection P&L Highlights

	nd 2 Quarter			st 1 Half Year
Amounts in NOK million	2022	2021	2021 Adj*	2022	2021	2021 Adj*
Revenues	1,519	1,379	1,427	2,913	2,743	2,783
Northern Europe	240	215		485	418
Europe (ex Northern)	569	596		1,142	1,222
North America	506	412		900	770
Rest of the world	204	156		386	333
Gross contribution in %	572 38%	603 44%	623 44%	1,110 38%	1,176 43%	1,189 43%
Operating expenses	347	325	333	678	642	648
EBITA in %	225 15%	278 20%	291 20%	433 15%	534 19%	541 19%

Recycling P&L Highlights

	nd 2 Quarter			st 1 Half Year
Amounts in NOK million	2022	2021	2021 Adj*	2022	2021	2021 Adj*
Revenues	552	439	440	1,041	757	751
Europe	363	264		672	464
Americas	90	40		184	105
Asia	61	99		108	129
Rest of the world	37	36		77	59
Gross contribution in %	273 49%	234 53%	233 53%	509 49%	393 52%	391 52%
Operating expenses	172	140	139	319	276	272
EBITA in %	100 18%	94 21%	94 21%	190 18%	117 15%	119 16%

Based upon current production and delivery plans, the revenues in 3Q22 are estimated to be approximately 65% of order backlog at the end of 2Q22

Food P&L Highlights

	nd 2 Quarter			st 1 Half Year
Amounts in NOK million	2022	2021	2021 Adj*	2022	2021	2021 Adj*
Revenues	983	867	915	1,601	1,476	1,527
Europe	289	254		429	442
Americas	483	465		794	725
Asia	114	63		190	111
Rest of the world	97	85		187	198
Gross contribution in %	434 44%	374 43%	400 44%	656 41%	615 42%	649 42%
Operating expenses	283	252	256	532	504	507
EBITA in %	151 13%	122 14%	144 16%	124 8%	111 8%	142 9%

Based upon current production and delivery plans, the revenues in 3Q22 are estimated to be approximately 70% of order backlog at the end of 2Q22

[NOK millions] Balance sheet and cash flow

	30 June	31 Dec
Amounts in NOK million	2022	2021	2021
ASSETS	13,242	11,281	11,589
Intangible non-current assets	3,949	3,810	3,790
Tangible non-current assets	2,481	2,226	2,197
Financial non-current assets	420	393	347
Inventory	2,203	1,673	1,883
Receivables	3,414	2,665	2,740
Cash and cash equivalents	775	514	632
LIABILITIES AND EQUITY	13,242	11,281	11,589
Equity	6,115	5,486	6,164
Lease liabilities	1,113	1,028	1,015
Interest-bearing liabilities	2,112	1,654	1,004
Non-interest-bearing liabilities	3,902	3,113	3,406

Cash flow from operations

Cashflow from operations

• Cash flow from operations of 310 MNOK in the second quarter 2022 (286 MNOK in second quarter 2021)

Solidity and gearing

• 46% equity ratio
• NIBD/EBITDA (rolling 12 months) of 1.0x
• o Dividend of total 6.0 NOK/share (of which 3.3 NOK/share ordinary and 2.7 NOK/share extraordinary) paid out in May 2022

Currency risk and hedging policy

Revenues and expenses per currency:

	EUR¹	USD	NOK	OTHER²	TOTAL
Revenues	50 %	30 %	0 %	20 %	100 %
Expenses	50 %	25 %	5 %	20 %	100 %

Assets and liabilities per currency:

	EUR¹	USD	NOK	OTHER²	TOTAL
Assets	45 %	15 %	10 %	30 %	100 %
Liabilities	55 %	15 %	10 %	20 %	100 %
¹ EUR includes DKK		² Most important: AUD, NZD, RMB, CAD, SEK, GBP and JPY			NOTE: Estimated and rounded figures

10% change in NOK towards other currencies will impact:

	Revenues	Expenses	EBITA
EUR*	5.0%	5.0%	5.0%
USD	3.0%	2.5%	6.0%
OTHER2	2.0%	2.0%	2.0%
ALL	10.0%	9.5%	13.0%

Hedging policy

CASHFLOW AND P/L

• TOMRA can hedge up to one year of future predicted cash flows. Gains and losses on these hedges are recorded at the finance line, not influencing EBITA

B/S

• TOMRA only hedges B/S items where exchange rate fluctuations could have P/L impact. Gains and losses on B/S hedging are recorded in accordance with IAS 21 and will normally not have P/L impact

Financial position

Debt maturity profile

• Weighted average debt maturity of 1.5 years
• Interest-bearing bonds are swapped to EUR and is exposed to EUR/NOK exchange rate fluctuations

Current funding sources

• TOMRA has a satisfactory liquidity situation with available unused credit lines of approx. 518 MNOK
• Senior unsecured bonds (no financial covenants) of 1 000 MNOK (swapped to EUR) are listed on Oslo Stock Exchange
• The financial covenant related to the bank debt is minimum equity ratio of 30 %

Outlook

e

Collection	• High activity related to preparation for new markets • Quarterly performance will be dependent upon timing of new initiatives
Recycling	• Positive momentum assumed to continue • Demand for recycled materials is expected to drive growth
Food	• Good demand signals and investment sentiment • The need for automation is expected to create opportunities in both the fresh and processed food segments
Supply Chain	• Supply chain challenges and inflation will continue to be a pressure point • Sourcing shortages and logistical bottlenecks remain a risk area
Currency	• Reporting in NOK and with some NOK cost base, TOMRA will in general benefit from a weak NOK, particularly measured against EUR

Copyright

The material in this Document (which may be a presentation, video, brochure or other material), hereafter called Document , including copy, photographs, drawings and other images, remains the property of TOMRA Systems ASA or third-party contributors where appropriate. No part of this Document may be reproduced or used in any form without express written prior permission from TOMRA Systems ASA and applicable acknowledgements. No trademark, copyright or other notice shall be altered or removed from any reproduction

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 trademark 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.

www.tomra.com

18