Slide 1: STAR Conference 2019
STAR Conference 2019 London - October 23rd, 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
BUSINESS UPDATE AGENDA FINANCIALS Q&A SESSION
Slide 4: Business Update
© esprinet’ BUSINESS UPDATE
Slide 5: Q2 in a nutshell
Q2 in a nutshell Sales ICONA 842 M€ +11% on Q2 2018 EBIT ICONA 7.2 M€(1) +30% on Q2 2018 Net profit ICONA 4.6 M€ +67% on Q2 2018 Net financial debt ICONA 183.1 M€ 90.0 M€ excluding IFRS 16 NOTES (1) 6.2 M€ (+12%) excluding effects of IFRS 16 «Leases». 5
Slide 6: Key Updates for Q3
Key Updates for Q3 Profit & Loss Balance Sheet Key projects • Working Capital • Sales in Q3 up strongly. • Debt refinanced. optimization gaining traction. • Gross Profit as of August • WACC down to ~8%. still under pressure. • Key strategic projects • Positive outlook into Q4. • Buy back in progress
Slide 7: Working Capital Dynamics
Working Capital Dynamics Inventory Payables Receivables Average levels of inventory progressively declining. Changes in vendor payment terms Changes in key-retailer payment achieved with one relevant ‘low- terms achieved. Spain burdened by above average ROCE’ business. levels of stock with a major P
Slide 8: Outlook / Delivery
Outlook / Delivery 2019 2020 Moderate top-line growth in future years as focus keeps being ROCE performance. We reiterate the target for a FY 2019E EBIT in the range 38-42 M€, with a strong Improvements in GP % as result of mix growth compared to FY 2018. and efforts on customer satisfaction. Progre
Slide 9: Investment Highlights
Investment Highlights A new attractiveness of the market Strong positioning • A sizable and growing 14.6 B€ addressable market(1). • 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%(1)]. • Growing sha
Slide 10: Final remarks
Final remarks Q3 took off in line with budgeted EBIT targets mainly due to very solid top-line performance Working capital optimization negotiations gaining traction Key strategic projects fully operational Debt refinanced FY 2019 operating profitability targets confirmed 10
Slide 11: Upcoming events
Upcoming events Date Event Venue Board of Directors: November 13th , 2019 Vimercate (IT) Q3 2019 Results November 13th , 2019 Press release th November 14 , 2019 Q3 2019 Earnings Call & Webcast 11
Slide 12: Financials
© esprinet 12s
Slide 13: Profit & Loss
Profit & Loss (M€) H1 2019 (1) H1 2018 Var. % FY 2018 adj. (2) H1 2019 • Reported net sales at 1,717.5 M€ Sales 1.717,5 100,00% 1.538,2 100,00% 12% 3.571,2 100,00% increased +12% compared to the prior- Cost of sales (1.636,4) -95,28% (1.461,2) -95,00% 12% (3.400,5) -95,22% year half (+179.3 M€). Gro
Slide 14: Balance Sheet Highlights
Balance Sheet Highlights IAS 17 post IFRS16 BS at June 30, 2019 • At June 30, 2019 the Group’s net equity (M€) 30.06.19 31.12.18 30.06.19 was 346,2 M€. Net operating working capital 338,8 10,4 339,8 • At the same date the Group had 91.0 M€ of Goodwill 91,0 90,6 91,0 goodwill resulting in a Net tangi
Slide 15: Working Capital Metrics
Working Capital Metrics 70 Cash Conversion Cycle 40 34 35 60 32 32 31 30 • Cash conversion cycle sequentially 29 stable at 28 days: 28 28 27 28 30 Idays = 48 50 27 27 26 27 26 DSO = 38 25 DPO = (58) 40 Tot = 28 20 • Compared to Q2 2018 metrics Idays 30 decreased -4 days, DSO increased +3 57 56 57 58
Slide 16: Return on Capital Employed
Return on Capital Employed (M€) (euro/mln) TTM ended March 31 TTM ended June 30 TTM ended December 31 (1) TTM Net Operating Profit After Tax (NOPAT) 2018 2019 2018 2019 2017 2018 EBIT 37,3 41,9 37,3 42,5 36,7 41,0 (2) Income taxes on EBIT -9,5 -10,7 -9,5 -10,9 -9,4 -10,5 NOPAT 27,8 31,2 27,8 31,7 27
Slide 17: Return on Capital Employed
Return on Capital Employed 450.000 11,4% 12,0% 10,9% 11,0% 400.000 10,1% 9,4% 10,0% 350.000 8,8% 8,5% 9,0% 8,1% 8,3% Corporate Cost of capital 7,7% 300.000 7,6% 8,0% 7,2% 7,0% 6,7% 6,9% 7,0% 250.000 6,0% 200.000 5,0% 150.000 4,0% 3,0% 100.000 2,0% 50.000 1,0% 0 0,0% 2016 Q1 2016 Q2 2016 Q3 2016 Q4 2
Slide 18: Debt Structure
Debt Structure • The parent company Esprinet S.p.A. signed on September 30th, 2019 a new 3-year RCF-Revolving Credit Facility of up to 152.5 M€ with a pool of domestic and international banks. • The facility is unsecured and is subject to certain financial covenants that are common for this kind of
Slide 19: Total funding sources
Total funding sources (M€) pro-forma (1) (euro/mln) 30.09.19 Syndicated RCF 152,5 • Participating banks within the pool are the following: Current portion of long-term financial debt 15,4 Long-term financial debt 56,0 Global Coordinator and Arranger: Banca T/R Securitisation program (2) 100,0 IMI S.
Slide 20: Term Loan Facilities
Term Loan Facilities (euro/mln) (M€) 30.09.19 Oustanding Initial Short-term Long-term Lender Borrower Nominal Maturity amount portion portion amount Bank 1 Esprinet SpA 10,0 2,5 3,8 6,3 dec-21 • The majority of the term loans are Bank 2 Esprinet SpA 10,0 2,5 3,8 6,3 mar-22 not subject to any financi
Slide 21: Share repurchase activity
Share repurchase activity Timetable Share repurchases(1) • Number of shares repurchased: • Start: July 12, 2019 901,508 (1.72% of total) • End: March 31, 2020 • Amount repurchased: 2.790 M€ • Average price per share: 3.10 € • No. 1,150,000 own shares already in portfolio at Remainder of the program
Slide 22: © esprinet
© esprinet
Slide 23: Thank you
Thank you GRAZIE +» GRACIAS * DANKE + MERCI « 7A} « dita » iat © esprinet
Slide 24: Annexes
© esprinet
Slide 25: Market trend
Market trend Overall Market performance Esprinet Group performance Both the Italian and Spanish operations of the Group grew more than the Q1 2019 Q2 2019 H1 2019 market and achieved a market share growth of +1.5% and +1.2% Region vs. vs. vs. respectively in Italy and Spain. Q1 2018 Q2 2018 H1 2018
Slide 26: Gross Profit Trend
Gross Profit Trend PCs & Phones ICONA PCs and Smartphones collectively grew in terms of Gross Profit during both H1 and Q2 2019. Advanced Advanced Solutions Gross Profit % in Q2 2019 was substantially stable sequentially compared to Q1 ICONA 2019 and was down compared to Q2 2018 mostly on mix and pr
Slide 27: Sales Breakdown: H1 2019 vs H1 2018
Sales Breakdown: H1 2019 vs H1 2018 27
Slide 28: The Company
THE COMPANY 28
Slide 29: The Leading ICT Distributor in Southern Europe
The Leading ICT Distri In Southern Europe Among the top 50 Italian industrial Groups by revenues(1) (1) Source: MBRES Mediobanca, 2018 29
Slide 30: History
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Slide 31: 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 32: Key Historical Financials
Key Historical Financials All figures in M€ 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 37 36 32 40 9
Slide 33: 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 33
Slide 34: 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 35: #1 & Growing In A Growing Market
#1 & Growing In A Growing Market ESPRINET SHARE ON TOTAL DISTRI SALES (ITALY, SPAIN, PORTUGAL) (M€) 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
Slide 36: Ranking South Europe
Ranking South Europe (M€) 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%
Slide 37: 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 figures 37
Slide 38: The Industry
THE INDUSTRY 38
Slide 39: 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(1) • Other peripherals • Supplies • Home storage • Stationary products • Servers • Cloud solutions ADVANCED SOLUTIONS • Storage • Tech services •
Slide 40: Go To Market: Suppliers
Go To Market: Suppliers IT CLIENTS ADVANCED SOLUTIONS CONSUMER ELECTRONICS Displayed vendors are just a selection aimed at representing whole product category. 40
Slide 41: 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 42: 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 43: 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 44: 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 45: 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 46: 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 bu
Slide 47: 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 48: 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 49: Gross Profit Drivers
Gross Profit Drivers Product categories • Commoditized product categories, such as Notebooks or Smartphone, typically allow for lower Gross Profit % as compared to more complex products such as many “Advanced Solutions” products. Vendor relative strength • Highly known vendors with a strong brand re
Slide 50: 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 51: The Strategy
THE STRATEGY 51
Slide 52: 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 PROF
Slide 53: 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 following: The emergence of the ‘XaaS’ • Cloud Computing, both i
Slide 54: 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 55: 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 f
Slide 56: 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
Slide 57: 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 le
Slide 58: 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’ a market where distri market opportunity transforming former source of Working Capital share moved from 39,5 from White Goods Analog markets and reduction
Slide 59: 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 59
Slide 60: 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 Adv
Slide 61: 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 62: 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 63: Governance
GOVERNANCE 63
Slide 64: 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 65: 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 66: 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 67: 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 68: 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 69: 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 Albemarle Funds PLC COVERAGE Albemarle Asset Albemarle Alternative 5,961% 5,9
Slide 70: 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 71: IFRS16 Reconciliation
IFRS16 RECONCILIATION 71
Slide 72: Profit & Loss - IFRS 16 Reconciliation
Profit & Loss - IFRS 16 Reconciliation Q2 2019 IFRS 16: P&L impact post IFRS 16 «as reported» • The adoption of IFRS 16, the (M€) Q2 2019 adj. Q2 2019 new lease standard, determined an increase of EBIT of 1.0 M€ Sales 842,0 100,00% 842,0 100,00% and a more significant increase Cost of sales (801,8)
Slide 73: Profit & Loss
Profit & Loss (M€) Q2 2019 (1) Q2 2018 Var. % Q2 2019 • Reported net sales at 842.0 M€ Sales 842,0 100,00% 756,9 100,00% 11% increased +11% compared to the prior- Cost of sales (801,8) -93,22% (718,9) -94,98% 12% year Q2 (+85.1 M€). Gross Profit 40,3 4,78% 38,0 5,02% 6% • Gross profit up +6% at 40.3
Slide 74: Profit & Loss - IFRS 16 Reconciliation
Profit & Loss - IFRS 16 Reconciliation H1 2019 IFRS 16: P&L impact post IFRS 16 «as reported» (M€) H1 2019 adj. H1 2019 Sales 1.717,5 100,00% 1.717,5 100,00% Cost of sales (1.636,4) -95,28% (1.636,4) -95,28% • The adoption of IFRS 16 Lease Gross Profit 81,1 4,72% - 81,1 4,72% determined an increase
Slide 75: Cash Flow Generation
Cash Flow Generation (M€) H1 2019 H1 2018 • Cash flow generated from operations Cash flow generated from operations 21,2 13,3 was 21.2 M€ (+59%). Cash flow provided by (used in) changes in working capital (338,2) (152,4) • Dividend distribution during Q2 of 6.9 M€. Other cash flow provided by (used