TOMRA Systems — Earnings Release 2022

Feb 24, 2023

4 th quarter 2022 results announcement

Click to enter name Place dd.mm.yy TOMRA Systems ASA 24 February 2023 © TOMRA

Financial highlights

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Revenues	• All-time high revenues of 3,477 MNOK (3,050 MNOK in fourth quarter 2021) Adjusted for currency, revenues were: - Up 7% for TOMRA Group - Up 6% in Collection - Up 4% in Recycling - Up 9% in Food
Gross margin	• Gross margin of 42.4% – down from 43.6% in fourth quarter 2021
Operating expenses	• Operating expenses of 979 MNOK (794 MNOK in fourth quarter 2021) — Driven by business expansion and business optimization initiatives
EBITA	• EBITA of 496 MNOK – down from 535 MNOK in fourth quarter 2021
Cash flow	• Cash flow from operations of 350 MNOK (627 MNOK in fourth quarter 2021) — Mainly explained by change in accounts receivable and accounts payable
Order intake	• Order intake of 1,525 MNOK in Recycling and Food – up 17% compared to fourth quarter 2021 - Good performance in Recycling and positive currency effects
	• Order backlog of 2,048 MNOK – up 17% compared to the same period last year
Other	• Cost inflation has continued to be a pressure point, especially in Collection • The Board proposed an ordinary dividend of NOK 1.80 per share for 2022

Collection Business update

Updates

• All-time high quarterly revenues
• New sales in Romania as retailers prepare for DRS start November 2023
• Installations in The Netherlands in preparation for can deposit extension
• Letter of intent signed with waste concessioner for the supply of 2,000 2,500 machines for Hungary's upcoming deposit system
• New reverse vending concepts at the EuroShop retail trade fair

The Netherlands – 1 April 2023 (expansion)

The Netherlands will extend the current deposit system to include cans as of January 1 st, 2023 (link). The system is planned to be operational from April 1st, 2023 (link).

Scotland – 16 August 2023

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

Romania – 30 November 2023

In 2021, Romania passed the government decision to introduce a deposit system (link). On October 5th, 2022 , the implementation date has been set to November 30th , 2023 (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).

Victoria and Tasmania – 2023

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

Hungary – January 2024

In 2021 Hungary modified its waste laws, one element of which was to ensure that plastic bottles can be returned (link). The waste concessioner has initiated the process of engaging reverse vending technology providers aiming for a start in January 2024.

Ireland – February 2024

On November 17th, 2021, Ireland approved DRS regulations (link). The scheme coordinator has been selected and the start date planned for February 2024 (link).

Austria – January 2025

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

All-time high order intake, up 23% compared with Q4 2021 Recycling Business update

Updates

• Solid order backlog, up 37% compared to 4Q21
• Normalization of demand levels
• Decrease in recycled polymer prices, stable metal prices

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

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

Food Business update

Order intake up 14% compared to Q4 2021

• Good order performance in processed food
• Fresh food orders below last year, partly due to weak harvests
• Signs of postponed projects in the pipeline (one month delay)

Highlights business transformation

Innovation and life-cycle management

Co-development of integrated solutions*)

ICOEL – integrated business partner Europe & Latin America

Direct go-to-market approach – fresh food in Europe & Latin America

Global category management

Streamlined and customer-centric business processes

*) see Spectra in-line inspection solution with Marel (link)

Our strategy is to accelerate growth in core and develop adjacent opportunities

Click to enter name Place Revenue growth 15% CAGR

EBITA margin

at 18%

dd.mm.yy

Dividend payout 40-60% of EPS

Capital structure Investment grade

Net Zero holistic sustainability strategy

Plastic sorting for advanced recycling

TOMRA will invest EUR 50-60 million in building a mid-scale sorting plant:

• Operational 2024-2025
• Located in Germany
• Capacity 80.000 tons p.a.

Mixed waste sorting can save between 9% and 25% of GHG emissions associated with waste (link).

Connecting the value chain

Group P&L Highlights

	th 4 Quarter		Full year
Amounts in NOK million	2022	2021	2021 Adj*	2022	2021	2021 Adj*
Revenues	3,477	3,050	3,257	12,188	10,909	11,290
Collection	1,693	1,481	1,591	6,192	5,738	5,940
Recycling	681	631	653	2,376	1,881	1,890
Food	1,103	938	1,013	3,620	3,290	3,460
Gross contribution in %	1,475 42%	1,329 44%	1,422 44%	5,053 41%	4,789 44%	4,966 44%
Operating expenses	979	794	828	3,427	3,020	3,067
EBITA in %	496 14%	535 18%	594 18%	1,625 13%	1,769 16%	1,899 17%

Collection P&L Highlights

	th 4 Quarter		Full year
Amounts in NOK million	2022	2021	2021 Adj*	2022	2021	2021 Adj*
Revenues	1,693	1,481	1,591	6,192	5,738	5,940
Northern Europe	227	187		927	801
Europe (ex Northern)	768	683		2,531	2,617
North America	480	413		1,944	1,672
Rest of the world	218	198		790	648
Gross contribution in %	634 37%	592 40%	635 40%	2,347 38%	2,412 42%	2,490 42%
Operating expenses	388	346	360	1,401	1,295	1,321
EBITA in %	246 15%	246 17%	276 17%	946 15%	1,117 19%	1,169 20%

Recycling P&L Highlights

	th 4 Quarter		Full year
Amounts in NOK million	2022	2021	2021 Adj*	2022	2021	2021 Adj*
Revenues	681	631	653	2,376	1,881	1,890
Europe	384	386		1,432	1,151
Americas	128	83		415	280
Asia	115	103		318	290
Rest of the world	54	59		212	160
Gross contribution in %	347 51%	338 54%	349 54%	1,195 50%	996 53%	1,003 53%
Operating expenses	206	160	166	702	582	583
EBITA in %	141 21%	178 28%	183 28%	493 21%	414 22%	420 22%

Based upon current production and delivery plans, the revenues in 1Q23 are estimated to be approximately 65% of order backlog at the end of 4Q22

Food P&L Highlights

	th 4 Quarter		Full year
Amounts in NOK million	2022	2021	2021 Adj*	2022	2021	2021 Adj*
Revenues	1,103	938	1,013	3,620	3,290	3,460
Europe	316	174		1,033	911
Americas	449	338		1,608	1,369
Asia	93	161		366	352
Rest of the world	245	265		614	658
Gross contribution in %	495 45%	399 43%	437 43%	1,511 42%	1,381 42%	1,473 43%
Operating expenses	337	254	268	1,167	1,021	1,041
EBITA in %	157 14%	145 15%	169 17%	344 10%	360 11%	432 13%

Based upon current production and delivery plans, the revenues in 1Q23 are estimated to be approximately 60% of order backlog at the end of 4Q22

[NOK millions] Balance sheet and cash flow

	31 December
Amounts in NOK million	2022	2021
ASSETS	13,932	11,589
Intangible non-current assets	4,132	3,790
Tangible non-current assets	2,671	2,197
Financial non-current assets	448	347
Inventory	2,370	1,883
Receivables	3,562	2,740
Cash and cash equivalents	750	632
LIABILITIES AND EQUITY	13,932	11,589
Equity	6,572	6,164
Lease liabilities	1,297	1,015
Interest-bearing liabilities	2,260	1,004
Non-interest-bearing liabilities	3,803	3,406

Cash flow from operations

Cashflow from operations

• Cash flow from operations of 350 MNOK in fourth quarter 2022 (627 MNOK in fourth quarter 2021)

Solidity and gearing

• 47% equity ratio
• NIBD/EBITDA (rolling 12 months) of 1.2x

Dividend

• The Board proposed an ordinary dividend of NOK 1.80 per share

Financial position

Debt maturity profile

• Weighted average debt maturity of 3.1 years
• Interest-bearing bonds are swapped to EUR and are exposed to EUR/NOK exchange rate fluctuations

Current funding sources

• TOMRA has a satisfactory liquidity situation with available unused credit lines of approx. 1 010 MNOK
• Senior unsecured bonds (no financial covenants) of 1 600 MNOK (swapped to EUR) are listed on Oslo Stock Exchange
  • Green Bonds portion amounts to 1 000 MNOK
• The financial covenant related to the bank debt is minimum equity ratio of 30%

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

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	• Positive momentum assumed to continue and normalize from high 2022 levels • Demand for recycled materials is expected to create opportunities
Food	• Stable demand despite tough economic backdrop • Need for automation creates opportunities mid and long term
Other	• Cost inflation will continue to be a pressure point • 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.

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