TOMRA Systems — Interim / Quarterly Report 2018

Apr 25, 2018

1 ST QUARTER 2018 RESULTS ANNOUNCEMENT

TOMRA SYSTEMS ASA 1 st Quarter Results 25.04.2018

HIGHLIGHTS FROM THE QUARTER

Revenues	•	Revenues of 1,754 MNOK (1,564 MNOK in first quarter 2017) – Up 12% Adjusted for currency and acquisitions, revenues were: - Up 10% for TOMRA Group - Up 5% in TOMRA Collection Solutions - Up 17% in TOMRA Sorting Solutions
Gross margin	•	Gross margin 41%, up from 40% in first quarter 2017 - Stable margin in TOMRA Collection Solutions - Improved margin in TOMRA Sorting Solutions
Operating expenses	•	Operating expenses of 580 MNOK (475 MNOK in first quarter 2017) - Higher activity, ramp-up New South Wales and acquisitions - Including 4 MNOK in transaction cost BBC
EBITA	•	EBITA of 142 MNOK (158 MNOK in first quarter 2017)
Cashflow	•	Cash flow from operations of 120 MNOK (122 MNOK in first quarter 2017)
TOMRA Collection	• • •	Stable activity in both Europe and North America. Still good momentum in Germany, due to replacement demand Ramp-up in New South Wales continues
TOMRA Sorting Solutions	• • •	BBC consolidated into Group accounts, starting 1 March 2018 Order intake of 1,188 MNOK, compared to 826 MNOK same period last year Order backlog of 1,515 MNOK, up from 1,139 MNOK at the end of first quarter 2017

CURRENCY

Revenues and expenses per currency; NOTE: Rounded figures

	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

FINANCIAL HIGHLIGHTS P&L STATEMENT

		1st Quarter
Amounts in NOK million	2018	2017	17 Adj*
Revenues	1,754	1,564	1,570
• Collection Solutions	934	877	889
• Sorting Solutions	820	687	681
Gross contribution	722	633	626
in %	41%	40%	40%
Operating expenses	580	475	488
EBITA	142	158	138
in %	8%	10%	9%

FINANCIAL HIGHLIGHTS BALANCE SHEET, CASH FLOW AND CAPITAL STRUCTURE

Amounts in NOK million	31 March 2018	31 March 2017	31 Dec 2017
ASSETS	8,808	7,927	8,437
• Intangible non-current assets	3,673	3,177	3,412
• Tangible non-current assets	996	856	998
• Financial non-current assets	350	349	349
• Inventory	1,276	1,211	1,197
• Receivables	1,917	1,808	1,887
• Cash and cash equivalents	596	526	594
LIABILITIES AND EQUITY	8,808	7,927	8,437
• Equity	4,493	4,301	4,594
• Minority interest	143	184	143
• Interest bearing liabilities	1,668	1,174	1,280
• Non-interest bearing liabilities	2,504	2,268	2,420

Cashflow

• From operations: 120 MNOK (122 MNOK in 1Q 2017)
• From investments: -502 MNOK (-490 MNOK in 1Q2017)

Solidity

• 53% equity
• NIBD/EBITDA = 0.8x (Rolling 12 months)
• Dividend of NOK 2.35 (NOK 2.10 last year) due 8 May 2018

TOMRA COLLECTION SOLUTIONS

HIGHLIGHTS COLLECTION SOLUTIONS

	• Revenues of 934 MNOK, up from 877 MNOK in first quarter 2017 - Revenues up 5% in local currencies, driven by New South Wales' volumes • Gross margin was 40% in the period - Unchanged from first quarter 2017
Overall	• Operating expenses of 253 MNOK, up from 207 MNOK in first quarter 2017 - Higher activity - Ramp-up New South Wales - Currency • EBITA decreased from 144 MNOK to 121 MNOK - A result of increased operating expenses
Europe	• Currency adjusted, revenues were stable in Europe TOMRA machines installed in the German market - Replacement in Germany continues, in line with 2017
North America	• Currency adjusted, revenues were stable in North America - Machine and throughput volumes in line with last year
Australia	• Deposit introduced 1st December in New South Wales - Ramp-up continued during first quarter 2018

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VOLUME AND SITE DEVELOPMENT IN NSW

Illustrative

8

Volume to gradually follow as the number of Automated Sites increases in the total infrastructure

The volume graph does not account for seasonal effects

UK GOVERNMENT ANNOUNCES A DEPOSIT RETURN SCHEME IN FIGHT AGAINST PLASTIC POLLUTION

• 28 March 2018, the UK government announced plans for a deposit return system
• The goal of the scheme is to drastically reduce plastic pollution and is a part of the government's 25 year environmental plan
• UK consumers go through an estimated 13 billion plastic drink bottles a year
• More than three billion are either incinerated, sent to landfill or left to pollute the streets, countryside and marine environment
• A consultation period taking into account views from producers, suppliers and consumers will follow
• The consultation will sit alongside a package of wider reforms of the current packaging waste system
• Will incentivize producers to take greater responsibility for the environmental impacts of their products and to increase the amount of packaging they recycle

9

COLLECTION SOLUTIONS FINANCIALS

		1st Quarter
Amounts in NOK million	2018	2017	17 Adj*
Revenues	934	877	889
• Northern Europe	148	139
• Europe (ex Nordic)	409	383
• US East/Canada	322	342
• Rest of the world	55	13
Gross contribution	374	351	359
in %	40%	40%	40%
Operating expenses	253	207	212
EBITA	121	144	147
in %	13%	16%	17%

*2017 actual restated at 2018 exchange rates, estimated ** Adjusted for one-time costs

TOMRA SORTING SOLUTIONS

HIGHLIGHTS SORTING SOLUTIONS

Revenues	• Revenues equaled 820 MNOK in first quarter 2018, up from 687 MNOK in first quarter 2017 • Adjusted for currency and acquisitions, revenues were up 17% • Includes BBC revenue of 12 MNOK in March 2018
Gross margin EBITA	• Gross margin at 42%, up from 41% same period last year • Due to product mix • EBITA of 41 MNOK (30 MNOK in first quarter 2017)
Orders	• Order intake of 1,188 MNOK, compared to 826 MNOK same period last year • Order backlog of 1,515 MNOK, up from 1,139 MNOK at the end of first quarter 2017

ACQUISITION OF BBC TECHNOLOGIES

The natural add-on to Compac

• TOMRA acquired BBC Technologies 26th February 2018
• BBC Technologies is headquartered in Hamilton, New Zealand and is a leading provider of precision grading systems for blueberries and other small fruits
• 145 employees across locations in New Zealand, Chile, Europe and USA
• The company complements TOMRA's own fruit inspection and grading technology portfolio. It also adds an innovative unique quality tracking system: www.freshtracker.com
• The majority of BBC Technologies sales have been in the blueberry segment, but the company also offers solutions for cherries, cherry tomatoes and other small soft fruits
• BBC is a market leader with the new platform (KATO)
• Berries are a very attractive segment, as they represent high value, but are very delicate to handle

Confirming our leading position in Food Complimentary geographical footprint Attractive Market Application fit expansion

Deal details:

• Purchase price of 363 MNOK / 64 MNZD, free of cash and interest-bearing debt.
• Closing 1 March 2018
• Acquisition settled in cash, financed through existing drawing rights
• FY17: 36 MNZD in revenues / 8 MNZD EBIT

The BBC Technology in Operation

BUSINESS STREAM UPDATE

FOOD

• Revenues in 1Q18 up from 1Q17
• Strong order intake, up quarter over quarter, leading to an all time high order backlog at the end of 1Q18
• BBC consolidated from 1 March 2018, ending the quarter with a backlog of 86 MNOK

RECYCLING

• Revenues in 1Q18 significantly up from 1Q17,
• Very strong order intake, up quarter over quarter
• All time high order backlog

MINING

• Revenues and order intake slightly down from 1Q17

SORTING SOLUTIONS FINANCIALS

		1st Quarter
Amounts in NOK million	2018	2017	17 Adj*
Revenues	820	687	681
• Europe	256	207
• North America	282	252
• South America	29	25
• Asia	115	108
• Oceania	86	57
• Africa	52	38
Gross contribution	348	282	267
in %	42%	41%	39%
Operating expenses	307	252	259
EBITA	41	30	8
in %	5%	4%	1%

*2017 actual restated at 2018 exchange rates, estimated ** Adjusted for one-time costs

BACKLOG DEVELOPMENT AND MOMENTUM

REVENUES

ORDER INTAKE ORDER BACKLOG

• Tomra Sorting Solutions (TSS):
• Delivered all time high order intake of 1,188 MNOK in the quarter, compared to 826 MNOK same quarter last year
• Revenues came in at 820 MNOK (up from 687 MNOK in 1Q17)
• With an all time high order intake, and somewhat limited number of orders taken to P/L, the quarter ends with an all time high order backlog of 1,515 MNOK
• Estimated backlog conversion ratio in 2Q18: 70%*

OUTLOOK

OUTLOOK

Collection Solutions

• The replacement demand in Germany is assumed to continue in 2018

• Ramp-up in New South Wales will carry on throughout second quarter 2018

Sorting Solutions • Currently good momentum in all business streams

Currency

• 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.

DISCLAIMER

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