Slide 1: Company Presentation
COMPANY PRESENTATION June 2019
Slide 2: Forward Looking Statement
Forward Looking Statement This presentation may contain forward-looking statements that are subject to risks and uncertainties, including those pertaining to the anticipated benefits to be realized from the proposals described herein. Forward-looking statements may include, in particular, statements
Slide 3: Agenda
01. THE COMPANY 02. THE INDUSTRY 03. THE STRATEGY AGENDA 04. GOVERNANCE 05. FINANCIALS 06. INVESTMENT CASE 07. ANNEX
Slide 4: The Company
THE COMPANY
Slide 5: The Leading ICT Distributor in Southern Europe
The Leading ICT Distri In Southern Europe Among the top 50 Italian industrial Groups by revenues* (*) Source: MBRES Mediobanca 2018
Slide 6: History
© esprinet fo) | Incorporation of Celo | re] InJuly listed on the i) and Micromax, Italian | ‘70s 1 Srdstnbutors | «= 2OOO HBHHEEEEE 8B BS DOWD D0» Established underthe | 19 80 ‘ Merger of Celo, | Esprinet toreach name Comprel, | | Micromaxand Comprel, the #1 position in ~ semiconductor | | Intoa ne
Slide 7: Group Structure
Group Structure Esprinet S.p.A. IT & CE Distributor (Italy) 5% 100% 100% 80% 100% 51% 95% Esprinet Portugal Lda Esprinet Iberica S.L.U. V-Valley S.r.l Celly S.p.A. Nilox Deutschland GmbH 4Side S.r.l. IT & CE Distributor IT & CE Distributor Value-Added Distributor Accessories Company Accessories Comp
Slide 8: Key Historical Financials
Key Historical Financials NOTE: All figures in Million € SALES EBIT EBIT adjusted for non-recurring items 3.571 84 4.000 90 1,2 3.217 3.042 80 2.694 3.500 1 67 2.430 2.373 70 2.291 2.225 2.205 3.000 2.096 2.043 56 56 2.119 53 1.932 2.500 60 0,8 48 47 1.628 44 1.499 42 50 40 41 41 38 2.000 0,6 1.315
Slide 9: Sales Mix
Sales Mix 100% 28.1% 35.9% 14.2% 9% 9.4% 3.3% 3.6 bn 1005M 1279M 513M 321M 337M 116M
Slide 10: Logistic Capability
Logistic Capability MORE THAN MORE THAN #SKU on stock #SKU Shipped 144K 63.7K (on average) 90.000 sqm 40.000 sqm 130.000 sqm Warehousing in Italy in Spain area 5.8 milion Shipped boxes 35.3 million Shipped Items • Customized delivery • Lab service installations HW e SW • Customized boxes • Boxes, pa
Slide 11: #1 & Growing In A Growing Market
#1 & Growing In A Growing Market ESPRINET SHARE ON TOTAL DISTRI SALES IN ITALY-SPAIN-PORTUGAL 16.000 25,6% 26,0% 14.6 B€ 14.000 13.3 B€ 25,0% 24,4% 11.7 B€ 11.8 B€ 24,2% Other Distri 12.000 24,0% 10.000 23,0% 11.090 23,0% 10.090 Esprinet 8.000 9.025 8.828 22,0% 6.000 21,0% 4.000 Share 2.000 20,0% 3.
Slide 12: Ranking South Europe
Ranking South Europe SALES 2018 SHARE SALES 2017 SHARE ITALY SPAIN PORTUGAL 1 Esprinet 3.571 24,4% 3.218 24,2% • • • 2 Tech Data 2.559 17,5% 2.363 17,8% • • • 3 Ingram Micro 1.910 13,0% 1.828 13,7% • • 4 Computer Gross 1.211 8,3% 1.065 8,0% • 5 Arrow ECS 807 5,5% 716 5,4% • • 6 Attiva 361 2,5% 326 2
Slide 13: Human Resources
Human Resources 1.247 2018 employees 1.263 792 471 ITALY IBERIA 2017 employees 708 Sales & Marketing 555 Back Office Average years of seniority in the company: 9.9 8.7 ITALY IBERIA 571 Male headcount 692 Female headcount (45%) (55%) Consolidated 2018 end-year figures
Slide 14: The Industry
THE INDUSTRY
Slide 15: Go To Market: Technology
Go To Market: Technology • Personal computers • Home networking IT CLIENTS • IT Accessories • IT Clients sw • Monitors • Printing & office solutions 7.2bn* • Other peripherals • Supplies • Home storage • Stationary products • Servers • Cloud solutions ADVANCED SOLUTIONS • Storage • Tech services • N
Slide 16: Go To Market: Suppliers
Go To Market: Suppliers IT CLIENTS ADVANCED SOLUTIONS CONSUMER ELECTRONICS The vendors displayed are just a selection aimed at representing the product category
Slide 17: Go To Market: Customers
Go To Market: Customers • Dealers • System Integrators PROFESSIONAL • Printing specialists • ISV IT RESELLERS • VARs • Telcos SPECIALIZED • Telco specialists • Electrical contractors VERTICAL • Photo shops • Videogame specialists CHANNELS • Furniture specialists • Stationary shops • Speciality Retai
Slide 18: Size Of Addressable End User Market
Size Of Addressable End User Market ITALY-SPAIN-PORTUGAL: TOTAL ICT SPENDING AT DISTRI PRICE 45.000 38,9 B€ 39,6 B€ 39,9 B€ 39,8 B€ 40,0 B€ 40.000 35.000 10.063 10.499 9.273 10.775 10.987 30.000 25.000 16.912 17.061 16.637 16.435 16.620 20.000 15.000 10.000 5.273 5.358 5.425 5.369 5.434 5.000 7.447
Slide 19: Weight Of Distris On Addressed Market
Weight Of Distris On Addressed Market ITALY-SPAIN-PORTUGAL: TOTAL ICT SPENDING AND SHARE OF DISTRIBUTORS (EX-WHITE GOODS) 45.000 56,0% 54,0% 53,0% 52,0% 40.000 50,6% 50,0% 48,0% 46,0% 45,2% 35.000 44,0% 42,0% 39,5% 40,1% 40,0% 30.000 38,0% 36,0% 34,0% 32,0% 25.000 30,0% 13.641 28,0% 16.116 14.329 17
Slide 20: Additional Opportunities In White Goods
Additional Opportunities In White Goods ITALY-SPAIN-PORTUGAL: TOTAL ICT SPENDING AND SHARE OF DISTRIBUTORS (EX-WHITE GOODS) 45.000 56,0% 54,0% 53,0% 52,0% 40.000 50,6% 50,0% 48,0% 46,0% 45,2% 35.000 44,0% 9.273 10.063 10.499 10.775 10.987 42,0% 39,5% 40,1% 40,0% 30.000 38,0% 36,0% 34,0% 32,0% 25.000
Slide 21: Why A Distributor
Why A Distributor ICT Distribution share on total ICT addressable sales grew from 39.5% (2015) to 50.6% (2018) and is forecasted to grow furthermore (53% expected in 2019). The “Why” for Vendors • Reduction of distribution fixed cost • Buffering stock • Credit lines & Credit collection capabilities
Slide 22: The Journey From Analog To Digital
The Journey From Analog To Digital • The End-user market is offering unprecedented opportunities of growth • 5G introduction will be a game changer for multiple industries paving the way to new requests from both companies, governments and people • The ICT industry will expand into new areas of busi
Slide 23: Inventory Risk Mitigants
Inventory Risk Mitigants «Stock Protection Clause» • A typical contractual clause provided by the vast majority of Vendors in which they assume the risk of inventory devaluation arising from purchase list price reductions planned by the Vendor itself. • During a contractual period which typically sp
Slide 24: Factoring & Credit Insurance Policies
Factoring & Credit Insurance Policies Credit insurance • Large and medium sized distributors routinely apply contracts with top-rated Credit Insurance Companies shielding the risk of default of debtors with deductibles typically between 10% to 15% of the insured value. Factoring/Securitization progr
Slide 25: Gross Profit Drivers
Gross Profit Drivers Product categories • Commoditized product categories, such as Notebooks or Smartphone, typically allow for lower Gross Profits Margins as compared to more complex products such as many “Advanced Solutions” products Vendor relative strength • Highly known vendors with a strong br
Slide 26: Credit Notes
Credit Notes The Industry operates with a significant amount of Credit Notes accruals at any given end-period • Vendors routinely operate with commercial programs that envisage significant amounts of price adjustments for multiple reasons such as: • End-period accruals for target achievements • Stoc
Slide 27: The Strategy
THE STRATEGY
Slide 28: The Key Trends In Our Industry
The Key Trends In Our Industry 1 3 The emergence of the «XaaS» The migration from «pure» (Everything as a Service) 5 brick&mortar or «pure» onliners business model to «omnichannel» retailers The growing «consumerization» of professional customers service-level expectations GROSS PROFIT GROSS PROFIT
Slide 29: Gross Profit Opportunities
Gross Profit Opportunities 1 The industry is undergoing a transformation with the growth of “As a Service” or “Consumption” based utilization models against traditional “Transactional” model 1 Typical “As a service” models include The emergence of the «XaaS» • Cloud Computing, both in the form of In
Slide 30: Gross Profit Opportunities
Gross Profit Opportunities 1 There is a growing number of examples of Vendors focusing on key technologies: • IBM: sold Printers, PCs & Servers and focused on Services, Cloud and A.I. • HP: Split into HP Inc (PCs & Printers) and HPE (Advanced Solutions) 2 • HPE: spun off its Software and Services di
Slide 31: Gross Profit Threats
Gross Profit Threats 1 Retailers are struggling to cope with the pure on-liners competition and are in the middle of journey to provide a comprehensive «omnichannel experience» to their customers 3 During the transition many traditional retailers are putting extraordinary pressure on suppliers to fu
Slide 32: Gross Profit Threats
Gross Profit Threats 1 PCs and smartphones, the two ICT product lines with higher sales volumes, have witnessed modest innovation in the last years and therefore margins for the manufacturers decreased 4 Gross profit opportunities could arise from a disruptive round of innovation at the moment not y
Slide 33: Operational Trends
Operational Trends 1 The employees of Resellers and Retailers are exposed everyday to the interaction with companies such as Amazon, Starbucks, Apple that are using amazing levels of customer experience as a competitive 5 advantage The growing «consumerization» More and more they expect the same lev
Slide 34: Summary Of Key Market Assumptions
Summary Of Key Market Assumptions A growing number of A 30B€ flattish end-user 10B€ of additional Digital technologies «Everything as a Service» market where distri market opportunity transforming former a source of Working share moved from 39,5 from White Goods Analog markets and Capital reduction
Slide 35: Esprinet Current Positioning
Esprinet Current Positioning Italy Spain Portugal IT Clients PORTFOLIO Advanced Solutions Consumer Electronics Resellers MARKET Specialized Channel COVERAGE Retailers & E-tailers IT Clients MARKET Advanced Solutions SHARE Consumer Electronics
Slide 36: The Strategy
The Strategy Aim at being the best distributor in the region for all stakeholders by: • Getting recognized as provider of the best Customer Satisfaction in the region • Leveraging the size in Italy and Spain to improve ROCE on IT Clients & Consumer Electronics • Pushing for an higher weight of Advan
Slide 37: Actions: Be The Best
Actions: Be The Best Getting recognized as provider Leveraging the size in Italy and Pushing for an higher weight of of the best Customer Achieving size Spain to improve ROCE on IT Advanced Solutions sales Satisfaction in the region in Portugal Clients & Consumer Electronics New procedures, tools an
Slide 38: Actions: Riding The Mid-Term Trends
Actions: Riding The Mid-Term Trends Developing further Be ready for potential new Developing a state-of-the-art Pushing on Distri adoption by the Outsourcing initiatives for markets: Robotics, A.I. Electrical «XaaS» strategy White goods manufacturers Vendors and Customers Mobility, 3D Print Long ter
Slide 39: Governance
GOVERNANCE
Slide 40: Mission & Corporate Values
Mission & Corporate Values Corporate Mission To be the best technology distributor operating in its relevant markets, assuring shareholders above-average return on investment thanks to precise, serious, honest, fast-footed, reliable, and innovative management of the customer and vendor relationship,
Slide 41: Management
Management Maurizio Rota Alessandro Cattani Maurizio Rota, was born in Alessandro Cattani, was Milan on 22 December 1957. born in Milan on 15 After early professional August 1963. After experience as Sales Supervisor completing his degree in for companies operating in the electronic engineering at I
Slide 42: Board Of Directors
Board Of Directors STRATEGY CONTROL AND REMUNERATION AND COMPETITIVENESS AND NAME POSITION EXECUTIVE INDEPENDENT APPOINTMENT COMM. SUSTAINABILITY COMM. COMMITTEE RISK COMM. Maurizio Rota Chairman • • • Alessandro Cattani CEO • • • Valerio Casari Director & CFO • • • Marco Monti Director • Matteo Ste
Slide 43: Code & Principles
Code & Principles Code of Etics Code of Conduct “231” Organisation Model The Code of Ethics applies to all The Esprinet Group wishes to This document, entitled “Organisation and Management Model activities carried out by or in the establish trade relations with its pursuant to “Legislative Decree 23
Slide 44: Star Requirements
Star Requirements • High transparency, disclosure requirements and liquidity (free float of minimum 35%) Esprinet Spa listed in the STAR • Corporate Governance in line with international standards Segment* voluntarily adhere to and comply with strict requirements *The market segment of Borsa Italian
Slide 45: Shareholders
Shareholders Significant Investments in Share Capital DIRECT % ON ORDINARY % ON VOTING DECLARANT SHAREHOLDER CAPITAL CAPITAL Francesco Monti Francesco Monti 15.709% 15.70% Giuseppe Cali Giuseppe Cali 11.253% 11.25% ANALYST COVERAGE Albemarle Funds PLC Albemarle Asset Albemarle Alternative 5.961% 5.9
Slide 46: Social Responsibility Report
Social Responsibility Report Presence of the CORPORATE OVERVIEW 3.6 bn euros of revenues N°1 First distributor in Identification of a Sustainability Competitiveness and Sustainability Italy and Spain Strategy Committee (+11% vs 2017) Green Project ENVIRONMENTAL to increase the visibility of the most
Slide 47: Financials
FINANCIALS
Slide 48: Profit & Loss
Profit & Loss (euro/mln) Q1 2019 (1) Q1 2018 (1) Var. % FY 2018 adj. (2) Sales 875,5 100,00% 781,3 100,00% 12% 3.571,2 100,00% Cost of sales (834,7) -95,34% (742,3) -95,01% 12% (3.398,7) -95,17% Q1 2019 40,8 4,66% 39,0 4,99% 5% 172,5 4,83% Gross Profit • Reported net sales at 875.5 M€ Operating cost
Slide 49: Balance Sheet Highlights
Balance Sheet Highlights excl. IFRS 16 post IFRS16 (euro/mln) 31.03.19 31.12.18 31.03.19 Net operating working capital 409,3 10,4 409,3 Goodwill 91,0 90,6 91,0 BS at March 31, 2019 Other fixed assets 29,9 27,9 108,3 Other current assets/liabilities 1,6 (12,7) 1,6 • At March 31, 2019 the Group’s net
Slide 50: Working Capital Metrics
Working Capital Metrics 70 CASH CASH CONVERSION CYCLE CONVERSION CYCLE 40 34 60 32 32 35 31 30 29 28 28 27 30 50 26 27 27 26 27 25 40 20 30 58 55 57 56 57 53 54 55 52 53 52 52 52 51 52 15 50 50 51 49 48 48 44 46 46 44 45 43 43 20 36 37 38 38 36 37 35 35 35 35 35 10 31 31 32 10 5 0 0 2015 Q4 2016 Q1
Slide 51: Profit & Loss – IFRS 16 Reconciliation
Profit & Loss – IFRS 16 Reconciliation post IFRS16 (euro/mln) Q1 2019 (1) adj. Q1 2019 (2) IFRS 16: P&L impact Sales 875,5 100,00% 875,5 100,00% Cost of sales (834,7) -95,34% (834,7) -95,34% • The first application of IFRS 16 Lease determined an increase of EBIT of 0.5 Gross Profit 40,8 4,66% - 40,8
Slide 52: Cash Flow Generation
Cash Flow Generation (euro/mln) Q1 2019 Q1 2018 Cash flow generated from operations 10,7 6,6 Cash flow provided by (used in) changes in working capital (417,3) (268,9) • Cash flow generated from operations was 10.7 M€. Other cash flow provided by (used in) operating activities (2,0) (0,1) • «Apparen
Slide 53: Return On Capital Employed
Return On Capital Employed (euro/mln) TTM ended March 31 TTM ended December 31 TTM (1) Net Operating Profit After Tax (NOPAT) 2018 2019 2017 2018 EBIT (2) 37,3 41,9 36,7 41,0 Income taxes on EBIT (3) -9,5 -10,7 -9,4 -10,5 NOPAT 27,8 31,2 27,3 30,5 Net operating working capital (5-qtr end average) 30
Slide 54: Investment Case
INVESTMENT CASE
Slide 55: Investment Highlights
Investment Highlights A new attractiveness of the market Strong positioning • A sizable and growing 14.6 B€ addressable market (*) • Strong leadership in southern Europe: 24.4% share against 17.5% of #2 (*) 2 1 • IT distribution gaining share on total IT spending (from 39.5% to 53.0% (*)) • Growing
Slide 56: Financial Targets
Financial Targets 2019 2020 on • Moderate top-line growth in future years as focus keeps being ROCE performance • FY 2019E EBIT expected in the range 38-42 • Improvements in Gross Profit % as result of M€, with a strong growth against “as mix and customer satisfaction initiatives reported” FY 2018 •
Slide 57: Share Buy-Back Program
Share Buy-Back Program Key Facts Timetable Repurchasable amounts • Share buy-back program in application of the authorization • Max purchasable total amount: granted by the AGM on May 8th, 1.47 million of shares on total 2019 • Start: 1st week of July 2019 52.40 million (2.81%) • Proposal for reduct
Slide 58: Thank you
Thank you GRAZIE +» GRACIAS * DANKE + MERCI « 7A} « dita » iat © esprinet