TOMRA Systems

Earnings Release • Feb 15, 2024

4 th quarter 2023 results announcement

Click to enter name Place dd.mm.yy TOMRA Systems ASA 15 February 2023 © TOMRA

Financial highlights

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Revenues	• Total revenue of 4,123 MNOK (3,477 MNOK in 4Q 2022). Adjusted for currency, revenues were: — Up 10% for TOMRA Group — Up 26% in Collection — Up 18% in Recycling — Down 20% in Food
Gross margin	• Gross margin improvement to 44% – (42% in 4Q 2022). Highest since 2Q 2021. — Improvement in Collection and Recycling and decline in Food on lower volumes (compared to same quarter last year)
Operating expenses	• Operating expenses of 1,179 MNOK adjusted for special items (979 MNOK in 4Q 2022) — Increase driven mainly by business expansion, currency and inflation
EBITA, adj.	• EBITA, adjusted for special items of 626 MNOK, up from 496 MNOK in 4Q 2022.
Special items	• One-off costs of 374 MNOK — 86 MNOK in cyberattack costs — 288 MNOK in Food restructuring
Cash flow	• Cash flow from operations of 1,316 MNOK (350 MNOK in 4Q 2022) — Positive normalization effect after the cyberattack which caused a delay in invoicing
Order intake	• Recycling order intake of 774 MNOK (638 MNOK in 4Q 2022) and order backlog of 1,107 MNOK (965 MNOK in 4Q 2022) • Food order intake of 1,099 MNOK (886 MNOK in 4Q 2022) and order backlog of 1,143 MNOK (1,083 MNOK in 4Q 2022)
Dividend	• Dividend of NOK 1.95 per share proposed by the Board (NOK 1.80 for 2022) — Payout ratio of 54% of adjusted EPS

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

Place dd.mm.yy

• Good performance in all regions both existing and new markets.
• Strong sales in Hungary which went live 1 January 2024, with good sales also coming from Romania and Ireland which recently went live.
• Quebec and six other DRS markets have expanded or modernized their existing DRS system. Agreement signed to equip Quebec Beverage Container Recycling Association (QBCRA) recycling depots with approximately 1,350 machines over the next three years.
• Over 500 TOMRA R1 machines installed in 16 countries so far

Continued revenue growth

up 26% (currency adj.) compared with 4Q 2022

Uruguay – December 2024

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

Tasmania – 2H 2024

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).

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Singapore – 1 April 2025

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

Recycling Business update

• Strong revenue growth in Europe and the Americas, especially within waste sorting
• Softer market sentiment has slowed down growth in order intake
• 25% investment in collaboration partner PolyPerception to offer complementary AI-powered material analysis

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

Continued revenue growth

up 18% (currency adj.) compared with 4Q 2022

Decline in revenues

down 20% (currency adj.) compared with 4Q 2022

• Weak market sentiment continues in fresh food. Processed food continues to perform well, driven by potatoes.
• Good progress on cost reduction program:
  • Save 30 MEUR (~350 MNOK) annually by Q4 2024; one-off restructuring costs of 288 MNOK booked in 4Q 2023
  • Relocating production from New Zealand to Slovakia
  • Closure of 11 sites announced
  • Reduction of 279 FTEs announced
  • On track to deliver 10-11% EBITA margin run-rate at the end of 2024

TOMRA's strategy is to Develop adjacent business through

TOMRA Horizon

We explore and scale up new adjacent business opportunities and alternative business models that leverage our technology and decades of know-how to

• ➢ accelerate growth
• ➢ diversify our business
• ➢ generate steadily growing revenues
• ➢ creating value for customers, shareholders, and society for generations to come

Closing the gap in plastic recycling

Systems for reusable packaging

Close the loop on

textiles

The Rotake system

TOMRA Reuse is developing a full circular value chain and an open managed system to enable reusable takeaway packaging with collection technology at the core

In January 2024, we launched the first ever Rotake system in Aarhus

29 machines

Users pay 5DKK deposit which is refunded upon return to RVM

20,000 cups at launch

Another 50,000 Being delivered in February

Over 40cafés and eateries participating

TOMRA investing 15 million NOK

in Aarhus pilot

Circulation fee (on par with single use)

Rotations required to capture GHG savings

Reuse enabled by technology

Serialized packaging for system integrity and transparency

Automated collection points for user convenience, scalability and seamless deposit refunds

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Reuse addresses the growing problem from increased waste and GHG emissions stemming from single-use packaging

In Europe alone, it is consumed up to ~25bn¹ in takeaway containers each year…

80 million

Tons of waste annually from packaging²

Up to 50% ~1bn 55-75%

Food and beverage containers in public waste bins in cities³

…creating substantial market opportunities for players like TOMRA Reuse…

…relying on key drivers materializing to ensure system scalability and profitability

Est. annual no. of units of reusable cups / containers⁴in 15 EU cities with population of >1m

GHG savings from shifting to reusable cups and food containers5

Regulatory support through bans / incentives

Convenient design to ensure high adoption and return rates

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1. Estimate based on Denmark's Ministry of Environment and Food's report "Markedsanalyse og kortlægning af engangsplastprodukter og deres Alternativer" and study of " Environmental impacts of takeaway food containers" 2. Eurostat (2023) 3. Measured in weight, based on a study from Aarhus Municipality 4. Assuming total population of 30-40 million. 50% adoption rate and 98% return rate. ~50 units consumed / capita (from sources listed in footnote #1). 5. Assessing Climate Impact 2023, Eunomia

Group P&L Highlights

	4th Quarter			Full Year
million Amounts in NOK	2023	2022	Adj* 2022	2023	2022	Adj* 2022
Revenues	4 123 ,	3 477 ,	3 753 ,	14 756 ,	12 188 ,	13 346 ,
Collection	2 306 ,	1 693 ,	1 829 ,	7 981 ,	6 192 ,	6 780 ,
Recycling	877	681	747	3 105 ,	2 376 ,	2 632 ,
Food	938	1 103 ,	1 178 ,	3 668 ,	3 620 ,	3 934 ,
Gross contribution	805 1 ,	1 475 ,	601 1 ,	6 283 ,	053 5 ,	567 5 ,
in %	44%	42%	43%	43%	41%	42%
Operating expenses	1 179 ,	979	1 040 ,	4 410 ,	3 427 ,	3 674 ,
, adj EBITA	626	496	560	1 873 ,	1 625 ,	1 893 ,
in %	15%	14%	15%	13%	13%	14%
items** Special	-374			-494
EBITA	252	496	560	1 379 ,	1 625 ,	1 893 ,
in %	6%	14%	15%	9%	13%	14%

*2022 actual restated at 2023 exchange rates, estimate

**Food restructuring and cyberattack-related costs

Collection P&L Highlights

		4th Quarter		Full Year
million Amounts in NOK	2023	2022	Adj* 2022	2023	2022	Adj* 2022
Revenues	2 306 ,	1 693 ,	1 829 ,	7 981 ,	6 192 ,	6 780 ,
Northern Europe	294	227		124 1 ,	927
(ex Northern) Europe	1 201 ,	768		3 832 ,	2 531 ,
North America	558	480		2 163 ,	1 944 ,
of the world Rest	253	218		862	790
Gross contribution	954	634	697	3 180 ,	2 347 ,	2 621 ,
in %	41%	37%	38%	40%	38%	38%
Operating expenses	537	388	406	1 856 ,	1 401 ,	1 478 ,
EBITA	416	246	292	1 324 ,	946	1 144 ,
in %	18%	15%	16%	16 6%	15 3%	16%

Recycling P&L Highlights ^{413 438}

		4th Quarter		Full Year
Amounts in NOK million	2023	2022	2022 Adj*	2023	2022	2022 Adj*
Revenues	877	681	747	3,105	2,376	2,632
Europe	535	384		1,650	1,432
Americas	198	128		689	415
Asia	79	115		462	318
Rest of the world	65	54		305	211
Gross contribution	457	347	379	1,606	1,195	1,316
in %	52%	51%	51%	52%	50%	50%
Operating expenses	256	206	227	948	702	778
EBITA	201	141	153	658	493	538
in %	23%	21%	20%	21%	21%	20%
Based upon current production and delivery plans, the revenues in 1Q24 are estimated to be approximately 50% of order backlog at the end of 4Q23

17 Revenues [NOK millions] 631 681 877 4Q19 4Q20 4Q21 4Q22 4Q23 Gross margin [NOK millions] EBITA [NOK millions] Order intake 521 638 774 4Q21 4Q22 4Q23 50% 4Q19 54% 4Q20 54% 4Q21 51% 4Q22 52% 4Q23 74 102 178 141 201 4Q19 4Q20 4Q21 4Q22 4Q23 [NOK millions] Order backlog 702 965 4Q21 4Q22 4Q23 1 107 [NOK millions]

*2022 actual restated at 2023 exchange rates, estimate

[NOK millions] Food P&L Highlights

	4th Quarter			Full Year
Amounts in NOK million	2023	2022	2022 Adj*	2023	2022	2022 Adj*
Revenues	938	1,103	1,178	3,668	3,620	3,934
Europe	216	316		1,055	1,033
Americas	248	449		1,527	1,608
Asia	188	93		423	366
Rest of the world	286	245		663	614
Gross contribution	394	495	524	1,496	1,511	1,630
in %	42%	45%	44%	41%	42%	41%
Operating expenses	331	337	360	1,396	1,167	1,260
EBITA, adj.	63	157	163	100	344	370
in %	7%	14%	14%	3%	10%	9%
Special items**	-288			-288
EBITA	-225	157	163	-188	344	370
in %	-24%	14%	14%	-5%	10%	9%

Based upon current production and delivery plans, the revenues in 1Q24 are estimated to be approximately 55% of order backlog at the end of 4Q23

*2022 actual restated at 2023 exchange rates, estimate **Food restructuring costs

4Q21 4Q22 4Q23

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4Q21 4Q22 4Q23

[NOK millions] Balance sheet and cash flow

	31 Dec
million Amounts in NOK	2023	2022
ASSETS	16 513 ,	13 932 ,
Intangible non-current assets	4 570 ,	4 132 ,
Tangible non-current assets	3 212 ,	2 671 ,
Financial non-current assets	692	448
Inventory	2 669 ,	2 370 ,
Receivables	4 202 ,	3 562 ,
Cash and cash equivalents	1 168 ,	750
LIABILITIES AND EQUITY	16 513 ,	13 932 ,
Equity	6 904 ,	6 572 ,
liabilities Lease	1 568 ,	1 297 ,
Interest-bearing liabilities	3 358 ,	2 260 ,
Non-interest-bearing liabilities	683 4 ,	3 803 ,

Cash flow from operations, YTD

Cashflow from operations

• Cash flow from operations of 1,316 MNOK in 4Q 2023 (350 MNOK in 4Q 2022)
• The strong cash flow in the quarter is due to a normalization after the cyberattack which caused a delay in invoicing 3Q 2023.

Solidity and gearing

• 42% equity ratio
• NIBD/EBITDA (rolling 12 months) of 1.6x

Financial position

Debt maturity profile

• Weighted average debt maturity of 2.2 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. 573 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 %

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 new and expanding markets • Quarterly performance will be dependent upon timing of new initiatives
Recycling	• Currently softer market sentiment leading to slower short-term growth • Demand for recycled materials is expected to create attractive growth opportunities
Food	• Challenging macroeconomic environment is delaying customer investments • Full savings effect 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	• Heightened sourcing and logistical risk is being monitored and is currently not expected to be material
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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