MARR S p A : Analysts' Presentation - First Half 2023 Results (speech translation and Q&A summary)

CONFERENCE CALL 4 August 2023

The following is a free translation in English of the speech and a summary of the Q&A topics session relating to the release of MARR's 1H 2023 Results. The speech, being held in Italian, will prevail in case of discrepancy with the written free English translation.

Antonio Tiso - Investor Relator

Good afternoon and thank you for attending the MARR conference on the figures relating to the first half 2023, reserved for investors, analysts and banks.

Before giving way to the CEO Francesco Ospitali and Pierpaolo Rossi responsible for Finance, Administration and Control for the presentation of the figures, I would point out that:

• as usual, we will follow the order of the slides sent to you and available in the Investor Relations section of the company website;
• the presentation is expected to last about half an hour. We will try to be brief and leave more time for your questions.
• lastly, I would remind you that on Monday 7 August, the English version of the speech and a Q&A summary will be published on the MARR website and will be available for consultation for one week.

I will now give way to the CEO Francesco Ospitali to begin presenting the figures.

Francesco Ospitali - CEO

3)

Thank you Antonio and good afternoon to you all

We will begin with slide 3 and a summary of the main consolidated economic and financial figures for the first half of 2023.

The first six months of 2023 closed with total consolidated revenues of over 1 billion Euros, amounting to 1,003.2 million Euros, increasing compared to 874.3 million Euros in the same period last year, and also to 793 million pre-pandemic in 2019.

The growth in revenues compared to the first six months of 2022 was affected in the early part of the first quarter by the tail end of the pandemic in the first months of last year and inflation in the food sector, which was acute from the second quarter of 2022 and then attenuated progressively in the second quarter of 2023. It can also be seen that the impact of inflation in the food sector in the second half of 2023 was mitigated by so-called trading down phenomena.

The improvement in operating profitability was confirmed, with EBITDA amounting to 53.4 million Euros in the first six months of 2023, compared to 35.0 million in 2022 and 56.3 million pre-pandemic in 2019.

EBIT for the period amounted to 34.7 million Euros, compared to 18.3 million in the first half of 2022 (42.0 million Euros in the first half of 2019).

At the end of the first half of 2023, the Net Result, affected by the increased net financial costs as a result of the increase in the cost of borrowing as of the second half of 2022, amounted to 18.7 million Euros compared to 10.5 million in the first half of 2022.

The Net Trade Working Capital as at 30 June 2023 amounted to 198.6 million Euros, a decrease compared to 233.5 million as at 31 March 2023 and 211.5 million after the first half of 2022.

4) We will now pass on to slide 4) and the revenues from sales.

With total revenues of 1,003.2 million Euros, the revenues from sales, in other words net of the other revenues, in the first half of 2023 amounted to 986.2 million Euros compared to 860.2 million in the same period of 2022 and 779.7 million pre-pandemic in 2019.

With regard to the second quarter of 2023, the sales amounted to 566.1 million Euros and increased compared to 538.5 million in 2022 and 450.4 million in 2019.

As already mentioned previously, the various trends by quarter in the growth in sales at the end of the first six months of 2023 are to be correlated to:

• the effects of the pandemic in the first part of the first quarter of 2022
• the inflationary dynamics in the foodservice sector, which were more accentuated as of the second quarter of 2022 and then progressively attenuated during the second quarter of 2023. The increase in sales prices during the course of the first six months of 2023 was also mitigated by trading down phenomena which occurred in all client segments, albeit in different ways.

Sales to clients in the Street Market and National Account segments amounted to 883.4 million Euros in the first half of 2023 and compared to 734.1 million in 2022 (+20.3%) benefitted by approximately 7.5 million, of which 2.4 million in the first quarter of 2023, from the contribution of Frigor Carni S.r.l., consolidated as of 1 April 2022.

The increase in sales in the Street Market and National Account segments compared to the first half of 2022 is a further example of over-performance compared to the reference market.

On the basis of the findings of the Confcommercio Studies Office (Survey no. 7, July 2023), consumption by quantity, and thus excluding the inflation component, in "Hotels, meals and out-of- home consumption" in Italy increased compared to the same period in 2022 by 18.9% in the first three months of 2023 and +2.5% in the second quarter of 2023 respectively. It must be recalled that the different trend in the first and second quarters of 2023 is to be correlated to the fact that the first part of the first quarter of 2022 was affected by the pandemic.

Sales to customers in the Wholesale category (almost entirely frozen seafood products to wholesalers) amounted to 102.7 million Euros in the first half of 2023 and compared to 126.1 million in the same period of 2022, were affected by the same temporary unavailability of caught seafood products that marked the second half of 2022 and the first half of 2023.

In addition to this is an approach oriented towards focusing on the marginality of sales of products to wholesalers.

We will now pass on to slide 5) and the analysis of the dynamics relating to the change in prices and of the Gross Margin.

5)

In a foodservice context characterised by a general increase in the cost of food products (more evident since the 2Q of 2022), the process of adjusting sales prices to the increase in the purchase cost of the products has been implemented, initially in the Street Market segment and then with a recovery also in the other segments. This trend, measured as the gross margin in terms of €/Kg, has been made highlighted in the line graphs by the margin regarding the total sales closing in with respect to that of the Street Market segment after the first six months of 2023, in comparison with the same trend in the first quarter.

The variation in sales prices in terms of €/Kg confirms the different speed of the process of price adjustment in different client segments and in particular, the graphs and histograms in the slides show that between the first quarter and first half-year of 2023, this variation shows a levelling out linked to the progressive attenuation of inflation in the food sector and also to the trading down phenomena.

Lastly, it must be recalled that increased selectivity, actuated in particular in canteens within the National Account category, has contributed towards the recovery in margins.

I will now leave the floor to Pierpaolo for the analysis of the financial figures.

6)

Thank you and good afternoon to you all.

We are now on slide 6) and the analysis of the income statement for the first half of 2023 compared to the same period in 2022.

As regards the increase in total revenues and the improvement of the initial margin compared to the first half of 2022, these were influenced respectively by inflation in the food sector and its pass- through process, as commented upon previously.

With regard to the operating costs, it can be seen that the reduction in the incidence of service costs compared to 2022 is also due to a greater operating leverage linked to the increase in revenues and a reduction in energy tariff costs.

As regards the logistical costs, in particular transport and internal handling, it can be seen that there has been a structural increase compared to pre-pandemic tariffs, which has been mitigated by efficiency policies.

As a result of the increase in revenues, of the improvement of the gross margin and of the reduction of the incidence of operating costs, EBITDA at the end of the first six months of 2023 amounted to

53.4 million Euros, an improvement compared to 35 million in the same period of 2022. EBITDA in the first half of 2019 had been 56.3 million Euros.

The amortizations are stable, while the Provisions amounted to 8.7 million Euros and its increase compared to 7.0 million in the first half of 2022 is mainly due to the portion regarding the allocation to the provision for bad debts, the increase of which is correlated to that of sales. In any event, the incidence of the provision for bad debts on the revenues remains substantially stable and prudent.

EBIT for the period thus amounted to 34.7 million Euros, compared to 18.3 million in the first half of 2022 (42.0 million Euros in the first half of 2019).

A recovery in operating profitability is thus confirmed after the first six months of 2023, compared to the pre-pandemic absolute value levels in 2019.

At the end of the first half of 2023, the Net Result, affected by the increased net financial costs as a result of the increase in the cost of borrowing as of the second half of 2022, amounted to 18.7 million Euros compared to 10.5 million in the first half of 2022.

7)

We will now pass on to slide 7) and some comments on the Net Trade Working Capital as at 30 June 2023.

The Net Trade Working Capital as at 30 June 2023 amounted to 198.6 million Euros, an improvement both in terms of absolute value and number of days of the cash conversion cycle compared to the end of the previous quarter and to the same period last year.

The number of days receivable at the end of the first half of 2023 improved compared to 30 June 2022 and confirm the level as at 31 March 2023.

Inventory as at 30 June 2023 decreased in absolute value compared to the same period last year, improving in terms of days and also compared to the end of the last quarter.

The management of days payable remains careful.

8)

The next slide, number 8, contains some details on the financial debt.

Net of the effects of the application of accounting standard IFRS 16, the Net Financial Position (NFP) at the end of the first half of 2023 amounted to 172.4 million Euros compared to 192.3 million as at 31 March 2023 and 147.2 million after the first half of 2022. It can be seen that in the period from 1 July 2022 to 30 June 2023 investments were made amounting to 22.9 million Euros, of which 14.8 million regarding the construction of the new distribution center in Lombardy, which is expected to begin operations in the first half of 2024.

The net financial debt including the effects of IFRS 16 as at 30 June 2023 amounted to 250.1 million Euros compared to 270.6 million as at 31 March 2023 and 228.7 million at the end of the first half of 2022.

As regards the composition of the gross debt, net of the IFRS 16 component, subdivided by maturity and between fixed and variable rate portions, it can be seen that the fixed rate portion amounted to 137.4 million Euros and represents about 36% of the total gross debt.

I will now give way again to the Chief Executive Officer Francesco Ospitali.

9)

Thank you Pierpaolo.

We are now on slide 9 and some comments on current trading.

The performance of sales to customers in the Street Market and National Account segments in July was consistent with the growth objectives for 2023, confirming the progressive recovery of margins that had already been highlighted in the first half of 2023.

The results in July were achieved in a context of out-of-home consumption that continued to benefit from the positive contribution of overseas tourism, especially in the major cities.

With the aim of supporting the organic growth, MARR continues to promote the activities aimed at increasing the level of customer satisfaction, also through innovative solutions, such as:

• the release of new functions in the myMARR app and the web catalogue for managing online orders. These functions on one hand facilitate the insertion of orders and on the other enable the consultancy services of our commercial technicians to customers to be enhanced;
• the segmenting by ranges of qualitative positioning of the range of products to enable customers to choose the product most suited to their own objectives and requirements, to the type of service to be offered and the consumption times to be catered for;
• the expansion and revamping of products with a high service content in the "Easy menu" line, enabling customers to control their "food cost" and overcome the lack of availability on the job market in the foodservice sector, and which also mitigate the effects of the trading down trends.

The entire workforce remains focused on activities aimed at recovering operating profitability, which, also on the basis of the performance in the first seven months, are expected to enable the pre-pandemic EBITDA to be approached in terms of absolute value during the current year.

Focus on controlling the levels of absorption of the trade working capital also remains strong, in order to attenuate the cost of its financing.

We have now finished our presentation and will take any questions you may have.

Thank you.

Thank you and we will speak to you for the presentation of the figures as at 30 September 2023 being in calendar on Tuesday 14th November.