Slide 1: Business Update 2022: Post Third Quarter 2021 Earnings Presentation
Business Update 2022 Post Third Quarter 2021 Earnings Presentation January 2022
Slide 2: Disclaimer
Disclaimer This presentation contains forward-looking statements and information relating to Befesa and its affiliates that are based on the beliefs of its management, including assumptions, opinions and views of Befesa and its affiliates as well as information cited from third party sources. Such s
Slide 3: 01 Business update
Electric arc furnace steel dust (EAFD) recycling plant at Asúa-Erandio, Spain 01 Business update
Slide 4: 9M record EBITDA; AZR acquisition; MDAX; China plants
✓9M record EBITDA; ✓AZR acquisition; ✓MDAX; ✓China: 1st Plant in commercial operations, 2nd construction completed €136.8m €73.9m FY’21 guidance 9M’21 adjusted EBITDA 9M’21 Operating cash flow • FY adjusted EBITDA of around €195m, 62% up yoy (9M’20: €84.5m), €36.2m up yoy (9M’20: €37.8m) up +54% yoy
Slide 5: Mid-term growth roadmap
Mid-term growth roadmap Executing well defined growth roadmap even during COVID-19 pandemic; In commercial operations at 1st China plant (Jiangsu) and completed construction of 2 nd plant (Henan); Driving progress on the integration of AZR and related synergies 1 HEDGING • Non-US hedge book fully ex
Slide 6: Zinc prices & hedging strategy
Zinc prices & hedging strategy Non-US operations fully hedged up to & incl. Oct’24, c. 3 years; US operations hedged up to & incl. Apr’24, c. 2.5 years; Improving earnings & cash flows visibility Zinc LME price vs. Befesa’s hedging prices (€/t) Zinc LME1) Befesa’s hedges2) Average blended €2,317 c.
Slide 7: EAF steel production and Befesa's steel portfolio growth & diversification
EAF steel production -&- Befesa’s steel portfolio growth & diversification China is the largest and growing EAF steel producer worldwide; Befesa growing and diversifying its portfolio to capture China and US addressable markets EAF steel production: EU-27 / US / China, million tonnes Befesa’s EAFD r
Slide 8: Befesa closed AZR acquisition on 17 August; operations delivering as expected
Befesa closed AZR acquisition on 17 August; Operations delivering as expected BEFESA #1 Europe (Steel Dust & Salt Slags) a US / North American leader (Steel Dust) #1 Asia1) (Steel Dust) Global leader1) in EAFD recycling EAFD recycling EAFD recycling Zinc refining EAFD annual installed recycling capa
Slide 9: China I and China II plants
China I Changzhou plant, Jiangsu province Key facts of the plant: 1 • 1st EAFD recycling plant in China • Capacity to recycle 110kt EAFD p.a. • Total investment: c. €42m • Location: Changzhou (Jiangsu province) Status update: Long-term financing closed Jul’20 Construction completed on budget In comm
Slide 10: Sustainability at Befesa
Sustainability at Befesa Key player within the circular economy, with c. 2 million tonnes recycled and c. 1.5 million tonnes of valuable materials recovered annually, that contributes significantly to increase efficiency of raw material use in the metals industry and promotes the transition towards
Slide 11: Befesa FY'21 EBITDA guidance & assumptions
Befesa FY’21 EBITDA guidance & assumptions FY’21 guidance range revised upwards to reflect records YTD earnings and c. 4 months of acquired Zinc US operations; Strong base metal prices offsetting higher inflation / energy cost trends around €195m Adjusted EBITDA (new record, up from previous €165-19
Slide 12: Acquisition of AZR closed on 17 August 2021
BEFESA acquired creating a global leader in EAFD recycling 02 Acquisition of AZR closed on 17 August 2021
Slide 13: Transaction highlights
Transaction highlights • On 16 June 2021, Befesa signed the acquisition of 100% of American Zinc Recycling (AZR)’s recycling assets for a purchase price of $450m / €372m – implying an attractive c. 6x post near-term synergies EBITDA acquisition multiple, about half of Befesa’s current 2021E trading
Slide 14: Acquired 100% of recycling assets upfront; option for zinc refining plant
Acquired 100% of recycling assets upfront; incremental add-on option for new zinc refining plant (ramping up) AZR is one of the largest EAFD recycler in North America1) with 4 plants with c. 620kt total capacity EAFD recycling assets Zinc refining 1 Barnwell, SC 2 Rockwood, TN 5 Rutherford County, N
Slide 15: Decarbonisation driving further growth of EAF steel production in the US
Decarbonisation driving further growth of EAF steel production in the US EAF method expected to grow further to >70% share by 2025 Crude steel production by process in the US, % share 37% 29% 28% BOF • US has one of the largest and growing markets of EAF steelmakers globally EAF 63% 71% 72% • EAF is
Slide 16: Befesa closed AZR acquisition on 17 August; operations delivering as expected
Befesa closed AZR acquisition on 17 August; Operations delivering as expected BEFESA #1 Europe (Steel Dust & Salt Slags) a US / North American leader (Steel Dust) #1 Asia1) (Steel Dust) Global leader1) in EAFD recycling EAFD recycling EAFD recycling Zinc refining EAFD annual installed recycling capa
Slide 17: Attractive acquisition multiple with additional upside potential
Attractive acquisition multiple with additional upside potential – 2021E pro forma view1) BEFESA (Steel Dust – current perimeter) (Recycling operations) 2) Further EBITDA8), €m 138 mid-term potential 62 45 3) 17 4) 2021E 2021E PF Near-term 2021E PF mid-point pre near-term synergies post near-term sy
Slide 18: Strong near- and mid-term synergy potential identified
Strong near– & mid– term synergy potential identified Total pre-tax near-term synergies of c. $20/€17m expected within first three years of combination (Recycling operations) EBITDA / ton throughput Up to Near-term synergies c. €185/t of c. $20m / €17m c. 35% mid-term efficiency potential €138/t €10
Slide 19: Leverage-neutral transaction with expected double-digit EPS accretion
Leverage–neutral transaction with expected strong double–digit EPS accretion1) Funding of transaction (at closing) Financial profile – 2021E Combined Pro Forma3) Total price, $m EBITDA, €m 2) Mid-point of 450 10 460 €165 to €190m 2021E guidance 62 240 178 Price for Price for Zinc Total BEFESA Befesa
Slide 20: Diversifying the highest margin business unit and improving profitability
Diversifying the highest margin business unit and further improving Befesa’s overall profitability EAFD recycling capacity1) EBITDA by segment c. 1,665kt c. €240m4) 2nd Alu 6% Salt Slags 10% US 620 €178m3) 1,045kt2) 8% 14% 550 Asia 550 Steel Dust 84% 78% 495 Europe 495 BEFESA Befesa BEFESA Befesa+AZ
Slide 21: AZR's zinc refining asset: strategic integration opportunity
AZR’s zinc refining asset: strategic integration opportunity to support EAFD recycling operations in the US Plant footprint • Close proximity to AZR recycling plants, at Rutherford County, NC • Applies new solvent extraction technology for zinc refining • Restarted operations in 2020; Ramping up; Ca
Slide 22: Option to acquire AZR's zinc refining asset upon milestones
Secured option to acquire AZR’s zinc refining asset only upon fulfilling operational & financial performance milestones Payment schedule to acquire AZR’s zinc refining asset1), $m $135m for remaining 93.1% stake in AZR’s zinc refining asset: • Only upon fulfillment of 2-phased operational and financ
Slide 23: AZR acquisition a key step on Befesa's accelerated growth path
The acquisition of AZR’s recycling business represents a key step on Befesa’s accelerated growth path … 2007 2017 2021E PF European leader1) European & European & Asian in EAFD recycling Asian leader1) & North American = a global leader1) 37% 37% 33% Befesa’s EAFD 495kt 780kt c. 1,665kt recycling ca
Slide 24: 9M 2021 results
Nanjing City, Location of Befesa China’s HQ 03 9M 2021 results
Slide 25: Consolidated key financials
Consolidated key financials 9M adjusted EBITDA at €136.8m, all-time-high, driven by strong base metal prices and continued solid volumes with plant utilisation at pre-pandemic levels; Acquired Zinc US operations delivering as expected Adjusted EBITDA bridge 9M 2020 to 2021 (€m) +€52.3 / +61.8% 1) 13
Slide 26: Steel Dust Recycling Services
Steel Dust Recycling Services 9M adjusted EBITDA at €102.7m, performing at strongest earnings level with 34% margin, driven mainly by favourable zinc prices; Overall plant utilisation continued at pre-pandemic levels; Acquired US operations delivering as expected Adjusted EBITDA bridge 9M 2020 to 20
Slide 27: Aluminium Salt Slags Recycling Services
Aluminium Salt Slags Recycling Services 9M EBITDA at €34.1m, delivered record level results, up 90% yoy; Mainly driven by higher aluminium metal prices yoy; Overall plant utilisation continued at solid pre-pandemic levels ≥ 90% EBITDA bridge 9M 2020 to 2021 (€m) +€16.1 / +89.6% -3 35.1 19 Inflation
Slide 28: Cash flow, net debt & leverage
Cash flow, net debt & leverage Continued strong liquidity of more than €275m including record €201m cash on hand, post-dividend & acquisition funding; Net leverage of x2.33 at Q3’21 closing, improved vs. x3.10 at YE’20 and x3.31 at Q3’20 Adjusted EBITDA to total cash flow (€m) €22 China local loans
Slide 29: Befesa overview
Secondary aluminium production plant at Bernburg, Germany 04 Befesa overview
Slide 30: Befesa at a glance
Befesa at a glance Global leader in Europe, Asia and US in providing regulated critical hazardous waste recycling services to the steel and aluminium industries 3–year average (2018-2020)1) Steel Dust Recycling1) Aluminium Salt Slags Recycling €657m Revenue2) #1 Position in Europe #1 Position in Eur
Slide 31: Key milestones
Key milestones EAFD expansion China Befesa has grown successfully through organic initiatives and acquisitions First to market with state-of-the-art EAFD recycling plants in China: Changzhou, Jiangsu: ✓ Completed on budget ✓ In commercial operations EAFD expansion Korea & Turkey since Dec’21 Seconda
Slide 32: Investment highlights
Investment highlights Environmental Favourable Global Strong solutions mega trends leader regulation in high demand supporting secondary steel in Europe, Asia & US, getting stricter and for the steel and and aluminium markets in niche recycling markets, expanding into aluminium industry e.g. CO2 red
Slide 33: Sustainability at Befesa
Sustainability at Befesa Key player within the circular economy, with c. 2 million tonnes recycled and c. 1.5 million tonnes of valuable materials recovered annually, that contributes significantly to increase efficiency of raw material use in the metals industry and promotes the transition towards
Slide 34: Global leader in Europe, Asia & North America
Global leader in Europe, Asia & North America EAFD recycling plants Befesa is the global leader in steel dust and salt slags recycling services with a competitive advantage due to its close-proximity to key clients Salt slags & SPL recycling plants Lünen Clients Duisburg Hannover Fouquières-lès-Lens
Slide 35: Highly regulated & critical service model
Highly regulated & critical service model Befesa is the leading environmental services partner in the circular economy of the 2 nd steel and aluminium industry by recycling and avoiding the landfilling of c. 2 MT hazardous residues and recovering c. 1.5 MT of new valuable materials HAZARDOUS WASTE B
Slide 36: Befesa's Resilience During Latest Crises
Befesa’s Resilience During Latest Crises Befesa has demonstrated resilient volumes and capacity utilisation levels during the latest crises 2008 / 2009 / 2010 2019 / 2020 / 20213) 600 1000 2019 2020 2021CE 240 >1.1Mt Incl. 240US acquisition 550 900 Befesa EAFD 220 500 474 482 800 220 throughput, kt
Slide 37: Experienced management team
Experienced management team Senior management team delivering results through long-standing industry expertise, entrepreneurial spirit and focus on operational excellence as well as governance and compliance processes Javier Molina Wolf Lehmann Key achievements / track record CEO CFO; incl. responsi
Slide 38: 05 Investor agenda & appendix
Waelz kiln at EAFD recycling plant in Gyeongju, South Korea 05 Investor agenda & appendix
Slide 39: Investor's agenda
Investor’s agenda Financial calendar Investor conferences 2022 H1 2022 H2 2022 Prelim. YE Results 2021 & Conf. Call ODDO BHF Forum 25 th Edition (virtual) Frankfurt – Commerzbank & ODDO BHF Thursday, 24 February 2022 6 & 7 January 2022 – ODDO BHF Corporate Conference 2022 Annual Report 2021 Commerzb
Slide 40: Q3 2021/20 – Key financials
Q3 2021/20 – Key financials (€m, unless otherwise stated) Steel Salt Secondary Corporate & Total Dust Slags Aluminium eliminations Befesa Revenue1) €108.7 €20.0 €72.0 -€10.8 €190.0 yoy change +€27.0 / +33.0% +€3.6 / +22.1% +€18.0 / +33.3% -€3.8 / - +€44.8 / +30.9% Reported EBITDA €29.9 €4.8 €4.5 -€4
Slide 41: 9M 2021/20 – Key financials
9M 2021/20 – Key financials (€m, unless otherwise stated) Steel Salt Secondary Corporate & Total Dust Slags Aluminium eliminations Befesa Revenue1) €304.1 €57.3 €244.3 -€31.5 €574.2 yoy change +€46.8 / +18.2% +€3.0 / +5.6% +€85.1 / +53.4% -€7.1 / - +€127.8 / +28.6% Reported EBITDA €99.2 €15.9 €18.2
Slide 42: Multi-year trend – Key financials
Multi-year trend – Key financials1) (€m, unless otherwise stated) 2017 2018 2019 2020 Revenue €667.42) €720.1 €647.9 €604.3 Reported EBITDA €153.0 €176.0 €159.6 €123.5 Reported EBITDA 22.9%2) 24.4% 24.6% 20.4% margin Adjusted EBITDA €172.43) €176.0 €159.6 €127.04) Adjusted EBITDA 25.8%2) 24.4% 24.6%
Slide 43: Q3 2021/20 – Operational data – Steel Dust Recycling Services
Q3 2021/20 – Operational data – Steel Dust Recycling Services Q3 2020 Q3 20211) yoy change EAFD 160.7 222.6 +61.9 / +38.5% throughput (kt) EAFD average 77.5% 77.7% +28 bps capacity utilisation (%) Waelz oxide 55.9 73.2 +17.3 / +30.9% (WOX) sold (kt) Zinc LME price €1,997 €2,538 +€541 / +27.1% (€/t)
Slide 44: 9M 2021/20 – Operational data – Steel Dust Recycling Services
9M 2021/20 – Operational data – Steel Dust Recycling Services 9M 2020 9M 20211) yoy change EAFD 501.9 563.3 +61.4 / +12.2% throughput (kt) EAFD average 81.2% 81.0% -26 bps capacity utilisation (%) Waelz oxide 182.4 192.6 +10.2 / +5.6% (WOX) sold (kt) Zinc LME price €1,905 €2,414 +€509 / +26.8% (€/t)
Slide 45: Q3 2021/20 – Operational data – Aluminium Salt Slags Recycling Services
Q3 2021/20 – Operational data – Aluminium Salt Slags Recycling Services Q3 20201) Q3 2021 yoy change Salt Slags & 102.6 107.2 +4.7 / +4.5% SPL treated (kt) Salt Slags & 77.0% 94.5% +1,754 bps SPL avg. cap. utilisation (%) Aluminium 44.4 42.9 -1.5 / -3.5% alloys produced (kt) Secondary Alu 86.2% 83.0
Slide 46: 9M 2021/20 – Operational data – Aluminium Salt Slags Recycling Services
9M 2021/20 – Operational data – Aluminium Salt Slags Recycling Services 9M 20201) 9M 2021 yoy change Salt Slags & 333.0 303.0 -30.0 / -9.0% SPL treated (kt) Salt Slags & 83.9% 90.0% +609 bps SPL avg. cap. utilisation (%) Aluminium 123.7 142.4 +18.7 / +15.1% alloys produced (kt) Secondary Alu 80.6% 9
Slide 47: Multi-year trend – Operational data
Multi-year trend – Operational data 2017 2018 2019 2020 EAFD throughput (kt) 661.0 717.1 665.8 687.0 EAFD average capacity 84.7% 92.0% 80.7% / 90.1%1) 83.0% utilisation (%) Waelz oxide (WOX) sold 217.8 240.9 217.6 239.2 (kt) Zinc LME price (€/t) €2,572 €2,468 €2,276 €1,979 Zinc hedging €1,876 €2,051
Slide 48: Consolidated key financials
Consolidated key financials Q3 adjusted EBITDA at €42.7m, up 46% yoy, mainly driven by strong metal prices; Contribution from acquired Zinc US operations (six weeks of Q3); Volumes continued solid with plant utilisation at pre-pandemic levels; EBITDA above pre-pandemic levels (up 15% vs. Q3’19) Adju
Slide 49: Steel Dust Recycling Services
Steel Dust Recycling Services Q3 adjusted EBITDA at €33.5m; Favourable zinc LME prices & TC, partially offset by lower zinc hedging prices; Contribution from acquired US operations (c. 6 weeks of Q3); EBITDA above pre-pandemic levels (up 11% vs. Q3’19) Adjusted EBITDA bridge Q3 2020 to 2021 (€m) +€9
Slide 50: Aluminium Salt Slags Recycling Services
Aluminium Salt Slags Recycling Services Q3 EBITDA at €9.2m, up 61% yoy, mainly driven by strong aluminium metal prices yoy; Better salt slags & SPL partially offset by lower alu alloys; EBITDA above pre-pandemic levels (up 52% vs. Q3’19) EBITDA bridge Q3 2020 to 2021 (€m) +€3.5 / +60.8% -3 9.2 6 5.7
Slide 51: Cash flow, net debt & leverage
Cash flow, net debt & leverage Continued strong liquidity of more than €275m including record €201m cash on hand, post-dividend & acquisition funding; Net leverage of x2.33 at Q3’21 closing, improved vs. x3.10 at YE’20 and x3.31 at Q3’20 €4 China local loans Adjusted EBITDA to total cash flow (€m) -