Befesa Sa · XETR:BFSA

Befesa Sa — Q2 2017 Earnings Presentation

41 slides from Befesa Sa's earnings presentation, Aug 3, 2017

1. Slide 1: Second Quarter 2017 Earnings Presentation

   BEFESA BEFESA Second Quarter 2017 Earnings Presentation 3rd August 2017

2. Slide 2: Agenda: Introduction, Highlights

   BEFESA Business Steel Dust Aluminium Salt Business Introduction Financials Q&A Appendix Highlights Recycling Services Slags Services Outlook Wolf Lehmann Chief Financial Officer 2

3. Slide 3: Forward-looking Statement

   BEFESA Forward-looking Statement This presentation contains forward-looking statements and information relating to Befesa and its affiliates that are based on the beliefs of its management as well as assumptions made and information currently available to Befesa and its affiliates. Such statements r

4. Slide 4: Agenda: Business Highlights

   BEFESA Business Steel Dust Aluminium Salt Business Introduction Financials Q&A Appendix Highlights Recycling Services Slags Services Outlook Javier Molina Chief Executive Officer 4

5. Slide 5: Befesa 1H 2017 Highlights

   BEFESA Befesa 1H 2017 Highlights Strong 1H revenues of €374m / +24% YoY and Earnings Growing to Adj EBITDA of €83m / +54% as well as Adj EBIT of €69m / +77% … Continued Run Rate Growth … LTM(*) 1H’17 Revenue of €685m, Adj. EBITDA of €162m (24% margin) & Adj. EBIT of €133m (19% margin) Strong core bu

6. Slide 6: Befesa Business at a Glance

   BEFESA Befesa Business at a Glance Befesa is the market leader in providing hazardous waste recycling services to the steel and aluminium recycling industries LTM 1H ‘17 Revenues: €685m LTM 1H ‘17 Adj. EBIT: €133m LTM 1H ‘17 Adj. EBITDA: €162m Salt Slags 2nd Alu 2nd Alu 14% 4% Salt Slags 7% 2nd Alu

7. Slide 7: Agenda: Steel Dust Recycling Services

   BEFESA Business Steel Dust Aluminium Salt Business Introduction Financials Q&A Appendix Highlights Recycling Services Slags Services Outlook Asier Zarraonandia Managing Director of Steel Dust Recycling Services 7

8. Slide 8: Consolidated Steel Dust Services – Financial Highlights

   BEFESA Consolidated Steel Dust Services – Financial Highlights YoY increase in revenues and earnings driven by higher volumes as well as operational excellence and higher prices Steel Dust Services – Revenues (€m) Revenues Highlights  YoY 2Q ’17 vs. ‘16 revenues increased by €11 million or +15% mai

9. Slide 9: Steel Dust Recycling Services – Operational Performance

   BEFESA Steel Dust Recycling Services – Operational Performance Strong 2Q EAF Dust and WOX volumes … Growing +15% / +12% YoY respectively … Growth initiatives on track Volumes & Capacity Utilization (K tons) Highlights  EAF Dust Throughput  Solid 2Q EAF dust throughput up +15% YoY global 315,5 - St

10. Slide 10: Zinc Prices & Hedging

    BEFESA Zinc Prices & Hedging Blended zinc prices incl. hedging up to €2.054 in 2Q‘17 or +12% YoY Zinc Prices  During 2Q ‘17 LME zinc prices traded on average $679/t above 2Q ’16 2H ‘16: 1H ‘17: €2.038/t €1.896/t ($2.596/t vs $1.918/t), and approx. $184/t above 1Q ‘17 avg level. 5.000 € 2013: 2Q ‘14

11. Slide 11: Agenda: Aluminium Salt Slags Services

    BEFESA Business Steel Dust Aluminium Salt Business Introduction Financials Q&A Appendix Highlights Recycling Services Slags Services Outlook Javier Molina Chief Executive Officer 11

12. Slide 12: Consolidated Alu Salt Slags Services – Financial Highlights

    BEFESA Consolidated Alu Salt Slags Services – Financial Highlights Growth in revenues & earnings driven by good volumes and recovery in alu alloy prices … Alu metal margin still below historical averages Alu. Salt Slags Services Revenues(*) (€m) Revenues Highlights  2Q ‘17 revenues grew 43% YoY mai

13. Slide 13: Aluminium Salt Slags Services – Operational Performance

    BEFESA Aluminium Salt Slags Services – Operational Performance Good volume in Salt Slags; Growth initiatives on track … Bernburg fully loaded … alu metal margin still room to recover Volumes & Capacity Utilization (K tons)  Salt Slags & SPL Recycled Highlights  2Q with solid volume growth 251,9 26

14. Slide 14: Agenda: Financials

    BEFESA Business Steel Dust Aluminium Salt Business Introduction Financials Q&A Appendix Highlights Recycling Services Slags Services Outlook Wolf Lehmann Chief Financial Officer 14

15. Slide 15: Befesa Consolidated Financial Highlights

    BEFESA Befesa Consolidated Financial Highlights Strong growth in Revenues & Earnings YoY … 3rd Consecutive Quarter with Adj. EBITDA c.€41-43 … LTM 1H Adj. EBITDA €162m (24% margin) Befesa Consolidated Revenues (€m) Highlights 374,4 201,6 300,8  2Q ‘17 consolidated revenues at €202 156,1 million, +2

16. Slide 16: LTM Revenue and Adjusted Earnings Trend

    BEFESA LTM Revenue and Adjusted Earnings Trend Second quarter performance continues with strong trend with steady revenue growth and stable adjusted earnings margins Revenues (€m) Adj. EBITDA & Margin (€m, %) Adj. EBIT & Margins (€m, %) 685 22% 24% 24% 17% 19% 19% 640 612 162 151 133 133 122 103 FY

17. Slide 17: Befesa Consolidated P&L

    BEFESA Befesa Consolidated P&L 2Q Total Revenue up +29%/+€46 YoY; Growth Initiatives Delivering … Total EBITDA up +20%/+€6 YoY … Total EBIT up +32%/+€7 YoY Consolidated P&L (‘000 euros) Reported(*) Reported (*) BEFESA Profit & Loss Statement ('000 euros) 2Q 2016 2Q 2017 Change 1H 2016 1H 2017 Change

18. Slide 18: Befesa Consolidated Cash Flow Statement

    BEFESA Befesa Consolidated Cash Flow Statement Strong Cash Generation … Cash Up €40 YoY from €44 to €84 after (€5) Taxes, (€23) Interests, (€5) Maintenance & Productivity CapEx … Consolidated Cash Flow (‘000 euros) BEFESA Reported(*) Reported (*) Cash Flow Statement ('000) 2Q 2016 2Q 2017 Change 1H

19. Slide 19: Debt Structure & Net Debt Position – June YTD 2017

    BEFESA Debt Structure & Net Debt Position – June YTD 2017 Reduced leverage further to x2.8 with 2Q close … Net Debt / PIK Note €162m Total Net LTM June ‘17 Adj EBITDA Debt(1)(5) €456m x2,8(2) Befesa Medio Ambiente Ring fence structure Steel Dust Recycling Services Alu Salt Slags Recycling Services N

20. Slide 20: Benchmarking – Business Model / Characteristics

    BEFESA Benchmarking – Business Model / Characteristics Befesa shows the key characteristics of a premium services and waste management company Premium Metal Standard Biz. Services / Recyclers Biz. Services Waste Mgmt. Stability of earnings     Delivering “mission critical” services     High

21. Slide 21: Benchmarking – Financial Comparison

    BEFESA Benchmarking – Financial Comparison Befesa's financial performance is closest to Business Services companies and US Waste players … 2017 2017 Cash Revenue Growth EBIT Margin Flow Conversion(1) (13-16A CAGR) 19% 72% 7.3% Greater (2Q17 LTM) (2Q17 LTM) (13-2Q17 LTM CAGR) Similarity Business 13%

22. Slide 22: Agenda: Outlook

    BEFESA Business Steel Dust Aluminium Salt Business Introduction Financials Q&A Appendix Highlights Recycling Services Slags Services Outlook Javier Molina Chief Executive Officer 22

23. Slide 23: 2017 Main Priorities & Overview

    BEFESA 2017 Main Priorities & Overview Main Priorities for 2017 Business & Market Overview Focus on profitable growth in core 2017 expected to be another strong markets (Steel Dust & Alu Salt Slags) year for Befesa based on current … Continuing operational excellence market trends …  Maintain a lea

24. Slide 24: Q&A

    BEFESA Business Steel Dust Aluminium Salt Business Introduction Financials Q&A Appendix Highlights Recycling Services Slags Services Outlook Q&A 24

25. Slide 25: Appendix

    BEFESA Business Steel Dust Aluminium Salt Business Introduction Financials Q&A Appendix Highlights Recycling Services Slags Services Outlook Appendix 25

26. Slide 26: Befesa New Financial Segmentation Reporting

    BEFESA Befesa New Financial Segmentation Reporting Financial Reporting by Segments adjusted to reflect new business perimeter after divestitures … Previous Financial Segmentation New Financial Segmentation  Zinc Business  Steel Dust Recycling Services(*) - Crude Steel - Stainless Steel  Non Zinc

27. Slide 27: Steel Dust Recycling Services – Operational Data

    BEFESA Steel Dust Recycling Services – Operational Data 2Q 2Q 2Q 2017 vs 2016 1H 1H 1H 2017 vs 2016 Change Change 2016 2017 2016 2017 (tons) (%) (tons) (%) Crude steel dust recycling Installed capacity1 tons 780.300 780.300 0 0,0% 780.300 780.300 0 0,0% Crude steel dust processed tons 138.167 159.01

28. Slide 28: Aluminium Salt Slags Services – Operational Data

    BEFESA Aluminium Salt Slags Services – Operational Data 2Q 2Q 2Q 2017 vs 2016 1H 1H 1H 2017 vs 2016 Change Change 2016 2017 2016 2017 (tons) (%) (tons) (%) Salt slags and SPLs recycling Installed capacity5 tons 609.000 630.000 21.000 3,4% 609.000 630.000 21.000 3,4% Salt slags recycled tons 126.854

29. Slide 29: Crude Steel – Financial Highlights

    BEFESA Crude Steel – Financial Highlights Higher EBITDA and EBIT YoY in our crude steel segment mainly due to recovering zinc prices and higher WOX volumes sold Crude Steel Revenues (€m) 144,5 102,2 70,3 54,0 2Q 2016 2Q 2017 1H 2016 1H 2017 Crude Steel Adj. EBITDA (€m) 61,0 20,5 28,1 36,5 2Q 2016 2Q

30. Slide 30: Stainless Steel – Financial Highlights

    BEFESA Stainless Steel – Financial Highlights Lower stainless steel volumes paired with margin in the sale of alloys still depressed … ScanDust shutdown resolved end of May Stainless Revenues (€m) 23,9 14,2 12,5 8,4 2Q 2016 2Q 2017 1H 2016 1H 2017 Stainless Adj. EBITDA (€m) 1,3 0,8 0,8 0,2 2Q 2016 2

31. Slide 31: Salt Slags – Financial Highlights

    BEFESA Salt Slags – Financial Highlights Higher volumes of salt slags … Aluminium alloy LME prices recovering but still room to improve Salt Slags Revenues (€m) 40,8 43,2 21,2 22,5 2Q 2016 2Q 2017 1H 2016 1H 2017 Salt Slags Adj. EBITDA (€m) 12,9 13,9 6,7 8,1 2Q 2016 2Q 2017 1H 2016 1H 2017 32% 36% 3

32. Slide 32: Secondary Aluminium – Financial Highlights

    BEFESA Secondary Aluminium – Financial Highlights Volumes of aluminium alloys produced in line with 1H 2016 … But aluminium metal margin still room to improve further Sec. Aluminium Revenues (€m) 191,7 149,4 109,4 75,3 2Q 2016 2Q 2017 1H 2016 1H 2017 Sec. Aluminium Adj. EBITDA (€m) 5,4 1,6 3,0 2,6 2

33. Slide 33: Segmentation Overview – Key Metrics

    BEFESA Segmentation Overview – Key Metrics Steel Dust Recycling Services Operational data (Kt) 2013 2014 2015 2016 1H 2016 1H 2017 Financial data (M€) Crude Stainless Total Crude Stainless Total Crude Stainless Total Crude Stainless Total Crude Stainless Total Crude Stainless Total Steel dust treate

34. Slide 34: EBITDA & EBIT – Proforma / Adjusted Reconciliation

    BEFESA EBITDA & EBIT – Proforma / Adjusted Reconciliation (Figures in million euros) 2013 2014 2015 2016 1H 16 1H 17 LTM 1H17 EBITDA Proforma-Adjusted Revenues 535,2 554,5 631,2 611,7 300,8 374,4 685,3 EBITDA Proforma 84,0 124,9 128,0 129,0 52,7 71,3 147,6 Adjustments to EBITDA: Steel Dust Recycling

35. Slide 35: Consolidated Steel Dust Recycling Services – Detailed P&L

    BEFESA Consolidated Steel Dust Recycling Services – Detailed P&L BEFESA ZINC Profit & Loss Statement ('000 euros) 2Q 2016 2Q 2017 Change 1H 2016 1H 2017 Change Revenue 68.174 78.686 10.512 126.154 156.997 30.843 Cost of sales (41.715) (47.914) (6.199) (78.604) (93.686) (15.082) Other operating incom

36. Slide 36: Consolidated Steel Dust Recycling Services – Detailed B/S

    BEFESA Consolidated Steel Dust Recycling Services – Detailed B/S BEFESA ZINC Balance Sheet ('000 Euros) Assets 30.06.2017 31.12.2016 Equity and liabilities 30.06.2017 31.12.2016 Non-current assets: Equity: Intangible assets: Of the Parent: Goodwill 278.357 278.357 Share capital 25.010 25.010 Other i

37. Slide 37: Consolidated Steel Dust Services – Cash Flow & Liquidity

    BEFESA Consolidated Steel Dust Services – Cash Flow & Liquidity 2Q 2017 with positive cash flow driven by operating activities  Operating activities: During 2Q 2017 net cash flows generated by operating activities amounted to €3,8 million (a €4m increase vs 2Q 2016), driven by the EBITDA improvemen

38. Slide 38: Consolidated Steel Dust Recycling Services – Detailed CF

    BEFESA Consolidated Steel Dust Recycling Services – Detailed CF BEFESA ZINC Cash Flow Statement ('000 euros) 2Q 2016 2Q 2017 Change 1H 2016 1H 2017 Change Cash flows from operating activities Profit for the period before tax 11.298 15.756 4.458 14.779 32.132 17.353 Adjustments due to: Amortization /

39. Slide 39: Befesa Consolidated – Detailed P&L

    BEFESA Befesa Consolidated – Detailed P&L BEFESA Profit & Loss Statement ('000 euros) 2Q 2016 2Q 2017 Change 1H 2016 1H 2017 Change From continuing operations: Revenue 156.059 201.593 45.534 300.817 374.383 73.566 +/- Changes in inventories of finished goods & work in progress (807) (29) 778 (3.022)

40. Slide 40: Befesa Consolidated – Detailed Balance Sheet

    BEFESA Befesa Consolidated – Detailed Balance Sheet BEFESA Balance Sheet ('000 euros) Assets 30.06.17 31.12.16 Equity and liabilities 30.06.17 31.12.16 Equity: Non-current assets Attibutable to owners of the parent - Intangible assets Share capital 13 13 Goodwill 319.143 319.143 Reserve for valuatio

41. Slide 41: Befesa Consolidated – Detailed Cash Flow Statement

    BEFESA BEFESA Befesa Consolidated – Detailed Cash Flow Statement Cash Flow Statement ('000) 2Q 2016 2Q 2017 Change 1H 2016 1H 2017 Change Cash flows from operating activities: Profit (loss) for the period before tax 12.172 15.702 3.530 15.483 36.973 21.490 From continuing operations: 12.090 15.702 3

Befesa — Q2 2017 Earnings Presentation on 6ix