Recticel : Half Year Results 2023

PRESS RELEASE

Regulated information - Inside information

Brussels, 31 August 2023 - 07:00 CET

Recticel Half Year Results 2023

• Net sales decrease from € 287.2 million1 in 2022 to € 266.1 million (-7.4%) in 2023
• Adjusted EBITDA: from € 31.7 million1 to € 18.2 million (-42.6%)
• Result of the period (share of the Group): from € 34.6 million to € 2.2 million
• Net cash position: € 142.3 million (31 December 2022: net financial debt of € 250.0 million1/2;
  30 June 2022: net financial debt of € 256.2 million1/2)
• Agreement reached on the divestment of the 33% share in Orsa Foam

Sales and profits have been disappointing in the first half of 2023. Recticel is entirely dependent on the European construction markets, which have remained very challenging in most segments and countries during the period. In the residential markets, new build and renovation activities have been seriously impacted by a combination of high inflation and interest rate increases, weighing on disposable income. In the industrial and commercial markets, fewer projects were launched and some have been postponed. These market trends have been observed in most European countries, with the notable exception of France, which has remained quite dynamic.

As a consequence of these subdued markets, our volumes have been lower year-on-year by more than 15%, in a context of substantial competition leading to price deflation and pressure on margins.

After the closing of the Engineered Foams divestment to Carpenter on 12 and 13 June 2023, and the subsequent € 142.3 million net cash position, several acquisition opportunities are being pursued and progressing well, which will enhance our market and segment positions in Europe.

OUTLOOK

Input costs of chemicals, steel, and to a lesser extent mineral wool have decreased, which should create the conditions for volume growth going forward. Although still volatile, we see improvements in the demand, particularly in Insulated Panels.

In this context, we expect our full year 2023 Adjusted EBITDA to reach between € 40 and 45 million.

1. As announced in the press release of 14 June 2023, The Soundcoat Company Inc. was not part of the divestment to Carpenter Co was transferred from Discontinued Operations to Continuing Operations as of
   1 January 2022. The formerly published 2022 income statements, financial position and cash-flow statements have been restated accordingly.
   Trimo d.o.o. (Insulated Panels) is fully consolidated as of 1 May 2022.
2. Excluding the drawn amounts under non-recourse factoring programs: EUR 0.0 million per 30 June 2023 compared to EUR 13.2 million per 31 December 2022 and EUR 29.5 million per 30 June 2022

Press release - Recticel Half Year Results 2023 - 31 August 2023 - 7:00 CET

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CONSOLIDATED GROUP RESULTS - KEY FIGURES

				in million EUR
	1H2022 restated¹		1H2023		%
Sales	287.2	266.1	-7.4%
Gross profit	52.1	45.5	-12.7%
as % of sales	18.1%	17.1%
Adjusted EBITDA	31.7	18.2	-42.6%
as % of sales	11.0%	6.8%
EBITDA	27.1	15.9	-41.5%
as % of sales	9.4%	6.0%
Adjusted operating profit (loss)	24.1	6.7	-72.4%
as % of sales	8.4%	2.5%
Operating profit (loss)	19.5	4.0	-79.4%
as % of sales	6.8%	1.5%
Financial result	(1.5)	(6.2)		n.m.
Income from other associates³	(2.4)	(1.8)		n.m.
Impairment other associates	0.0	(3.9)		n.m.
Change in fair value of option structures	2.3	0.0		n.m.
Income taxes	(5.0)	(3.1)		n.m.
Result of the period of continuing operations	12.9	(10.9)		n.m.
Result of discontinued operations	22.1	13.0		n.m.
Result of the period (share of the Group)	34.6	2.2	-93.6%
Result of the period (share of the Group) - base (per share, in EUR)	0.62	0.04	-93.6%
	31 Dec 2022		30 Jun 2023		%
Total equity	446.2	437.3	-2.0%
Net Financial Debt (incl. IFRS 16 - Leases)	250.0	(142.3)		n.m.
Gearing ratio (Net financial debt / Total equity)	56.0%		N/A
Leverage ratio (Net financial debt / EBITDA)⁴	2.2		N/A

The following change in the scope of consolidation took place in 1H2023:

• Disposal on 12 June 2023 of the Engineered Foams activities, which were already accounted for as Discontinued Operations on 30 June 2022.

The results of the Automotive joint-venture (TEMDA2/Ascorium) are reported under 'Income from other associates'.

3

4

Income from other associates = income from associates not considered as being part of the Group's core business are not integrated in Operating profit (loss); i.e. Proseat (until April 2022) and Ascorium (formerly Automotive Interiors).

The pro forma leverage ratio = Net financial debt (after application of IFRS 5) divided by the sum of (a) (EBITDA (last 12 months) (before application of IFRS 5) and (b) EBITDA (last 12 months) of the recently acquired company Trimo d.o.o. This pro forma leverage ratio is a better comparable.

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Sales: from € 287.2 million1 in 1H2022 to € 266.1 million in 1H2023.

Second quarter 2023:

2Q2023 sales decreased by 13.7% from € 160.4 million1 to € 138.4 million, including -1.0% currency impact.

Sequentially, from 1Q2023 to 2Q2023, volumes have increased by about 5% and 40% respectively for Insulation Boards and Insulated Panels. In parallel, the order intake has improved in both segments, and is in 3Q2023 superior to 3Q2022.

Due to the lack in demand, margin pressure has been building up and increasing during the first half of 2023 mostly in the Insulation Boards segment.

First half year 2023:

1H2023 sales decreased by 7.4% from € 287.2 million1 to € 266.1 million, including -0.9% currency impact.

Adjusted EBITDA: from € 31.7 million1 in 1H2022 to € 18.2 million in 1H2023. Adjusted EBITDA margin on sales decreased from 11.0% to 6.8%.

Besides the topline volume/price evolutions, the raw materials costs have decreased, compensating partially for the negative volume and price effects, as well as for the salary inflation impact.

Adjusted operating profit (loss): from € 24.1 million1 in 1H2022 to € 6.7 million in 1H2023. Adjusted operating profit (loss) margin on sales decreased from 8.4% to 2.5%.

Adjustments to Operating profit (loss) on continuing operations in 1H2023 amount to € 2.7 million and include:

• € 1.2 million of restructuring costs;
• € 1.2 million of various smaller other adjustments;
• € 0.3 million impairment on intangible and tangible fixed assets.

EBITDA: from € 27.1 million1 in 1H2022 to € 15.9 million in 1H2023. EBITDA margin on sales decreased from 9.4% to 6.0%.

Operating profit (loss): from € 19.5 million1 in 1H2022 to € 4.0 million in 1H2023. Operating profit (loss) margin on sales decreased from 6.8% to 1.5%.

Financial result: from € -1.5 million1 in 1H2022 to € -6.2million in 1H2023.

Net interest charges increased from € -1.5 million1 in 1H2022 to € -6.0 million in 1H2023 as a result of the higher debt following the Trimo acquisition in the second quarter of 2022 and the gradually increasing interest rates, in absence of hedging as it was expected to close the Engineered Foams divestment earlier in time.

Other net financial income and expenses: from € -0.04 million1 in 1H2022 to € 0.13 million in 1H2023.

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Income from other associates: from € -2.4 million1 in 1H2022 to € -1.8million in 1H2023 relates to the negative result of TEMDA2 (at 49%).

Fair value of option structures: from € +2.3 million1 in 1H2022 to € +0 million in 1H2023

Income and deferred taxes: from € -5.0 million1 in 1H2022 to € -3.1million in 1H2023

• Current income tax: from € -3.8 million1 in 1H2022 to € -2.3 million in 1H2023; Current tax charges decrease in line with the lower results.
• Deferred tax: from € -1.2 million1 in 1H2022 to € -0.7 million in 1H2023;

Result of the period from continuing operations: from € 12.9 million1 in 1H2022 to € -11.5million in 1H2023.

Result from discontinued operations: from € 22.1 million1 in 1H2022 to € 13.0 million in 1H2023.

The result from discontinued operations mainly represents:

1. the result until 12 June 2023 of the Engineered Foams activities sold to Carpenter Co. (€ -0.5 million);
2. the net capital gain on the disposal of the Engineered Foams activities sold to Carpenter Co. amounting to € +12.3 million and composed of the following items:
3. • gain on the divestment of Engineered Foams: € +30.9 million (including € 24.6 million provisions on transactions related tax exposures and indemnities (incl. Orsa Foam indemnity)
   • direct attributable transaction costs: € -4.7 million;
   • Cumulative Translation Adjustment release in the income statement: € -7.5 million;
   • positive result 1H2023 Orsa Foam (€ +0.5 million) + impairment (€ -6.9 million)
4. the result of the Aquinos closing account settlement (including the release of the closing accounts provision (€ +1.2 million).

The total result (restated) of discontinued operations in 1H2022 was composed of:

1. the result of the period of the Engineered Foams activities which were sold to the Carpenter Co. (€ +4.6 million);
2. the result of the first three months of 2022 of the Bedding activities (€ +1.1 million);
3. the net capital gain on the disposal of the Bedding activities sold to Aquinos Group (€ +17.9 million, including € 5.0 million of provisions for indemnities);
4. the impact of the restatement linked to the transfer from Discontinued Operations to Continuing Operations of The Soundcoat Company Inc. (€ -1.4 million); and
5. the result of the settlements related to the divestment of the Ascorium activities (€ -0.1 million).

Consolidated result of the period (share of the Group): from € 34.6 million in 1H2022 to € 2.2 million in 1H2023.

Press release - Recticel Half Year Results 2023 - 31 August 2023 - 7:00 CET

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FINANCIAL POSITION

									in million EUR
	30 JUN 2022		30 SEP 2022		31 DEC 2022		31 MAR 2023		30 JUN 2023
	restated¹		restated¹		restated¹
Total equity	417.6		-		446.2		-		437.3
Net financial debt excluding factoring	248.8	254.5	239.8	250.8	(151.0)
+ Lease debt (IFRS 16)	7.4	8.2	10.2	9.5	8.8
Net financial debt	256.2		262.8		250.0		260.3		(142.3)
+ Drawn amounts under factoring programs	29.5	17.8	13.2	18.9	0.0
Total net financial debt	285.8		280.5		263.2		279.1		(142.3)
Gearing ratio (incl. IFRS 16)	61.3%	-	56.0%	-		N/A
Leverage ratio (incl. IFRS 16)	2.1	-	2.2	-		N/A

The Group's total net debt position decreased by € 405.5 million over 1H2023 to reach a net cash position of € 142.3 million due to the receipt of € 428.2 million from the sale of the Engineered Foams activities.

SUBSEQUENT EVENT - ORSA FOAM DIVESTMENT

Following the closing of the sale of Engineered Foams to Carpenter, Recticel has now reached an agreement in principle to divest its 33% participation in Italian foam company Orsa Foam srl to its joint venture partner Orsa srl. The purchase price amounts to € 7.15 million and will be paid in instalments with the last payment due in December 2025. The deal is expected to close by the end of the third quarter of 2023.

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Press release - Recticel Half Year Results 2023 - 31 August 2023 - 7:00 CET

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