Franchi Umberto Marmi Spa · MIL:FUM
Franchi Umberto Marmi Spa — Investor Presentation (March 2023)
45 slides from Franchi Umberto Marmi Spa's investor presentation, March 2023
Slide 1: Franchi Umberto Marmi Investor Presentation
Franchi Umberto Marmi Investor Presentation March 2023 1
Slide 2: Notice to Recipient
Notice to Recipient The information contained in this documentation has been prepared by Franchi Umberto Marmi S.p.A. (the “Company”) and its consolidated subsidiaries (together, the "Group") for the sole purpose of the presentation made to you concerning the Company. This presentation and the infor
Slide 3: Today's presenting team
Today’s presenting team • 34 years with FUM Alberto Franchi • Director from 1988 to 1991 Chairman & CEO • Chairman and CEO since 1990 • 31 years with FUM Carlo Varni • Over 20 years within the commercial department General Manager • Leading the commercialisation of marble slabs • 4 years with FUM Ma
Slide 4: Company at glance
Company at glance Strong 2021 financials… International leader of high-quality marble Luxury product portfolio Gioia Statuario Calacatta €65.3m +6.4% Headquarter Venato Total revenue(1) Revenue CAGR (‘17-’21) Carrara Following acquisition of IGFC in 2021, FUM €24.7m 37.9% secured privileged Adj. EBI
Slide 5: From the quarry to the end customer
From the quarry to the end customer Scope of activity of FUM TRADING OF BLOCKS MARBLE PURCHASE OF BROKERS & END CONSUMERS EXTRACTION BLOCKS DEALERS Minority interest offering a privileged acccess for FUM TRANSFORMATION TRADE OF INTO SLABS SLABS 5
Slide 6: Holistic luxury positioning
Holistic luxury positioning FUM portfolio focuses on the highest quality marble … Only extracted in the mountains above Carrara by a handful of quarries, FUM has a privileged access to 25-30% of total Calacatta and Statuario production 60% Calacatta of FUM Sales FUM’s superior Unique Italian heritag
Slide 7: A differentiated marketing approach
A differentiated marketing approach Warehouse showrooms Collaborations • FUM collaborates with stone sculptors to exalt Carrara marble and • Headquarters of 60,000m2 where 5 modern warehouses are give its product new dimensions used as showrooms for clients • Build exhibition corners in the most imp
Slide 8: Key investment highlights
Key investment highlights Compelling financial performance Luxury positioning translates into best-in-class margins and stable cash flow generation, enabling significant headroom to create value for shareholders 1 Marble market overview Solid demand for Italian marble, stimulated by its higher produ
Slide 9: M&A case study - IGFC (2021)
M&A case study - IGFC (2021) In 2021 FUM acquired 50% of IGFC(1), which owns 50% of one the most important quarries producing Statuario and Calacatta in the Apuane district As a result of the deal, FUM has exclusive access to 25% (~10k tons a year) of the production of the two most renowned marble q
Slide 10: Compelling financial performance
5.1 Compelling financial performance 10
Slide 11: Historical top-line results
Historical top-line results Total Revenue(1) (in €m) +5.0% (21.5)% +27.6% +16.8% 76.3 Total revenue growing 16.8% YoY in 2022, registering a record turnover 65.2 65.3 51.2 2022 total revenue growing mainly sustained by increasing orders from Middle East Further boost in both revenue and EBITDA expec
Slide 12: Historical margins results
Historical margins results Adj. EBITDA(1) (in €m) Fiscal Years First Half 41.7% 35.6% 37.9% 38.4% 40.3% Strong margins even during contraction period thanks to luxury positioning and technology expertise Additional increase in marginality during 1H 2022 thanks to better product mix (higher quota of
Slide 13: Capital expenditure and strong cash generation
Capital expenditure and strong cash generation Capital expenditure(1) Cash conversion ratio(2) (in €m) 7.5% 4.2% 2.7% 1.3% 96.8% 93.0% 4.9 88.1% 81.8% 2.1 1.7 0.5 FY 2019 FY 2020 FY 2021 1H 2022 FY 2019 FY 2020 FY 2021 1H 2022 % of Total revenue Source (s): Company’s annual reports Note(s): (1) FY21
Slide 14: Net Income, Dividend Pay-out, NFP
Net Income, Dividend Pay-out, NFP Net income NFP (in €m) Fiscal Years First Half 39.8% 69.4% 78.9% 22.5 16.3% 27.8% 37.2 25.4% 20.2% 15.9% 8.5 7.9 16.6 10.3 10.4 (1) 9.3 (1) 37.7 36.5 6.8 7.7 0.7 5.1 1.1 FY2019 FY2020 FY2021 1H 2021 1H 2022 (8.0) (7.1) (13.8) % of Total revenue (6.2) (23.7) % of Tot
Slide 15: Revenues breakdown by country 2021 – 2022
Revenues breakdown by country 2021 – 2022 2021 A 2022 A Revenues • In terms of foreign countries, 65.1 75.8 (€/m) during the 2022 the Company registered a strong increase 18,6% 14,6% in revenues generated in Italy 2,7% Italy 3,3% Italy and Saudi Arabia of € Cina Cina 2.1 million (+8%) and € 8.6 Reve
Slide 16: Revenue breakdown by marble quality 2021 - 2022
Revenue breakdown by marble quality 2021 - 2022 2021 A 2022 A • In terms of marbles quality Revenues (*) 64.7 75.0 (€/m) sold, it can be noted that between the end of 2021 and Calacatta Calacatta the same period of 2022 there was a clear increase 17,3% Statuario 17,3% Statuario 27,6% 27,3% in sales
Slide 17: Quantity sold by marble quality 2021 - 2022
Quantity sold by marble quality 2021 - 2022 2021 A 2022 A Quantity(1) 48,105 45,476 (tons) Calacatta Calacatta 12,2% 14,0% Quantity 10,0% Statuario Statuario • In terms of quantities sold by 38,6% 39,6% 12,7% marbles quality, in 2022 there breakdown Gioia Venato Gioia Venato was a growth in Calacatt
Slide 18: Revenue breakdown by marble type 2021 - 2022
Revenue breakdown by marble type 2021 - 2022 2021 A 2022 A Revenue(1) 64.7 75.0 (€m) • In terms of marbles type, between the end of 2021 and 2022 there was an increase Revenue in absolute values in both breakdown 42,6% Blocks Slabs Blocks Slabs block and slab sales, with a by marbles 49,2% 50,8% gro
Slide 19: Quantity breakdown by marble type 2021 - 2022
Quantity breakdown by marble type 2021 - 2022 2021 A 2022 A Average price by 1,430 1,244 1,704 1,600 marble type (€/tons) Quantity(1) (tons) 48,105 45,476 • In 2022 there was a greater quantity of slabs sold Quantity breakdown by (50.7%) than block. 46,1% Blocks Slabs Blocks Slabs Moreover, compared
Slide 20: Marble market overview
2) Marble market overview marmi
Slide 21: FUM's total addressable market
FUM’s total addressable market Total Addressable Market - 2020 Carrara best in class marble Carrara marble has the highest quality worldwide because of its ~€18.0bn (1) unique physical characteristics: 99% CaCO3 with distinctive grain type Global marble market +4.5% CAGR ‘22-’27 ~€2.0bn (2) Market d
Slide 22: Positioned at the top of the Italian's most premium district
Positioned at the top of the Italian’s most premium district Raw marble average selling price per geography • The Carrara district’s marble is world- renowned for its superior quality and (€/ton) Statuario Calacatta Statuario Calacatta unique elegant classic look 2,905 3,702 • Carrara marble experie
Slide 23: Luxury product & best-in class operations
3 Luxury product & best-in class operations 23
Slide 24: A best in class quality and diversified product offering
A best in class quality and diversified product offering Calacatta Statuario Gioia Venato Venatino Others High-end High-end Medium-end Medium-end Medium / Low-end 3,205€/ton(1) 4,252€/ton(1) 705€/ton(1) 1,092€/ton(1) 949€/ton(1) Revenue share: Revenue share: Revenue share: Revenue share: Revenue sha
Slide 25: Technology to maximise block value
Technology to maximise block value DAMAGED WASHED AND KEPT UNDER REINFORCED BLOCKS SLABS READY FOR BLOCKS COVERED WITH PRESSURE FOR 24H CUT INTO SLABS PROCESSING SALE RESIN UNDER VACUUM FUM leverages its cutting-edge technology to enhance its value proposition for slabs Ability to market increased v
Slide 26: FUM's Global Presence
FUM’s Global Presence Others 17% Italy 39% USA 10% €76m 2022 Total Revenue(1) 14% Saudi 20% Arabia China Top 10 countries by of revenues generated revenue size in 2022 72% from top 3 countries FUM marbles reach FUM’s recurrent dealers 450+ clients and 2022 between 2019 Note(s): (1) Includes other in
Slide 27: Privileged procurement process while remaining flexible
Privileged procurement process while remaining flexible FUM suppliers by source in 2021(1) Key advantages of diversified suppliers Only minority interest for diversification purpose Quarries in which FUM owns an interest 18,5% FUM enjoys privileged marble supply through: • Long-term preferential con
Slide 28: Logistical process
Logistical process Extraction Storage Shipment • Carried out through trusted and long-term relationships third part shippers • Material is transferred to the warehouse of the Issuer • Slabs are stored in same storage until the day of the by trucks shipment • Deliveries within Italy are predominantly
Slide 29: A truly global client base
A truly global client base FUM customer base concentration 30% 31% 32% 40% 38% 39% 2020 2021 2022 Other Brokers 100% countries Broker ~60% 12% 12% 11% 18% 19% 18% Dealers Client 1-10 Client 11-20 Clients 21-30 Others Dealers Dealers • FUM built up decades of relationships with dealers and brokers th
Slide 30: ESG Considerations
ESG Considerations FUM’s environmental impact Energy intensive Risk of landslides Transformation process from fine debris produced by block cutting - 76% greenhouse gas emissions than average ceramics producer(2) ✓ FUM’s slabs have lower environmental ✓ FUM imposed to its suppliers to work impact on
Slide 31: Growth Strategy
4 | Growth Strategy marmi
Slide 32: FUM organic growth strategy
FUM organic growth strategy Market Penetration Market Expansion Partnerships Projects Penetration focused on high- FUM has set goals to expand in Develop existing and new Decades of collaborations allows margins markets, such as new geographies to leverage its partnerships across the globe FUM to ta
Slide 33: China market expansion strategy
China market expansion strategy tons imported in 2021(1), making China 361k the largest importer of Italian marble(2) Expansion Strategy ▪ FUM targets Megalopolis given Market strength UHNWI driving demand since the 90s high concentration of wealth ▪ Increase FUM’s penetration with Preferences for b
Slide 34: US market expansion strategy
US market expansion strategy Strong market for high-end marble qualities due to luxury projects and estates Expansion Strategy ▪ 10% of FUM 2021 sales Market strength $2,535 Average FUM vs. average Italian marble vs. exports in US(1) coming from the US backed $1,661 by showroom in New York City Impo
Slide 35: Established expansion strategy into new markets
Established expansion strategy into new markets GCC(1) Growing interest for marble with 33% increase in import of processed stones since 2014(2) Kuwait Bahrain Qatar New luxury projects driven by demand Saudi UAE from UHNWIs Arabia Oman Real estate development across the region for state-of-the-art
Slide 36: Stronger together – FUM's strategic partnerships
Stronger together – FUM’s strategic partnerships Partnerships across the globe, laying the foundations for future growth • Partnership with distributor Ciot NY for a new showroom in Brooklyn, New York City • Partnership with local distributor Corsi & Nicolai since 2019 • The collaboration builds out
Slide 37: International exposure to renown architectural projects
International exposure to renown architectural projects Waldorf Astoria Saudi Arabia’s Hotel in NYC, Investment Fund synonymous with (PIF) renewed its 5- exquisite luxury for year strategy aiming over a century, is to develop the undergoing Kingdom’s economy renovations since and real estate 2017(1)
Slide 38: Appendix
5 Appendix 38
Slide 39: High end marble benefiting from attractive growth drivers
High end marble benefiting from attractive growth drivers Growing UHNWI group Sustained demand for Italian quality products +27%(2) expected UHNWI population growth +3.3%(4) — ’22-’25 expected CAGR for the luxury Italian for 2025 vs. 2020 segment • UHNWI have a large portion of their wealth in • Ita
Slide 40: Flexible block trade
Flexible block trade FUM, thanks to its experience and know-how, operates with bespoke contract with its dealers and brokers across all geographies This allows the company to offer maximum flexibility to its customers on timing and size, but also price negotiation Such flexibility is necessary for a
Slide 41: Transformation using advanced technologies
Transformation using advanced technologies • Each block goes through internal and external damage assessment 1 Reinforcement • Damaged blocks undergo a thorough under vacuum Recovery Stone reinforcement process (“Risanamento”) acquisition (2021) • Marble blocks are cut in the FUM sawmill located in
Slide 42: Management Organisational Structure
Management Organisational Structure Board of Directors Bernarda Maurizia Alberto Paolo Marco Gualtiero Roberto Franchi Maurizio Gianluca Leto Andrea Davide Franchi Orlando Galatieri Vanelli Lettieri Vice Saravini Cedro Di Priolo Franchi Giovanetti Chairman & Daviddi di Genola Marketing Independent C
Slide 43: Regulatory framework
Regulatory framework Quarries, qualify as a property (bene estimato), and/or concession: Renewal of authorization (art. 38 of the Tuscany Regional Law No. 35/2015) Property (bene estimato) Concession Owners of authorizations(2) on concessions can apply for an extension of maximum of 25 years if: • A
Slide 44: Call options
Call options FUM has four option contracts Alberto Bernarda Counterparty Carrara Real Estate Franchi Franchi 33.3% 16.7% 50% 50% 25% 50% M.P.A. Marmi Pregiati N.P.A. Nuovi Pregiati Right to purchase (%) shareholding in Marmi Carrara S.r.l. Bettogli Marmi S.r.l. Apuani S.r.l. Apuani S.r.l. Right to p
Slide 45: Mix of property and concession – Gioia Pianello example
Mix of property and concession – Gioia Pianello example Gioia Pianello example case • Gioia Pianello quarry is a combination of private property (bene estimato) and concession area • The area has an approximate 50/50 split between two categories • Example highlights how extraction process can become
Franchi Umberto Marmi — Investor Presentation (March 2023) on 6ix