TOMRA Systems — Interim / Quarterly Report 2023

Jul 14, 2023

2 nd quarter 2023 results announcement

Click to enter name Place dd.mm.yy TOMRA Systems ASA 14 July 2023 © TOMRA

Financial highlights

Revenues	• All-time high revenues in all divisions. Total revenue of 3,879 MNOK (3,054 MNOK in the second quarter 2022) Adjusted for currency, revenues were: — Up 14% for TOMRA Group — Up 15% in Collection — Up 26% in Recycling — Up 4% in Food
Gross margin	• Gross margin improvement to 42% – highest since 2021 — Improvement in both Collection and Recycling (compared to same quarter last year) — Slightly lower margin in Food (compared to same quarter last year)
Operating expenses	• Operating expenses of 1,112 MNOK (841 MNOK in the second quarter 2022) — Driven mainly by business expansion — Adjusted for currency and general inflation, underlying cost has been stable over the last nine months
EBITA	• EBITA of 536 MNOK, up 22% from 438 MNOK in the second quarter 2022
Cash flow	• Cash flow from operations of 41 MNOK (310 MNOK in the second quarter 2022) — Increase in receivables of 605 MNOK compared to last year
Order intake	• Recycling order intake of 900 MNOK and order backlog of 1,421 MNOK • Food order intake of 1,024 MNOK and order backlog of 1,128 MNOK
Other	• Announcement of Norwegian Feedstock plant in Joint Venture with Plastretur • Collaboration with Aarhus Municipality in Denmark on a deposit system for takeaway packaging

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

>105,000 installations

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

Collection Recycling Food

100+ countries

e

Publicly listed on Oslo Stock Exchange (OSE: TOM)

Collection Business update

• All-time high quarterly revenues
• Continued improvement in gross margins to highest level since 2021
• New sales started in Hungary, continued in the Netherlands, and increased in Romania
• Downsizing Scottish operations due to DRS delay

All-time high revenue

up 15% (currency adj.) compared with Q2 2022

Victoria – 1 November 2023

Victoria will go live with its container deposit scheme on 1 November 2023 with TOMRA Cleanaway as 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 set to go live on 30 November 2023 with its deposit returns scheme which will include one-way beverage containers made of plastic, metal and glass (link).

Hungary – January 2024

Commencement of a deposit return system for glass and plastic bottles and metal cans from 1 January 2024 (link).

Ireland – 1 February 2024

Commencement of a deposit return scheme for glass and plastic bottles and metal cans from 1 February 2024 (link).

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

Austria – January 2025

Uruguay – December 2024

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

Singapore – 1 April 2025

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

Recycling Business update

• All-time high quarterly revenues and order backlog
• Strong but more normalized order intake growth of 16% (currency adj.)
• Launch of AUTOSORT PULSE for next-level alloy sorting with laserinduced breakdown spectroscopy (LIBS) technology

All-time high order backlog up 28% (currency adj.) compared with Q2 2022

Decline in order intake down 18% (currency adj.) compared with Q2 2022

Food Business update

8

• Good performance in the quarter driven by processed food
• Weakened market sentiment due to a challenging macroeconomic environment
• Focus on accelerated improvement agenda
• New EVP Food in place

Closing the gap in plastic recycling

Close the loop on textiles

Positioned to develop adjacent opportunities

Systems for reusable packaging

Legislative push to advance circularity

Recycled content

EU's Packaging & Packaging Waste Regulation (proposed)

% of post-consumer recycled content in packaging

	2030	2040
Single use plastic beverage bottles	30%	65%
Contact-sensitive packaging	30%*	50%
Other types of packaging	35%	65%

Reuse and refill EU's Packaging & Packaging Waste Regulation (proposed)

% of reusable Take-away packaging

	2030	2040
Cold & hot beverages	20%	80%
Ready prepared food	10%	40%

National legislation on take-away packaging

France 1 January 2023: Mandatory reusable tableware for dine-in

Germany 1 January 2023: Mandatory reusable take-away alternatives

Sweden 1 January 2024: Mandatory reusable take-away alternatives

Denmark 1 January 2025: Introduction of EPR packaging fees

Portugal 1 July 2022: Tax on single use take-away packaging

Mixed plastics fraction sourced from material recovery facilities

Advanced sorting

Dry washing

High quality polymer fractions to be supplied to recyclers (PE, PE-LD, PP, PS, PET, film)

TOMRA Feedstock Plants

Germany

• Announced 19 December 2022
• 100% TOMRA owned
• EUR ~ 50-60 million investment
• Capacity ~ 80.000 tons p.a.
• Input: mixed post-consumer plastic
• Output: >10 different polymer fractions for mechanical and chemical recycling
• Operational in 2024-2025 est.

Norway

• Announced 31 May 2023
• Joint Venture 65% TOMRA / 35% Plastretur
• EUR ~ 32 million investment
• Capacity ~ 90.000 tons p.a.
• Input: mixed post-consumer plastic
• Output: 8 different polymer fractions for mechanical and chemical recycling
• Operational in the first quarter 2025 est.

Circular re-use system for takeaway packaging

Collaboration with Aarhus Municipality in Denmark on a deposit system for takeaway packaging

Group P&L Highlights

	2nd Quarter			Half 1st Year
million Amounts in NOK	2023	2022	Adj* 2022	2023	2022	Adj* 2022
Revenues	3 879 ,	3 054 ,	3 416 ,	7 118 ,	5 555 ,	6 186 ,
Collection	1 952 ,	1 519 ,	1 702 ,	3 779 ,	2 913 ,	3 245 ,
Recycling	789	552	624	406 1 ,	041 1 ,	162 1 ,
Food	1 139 ,	983	1 090 ,	1 933 ,	1 601 ,	1 780 ,
Gross contribution	648 1 ,	279 1 ,	439 1 ,	2 951 ,	2 275 ,	2 553 ,
in %	42%	42%	42%	41%	41%	41%
Operating expenses	1 112 ,	841	917	2 138 ,	1 600 ,	1 730 ,
EBITA	536	438	522	813	675	824
in %	14%	14%	15%	11%	12%	13%

Collection P&L Highlights

	2nd Quarter			Half 1st Year
million Amounts in NOK	2023	2022	Adj* 2022	2023	2022	Adj* 2022
Revenues	1 952 ,	1 519 ,	1 702 ,	3 779 ,	2 913 ,	3 245 ,
Northern Europe	300	240		568	485
(ex Northern) Europe	892	569		1 764 ,	1 142 ,
North America	570	506		1 027 ,	900
of the world Rest	190	204		420	386
contribution Gross	758	572	656	1 460 ,	1 110 ,	1 262 ,
in %	39%	38%	39%	39%	38%	39%
Operating expenses	453	347	371	874	678	722
EBITA	306	225	285	586	433	540
in %	16%	15%	17%	15%	15%	17%

*2022 actual restated at 2023 exchange rates, estimate

Recycling P&L Highlights ^{426 354 439}

	2nd Quarter				Half 1st Year
million Amounts in NOK	2023	2022	Adj* 2022	2023	2022	Adj* 2022
Revenues	789	552	624	1 406 ,	1 041 ,	1 162 ,
Europe	403	363		730	672
Americas	163	90		318	184
Asia	135	61		241	108
of the world Rest	88	37		116	77
contribution Gross	399	273	306	708	509	564
in %	51%	49%	49%	50%	49%	49%
Operating expenses	239	172	196	456	319	355
EBITA	161	100	110	253	190	208
in %	20%	18%	18%	18%	18%	18%

Based upon current production and delivery plans, the revenues in 3Q23 are estimated to be approximately 60% of order backlog at the end of 2Q23

*2022 actual restated at 2023 exchange rates, estimate

Food P&L Highlights ^{910 867}

	2nd Quarter				Half 1st Year
in million Amounts NOK	2023	2022	Adj* 2022	2023	2022	Adj* 2022
Revenues	139 1 ,	983	090 1 ,	933 1 ,	601 1 ,	780 1 ,
Europe	388	289		610	429
Americas	501	483		920	794
Asia	82	114		159	190
of the world Rest	168	97		243	187
contribution Gross	490	434	477	784	656	727
in %	43%	44%	44%	41%	41%	41%
Operating expenses	369	283	312	712	532	581
EBITA	121	151	166	72	124	147
in %	11%	15%	15%	4%	8%	8%

Based upon current production and delivery plans, the revenues in 3Q23 are estimated to be approximately 80% of order backlog at the end of 2Q23

*2022 actual restated at 2023 exchange rates, estimate

[NOK millions] Balance sheet and cash flow

	30	June	December 31
million Amounts in NOK	2023	2022	2022
ASSETS	15	13	13
	617	242	932
	,	,	,
Intangible	4	3	4
non-current	520	949	132
assets	,	,	,
Tangible	2	2	2
non-current	954	481	671
assets	,	,	,
Financial non-current assets	633	420	448
Inventory	2	2	2
	848	203	370
	,	,	,
Receivables	019	3	3
	4	414	562
	,	,	,
Cash and cash equivalents	643	775	750
LIABILITIES	15	13	13
AND	617	242	932
EQUITY	,	,	,
Equity	7	6	6
	007	115	572
	,	,	,
liabilities Lease	1 460 ,	1 113 ,	1 297 ,
Interest-bearing liabilities	2 961 ,	2 112 ,	2 260 ,
Non-interest-bearing liabilities	4 189 ,	3 902 ,	3 803 ,

Cashflow from operations

• Cash flow from operations of 41 MNOK in the second quarter 2023 (310 MNOK in the second quarter 2022)
• Increase in receivables of 605 MNOK compared to last year reduces quarterly cash flow

Solidity and gearing

• 45% equity ratio
• NIBD/EBITDA (rolling 12 months) of 1.5x

Financial position

Debt maturity profile

• Weighted average debt maturity of 2.6 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. 663 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

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 but normalize from high 2022-2023 levels • Demand for recycled materials is expected to create opportunities
Food	• Challenging macroeconomic environment is delaying customer investments • 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.

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