EuroGroup Laminations S p A : - PR 1H 2023 Results - English

Published August 4, 2023 at 1:34 p.m. UTC

Source: MarketScreener

PRESS RELEASE

THE BOARD OF DIRECTORS APPROVES THE INTERIM FINANCIAL REPORT AS OF 30 JUNE 2023

Revenues and EBITDA up in 1H 2023, to € 453.8 million and € 57 million respectively (+6.1% and +4.4% compared to 1H 2022)

Continued strong revenue growth in the EV & Automotive segment at € 245.1 million, +73.1% compared to 1H 2022

EV & Automotive: overall increase in order book and pipeline under discussion as of 31 July 2023 at €6.0 billion and €3.8 billion respectively

Net financial debt decreased to € 113.5 million compared to € 135.1 million as of 31 March 2023, with a Net Leverage Ratio of 1.1x

DS4 S.r.l. acquisition and Joint Venture with Eligio Re Fraschini S.p.A.: widening of the Group tech know-how to enhance innovation in production processes

IPO mid-term targets confirmed. Update of the FY2023 guidance due to the longer than expected enduring of adverse macroeconomic conditions affecting the Industrial segment

1H 2023 highlights:

Revenues € 453.8 million vs € 427.8 million in 1H 2022 (+6.1%)
EBITDA € 57 million vs € 54.6 million in 1H 2022 (+4.4%)
EBIT € 42 million vs € 42.3 million in 1H 2022 (-0.6%)
Profit for the period € 18.8 million vs € 22.0 million in 1H 2022 (-14.7%)
EV & Automotive order book and pipeline as of 31 July 2023 of € 6.0 billion and € 3.8 billion respectively

Baranzate (MI), 2 August 2023 - The Board of Directors of EuroGroup Laminations S.p.A. ("EuroGroup Laminations" or the "Group") - a world leader in the design, manufacture and distribution of stators and rotors for electric motors and generators - approved the Interim Financial Report as of 30 June 2023.

Marco Arduini, Chief Executive Officer of EuroGroup Laminations commented: "'The first half of 2023 saw a sustained growth in the EV & Automotive segment, where OEMs increasingly recognise the Group's high technology and competitiveness, as demonstrated by the substantial order book. Conversely, the Industrial segment has suffered from a decrease in volumes in its underlying markets, which is lasting longer than expected. In any case, thanks to our operational flexibility and the synergies between our two businesses, we are able to efficiently manage the temporary swings in production volumes due to the economic conjuncture, so as to preserve

EuroGroup Laminations S.p.A.

margins and be ready to return to grow in the Industrial segment as soon as the market outlook improves. We are also proud to announce the acquisition of DS4. This transaction will enable us to strengthen our technology leadership in the development of unique stator and rotor manufacturing solutions that integrate software, neural networks, mathematical algorithms and innovative manufacturing processes. It will also enable us to generate significant synergies in the execution of our future investment plan."

MAIN CONSOLIDATED ECONOMIC AND FINANCIAL RESULTS AS OF 30 JUNE 2023

thousands of euro		1H 2023		1H 2022	Var %


Revenues	453,804	427,765	+6.1%

EBITDA	57,036	54,635	+4.4%

EBIT	42,036	42,286	(0.6%)

Profit for the period	18,752	21,991	(14.7%)

thousands of euro	30/06/2023	31/12/2022	Var %
Net financial indebtedness	113,478	259,377	(56.2%)

Equity	448,055	195,625	+129.0%

During the first six months of 2023 revenues amounted to € 453.8 million, up 6.1% compared to the same period of 2022 (€ 427.8 million). Growth was driven by the EV & Automotive segment which increased strongly compared to the same period in 2022 (+73.1%), more than offsetting the contraction of the Industrial segment.

Consolidated revenues by operating segment:

thousands of euro	1H 2023	1H 2022	Var %

EV & Automotive	245,140	141,591	+73.1%

Industrial	208,664	286,174	(27.1%)

Total Revenues	453,804	427,765	+6.1%

In the first half of 2023, the EV & Automotive segment posted revenues of € 245.1 million, up by 73.1% compared to the same period in 2022 (€ 141.6 million), mainly due to the ramp-up in production volumes on new projects related to the growing demand for EV products, consistently with the net order book execution. This result confirms the Group's leadership in the markets it competes in.

The Industrial segment in the first half of 2023 posted revenues of € 208.7 million, compared to

286.2 million in the same period of 2022 (-27.1% YoY). The decrease in revenues is mainly due to the reduction in volumes as a result of an enduring de-stocking process of the Group's customers. In addition, it should be noted that the second quarter of 2022 had been

EuroGroup Laminations S.p.A.

characterized by a strong re-stocking process, lasting also in the 2022 third quarter, triggered by

the outbreak of the Russian-Ukrainian conflict.

Consolidated revenues by geographic area:

thousands of euro	1H 2023	1H 2022	Var %

EMEA	267,143	250,981	+6.4%

of which in Italy	263,004	242,490	+8.5%

North America	164,469	153,645	+7.0%

of which in Mexico	137,142	91,390	+50.1%

of which in the USA	27,327	62,255	(56.1%)

Asia	22,192	23,139	(4.1%)

of which in China	22,192	23,139	(4.1%)

Total Revenues	453,804	427,765	+6.1%

Revenues from the EMEA region amounted to € 267.1 million (€ 251.0 million in H1 2022), up 6.4%; revenues from North America amounted to € 164.5 million (€ 153.6 million in H1 2022), up 7.0%, in both cases mainly due to increased volumes driven by strong demand in EV & Automotive segment.

Revenues from the USA amounted to € 27.3 million (€ 62.3 million in H1 2022) with a reduction driven by the combined effect of lower volumes, in particular in the Energy and HVAC segments, and by the reduction in steel prices.

Revenues in the Asia region, which are currently mostly related to the Industrial segment, amounted to € 22.2 million, in line with the previous year (€ 23.1 million in H1 2022). In this area EV & Automotive projects are in a full expansion phase, coherently with the order book.

In the first half of 2023, EBITDA amounted to € 57.0 million, up (+4.4%) compared to the first half of the previous year (€ 54.6 million) with an EBITDA Margin at 12.6%, substantially in line with the 12.8% recorded in the first half of 2022.

EBITDA by operating segment: in 1H 2023, EBITDA of the EV & Automotive segment stood at €

32.6 million (+73.4% compared to € 18.8 million in 1H 2022), with an EBITDA Margin of 13.3%, in line with the 1H 2022 result. Industrial segment's EBITDA stood at € 24.4 million (-32%

compared to € 35.9 million in 1H 2022), with an EBITDA Margin of 11.7%, slightly down from 12.5% in 1H 2022. The effect of the reduction in production volumes on the Industrial segment margin has been limited due to the ability of the Group to synergically manage activities' swings between the two business segments, and also to the effect of the pass-through mechanism related to the changes in raw materials' prices.

EBIT in the first half of 2023 amounted to € 42 million compared to € 42.3 million in the same period of 2022. The performance reflects the different mix of products sold despite higher depreciation and amortisation, which increased from € 12.3 million in the first half of 2022 to € 15.0 million in the same period of 2023, due to the progressing of the investment plan to support

EuroGroup Laminations S.p.A.

business growth.

Net profit for the period in the first half of 2023 amounted to € 18.8 million, compared to € 22.0 million in the same period of 2022, mainly due to a higher incidence of financial expenses, also related to unrealized losses on foreign exchange amounting to € 4.9 million as of the 30 June 2023, compared with a gain on foreign exchange amounting to € 3.4 million as of the 30 of June 2022.

The EV & Automotive segment's order book and pipeline show a collective growth, reaching an estimated value of € 6.0 billion and of € 3.8 billion respectively as of the 31st July 2023. Of the latter, around € 900 million are related to advanced talks with important European and Chinese OEMSs. These results further confirm the Group's solid long-term growth prospects and its contribution to decarbonisation and to the development of more sustainable mobility.

Financial position

In the first half of 2023, net investments (CAPEX) amounted to € 51 million, with an increase of 20.4% compared to the same period of the previous year (€ 42.3 million) to support the Group's expansion plans, mainly related to the EV & Automotive segment (>70% of total investments implemented).

As of 30 June 2023, Net Trade Working Capital was € 253.6 million (€ 260.1 million as of 31 March 2023) compared to € 179.6 million as of 30 June 2022 and € 157.0 million as of 31 December 2022 mainly driven by the increase in inventories to support significant EV & Automotive projects in the ramp-up phase in Europe and China expected in the second part of the year.

Net financial debt as of 30 June 2023 decreased by € 145.9 million compared to 31 December 2022 (€ 259.4 million) to € 113.5 million, resulting in an improvement in leverage (1.1x as of 30 June 2023, compared to 2.5x as of 31 December 2022). The trend is mainly due to the effect of the proceeds from the listing process completed in February 2023, despite the absorption of working capital and the increase in operating investments to support growth.

SIGNIFICANT EVENTS DURING THE PERIOD

On 26 May 2023, the Parent Company EuroGroup Laminations S.p.A. established Euro Automation S.r.l. The new entity will operate in the sector of the design and construction of technologically advanced plants for dimensional controls and post-tensioning accessory machining of the rotor-stator pack, supported by artificial intelligence systems. This will allow to increase the efficiency of the various stages of processing and simulation, diagnostics and predictive maintenance processes, with positive effects on operating efficiency and the Group business margins.

On 8 June 2023, Eurotranciatura S.p.A. and Corrada S.p.A. presented, as proposing party and as adhering party respectively, a proposal for a Development Contract to be entered into with Invitalia S.p.A., pursuant to Article 9 of the Decree of the Ministry of Economic Development dated 9 December 2014 and the Directorial Decree dated 10 October 2022 "Support for the

EuroGroup Laminations S.p.A.

Automotive Supply Chain". This proposal is focused on a series of significant industrial investments, worth around € 81 million, that the Group intends to put in place at the Baranzate and Bollate plants, functional to the execution of the Electric Vehicle (EV) supply contracts recently stipulated with some leading OEMs. Of the total planned investments, about 72 million euro will be allocated to the structural and plant engineering part, while about 8 million euro will be dedicated to the related research and development activities. The contract proposal is still in the preliminary staging phase, which, should it be successfully concluded, envisages the distribution of grants in the amount estimated to date at approximately € 13 million, to be deployed over the next years.

Also, in the first half of 2023, an agreement was signed with Eligio Re Fraschini S.p.A., a leading company in the field of processing composite materials and, among other things, a pluri-decades supplier to Formula 1 and America's Cup teams, for the establishment of a Joint Venture for the joint development of innovative solutions in the field of the use of these materials, primarily carbon fibres, in the construction of increasingly high-performance electric motors for the EV segment.

SIGNIFICANT SUBSEQUENT EVENTS

On August 2, 2023, the Group signed a binding agreement with Angelo Petrogalli to purchase the 100% of the shares of DS4 S.r.l. ("DS4"), a company based in Pedrengo (BG) active in the design and construction of custom-made software and hardware with applications in the field of industrial automation. DS4 was founded in 1996 as a manufacturer of laser cutting machinery mainly dedicated to the optics sector, and over the years it has also developed unique skills in the field of components to support machining on steel, combining elements of robotics, 3D vision and artificial intelligence, that have enabled it to obtain prestigious collaborations and awards, such as the ABB Most Innovative Solution Award. EuroGroup Laminations and DS4 boast a fruitful technical and commercial relationship, which began in 2019 with the development of an innovative human-less production line equipped with its own neural network system for the production of motor cores destined for the Electric Vehicles market. The transaction will enable EuroGroup Laminations to acquire strategic skills in industrial automation, that are key to support, also through the digitization of industrial processes, the future growth envisaged at the Group level, and will provide DS4 with the access to EuroGroup Laminations' consolidated platform of know-how and customers.

Moreover, it is to be noted the high level of attainable operating synergies thanks to the acquisition.

In 2022 DS4 recorded € 7.9 million revenues and a € 2.5 million EBITDA, with a € 18.4 million order book as of July 2023.

The transaction has an enterprise value of approximately € 16.5 million, with a net cash position equal to € 1.9 million and includes the payment of a ticking fee of € 4,450 that will accrue daily from January 1, 2023 until the closing date and a part of the consideration equal to € 3.5 million to be paid in 5 equal annual instalments, with an annual interest which will accrue on each instalment. The payment of the consideration will be made entirely in cash, through the buyer's own resources. The transaction does not involve either debt assumption agreements or assignment of receivables. There are no call or put options. The completion of the transaction is subject to the clearance from the Italian Government pursuant to the golden power regulation

EuroGroup Laminations S.p.A.