Mid & Small Virtual Conference - Comer Industries€¦ · COMER INDUSTRIES Property. 55,3 40,7 36,7...

COMER INDUSTRIES PropertyCOMER INDUSTRIES Property

Mid & Small Virtual Conference 31st March – 1st April 2020

COMER INDUSTRIES Property2

DISCLAIMERThis document has been prepared by Comer Industries S.p.A (“Comer Industries”) for use during meetings with investors andfinancial analysts and is solely for information purposes. The information set out herein has not been verified by an independent auditcompany. Neither the Company nor any of its subsidiaries, affiliates, branches, representative offices (the “Group”), as well as any oftheir directors, officers, employees, advisers or agents (the “Group Representatives”) accepts any responsibility for/or makes anyrepresentation or warranty, express or implied, as to the accuracy, timeliness or completeness of the information set out herein orany other related information regarding the Group, whether written, oral or in visual or electronic form, transmitted or made available.This document may contain forward-looking statements about the Company and/or the Group based on current expectations andopinions developed by the Company, as well as based on current plans, estimates, projections and projects of the Group.These forward-looking statements are subject to significant risks and uncertainties (many of which are outside the control of theCompany and/or the Group) which could cause a material difference between forward-looking information and actual future results.The information set out in this document is provided as of the date indicated herein. Except as required by applicable laws andregulations, the Company assumes no obligation to provide updates of any of the aforesaid forward-looking statements. Under nocircumstances shall the Group and/or any of the Group Representatives be held liable (for negligence or otherwise) for any loss ordamage howsoever arising from any use of this document or its contents or otherwise in connection with the document or theaforesaid forward-looking statements. This document does not constitute an offer to sell or a solicitation to buy or subscribe toCompany shares and neither this entire document or a portion of it may constitute a recommendation to effect any transaction or toconclude any legal act of any kind whatsoever. This document may not be reproduced or distributed, in whole or in part, by anyperson other than the Company. By viewing and/or accepting a copy of this document, you agree to be bound by the foregoinglimitations.

COMER INDUSTRIES [email protected]

http://www.comerindustries.com/

mailto:[email protected]

COMER INDUSTRIES PropertyCOMER INDUSTRIES Property

AG

END

A01 Comer Industries

in a nutshell

02

03 Market and strategy

04 Key financials

05 Shareholders structure & Corporate Governance

06 Appendix

Business model

COMER INDUSTRIES Property

1. COMER INDUSTRIES IN A NUTSHELL


COMER INDUSTRIES AT A GLANCE

Generational transition fully completed

Board of Directors with Independent member and experienced executive management fully operational

Robust business model and diversified portfolio products

Continuous growth trend in turnover and profits

Solid financial position


VISION, MISSION AND VALUESVISION

MISSION We run vertical innovative solutions for agriculture and industrial business. We boost our strong global leadership position.Aware of our roots and challenging in depth our identity, we attract talents and encourage disruptive mindset.

OUR VALUES HONESTY AND TRANSPARENCYCOURAGE AND PASSION PEOPLE AT THE CENTER TEAMWORK COMMITMENT TO STAKEHOLDERS

Creating an easy world through sustainable food, streets, houses and energy.


CORPORATE SOCIAL RESPONSIBILITY

In 2019 Comer Industries has launched a new project: OUR BRIGHT IMPACT.

An important responsibility towards the environment and the society.

The courage to take on a strong commitment, starting from adherence to the Global Goals for the sustainable development.

The ambition to leave our positive mark and to create something new, making “bright” the world around us.

The promise we make to ourselves and to the environment in which we act.


39m379m

8

MAIN TRENDSNET REVENUES

342m

405m

Euro

in m

illio

ns

30m45m

Euro

in m

illio

ns

EBITDA (adjusted)

2017 2018 2019

+10,8%

+16,7%

+8,8%CAGR 17-19

+28,5%+6,7%

2017 2018 2019

1387

1362

1388

2017 2018 2019

+25

+1

PEOPLE

Ave

rage

em

ploy

ees

+22,5%CAGR 17-19

9%10%

11%

[…]% of revenues

Note: EBITDA [adjusted] excludes the impacts from the application of IFRS 2 standard for stock grant plans, listing costs and IFRS 16 standard for lease contracts.


2. BUSINESS MODEL


AG

RI

OEM Construction

OEM Energy

Tier 2 raw material

suppliers

Tier 1 supplier

Original Equipment

Manufactures (OEM)

Customers

Farmers

Oil & GasConstruction playersMining

Wind plants owners

WHERE WE ARE IN THE VALUE CHAIN

IND

UST

RIA

L


WHO WE ARE, WHAT WE DO & OUR MAIN CUSTOMERComer Industries is a global player in mechatronic solutions and integrated systems for power transmission. Transmissions are designed to move or to bring power to the various parts of customer’s vehicles.

OUR CUSTOMERS


BUSINESS OVERVIEWBUSINESS AREA PRODUCTS LINES TECHNOLOGYREGIONS STRUCTURE

AG

RI

IND

UST

RIA

L

Gearboxes

Planetary drives

Powertrain systems

Wheel drives

Driveshafts

23% NAM

17% APAC

54% EU

5% LATAM

Mechanical

100%

Hydraulic0%

Electric0%

Electronic0%

10 legal entities; 6 trading

companies; 7 production

areas; C. 1.400

employees.

Note: the […]% represents FY19 net revenues breakdown.

54% (61% in FY18)

32% (27% in FY18)

14% (12% in FY18)


3. MARKET AND STRATEGY


FOOD SECURITY

In 10 years the world may not be able to feed itself according to WEF, World Economic Forum.

By 2027 the world could be facinga 214 trillion calorie deficit – in just a decade we won’t have enough food to feed the planet. By 2050, the world’s population is expected toreach 9.1 billion, and the United Nation’s Food and Agriculture Organization(FAO) predicts that at that point, the world would need to produce 70% more food than today.


3+ €b 5+ €b 0.2 €b

15

OPPORTUNITY AND STRATEGY PILLARS

STRATEGY PILLARS Maintain leadership in the Agri

Business Size growth driving economies of scale Increase margins Simplification and digitization


MAIN COMPETITORS BY MARKET SEGMENT

BUSINESS AREA MAIN COMPETITORS

AG

RI

IND

UST

RIA

L

(LISTED IN ITALY MTA) (LISTED IN US-NYSE)

AN

D IN

CU

BA

NT

CO

MPE

TITO

RS


4. KEY FINANCIAL


Euro in millions 2016 2017 2018 2019 2017 2018 2019

Net revenues 303,7 342,1 379,0 404,6 12,6% 10,8% 6,7%

EBITDA 22,0 29,8 38,4 45,7 35,6% 28,9% 18,9%Margin 7,2% 8,7% 10,1% 11,3% 1,5p.p. 1,4p.p. 1,2p.p.

EBITDA [adjusted] 22,3 30,0 38,6 45,0 34,8% 28,5% 16,7%Margin 7,3% 8,8% 10,2% 11,1% 1,4p.p. 1,4p.p. 1,0p.p.

EBIT 9,8 17,1 24,9 27,8 73,9% 45,7% 11,7%Margin 3,2% 5,0% 6,6% 6,9% 1,8p.p. 1,6p.p. 0,3p.p.

Net income 6,7 11,4 15,7 18,5 70,9% 38,3% 17,7%Margin 2,2% 3,3% 4,1% 4,6% 1,1p.p. 0,8p.p. 0,4p.p.

TWC 76,0 74,5 84,4 85,1TWC % of net revenues 25,0% 21,8% 22,3% 21,0%Net Equity 71,3 76,3 88,9 129,1

Net Debt / (cash) [adjusted] 55,3 40,7 36,7 2,9

Net Debt / EBITDA [adjusted] (*) 2,55x 1,37x 0,96x 0,06xNet Debt [adjusted] /Net Equity 0,78x 0,53x 0,41x 0,02x

Var.% YoY

18

KEY CONSOLIDATED RESULTS KEY MATTERS• FY19 net revenues increased by +6,7%

vs FY18.• Top 10 customers generated

approximately 50% of total revenues.• FY19 EBITDA [adjusted] margin equals

to 11,1% of net revenues, +95 bps vs FY18.

• Operating cash flow generation of c. €16,6m in FY19.

• A proposal for a dividend distribution of €0,35 per share will be submitted to the 22Apr2020 General Shareholders’ meeting.

(*) On EBITDA since 2018.Source: Consolidated Statutory Financial Statements

To note that:• EBITDA [adjusted] excludes the impacts from the application of IFRS 2 standard for stock grant plans and listing costs and

IFRS 16 standard for lease contracts.• Net debt presented aside has been adjusted to exclude the impact of new IFRS 16 (€26.2m at 31Dec19)


209,1

91,8

27,3 13,9

EMEA NORTH AMERICA ASIA PACIFIC LATIN AMERICA

228,1

91,6

44,3 15,0

220,4

94,1

70,7

19,4

19

REVENUES BY GEOGRAPHYKEY MATTERS• Consolidated turnover stands at 404,6 million euros, the best result in the company’s 50-year history, with an increase

compared to the previous year of +6,7%.• FY19 Export turnover amounts to 88,3% of total and confirms the Group’s propensity for international growth.• FY19 net revenues growth mainly driven by new products (c. €50m or c. 12% of revenues), mainly in the Industrial area. • Net revenues primarily grew in the emerging markets, in particular in Asia Pacific (+€26m or +60%) and Latin Americain

(+€4m or +29%), in particular in the Industrial business, both in Wind and Construction sectors.

2017€342m

2018€379m

2019€405m

Source: Consolidated Statutory Financial Statements


TWC EVOLUTION

KEY MATTERS• On average DSO are approximately 30 days lower than DPO.• Supply chain and Stock management improvement over 2019.• At 31Dec19 DOI (*) are c. 20 days lower than at 31Dec18 (142 days).

68,5 69,5 77,4 77,3

76,4 85,6 93,0 85,5

(68,9) (80,6) (86,1) (77,7)

25,0%21,8% 22,3% 21,0%

(30,0%)

(20,0%)

(10,0%)

0,0%

10,0%

20,0%

30,0%

(100,0)

(50,0)

-

50,0

100,0

150,0

200,0

31Dec16A 31Dec17A 31Dec18A 31Dec19A

Euro

m

Evolution of TWC

Trade receivables Stock Trade payables TWC as % of net revenues

(*) Calculated on COGS (purchases + change inventory).Source: Consolidated Statutory Financial Statements


55,3

40,736,7

2,9

55,3

40,736,7

29,1

0

10

20

30

40

50

60


Euro

m

Evolution of Net Debt / (cash) [adjusted]

Net Debt / (cash) [adjusted] Net Debt / (cash)KEY MATTERS• The €33,9m decrease of Net debt [adjusted] in 2019 reflects:

1) the continuous generation of operating cash flow (€16,6m in 2019); 2) the capital contribution acquired through the listing process and the subsequent exercise of the first tranche of

warrants (€29,5m);3) the payment of 2018 dividends (-€12,2m).

• The additional bank lines (up to €80m) of the new facility agreement signed in Jun19 were not utilized at 31Dec19.• Net debt [adjusted] excludes the impacts traceable to the application IFRS 16 standard in relation to lease contracts.

21

NET DEBT/(CASH) EVOLUTION



NET DEBT RATIOSKEY MATTERS• The Group is not leveraged.• At 31Dec9 Net debt [adjusted] as a

proportion of EBITDA [adjusted] is close to zero (0,96 at 31Dec18).


2,55x

1,37x

0,96x

0,06x 0,0

0,5

1,0

1,5

2,0

2,5

3,0


Net debt - ratios (Net Debt [adj] / EBITDA [adj])

Net Debt [adj] / EBITDA [adj] (*)

0,78x

0,53x

0,41x

0,02x 0,0

0,1

0,2

0,3

0,4

0,5

0,6

0,7

0,8

0,9


Net debt ratios (Net Debt [adj] / Net Equity)

Net Debt [adj] / Net Equity


5. SHAREHOLDERS STRUCTURE & CORPORATE GOVERNANCE


Nr. of shares % of share capital

% of voting rights

Lock up shares

Lock upduration

█ Eagles OAK S.r.l. 14.640.089 71,73% 71,73% 14.450.000 18/36 months*

█ Finregg S.p.A. 1.700.000 8,33% 8,33%

█ Market 4.069.191 19,94% 19,94% 1.043.911 12/36 months **

TOTAL ORDINARY SHARES 20.409.280 100,00% 100,00% 75,92%

Latest Update: 23 March 2020

24

SHAREHOLDERS’ STRUCTURE

WARRANT “COMER INDUSTRIES 2019-2021”• Comer Industries SpA issued 300.000 warrants during the listing process on March 2019.• In July 2019, at the end of the first exercise period, 59.280 warrants have been exercised, leading to the issue of

59.280 shares and the capital increase of c. €0,6m (fixed conversion rate: €10 per warrant).• 240.720 warrants are currently outstanding on the AIM Italia market.• As at today, there is a potential cash-in / maximum capital increase of c. €2,4m deriving from the outstanding

warrants (fixed conversion rate: €10 per warrant).

SHARES AND RIGHTS

* calculated by business combination date ** calculated by FY19 stock grant effective date

71,73%

8,33%

19,94%


COVID-19: IMPACTED AREAS• The evolution of the COVID-19 epidemic and the current alarming situation at global level have underlined

a risk of downside in the worldwide economic scenario that does not allow today to express assessments on its future evolution.

• This evolving scenario may lead to changes and challenges on the following areas:

PEOPLE / EMPLOYEES

SUPPLYCHAIN

SHORT-TERMLIQUIDITY CUSTOMERS

Behaviours,productivity, processes, etc.

Inventory,reliability, demand, etc.

Demand,inventory,loyalty,etc.

Cash-flow management,resilience, relations, etc.


COVID-19: OUR APPROACH• Thanks to our capital and financial strength, the Group has implemented and will implemented all adequate

and required measures to mitigate and contain the negative impacts deriving from the current scenario.• In order to face this new challenge, Comer Industries undertook the following action plan:

Identification and prioritization of key risks, by country, sector and business area to define focused actions.

Development of tailored scenarios, according to the identified risks and priorities.

Simulation of stress testing of financials, with different scenario at balance sheet, cash-flow and P&L level.

Definition of a portfolio of interventions, identifying actions and measurable goals.

Preparation of a cash dashboard with availability, deadlines, collections to support cash flow management.

Implementation of the resilience dashboard, identifying indicators by area to regularly monitor.


6. APPENDIX


PRODUCT LINES AND APPLICATIONSPR

OD

UC

T LI

NES

APP

LIC

ATI

ON

S

GEARBOXES WHEEL DRIVESPLANETARY DRIVES POWERTRAIN SYSTEMS DRIVESHAFTS

TRACTORS

COMBINED HARVESTERS & SELF PROPELLED MACHINES

AGRICULTURAL MACHINERY & GARDEN EQUIPMENT

MINING MACHINERY

CRANES

CONSTRUCTION EQUIPMENT

WIND TOWER GENERATORS

CONSTRUCTION EQUIPMENT

TELEHANDLERS

ROAD CONSTRUCTION MACHINERY

COMBINED HARVESTERS & SELF PROPELLED

MACHINES

AGRICULTURAL & GARDEN EQUIPMENT


EXAMPLES OF AGRI APPLICATIONS

• Land preparation machines

• Soil tillage machines • Crop treatment machines • Forage and hay

machines • Biogas systems • Corn and grain headers • Combines and forage

harvesters • Forage mixing and

distribution machines • Tractors

AGRI


EXAMPLES OF INDUSTRIAL APPLICATIONS

• Construction machines • Road construction machines • Forestry machines • Mining machines • Material handling Renewable Energy• Water treatment machines

INDUSTRIAL


MAIN MILESTONES FROM 1970 TO DATE

1970: The Storchi family founds CO.ME.R. (Costruzioni Meccaniche Riduttori) specialized in the manufacture of mechanical transmissions for agricultural machinery.

1985: Subsidiaries are set up in France, Germany, Great Britain and the United States.1985-1980: Comer grows both organically and through acquisitions.

1996: Opening of the Mechatronics Research Centre, a state-of-the-art laboratory dedicated to the company’s R&D activities.

1998: Opening of the representative office in Beijing for the industrial partnership with local suppliers.

2007: The Comer Industries Components Operating Unit is officially inaugurated in Matera. Comer (Shanghai) Trading Co. Ltd., the new sales Subsidiary and the Operating Unit Comer Industries (Shaoxing) Co. Ltd are also opened in China.

2013: Opening of a new sales subsidiary “Comer Industries do Brazil”, in the state of São Paulo.

2015: Re-building Reggiolo Plant and start up Comer Industries India Pvt. Ltd. in Bangalore for axles production.

2017: New governance due to succession plan.

2018: Start up Comer Industries (Jiaxing) Co. Ltd.

2019: Listing on the Milan Stock Exchange (in the AIM Italia Market trading platform).


GROUP STRUCTURE

Comer Industries SpA

Reggiolo (RE) (Italy)(Head Quarter)

Comer Industries (Shaoxing) Co LtdShaoxing (China)

Comer Industries Components SrlMatera (MT) (Italy)

Comer Industries (Jiaxing) Co LtdJiaxing (China)

Comer Industries India Pvt Ltd

Bangalore (India)

Comer Industries UK Ltd

Leicester (UK)

Comer IndustriesInc

Charlotte NC (US)

Comer GmbH

Schermbeck (Germany) (Sales Office)

Comer Industries Sarl

Serris (France)(Sales Office)

Comer Industries do Brasil EIRELILimeira SP, Brazil

100% 100%

95%34,2%

65,8%

100% 100%

99,9%100%

100%

Sales office legal entity

Trading company

Production company


Thanks for your attention

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