Franchi Umberto Marmi Spa · MIL:FUM
Franchi Umberto Marmi Spa — Investor Presentation (November 2022)
50 slides from Franchi Umberto Marmi Spa's investor presentation, November 2022
Slide 1: Franchi Umberto Marmi Investor Presentation
Franchi Umberto Marmi Investor Presentation November 2022 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: Compelling financial performance
5.1 Compelling financial performance 4
Slide 5: Historical top-line results
Historical top-line results Total Revenue(1) (in €m) Fiscal Years 9 Months +5.0% (21.5)% +27.6% +33.0% +32.0% Total revenue growing 27.6% YoY above pre-pandemic levels, sustained 65.2 65.3 62,9 by increased orders from China 51.2 47,7 9M 2022 total revenue growing 32.0% (vs 9M 2021) mainly sustained
Slide 6: 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 7: 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 8: 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 9: Revenue breakdown by country 2019 - 2021
Revenue breakdown by country 2019 - 2021 2019 A 2020 A 2021 A Revenue(1) 64.9 50.9 65.1 (€m) Revenue 23,7% 22,0% 26,3% Italy Italy Italy • After a significant decrease breakdown 37,7% between 2019 and 2020, the China China 42,0% China 47,6% Company registered a by country USA USA 9,7% USA (%) 10,8%
Slide 10: Revenues breakdown by country 9M 2021 – 9M 2022
Revenues breakdown by country 9M 2021 – 9M 2022 9M 2021 A 9M 2022 A Revenue(1) • In terms of foreign countries, 47.7 62.9 (€m) during the first nine months of 2022 the Company 2,5% registered a strong increase Italy Italy 3,5% in revenues generated in 11,5% 18,9% Cina Cina Italy and Saudi Arabia of
Slide 11: Revenue breakdown by marble quality 2020 - 2021
Revenue breakdown by marble quality 2020 - 2021 2020 A 2021 A Revenue(1) 50.6 64.7 (€m) Calacatta Calacatta 26,0% 25,2% 27,6% Revenue 31,9% Statuario Statuario • In terms of marble qualities, breakdown between 2020 and 2021 Gioia Venato Gioia Venato there was a clear increase in by marble 7,4% sales
Slide 12: Revenues breakdown by marble quality 9M 2021 – 9M 2022
Revenues breakdown by marble quality 9M 2021 – 9M 2022 9M 2021 A 9M 2022 A • In terms of marble qualities Revenue(1) 47.4 62.4 sold, it can be noted that (€m) between the first nine months of 2021 and the same period Calacatta Calacatta of 2022 there was a clear 16,3% Statuario 18,0% Statuario 27,8%
Slide 13: Quantity sold by marble quality 2020 - 2021
Quantity sold by marble quality 2020 - 2021 2020 A 2021 A Quantity(1) 43,005 48,105 (tons) Calacatta Calacatta 8,6% 12,2% 6,7% Statuario Statuario Quantity 38,6% 10,0% breakdown Gioia Venato • In terms of quantities sold by 50,5% Gioia Venato by marbles 25,1% marbles quality, in 2021 there quality (
Slide 14: Quantity sold by marble quality 9M 2021 – 9M 2022
Quantity sold by marble quality 9M 2021 – 9M 2022 9M 2021 A 9M 2022 A Quantity(1) 36,569 36,487 (tons) Calacatta Calacatta 11,2% 14,6% 8,8% Statuario Statuario Quantity 38,8% 40,0% 13,7% • In terms of quantities sold by breakdown Gioia Venato Gioia Venato marbles quality, in 9M2022 by marbles there
Slide 15: Revenue breakdown by marble type 2020 - 2021
Revenue breakdown by marble type 2020 - 2021 2020 A 2021 A Revenue(1) 50.5 64.7 (€m) • Compared in absolute numbers, the percentage of Revenue sales between blocks and slabs has not radically breakdown 43,3% Blocks Slabs 42,6% Blocks Slabs changed between 2020 and by marbles 56,7% 2021 57,4% type (%
Slide 16: Revenues breakdown by marble type 9M 2021 – 9M 2022
Revenues breakdown by marble type 9M 2021 – 9M 2022 9M 2021 A 9M 2022 A Revenue(1) 47.4 62.4 (€m) • In terms of marble type, between the first three quarters of 2021 and 2022 there was an increase in Revenue absolute values in both breakdown 40,3% Blocks Slabs 44,0% Blocks Slabs block and slab sales
Slide 17: Quantity breakdown by marble type 2020 - 2021
Quantity breakdown by marble type 2020 - 2021 2020 A 2021 A Average price by 1,246 1,091 1,430 1,244 marble type (€/tons) • In both 2020 and 2021, there Quantity(1) (tons) 43,005 48,105 was a greater quantity of blocks sold (53.9%) than slabs. Moreover, compared to 2020, a larger proportion of marbl
Slide 18: Quantity breakdown by marble type 9M 2021 – 9M 2022
Quantity breakdown by marble type 9M 2021 – 9M 2022 9M 2021 A 9M 2022 A Average price by 1,409 1,160 1,822 1,584 marble type (€/tons) • In both 9M 2021 and 9M 2022, there was a greater Quantity(1) (tons) 36,569 36,487 quantity of blocks sold than slabs. Moreover, compared to 9M 2021, a larger propor
Slide 19: Marble market overview
f 2 | Marble market overview 4 marmi
Slide 20: 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 21: 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- Statuario Calacatta renowned for its superior quality and (€/ton) unique elegant classic look 2,905 • Carrara marble experienced significant premiumis
Slide 22: Luxury product & best-in class operations
3 Luxury product & best-in class operations 22
Slide 23: 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 2,391€/ton(1) 3,211€/ton(1) 757€/ton(1) 926€/ton(1) 827€/ton(1) Revenue share: Revenue share: Revenue share: Revenue share: Revenue share
Slide 24: FUM's Global Presence
FUM’s Global Presence Others 22% Italy 42% 10% €65m 2021 Total USA Revenue(1) 26% China Top 10 countries by of revenues generated revenue size in 2021 78% from top 3 countries FUM marbles reach FUM’s recurrent dealers 450+ clients and 2021 between 2019 Note(s): (1) Includes other income 24
Slide 25: A truly global client base
A truly global client base FUM customer base concentration 32% 30% 31% 37% 40% 38% 2019 2020 2021 Other Brokers 100% countries Broker ~60% 12% 12% 12% 19% 18% 19% 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 26: 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 27: Growth Strategy
f 4 | Growth Strategy / marmi
Slide 28: 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 29: 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 30: 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 31: 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 32: 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 33: 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 34: Appendix
5 Appendix 34
Slide 35: 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 36: 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 36
Slide 37: 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 53% Calacatta of FUM Sales FUM’s superior Unique Italian heritag
Slide 38: 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 39: 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 40: 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 41: 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 42: 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 43: 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 44: 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 45: 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 46: 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 47: 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
Slide 48: 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 49: 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 50: 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
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