Lu-ve S.p.a. · MIL:LUVE
Lu-ve — Q1 2024 Earnings Presentation
61 slides from Lu-ve's earnings presentation, May 2024
Slide 1: Q1 2024 results
LU-VE GROWP leadership with aeiton 7 Q1 2024 results 13% May 2024
Slide 2: Executive Summary – Q1 2024
Executive Summary – Q1 2024 Excluding HP Sales Grew by 4.9% Profitability Improvements Thanks to Cost Saving Programs Economics Financials Strategy • In Q1-24, sales • Leverage at 1.7x • Resilient business decreased by 6.3% EBITDA adj (vs 2.1x as model thanks to ( -5.9% volumes and of Mar 23), thank
Slide 3: Q1 2024 - Financial Highlights
Q1 2024 - Financial Highlights Increase of EBITDA Despite Lower Sales € millions Q1-23 Q1-24 2023 FY • In Q1-24 EBITDA margin increased to 13.8% Sales 151.4 141.9 617.3 • Net income adjusted in Q1-24 increased Growth % 1.7% by 18% YoY -6.3% -0.2% EBITDA 19.2 19.6 80.1 EBITDA % 12.7% 13.8% 13.0% (1)
Slide 4: Q1-24 – Revenues Breakdown
Q1-24 – Revenues Breakdown New Market Opportunities and Benefit from Diversification Products Q1 23 % Q1 24 % ∆% € 000 Heat Exchangers 85.9 56.7% 70.1 49.4% -18.5% Air Cooled Equipment 61.1 40.4% 67.0 47.2% 9.5% Glass Doors 3.6 2.4% 4.3 3.0% 19.3% Total sales of products 150.6 99.5% 141.3 99.6% -6.2
Slide 5: 2018-2024 Consensus - Sales Growth vs Guidance
2018-2024 Consensus - Sales (1) Growth vs Guidance (HSD – M/LT) CAGR 2018-2023 (actual) = 15.0% CAGR 2018-2024 (consensus) = 12.9% In 2021/2022 a growth equivalent to the 4-year guidance target growth was achieved Organic growth: CAGR 2018-2024 consensus = 7.5% Guidance: HSD Considering
Slide 6: Heat Pumps - Focus
HEAT PUMPS - Focus The market (1) LUVE strategy • To align with all existing national energy • In 2023 heat pumps represent 10% of and climate pledges worldwide, heat LUVE total sales. In Q1-24 = 3.4% pumps will have to meet nearly 20% of global heating needs in buildings by 2030. • Heat exchangers
Slide 7: Sales by application and market
Sales by application and market Benefit of Diversification of Applications • SBU components -16.9%: • Excluding HP sales grew by 0.8% • Demand recovery for mobile applications, dryers and commercial refrigeration • Expected drop of sales in HP due to lack of clear direction in incentives schemes in
Slide 8: EBITDA Bridge Analysis
EBITDA Bridge Analysis Q1-24 vs Q1-23 = + 2.3% EBITDA Margin from 12.7% to 13.8% 25,0 2,2 19,6 20,0 19,2 - 19,2 19,6 - -1,3 -0,5 15,0 € Million 10,0 5,0 - EBITDA NRI Q1-23 EBITDA Selling prices Operating Contribution EBITDA NRI Q1-24 EBITDA reported Q1- adjusted Q1-23 costs margin adjusted Q1-24 rep
Slide 9: Q1-24 From EBITDA to Net Income
Q1-24 From EBITDA to Net Income EBIT Adjusted +4.0% and Net Income Adjusted + 18.2% € millions 2021 2022 2023 Q1-23 Q1-24 EBITDA reported 60.8 75.1 78.8 19.2 19.6 D&A 30.1 32.7 32.4 7.8 7.7 • In 2022 capital gain on Gain (loss) of non current assets (0.1) (0.3) (0.0) 0.0 0.1 Tecnair divestiture EBIT
Slide 10: Impact of IFRS on Interest Costs
Impact of IFRS on Interest Costs € millions 2022 2023 Q1-23 Q1-24 Cash interest cost (4.9) (11.8) (2.5) (3.3) Cash interest income 2.0 5.5 0.9 2.2 Net realized FX gain (cost) (1.2) 2.0 0.9 0.1 Net cash financial costs (A) (4.1) (4.3) (0.6) (1.0) Derivatives fair value 14.4 (7.7) (1.0) 0.4 Amortizati
Slide 11: Net Income – Net income Adjusted
Net Income – Net income Adjusted Net Income Bridge Analysis +18.2% (1) Due to rounding, numbers presented throughout this chart may not add up precisely to the totals provided (2) Source: management analysis of consolidated results as of 31/03/2024 (3) Net income adjusted considers the depreciation
Slide 12: TNWC back toward M/LT Guidance
TNWC back toward M/LT Guidance 31/03/2023 Days 31/12/23 Days 31/03/2024 Days € Millions Stock 137,6 80 110,8 65 113,7 67 A/receivable 101,9 59 87,8 51 106,6 63 Working capital 239,4 198,6 220,4 A/payable 105,8 91 95,7 90 100,1 97 Net working capital 133,6 103,0 60 120,2 71 % on net sales LTM 21,5% 1
Slide 13: Net Cash Generation Adjusted at New Record Level
Net Cash Generation Adjusted at New Record Level Net cash / (net debt) €m Net financial position as of March 2023 ( 161.4) Net financial position as of March 2024 ( 137.1) Accelerated capex program above maintenance level Delta in net financial position 24.3 24.3 In 2022 and 2023 temporary worki
Slide 14: Balance Sheet and Capital Allocation
Balance Sheet and Capital Allocation • Cash flow from operations at 13.0% of sales (vs 10.0% in Q1-23) • Change in NWC is due to seasonality in NWC (- € 13.4 M vs March 2023) (1) Due to rounding, numbers presented throughout this chart may not add up precisely to the totals provided (2) Source: mana
Slide 15: Future Developments and Closing Remarks
Future Developments and Closing Remarks • Focus on Datacenter and Industrial Projects • Focus on automation, process optimization and cost reduction • Focus on supply chain optimization Strategy • Further product range rationalization • Second stage of plant expansion in China and US • New capex rev
Slide 16: Annexes
Annexes 16
Slide 17: Income Statement as of 31/3/2024
Income Statement as of 31/3/2024 Consolidated Profit & Loss Q1-23 % Q1-24 % Delta % Reclassified (000 Euro) Sales and operating income 151,441 100.0% 141,915 100.0% -6.3% Purchases of materials (80,780) -53.3% (71,978) -50.7% Inventory increase (decrease) 4,195 2.8% 2,931 2.1% Services (21,556) -14.
Slide 18: Balance Sheet as of 31/3/2024
Balance Sheet as of 31/3/2024 Consolidated Balance Sheet % net % net % net 31/03/2023 invested 31/12/2023 invested 31/03/2024 invested Reclassified (000 Euro) capital capital capital Net intangible assets 97,089 92,863 92,173 Net tangible assets 192,821 205,412 204,362 Pre-paid taxes 8,478 11,039 11
Slide 19: Short company profile
Short company profile
Slide 20: Business Highlights
Business Highlights Business Unit Products % of Sales Applications Type of Customer (1) Heat exchangers • Refrigeration (food cold chain) • Commercial air conditioning and 50% ventilation OEM • Special applications (whitegoods, Business Unit “mobile applications” etc.) Components Glass doors for ref
Slide 21: Diversification to Avoid Cyclicality
Diversification to Avoid Cyclicality Diversified applications, segments and markets with uncorrelated business cycles Focus on markets with expected high potential growth Business growth sustained by megatrends 21 21
Slide 22: Seculars Trends Increase the Addressable Market
Seculars Trends Increase the Addressable Market Cold chain and Urbanization & refrigeration consumer habits Electrification (heat pumps / Global warming district heating) Digitalization Regulations (F-gas etc.) (data centers, IOT) Food safety Safety in supply chains Decarbonization Air treatment & v
Slide 23: Secular Trends Increase total Addressable Market
Secular Trends Increase total Addressable Market Drivers and trends What LUVE does Acceleration of the transition to “green capex” by major • LUVE was a first mover in green customers to: technologies applied to heat exchangers • Adopt refrigerants with low GWP • Currently, ≈ 53.5% of sales are alre
Slide 24: Track Record of Profitable Organic Growth and Acquisitions
Track Record of Profitable Organic Growth and Acquisitions 24 24
Slide 25: Strategy
Strategy Create sustainable competitive advantage through: Product focus and innovation Technology enhancements Production plants efficiency and flexibility First mover in "green tech" Reduce risk profile through: Widening product applications in uncorrelated sectors Increasing internati
Slide 26: LU-VE’s Medium Term Value Creation Framework
LU-VE’s Medium Term Value Creation Framework • High Single Digit growth in sales volume (organic) • EBITDA margin toward 14/15% thanks to scale and efficiency capex • NWC on sales: Mid Double Digit (net of extraordinary fluctuation) • Growth capex: € 20/30 m p.a. • Tax rate: 20-21% • ESG targets in
Slide 27: Pillars of a Sustainable Competitive Advantage
Pillars of a Sustainable Competitive Advantage Sources LU-VE business model Technological • Patent and tech innovation Advantage • Leadership in R&D: laboratories / CFD / nanotechnologies / IOT • Market leadership: ca. 50% (1) of sales are in market segments where Lu-Ve is market leader Cost advanta
Slide 28: Years of Experience in Heat Exchanger Technology
ver 600 YEARS OF EXPERIENCE IN HEAT EXCHANGER TECHNOLOGY if = ie - t o Ke) (=y) re i i : 1 Cc Ww i 28
Slide 29: Organization: 20 Production Units
Organization: 20 Production Units Italy Finland 34 SALES COMPANIES Poland India • AUSTRIA – VIENNA • BENELUX – BREDA-UCCLE • CHINA – TIANMEN-CHANGZHOU • CZECH REPUBLIC - NOVOSEDLY • DENMARK - AARHUS • FINLAND - VANTAA • FRANCE - LYON • GERMANY – STUTTGART • Over 1.080.000 sqm. total surface area (30
Slide 30: Metal Price Impact on Profitability
Metal Price Impact on Profitability Metal influence on Sale contract Main application Metal fluctuation management product price Frame contracts Mainly in the Mechanical price • Price adjusted through formulas linked to Components SBU adjustment through metal publicly available quotation (average fo
Slide 31: The Pricing Power in 2021
The Pricing Power in 2021 H1 + H2 2021 31
Slide 32: The Pricing Power in 2022
The Pricing Power in 2022 EBITDA FY 2022 vs 2021 + 29.6% • EBITDA adjusted grew by 29.6% thanks to volumes increase and pricing power • In 2022, non-recurring items are M&A transaction costs and extraordinary bonuses to employees (no adjustments in 2021) (1) Due to rounding, numbers presented throug
Slide 33: EBITDA 2023 Bridge Analysis
EBITDA 2023 Bridge Analysis FY 2023 vs 2022 = + 1.7% FY 2023 vs 2018 = + 108.6% • EBITDA adjusted grew by 1.7% thanks to cost savings • In 2023, non-recurring items are new plant in Belluno start-up costs and extraordinary contribution to flooded populations of Emilia Romagna (1) Due to rounding, nu
Slide 34: 2023 Net Income – Net income Adjusted Bridge Analysis
2023 Net Income – Net income Adjusted Bridge Analysis +5.4% (1) Due to rounding, numbers presented throughout this chart may not add up precisely to the totals provided (2) Source: management analysis of consolidated results as of 31/12/2023 (3) Net income adjusted considers the depreciation of “pur
Slide 35: Performance since IPO (2015)
Performance since IPO (2015) Strategic targets identified since 2015 Actual results: 2015 – 2023 CAGR Organic Total Organic growth 5/6% p.a. Sales 10.5% 14.3% (CAGR) EBITDA 11.2% 15.0% 10-15% on sales NWC Strict control In 22/23 temporary increase of safety stock due to uncertain supply chain Growth
Slide 36: Financial Highlights
Financial Highlights Turnover 2009-2023 EBITDA ADJ (2) 2009-2023 CAGR +14.3% since IPO CAGR +7.5% Net Income reported 2009-2023 Net Cash Generation ADJ (2) 2013-2023 AVG = €21.2M • All data in € millions • (1) 2014-2023 based on IFRS – 2009-2013 based on ITA GAAP 36 • (2) Adjustments to exclude non-
Slide 37: Resilient business model and improving profitability
Resilient business model and improving profitability Since H2 2019, dilutive effect on margin percentage due to lower profitability of AL AIR (≈ 125bps) In 2020 impact of Covid and lockdown In H1-20, volumes decreased by 10.4% LFL due to lockdown In 2021, volumes increased by 14.7% In 2022
Slide 38: Shareholders Structure
Shareholders Structure (1) 45,82% (3)(4) 16,00% (3) (4) 38,18% (3) (1) Fully diluted – post warrant conversion at end of May 2017 (2) Updated as of as of March 5th, 2024 (3) Based on number of shares (4) Thanks to the Loyalty Share Program (2 years ownership) as of March 5th, 2024, Finami owns 50,9%
Slide 39: LU-VE presence on the Italian Stock Exchange
LU-VE presence on the Italian Stock Exchange STAR segment MID Cap index 21st MTA September 19th 2022 AIM 21st June September 9th July 2017 2022 2015 39
Slide 40: ESG
LU-VE GROUP leadership with passion zs
Slide 41: LU-VE Group Approach to ESG Topics
LU-VE Group Approach to ESG Topics Global Scenario Paris Green Deal – Horizon, IPPC, Sixth 28th United Nations climate 2015 Agreement 2019 Kigali Amendment Assessment Report change conference (COP28) 1985 LU-VE 2017 SUSTAINABILITY 2020 2022 SUSTAINABILITY 2023 SUSTAINABILITY 2021 EU TAXONOMY GOVERNA
Slide 42: Social Impact of LU-VE Group solutions
Social Impact of LU-VE Group solutions FOOD ENERGY SAFETY 50% CLIMATE EFFICIENCY WELL-BEING 18% DIGITAL DIGITAL TRANSFORMATION CLIMATE 25% TRANSFORMATION 7% WELL-BEING *respect Group’s total turnover in 2023 42
Slide 43: Our Vision in 4 pillars is aligned to the SDGs
Our Vision in 4 pillars is aligned to the SDGs Our vision is linked to the material topics that we pursue so that this vision can take shape in the real world. The Sustainable Development Goals (SDGs) have been defined at global level by the United Nations to identify global priorities for developme
Slide 44: The Sustainability Governance
The Sustainability Governance In 2022 LU-VE Group set up a corporate Sustainability Steering Committee: this is where the strategic lines will be plotted and the progress of our performance will be evaluated. The new figure of Group General Manager (GM), introduced in 2023, has been also involved in
Slide 45: The Sustainability Plan
The Sustainability Plan The 2023 was the first year of implementation of LU-VE Group’s 2023-2025 Sustainability Plan. It was prepared by the Corporate Sustainability Steering Committee, reviewed by the Control and Risk Committee, and approved by the Board of Directors in February 2023. All the targe
Slide 46: EU Taxonomy and the eligible activities of the LU-VE Group
EU Taxonomy and the eligible activities of the LU-VE Group LU-VE Group’s activities eligible to the EU Taxonomy, because of its contribution to the objectives: «Climate Change Mitigation» (CCM) - Delegated Regulation (EU) 2023/2485 and «Transition to a circular economy» (CE) - Delegated Regulation (
Slide 47: Climate Risks analysis for the Business Plan 2023-2026
Climate Risks analysis for the Business Plan 2023-2026 PHYSICAL CLIMATE RISKS ANALYSIS • LU-VE Group already required a risk assessment for its production facilities in 2022. This analysis is considered up-to-date and also applicable for the financial year 2023 as it is based on IPCC (Intergovernmen
Slide 48: Helping Customers Reach their Sustainability goals
Helping Customers Reach their Sustainability goals FIRST MOVER IN GREEN TECH LU-VE GROUP FOR CO2 Over the last 10 years, LU-VE Group’s technological leadership has been strengthened thanks to the development fluids and energy-efficient motors. 48 The graph “% of sales with EC/AC motors” shows for 20
Slide 49: Decarbonisation and heat pumps
Decarbonisation and heat pumps • Heat pumps are a decisive element for achieving the goal of zero “net carbon emissions” • LU-VE Group has designed special products to make the best use of heat sources for heat pumps: thus supporting this market which in 2022 recorded a strong growth HEAT PUMPS FOR
Slide 50: Sustainability Ambassadors’ Journey
Sustainability Ambassadors’ Journey The “Sustainability Ambassadors’ Journey” is a global internal training programme launched in 2023 to increase the sustainability culture at LU-VE Group and accelerate sustainable change in the company. From the various applications received, a total of 80 employe
Slide 51: LU-VE Group
LU-VE GROUP leadership with passion zs
Slide 52: M&A activity (2015-2022)
M&A activity (2015- 2022) Four acquisitions completed Sales acquired: € 145 m (1) Amount invested: € 122 m (1) Average EBITDA multiple paid = 7.0x (1) ACC Wanbao asset deal (1) Including Refrion acquired on 30 March 2022 52
Slide 53: Refrion (Italy) (2022)
Refrion (Italy) (2022) Main financial terms Strategic rationale • Acquisition completed on 30th of March • Refrion specializes in the production and 2022 marketing of air heat exchangers with adiabatic technology, which enables • Acquisition of 75%, plus put&call on reductions to be made in energy t
Slide 54: ACC (Italy) (2022)
ACC (Italy) (2022) Main financial terms Strategic rationale • Transaction completed on 29th of July • Access to modern industrial plant at 2022 cheap conditions (40.000 mq) • Contracting of selected assets and employees of former ACC under receivership (based on Belluno – Italy) • Hiring skilled peo
Slide 55: Tecnair LV (Italy) (2022) - Divestiture
Tecnair LV (Italy) (2022) - Divestiture Main financial terms Strategic rationale • Transaction completed on 21st of March • Limited integration with the LUVE 2022 Group • Sale to Systemair of the entire • Product range in competition with large participation (80%) in Tecnair LV customers of LUVE • T
Slide 56: Acquisition of Alfa Laval Air Heat Exchanger Business: Overview (2019)
Acquisition of Alfa Laval Air Heat Exchanger Business: Overview (2019) On December 12th, 2018, Lu-Ve signed a binding contract to acquire 100% of Alfa Laval Air Heat Exchanger division (“AL Air”) of Alfa Laval Group. The acquisition was completed on April 30th, 2019 (1) Purchase price paid at cl
Slide 57: Acquisition of Alfa Laval Air Heat Exchanger Business: Rationale (2019)
Acquisition of Alfa Laval Air Heat Exchanger Business: Rationale (2019) Becoming the third largest player in the world in the air-cooled products Strengthening market position in Europe in industrial cooling business unit, achieving a leading position Enlargement of product applications (engin
Slide 58: ZHT (USA) (2018)
ZHT (USA) (2018) On June 26, 2018, LUVE completed the acquisition of Zyklus Heat Transfer Inc (ZHT), based in Jacksonville (Texas) Luve acquired 100% ZHT is specialized on heat exchanger for the US market Mr. Zachary Riddleseperger – founder and 100% owner – remains as VP Operation Three y
Slide 59: Spirotech (India) (2016)
Spirotech (India) (2016) • Binding contract to acquire 95% of Spirotech signed on 18/9/2016 • Spirotech is a leading and fast-growing Indian producer of heat exchanger for HVAC industry, home appliances and transportation: • turnover of € 21 millions with an average EBITDA margin > 20% • doubled the
Slide 60: Disclaimer
Disclaimer • This presentation has been prepared by LU-VE S.p.A. for information purposes only and for use in presentations of the Group’s results and strategies. • For further details on the LU-VE Group, reference should be made to publicly available information. • Statements contained in this pres
Slide 61: Our best days have yet to be lived
OUR BEST DAYS HAVE YET TO BE LIVED Nazim Hikmet