TOMRA Systems

Earnings Release • Oct 20, 2023

3 rd quarter 2023 results announcement

Click to enter name Place dd.mm.yy TOMRA Systems ASA 20 October 2023 © TOMRA

Financial highlights

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Revenues	• Total revenue of 3,515 MNOK (3,156 MNOK in 3Q 2022). Adjusted for currency, revenues were: — Up 3% for TOMRA Group — Up 11% in Collection — Up 14% in Recycling — Down 18% in Food
Gross margin	• Gross margin improvement to 43% – highest since 2021 — Improvement in all three divisions: Collection, Recycling, and Food (compared to same quarter last year)
Operating expenses	• Operating expenses of 1,092 MNOK adj. for cyberattack costs (848 MNOK in 3Q 2022) — 1,212 MNOK when including 120 MNOK in cyberattack related costs — Increase driven mainly by business expansion and currency — Adjusted for currency and inflation, the cost base has been stable last three quarters
EBITA	• EBITA of 434 MNOK adj. for cyberattack costs, down from 454 MNOK in 3Q 2022. Including cyberattack costs, EBITA was 314 MNOK in the quarter
Cash flow	• Cash flow from operations of -280 MNOK (325 MNOK in 3Q 2022) — Increase in receivables of 1,033 MNOK compared to last year because of delayed invoicing due to the cyberattack
Order intake	• Recycling order intake of 611 MNOK and order backlog of 1,210 MNOK • Food order intake of 651 MNOK and order backlog of 982 MNOK
Other	• Cyberattack in July contained with limited impact on customers. No loss of sensitive date, no data encryption or any ransom demands. Company progressing well toward normal operations. • 30 MEUR (~350 MNOK) cost reduction program initiated in Food

Cyberattack

update TOMRA discovered a cyberattack against the company on 16 July affecting the TOMRA domain and internal IT systems. TOMRA is progressing well toward normal operations.

• Swift actions limited its impact
• No evidence of sensitive data loss, no ransom demands
• Most customer machines remained operational in offline mode
• Manual workarounds kept company operational
• Systems have been validated and restored or rebuilt
• Strengthened security measures implemented

Our strategy is to accelerate growth in core and develop adjacent opportunities while becoming a fully circular business and safe, fair and

inclusive

Our ambitions towards 2027

Revenue growth 15% CAGR

EBITA margin at 18%

Dividend payout 40-60% of EPS

Capital structure Investment grade

Net Zero holistic sustainability strategy

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>105,000 installations

Creating sensor-based solutions for optimal resource productivity - transforming how we obtain, use, and reuse resources

Collection Recycling Food

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100+ countries

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Publicly listed on Oslo Stock Exchange (OSE: TOM)

Collection Business update

• Positive business mix in the quarter and continued improvement in gross margins
• Continuation of new sales in Hungary and Romania, and DRS expansion in Netherlands
• Poland has passed a DRS law with potential of becoming the second biggest market (in Europe) to date
• No DRS legislation on single-use plastic bottles in France for now, but still significant potential for re-use bottles

Continued revenue growth

up 11% (currency adj.) compared with 3Q 2022

Victoria is going live with its container deposit scheme. TOMRA Cleanaway is the network operator for zones 1 and 4 (link). The Tasmanian bottle bill was passed in 2022 with implementation expected in second half 2024 (link).

Quebec – 1 November 2023

First phase of the modernization of Quebec's deposit scheme to include all aluminum beverage containers and increased deposits on existing containers. Further expansion to include all beverage sold in plastic and glass bottles, and cartons in 2025 (link).

Romania – 30 November 2023

Romania is going live with its deposit returns scheme which will include one-way beverage containers made of plastic, metal and glass (link).

Hungary – 1 January 2024

Commencement of the country's deposit return system for glass, plastic bottles and metal cans (link).

Ireland – 1 February 2024

Commencement of a deposit return scheme for glass and plastic bottles and metal cans (link).

Uruguay – December 2024

A deposit return scheme for beverage containers is in process of implementation, planned to commence by the end of 2024 (link).

Austria – 1 January 2025

Introduction of deposit on single-use beverage containers (link).

Poland – 1 January 2025

A DRS law was published by the Government of Poland on 12 September 2023. The legislation mandates deposits on single-use plastic bottles, reusable glass bottles and metal cans (link).

Singapore – 1 April 2025

In March 2023, the parliament passed legislation for a deposit return scheme for beverage containers. (link).

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Recycling Business update

• High activity level in most regions and market segments
• Growth normalizing from high levels over the last couple of years
• Stable metal and polymer prices, but some decline in recycled polymer prices
• EPR schemes continue to drive demand for waste sorting

Price development (illustrative) of virgin PET and recycled PET (rPET)

Continued revenue growth up 14% (currency adj.) compared with 3Q 2022

down 18% (currency adj.) compared with 3Q 2022

• Good performance within processed food
• Continued weak market sentiment in fresh food
• Improvement agenda to focus on increase profitability and customer satisfaction over the next year
• 30 MEUR (~350 MNOK) cost reduction program initiated to increase profitability and customer satisfaction

Fundamental drivers in Food remain sound with market expected to grow 6-7% annually

Food market has strong mid to long term growth drivers

Population growth and rise of the middle class

Need for reduced loss and waste of food

Shift to automation and digital tools

Stricter food safety regulations

New technological developments

TOMRA has a leading position globally within grading and sorting fresh and processed food

²⁰²³ TOMRA Food

Mergers and acquisitions with unrealized synergy potential

Food cost reduction program:

Take advantage of unrealized synergies to increase profitability and customer satisfaction

Customer Satisfaction Profitability Double down on drivers of customer satisfaction and be closer to the customer Leverage our technology capabilities to maintain and strengthen our competitive edge Simplify our organization and processes to increase efficiency Reduce costs with 30 MEUR (~ 350 MNOK) to restore profitability to 10 -11% EBITA margin

Group P&L Highlights

	3rd Quarter			Year-to-Date 9 Months
Amounts in NOK million	2023	2022	2022 Adj*	2023	2022	2022 Adj*
Revenues	3,515	3,156	3,407	10,633	8,711	9,593
Collection	1,896	1,586	1,707	5,676	4,499	4,951
Recycling	822	654	724	2,228	1,695	1,886
Food	797	916	976	2,730	2,517	2,756
Gross contribution	1,527	1,302	1,413	4,478	3,577	3,966
in %	43%	41%	41%	42%	41%	41%
Operating expenses	1,092	848	903	3,231	2,448	2,633
EBITA, adj.	434	454	509	1,247	1,129	1,333
in %	12%	14%	15%	12%	13%	14%
Special items**	-120			-120
EBITA	314	454	509	1,127	1,129	1,333
in %	9%	14%	15%	11%	13%	14%

*2022 actual restated at 2023 exchange rates, estimate

**Cyberattack-related costs, shown here as special items, are booked as Operating expenses in Group Functions in the Financial Statements

Collection P&L Highlights

	3rd Quarter			Months Year-to-Date 9
million Amounts in NOK	2023	2022	Adj* 2022	2023	2022	Adj* 2022
Revenues	1 896 ,	1 586 ,	1 707 ,	5 676 ,	4 499 ,	4 951 ,
Northern Europe	262	214		830	699
(ex Northern) Europe	867	621		2 631 ,	1 763 ,
North America	579	565		605 1 ,	465 1 ,
of the world Rest	189	186		610	572
contribution Gross	767	603	661	2 226 ,	1 713 ,	1 924 ,
in %	40%	38%	39%	39%	38%	39%
Operating expenses	445	335	350	1 319 ,	1 013 ,	1 072 ,
EBITA	322	268	312	907	700	852
in %	17%	17%	18%	16%	16%	17%

Recycling P&L Highlights ^{421 417 493}

	3rd Quarter			Months Year-to-Date 9
million Amounts in NOK	2023	2022	Adj* 2022	2023	2022	Adj* 2022
Revenues	822	654	724	2 228 ,	1 695 ,	1 886 ,
Europe	384	376		1 114 ,	048 1 ,
Americas	172	103		490	287
Asia	142	95		383	203
of the world Rest	123	79		240	157
contribution Gross	441	339	373	1 150 ,	848	937
in %	54%	52%	52%	52%	50%	50%
Operating expenses	237	177	196	692	496	551
EBITA	205	162	177	457	352	385
in %	25%	25%	24%	21%	21%	20%

Based upon current production and delivery plans, the revenues in 3Q23 are estimated to be approximately 70% of order backlog at the end of 3Q23

*2022 actual restated at 2023 exchange rates, estimate

Food P&L Highlights ⁷¹⁹

	3rd Quarter			Months Year-to-Date 9
in million Amounts NOK	2023	2022	Adj* 2022	2023	2022	Adj* 2022
Revenues	797	916	976	2 730 ,	2 517 ,	2 756 ,
Europe	229	287		840	717
Americas	360	365		1 279 ,	1 159 ,
Asia	75	82		235	273
of the world Rest	133	182		376	369
contribution Gross	319	360	378	1 102 ,	1 016 ,	1 106 ,
in %	40%	39%	39%	40%	40%	40%
Operating expenses	353	297	318	1 065 ,	829	899
EBITA	-34	63	60	37	187	207
in %	-4%	7%	6%	1%	7%	7%

Based upon current production and delivery plans, the revenues in 3Q23 are estimated to be approximately 85% of order backlog at the end of 3Q23

*2022 actual restated at 2023 exchange rates, estimate

[NOK millions] Balance sheet and cash flow

	30 Sept	December 31
million Amounts in NOK	2023	2022	2022
ASSETS	15	13	13
	954	744	932
	,	,	,
Intangible	4	4	4
non-current	425	045	132
assets	,	,	,
Tangible	2	2	2
non-current	788	583	671
assets	,	,	,
Financial non-current assets	683	488	448
Inventory	2	2	2
	902	411	370
	,	,	,
Receivables	648	3	3
	4	558	562
	,	,	,
Cash and cash equivalents	508	660	750
LIABILITIES	15	13	13
AND	954	744	932
EQUITY	,	,	,
Equity	7	6	6
	001	531	572
	,	,	,
liabilities Lease	1 427 ,	1 140 ,	1 297 ,
Interest-bearing liabilities	3 371 ,	2 086 ,	2 260 ,
Non-interest-bearing liabilities	4 154 ,	3 987 ,	3 803 ,

Cashflow from operations

• Cash flow from operations of -280 MNOK in the third quarter 2023 (325 MNOK in the third quarter 2022)
• Increase in receivables of 1,033 MNOK compared to last year due to delayed invoicing in the third quarter because of the cyberattack

Solidity and gearing

• 44% equity ratio
• NIBD/EBITDA (rolling 12 months) of 1.74x

Financial position

Debt maturity profile

• Weighted average debt maturity of 2.3 years
• Interest-bearing bonds are swapped to EUR and is exposed to EUR/NOK exchange rate fluctuations

Current funding sources

• TOMRA has unused credit lines of approx. 269 MNOK
• Senior unsecured bonds (no financial covenants) of 1 600 MNOK (swapped to EUR) are listed on Oslo Stock Exchange
  • Green Bonds portion amount to 1 000 MNOK
• The financial covenant related to the bank debt is minimum equity ratio of 30 %

Bonds Unused credit facilities Bank loans

Currency risk and hedging policy

Revenues and expenses per currency:

	EUR	USD	NOK	OTHER1	TOTAL
Revenues	50 %	30 %	0 %	20 %	100 %
Expenses	50 %	25 %	5 %	20 %	100 %

Assets and liabilities per currency:

	EUR	USD	NOK	OTHER1	TOTAL
Assets	45 %	20 %	5 %	30 %	100 %
Liabilities	50 %	15 %	10 %	25 %	100 %

¹ 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%
OTHER1	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

Outlook

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Collection	• High activity related to preparation for new markets • Quarterly performance will be dependent upon timing of new initiatives
Recycling	• The market activity is normalizing after extraordinary high growth in 2022 and 2023 • Demand for recycled materials continues to drive demand for high quality sorting
Food	• Challenging macroeconomic environment and weak harvests are delaying customer investments • Benefits of 30 MEUR (~350 MNOK) cost reduction program expected by end of 2024 • Need for automation and increased quality and safety requirements create opportunities mid and long term
Other	• Pricing actions and cost measures are expected to mitigate continued inflation • Lower risk of sourcing shortages and logistical bottlenecks
Currency	• Reporting in NOK and with some NOK cost base, TOMRA will in general benefit from a weak NOK, particularly against EUR and USD

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

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