Ermenegildo Zegna N.v. · NYSE:ZGN
Ermenegildo Zegna — H1 2023 Earnings Presentation
46 slides from Ermenegildo Zegna's earnings presentation, Sep 13, 2023
Slide 1: 1H 2023 Financial Results
1H 2023 FINANCIAL RESULTS September 13th, 2023 DATE 1
Slide 2: Disclaimer
DISCLAIMER Non-IFRS Financial Measures Zegna’s management monitors and evaluates operating and financial performance using several non-IFRS financial measures including: adjusted earnings before interest and taxes (“Adjusted EBIT”), Adjusted EBIT Margin, Adjusted Profit, Net Financial Indebtedness/(
Slide 3: CEO quote: Ermenegildo Zegna Group
Ermenegildo Zegna Group “In this dynamic operating environment, we are encouraged by the strong growth we are seeing in the United States and EMEA but also acknowledge the impact of a milder recovery in Greater China. lam proud of our exceptional leadership team, and we are confident in the steps we
Slide 4: Select Highlights and Upcoming Events
1H 2023 SELECT HIGHLIGHTS AND UPCOMING EVENTS ZEGNA SEGMENT THOM BROWNE SEGMENT TOM FORD FASHION SEGMENT Elder Statesman Partnership Thom Browne 20° Anniversary Book Peter Hawkins debut show at Milan Fashion Week September 5, 2023: completed the previously announced acquisition of a 15% Lelio Gavazz
Slide 5: Key Highlights
1H 2023 KEY HIGHLIGHTS REVENUES PROFIT & PROFIT MARGIN (+23.9% year-over-year, +21.5% Organic Growth*) (+147.9% year-over-year) 1H23 903.1 1H23 52.1 5.8% 1H22 729.0 1H22 21.0 2.9% ADJUSTED EBIT* & ADJUSTED EBIT MARGIN* (Adjusted EBIT +45.0% year-over-year) 2025 OUTLOOK (excluding the TOM FORD FASHIO
Slide 6: Financial Highlights
1H 2023 FINANCIAL HIGHLIGHTS 6
Slide 7: Group Revenues
1H 2023 GROUP REVENUES • €903 million • +23.9% YoY • +24.7% YoY in cFX* • +21.5% Organic Growth * • Continued growth for both Zegna and Thom Browne segments, both up by double digits • Zegna segment +23.8% YoY Organic Growth/ +18.4% in cFX, with market share gains driven by Zegna One Brand strategy
Slide 8: Group Profitability
1H 2023 GROUP PROFITABILITY P&L Format changed to “costs by function” • Starting with 1H 2023, the format of the P&L was changed from "by nature" to "by function • Profit of €52.1 million, +147.9% y-o-y • Gross Profit €579.8 million, +29.2% y-o-y • Gross Profit Margin 64.2% vs. 61.6% in 1H 2022, as
Slide 9: Group Profitability
1H 2023 GROUP PROFITABILITY Strong increase in profits • Adjusted EBIT of €119.9 million, +45.0% y-o-y • Adjusted EBIT Margin of 13.3% vs. 11.3% in 1H 2022 • Execution of Zegna One Brand strategy • Favorable factors more than offset step-up in “growth costs,” increase in Thom Browne expansion costs,
Slide 10: Group Income Statement
1H 2023 GROUP INCOME STATEMENT % on % on (Euro million in Actual FX) 1H23 1H22 Δ€ vs 1H22 Δ% vs 1H22 revenues revenues Revenues 903.1 100% 729.0 100% 174.1 24% Cost of sales (323.2) (35.8%) (280.2) (38.4%) (43.0) 15.4% Gross profit 579.8 64.2% 448.8 61.6% 131.0 29.2% Selling, general & administrativ
Slide 11: Results – Zegna Segment
1H 2023 RESULTS – ZEGNA SEGMENT 11
Slide 12: Results – Zegna Segment
1H 2023 RESULTS – ZEGNA SEGMENT FOR SIX MONTHS ENDED JUNE 30 INCREASE / (DECREASE) € MILLION 2023 2022 2023 vs. 2022 % Revenues €651.8 €553.0 €98.8 17.9% Adjusted EBIT* €100.5 €68.0 €32.5 47.8% Adjusted EBIT Margin* 15.4% 12.3% One Brand strategy starting to pay off • Higher revenues • Better channe
Slide 13: Results – Thom Browne Segment
1H 2023 RESULTS – THOM BROWNE SEGMENT 13
Slide 14: Results – Thom Browne Segment
1H 2023 RESULTS – THOM BROWNE SEGMENT FOR SIX MONTHS ENDED JUNE 30 INCREASE / (DECREASE) € MILLION 2023 2022 2023 vs. 2022 % Revenues €208.0 €185.8 €22.2 11.9% Adjusted EBIT* €31.5 €31.6 (€0.1) (0.1%) Adjusted EBIT Margin* 15.2% 17.0% Investing for growth • Adjusted EBIT in line with same period of
Slide 15: Results – Tom Ford Fashion Segment
1H 2023 RESULTS – TOM FORD FASHION SEGMENT 15
Slide 16: Results – Tom Ford Fashion Segment
1H 2023 RESULTS – TOM FORD FASHION SEGMENT FOR SIX MONTHS ENDED JUNE 30 INCREASE / (DECREASE) € MILLION 2023 2022 2023 vs. 2022 % Revenues €64.0 - €64.0 - Adjusted EBIT* €3.7 - €3.7 - Adjusted EBIT Margin* 5.7% - • Reflects performance following the acquisition of TFI completed on April 28, 2023 • A
Slide 17: Net Financial Indebtedness, Capex and Trade Working Capital
1H 2023 RESULTS – NET FINANCIAL INDEBTEDNESS / (CASH SURPLUS), CAPITAL EXPENDITURE AND TRADE WORKING CAPITAL 17
Slide 18: Net Financial Indebtedness, Capital Expenditures and Trade Working Capital
NET FINANCIAL INDEBTEDNESS / (CASH SURPLUS), CAPITAL EXPENDITURES AND TRADE WORKING CAPITAL • €17 million Net Financial Indebtedness* on June 30, 2023, compared to a Cash Surplus of €122.2 million on December 31, 2022, and €103.1 million Net Financial Indebtedness at June 30, 2022 • Among other fact
Slide 19: Group Balance Sheet
1H 2023 GROUP BALANCE SHEET June 30, December 31, June 30, December 31, (Euro million in Actual FX) (Euro million in Actual FX) 2023 2022 2023 2022 Assets Liabilities and Equity Non-current assets Equity attributable to shareholders of the Parent Company 762.0 678.9 Intangible assets 543.9 455.9 Pro
Slide 20: Group Statement of Cash Flow
1H 2023 GROUP STATEMENT OF CASH FLOW (Euro million in Actual FX) 1H23 1H22 (Euro million in Actual FX) 1H23 1H22 Operating Activities Financing activities Profit 52.1 21.0 Proceeds from borrowings 65.0 - Income taxes 26.2 27.1 Repayments of borrowings (173.4) (76.7) Depreciation, amortization and im
Slide 21: Outlook & Guidance
OUTLOOK & GUIDANCE Ermenegildo Zegna Group 21
Slide 22: Outlook & Guidance
OUTLOOK & GUIDANCE * By 2025 • Revenues to exceed €2 billion • Adjusted EBIT Margin to reach at least 15% of revenues The Group expects that 2023 results will demonstrate it is on the trajectory to meet these targets, as shown by 1H 2023 results. Assuming no further future escalation of the war in U
Slide 23: Upcoming Capital Markets Day
UPCOMING CAPITAL MARKETS DAY DECEMBER 5, 2023 NEW YORK STOCK EXCHANGE 23
Slide 24: Ermenegildo Zegna Group
Ermenegildo Zegna Group
Slide 25: Appendix
APPENDIX Ermenegildo Zegna Group
Slide 26: Non-IFRS Financial Measures
NON-IFRS FINANCIAL MEASURES Zegna’s management monitors and evaluates operating and financial performance using several non-IFRS financial measures including: adjusted earnings before interest and taxes (“Adjusted EBIT”), Adjusted EBIT Margin, Adjusted Profit, Net Financial Indebtedness/(Cash Surplu
Slide 27: Non-IFRS Financial Measures: Adjusted Profit
NON-IFRS FINANCIAL MEASURES Adjusted Profit Adjusted Profit is defined as Profit adjusted for income and costs (net of related tax effects) which are significant in nature and that management considers not reflective of underlying activities, including, for one or all of the periods presented and as
Slide 28: Non-IFRS Financial Measures: Trade Working Capital
NON-IFRS FINANCIAL MEASURES Trade Working Capital Trade Working Capital is defined as current assets less current liabilities adjusted for derivative assets and liabilities, tax receivables and liabilities, cash and cash equivalents, borrowings, lease liabilities, and certain other current assets an
Slide 29: Non-IFRS Financial Measures: Organic Growth
NON-IFRS FINANCIAL MEASURES Revenues on an organic growth basis (Organic Growth) In addition to presenting our revenues on a current currency basis, we also present certain revenue information on an organic growth basis (Organic Growth). Organic Growth is calculated as the change in revenues from pe
Slide 30: Adjusted EBIT and Adjusted EBIT Margin
NON-IFRS FINANCIAL MEASURES Adjusted EBIT and Adjusted EBIT Margin (€ thousands, except percentages) For the six months ended June 30, 2023 2022 Profit 52,116 21,021 Income taxes 26,162 27,050 Financial income (15,601) (15,901) Financial expenses 44,592 41,965 Foreign exchange losses 7,003 9,893 Res
Slide 31: Adjusted Profit
NON-IFRS FINANCIAL MEASURES Adjusted Profit (€ thousands) For the six months ended June 30, 2023 2022 Profit 52,116 21,021 (1) Transaction costs related to acquisitions 4,975 - (2) Costs related to the Business Combination 1,059 1,090 (3) Severance indemnities and provisions for severance expenses 7
Slide 32: Explanatory Notes
NON-IFRS FINANCIAL MEASURES Explanatory Notes 1) Relates to transaction costs of €4,975 thousand for the six months ended June 30, 2023 for consultancy and legal fees related to the TFI Acquisition and the acquisition of a 25% in Norda. 2) Costs related to the Business Combination of €1,059 thousand
Slide 33: Net Financial Indebtedness/(Cash Surplus)
NON-IFRS FINANCIAL MEASURES Net Financial Indebtedness/(Cash Surplus) (€ thousands) At June 30, 2023 At December 31, 2022 Non-current borrowings 112,747 184,880 Current borrowings 283,077 286,175 Derivative financial instruments - Liabilities 2,186 2,362 Total borrowings, other financial liabilities
Slide 34: Trade Working Capital
NON-IFRS FINANCIAL MEASURES Trade Working Capital (€ thousands) At June 30, 2023 At December 31, 2022 Current assets 1,262,741 1,285,657 Current liabilities (1,021,920) (866,984) Working capital 240,821 418,673 Less: Derivative financial instruments 17,985 22,454 Tax receivables 17,734 15,350 Other
Slide 35: Organic Growth – Segment (1/2)
NON-IFRS FINANCIAL MEASURES The tables below show a reconciliation of revenue growth to Organic Growth, excluding the effects of foreign exchange, acquisitions and disposals and changes in license agreements where Zegna operates as a licensee, by segment, by product line, by sales channel and by geo
Slide 36: Organic Growth – Segment (2/2)
NON-IFRS FINANCIAL MEASURES Organic Growth – Segment (2/2) Q1 2023 vs Q1 2022 Changes in license Acquisitions and Revenue growth Foreign exchange agreements where Zegna Organic Growth disposals operates as a licensee Zegna 12.6% 0.7% —% (7.8%) 19.7% Thom Browne 15.4% (0.7%) —% —% 16.1% Tom Ford Fash
Slide 37: Organic Growth – Product line (1/2)
NON-IFRS FINANCIAL MEASURES Organic Growth – Product line (1/2) H1 2023 vs H1 2022 Changes in license Revenue growth Foreign exchange Acquisitions and disposals agreements where Zegna Organic Growth operates as a licensee Zegna branded products 27.3% (1.1%) —% —% 28.4% Thom Browne 11.8% (1.6%) —% —%
Slide 38: Organic Growth – Product line (2/2)
NON-IFRS FINANCIAL MEASURES Organic Growth – Product line (2/2) Q2 2023 vs Q2 2023 Changes in license Revenue growth Foreign exchange Acquisitions and disposals agreements where Zegna Organic Growth operates as a licensee Zegna branded products 33.9% (3.1%) —% —% 37.0% Thom Browne 8.2% (2.8%) —% —%
Slide 39: Organic Growth – Sales channel (1/3)
NON-IFRS FINANCIAL MEASURES Organic Growth – Sales channel (1/3) H1 2023 vs H1 2022 Changes in license Revenue growth Foreign exchange Acquisitions and disposals agreements where Zegna Organic Growth operates as a licensee Direct to Customer (DTC) Zegna branded products 28.7% (1.6%) —% —% 30.3% Thom
Slide 40: Organic Growth – Sales channel (2/3)
NON-IFRS FINANCIAL MEASURES Organic Growth – Sales channel (2/3) Q1 2023 vs Q1 2022 Changes in license Revenue growth Foreign exchange Acquisitions and disposals agreements where Zegna Organic Growth operates as a licensee Direct to Customer (DTC) Zegna branded products 24.8% 0.2% —% —% 24.6% Thom B
Slide 41: Organic Growth – Sales channel (3/3)
NON-IFRS FINANCIAL MEASURES Organic Growth – Sales channel (3/3) Q2 2023 vs Q2 2022 Changes in license Revenue growth Foreign exchange Acquisitions and disposals agreements where Zegna Organic Growth operates as a licensee Direct to Customer (DTC) Zegna branded products 32.7% (3.5%) —% —% 36.2% Thom
Slide 42: Organic Growth – Geographical area (1/3)
NON-IFRS FINANCIAL MEASURES Organic Growth – Geographical area (1/3) H1 2023 vs H1 2022 Changes in license Revenue growth Foreign exchange Acquisitions and disposals agreements where Zegna Organic Growth operates as a licensee (1) EMEA 23.8% (0.4%) 8.7% (5.9%) 21.4% of which Italy 20.2% 0.2% 6.3% (3
Slide 43: Organic Growth – Geographical area (2/3)
NON-IFRS FINANCIAL MEASURES Organic Growth – Geographical area (2/3) Q1 2023 vs Q1 2022 Changes in license Revenue growth Foreign exchange Acquisitions and disposals agreements where Zegna Organic Growth operates as a licensee (1) EMEA 11.6% —% —% (7.0%) 18.6% of which Italy 16.1% 0.2% —% (3.4%) 19.
Slide 44: Organic Growth – Geographical area (3/3)
NON-IFRS FINANCIAL MEASURES Organic Growth – Geographical area (3/3) Q2 2023 vs Q2 2022 Changes in license Revenue growth Foreign exchange Acquisitions and disposals agreements where Zegna Organic Growth operates as a licensee (1) EMEA 36.8% (1.1%) 18.1% (4.7%) 24.5% of which Italy 24.4% 0.3% 12.7%
Slide 45: Glossary & Definitions
GLOSSARY & DEFINITIONS (1) y o y: used to refer to year on year growth rate. Unless otherwise specified, all growth rates are at actual currency (2) Growth rates in this presentation are year on year unless specified differently (3) cFX growth: means growth at constant currency. For the description
Slide 46: Investor Relations Contacts
INVESTOR RELATIONS CONTACTS Investor Relations / Group Communications / Media Francesca Di Pasquantonio / Clementina Tito ir@zegna.com / corporatepress@zegna.com 46