Vidrala S.A. — Investor Presentation 2020

Jul 24, 2020

DISCLAIMER

This presentation includes or may include representations or estimations concerning the future about intentions, expectations or forecasts of VIDRALA or its management. which may refer to the evolution of its business performance and its results. These forward looking statements refer to our intentions, opinions and future expectations, and include, without limitation, statements concerning our future business development and economic performance. While these forward looking statements represent our judgment and future expectations concerning the development of our business, a number of risks, uncertainties and other important factors could cause actual developments and results to differ materially from our expectations. These factors include, but are not limited to, (1) general market, macro-economic, governmental and regulatory trends, (2) movements in local and international securities markets, currency exchange rates and interest rates as well as commodities, (3) competitive pressures, (4) technological developments, (5) changes in the financial position or credit worthiness of our customers, obligors and counterparties.

The risk factors and other key factors that we have indicated in our past and future filings and reports, including those with the regulatory and supervisory authorities (including the Spanish Securities Market Authority – Comisión Nacional del Mercado de Valores - CNMV), could adversely affect our business and financial performance. VIDRALA expressly declines any obligation or commitment to provide any update or revision of the information herein contained, any change in expectations or modification of the facts, conditions and circumstances upon which such estimations concerning the future have been based, even if those lead to a change in the strategy or the intentions shown herein.

This presentation can be used by those entities that may have to adopt decisions or proceed to carry out opinions related to securities issued by VIDRALA and, in particular, by analysts. It is expressly warned that this document may contain not audited or summarised information. It is expressly advised to the readers of this document to consult the public information registered by VIDRALA with the regulatory authorities, in particular, the periodical information and prospectuses registered with the Spanish Securities Market Authority – Comisión Nacional del Mercado de Valores (CNMV).

H1 2020 KEY FIGURES

	H1 2020	Change	- Organic change (constant currency basis)
Net sales (EUR million) EBITDA (EUR million)	474.4 122.4	-6.5% -6.7%	-6.5% -6.6%
Earnings per share (EUR/share)	2.30	-7.2%
Debt (EUR million) Debt / LTM EBITDA (multiple)	294.5 1.1x	-26.8% -0.5x

YEAR OVER YEAR CHANGE

EUR million

YEAR OVER YEAR CHANGE

EUR million

OPERATING MARGINS

YEAR OVER YEAR CHANGE

EARNINGS PER SHARE

YEAR OVER YEAR EVOLUTION, SINCE 2016

EUR per share

CASH PROFILE

FREE CASH FLOW GENERATION LAST 12 MONTHS TO JUNE 2020

EUR million / as percentage of sales

YEAR OVER YEAR EVOLUTION, SINCE 2018

Debt in EUR million and times EBITDA

H1 2020 MAIN HIGHLIGHTS

RESILIENT TOP-LINE PERFORMANCE AMID THE PANDEMIC

Sales during the first six months 2020 amounted to EUR 474.4 million, showing an organic decline of 6.5%.

SOLID OPERATING MARGINS

Operating profit, EBITDA, was EUR 122.4 million representing an operating margin of 25.8%.

FURTHER DELEVERAGING, STRENGHTENING FINANCIAL POSITION

Debt at June 30, 2020 stood at 1.1 times last twelve months EBITDA, reflecting a year-on-year reduction of 27%.

FY 2020 OUTLOOK, REITERATED

BUSINESS UPDATE

• Sales volumes during Q2 standalone down approx. -15%, as expected
• Operating margins year-to-date consolidated at levels above 25% EBITDA over sales
• Financial position remains solid, debt reduction approx. -25% year-on-year

STRATEGIC GUIDELINES UNDER THE PANDEMIC

OUR VIEW, ON THE FUTURE

• Invest more now, for our business future
• With our customer in mind
• To further improve our competitiveness
• Selectively allocating capital in strategic projects
• CapEx 2020 reaffirmed at levels of EUR 130 million, approx. 14% of sales

SECURING A SOLID FINANCIAL POSITION

• Current leverage ratio below 1.2x EBITDA
• No maturities until end of 2023
• Total current cost of debt below 1% annual
• Strong committed liquidity, currently in excess of 1.0x EBITDA
• Disciplined protection of our cash, gradually balancing production with real demand

FULL YEAR 2020 OUTLOOK

• FY 2020 sales volumes expected to decline in the range of 5-10% vs. 2019
• FY 2020 operating margins expected to remain solid around 25% EBITDA over sales
• FY 2020 earnings expected to drop in the range of 15-25% vs. 2019
• FY 2020 cash after capex to exceed dividend payments and to be used for further debt reduction
• o Uncertainty high amid the pandemic, macro context weak, business conditions changing
• o Prudency and time needed before defining new mid-term business targets
• o STRATEGIC INTERNAL ACTIONS WILL REMAIN FIRMLY COMMITTED TO OUR LONG TERM BUSINESS PRINCIPLES: CUSTOMER, COST AND CAPITAL

Vidrala publishes this information in order to promote comparability and interpretation of its financial information and in compliance with the Directive of the European Securities and Markets Authority (ESMA) on Alternative Performance Measures (APM).

See below, the alternative performance measures used by Vidrala, as well as its basis of calculation. For further detail, please check the reference document published on the corporate website (link), as well as the reconciliation provided on the next slide of this presentation.

EBITDA. Vidrala calculates EBITDA as earnings before interest, taxes, depreciation and amortization (as reported in the consolidated income statement).

Consolidated net debt. Vidrala calculates consolidated net debt as the sum of all long-term liabilities and short-term obligations, and then subtracting cash and cash equivalents (as reported in the consolidated balance sheet).

Free cash flow. Vidrala calculates free cash flow by adding –to the real variation in net debt balances (as reported in the consolidated balance sheet)– payments during the period dedicated to dividends and net treasury stock purchases (as reported in the consolidated statement of cash flows).

Other magnitudes referred to in this report:

• Organic refers to the variation on a like-for-like (comparable perimeter) and constant currency basis.
• Debt/EBITDA ratio is calculated as consolidated net debt at the end of the reported period divided by EBITDA obtained in the last 12 months.

^• EBITDA margin is calculated as accumulated EBITDA during the reported period divided by net sales.

i) EBITDA

EUR million	H1 2020	Source of data
Profit before income tax from continuing operations	74.900	Consolidated Income Statement
Amortisation and depreciation	+43.523	Consolidated Income Statement
Finance income	-1.305	Consolidated Income Statement
Finance costs	+3.329	Consolidated Income Statement
Impairment of non-current assets	+1.941	Consolidated Income Statement
Reported EBITDA	122.388

Source of data
Consolidated Income Statement
Consolidated Income Statement
Consolidated Income Statement
Consolidated Income Statement
Consolidated Income Statement

ii) Consolidated net debt

EUR million	H1 2020	Source of data
Loans and borrowings (non-current liabilities)	216.946	Consolidated Balance Sheet
Loans and borrowings (current liabilities)	+158.685	Consolidated Balance Sheet
Cash and cash equivalents	-81.141	Consolidated Balance Sheet
Reported consolidated net debt	294.490

Source of data
Consolidated Balance Sheet
Consolidated Balance Sheet
Consolidated Balance Sheet

iii) Free Cash Flow*

EUR million	H1 2020	Source of data
Year-over-year change in net debt balances	107.580	Consolidated Balance Sheets
Dividends paid**	+30.391	Consolidated Statements of Cash Flows
Annual General Meeting attendance bonus	+933	Note 23 – Subsequent events
Proceeds from issue of treasury shares and own equity instruments**	+0	Consolidated Statements of Cash Flows
Payments to redeem own shares and other own equity instruments**	+13.693	Consolidated Statements of Cash Flows
Reported Free Cash Flow last twelve months	152.597

Source of data
Consolidated Balance Sheets
Consolidated Statements of Cash Flows
Note 23 – Subsequent events
Consolidated Statements of Cash Flows
Consolidated Statements of Cash Flows